Consumer Markets

and Buying Behavior

Agenda

Definition and Components

Models of consumer behaviour

Factors affecting Consumer

Behavior

Types of Buying Behavior

Buying Decision Process for

new products
2
Maslow‟s Hierarchy of needs

3
Physiological Needs

 These are biological requirements for human survival, e.g. air, food, drink,
shelter, clothing, warmth, sleep.
 If these needs are not satisfied the human body cannot function optimally.
Maslow considered physiological needs the most important as all the other
needs become secondary until these needs are met.

4
Safety Needs

 Protection from elements, security, order, law, stability, freedom from fear.

5
Love and Belongingness Needs

 After physiological and safety needs have been fulfilled, the third level of human
needs is social and involves feelings of belongingness. The need for
interpersonal relationships motivates behavior
 Examples include friendship, intimacy, trust, and acceptance, receiving and
giving affection and love. Affiliating, being part of a group (family, friends, work).

6
Esteem Needs

 This Maslow classified into two categories: (i) esteem for oneself (dignity,
achievement, mastery, independence) and (ii) the desire for reputation or
respect from others (e.g., status, prestige).
 Maslow indicated that the need for respect or reputation is most important for
children and adolescents and precedes real self-esteem or dignity.

7
Self actualization needs

 realizing personal potential, self-fulfillment, seeking personal growth and peak

experiences. A desire “to become everything one is capable of becoming”

8
Perception

 Human beings have considerably more than five senses. Apart from the basic
five (touch, taste, smell, sight, hearing) there are senses of direction, the sense
of balance, a clear knowledge of which way is down, and so forth. Each sense
is feeding information to the brain constantly, and the amount of information
being collected would seriously overload the system if one took it all in. The
brain therefore selects from the environment around the individual and cuts out
the extraneous noise.
 In effect, the brain makes automatic decisions as to what is relevant and what is
not. Even though there may be many things happening around you, you are
unaware of most of them; in fact, experiments have shown that some
information is filtered out by the optic nerve even before it gets to the brain.
People quickly learn to ignore extraneous noises: for example, as a visitor to
someone else‟s home you may be sharply aware of a loudly ticking clock,
whereas your host may be entirely used to it, and unaware of it except when
making a conscious effort to check that the clock is still running.

9
Past Experience

 This leads us to interpret later experience in the light of what we already know.
Psychologists call this the law of primacy, Sometimes sights, smells or sounds
from our past will trigger off inappropriate responses: the smell of bread baking
may recall a village bakery from twenty years ago, but in fact the smell could
have been artificially generated by an aerosol spray near the supermarket bread
counter.
 An example of cognitive mapping as applied to perception of product quality
might run as follows.

10
Past experience

 The consumer uses the input selector to select clues and assign values to them.
For quality, the cues are typically price, brand name and retailer name. There
are strong positive relationships between price and quality in most consumers‟
perceptions, and brand name and quality; although the retailer name is less
significant, it still carries some weight.
 For example, many consumers would feel confident that Big Bazaar would sell
higher-quality items than the local corner shop, but might be less able to
distinguish between Food Bazaar and Giant hyper store. The information is
subjective in that the consumer will base decisions on the selected information.
Each of us selects differently from the environment and each of us has differing
views. Information about quality will be pigeonholed, or categorised: the
individual may put Scoda Octavia in the same category as Mercedes Benz or
perhaps put Sony in the same slot as Aiwa.

11
Agenda

Definition and Components

Models of consumer behaviour

Factors affecting Consumer

Behavior

Types of Buying Behavior

Buying Decision Process for

new products
12
Preface

Buying decision behavior varies from place to place and also from person to
person. Buying decision behavior become more complex in the result of more
buying participants and deliberation. There are different factors which affects
buying behavior.
Buying Decision Behavior can be classified in to four different categories.
 Complex Buying Behavior
 Dissonance Reducing Buying Behavior
 Habitual Buying Behavior
 Variety Seeking Buying Behavior

13
Complex Buying behavior

 In complex buying behavior consumer shows high level of involvement while

purchase and observe considerable differences among brands. Complex
consumer buying behavior is noticeable when the product price remians
high and risky, low quality after sale service and so on. Its good example is
buying a mobile or laptop. Both the products are expensive and variety of
brands. Consumers feel uncomfortable to decide for a specific brand.

14
Dissonance Reducing Buying Behavior

 In dissonance reducing buying behavior consumer involvement is very high due

to high price and infrequent purchase with less significance differences among
brands. In this case buyer purchases the product which is easily available. After
the product purchase, consumers may face dissonance post purchase behavior.

15
Habitual Buying Behavior

 In Habitual buying behavior consumer involvement is low as well as low is no

significance among brands names. The good example is a lighter or match box.
They just go for it and purchase it, there is no brand loyalty. Consumers do not
need information regarding brand purchase, characteristics. For such brands tv
commercials, news papers and magazines build positive attitude of consumers
towards.

16
Variety Seeking Buying Behavior

 In variety seeking buying behavior situation consumer involvement is very low

but there are significance differences among brands. In this situation consumers
perceive brand switching. A good example is purchase is chips. In such case
consumer purchase chips and make results are consumption. Next time they
purchase another brand just to change the taste.

17
Preface

 The customer buying process (also called a buying decision process) describes
the journey your customer goes through before they buy your product.
Understanding your customer‟s buying process is not only very important for
your salespeople, it will also enable you to align your sales strategy accordingly.
 The five stages framework remains a good way to evaluate the customer‟s
buying process. John Dewey first introduced the following five stages in 1910

18
The Buyer Decision process

19
Problem/ Need Recognition

 This is often identified as the first and most important step in the customer‟s
decision process. A purchase cannot take place without the recognition of the
need. The need may have been triggered by internal stimuli (such as hunger or
thirst) or external stimuli (such as advertising or word of mouth).

