Amity Business School

Module IV

Introduction to
Consumer Behavior
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What is Consumer Behavior?

The study of how consumers

• Select
• Purchase
• Use
• Dispose of

goods and services in the process of satisfying

their personal and household needs and wants.
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Why did consumer behavior become a

separate discipline from marketing?
• Marketers came to realize that consumers did not always
act or react as marketing theory suggested they would
• Consumers rejected mass-marketed products, preferring
differentiated products that reflected their own special
needs, personalities and lifestyles
• Even in industrial markets, where needs are more
homogeneous than consumer markets, buyers exhibited
diversified preferences and less predictable purchase
behavior
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Other factors that contributed to the

growing interest in consumer behavior
• The accelerated rate of new product development
• The consumer movement
• Public policy considerations
• Environmental concerns
• The opening of national markets throughout the world
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Consumer behavior is more than just

purchasing
Consumer Behavior involves
• Exposure to the media
• Browsing
• Influencing others
• Being influenced by others
• Complaining about and returning products
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Economics alone does not explain

consumer behavior
• Early theories based on notion that individuals act rationally to
maximize their benefits (satisfaction) from purchasing
• Later research discovered that consumers are just as likely to
• Purchase impulsively
• Be influenced by family, friends, advertisers and role models
• Be influenced just as strongly by mood, situation and emotion
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Consumer behavior is an
Interdisciplinary Field

Psychology Anthropology
Consumer
Behavior
studies

Social
Psychology Economics

Other Fields
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What Do Buying Decisions Involve?

Consider a decision to acquire a pet

• Decision entails determining:

– Where to learn about pets
– Where to purchase the selected pet
– How much to pay for it
– Who will take care of it
– What supplies or services are needed for it
– Where to purchase such supplies or services
– How much to pay for supplies and services
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The Marketing Concept

• An operating philosophy of business in which the consumer

is the focal point of the firm’s activities
• Embodies the view that industry is a customer-satisfying
process, not a goods-producing process (the “selling
concept”)
• Key assumption is that, to be successful, a company must
determine the needs and wants of specific target markets and
deliver the desired satisfactions better than the competition
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Trends influencing consumer behavior in

contemporary society
The Information Superhighway Concern about Safety

Focus on Health and Beauty Focus on Ethics

Shifting Roles of Sexes Diversity

Telecommuting A Global Village

Personalized Economy Ecological Consciousness

Emphasis on Leisure Changing Perception of Religion

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1. Growth of the information superhighway

Positive Implications
• Marketers can be in touch with anyone, anywhere
and at any time
• Availability of information increases consumers’
knowledge and power in the marketplace.
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Negative Implications
• Increased information about consumers raises serious privacy
issues
• Creation of a digital divide that further stratifies society based
on wealth, education and age
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2. Focus on health, fitness, and beauty

• Golden opportunities are created for marketers of

many products ranging from fat-free foods to
vitamins, as well as for services ranging from plastic
surgery to hair implants.
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3. Shifting roles of men and women

• More women in the workforce

• More women in management positions
• More women raising children alone
• Gay and lesbian families changing the traditional model of
the family
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• A redefinition of buying decision centers within the family

• A redefinition of sales and advertising strategies
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4. Telecommuting and the office of the

future
• Decline in demand for products and services such
as cars, public transportation, automobile
insurance, car repair, child care, and baby-sitting
services
• Increased need for efficient package-delivery
services
• Rise in demand for state-of-the-art communication
devices
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5. Emphasis on leisure

• People engage in leisure activities for different reasons

• Knowing those reasons helps marketers select appropriate
promotional appeals
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6. Concern About Personal Safety

