Marketing Management 20MBA15

DAYANANDA SAGAR

ACADEMY OF TECHNOLOGY & MANAGEMENT

DEPARTMENT

OF

MANAGEMENT STUDIES

MARKETING MANAGEMENT

Subject Code: 20MBA15

Roopa Ajwal, Assistant Professor

Roopa Ajwal, Assistant Professor,DSATM Page 1

 Marketing Management 20MBA15

UNIT -02

ANALYSING CONSUMER BEHAVIOUR

Content of the Unit

• Consumer Behaviour

• Factors Influencing Consumer Behaviour

• Consumer Buying Decision Process

• Buying Roles and Buying Motives

• The Black Box Model of Consumer Buying Behaviour

• Psychological Processes underlying consumer behaviour

Roopa Ajwal, Assistant Professor,DSATM Page 2

 Marketing Management 20MBA15

A customer is a person who buys goods and services regularly from the
seller and pays for it to satisfy their needs. Customers are divided into
two categories:

• Trade Customer- These are customers who buy the product, add
value and resell it. Like a reseller, wholesaler, and distributor, etc.

• Final Customer– These are the customers who buy the product to
fulfil their own needs or desires.

Further, according to an analysis of the product satisfaction and

relationship with the customers, the customers are divided into three
kinds-

• Present Customer

• Former Customer

• Potential Customer

A consumer is someone who purchases the product for his/her own need
and consumes it. A consumer cannot resell the good or service but can
consume it to earn his/her livelihood and self-employment. Any person,
other than the buyer who buys the product or services, consumes the
product by taking his/her permission is categorized as a consumer. In
simple word, the end-user of the goods or services is termed as a
consumer.

Roopa Ajwal, Assistant Professor,DSATM Page 3

 Marketing Management 20MBA15

Customer Consumer

Customer is the one who is Consumer is the one who is the end
purchasing the goods. user of any goods or services.

Customer can purchase the good Consumers are unable to resell any
and is able to resell product or service.

Customers need to purchase a For a consumer purchasing a

product or service in order to use it. product or service is not essential.

The motive of buying is either for The motive of buying is only for
resale or for consumption consumption

Must be paid by customer May or may not be paid by the

consumer

Consumer Behaviour: Consumer behavior is the study of individuals, groups,

or organizations and all the activities associated with the purchase, use and
disposal of goods and services. Consumer Behavior is the study of how an
individual decides to purchase a particular product over the other and what
are the underlying factors that mold such behavior.

Factors Influencing Consumer Behaviour:

1. Cultural Factors (culture, subculture, and social class).

2. Social Factors (family, groups, and social roles).

Roopa Ajwal, Assistant Professor,DSATM Page 4

 Marketing Management 20MBA15

3.Personal Factors (life-cycle stage, occupation, lifestyle, personality, and self-

concept).

4. Economical Factors (Income, pricing, Inflation)

5. Psychological Factors (motivation, perception, learning, and beliefs and

attitudes).

Cultural factors have the most significant influence on consumer behavior. Marketers need to
understand the role played by the buyer’s culture, subculture, and social class in shaping consumer
behavior.

Some of the cultural factors are:

i. Culture: Cultural Factors have strong influence on consumer buyer behavior. Cultural Factors
include the basic values, needs, wants, preferences, perceptions, and behaviors that are observed
and learned by a consumer from their near family members and other important people around
them.

ii. Subculture: Within a cultural group, there exists many subcultures. These subcultural groups
share the same set of beliefs and values. Subcultures can consist of people from different religion,
caste, geographies and nationalities. These subcultures by itself form a customer segment.

iii. Social Class: Each and every society across the globe has form of social class. The social class is
not just determined by the income, but also other factors such as the occupation, family

Roopa Ajwal, Assistant Professor,DSATM Page 5

 Marketing Management 20MBA15

background, education and residence location. Social class is important to predict the consumer
behaviour.

