Module 1 Introduction To Consumer Behaviour

Meaning of Consumer Behaviour

Consumer behaviour in marketing refers to the actions and decisions that people make
when they are purchasing or using products.
Definition of Consumer Behaviour
According to [Link] consumer behavior is the process where by individual
decides whether, when, what, where, how& from where to purchase goods & services.
Why study consumer behaviour?

1. Significance in daily life: in a general case sense the most important reason for
Studying consumer behaviour is the significant role it plays in our lives. Much of our
time is spent directly in the market place, shopping or engaging in other activities. A
large amount of additional time is spent thinking about products &services, talking to
friends about them, & seeing or hearing advertisements about them.
2. Application to decision making: Consumers are often studied because certain
decisions are significantly affected by their behaviour or expected actions for this reason,
consumer behaviour is said to be an applied decision.
(A) Micro perspective: The micro prospective involves undertaking consumers for the
purpose of helping a firm or organization accomplish its objectives. Advertising
managers, product designers and many others in profit oriented businesses are interested
in understanding consumers in order to be more effective at their task. In addition,
managers of various non-profit organizations have benefited from the same knowledge.
(B) Societal perspective: On the macro, or aggregate, level we know that consumers
collectively influence economic and social conditions within an entire society. In market
based on individual choices, consumers strongly influence what will be produced, for
whom it will be produced, and what resources will be used to produce it.
• Enables marketers to understand and predict market behavior of consumers in market
place
• It is concerned with what consumers buy why they buy? When where and how they
buy? How often they buy? How they consume and dispose it? How satisfied/dissatisfied
they are after using a product
• Important to understand consumer psychology in order to understand and predict
consumer choices
• Making prediction on how consumer respond to marketing action can generate profits.
• Economic decision making process.
Applications of consumer behaviour knowledge:

1. Consumer behaviour and marketing management: Marketing may be defined as

the process of planning & executing the conception, pricing, promotion and distribution,
and distribution of ideas, goods, & services to create exchange that satisfy individual &
organizational objectives.
(A) Consumer wants& needs: when the focus is on identifying & satisfying the
wants & needs of consumers, the intention of the firm is not seen as merely providing
goods & services .instead, want, need & satisfaction is viewed as a purpose, &
providing products & services is the means to achieve that end. The advertisement for
AT &T illustrates this.
(B) Company objectives: Consumes wants & needs are numerous. Therefore, a firm
that concentrates on satisfying a small proportion of all desires will most effectively
utilize its resources .Company objectives and any of the firms special advantages are
used as criteria to select the specific wants and needs to be addressed.
(C) Integrated strategy: An integrated effort is most effective in achieving a firm’s
objective through consumer satisfaction. For maximum impact this requires that
marketing efforts be closely coordinated & compatible with each other & with other
activities of the firm.
(D) Market opportunity analysis: This activity involves examining trends &
conditions in the market place to identify consumer’s needs & wants that are not
being fully satisfied. The analysis begins with a study of general market trends, such
as consumer’s life styles & income levels, which may suggest unsatisfied wants&
needs. More specific examination involves assessing any unique abilities the
company might have in satisfying identified consumer desires.
(E) Target-market selection: The process of reviewing market opportunities often
results in identifying distinct groupings of consumers who have unique wants &
needs. This can result in a decision to approach each market segment with a unique
marketing offering.
(F) Marketing-mix determination: This stage involves developing & implementing
a strategy for delivering an effective combination of want- satisfying features to
consumers within target markets. A series of decision are made on four major
ingredients frequently referred to as the marketing- mix variables. Product, place,
price & promotion. The following characterizes each area &provides a small
sampling how knowledge of consumer behaviour is relevant for decision making.
2. Consumer behaviour & non-profit & social marketing: Such organizations include
governmental agencies, religious orders, universities & charitable institutions. Often this
group must all appeal to the public for support in addition to attempting to satisfy some
want or need in society. Clearly, a sound understanding of consumer decision processes
can assist their efforts. Consider, for example, the benefits such knowledge would have to
administrators of the American Cancer society. Two major tasks of their organization are
To solicit public contributions for support of cancer research.
 To encourage regular physical examinations for early detection of the disease.
3. Consumer behaviour & governmental decision making: The relevance of consumer
behaviour principles to governmental decision making has become quite evident. Two
major areas of activity have been affected:
Government policies that provide services to the public or result in decisions that
influence consumer behaviour.
The design of legislation to protect consumers or to assist them in evaluating products
& services.
4. Consumer behaviour & demarketing: The term DE marketing refers to all such
efforts to encourage consumers to reduce their consumption of a particular product of
services. The following example illustrates a DE marketing program
EXAMPLE: antismoking campaigns: in 1988 the voters of California approved a 25-
percent- pack cigarette excise tax to fund efforts aimed at reducing the percentage of
California residents who smoke.
5. Consumer behaviour & consumer education: Consumers also stand to benefit
directly from orderly investigations of their own behaviour. This can occur in an
individual basis or as part of more formal educational programs. As we study what had
been discovered about the behaviour of others, we can gain inside into our own
interactions with the marketplace.