20
Information search

Information search refers to what the customer surveys in his/her environment for :
 Appropriate information
 Which leads to reasonable purchase decision.

 After problem recognition, the first stage is :

 recalling & reviewing relevant information stored in long term memory (internal
search)
 if internal search fails to give appropriate options, the consumer searches for
information from other sources (external search, can be friends, references, other
media .

21
 Information search

EXTERNAL INFORMATION SEARCH

External information can refer to any of the following :
 Opinions, belief, behavior & feelings of relatives, friends, neighbours etc.
 Professional information in handouts, pamphlets, articles, magazines, journals, book etc
 Market initiated information through advertisements.

TYPES OF INFORMATION CONSUMERS SEEK

 The appropriate evaluative criteria for the solution of the problem.
 The existence of appropriate alternative solutions
 Performance level or attributes of each alternative on each evaluative criteria.

22
 Information search

1) EVALUATIVE CRITERIA
 An important objective for the search of information is the determination of appropriate
evaluative criteria, basis which the product is purchased.
 These criteria are standards or specifications that the consumer use to evaluate the brand.
EXAMPLE :
 FOR A LAPTOP, the evaluative criteria can be : processor speed, RAM size, monitor size, wi-fi
ability etc.
 For a Mobile, the evaluative criteria can be : android version, camera capacity, internal memory,
pinch to zoom, FM etc.
 DELL Computers encourages consumers to have their own personal configuration.
 Number & type of evaluative criteria can vary depending on product category.
 For products consumed regularly like grocery, EC can be very few.
 But in case of major purchases, more evaluative criteria are used.

23
 Information search

1) EVALUATIVE CRITERIA

24
 Information search

2) APPROPRIATE ALTERNATIVES.
ALL ALTERNATIVES KNOWN & UNKNOWN

AWARENESS SET UNAWARENESS SET

Brands known to Brands not known to
consumers consumers

EVOKED SET
INEPT SET INERT SET
Brands
Brands avoided Back up Brands
considered

Brand Brands considered but

purchased not purchased

25
 Information search

3) ATTRIBUTES OF ALTERNATIVES
 This process of evaluation requires consumers to collect information
about each brand on each relevant evaluative criterion.

PARAMETERS EON ALTO 800

WHEELS ALLOY NON ALLOY
AC AVAILABLE NOT AVAILABLE
INSURANCE COVERED – 5YEARS COVERED- 3 YEARS
POWER STEERING YES YES
EXTRA LEG SPACE YES NO

26
Evaluation of alternatives

 As one might expect, individuals will evaluate different products or brands at this
stage on the basis of alternative product attributes – those which have the ability
to deliver the benefits the customer is seeking. A factor that heavily influences
this stage is the customer‟s attitude. Involvement is another factor that
influences the evaluation process. For example, if the customer‟s attitude is
positive and involvement is high, then they will evaluate a number of companies
or brands; but if it is low, only one company or brand will be evaluated.

27
Purchase decision

 The penultimate stage is where the purchase takes place. Philip Kotler (2009)
states that the final purchase decision may be „disrupted‟ by two factors:
negative feedback from other customers and the level of motivation to accept
the feedback. For example, having gone through the previous three stages, a
customer chooses to buy a new telescope. However, because his very good
friend, a keen astronomer, gives him negative feedback, he will then be bound
to change his preference. Furthermore, the decision may be disrupted due to
unforeseen situations such as a sudden job loss or relocation.

28
Post-purchase Behaviour

 In brief, customers will compare products with their previous expectations and
will be either satisfied or dissatisfied. Therefore, these stages are critical in
retaining customers. This can greatly affect the decision process for similar
purchases from the same company in the future, having a knock-on effect at the
information search stage and evaluation of alternatives stage. If your customer
is satisfied, this will result in brand loyalty, and the Information search and
Evaluation of alternative stages will often be fast-tracked or skipped altogether.
 On the basis of being either satisfied or dissatisfied, it is common for customers
to distribute their positive or negative feedback about the product. This may be
through reviews on website, social media networks or word of mouth.
Companies should be very careful to create positive post-purchase
communication, in order to engage customers and make the process as efficient
as possible.

29
Agenda

Definition and Components

Models of consumer behaviour

Factors affecting Consumer

Behavior

Types of Buying Behavior

Buying Decision Process for

new products
30
 The Buyer Decision Process for new products

 A new product is a good, service, or idea that is perceived by some potential custome
rs as new-
 Adoption process: the mental process through which an individual passes from first le
arning about an innovation to final adoption-
Adoption is the decision by an individual to become a regular user of the product-
Consumers go through 5 stages in the process of adopting a new product:
1. Awareness: the consumer becomes aware of the new product but lacks info about
2. Interest: the consumer seeks info about the new product
3. Evaluation: the consumer considers whether trying the new product makes sense
4. Trial: the consumer tries the new product on a small scale to improve estimation of
its value
5. Adoption: the consumer decide to make full and regular use of the new product-
This model suggests that newproduct marketers should think about how to help con
sumers move through these stages

31
 5 Adopter groups that have different values

1. Innovators: try new ideas at some risk

2. Early adopters: opinion leaders in their communities and adopt ideas early but caref
ully
3. Early majority: adopt new ideas before the average person
4. Late majority: adopt only after a majority of people have tried it
5. Laggards: suspicious of changed and adopt the innovation only when it has become
something of a tradition itself
The adopter classification suggests that an innovating firm should research the
characteristics of innovators and early adopters in their product categories and direct
marketing efforts towards them

32
Thank you
33