Unit-4:: CONSUMER AND INDUSTRIAL MARKETS

Consumer Behaviour:

Meaning and Definition:

Consumer behaviour 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 of the consumers
in the marketplace and the underlying motives for those actions OR Consumer behaviour is the study
of consumers and the processes they use to choose, use (consume), and dispose of products and
services, including consumers’ emotional, mental, and behavioural responses. Consumer behaviour
incorporates ideas from several sciences including psychology, biology, chemistry, and economics.

Why is consumer behaviour important:

Studying consumer behaviour is important because these way marketers can understand what
influences consumers’ buying decisions. By understanding how consumers decide on a product they
can fill in the gap in the market and identify the products that are needed and the products that are
obsolete. Studying consumer behaviour also helps marketers decide how to present their products in
a way that generates maximum impact on consumers. Understanding consumer buying behaviour is
the key secret to reaching and engaging your clients, and converts them to purchase from you. So what
are the factors that influence consumers to say yes? There are three categories of factors that influence
consumer behaviour:

1. Personal factors: an individual’s interests and opinions that can be influenced by

demographics (age, gender, culture, etc.).
2. Psychological factors: an individual’s response to a marketing message will depend on their
perceptions and attitudes.
3. Social factors: family, friends, education level, social media, income, they all influence consumers’
behaviour.

Types of consumer behaviour

There are four main types of consumer behaviour:

1. Complex buying behaviour

This type of behaviour is encountered when consumers are buying an expensive, infrequently bought
product. They are highly involved in the purchase process and consumers’ research before committing
to invest. Imagine buying a house or a car; these are an example of a complex buying behaviour.

2. Dissonance-reducing buying behaviour

The consumer is highly involved in the purchase process but has difficulties determining the differences
between brands. ‘Dissonance’ can occur when the consumer worries that they will regret their choice.

3. Habitual buying behavior

Habitual purchases are characterized by the fact that the consumer has very little involvement inthe
product or brand category. Imagine grocery shopping: you go to the store and buy your preferred type
of bread. You are exhibiting a habitual pattern, not strong brand loyalty.

4. Variety seeking behavior

In this situation, a consumer purchases a different product not because they weren’t satisfied with the
previous one, but because they seek variety. Like when you are trying out new shower gel scents.

Consumer Behaviour Models:

Traditional models:

Economic model: The economic model of consumer behavior focuses on the idea that a consumer's
buying pattern is based on the idea of getting the most benefits while minimizing costs. Thus, one can
predict consumer behavior based on economic indicators such as the consumer's purchasing power
and the price of competitive products. For instance, a consumer will buy a similar product that is being
offered at a lower price to maximize the benefits; an increase in a consumer's purchasing power will
allow him to increase the quantity of the productshe is purchasing.

Learning model: This model is based on the idea that consumer behavior is governed by the need to
satisfy basic and learned needs. Basic needs include food, clothing and shelter, while learned needs
include fear and guilt. Thus, a consumer will have a tendency to buy things that will satisfy their needs
and provide satisfaction. A hungry customer may pass up on buying anice piece of jewellery to buy
some food, but will later go back to purchase the jewellery once her hunger is satisfied.

Psychoanalytic model: The psychoanalytical model takes into consideration the fact that consumer
behaviour is influenced by both the conscious and the subconscious mind. The three levels of
consciousness discussed by Sigmund Freud (id, ego and superego) all work to influence one’s buying
decisions and behaviours. A hidden symbol in a company's name or logo may have an effect on a
person's subconscious mind and may influence him to buy that product instead of a similar product
from another company.

Sociological model: The sociological model primarily considers the idea that a consumer’s buying
pattern is based on his role and influence in the society. A consumer's behaviour may also be influenced
by the people she associates with and the culture that her society exhibits. For instance, a manager
and an employee may have different buying behaviours given their respective roles in the company
they work for, but if they live in the same community or attend the same church, they may buy products
from the same company or brand.

II. Contemporary Models

• Engel-Kollat-Blackwell Model
• Nicosia Model
• Stimulus-Response Model
• Howard-Sheth model (1969)

Consumer buyer decision process: The buying decision process is the decision-making process
used by consumers regarding the market transactions before, during, and after the purchase of a good
or service. It can be seen as a particular form of a cost–benefit analysis in the presence of multiple
alternatives.

According to Philip Kotler, the typical buying process involves five stages the consumer passes through
described as under: Problem Identification: During need or problem recognition, the consumer
recognizes a problem or need that could be satisfied by a product or service in the market. Problem
Recognition is the first stage of the buyer decision process. At this stage, the consumer recognizes a
need or problem. The buyer feels a difference between his or her actual state and some desired state.
Information Search
• Once the need is recognized, the consumer is aroused to seek more information and moves
into the information search stage. The second stage of the purchasing process is searching for
information. After the recognition of needs, the consumers try to find goods for satisfying
such needs. They search for information about the goods they want.