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 distribution.
(b) Personal factors such as age, gender, education and income level.
(c) Psychological factors such as buying motives, perception of the product and attitudes
towards the product.
(d) Situational 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.
(f) Cultural factors, such as religion, social class-caste and sub-castes.
2. Undergoes a constant change: Consumer behaviour is not static. 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 trendy footwear, and as middle- aged and senior citizens they prefer more
sober 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.
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 technoholics. They go on a shopping and spend
beyond their means. 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 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.

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: The goods, which are sold and solely
on the basis of low price mast and economical distribution channels. In case of those
articles, which week T.V. sets, refrigerators etc. Must have different channels of
distribution. Thus, decisions regarding channels of distribution are taken on the basis of
consumer behaviour.
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 utilised in promotional
campaigns to awaken desire to purchase.
5) Exploiting marketing opportunities: Study of consumer behaviour helps the
marketers to understand the consumer’s 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, week value for
money, lesser price but with superior features. The consumer’s 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 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.

Needs for consumer behaviour

1. Market Segmentation: Consumer behaviour research helps businesses identify and
segment their target audience effectively. By understanding the diverse needs,
preferences, and characteristics of consumers, companies can tailor their products,
services, and marketing strategies to different market segments.
2. Product Development and Innovation: Knowing what consumers want and need is
crucial for developing new products and improving existing ones Consumer behaviour
insights can guide product design, features, and functionality to meet customer
expectations and stay competitive in the market.
3. Marketing Strategy: Consumer behaviour data informs marketing decisions, such as
advertising, pricing, and distribution. By understanding how consumers perceive and
respond to marketing messages, businesses can create more persuasive and effective
campaigns.
4. Brand Loyalty: Building brand loyalty is a long-term goal for many companies.
Understanding consumer behaviour helps businesses create positive brand experiences,
address customer concerns, and foster long-lasting relationships, increasing the
likelihood of repeat purchases and customer loyalty.
5. Customer Satisfaction: Satisfied customers are more likely to become repeat buyers
and advocates for a brand. By studying consumer behaviour, companies can identify
pain points, improve customer service, and enhance overall satisfaction.
6. Competitive Advantage: Businesses that have a deep understanding of consumer
behaviour gain a competitive edge. They can anticipate market trends, respond to
changes in consumer preferences, and competitors by aligning their strategies with
customer needs and desires.
7. Risk Mitigation: Consumer behaviour research can help companies anticipate
potential challenges and risks. For instance, by analysing consumer feedback and
complaints, businesses can identify quality issues and take corrective actions before
problems escalate.
8. Innovation and Adaptation: The business environment is constantly evolving.
Understanding consumer behaviour allows companies to adapt to changing market
conditions and consumer trends, enabling them to stay relevant and thrive in a dynamic
marketplace.
9. Policy and Regulation: Governments and regulatory bodies often rely on consumer
behaviour research to develop and implement policies that protect consumers' rights
and ensure fair business practices. Consumer insights can inform regulations related to
product safety, advertising standards, and consumer protection.
10. Personal Financial Decision-Making: On the consumer side, understanding one's
own behaviour is crucial for making informed financial decisions. Knowledge of
consumer behaviour can help individuals manage their finances, avoid impulse
purchases, and make choices aligned with their long-term goals.

