Consumer Behavior: Meaning/Definition and Nature of Consumer Behavior

Meaning and Definition:

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.
The study of consumer behavior 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.
Some selected definitions of consumer behavior are as follows:
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’.
Nature of Consumer Behavior:
1. Influenced by various factors:
The various factors that influence the consumer behavior 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 behavior is not static. It undergoes a change over a period of time
depending on the nature of products. For example, kids prefer colorful 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 soberer footwear. The
change in buying behavior 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 behavior 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 behavior varies across states, regions and countries. For example,
the behavior of the urban consumers is different from that of the rural consumers.
A good number of rural consumers are conservative in their buying behaviors.
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 behavior may
also vary across the states, regions and countries. It may differ depending on the
upbringing, lifestyles and level of development.
5. Information on consumer behavior is important to the marketers:
Marketers need to have a good knowledge of the consumer behavior. They need to
study the various factors that influence the consumer behavior of their target
customers.
The knowledge of consumer behavior 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 behavior 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 marketer’s increase.
Therefore, marketers need to influence consumer behavior to increase their
purchases.
7. Varies from product to product:
Consumer behavior 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 behavior 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
deprive themselves of higher standard of living.
9. Reflects status:
The consumer behavior 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.
Definition of Customer
A customer is the individual/business/organization which buys the offering from
the seller via a financial transaction or monetary exchange.
In simple terms – Customer is the buyer of the offering.
Example: A person buying a gift for someone from a gift shop – the person is a
customer of the gift shop.
Definition of Consumer
A consumer is an individual who is the end-user of the product/service offered by a
business.

In simple terms – Consumer is the end-user who consumes the offering.

Example: Take a kid who recently got candy from his dad. Even though his dad
was the customer who bought the candy, this child is the consumer who ends up
consuming the product.
Individual or Consumer Buying Behavior
Buying behavior is the decision processes and acts of people involved in buying
and using products.
Consumer buying behavior refers to the buying behavior of ultimate consumers—
those who purchase products for personal use and not for business purposes.
Understanding buying behavior requires knowledge of the consumption process
and consumers ‘perceptions of product utility.

Consumer Buying Decision Process

The consumer buying decision process is a five-stage purchase decision process

which includes problem recognition, information search, evaluation of alternatives,
purchase, and post-purchase evaluation.
The actual act of purchase is only one stage in the process and is not the first stage.
Not all decision processes, once initiated, lead to an ultimate purchase; the
individual may terminate the process at any stage.
Not all consumer buying decisions include all five stages.

Problem Recognition

This stage occurs when a buyer becomes aware of a difference between a desired
state and an actual condition.
Recognition speed can be slow or fast.
Individual may never become aware of the problem or need. Marketers may use
sales personnel, advertising, and packaging to trigger recognition of needs or
problems.
Information Search

After the consumer becomes aware of the problem or need, he or she searches for
information about products that will help resolve the problem or satisfy the need.

There are two aspects to an information search:

In the internal search, buyers first search their memories for information
about products that might solve the problem.
In the external search, buyers seek information from outside sources.

An external search occurs if buyers cannot retrieve enough information from their
memories for a decision.

Buyers seek information from friends, relatives, public sources, such as

government reports or publications, or marketer-dominated sources of information,
such as salespeople, advertising, websites, package labeling, and in-store
demonstrations and displays. The Internet has become a major information source.

Repetition, a technique well known to advertisers, increases consumers ‘learning.

Repetition eventually may cause wear-out, meaning consumers pay less attention
to the commercial and respond to it less favorably than they did at first.

Evaluation of Alternatives

A successful information search within a product category yields a consideration

set (aka evoked set), which is a group of brands that the buyer views as possible
alternatives. The consumer establishes a set of evaluative criteria, which are
objective and subjective characteristics that are important to him or her. The
consumer uses these criteria to rates and ranks brands in the consideration set.
Marketers can influence consumers ‘evaluations by ―framing‖ the alternatives—
that is, by the manner in which they describe the alternatives and attributes.
 Purchase

Purchase selection is based on the outcome of the evaluation stage and other
dimensions. roduct availability, seller choice, and terms of sale may influence the
final product selection. The buyer may choose to terminate the buying decision
process, in which case no purchase will be made.

Post purchase Evaluation

After purchase, the buyer begins to evaluate the product to ascertain if the actual
performance meets expected levels. Evaluation is based on many of the same
criteria used when evaluating alternatives. Cognitive dissonance is a buyer‘s
doubts that arise shortly after a purchase about whether it was the right decision.

The Importance of Consumer Behavior in Marketing

What Is Consumer Behavior?

In general terms, consumer behavior is a psychologically-based study of how

individuals make buying decisions; what motivates them to make a purchase.
Several facets of consumer behavior exist, such as:

 How a consumer feels about certain brands, products, or services

 What motivates a consumer to pick one product over another and why
 What factors in a consumer's everyday environment affect buying decisions or
brand perceptions and why?
 How consumers make decisions in groups or when they are alone

Multiple factors exist that determine buyer behavior, such as social factors,
psychological factors, and even simply personal factors. For instance, a good
consumer behavior example would be a single mother in her 20s choosing to
purchase an SUV instead of a minivan because of her personal perception of the
minivan being a vehicle for a middle-aged mother.
Why Is Consumer Behavior Important to Business?

According to a Salesforce report, 76% of consumers expect companies to

understand their needs and expectations. This means that if you don't understand
what a consumer wants before they can tell you, they're probably taking their
business elsewhere.

What is market segmentation?

At its core, market segmentation is the practice of dividing your target market into approachable
groups. Market segmentation creates subsets of a market based on demographics, needs,
priorities, common interests, and other psychographic or behavioral criteria used to better
understand the target audience. By understanding your market segments, you can leverage this
targeting in product, sales, and marketing strategies. Market segments can power your product
development cycles by informing how you create product offerings for different segments like
men vs. women or high income vs. low income.

The benefits of market segmentation

1. Developing effective marketing strategies: Knowing your target audience gives you a
head start about what methods, tactics and solutions they will be most responsive to.
2. Better response rates and lower acquisition costs: will result from creating your
marketing communications both in ad messaging and advanced targeting on digital
platforms like Facebook and Google using your segmentation.
3. Attracting the right customers: targeted, clear and direct messaging attracts the people
you want to buy from you.
4. Increasing brand loyalty: when customers feel understood, uniquely well served and
trusting, they are more likely to stick with your brand.
5. Differentiating your brand from the competition: More specific, personal messaging
makes your brand stand out.
6. Stronger marketing messages: You no longer have to be generic and vague – you can
speak directly to a specific group of people in ways they can relate to, because you
understand their characteristics, wants and needs.
7. Targeted digital advertising: Market segmentation helps you understand and define
your audience’s characteristics, so you can direct your marketing efforts to specific ages,
locations, buying habits, interests etc.