• Enhanced demand for defense-related products

• Post 9/11 issues relating to travel
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7. Diversity in the workplace and

marketplace
“Traditional” minority groups in the US include:
• Women
• African-Americans
• Asian-Americans
• Latinos
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Even in “lily white” Vermont recent immigrant groups have

included:
• Russian Jews
• Bosnians
• Tibetans
• Vietnamese
• Congolese
• Sudanese
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• A salad bowl in which these diverse groups maintain elements

of their traditions
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• Diversity offers divergent perspectives and enhanced creativity

and innovation within the workplace
• Product adaptation becomes necessary to suit the tastes of
distinct ethnic groups
• Promotional appeals must be adjusted
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8. Focus on ethics
• For much of history, business ethics was considered an
oxymoron
• In the 1980’s, ethics became an issue with the discovery of
numerous instances of corporate wrongdoing
– Ford Pinto
– Bhopal disaster
– Asbestos
– Tobacco
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• Ethical codes were enacted by many companies and institutions

and ethics became part of the curriculum of business schools
• It is likely that ethics in marketing will receive greater attention
from the public and from government and private watchdog
groups
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9. Ecological consciousness

Studies show that:

• Consumers consider themselves
“environmentalists”
• They have changed their habits to protect the
environment
• They are willing to pay more for products that
are considered environmentally safe
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• An increasing flow of environmentally friendly products

• Positive shift in public attitudes toward firms
and products that protect the environment
• As a result, the rise of green marketing
• Greater potential for deception based on false claims of
environmental safety of products
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10. The rise of the global village

• An increasing acceptance of the free market system in

many foreign countries (e.g., Eastern Europe)
• Growth of major regional free-trade areas, such as
NAFTA and the EU, resulting in increased trade
• Expansion of American media—including
advertising—to other nations exposes consumers to
availability of American goods
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• More markets opening up for American products overseas

• Marketers need to understand the cultures of foreign countries
to market their products effectively
• Potential for abuse arises
Consumer Decision
Making Process
Consumer Decision Making Process

Customer decisions are those decision

customers make in the marketplace as users,
payers and buyers. Decision are often guided
by mental budgeting.
Consumer information processing
model
Problem
recognition

Post purchase Information

evaluation search

Model
process

Decision Evaluation &

implementation selection
 1. Problem recognition
◼ Internal stimuli may include perceived states
of physical or psychological discomfort such
as hunger or boredom.
◼ External stimuli may include marketplace
information. Ex. The smell of freshly backed
bread.
◼ Primary versus secondary demand –primary
demand is for a product category while
secondary demand is for for a specific brand
with in the category.
 2. Information search

Awareness
set

Brand Brand not

recalled recalled
◼ Awareness set:- all brand that the customer is
aware of.
◼ Evoked set:- all those brands that the customer
remembers at decision-making time.
◼ Consideration set:- those brands in the evoked
set that the customer will considered buying.
 3. Evaluation and selection
◼ Compensatory model:- all attributes are
evaluated with mental trade off perceived
weaknesses and.
◼ Non-compensatory model:-
(a) conjunctive
(b) disjunctive
(c) lexicographic
(d) elimination
4. Purchase decision implementation

Purchase step

Choice Purchase
Purchase intent
identification implementation
 5. Post purchase evaluation
◼ The degree of commitment irrevocability of
decision.
◼ The importance of the decision to the
consumer.
◼ The difficulty of choosing among the
alternative.
◼ The individual’s tendency to experience
anxiety.
 Stapes in the purchase post phase