Evaluation of Alternatives:
With the information in hand, the consumer proceeds to alternative evaluation, during which the
information is used to evaluate” brands in the choice set. Evaluation of alternatives is the third stage of
the buying process. Various points of information collected from different sources are used in evaluating
different alternatives and their attractiveness. While evaluatinggoods and services, different consumers
use different bases.

Purchase Decision:
After the alternatives have been evaluated, consumers take the decision to purchase products and

importance of Consumer Behaviour

It is essential for the marketer to study the behaviour of the consumers in order to make better strategic
marketing decisions. If the marketer has complete knowledge about the consumer’s likings or disliking,
then he can predict the response of the potential customers towards his offerings. Thus, by studying
the consumer behaviour before and during purchase helps in production scheduling, designing, pricing,
positioning, segmentation, advertising and other promotional activities.

The study of consumer behaviour is equally important for non-profit organizations such as
governmental agencies, hospitals, NGO’s, charitable organizations. For example, the polio campaigns
can be designed for the vulnerable sections of the society who cannot afford the basic livelihood.
The Government also studies consumer behaviour to provide them with the necessary goods and
services, understanding the potential future problems, such as pollution, anti-plastic drive, Swachh
Bharat Abhiyan, traffic, etc.

For legislation, it is again essential to understand consumer behaviour, then only the protective
measures against consumer exploitation can be taken. Such as mandatory information on the
packaging related to manufacturing date, expiry date, terms of use, etc.

The understanding of a behaviour of a consumer is necessary before the launch of the demarketing
programmes. For example, motives, attitude, behaviour of the customers behind the purchase of
injurious products Viz. Cigarettes, Tobacco, etc. should be properly understood.

7 O’s Framework for Consumer Behaviour

The 7 O’s Framework to understand Consumer Behaviour is discussed as under:7'Os framework-of-
consumer-behaviour
Occupants – Who is the Consumer?: This questions makes it easier to know about the consumer’s
overall profile in relation to geographic, psychographic, demographic factors .The geographic factors
state the particular area to which the consumer belongs, while psychographic factors lead to the
understanding of the consumer’s lifestyle often reflected in their interest, activities and opinion.
Similarly, demographic factors enable the understanding of consumers age, income, sex, education,
and occupation.

Object – What does the Consumer Buy?: It determines the product proposition which the consumer
purchases, i.e. the brand, product or product form. Further, it will also identify the specification, colour,
size, type, variant, etc which the customer seeks to buy.

Objective – Why is Consumer Buying?: It gives reason for the purchase of the product by the customer,
in terms of the needs satisfied or benefits expected from the product.

Occasion - When do they Buy?: It ascertains the buying frequency (how often) and the occasion on
which the customer tend to buy the product or services.
For Example, Item whose ticket size is high, such as television, air conditioner, are bought during Diwali
or New Year.

Outlet – Where do they Buy?: It identifies the outlet, be it a retail shop, online platform i.e. app or
website, departmental store or any other location from where the customer makes the buying decision.
For example: Do customers buy a mobile phone from a retail outlet or online via Amazon or Flipkart?

Operations – How do they Buy?: It determines the background information which the consumer
collects from various sources, before making the purchase.
For example: Before buying a laptop consumers often look for the reviews of the latest laptops, as well
as ask various questions from the company’s representatives to get assured of the product quality.
Organization – Who is Involved? It determines the management of the sources of information which
influence the buying decision of the consumer.
Thus, marketers try to understand consumer psychology with respect to their purchase decisions and
identify the factors influencing consumer behaviour.

Factors Affecting Consumer Behavior:

It is defined as a complex sum total of knowledge, belief, traditions, customs, art, moral law or any other
habit acquired by people as members of society. Our consumer behavior, that is the things we buy are
influenced by our background or culture. Different emphasis is given by different cultures for the buying,
use, and disposing of products. People in South India have a certain style of consumption of food,
clothing, savings, etc. This differs from the people in the North of India. Different cultures and habits
are predominant in different parts of the world.

Japanese have a different culture from that of USA, England or Arabian countries. Therefore,
in consumer behavior culture plays a very important part.

 Sub-cultural Influences
 Social Class
 Social Group Influences
 Family Influence
 Personal Influences
 Other Influences

Sub-cultural Influences:
Within a culture, there are many groups or segments of people with distinct customs, traditions and
behavior. In the Indian culture itself, we have many subcultures, the culture ofthe South, the North, East
and the West. Hindu culture, Muslim culture, Hindus of the Southdiffer in culture from the Hindus of the
North and so on. Products are designed to suit a targetgroup of customers which have similar cultural
background and are homogeneous in many respects.