Difference between consumer and customer

Basis Consumer Customer

Definition Consumer is the one who is the Customer is the one who is
end user of any goods or purchasing the goods.
services.

Ability to resell Consumers are unable to resell Customer can purchase the good
any product or service. and is able to resell

Need for For a consumer purchasing a Customers need to purchase a

purchase product or service is not product or service in order to
essential. use it.

Motive of The motive of buying is only The motive of buying is either

buying for consumption for resale or for consumption

Is payment May or may not be paid by the Must be paid by customer

necessary consumer

Target group Individual, family or group Individual or Company

Engages Engages in the product usage Engages in the buying decision-

or consumption process making process

Users Always the end-user of the May or may not be the end-user
product of the product

Buyer: The buyer is the person who makes the final decision to purchase your product
and has a set of expectations as a result.
User: The user is the person who uses your product to make progress. But they're not
necessarily the ones paying for it.
Difference between Buyers and Users

Consumer decision making process

1. Need Recognition: The process begins with the consumer recognizing a need or want.
This could be triggered by various factors, such as running out of a product, feeling a
desire for something new, or identifying a problem that requires a solution.
2. Information Search: Once the need is recognized, the consumer seeks information to
find possible solutions. They may use internal sources (e.g, memory, past experiences)
and external sources (e.g, friends, family, online research, reviews, advertisements) to
gather information about different products or services that can meet their needs.
3. Evaluation of Alternatives: Consumers compare the available alternatives based on
various attributes such as price, quality, features, brand reputation, and other relevant
factors. They may create a consideration set, a smaller group of options they consider
seriously.
4. Purchase Decision: After evaluating the alternatives, the consumer makes a purchase
decision. They select one product or service from the consideration set and decide where
and how to purchase it.
5. Purchase: This is the stage where the consumer completes the transaction and
acquires the chosen product or service.
6. Post-Purchase Evaluation: After the purchase, consumers assess their experience
with the product or service. They compare their expectations before purchase with their
experience and level of satisfaction. If the product meets or exceeds their expectations, it
leads to customer satisfaction. If not, it may result in dissatisfaction or buyer's remorse.
7. Post-Purchase Behavior: Based on their post-purchase evaluation, consumers might
exhibit different behaviors satisfied customers are likelier to repurchase the product,
recommend it to others, and become loyal to the brand. Dissatisfied customers may
return the product, complain, or avoid buying from the brand in the future.
Need to study consumer Behaviour
1. Modern Philosophy: It concerns with modern marketing philosophy – identify
consumers’ needs and satisfy them more effectively than competitors. It makes marketing
consumer-oriented. It is the key to succeed.
2. Achievement of Goals: The key to a company’s survival, profitability, and growth in
a highly competitive marketing environment is its ability to identify and satisfy
unfulfilled consumer needs better and sooner than the competitors. Thus, consumer
behavior helps in achieving marketing goals.
3. Useful for Dealers and Salesmen: The study of consumer behavior is not useful for
the company alone. Knowledge of consumer behavior is equally useful for middlemen
and salesmen to perform their tasks effectively in meeting consumers’ needs and wants
successfully. Consumer behavior, thus, improves performance of the entire distribution
system.
4. More Relevant Marketing Program: Marketing program, consisting of product,
price, promotion, and distribution decisions, can be prepared more objectively. The
program can be more relevant if it is based on the study of consumer behavior.
Meaningful marketing program is instrumental in realizing marketing goals.
5. Adjusting Marketing Program over Time: Consumer behavior studies the consumer
response pattern on a continuous basis. So, a marketer can easily come to know the
changes taking place in the market. Based on the current market trend, the marketer can
make necessary changes in marketing program to adjust with the market.
6. Predicting Market Trend: Consumer behavior can also aid in projecting the future
market trends. Marketer finds enough time to prepare for exploiting the emerging
opportunities, and/or facing challenges and threats.
7. Consumer Differentiation: Market exhibits considerable differentiations. Each
segment needs and wants different products. For every segment, a separate marketing
program is needed. Knowledge of consumer differentiation is a key to fit marking offers
with different groups of buyers. Consumer behavior study supplies the details about
consumer differentiations.
8. Creation and Retention of Consumers: Marketers who base their offerings on a
recognition of consumer needs find a ready market for their products. Company finds it
easy to sell its products. In the same way, the company, due to continuous study of
consumer behavior and attempts to meet changing expectations of the buyers, can retain
its consumers for a long period.
9. Competition: Consumer behavior study assists in facing competition, too. Based on
consumers’ expectations, more competitive advantages can be offered. It is useful in
improving competitive strengths of the company.
10. Developing New Products: New product is developed in respect of needs and wants