◼ Future response

◼ Satisfaction/dissatisfaction

◼ Experience evaluation

◼ Decision confirmation
General model of hierarchy of effects

Purchase

Unawareness Conviction

Hierarchy
model
awareness preference

knowledge liking
Consumer Buying Roles

User

Buyer

Decider

Influencer

Initiator
 Consumer Buying Roles
◼ People might play several roles in a buying decision. The
different roles are as follows.
◼ Initiator: The person who first suggests or thinks of buying a
particular product or service.
◼ Influencer: A person whose views or advice influences the buying
decision.
◼ Decider: The person who ultimately makes a buying decision or any
part of it – whether to buy, what to buy, how to buy, or where to
buy, how much to buy, and how frequently to buy.
◼ Buyer: The person who makes an actual purchase.
◼ User: The person who consumes or uses a product or service.
 Concept of Consumer Adoption
Process
◼ Though most buyers of a product have some common
needs, they are not alike in all respects.
◼ Purchasers in the initial stages of a product’s life are
considerably different from those who make their
purchases later. Some of their demographic
characteristics may vary, their buying behavior may
be distinct, and their purchasing motives may differ.
◼ To describe the various types of buyers who purchase
a product over the course of its life cycle, the
marketing experts proposed an adoption process.
 Concept of Consumer Adoption
Process
◼ To build an effective strategy for market penetration,
management must understand the consumer adoption
process. Kotler defines adoption as an individual’s
decision to become a regular user of a product. There
was a time when marketers would offer their products
to the mass market.
◼ Under this concept, people everywhere were thought to
buy a company’s product, and consequently, companies
were inviting everybody to buy their products by
making them available in wider areas. It would cost
companies to spend heavily on promotion and
distribution, most of which were wasted.
Definition of Consumer Adoption
Process
◼ “The consumer adoption process focuses on the
mental process through which an individual
passes from first hearing about an innovation to
final adoption.”
Stages of the Consumer Adoption
Process
◼ Consumers go through 5 stages in the process of
adopting a new product.
Product Awareness.
Product Interest.
Product Evaluation.
Product Trial.
Product Adoption.
 Factors Affecting the Adoption
Process
◼ The three important factors affecting the
adoption process are people’s readiness to try
new products, personal influence, and innovation
characteristics.

People’s Personal innovation

Readiness Influence characteristics
 People’s Readiness
◼ People differ in their readiness to accept new
products, services, opinions, and ideas. Some
people always prefer adopting new market offers.
Those who are venturesome and enjoy taking
risks, are younger in age, have higher social status,
and have favorable financial positions will be
innovators.
 People’s Readiness

◼ Those who are guided by respect are treated as

opinion leaders and consider themselves cautious
about adopting early. The deliberate persons are
usually the early majority. Those who are skeptical
and follow the majority adopt once a large number
of people try the product.
 People’s Readiness
◼ Those who are tradition-bound, have insular
attitudes, and are suspicious usually accept a
product when the masses use it.
◼ To understand adopter categories and locate the
innovators and early adopters, a marketer should
undertake an extensive study based on potential
customers’ demographic, psychographic, and
media characteristics.
 Personal Influence
◼ Since we are social and human beings, we are
always subject to interpersonal influence in our
decisions. The degree of personal influence varies
according to the buying situation and the
individual in question.
◼ There are some buying situations where we are
influenced more by others. Again, personality type
determines the susceptibility of interpersonal
influence.
 Personal Influence
◼ The submissive type of person is more influenced
by others than the aggressive type of person. In
complex buying situations, particularly while
buying expensive items, personal influence works
more than in simple buying situations and in
buying small items.
 Characteristics of the Innovation
Influence Adoption Process
◼ Relative Advantage: If a new product is perceived as
superior to existing products, it will be adopted quickly.
◼ Compatibility: If innovation is considered consistent with
the individuals’ values and experiences, it will soon be
adopted.
◼ Complexity: If innovation is perceived as complex by a
particular group of people, they will adopt it slowly.
◼ Divisibility: If there is a scope of trying the innovation on
a test or sample basis, the chances will be adopted soon.
◼ Communicability: If the innovation benefits can be
described easily or observed, it will be adopted fast.
 Characteristics of the Innovation
Influence Adoption Process
◼ Relative Advantage: If a new product is perceived as
superior to existing products, it will be adopted quickly.
◼ Compatibility: If innovation is considered consistent with
the individuals’ values and experiences, it will soon be
adopted.
◼ Complexity: If innovation is perceived as complex by a
particular group of people, they will adopt it slowly.
◼ Divisibility: If there is a scope of trying the innovation on
a test or sample basis, the chances will be adopted soon.
◼ Communicability: If the innovation benefits can be
described easily or observed, it will be adopted fast.
 Characteristics of the Innovation
Influence Adoption Process
◼ Relative Advantage: If a new product is perceived as
superior to existing products, it will be adopted quickly.
◼ Compatibility: If innovation is considered consistent with
the individuals’ values and experiences, it will soon be
adopted.
◼ Complexity: If innovation is perceived as complex by a
particular group of people, they will adopt it slowly.
◼ Divisibility: If there is a scope of trying the innovation on
a test or sample basis, the chances will be adopted soon.
◼ Communicability: If the innovation benefits can be
described easily or observed, it will be adopted fast.
Adopter Groups in Adoption
Process
Adopter Groups in Adoption
Process