Introduction to Consumer Behavior
-By GOURANGA PATRA
Roadmap
Types of Consumer Consumer Value, Satisfaction,
Behavior and Retention
History of Consumer
Behavior 3
1 5 7
Glossary
2 4 6
Definitions Importance of Consumer Illustration
Behavior
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Who is a Consumer?
The consumer is the one who is the end-user of any goods or services. Any person, other than the buyer who
buys the product or services, and consumes the product by taking his/her permission is categorized as a
consumer. Any single or group of people, other than the buyer who buys the product or services, consumes the
product by seeking his/her permission falls under the category of a consumer. In simpler words, the consumer
can be termed as the end-user of the goods or services.
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What is Consumer Behaviour?
Consumer behavior or consumer buying behavior are all the aspects that affect consumers’ search, selection, and
purchase of products. We can use the term for the purchases of services too. Consumer behavior also includes the post-
purchase stage. Consumer behavior is an area of research within the business field of ‘marketing.’ To understand
consumer behavior, companies need to know why customers bought something and what pushed them to buy. They
also need to know what trends are developing in society. Consumer buying behavior studies various situations such as
what do consumers buy, why do they buy, when do they buy, how often do consumers buy, for what reason do they
buy, and much more.
An example of a new trend developing in society is children’s influence on their parents’ purchases. Kids today are
major factors in the purchase of expensive products. In fact, many parents today will not purchase a car if their children
do not like it. This was not the case forty years ago.
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Factors Affecting Consumer Behaviour
Cultural Factors
Consumer behavior is influenced by cultural factors like social class,
buyer’s culture, and subculture. There are three types of cultural
factors include social class, culture, and subculture. Culture can be
different by region, different groups and even countries.
Social Factors
Social factors greatly influence the purchasing behavior of consumers.
Social influencers are diverse and include family, school or work
communities, social interaction or any group with which an individual
interacts. It also includes an individual’s social class which comprises of
education level, living conditions, and income.
Factors Affecting Consumer Behaviour
Personal Factors
Personal factors impact buying decisions and include age, economic situation and
occupation. In considering personal factors, buying behavior is also influenced by
habits, opinions and interests along with other personal issues.
Human Life Cycle Stages is another example, here marketers target markets based on
the human life cycle. They will target teenagers with bright colors, loud music and
fast food. A young couple will prefer to buy a retirement plan and secure their
future.
Psychological Factors
Psychological factors that impact buying decision includes perception, motivation and
beliefs and attitudes. Every consumer will respond to marketing message based
upon their attitudes and perceptions.
Consumer Behavior Models
Through observation and research, there have been developed several
models which further explains the buying behavior of consumers and
which includes black box, personal variables as well as complex
models.
Black-box model: This model is based upon external stimulus-response
which means that a point triggers the consumer’s mind to make a
purchasing decision which is influenced by different factors like sampling,
marketing message, promotions, product availability and price
Personal variables: When a consumer is influenced by personal-variable
model, decisions are based upon internal factors. Internal factors may
include belief systems, goals, goals, traditions, personal opinions or any
other similar internal motivator.
Complex model: Complex model includes both external and internal
variables.
History of Consumer Behaviour
Consumer behavior emerged in the 1940–1950s as a distinct sub-discipline of marketing, but has become
an interdisciplinary social science that blends elements from psychology, sociology, social anthropology,
anthropology, ethnography, ethnology, marketing, and economics (especially behavioral economics).
Consumer behavior 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. Definition: 1. According to Engel, Blackwell, and Mansard, ‘Consumer behavior is the actions
and decision processes of people who purchase goods and services for personal consumption’. 2.
According to Louden and Bitta, ‘Consumer behavior is the decision process and physical activity, which
individuals engage in when evaluating, acquiring, using or disposing of goods and services’.
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Understanding The Concept
To have a better understanding the concept of consumer behaviour
there are some fundamental concept that are to be addressed:
• Marketing Concept
• Production concept
• Product Concept
• Selling Concept
Marketing Concept
In marketing concept the firms analyses the needs of their customers and then make decisions to
satisfy those needs, better than the competition. To better understand the marketing concept, it
is worthwhile to put it in perspective by reviewing other concepts that once were predominant.
While these alternative concepts prevailed during different historical time frames, they are not
restricted to those periods and are still practiced by some firms today.
