Introduction to Consumer Behaviour:

An organization is set up for satisfying the consumers’ unfulfilled needs and wants. In your
professional capacity you may also be a part of one such business organization. But as part of
the organization, have you ever wondered about who are the consumers of your products and
services? Why do these consumers buy your product and not that of the competitors? How do
your consumers perceive your product in terms of meeting their needs effectively? And how
are these feelings reflected in their marketplace behaviour as consumers? etc.

It is important for the survival and growth of the organization that one should regularly raise
such questions and attempt to find answers to them. It is only through such a process of
questioning and seeking answers to will help you in ensuring that the firm is on the growth
trajectory. A thorough knowledge of consumers and an understanding of their behaviour (as
consumers) are essential if you are to sustain yourself as an organization and grow manifolds in
the current business scenario.

Consumers are unique in terms of their needs, wants, consumption patterns and consumption
behaviour. In the marketplace, the marketer tries to satisfy these needs by offering suitable
product or service offering. In contemporary market, considering the varied needs, wants,
consumption patterns behaviour of consumers and increased level competition etc. it has
become all the more difficult for a marketer to do so effectively. Therefore, a comprehensive
yet meticulous understanding of consumers and their consumption behaviour has become
essential for an organization to succeed. In other words, a comprehensive, yet sound
knowledge of consumers is of vital importance in furthering the company’s business interests.

The roots of consumer behaviour can be seen in the concept of ‘Marketing’ and has essentially
an interdisciplinary in nature. It has emerged as separate field of study in 1960s.

How consumer behaviour is an interdisciplinary subject?

a) Psychology: The study of an individual (individual determinants of consumer behaviour).

b) Sociology: The study of groups and its dynamics in buying behaviour.
c) Social psychology: The study of how an individual operates or behaves in the group.
d) Economics: The study of income and purchasing power
Definition:
Consumer Behaviour can be defined as the study of individuals, groups/organizations and the
processes they use to select, secure, use and dispose of products to satisfy the needs and the
impact of these processes have on consumer and the society.

It is a decision process and physical activity engaged in evaluating, acquiring, using and
disposing of goods.

Importance / relevance of studying consumers’ behaviour in the field of marketing:

Why to study consumer behaviour?

“With every new satisfaction given, customer becomes aware of the further satisfactions that
can be obtained from a product / service and it is prudent that as an organization you realize it
before the competitor / customer “.
Theodor Levitt

As a subject or course Consumer Behavior is viewed as the building block of the marketing
concept. According to the marketing concept, the marketer should be able to determine the
needs and wants of the targeted market and provide suitable product and service offerings more
effectively and efficiently than the competitors.
In other words, Marketing is essentially a customer-centric philosophy, which aims at
understanding customer needs and wants, providing them the right product/service, and thereby
generating customer delight. A sound knowledge of consumers’ behavior helps the marketer in
understanding and predicting the consumption patterns and consumption behaviors of people.
It also helps the marketers in understanding the internal (individual determinants) and external
(environmental factors) forces that makes the people to act out different consumption patterns
and behaviors in the market place.
In addition to this, the study of consumer behaviour is important for the following tasks
performed by a marketer:

a) Analyzing the environment: identifying opportunities and fighting threats:

By identifying needs and wants of the prospective customers. This can be done by
examining trends in income consumer lifestyle and emerging influences.

e.g. - the trend towards increasing number of working wives and greater emphasis on
leisure and convenience have signaled the emerging needs for household gadgets such
as vacuum cleaner, washing machine, food processor, dishwasher etc.

