UNIT 1: INTRODUCTION TO CONSUMER BEHAVIOUR

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.
Marketers expect that by understanding what causes the consumers to buy particular goods and
services, they will be able to determine—which products are needed in the marketplace, which
are obsolete, and how best to present the goods to the consumers.

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

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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

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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.

Features of Consumer Behaviour:

1) Consumer behaviour and marketing management: Effective business managers realise
the importance of marketing to the success of their firm. A sound understanding of consumer
behaviour is essential to the long run success of any marketing program. In fact, it is seen as a
comerstone of the Marketing concept, an important orientation of philosophy of many
marketing managers. The essence of the Marketing concept is captured in three interrelated
orientations consumers needs and wants, company integrated strategy.
2) Consumer behaviour and non profit and social marketing: In today’s world even the
non-profit organisations like government agencies, religious sects, universities and charitable
institutions have to market their services for ideas to the “target group of consumers or
institution.” At other times these groups are required to appeal to the general public for support
of certain causes or ideas. Also they make their contribution towards eradication of the
problems of the society. Thus a clear understanding of the consumer behaviour and decision
making process will assist these efforts

3) Consumer behaviour and government decision making: In recent years the relevance of
consumer behaviour principles to government decision making. Two major areas of activities
have been affected:
i) Government services: It is increasingly and that government provision of public services
can benefit significantly from an understanding of the consumers, or users, of these services.
ii) consumer protection: Many Agencies at all levels of government are involved with
regulating business practices for the purpose of protecting consumers welfare.
4) Consumer behaviour and demarketing: It has become increasingly clear that consumers
are entering an era of scarcity in terms of some natural gas and water. These scarcities have led

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to promotions stressing conservation rather than consumption. In other circumstances,
consumers have been encouraged to decrease or stop their use of particular goods believed to
have harmful effects. Programs designed to reduce drug abuse, gambling, and similar types of
conception examples. These actions have been undertaken by government agencies non profit
organisations, and other private groups. The term “demarketing” refers to all such efforts to
encourage consumers to reduce their consumption of a particular product or services.
5) Consumer behaviour and consumer education: Consumer also stands to benefit directly
from orderly investigations of their own behaviour. This can occur on an individual basis or as
part of more formal educational programs. For example, when consumers learn that a large
proportion of the billions spend annually on grocery products is used for impulse purchases
and not spend according to pre planned shopping list, consumers may be more willing to plan
effort to save money. In general, as marketers that can influence consumers’ purchases,
consumers have the opportunity to understand better how they affect their own behaviour.

Importance of consumer behaviour:

1) production policies: The study of consumer behaviour effects production policies of
enterprise. Consumer behaviour discovers the habits, tastes and preferences of consumers and
such discovery enables and enterprise to plan and develop its products according to these
specifications. It is necessary for an enterprise to be in continuous touch with the changes in
consumer behaviour so that necessary changes in products may be made.
2) Price policies: The buyer behaviour is equally important in having price policies. The
buyers of some products purchase only because particular articles are cheaper than the
competitive articles available in the market.
3) Decision regarding channels of distribution: The goods, which are sold and solely on the
basis of low price mast and economical distribution channels. In case of those articles, which
week T.V. sets, refrigerators etc. Must have different channels of distribution. Thus, decisions
regarding channels of distribution are taken on the basis of consumer behaviour.
4) Decision regarding sales promotion: Study of consumer behaviour is also vital in making
decisions regarding sales promotion. It enables the producer to know what motive prompt
consumer to make purchase and the same are utilised in promotional campaigns to awaken
desire to purchase.
5) Exploiting marketing opportunities: Study of consumer behaviour helps the marketers
to understand the consumers needs, aspirations, expectations, problems etc. This knowledge
will be useful to the marketers in exploiting marketing opportunities and meeting the challenges
of the market.
6) Consumer do not always act or react predictably: The consumers of the past used to react
to price levels as if price and quality had positive relation. Today, week value for money, lesser
price but with superior features. The consumers response indicates that the shift had occurred.
7) Highly diversified consumer preferences: This shift has occurred due to availability of
more choice now. Thus study of consumer behaviour is important to understand the changes.
8) Rapid introduction of new products: Rapid introduction of new product with
technological advancement has made the job of studying consumer behaviour more imperative.
For example, the information Technologies are changing very fast in personal computer
industry.
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9) Implementing the “Marketing concept”: This calls for studying the consumer behaviour,
all customers need have to be given priority. Thus identification of target market before
production becomes essential to deliver the desired customer satisfaction and delight.