Production Concept
The term production concept was coined by Henry Ford who made the
auto mobile which was till then only affordable for the rich people for
even a common man to purchase. This concept assumes that consumers
are interested primarily in product availability at low prices
Marketing objectives:
* Cheap, efficient production
* Intensive distribution
* Market expansion
The production concept was the idea that a firm should focus on those
products that it could produce most efficiently and that the creation of a
supply of low-cost products would in and of itself create the demand for
the products. Virtually everything that could be produced was sold
easily by a sales team whose job it was simply to execute transactions at
a price determined by the cost of production. The production concept
prevailed into the late 1920's.
Product Concept
The product concept is on the assumption that the customers would choose the
product if it has better quality, features, and performance. The reason product
concept is important is because it makes it necessary for you to meet the demands
and wishes of customers by delivering the best product. Sales, marketing, and
distribution are also important factors in the product concept.
The concept assumes that consumers will buy the product that offers them the
highest quality, the best performance, and the most features
Marketing objectives:
* Quality improvement
* Addition of features
*Tendency toward Marketing Myopia
Sales concept
The sales concept paid little attention to whether the product actually was needed; the
goal simply was to beat the competition to the sale with little regard to customer
satisfaction. Marketing was a function that was performed after the product was
developed and produced, and many people came to associate marketing with hard
selling. Even today, many people use the word "marketing" when they really mean
sales.
By the early 1930's however, mass production had become commonplace,
competition had increased, and there was little unfulfilled demand. Around this time,
firms began to practice the sales concept (or selling concept), under which companies
not only would produce the products, but also would try to convince customers to
buy them through advertising and personal selling. Before producing a product, the
key questions were:
* Can we sell the product?
* Can we charge enough for it?
Stage of consumer Behaviour
• First stage: economic man approach. The earliest approach to
consumer behaviour, economic man approach perceives
consumers to be thinking logically and rationally at all times in
relation to decision making. According to Arnoult et al. (2002) this
approach to consumer behaviour has been subjected to criticism
due to neglecting irrational aspect of consumer behaviour.
• Second stage: psychodynamic approach. Psychodynamic
approach is mainly based on the work of famous psychologist
Sigmund Freud (1856 – 1939) and this approach views consumer
behaviour as biological influence of drivers that are beyond
rational thinking capabilities of individuals (Blythe, 1997).
Specifically, three facets of human psychology are identified as
the ID, ego, and superego.
Stage of consumer Behaviour
• Third stage: behaviourist approach. Behaviourist approach to
consumer behaviour focuses on the impact of external factors on
patterns of behaviour amongst individuals (Neal and Quester,
1997). The majority of literatures discussing behaviourist approach
mention experiments conducted by Russian scientist Ivan Pavlov
(1849 -1936), where dogs were taught to behave in certain ways in
given conditions with organising impact of the same external factor
in a repeated manner.
• Fourth stage: cognitive approach. This approach to consumer
behaviour is based on Stimulus – Organism – Response model
proposed by Hebb (Bray, 2008). As illustrated in figure below,
according to this model once organism is impacted by an external
stimulus the response to the stimulus directly affects the nature of
the final decision about the purchase of products and services.
Stage of consumer Behaviour
• Fourth Stage:
Consumer Decision-Making
The process of consumer decision-making, includes the input, process, and output stages of
decision-making.
The input stage of consumer decision-making includes two influencing factors: the firm’s marketing efforts (i.e.,
the product, its
price and promotion, and where it is sold) and sociocultural influences (i.e., family, friends, neighbors, social
class, and cultural and
subcultural entities). This stage also includes the methods by which information from firms and sociocultural
sources is transmitted
to consumers.
The process stage focuses on how consumers make decisions. The psychological factors (i.e., motivation,
perception, learning,
personality, and attitudes) affect how the external inputs from the input stage influence the consumer’s recognition
of a
need, pre-purchase search for information, and evaluation of alternatives. The experience gained through
evaluation of alternatives,
in turn, becomes a part of the consumer’s psychological factors through the process of learning.
The output stage consists of two post-decision activities: purchase behavior and post-purchase [Link]
Consumer decision Funnel
Post-Purchase Behaviour Insert your content
Purchase Decision Insert your content
Alternative Evaluation
Insert your content
Information Search Step 2
Need Recognition
Step 1
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Importance Of Consumer Behaviour
• To design the best possible product or service that fully satisfies
consumer’s needs and demands.
• To decide where the service or product would be made available for
easy access of consumers.