Social Class:
By social class we refer to the group of people who share equal positions in a society. Social class is
defined by parameters like income, education, occupation, etc. Within a social class, people share the
same values and beliefs and tend to purchase similar kinds of products. Their choice of residence, type
of holiday, entertainment, leisure all seem to be alike. The knowledge of social class and their consumer
behavior is of great value to a marketeer.

Social Group Influences:

A group is a collection of individuals who share some consumer relationship, attitudes and have the
same interest. Such groups are prevalent in societies. These groups could be primary where interaction
takes place frequently and, consists of family groups. These groups have a lot of interaction amongst
themselves and are well knit. Secondary groups are a collection of individuals where relationship is
more formal and less personal in nature.

These could be political groups, work group and study groups, service organisations like the Lions,
Rotary, etc. The behavior of a group is influenced by other member of the group. An individual can be
a member of various groups and can have varied influences by different members of groups in his
consumption behavior. An individual can be an executive in a company, can be a member of a political
party. He may be a member of a service organisation and of entertainment clubs and study circles.
These exert different influences on his consumption.

Family Influence
As has already been said, the family is the most important of the primary group and is the strongest
source of influence on consumer behavior. The family tradition and customs are learnt by children, and
they imbibe many behavioral patterns from their family members, both consciously and unconsciously.
These behavior patterns become a part of children’s lives. In a joint family, many decisions are jointly
made which also leave an impression on the members of the family.

These days the structure of the family is changing and people are going in more for nucleus families
which consists of parent, and dependent children. The other type of family is the joint family where
mother, father, grandparents and relatives also living together.

Personal Influences
Each individual processes the information received in different ways and evaluates the products in his
own personal way. This is irrespective of the influence of the family, social class, cultural heritage, etc.
His own personality ultimately influences his decision. He can have his personal reasons for likes,
dislikes, price, convenience or status. Some individuals may lay greater emphasis on price, others on
quality, still others on status, symbol, convenience of the product, etc. Personal influences go a long
way in the purchase of a product.

AIDA Model (Attention, Interest, Desire, Action):

It is crucial in advertising because it provides a structured framework for persuasive messaging, guiding
marketers through the consumer's purchase journey from initial awareness to final purchase, ensuring
messages build sequentially to create emotional connection, highlight benefits, and drive a clear call-
to-action, making campaigns more effective, especially in digital spaces. PDFs and research highlight
its enduring relevance for structuring content, from headlines (Attention) to benefits (Interest/Desire) to
CTAs (Action), adapting to social media's interactive elements while remaining a core principle for
conversion.

Importance in Advertising

Structured Communication: AIDA offers a blueprint for creating logical, compelling narratives in ads,
ensuring key steps aren't missed.

Consumer Journey Mapping: It maps the cognitive path a buyer takes, helping marketers understand
what information to provide at each stage.

Content Strategy: Guides content creation, from grabbing headlines (Attention) to detailed benefit
explanations (Interest) and emotional connection (Desire).

Drives Action: Focuses on the final step—a clear Call-to-Action (CTA)—to convert prospects into
customers.

Adaptability: While old, it's adaptable for digital marketing, social media, and SaaS, incorporating
elements like social proof and online engagement.

AIDA Stages & Application:

Attention: Get noticed with headlines, visuals, emotional hooks (e.g., intriguing image, surprising fact).

Interest: Hold attention by detailing relevant benefits, features, and how the product solves a problem.
Desire: Build an emotional connection, making the product feel essential, often by showing unique
value vs. competitors.

Action: Prompt the next step (buy, sign up, download) with a strong CTA.

Industrial Marketing:

It refers to the process of marketing products or services to another company within an industrial
market. In contemporary terms, it’s known as business-to-business marketing (B2B marketing).It is
distinct from consumer marketing (business-to-consumer, or B2C) in that the nature of industrial goods
and services is different from that of consumer goods in both strategy and market. Think a food
manufacturer selling to a retailer such as Tesco, rather than via a bricks-and-mortar shop or e-
commerce platform of their own. Businesses in the same industry sell to one another in order to
maximise revenues, lower operating costs and utilise innovative technologies.

Frequently, industrial marketing features long-held relationships and sizeable orders between, for
example, a manufacturer and a client. As such, pitches can be tricky; often a lot more challenging than
landing sales between businesses and private clients, or businesses and consumers. There are also
likely to be several individuals or functions to pitch to within a business, meaning sellers need to win
over multiple people who often require different pieces of information.

The major industry types that constitute the industrial business market include:

Agriculture, forestry and fisheries, mining, manufacturing, construction and transportation,

communication, public utilities, banking and finance.

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