HEC Group of Institutions, HARIDWAR

Online Notes for the Subject – Consumer Behaviour

Class- B.B.A.Vsem
Topic- 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
the actions of the consumers in the marketplace and the underlying motives for those actions.

The study of consumer behaviour 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.
- According to Engel, Blackwell, and Mansard, ‘consumer behaviour is the actions and decision
processes of people who purchase goods and services for personal consumption’.

According to Louden and Bitta, ‘consumer behaviour is the decision process and physical activity,
which individuals engage in when evaluating, acquiring, using or disposing of goods and services’.

Nature of Consumer Behaviour:

1. Influenced by various factors:

The various factors that influence the consumer behaviour 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 behaviour is not static. It undergoes a change over a period of time depending on
the nature of products. For example, kids prefer colourful 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 more sober footwear. The change in buying behaviour 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 behaviour 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 behaviour varies across states, regions and countries. For example, the
behaviour of the urban consumers is different from that of the rural consumers. A good
number of rural consumers are conservative in their buying behaviours.

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 behaviour may also varies across the states,
regions and countries. It may differ depending on the upbringing, lifestyles and level of
development.

5. Information on consumer behaviour is important to the marketers:

Marketers need to have a good knowledge of the consumer behaviour. They need to study the
various factors that influence the consumer behaviour of their target customers.

The knowledge of consumer behaviour 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 behaviour 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 marketers increase. Therefore, marketers need to
influence consumer behaviour to increase their purchases.

7. Varies from product to product:

Consumer behaviour 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 behaviour 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 deprives themselves of
higher standard of living.

9. Reflects status:

The consumer behaviour 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.

Top 5 Important Factors Influencing Consumer Behaviour

Some of the most important factors influencing consumer behaviour are as follows:
A. Marketing Mix Factors
B. Personal Factors
C. Psychological Factors
D. Social Factors E. Cultural Factors.

In general, the factors that affect consumer behaviour are discussed in the following
sections:

A. Marketing Mix Factors:

Each component of the market mix—product, pricing, promotion and place of distribution—
has a direct or indirect impact on the buying process of the consumers.

1. Product:

The special characteristics of the product, the physical appearance and the packaging can
influence the buying decision of a consumer.

2. Pricing:

The price charged on the product or services consumed by the consumer affect the buying
behaviour of the consumers. Marketers must consider the price sensitivity of the target
customers while fixing prices.

3. Promotion:

The variables of promotion mix such as advertising, publicity, public relations, personal
selling and sales promotion affect the buying behaviour of the consumers. Marketers select
the promotion mix after considering the nature of the target audience.

4. Place:

The channels of distribution and the place of distribution affect the buying behaviour of the
consumers. The marketers makes an attempt to select the right channel and distribute the
products at the right place.

B. Personal Factors:

The personal factors such as age, occupation, lifestyle, social and economic status and the
gender of a consumer may affect the buying decisions of the consumers individually or
collectively.

1. Age factor:

The age factor greatly influences the buying behaviour. For example, teenagers prefer trendy
clothes, whereas office executives prefer sober and formal clothing.

2. Gender:

The consumer behaviour varies across gender. For example, girls prefer certain feminine
colours such as pink, purple and peach, whereas boys go for blue, black and brown.

3. Education:

Highly educated persons may spend on books, personal care products, and so on. But a
person with low or no education may spend less on books and more on personal grooming
products.
4. Income level:

Normally, the higher the income level, the higher is the level of spending and vice versa. But
this may not be the case in developing countries, especially in the rural areas.

5. Status in the society:

Persons enjoying higher status in the society spend a good amount of money on luxury items
such as luxury cars, luxury watches, premium brands of clothing, jewellery and perfumes.

C. Psychological Factors:

A person’s buying behaviour is influenced by the psychological factors such as the

following:

1. Learning:

It refers to changes in individual behaviour that are caused by information and experience.
For example, when a customer buys a new brand of apparels, and is satisfied by its use, then
they are more likely to buy the same brand the next time. Through learning, people acquire
beliefs and attitudes, which in turn influence the buying behaviour.