Applications of consumer behaviour:

1) Analysing market opportunity: Consumer behaviour study help in identifying the
unfulfilled needs and wants of consumers. This requires examining the friends and conditions
operating in the Marketplace, consumers lifestyle, income levels and energy influences. This
may reveal unsatisfied needs and wants. Mosquito repellents have been marketed in response
to a genuine and unfulfilled consumer need.
2) Selecting target market: Review of market opportunities often helps in identifying district
consumer segments with very distinct and unique wants and needs. Identifying these groups,
behave and how they make purchase decisions enable the marketer to design and market
products or services particularly suited to their wants and needs. For example, please sleep
revealed that many existing and potential shampoo users did not want to buy shampoo fax price
at rate 60 for more and would rather prefer a low price package containing enough quantity for
one or two washers. This finding LED companies to introduce the shampoos sachet, which
become a good seller.
3) Marketing-mix decisions: Once unsatisfied needs and wants are identified, the marketer
has to determine the right mix of product, price, distribution and promotion. Where too,
consumer behaviour study is very helpful in finding answers too many preplexing questions.
The factors of marketing mix decisions are: i) product ii) price iii) promotion iv) distribution
4) Use in social and non profits marketing: Consumer behaviour studies are useful to design
marketing strategies by social, governmental and not for profit organisations to make their
programmes more effective such as family planning, awareness about AIDS.

Consumer decision-making varies with the type of buying decision. There are
great differences between buying toothpaste, a tennis racket, a personal computer, and a new
car. Complex and expensive purchases are likely to involve more buyer deliberation and
more participants.

1) Complex Buying Behaviour:

Consumer go through complex buying behaviour when they are highly involved in a purchase
and are aware of significant differences existing among brands. Consumers are highly involved
in a purchase when it is expensive, bought infrequently.
Risky and highly expensive. Typically, the consumer does not know much about the product
category and has much to learn. For e.g. – a person buying a personal computer may not even
know what attributes to look for.
2) Buying Behaviour Reducing Dissonance:
Sometimes the consumer who is highly involved in a purchase sees little difference in the
brands. His high involvement is based on the fact that the purchase is expensive, in-frequent

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and risky. The buyer will shop around to learn what is available but he will buy fairly quickly
because brand differences are not pronounced.

(3) Buying Behaviour Based on Habits:

Many products are purchased under conditions of low consumer involvement and the absence
of significant brand differences. For example- in purchase category. They go to store and reach
for the brand, having no strong brand loyalty. They have low involvement with most low cost,
frequently purchased products. Their behaviour in these cases does pass through the normal
belief/attitude/behaviour sequences. They do not search extensive information about the
brands.

(4) Variety-Seeking Buying Behaviour:

Some buying situation depicts low consumer involvement but significant brand differences.
Consumers are often observed to do a lot of brand switching. For example in purchasing
cookies the consumer has some beliefs, chooses a brand of cookies without much evaluation
and evaluates it during consumption. In future, the consumer may reach for another brand out
of boredom or a wish to experiment. Here brand switching occurs for the sake of variety rather
than dissatisfaction.

A company can segment a market in many ways. Segmentation variables are the criteria that
a company uses to segment its market. The criteria that a company chooses should be good
predictors of differences in customer needs and the way they buy.

