MODULE I: CONSUMER BEHAVIOUR

Meaning and Nature of Consumer Behaviour

Consumer behaviour refers to the study of individuals, groups, or organizations and the
processes they use to select, purchase, use, and dispose of products and services to
satisfy needs and desires. It includes mental, emotional, and physical activities involved in
buying decisions.

According to Philip Kotler, consumer behaviour includes “the mental, emotional, and physical
activities that people use during selection, purchase, use, and disposal of products and
services.”

Nature and Characteristics

●​ Dynamic – consumer preferences change with time, trends, and technology

●​ Complex – influenced by psychological, social, cultural, and economic factors
●​ Situational – behaviour varies across products and contexts
●​ Goal-oriented – consumers seek satisfaction and value

Scope of Consumer Behaviour

Consumer behaviour studies:

●​ What consumers buy

●​ Why they buy
●​ When and where they buy
●​ How often they buy
●​ How they evaluate and dispose of products

Importance in the Digital Era

Digitalization and AI have transformed consumer behaviour by enabling:

●​ Easy product comparison

●​ Access to reviews and ratings
●​ Personalized recommendations
●​ Strong electronic word-of-mouth (e-WOM)

Consumers today are active decision-makers, not passive recipients of marketing messages
Factors Affecting Consumer Behaviour

1. Social Factors

●​ Reference Groups – friends, colleagues influence preferences Example:​

A college student buys Nike shoes because most of their friends wear and recommend
the brand.
●​ Family – parents and children influence each other’s buying decisions Example:​
Parents decide to buy a healthy breakfast cereal after children see TV ads and ask for
it.
●​ Roles and Status – purchases reflect social position Example:​
A company manager buys a sedan or luxury car (like Honda City) to reflect
professional status.

2. Cultural Factors

●​ Culture & Subculture – religion, language, traditions Example: During Diwali, Indian
consumers buy sweets, new clothes, and gold due to cultural traditions.
●​ Social Class – influences taste, lifestyle, and consumption patterns Example:​
Upper-middle-class consumers prefer branded clothing and smartphones, while
lower-income groups choose budget brands.

3. Personal Factors

●​ Age, gender, education Example: Teenagers buy gaming consoles, while older adults
prefer health supplements.
●​ Income level Example: A high-income person may buy an iPhone, while a low-income
consumer opts for a budget Android phone.
●​ Lifestyle and occupation Example: A fitness enthusiast buys protein supplements and
gym wear, while an office worker buys formal clothes.

4. Psychological Factors

●​ Motivation – inner drive Example: A hungry person buys fast food due to the
motivation to satisfy hunger.
●​ Perception – interpretation of stimuli Example: Consumers perceive expensive
perfumes as higher quality even if cheaper options smell similar.
●​ Learning – past experiences Example: After a good experience with Amazon, a
customer continues shopping there regularly.
●​ Attitudes – favorable or unfavorable evaluation Example: A person with a positive
attitude toward eco-friendly products prefers cloth bags over plastic ones.

5. Marketing Factors
 ●​ Product features and design : Example Consumers buy smartphones with better
cameras and sleek design.
●​ Pricing strategies : Example: “Buy 1 Get 1 Free” offers increase purchase of shampoos
or snacks.
●​ Promotion and advertising Example: Celebrity endorsements influence people to buy
fairness creams or sports shoes.
●​ Distribution and availability Example: A consumer buys nearby store brands because
they are easily available compared to distant options.

Consumer Awareness
Consumer awareness means that consumers are knowledgeable about products, prices,
quality, and their legal rights, so they can make informed decisions and protect themselves
from cheating, false advertising, and exploitation.

Six Consumer Rights in India

1. Right to Safety
Meaning: Protection against goods and services that are dangerous to health or life.

Real-life example:​
A consumer checks the ISI mark before buying an electric iron to ensure it does not cause
short circuits or electric shocks.​
Similarly, buying rice or pulses with the AGMARK label ensures they are safe and of standard
quality.

2. Right to Choose
Meaning: Freedom to select products without force or unfair pressure.

Real-life example:​
A mobile store cannot force a customer to buy a specific brand or expensive model. The
customer can choose from different brands and price ranges.

3. Right to Be Informed
Meaning: Right to receive correct and complete information about products.
Real-life example:​
A packaged food item must clearly mention price, ingredients, manufacturing date, and
expiry date. If this information is missing or false, consumer rights are violated.

4. Right to Consumer Education

Meaning: Right to gain knowledge about consumer rights and responsibilities.

Real-life example:​
Government awareness programs educate people about online shopping frauds, fake
discounts, and how to file complaints on consumer portals.

5. Right to Be Heard
Meaning: Right to express complaints and have them considered seriously.

Real-life example:​
If a customer receives poor service from a telecom company, they can complain to customer
care or register a grievance online, and the company must respond.

6. Right to Seek Redressal

Meaning: Right to compensation for defective goods or deficient services.

Real-life example:​
If a newly purchased washing machine stops working, the consumer can demand repair,
replacement, or refund through the seller or consumer court.