2. Attitude:

It is human tendency to respond in a given manner to a particular situation or object or idea.

Consumers may develop a positive, or a negative, or a neutral attitude towards certain
products or brands, which in turn affects their buying behaviour.

3. Motives:

A motive is the inner drive that motivates a person to act or behave in a certain manner. A
marketer must identify the buying motives of the target customers and influence them to act
positively towards the marketed products.

Some of the buying motives include the following factors:

a. Pride and possession

b. Love and affection

c. Comfort and convenience

d. Romance

4. Beliefs:

A belief is a descriptive thought that a person holds about certain things. It may be based on
knowledge, opinion, faith, trust and confidence. People may hold certain beliefs of certain
brands/products. Beliefs develop brand images, which in turn can affect the buying
behaviour.
D. Social Factors:

The social factors such as reference groups family, and social status affects the buying
behaviour. Social factors in turn reflect a constant and dynamic influx through which
individuals learn different meanings of consumption.

1. Reference groups:

A reference group is a small group of people such as colleagues at workplace, club members,
friends circle, neighbours, family members, and so on.

The reference groups influence the members in following manner:

a. They influence members’ values and attitudes.

b. They expose members to new behaviours and lifestyles.

c. They create pressure to choose certain products or brands.

2. Family:

The family is the main reference group that may influence the consumer behaviour.
Nowadays, children are well informed about goods and services through media or friends
circle, and other sources. Therefore, they influence considerably in the decisions of buying
both fast moving consumer goods and durable items.

3. Roles and status:

A person performs certain roles in a particular group such as family, club, organization, and
so on. For example, a person may perform the role of a vice president in a firm and another
person may perform the role of a marketing manager.

The vice president may enjoy higher status in the organization as compared to the marketing
manager. People may purchase the products that conform to their roles and status, especially
in the case of branded clothes, luxury watches, luxury cars, and so on.

E. Cultural Factors:

There is a subtle influence of cultural factors on a consumer’s decision process. Consumers

live in a complex social and cultural environment. The types of products and services they
buy can be influenced by the overall cultural context in which they grow up to become
individuals. Cultural factors includes race and religion, tradition, caste and moral values.
Culture also includes subcultures, sub-castes, religious sects and languages.

1. Culture:

It influences consumer behaviour to a great extent. Cultural values and elements are passed
from one generation to another through family, educational institutions, religious bodies and
social environment. The cultural diversity influences food habits, clothing, customs and
traditions. For example, consuming alcohol and meat in certain religious communities is not
restricted, but in certain communities, consumption of alcohol and meat is prohibited.

2. Subculture:

Each culture consists of smaller subcultures that provide specific identity to its members.
Subcultures include sub-castes, religious sects (Roman Catholics, Syrian Catholics, Protestant
Christians, etc.), geographic regions (South Indians, North Indians) and language (Marathi,
Malayali, Gujarati).

The behaviour of people belonging to various subcultures is different. Therefore, marketers

may adopt multicultural marketing approaches, that is, designing and marketing goods and
services that cater to the tastes and preferences of the consumers belonging to different
subcultures.

Models of Consumer Behaviour:

An insight into psyche of the consumer helps us understand the processes that go behind their
preference of certain goods and services over other. Consumer behaviour not only helps
companies plan market strategies, but also facilitates the process of new product development
to cater to the needs of customers.

India is home to over 1.17 billion people who represent a broad spectrum of cultures,
traditions and ideologies. Indians thus belong to different market segments based on
characteristics such as demographics, social status and income levels. Traditionally, Indian
consumers have a high degree of family orientation. As a result values like nurture and care
have been preferred to ambition and achievement.

So brands with identities that support family values are more likely to be popular with Indian
consumers. Many FMCG products have aimed at connecting with the cultural values of
people. For instance, Cadbury India launched its Celebrations range as an expression of love
and festivity for occasions like Raksha Bandhan. Nestle s Nescafe Coffee emphasizes
building relationships over coffee. We now look at popular models of consumer behaviour
applied to the Indian context.