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 b) Segmenting, targeting and positioning:
By thoroughly studying the consumer and his purchase behaviour in terms of how they
behave and how they make their purchase decision in a given situation. This in turn
leads to identification of distinct groups having more or less similar needs and wants.
e.g. – a study on potential consumers for shampoo revealed that there was a class of
consumers who would like to use shampoo only on special occasions and otherwise use
soap to wash their hair. Further, this consumer class would not afford to spend more
than Rs. 3 or 4 on shampoo. Having identified this target market companies with
leading brands launched their shampoos in small sachets containing enough quantity for
one wash and priced just at Rs. 2 or 3.
c) Designing the marketing-mix:

Product: - Product is a bundle of benefits that a marketer offers to customer for

satisfying his needs. By studying consumer behaviour a marketer can make decisions
about the product development, its size, shape, packaging, flavors etc.
e.g. – Maggi Bhuna masala, Sintex indoor loft water tanks
Price: - This is one of the most widely used marketing mix tool while furthering the
business interests. A marketer faces various questions while determining the prices of
their products and they are as following:

a) What should be the price of the product?

b) Should it be the same as that of the competing product or lower or higher?
c) Should the price be marked on the product or left to the discretion of the retailer to
charge what he can from the customer?
d) Should any price discounts be offered?
e) What is the customer perception of a lower or higher price?
f) Would a lower price stimulate sales? Or is a lower price associated with poor
quality?

The marketer has to determine the price level which helps in creating the image of the
product and also in maximizing the sales revenue. To do so he must try to understand the
consumer’s perception about the product, the influence of price on the purchase decisions
and impact of pricing on the sales. Therefore, it is only through a continuous study of
consumers’ behaviour in the marketplace that the marketer can get answers to the
aforementioned issues.

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 Place/ Distribution: Having determined the product, its size, shape, packaging, price etc.
the next decision a marketer has to make regarding the ways to make the products
available in the market. In doing so, he has to consider the customers’ convenience.
While determining the channels of distribution the marketers have to find answers to the
following questions:
a) What type of retail outlets should sell the products?
b) Should it be sold through all the retail outlets or only through a selected few?
c) Should it be sold through existing outlets which also sell competing brands or
should new outlets selling exclusively your brand of product be created?
d) How critical is the location of the retail outlets from the consumers' viewpoint?
e) Does the consumer look for the nearest convenient location or is he willing to
travel some distance for buying the product?
e.g. Few years ago, Eureka Forbes introduced a vacuum cleaner in the Indian market. It
was not only the launch of a new brand, but also a launch of a new product concept. No
retail outlets were selling vacuum cleaners, very few consumers were aware about the
product and they were willing to buy it.
Under these circumstances, the company decided to sell the product only through personal
selling with the salesman calling on the prospective customers at their homes. In this
particular set up the salesman had enough time to explain, demonstrate and convince the
prospective customer about the utility of the vacuum cleaner. On the other hand in a retail
outlet this would not have been possible. The retailer has neither the time nor the detailed
knowledge required to sell such a new product concept.
This distribution strategy of Eureka Forbes was based on a very fine understanding of the
consumer behaviour that resulted in good sales volume. The product concept is well
accepted in the urban markets and today the vacuum cleaner is sold through personal
selling as well as selected retail outlets.

Promotion: Doing business without promotions is just like hitting the target in the dark.
You know where you are aiming at but nobody else does. In the contemporary market
there are different media available to a marketer to promote his products or service
offering. To do it in the most efficient and effective way a marketer must study the
targeted consumers, their geographical location, the media they are having an access to,
the mostly preferred media and the role of advertising in influencing the purchase decision
etc.

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 d) Designing the marketing strategies:

Motive hierarchy, types of buying motives and the dimensions of consumer involvement:
Consumer needs are the soul of the marketing concept. Psychologists and consumer
researchers agree that human beings have the same needs; however, these needs get translated
differently into different wants, resulting in varied motives. An understanding of human needs
and motives would also help marketers understand and to predict consumption behavior.

Generally, it is observed that the terms such as “need” and “want” are often used
interchangeably even though they hold different meanings. A need is a state of felt deprivation
while a want is a desire for a specific satisfier in the form of a product or service offering.
e.g. – Drive- hunger
Need – food
Want - Roti and subji

A want may further get translated into a brand too, eg. the person desires a Dosa but from
Mankar Dosa or a Udipi restaurant.

The needs of the target market are always at the epicenter of the marketing activities. However,
marketers cannot create needs. In other words it can be described as needs pre-exists a
marketer.