Behavioural segmentation:
A company segments its market on the basis of the buying behaviour of customers. It tracks
customer purchases to identify patterns of buyer behaviour, which it then uses to segment its
market.
Benefits sought:
Customers may seek different benefits from a product. For example, customers may seek
benefits of energy efficiency and rapid cooling in air conditioners. It is important that a
company carries out benefit segmentation diligently, because a company exists only till it
serves customer needs. It then profiles its segment in terms of age, income, and so on, so that
the company can reach them easily.
Purchase occasion:
A customer can buy a product to replenish a depleted stock or he can buy to take care of an
emergency. A customer is less price sensitive when he buys to take care of an emergency.
Products are also bought as gifts and their purchase is concentrated at festival times.
Therefore, manufacturers of such products should advertise mainly in the pre-festival period.
They may make special offers and also create special package designs for such occasions.
Purchase behavior:
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Customers exhibit different buying behaviour in terms of the time of their purchase relative to
the launch of the product. When a company launches a new product, it has to identify the
segment of innovators who would be willing to take the risk of buying the new product as soon
as it is launched.
The initial communication is targeted at this segment of innovators, so it is important to know
them and their sensibilities. Other segments will evaluate the product rigorously and wait for
the feedback from innovators before they buy the product. Some other segments will buy only
when the product is firmly established in the market and hence face no risk in buying it.
Brand loyalty:
Brand loyalty is an important basis for segmenting consumer markets. Some consumers buy
only one brand in a product category, and hence are totally brand loyal. But, most consumers
switch brands. Some consumers buy one particular brand at most times, but also buy other
brands.
There are a large number of customers who do not have any brand preference, and they buy a
brand depending on the concessions that it may be providing. And then there are variety seeking
consumers who buy a different brand whenever they buy one.
Usage:
A company can segment its market on the basis of its consumers being heavy users, light users
and nonusers. Most companies target heavy users and provide concessions to retain them. The
result is that heavy consumers are expensive to serve.
Light users are not targeted by large companies, and hence small companies can more easily
attract them and retain them. A company can target non-users without the fear of competitor
retaliation, but it has to find out as to why the non-users are not using the product.
The company may have to make some changes in the product to make it useful to non-users,
or it has to communicate articulately to make them aware of the usefulness of the product.
Perceptions and beliefs:
A customer’s behaviour is influenced by the perceptions and beliefs that he holds of issues and
events.
A company can conduct perceptual segmentation by grouping customers who have similar
views about a product, and it can conduct belief segmentation by grouping customers who have
similar beliefs about a product. For instance, when iPod was launched, it appealed more to
consumers who were passionate about their music and were also technology savvy.
Psychographic segmentation:
The psychological makeup of a customer is analysed to unearth deeper motivations for
purchasing specific products or brands. The process often involves studying a customer’s
values, opinions, activities and lifestyles. The idea is to establish patterns, which can be used
as a basis for clustering similar customers.
Lifestyle:
A company groups people according to their way of living as reflected in their activities,
interests and opinions. The company identifies groups of people with similar patterns of living.

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The company that practices lifestyle segmentation relates a brand to a particular lifestyle. But,
it is doubtful whether general lifestyle patterns are predictive of purchasing behaviour in
specific markets.
Personality:
In some product categories like cars and garments, customers prefer brands which reflect their
personalities. Therefore, companies have to endow their brands with values that are cherished
by consumers of such products. There is a strong relationship between personality of the brand
and personality of customers, when the brands that the customers select showcase their
personal values.
Segment profiling:
Once a company has identified its segments, it needs to profile them in terms of variables such
as age, occupation, socio-economic status, place of residence, gender, etc. Profiling will help
companies in identifying the segments and focusing their attention on them.
Demographic variables:
Age:
Age is used to segment many consumer markets, like food and clothing.
Gender:
Differing tastes and customs between men and women are reflected in specialist products
aimed at these market segments.
Life cycle:
Disposable income and purchase requirement vary according to life cycle stage. Young couples
without children may be a prime target for consumer durables, whereas couples with grown
children may be prime target for education loans.
Socio-economic variables:
Social class is a good predictor of what a customer buys and how he buys, even though many
customers who have similar occupations live life differently and hence exhibit different buyer
behaviour. A company can also use educational qualifications and income of customers to
segment consumer markets, and when they are used together with customers’ occupation, the
process yields more valid segments.
Geographic variables:
A customer’s place of residence also affects the products that he buys and how he buys. A
customer’s eating and dressing habits are strongly influenced by the place he belongs to, and it
continues to be a strong determinant of buyer behaviour even when he leaves his original place
of residence.
Consumer behaviour principles are applied in many areas of marketing as discussed below:
Analysing market opportunity: Consumer behaviour study helps in identifying the
unfulfilled needs and wants of consumers. This requires examining the trends and conditions
operating in the marketplace, consumers’ lifestyles, income levels and emerging influences.
Selecting target market: A review of market opportunities often helps in
identifying distinct consumer segments with very distinct and unique wants and need.