A. The Nicosia Model:

The Nicosia model illustrates how a potential consumer responds to news of a new brand.
The model’s three-stage sequence begins with the consumer being made aware of the brand’s
existence and then traces the decision process through, from purchase to post-purchase
evaluation and feedback. This sequence is assumed to begin with advertising, which makes
the consumer aware of the brand’s existence and of an unfilled want.

The perception of the message is influenced by attributes of both the company and the
consumer, and may lead to the development of an attitude towards the brand. The consumer
is then assumed to search for alternative brands which are evaluated by means of other
consumers, advertising messages, and previous experiences with each company and so on.

This search process leads the consumer to either dismiss or purchase the product. The
experience of purchase and consumption then has the effect of modifying the consumer’s
psychological state and acts as a feedback loop, leading either to a decision to repeat the
purchase or not buy it again.

B. The Engel, Kollat and Blackwell (EKB) Model:

The starting point for the EKB model is the consumer’s perception of a want that must be
satisfied. This stimulates the search for information internally (memory), externally
(neighbours, colleagues, and friends) and from market sources (advertisements, trade
literature, magazine reports).

This search process identifies the various ways in which the, want can be satisfied and leads
to the consumer setting the criteria by which the alternatives can then be compared and
evaluated. This leads in turn to the emergence of a set of attitudes and beliefs that ultimately
determine choice. The outcome of this choice then feeds back to influence future behaviour.

C. The Howrard and Sheth Model:

Howard and Sheth’s approach is broadly similar to those of Nicosia and Engel et al. in that it
again attempts to coalesce, a disparate set of variables.

These are grouped under four main headings:

Traditionally, Indian consumers have a high degree of family orientation. As a result, values
like nurturing and care have been preferred to ambition and achievement. So, brands with
identities that support family values and exhibit strong emotions are more likely to be popular
with Indian consumers.

1. Inputs, which stimulate the buying process. These include product-related factors (price,
quality and distinctiveness), symbolic factors (images that stem from the mass media and
sales people), and social factors (family, reference groups and social class influences).

2. Perceptual constructs, which explain the consumer’s cognitive activity in terms of

information processing.

3. Learning constructs, which represent the results of information processing.

4. Outputs, which include not just the purchases but also the implications for perception and
learning.

Factors Influencing Consumer Behaviour:

People today have become far more empowered due to the widespread availability of
information. This is causing a transformation in consumer preferences, much of which is
powered by the evolving middle class.

For instance, a vast majority of middle class women were housewives, so they preferred self-
cooked meals that catered to the family’s taste. With time, more women have begun to work,
thus increasing the demand for packaged food. Some other changing consumer preferences
are presented in Figure 2.1.
India’s dramatic pace of urbanization is influencing lifestyle patterns and buying
behaviour of consumers:

1. Bulk purchases from supermarkets and hyper stores instead of frequent trips to the nearby
shops this is due to convenience, hygiene and an attractive ambience associated with the
former. Consumers today are also more experimental and ready to take risks.

2. A changing work culture leads to an increasing focus on ready to eat food instead of
traditional cooking. ITC offers a range of such products under the ‘Kitchens of India’ label.
Other packaged food products include Knorr and Maggi soups and MTR idli and upma
mixes. Despite the presence of Indian brands, the ready to eat food segment is
underdeveloped and has become the focus of foreign companies who are eyeing the growth
opportunities presented by this market.

3. There is a growing influence of Western culture on Indians, who have become more
modernized and willing to experiment. A number of foreign brands have been successful in
the FMCG sector in India due to this Westernization. For instance, many Indian women use
L’Oreal and Maybelline products.

4. Consumers today are also health conscious. They want to eat healthy and stay fit. Hence, a
greater number of FMCG products position themselves as being healthy options. Maggi Atta
Noodles, Sunfeast’s Sachin Fit Kit Multigrain Biscuits, and Tropicana fruit juices are a few
products that address this need.