Consumer Protection Act, 2019

The Consumer Protection Act, 2019 is an Indian law enacted to protect the rights of
consumers, prevent unfair trade practices, and provide a simple, speedy, and effective
grievance redressal system. It replaced the earlier Consumer Protection Act, 1986, and came
into force to address modern consumer issues, especially e-commerce and digital
transactions.
Purpose of the Act

●​ To safeguard consumers from exploitation​

●​ To ensure fair trade practices​

●​ To provide quick compensation and justice​

●​ To strengthen consumer rights in a digital economy​

Key Features (Exam-Oriented)

1.​ Protection of Consumer Rights​

The Act recognizes six rights: safety, information, choice, education, being heard,
and redressal.​

2.​ Three-Tier Consumer Dispute Redressal System​

○​ District Commission – local-level complaints Value ≤ ₹50 lakh​

○​ State Commission – appeals and higher-value cases ₹50 lakh – ₹2 crore​

○​ National Commission – high-value cases and national appeals > ₹2 crore​

3.​ Central Consumer Protection Authority (CCPA)​

A new authority to:​

○​ Take action against misleading advertisements​

○​ Penalize manufacturers/endorsers (including celebrities)​

○​ Order recall of unsafe goods and refunds​

4.​ Coverage of E-Commerce​

○​ Online platforms (Amazon, Flipkart, etc.) are covered​

○​ Consumers can file complaints for defective products, fake reviews, or

misleading online ads​
 5.​ Product Liability​
Manufacturers, sellers, and service providers can be held legally responsible for harm
caused by defective products or deficient services.​

6.​ E-Filing of Complaints​

Consumers can file complaints online from their place of residence, making the
process easier and faster.​

7.​ Unfair Trade Practices​

The Act strictly prohibits:​

○​ False or misleading advertisements​

○​ Overpricing​

○​ Sale of unsafe or substandard goods​

Simple Example

If a consumer buys a defective product online and the seller refuses a refund, the consumer
can file a complaint under the Consumer Protection Act, 2019, even online, and seek
compensation through consumer courts.

1. Survey Method
A survey is a structured research method that uses a written questionnaire to collect data
from a large number of consumers. The questions are pre-designed and may be open-ended
or closed-ended (rating scales, check marks).

Modes of Conduct

●​ Face-to-face​

●​ Telephone​

●​ Mail​

●​ Online / Web-based surveys​

Importance
 ●​ Helps understand consumer attitudes, preferences, media usage, and buying
patterns​

●​ Cost-effective and faster when conducted online​

●​ Useful for collecting data from large and diverse populations​

Example from document

Companies like Procter & Gamble conduct thousands of online surveys every year to
understand consumers faster and at lower cost.

📌 Best suited for: Descriptive research and large-scale consumer studies.

2. Focus Groups
A focus group is a qualitative research method where 6–12 participants (usually 8) discuss a
specific topic under the guidance of a moderator.

Key Features

●​ Participants share opinions, perceptions, and attitudes​

●​ Discussion is informal but guided​

●​ Often observed by managers through one-way mirrors or recordings​

Advantages

●​ Quick and relatively inexpensive​

●​ Provides rich, in-depth insights​

●​ Useful for exploratory research​

Limitations

●​ Group dynamics may influence responses​

 ●​ Dominant members may cause groupthink​

●​ Some participants may hesitate to express honest opinions​

Applications

●​ Testing new products, packaging, advertisements​

●​ Understanding shared meanings and terminology​

📌 Best suited for: Exploratory research and idea generation.

3. Interview Method
An interview involves direct, one-to-one interaction between the researcher and the
consumer to collect deep and detailed information.

When Interviews Are Preferred

●​ Sensitive or emotional topics​

●​ Confidential or personal issues​

●​ When detailed thought processes are required​

Characteristics

●​ Conducted by trained interviewers​

●​ Researchers observe non-verbal cues (tone, gestures, body language)​

●​ Often audio- or video-recorded for analysis​

Example from document

Volvo interviewed valet parking attendants worldwide to understand customer values, which
helped shape its advertising message: “Life is better lived together.”
📌 Best suited for: In-depth understanding of consumer decision-making.

4. Experimental Method
An experiment is a scientific research method used to study cause-and-effect relationships
by manipulating one variable (independent variable) and observing its effect on consumer
behaviour (dependent variable).

Key Features

●​ Consumers are randomly assigned to different groups​

●​ Only one factor is changed at a time​

●​ All other conditions are kept constant​

Types of Experiments

●​ Laboratory experiments – conducted in controlled settings​

●​ Field experiments – conducted in real market environments​

Applications

●​ Testing brand names, packaging, pricing, advertisements​

●​ Measuring emotional reactions using eye-tracking or brain scans​

Example

Taste-test experiments where consumers evaluate different products under identical conditions.

📌 Best suited for: Testing marketing strategies and consumer responses.

5. Purchase Panels
Purchase panels involve tracking the actual buying behaviour of the same group of
consumers over a period of time.

How It Works

●​ Panel members’ purchases are recorded automatically at checkout​

●​ Data is combined with demographic information​

●​ Conducted by research firms like IRI​

Uses

●​ Identifying repeat purchases​

●​ Studying brand loyalty and switching​

●​ Measuring impact of coupons and promotions​

Example

Campbell Soup tracks household soup purchases to understand buying frequency and brand
preference.

📌 Best suited for: Studying long-term consumer behaviour patterns.

6. Database Marketing
Database marketing involves combining consumer data into a central database and analysing
it using data mining techniques to predict and influence consumer behaviour.

Data Included

●​ Demographics and lifestyle​

●​ Purchase history​

●​ Media usage​
 ●​ Coupon usage​

●​ Online browsing behaviour (clickstream data)​

Importance

●​ Enables personalized marketing​

●​ Helps identify profitable customers​

●​ Improves targeting and customer retention​

Example

Retailers like Wal-Mart analyse shopping basket data to decide pricing, store layout, and
inventory management.

Concern

●​ Raises issues of consumer privacy and data protection