of the target market. In order to develop the best-fit product, a marketer must know
adequately about the market. Thus, the study of consumer behavior is the base for
developing a new product successfully.
11. Dynamic Nature of Market: Consumer behavior focuses on dynamic nature of the
market. It helps the manager to be dynamic, alert, and active in satisfying consumers
better and sooner than competitors. Consumer behavior is indispensable to watch
movements of the markets.
12. Effective Use of Productive Resources: The study of consumer behavior assists the
manager to make the organizational efforts consumer-oriented. It ensures an exact use of
resources for achieving maximum efficiency. Each unit of resources can contribute
maximum to objectives.
Consumer Behaviour – A managerial perspective
1. Who Buys? Understanding the target audience's characteristics, demographics, and
psychographics helps managers identify their ideal customers and tailor marketing efforts
accordingly. This involves analysing age, gender, income, lifestyle, and interests.
2. When Do They Buy? Managers need to comprehend when consumers are more likely
to make purchasing decisions, whether influenced by specific events, seasons, or personal
life events. This information helps in timing marketing campaigns and promotions
effectively.
3. Where Do They Buy? Knowing where consumers prefer to make purchases, whether
online or offline, in-store or via e-commerce platforms, helps managers optimize their
distribution channels and ensure the products are available where the target consumers
expect them.
4. Why Do They Buy? Understanding the underlying motivations, needs, and desires
that drive consumer purchases allows managers to create compelling marketing messages
and value propositions that resonate with their target audience.
5. What Do They Buy? Analysing the specific products, features, and attributes
consumers seek enables managers to optimize their product offerings and tailor them to
meet consumer preferences.
6. How Do They Buy? Studying the decision-making process, including the information
search, evaluation, and purchase behaviour, provides insights into consumers' buying
decisions. This helps managers create seamless and frictionless buying experiences.
7. How They Consume and Dispose of the Product: Understanding how consumers
use and interact with products after purchase informs product design, improvements, and
post-purchase support.
8. Customer Satisfaction and Dissatisfaction: Monitoring customer satisfaction levels
and identifying the factors that lead to dissatisfaction helps managers address customer
issues, enhance product quality, and improve overall customer experience.
Consumer Research
Consumer research is the process finding data on consumer behaviour or preferences, in
order to establish a target market segment for product or services.
Why conduct consumer research?
1. Understanding Consumer Needs: Consumer research helps businesses gain insights
into their target audience's needs, desires, and preferences. By understanding what
consumers seek, companies can develop products and services that better meet their
customers' expectations.
2. Identifying Market Opportunities: Consumer research allows businesses to identify
new market opportunities and potential gaps in the market. Companies can identify
unmet needs and develop innovative solutions by analysing consumer trends and
behaviours.
3. Product and Service Development: Consumer research provides valuable feedback
for developing and improving products and services. It helps businesses identify areas for
improvement, potential features to add, or changes to make to better align with consumer
preferences.
4. Marketing Strategy Optimization: Consumer research enables businesses to create
more effective marketing strategies. Companies can tailor their marketing messages and
channels by understanding consumer behaviour and preferences to resonate with their
target audience.
5. Pricing Strategy and Value Perception: Researching consumer perceptions of
pricing and value helps businesses set appropriate pricing levels for their products and
services. Understanding how consumers perceive value allows companies to position
their offerings competitively.
6. Competitive Analysis: Consumer research provides valuable insights into how
consumers view and compare brands and products. This information helps businesses
understand their competitive position in the market and identify opportunities for
differentiation.
7. Brand Perception and Image: Consumer research helps businesses assess their brand
perception and image among consumers. Understanding how consumers perceive the
brand allows companies to refine their brand positioning and messaging.
8. Customer Satisfaction and Loyalty: By conducting consumer research, businesses
can gauge customer satisfaction levels and identify factors contributing to customer
loyalty. Satisfied and loyal customers are likelier to become brand advocates and repeat
buyers.
9. Decision-Making Support: Consumer research provides data-driven insights that
support decision-making across various business functions, such as product development,
marketing, sales, and customer service.
10. Forecasting and Planning: Consumer research data can be used for forecasting
future market trends and consumer behaviour. This helps businesses make informed
decisions about future investments, product launches, and marketing campaigns.
Consumer research process
Step-1: Define Research Objectives: Clearly articulate the specific goals and objectives
of the research. What do you want to learn or achieve through the research? Determine
the scope of the research, including the target audience and the aspects of consumer
behaviour you intend to study.
Step-2: Literature Review: Conduct a review of existing literature, market reports, and
relevant studies to gather background information on the topic and understand what is