Rohini.R Assistant Professor EWCM

Identifying these groups, learning how they behave and how they make purchase decisions
enables the marketer to design and market products or services particularly suited to their
wants and needs. For example, consumer studies revealed that many existing and potential
shampoo users did not want to buy shampoo packs priced at Rs. 60 or more and would rather
prefer a low priced sachet containing enough quantity for one or two washes. The finding led
companies to introduce the shampoo sachet which became a good seller.

Marketing-mix decisions: Once unsatisfied needs and wants are identified, the marketer has
to determine the right mix of product, price, distribution and promotion. Here too, consumer
behaviour study is very helpful in finding answers to many perplexing questions.

 Product: The marketer designs the product or service that would satisfy unfulfilled
needs or wants. Further decisions regarding the product concern to size, shape and
features. The marketer has also to decide about packaging important aspects of service,
warranties and accessories etc. Nestle first introduced Maggie noodles in masala and
capsicum flavours. Subsequently, keeping in view the consumer preferences in some
regions, the company introduced garlic, Shambhar and other flavours.
 Price: The second important component of marketing mix is price. Marketers must
decide what price to charge for the product or service. These decisions will influence
the flow of revenue to the company
 Distribution: The next decision relates to the distribution channel, that is, where and
how to offer products and services for sale. Should the products be sold through all the
retail outlets or only through selected ones?
 Promotion: Promotion is concerned with marketing communications to consumers,
The more important methods are advertising, personal selling, sales promotion,
publicity and direct marketing..

Current trends in Consumer Behaviour

Current trends have indicated that marketers need to be sensitive to the changes in consumer
needs, demographic characteristics and lifestyles and develop effective marketing strategies.
Evaluation of marketing strategies is more valid because of the greater value orientation on
the part of the consumers’ today. They desire for more customised products because of their
accessibility to better and more information on products and services.

Increased Demand for Transparency

There is an increasing customer demand around transparency. Big corporations have abused
the trust of the customer for a long time. We’ve seen many scandals within various industries
from food to automotive. That’s the reason why the customers of today require transparency
on the supply chain, ingredients, and processes and so on.
Health conscious
Perhaps unsurprisingly, consumers are far more health conscious than before. According to
Accenture, health ranked as consumers’ top priority right now. With 80% of surveyed people
reporting that the health of their friends and family is at the top of their minds, followed by
78% who were most concerned with their personal health.

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After months of increased hand washing, wearing protective masks and isolating indoors,
hygiene will remain at the forefront of everyone’s minds. Research from Shekel shows that
87% of US shoppers would now rather shop in stores with touchless self-checkout capabilities.
Accelerated Online Buying
Customers will accelerate buying online and using home delivery. This was already happening,
but the pandemic revealed to skeptics that it’s easy, it works and it makes their life easier. All
businesses will need to have an online strategy or they’re going to get beaten by their
competitors that embrace and execute an online sale and marketing strategy.
Community driven
Although the coronavirus crisis has been a time of extreme isolation, it has actually brought
communities around the globe together. Just think back to those videos of Italians singing to
their neighbours in the height of lockdown, or the weekly applause for carers adopted by
countries worldwide.
B2B Customers Gaining More Leverage
Business-to-business customers will continue to have more and more leverage with tech
vendors from checking authentic reviews to managing the sales cycle on their timeline and
even benefiting from group buying pricing. Buying is changing for B2B and it’s a blessing. I
encourage customers to have more leverage and power as it will result in a better relationship,
less buyer remorse and higher retention.
Flexible first
Of course, while online shopping is set to boom, there’s still the issue of consumers feeling
confident in their purchases. After months of living through an ever-changing and, dare we say
it, ‘uncertain’ situation, the way consumers make purchasing decisions has changed.

Segmentation refers to a process of bifurcating or dividing a large unit into various small units
which have more or less similar or related characteristics.

Market Segmentation

 Market segmentation is a marketing concept which divides the complete market set up
into smaller subsets comprising of consumers with a similar taste, demand and
preference.
 A market segment is a small unit within a large market comprising of like minded
individuals.
 One market segment is totally distinct from the other segment.
 A market segment comprises of individuals who think on the same lines and have
similar interests.
 The individuals from the same segment respond in a similar way to the fluctuations in
the market.