Sometimes, consumers fail to identify the needs as they exist at the sub conscious level and
remain unfelt. In such situations, a marketer can help a consumer identify such needs and act
so as to satisfy them.
e.g. We as individuals have to face sweating and the resultant body odour during summer
season. People did not become aware about social embarrassment and feel the need of deo
sprays or sticks till companies introduced them in the market for consumption.
e.g. Rexona, Ponds etc. aired the advertisements of deo sticks and sprays depicting social
embarrassment amongst friends ,relatives at parties and social gatherings because of body
odour .
As consumers begin to identify and feel that a need exists, there occurs an inner urge or a drive
towards taking an action so as to fulfill the need. This inner urge and the impelling action to
put in efforts to attain a goal and fulfill the need and thereby attempt at satisfaction is referred
to as motivation.

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Motive Hierarchy:
Abraham Maslow a clinical psychologist, proposed the Hierarchy of Needs Theory in 1943. It
is regarded as one of the most important contributions to the field of motivational research. In
this theory, Maslow proposed that human needs could be classified into five basic levels
namely, physiological needs, safety/security needs, social/affiliation needs, ego/esteem needs
and self actualization needs.

Each of the needs were ranked in order of importance from the lowest to the highest and
depicted in a structure of a pyramid.

Self
Actualization
Needs

Esteem Needs

Social Needs

Safety or Security Needs

Physiological Needs

Source: Abraham Maslow’s Hierarchy of Needs Theory.

1. Physiological needs: - this is the first need related to the survival or sustainability of an
individual.
e.g.- food, clothing and shelter.

2. Safety needs: Once the physiological needs are met then the next set of need i.e. safety
needs are felt by the individuals. Here individuals are trying to protect self and his /her
family from any types risks in future.
e.g.- Life insurance policies, fire extinguishers.

3. Social needs: being a social animal, human beings tend to go for social affiliation or
belongingness in a given society. Therefore, various groups are created by them and
they are family, friends, peers etc.
e.g.:- Friendship

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 4. Esteem Needs: Maslow has classified esteem needs into two categories namely; esteem
for oneself. e.g.- dignity, achievement, mastery, independence) and the desire for
reputation or respect from others. e.g.- status, prestige

5. Self Actualization needs: It refers to the need for personal growth and development
wherein an individual tries to fulfill the same by using his capabilities and resources.

According to the theory, these needs are hierarchical and an individual will go level by level,
starting first with the fulfillment of the lower-order needs and gradually move towards the
fulfillment of the higher-order needs. A person cannot move to the second level unless the first
level is satisfied. Once a level is satisfied, it ceases to be a motivator and the moves to the next.

Application of Maslow’s need hierarchy theory in Marketing:

1) Product Development
2) Brand Positioning
3) Influencing consumption patterns

Buying motives:

Motivation refers to the processes that makes people to behave as they do. It occurs when a
need is aroused that the consumer wishes to satisfy. Once a need has been activated, a state of
tension exists that drives the consumer to satisfy the need. Motivation satisfies either utilitarian
or hedonic needs. A utilitarian need implies that, consumers emphasize the objective and
tangible attributes of products e.g. fuel economy in a car. A hedonic need implies that,
consumers emphasize subjective and experiential aspects such as self confidence, excitement,
etc.

Consumer or buyer is the central figure of all marketing endeavors. It is the consumers who
determine the growth, prosperity & even existence of a business enterprise. Hence, it is
imperative for all the marketers to understand the pulse of the target market. In order to do so,
the marketer must try to delve into the buyer’s mind. In other words the marketer should
always try to understand the buying motives of the customers.

Motive is a strong feeling, desire or emotion that makes a person to do something. When a
motive makes a person to buy a product, then it becomes a buying motive. In other words it
can be described as all the desires, considerations & impulses that induce a buyer to purchase a
given product.

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Types of buying motives:

1. Inherent and Learned Buying Motives: Inherent buying motives are those, which
arise from the basic needs of the consumers such as food, clothing, shelter etc.

2. Emotional Buying Motives: Emotional buying motives are those, which are affected
by consumer’s feelings and are often judged by using feelings or affective part of
consumer's attitude.