already known about consumer behaviour in your industry or niche.
Step-3: Research Design: Select the appropriate research methods and techniques. Will
you use surveys, focus groups, interviews, observational research, or a combination of
these methods? Develop a research plan that outlines the methodology, data collection
tools, and data analysis techniques to be used.
Step-4: Sampling: Determine the sampling strategy, which involves selecting a
representative group of participants or consumers from your target population. Decide on
the sample size and how participants will be recruited or selected.
Step-5: Data Collection: Implement the chosen research methods to collect data from
the selected sample. Ensure that data collection tools, such as surveys or questionnaires,
are designed to gather the necessary information.
Step-6: Data Analysis: Process and analyse the collected data using appropriate
statistical or qualitative analysis techniques Organize and clean the data to prepare it for
analysis.
Step-7: Interpretation of Findings: Interpret the research findings in the context of your
research objectives. What do the data and analysis reveal about consumer behaviour?
Identify patterns, trends, and key insights that emerge from the data.
Step-8: Report Preparation: Create a comprehensive research report that includes a
summary of the research objectives, methodology, key findings, and interpretations. Use
visuals like charts and graphs to present data in an understandable format.
Application of consumer behaviour / consumer research in marketing
1. Market Segmentation: Consumer research helps identify distinct market segments
based on demographics, psychographics, and behavioural patterns. Marketers can tailor
their messaging and product offerings to different segments, ensuring they resonate with
specific consumer groups.
2 Product Development and Improvement: Research insights inform the design and
development of products and services. By understanding what consumers want and need,
businesses can create offerings that better align with market demand. Additionally,
consumer feedback helps identify areas for improvement in existing products.
3. Advertising and Promotion: Consumer research helps marketers create advertising
and promotional campaigns that are more relevant and persuasive. Understanding
consumer attitudes, preferences, and media consumption habits allows for better targeting
and messaging.
4. Price Determination: Businesses can use research data to assess consumers'
willingness to pay for specific products or services. This information helps in setting
optimal pricing strategies, including pricing tiers, discounts, and promotions.
5. Brand Positioning: Understanding how consumers perceive a brand and its
competitors is critical for effective brand positioning. Research helps businesses identify
their unique selling points and differentiate themselves in the market.
6. Consumer Behaviour Analysis: Research helps in understanding the entire consumer
decision-making process, from problem recognition to post-purchase evaluation. This
knowledge enables marketers to influence each stage effectively.
7. Customer Satisfaction and Loyalty: Regular consumer research, such as customer
satisfaction surveys, allows businesses to monitor and improve customer experiences
Satisfied customers are more likely to become repeat buyers and brand advocates.
8. Market Trends and Forecasting: Research data can help identify emerging market
trends and consumer preferences. This Information is invaluable for adapting marketing
strategies and staying ahead of competitors.
9. Competitive Analysis: Analysing consumer behaviour and perceptions regarding
competitors can provide insights into areas where a business can gain a competitive
advantage. This includes identifying weaknesses in competitors' products or services.
10. New Market Entry: When expanding into new markets or launching new products,
consumer research can help assess the feasibility and potential success of such initiatives.
It helps reduce risks associated with market entry.
11. Content Creation: Understanding what type of content resonates with the target
audience can inform content marketing strategies. Research can reveal the topics,
formats, and channels that consumers prefer.
12 Crisis Management: In times of crisis or negative events, consumer research can
provide insights into consumer sentiment and perceptions. This helps in developing
effective crisis management and communication strategies.
Understanding consumer through Research process
1. Develop research objectives: The first step to the consumer research process is to
clearly define the research objective, the purpose of research, why is the research being
conducted, to understand what? A clear statement of purpose can help emphasize the
purpose.
2. Collect Secondary data: Collect secondary data first, it helps in understanding if
research has been conducted earlier and if there are any pieces of evidence related to the
subject matter that can be used by an organization to make informed decisions regarding
consumers.
3. Primary Research: In primary research organizations or businesses collect their own
data or employ a third party to collect data on their behalf. This research makes use of
various data collection methods (qualitative and quantitative) that helps researchers
collect data first hand.
4. Collect and analyse data: Data is collected and analysed and inference is drawn to
understand consumer behaviour and purchase pattern.
5. Prepare report: Finally, a report is prepared for all the findings by analysing data
collected so that organizations are able to make informed decisions and think of all
probabilities related to consumer behaviour. By putting the study into practice,
organizations can become customer-centric and manufacture products or render services
that will help them achieve excellent customer satisfaction.