• To decide the price at which the consumers would be ready to buy that
product or service.
• To find out the best method of promotion that will prove to be effective
to attract customers to buy a product.
• To understand why, when, how, what and other factors that influence
buying decision of the consumers.
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Importance Of Consumer Behaviour
• To understand Buying Behavior of consumers
• To create and retain customers though online stores
• To Understand the factors influencing Consumer’s buying Behavior
• To Understand the factors influencing Consumer’s buying Behavior
• To understand the consumer’s decision to dispose a product or services
• To increase the knowledge of sales person influence consumer to buy product
• To help marketers to sale of product and create focused marketing strategies
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How to Study Consumer Behavior
Several factors affect the consumer behavior and there are some methods that
are used to study consumer behavior. These methods include:
• Surveys: Surveys can be conducted on the phone, internet or in-person.
Surveys should avoid the open-ended question and should include multiple-
choice questions so that answers are given easily.
• Focus groups: This involves hosting a group of different type of customers
to discuss over a product type and to understand the reasons why
customers will buy certain brands. This should include open-ended
questions and allow participants to try a new brand and write down their
views about it.
• Point-of-sale: This requires obtaining statistics from stores or corporate
headquarters. Companies should focus upon a particular type of product and
determine whether the product is purchased more than often in a certain
time period in comparison to other time periods. This paves way for
researching the reasons why a particular brand was selected over the other.
Marketing segmentation
Targeting Segmentation
Customer targeting is the process of
segmenting, selecting, and making contact Customer segmentation is the process
with your business customers, often to by which you divide your customers up
reconnect with them for increased sales. based on common characteristics – such
Customer targeting can take place across as demographics or behaviors, so you
numerous channels, and in its best form, is can market to those customers more
highly directed to the target customers that effectively.
need it most for engagement. It shapes
your marketing strategies to bring more
value to your marketing’s limited resources
and helps you to create content that is
more effective in its ROI.
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Marketing segmentation
Targeting Segmentation
For example. demographic segmentation might
For example, if a customer has purchased from you
target potential customers based on their
before but hasn’t in a while, you can deliver income, so your marketing budget isn’t wasted
targeted adverts via email with your most relevant directing your messaging at people who likely
top sellers to encourage them to re-engage and can’t afford your product.
spend more money with you. Luxury goods manufacturer Montblanc worked
with Yield to present a selection of offers across
their website. One sought to raise conversions
using a Father’s Day deal that offered a free gift
to those spending over £200 – an amount that
acknowledged the spending expectations of
Montblanc’s target audience and saw a +118%
uplift in conversions for those targeted.
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Value, Retention, Satisfaction
Consumer Value Consumer Satisfaction Consumer Retention
A consumer perceives value Customer satisfaction is Customer retention refers to a
as what they have received defined as a measurement that company's ability to turn
(i.e., an assessment of the determines how happy customers into repeat buyers
overall utility of a product) and customers are with a and prevent them from
what they have given for the company's products, services, switching to a competitor. It
product (e.g., price). A and capabilities. Customer indicates whether your product
consumer makes a choice satisfaction information, and the quality of your service
based on various consumption including surveys and ratings, please your existing customers.
values, including functional, can help a company determine It's also the lifeblood of most
social, emotional, epistemic how to best improve or subscription-based companies
and conditional value. changes its products and and service providers.
services.
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Amazon Creates Consumer Value
Amazon Creates Value for Customers Amazon creates value for its customers by offering
customer satisfactory services by managing retail operations with efficient use of
technology. Operational efficiency is the strength of [Link] and supports the
management to maintain its competitive advantage and enhance corporate performance.
[Link] creates value for its customers by offering customers broad array of products
to select from through their website and ensuring timely delivery of products to exhibit
high level of commitment towards their business and customers
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Nike’s Esurance of Consumer Satisfaction
To put it simply, Nike doesn't just sell products. It tells customers what they want — and then makes
that value readily available. The key is Nike's ability to cultivate customer trust. Between its brand
legacy, its knowledgeable team and its commitment to the entire athletic experience, Nike proves it
knows athletes. If products perform their function, customers are likely to feel good when wearing
Nike shoes. If they run fast and with comfort, customers will associate happier sentiments with the
brand. Similarly, aesthetically pleasing products inspire positive emotions in customers.