5. In India, celebrities, especially movie stars and cricketers, are frequently asked to endorse
products and play a role in marketing communication. As the print and electronic media
become all pervasive, the influence of celebrities has increased.

They are closely followed and even their most mundane activities create headlines. They are
watched and imitated. Consequently roping in celebrities for advertising attracts a lot of
consumer attention.

6. Consumers like advertisements more if they feature their favorite celebrity. What the star
says has a positive impact on the consumer’s mind leading to positive vibes about the
product. Also, these advertisements have a higher recall value amidst the advertisement
clutter.
For example, Lux soaps created headlines when they aired the advertisement featuring
Bollywood heartthrob Shah Rukh Khan along with four Bollywood beauties.

From the viewpoint of marketing strategy the mix of cultural, social, personal and
psychological factors which influence behaviour are largely non-controllable. Because of the
influence they exert on patterns of buying, it is essential that we understand how they interact
and influence purchase behaviour.

In doing this, we should not lose sight of the differences that exist between customers and
consumers, and the implications of these differences for strategy.

Top 6 Model of Consumer Buying Decision Process

The six model of consumer buying decision process are as follows: 1. Problem Identification
2. Information Search 3. Listing Alternative Brands 4. Evaluation of Alternatives 5. Purchase
Decision 6. Post-purchase Behaviour.

Philip Kotler presents a six-stage model involving consumer buying decision process.

The live-stage model of consumer buying process is stated as follows:

1. Problem/need identification

2. Information search

3. Listing alternative brands

4. Evaluation of alternatives

5. Purchase decision

6. Post-purchase behaviour

1. Problem Identification:

The consumer buying decision process begins with the identification of needs. These needs
can be triggered by internal and external stimuli. For example, a person may have the desire
to wear fashionable clothes from internal stimuli or by getting suggestions from friends,
which act as a form of external source. The marketer tries to stimulate the needs and help
people in identifying these needs by intelligent use of the marketing mix variables.

2. Information Search:

When consumers identify a need, they may look for information about how to satisfy it.

A consumer may look for information from five general sources:

1. Internal sources:
By recalling from memory, if they have satisfied a similar need in the past.

2. Group sources:

By consulting other people such as family members, friends and others.

3. Marketing sources:

Through sales people, advertisement and packaging.

4. Public sources:

Through media publicity, reports of research firms.

5. Experiential sources:

By experiencing products, that is, by handling them or by consuming or using them. For
example, a consumer may taste a particular item of fast food, and if they likes it may make a
purchase decision.

3. Listing Alternative Brands:

In this stage, the consumer analyses the information available with them to select the right
product or brand. A consumer may list out a few alternative brands that are available in the
market. The brands may be listed after collecting necessary information from various sources.

The information of alternative brands may include the following factors:

1. Features

2. Price

3. Model 4. After-sale service

5. Warranty

4. Evaluation of Alternatives:

On the basis of the available information, consumers identify and evaluate ways to satisfy
their needs. A consumer may identify the products or brands that effectively satisfy their
needs or solve their problems, and then evaluate each brand/product against certain criteria
such as features, price, reputation of the company, and so on.
5. Purchase Decision:

Once the consumer has narrowed down the possible alternatives to just a few, there may
make a decision to purchase. The consumer will decide whether to buy, and if so, then what,
where and when to buy. Consumers may also postpone or forgo purchase decision, if none of
the shortlisted alternatives meet their needs.

6. Post-purchase Behaviour:

A marketer’s job is not complete with the purchase decision by the buyer. After purchasing
and consumption, the customer will experience some level of satisfaction. If the product
meets the expectations of the consumer, then the consumer will be satisfied. If the
performance of the product exceeds customers’ expectations, then they will be delighted, and
if it falls below the expectations, then they will be dissatisfied.

A satisfied consumer may involve in repeat purchases. A delightful customer propagates a

positive image of the brand, whereas a dissatisfied consumer may spread a bad image of the
product or the brand. Thus, a study on the post-purchase behaviour gives a learning of the
way the product is used and disposed, and helps the marketer to design their marketing mix.