Factors affecting Consumer Behaviour

I Psychological Factors
Human psychology plays a major role in understanding consumer behavior. Difficult to
measure, but psychological factors are powerful enough to influence a buying decision.
1. Motivation: Motivation to do something often influences the buying behavior of the
person. Individuals have different needs such as social needs, basic needs, security
needs, esteem needs, and self-actualization needs. Out of all these, the basic needs and
security needs take a position above all other needs, and these motivate a consumer to
buy products and services.
2. Perception: Our perception is shaped when we gather information regarding a
product and examine it to generate a relevant image regarding a certain product.
Whenever we see an advertisement, review, feedback, or promotion regarding a
product, we form an image of that item. As a result, our perception plays an integral
role in shaping our purchasing decisions.
3. Learning: When a person buys a product, the general tendency is to learn
something more about the product. Learning also comes over a period through
experience. This learning depends on skills and knowledge. While skill can be gained
through practice, knowledge can be acquired only through experience.
4. Attitudes and Beliefs: Consumers’ attitudes and beliefs also influence the buying
decision. Based on this attitude, the consumer behaves in a particular way towards a
product. This attitude plays a significant role in defining the brand image of a product.
Hence, marketers try hard to understand the attitude of a consumer to design their
marketing campaigns.
II Social Factors
Humans are social beings, and the society or the people they live around influence their
buying behaviour. Human beings try to imitate other humans and nurture a desire to be
socially accepted. Hence, their buying behaviour is influenced by other people around
them. These factors are considered as social factors.
1. Family: Family plays a significant role in shaping the buying behaviour of a person.
A person builds his/her preferences from his childhood by watching their family buy
certain products and continues to buy the same products even when they grow up.
2. Reference Groups: A reference group is a group of people with whom a person
associates himself. Generally, all the people in the reference group have common
buying behaviour and influence each other.
3. Roles and status: A person is influenced by the role that he holds in the society. If a
person is in a high position, his buying behaviour will be influenced largely by his
status. A person who is a Chief Executive Officer in a company will buy according to
his status while a staff or an employee of the same company will have different buying
pattern.
III. Cultural Factors
A group of people is associated with a set of values and ideologies that belong to a
particular community. People coming from particular communities have behaviours
highly influenced by their culture. Cultural factors also include the concepts of subculture
and social class.
1. Culture: Essentially, culture is the share of each company and is the major cause of
the person who wants culture and behavior. The influence of culture on the purchasing
behavior varies from country to country, therefore sellers have to be very careful in the
analysis of the culture of different groups, regions or even countries.