In such motives, the heart dominates over head and mind. Sometimes in satisfying these
needs, man is not rational. The motives are hunger, thirst, ego, prestige, comfort,
pleasure, love and affection etc.

e.g. – A brother buying gifts for his sister on the occasion of Rakshabandhan or Bhai
Dooj.

3. Rational Buying Motives: Rational buying motives are those motives where a
consumer is rational and his decision is based on logic and justifications while taking
buying decision.
In this case brain dominates over heart. Before making any purchase, the customer get
convinced about the price, quality, durability, reliability, service. And then decides to
purchase the goods, which are useful to him.

The consumer is often seen taking more time in making rational purchases.

4. Patronage buying motives: - These are the motives which determine where or from
whom the products are purchased. Further it can be classified as emotional & rational
patronage motives.

a) Emotional patronage motives: - are those impulses which motivate & persuade a
buyer to purchase products from a specific shop. This type of motive is merely
based on subjective reasons.

e.g. – hair treatment from a particular saloon, purchase of monthly provisions from
a particular shop etc.

b) Rational patronage motives: -

When a buyer solicits a particular shop after following a logical reasoning of mind
then it is called as rational patronage motive.
e.g. – Big Bazaar.

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Dimensions of Consumer involvement
Involvement refers to a person’s ‘perceived relevance of the object based on their inherent
needs, values and interests.’ (Zaichkowsky, 1985)

Involvement can be viewed as the motivation to process information. (Mitchell, 1979)

Consumer involvement influence the ways in which consumers seek, process, and transmit
information, make purchase decisions and do the post-purchase evaluation.
As the level of consumer involvement increases, the consumer has greater motivation to gather,
understand, elaborate and absorb the information. Therefore it is imperative for a marketer to
design marketing mix in such a manner that, he can activate the involvement process in favor
of his products or service offerings. In doing so marketing communication can play vital role.
A few models have been proposed that are based on consumer involvement; these are
discussed below.
a) Low involvement products:
Low involvement products are those products that are inexpensive or moderately
priced. They are considered to be low in value and risk and are frequently purchased.
Generally it is observed that, such products are purchased as a matter of routine.
e.g. - Toothpaste, soap, bread etc.
For such products, the consumer gives little thought, and feelings may not be formed
for the product until the products are purchased.

b) High Involvement products:

High involvement and thinking, typically signifies higher level of rationality. Products
that comes under this category requires lot of thinking, more and detailed information
about the product while making a purchase decision. Such decision making is driven by
economic motives.
e.g. - cars, laptops, real estate etc.

Dimensions of consumer involvement

• Cognitive involvement - where a person is motivated to learn everything about the
product.
• Product involvement - the consumer’s level of interest in making a particular purchase.
• Message response involvement (advertising involvement) - the consumer’s interest in
processing marketing communications.
• Ego involvement (enduring involvement) - the importance of a product to a consumer’s
self-concept.

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Perception:

It is the process wherein an individual selects, organizes and interprets a stimuli into a
meaningful and coherent picture of the world.

Perception determines how consumers view a company’s product, service or marketing

communication. Companies do send messages to consumers in various forms informing them
how their product offer better quality or value for money. Advertisement plays on emotions
and psychological appeals. Every company tries to create space in the minds of the consumers
and hopes that people will think favorably about its products and services.

However, do customers /buyers think about the company and their offerings in the way they
intends them to?
Post airing of the advertisement, when we talk to different people we may find different
interpretations of the messages. Some may interpret it favorably and some may disagree with
it. Therefore, it can be inferred that impressions are made automatically and independently
sometimes quite opposite to what was intended by the advertisers.

e.g. A company is offering 70 % discount on its product. How do people interprets the message
passed on through the advertisements? The different perceptions could be
a) It’s a good buying opportunity.
b) There must be something wrong with the quality of the products
c) It’s a gimmick

Perceptual Process:

Perceptual mechanism
Perceptual input

Stimuli Reception Selection Organization

(Marketing Communication)

Interpretation

Perceptual output

Behaviour or Action

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Learning and Memory:

What is learning?