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Nestle’s Consumer Retention through Monitor and Improve
Nestlé: monitor and improve based on customer feedback
A way to retain customers is to facilitate customer feedback. This is a no-brainer. The best people who can tell you
how to retain customers, after all, are your customers themselves. Once you get that feedback, you can adjust your
products and services accordingly. Facilitating customer feedback can be done in several ways.
For example, you can send surveys through an email service provider to your customers. Through a survey, you could
ask questions like:
How did they come across your company?
Would they recommend the company to friends and family?
How would they rate the shopping experience?
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Technology and Consumer Relationships
Technologies often enhance customer relationships and retention by engaging consumers with brands. Procter and Gamble
is the world’s larger manufacturer of beauty and grooming (e.g., fragrances, mouthwash, toothpaste, feminine care)
and household care products (e.g., household cleaning, laundry detergents, over-the-counter drugs, and disposable diapers).
For every brand, the company’s website includes suggestions on how to use the product more effectively. For example,
for shampoo, the company provides a “scalp care handbook.” For its Gillette shaving blades, the website offers
comprehensive advice about facial care and proper shaving. For its detergents, P&G advises consumers
how to wash white
and colors, which temperature is best for which types of fabrics, and how to handle stains on different materials. Amazon.
com sends personalized e-mails to previous buyers announcing newly published books that reflect their interests and are
based on past purchases. Nature Valley—the granola bar brand—uses technology inspired by Google Street View. A website
called Nature Valley Trail View uses cameras showing hikers, in nearly real time, in the Grand Canyon and other national
parks. There is no sales pitch on the site and only a small Nature Valley logo appears on the screen. The marketer’s objective
is to feature lifestyles that its customers care about, engage them with the brand, and build brand awareness and
loyalty.
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Technology and Consumer Relationships
The opportunities for technology-enabled added value are virtually limitless. Professors can enhance classroom teaching
with online networks and tools that enable students to read current and beyond-the-text material and practice and complete
assignments from any location and at any time. Online newspapers customized to personal preferences include links to previous
articles about consumers’ favorite topics and send them e-mails about breaking stories. The most revolutionary example of
technology-enabled value added to physical products are Apple’s iTunes and its large software selection for editing and posting
content online.
Researchers have identified two interrelated forms of customer engagement with marketers: Emotional bonds represent
a customer’s high level of personal commitment and attachment to the company. Transactional bonds are the mechanics and
structures that facilitate exchanges between consumers and sellers. Savvy marketers always strive to build emotional bonds with
customers. Technology, mostly in the form of social media, is the most innovative and versatile tool for engaging customers with
companies emotionally and far beyond the selling act.
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Glossary
Market Consumer Consumer behaviour
marketing in consumer behavior is about meeting
consumers' needs, understanding what makes A consumer is the one who purchases the Consumer behavior is the study of
them tick, and speaking to them in the ways that product for his/her own need and uses or individuals, groups, or organizations and
make them want to engage. In order to do this, consumes it. A consumer cannot resell the all the activities associated with the
marketers turn to a variety of reports, surveys, good, product or service but can consume it to purchase, use and disposal of goods and
and tools to understand one thing - consumer earn his/her livelihood and self employment services. Consumer behaviour consists of
behavior. It's a marketer's gold how the consumer's emotions, attitudes,
and preferences affect buying behaviour.
Buying behaviour Targeting Segmentation
Consumer Buying Behavior refers Targeting is the process through Customer segmentation is the process
to the actions taken (both on and which an advertiser identifies its by which you divide your customers up
offline) by consumers before buying a target audience and then advertises based on common characteristics – such
product or service. This process may to them through a variety of as demographics or behaviours, so you
include consulting search engines, channels. can market to those customers more
engaging with social media posts, or effectively.
a variety of other actions.
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Glossary
Consumer Value Consumer Retention Consumer Satisfaction
A consumer perceives value as what they Customer satisfaction is defined as a
have received (i.e., an assessment of the Customer satisfaction is defined as a measurement that determines how happy
overall utility of a product) and what they measurement that determines how customers are with a company's products,
have given for the product (e.g., price). A happy customers are with a company's services, and capabilities. Customer
consumer makes a choice based on various products, services, and capabilities. satisfaction information, including surveys
consumption values, including functional, Customer satisfaction information, and ratings, can help a company determine
social, emotional, epistemic and conditional including surveys and ratings, can help a how to best improve or changes its products
value. company determine how to best improve and services.
or changes its products and services.
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Thanks!
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