2. Subculture: Each culture has different subcultures, such as religions, nationalities,

geographical regions, racial, etc. Marketing groups may use these groups, segmenting
the market in several small portions. For example, marketers can design products
according to the needs of a specific geographical group.

3. Social Class: Every society has some kind of social class which is important for
marketing because the buying behavior of people in a particular social class is similar.
Thus marketing activities could be adapted to different social classes. Here we should
note that social class is not only determined by income, but also there are several other
factors such as wealth, education, occupation etc.

IV. Personal Factors

Factors that are personal to the consumers influence their buying behaviour. These
personal factors vary from person to person, thereby producing different perceptions and
consumer behaviour.
1. Age: The buying choices of individuals depend on which age group they belong to.
Elderly people will have totally different buying behaviours as compared teenagers.
 2. Income: Income influences the buying behaviour of a person. Higher income gives
higher purchasing power to consumers. When a consumer has higher disposable
income, it gives more opportunity for the consumer to spend on luxurious products.
Whereas low-income or middle-income group consumers spend most of their income
on basic needs such as groceries and clothes.
3. Occupation: Occupation of a consumer influences the buying behaviour. A person
tends to buy things that are appropriate to this/her profession. For example, a senior
corporate professional would tend to buy formal clothing whereas a creative designer
would tend to spend on casual wear.
4. Lifestyle: Lifestyle is an attitude, and a way in which an individual stay in the
society. The buying behaviour is highly influenced by the lifestyle of a consumer.
Someone who leads a healthy lifestyle would spend more or healthy food
alternatives.
V. Economic Factors
Consumer buying habits greatly depend on the economic situation of a country or a
market. When a nation’s economy is strong, it leads to a greater money supply in the
market and higher purchasing power for consumers. Whereas a weak economy reflects a
struggling market that is impacted by unemployment and lower purchasing power.
1. Personal Income: When a person has a higher disposable income, the purchasing
power increases simultaneously. Disposable income refers to the money that is left
after spending towards the basic needs of a person. When there is an increase in
disposable income, it leads to higher expenditure on various items. But when the
disposable income reduces, parallelly the spending on multiple items also reduced.
2. Family Income: Family income is the total income from all the members of a
family. When more people are earning in the family, there is more income available
for shopping basic needs and luxuries. Higher family income influences the people in
the family to buy more.
3. Consumer Credit: When a consumer is offered easy credit to purchase goods, it
promotes higher spending. Sellers are making it easy for the consumers to avail credit
in the form of credit cards, easy instalments, bank loans, hire purchase, and many
such other credit options. When there is higher credit available to consumers, the
purchase of comfort and luxury items increases.
4. Liquid Assets: Consumers who have liquid assets tend to spend more on comfort
and luxuries. Liquid assets are those assets, which can be converted into cash very
easily. Cash in hand, bank savings and securities are some examples of liquid assets.
When a consumer has higher liquid assets, it gives him more confidence to buy
luxury goods.
5. Savings: A consumer is highly influenced by the amount of savings he/she wishes
to set aside from his income. If a consumer decided to save more, then his
expenditure on buying reduces. Whereas if a consumer is interested in saving more,
then most of his income will go towards buying products.
Current Trends in Consumer Behaviour
1. Increased demand for transparency: There is an increasing customer demand
around transparency. Big corporations have abused the trust of the customer for a long
time. We've seen many scandals within various industries from food to automotive.
That's the reason why the customers of today require transparency on the supply chain,
ingredients, processes and so on.
2. Accelerated online buying: Customers will accelerate buying online and using home
delivery. This was already happening, but the pandemic revealed to skeptics that it’s
easy, it works and it makes their life easier. All businesses will need to have an online
strategy or they’re going to get beaten by their competitors that embrace and execute an
online sale and marketing strategy.
3. Increased focus on what's truly important: Covid has taught us all how to better
value and prioritize what's important in our lives. This will change the products and