Learning is a process of acquiring the knowledge, developing skills through discussions,

experiments and experiences which in turn affect the individual’s behaviour in future.

Principal Elements of Learning:

1. Motivation: Relevance of needs and goal. A need that motivates action.

2. Cues: - A stimulus that drives an action. It directs a drive when it matches with
consumer’s expectations.
3. Response: Action to satisfy need.
4. Reinforcement: The feedback a consumer receives post usage and subsequent action if
he doesn’t get a rewarding experience.

e.g. - A person looking for trolley bags/ Suitcase for an overseas pleasure trip with family.

1. Motivation: Relevance of needs and goal. Requirement of trolley bags / suitcases for
A need that motivates action. such a trip.
2. Cues: - Cash discounts
A stimulus that drives an action. - Good deals or offers
It directs a drive when it matches with
Good designs
consumer’s expectations. -
3. Response: Action to satisfy need. - The person sees a discount in a store and goes
and buys from the shop.
4. Reinforcement: The feedback a consumer If, he buys the suitcase/ trolley bag and finds
receives – it comfortable and long lasting, he would buy
the same brand or buy from the same shop in
future.
The reward or action - In case he doesn’t find it satisfactory the he
will switch to some other brand.

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THE ROLE OF LEARNING IN MEMORY
Memory involves a process of acquiring information and storing it over time so that it will be
available when needed. Contemporary approaches to the study of memory employ an
information-processing approach.
 In the encoding stage, information is entered in a way the system will recognize.
 In the storage stage, this knowledge is integrated with what is already in memory
and ‘warehoused’ until needed.
 During retrieval, the person accesses the desired information.
The memory process

Encoding Storage Retrieval

Information is Information is Information stored
External Inputs
placed in memory retained in memory in memory is found
as needed

Source: Consumer Behaviour – A European Perspective 3rd Edition, Prentice Hall

Memory system:
According to the information-processing perspective, there are three distinct systems of
memory namely;
a) Sensory memory
b) Short term memory
c) Long term memory

Relationship among memory system:

Source: Consumer Behaviour – A European Perspective 3rd Edition, Prentice Hall

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a) Sensory memory:
Sensory memory refers to temporary storage of information received from our senses and
lasts a couple of seconds at the most.
e.g. A person who passes by a bakery may get a brief, but enticing, smell of cake baking
inside. This sensation would only last for a few seconds and may be good enough for that
person to determine if he or she should investigate further. If the information is retained for
further processing, it passes through an attentional gate and is transferred to short-term
memory.

b) Short-term memory
Here, information is stored for a limited period of time and its capacity is limited. It is
similar to a computer’s cache memory wherein the information processing takes place.
Verbal input may be stored acoustically (in terms of how it sounds) or semantically (in
terms of its meaning).
c) Long-term memory
It is the system that allows us to retain information for a long period of time. Elaborative
rehearsal is required for transfer the information from short-term memory to long-term
memory.
This process involves thinking about the meaning of a stimulus and relating it to other
information already present in the memory. Marketers sometimes assist in the process by
devising catchy slogans or jingles that consumers repeat on their own.

Recognition and Recall Measures:

Recognition and recall tests are conducted to find out:
a) whether consumers remember seeing a particular ad
b) the extent to which they have read it or seen it and can recall its content
c) the resultant attitudes toward the product and the brand,
d) their purchase intentions.

Recognition tests are based on aided recall, although recall tests use unaided recall. In
recognition tests, the consumer is shown an ad and asked whether he or she remembers seeing
it and can remember any of its salient features.
In recall tests, the consumer is asked whether he or she has read a specific magazine or
watched a specific television show, and if so, can he /she recall any ads seen, the product
advertised, the brand, and any salient points about the product. Buying Behavior is nothing but
a decision processes wherein people are actively involved in the buying and using the products.

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The analysis of buyer’s behaviour is important for:
a) Understanding buyer’s reactions to a firms marketing strategy.
b) Meeting the needs of the customers effectively by providing them a suitable marketing
mix. To do so, it is imperative for the marketer to analyze what, where, when and how the
consumers buy.
c) Predicting how consumers will respond to marketing strategies.

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