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Basis of Market Segmentation
1) Gender
The marketers divide the market into smaller segments based on gender. Both men and women
have different interests and preferences, and thus the need for segmentation.
Organizations need to have different marketing strategies for men which would obviously not
work in case of females.
2) Age Group
Division on the basis of age group of the target audience is also one of the ways of market
segmentation.
The products and marketing strategies for teenagers would obviously be different than kids.
Age group (0 – 10 years) – Toys, Nappies, Baby Food, Prams
Age Group (10 – 20 years) – Toys, Apparels, Books, School Bags
Age group (20 years and above) – Cosmetics, Anti-Ageing Products, Magazines, apparels and
so on
3) Income
Marketers divide the consumers into small segments as per their income. Individuals are
classified into segments according to their monthly earnings.
The three categories are:
High income Group
Mid Income Group
Low Income Group
Stores catering to the higher income group would have different range of products and
strategies as compared to stores which target the lower income group.
4) Marital Status
Market segmentation can also be as per the marital status of the individuals. Travel agencies
would not have similar holiday packages for bachelors and married couples.

Types of Market Segmentation

 Psychographic segmentation

The basis of such segmentation is the lifestyle of the individuals. The individual’s attitude,
interest, value help the marketers to classify them into small groups.

 Behaviouralistic Segmentation

The loyalties of the customers towards a particular brand help the marketers to classify them
into smaller groups, each group comprising of individuals loyal towards a particular brand.

 Geographic Segmentation

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Geographic segmentation refers to the classification of market into various geographical areas.
A marketer can’t have similar strategies for individuals living at different places.

Steps in Market Segmentation

1. Identify the target market
The first and foremost step is to identify the target market. The marketers must be very clear
about who all should be included in a common segment. Make sure the individuals have
something in common. A male and a female can’t be included in one segment as they have
different needs and expectations.
Burberry stocks separate merchandise for both men and women. The management is very clear
on the target market and has separate strategies for product promotion amongst both the
segments.
A Garnier men’s deodorant would obviously not sell if the company uses a female model to
create awareness.
Segmentation helps the organizations decide on the marketing strategies and promotional
schemes.
Maruti Suzuki has adopted a focused approach and wisely created segments within a large
market to promote their cars.
Lower Income Group – Maruti 800, Alto
Middle Income Group – Wagon R, Swift, Swift Dzire, Ritz
High Income Group – Maruti Suzuki Kizashi, Suzuki Grand Vitara
Suzuki Grand Vitara would obviously have no takers amongst the lower income group.
The target market for Rado, Omega or Tag Heuer is the premium segment as compared to
Maxima or a Sonata watch.
2. Identify expectations of Target Audience
Once the target market is decided, it is essential to find out the needs of the target audience.
The product must meet the expectations of the individuals. The marketer must interact with the
target audience to know more about their interests and demands.
Kellogg’s K special was launched specifically for the individuals who wanted to cut down on
their calorie intake.
Marketing professionals or individuals exposed to sun rays for a long duration need something
which would protect their skin from the harmful effects of sun rays. Keeping this in mind,
many organizations came with the concept of sunscreen lotions and creams with a sun
protection factor especially for men.
3. Create Subgroups
The organizations should ensure their target market is well defined. Create subgroups within
groups for effective results.
Cosmetics for females now come in various categories.

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  Creams and Lotions for girls between 20-25 years would focus more on fairness.
 Creams and lotions for girls between 25 to 35 years promise to reduce the signs of
ageing.

4. Review the needs of the target audience

It is essential for the marketer to review the needs and preferences of individuals belonging to
each segment and sub-segment. The consumers of a particular segment must respond to similar
fluctuations in the market and similar marketing strategies.
5. Name your market Segment
Give an appropriate name to each segment. It makes implementation of strategies easier.
A kids section can have various segments namely new born, infants, toddlers and so on.
6. Marketing Strategies
Devise relevant strategies to promote brands amongst each segment. Remember you can’t
afford to have same strategies for all the segments. Make sure there is a connect between the
product and the target audience. Advertisements promoting female toiletries can’t afford to
have a male model, else the purpose gets nullified.
A model promoting a sunscreen lotion has to be shown roaming or working in sun for the
desired impact.
7. Review the behavior
Review the behavior of the target audience frequently. It is not necessary individuals would
have the same requirement (demand) all through the year. Demands vary, perceptions change
and interests differ. A detailed study of the target audience is essential.
8. Size of the Target Market
It is essential to know the target market size. Collect necessary data for the same. It helps in
sales planning and forecasting.

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