services we decide to purchase, the types of products and services we buy and how we
actually affect that purchase.
4. A shift in wide communication: There will be a definite shift in omnipresent
communication. As organizations move online and remotely, creating a cohesive brand
experience is not only desired but also expected. Customers are looking for an experience
that meets them where they are, when it's convenient. AI and robust customer service
will lead the charge across all platforms.
5. A greater human element in client interactions: Customers will expect a greater
“human” element in their interactions. Virtual meetings and the absence of gatherings has
people eager for real-time, meaningful conversations. To a Zoom-fatigued population, a
phone call can seem more personal and relaxed. Now is the time to reacclimate to
personal phone calls or even mutually-acceptable live visit.
6. B2b customers gaining more leverage (debt): Business-to-business customers will
continue to have more and more leverage with tech vendors from checking authentic
reviews to managing the sales cycle on their timeline and even benefiting from group
buying pricing. Buying is changing for B2B and it's a blessing. I encourage customers to
have more leverage and power as it will result in a better relationship, less buyer remorse
and higher retention.
7. Increased demand for anonymity: Customers will demand more anonymity. Given
continued data breaches combined with recent politicization of electronic and social
media footprints of private citizens, a new trend will emerge where assurances of security
will no longer suffice. Companies will need to accommodate customers who will simply
refuse to provide any information beyond what is needed for a particular transaction.
8. Consumers looking for social experiences: Once the vaccine reaches the masses and
the weather breaks, we are going to see a wave of consumers wanting to go out and shop.
Beyond making purchases, consumers are going to want an experience and to socialize.
The demand for interaction with others will never be higher and there will be an
opportunity for brands to capitalize on this consumer behavior that we hope to see in the
near future.
9. More people taking a diy approach: We expect to see more people leaning toward
trying to do more things themselves instead of looking for others to do them. This can
include more cooking at home, less dining out, more attempts at doing one's own nails or
styling one's own hair, fewer salon visits, more at-home workouts and less gym time.
10. Growing importance of content marketing: As conferences and trade shows put
their events on hold in 2021, more businesses will search for alternative ways to sell their
products and services. Content marketing is going to play a larger role in this transition
and I'm not talking about ads. Businesses will turn to the media to try to introduce their
products to consumers and enterprise. The successful ones will find ways to sell online.
11. Increased focus on green products: Clean energy has already been a trend but this
year it will grow exponentially because we've evidently seen the damage we have
brought to the planet. As consumers demand more green products, suppliers will produce
more, pushing the demand further. Demand for electric vehicles, solar panels and vegan
meat will be higher than ever, and more and more companies will pivot toward this.
12. More socially conscious shopping: Higher degrees of socially conscious shopping is
a behavioral trend to watch for in 2021. Love it or hate it, cancel culture as a
phenomenon is not new to the world of commerce. However, with tensions high,
customers will heavily consider the political, social and ethical ramifications of
supporting businesses or brands that are not aligned with their philosophies and beliefs.
13. Increased value-based spending: Increased value-based spending (e.g., purchasing
locally and buying from brands that align with personal values) is a trend to watch.
Before buying from your brand, customers will continue wanting to see brands be a
leader for change within different industries and communities and take action on the
social issues they care about.
14. A boom in customer automated decisions: 2021 will see a boom in customer
automated decisions in both the business-to-consumer and the business-to-business
markets. Customers have learned that they can set their software to make decisions based
on preferences and trends. It can be something as simple as reordering office paper, or
something more critical like letting your digital marketing software make autonomous
daily decisions on a million dollars in ad revenue.
15. Customers preferring vetted vendors: Customers are going to be more cautious in
how they join with vendors for a number of reasons. With continued data breaches, more
customers will want to make sure they are working with vetted vendors. This will also be
done for quality—with a slowdown in all industries, customers will be looking for better
quality and standards instead of rushing in for the lowest costs.