Social Factors, Humans are social beings and they live around many people who influence their
buying behavior. Human try to imitate other humans and also wish to be socially accepted in the
society. Hence their buying behavior is influenced by other people around them. These factors are
considered as social factors. Some of the social factors are:

i. Family: Family plays a significant role in shaping the buying behavior of a person. A person
develops preferences from his childhood by watching family buy products and continues to buy the
same products even when they grow up.

ii. Reference Groups: Reference group is a group of people with whom a person associates himself.
Generally, all the people in the reference group have common buying behavior and influence each
other.

iii. Roles and status: A person is influenced by the role that he holds in the society. If a person is in a
high position, his buying behavior will be influenced largely by his status. A person who is a Chief
Executive Officer in a company will buy according to his status while a staff or an employee of the
same company will have different buying pattern.

Personal Factors are personal to the consumers influence their buying behavior. These personal
factors differ from person to person, thereby producing different perceptions and consumer
behavior. Some of the personal factors are:

i. Age: Age is a major factor that influences buying behavior. The buying choices of youth differ from
that of middle-aged people. Elderly people have a totally different buying behavior. Teenagers will
be more interested in buying colorful clothes and beauty products. Middle-aged are focused on
house, property and vehicle for the family.

ii. Occupation

Occupation of a consumer influences the buying behavior. A person tends to buy things that are
appropriate to this/her profession. For example, a doctor would buy clothes according to this
profession while a professor will have different buying pattern.

iii. Lifestyle

Lifestyle is an attitude, and a way in which an individual stay in the society. The buying behavior is
highly influenced by the lifestyle of a consumer. For example when a consumer leads a healthy
lifestyle, then the products he buys will relate to healthy alternatives to junk food.

Roopa Ajwal, Assistant Professor,DSATM Page 6

 Marketing Management 20MBA15

Psychological Factors: Human psychology is a major determinant of consumer behavior. These

factors are difficult to measure but are powerful enough to influence a buying decision. Some of the
important psychological factors are:

i. Motivation: When a person is motivated enough, it influences the buying behaviour of the person.
A person has many needs such as the social needs, basic needs, security needs, esteem needs and
self-actualization needs. Out of all these needs, the basic needs and security needs take a position
above all other needs. Hence basic needs and security needs have the power to motivate a
consumer to buy products and services.

ii. Perception: Consumer perception is a major factor that influences consumer behavior. Customer
perception is a process where a customer collects information about a product and interprets the
information to make a meaningful image about a particular product. When a customer sees
advertisements, promotions, customer reviews, social media feedback, etc. relating to a product,
they develop an impression about the product. Hence consumer perception becomes a great
influence on the buying decision of consumers.

iii. Learning: When a person buys a product, he/she gets to learn something more about the
product. Learning comes over a period of time through experience. A consumer’s learning depends
on skills and knowledge. While a skill can be gained through practice, knowledge can be acquired
only through experience.

iv. Attitudes and Beliefs: Consumers have certain attitude and beliefs which influence the buying
decisions of a consumer. Based on this attitude, the consumer behaves in a particular way towards a
product. This attitude plays a significant role in defining the brand image of a product. Hence, the
marketers try hard to understand the attitude of a consumer to design their marketing campaigns.

Economic Factors: The consumer buying habits and decisions greatly depend on the economic
situation of a country or a market. When a nation is prosperous, the economy is strong, which leads
to the greater money supply in the market and higher purchasing power for consumers. When
consumers experience a positive economic environment, they are more confident to spend on
buying products. Economic factors bear a significant influence on the buying decision of a consumer.
Some of the important economic factors are:

i. Personal Income: When a person has a higher disposable income, the purchasing power increases
simultaneously. Disposable income refers to the money that is left after spending towards the basic
needs of a person.

Roopa Ajwal, Assistant Professor,DSATM Page 7

 Marketing Management 20MBA15

ii. Family Income: Family income is the total income from all the members of a family. When more
people are earning in the family, there is more income available for shopping basic needs and
luxuries. Higher family income influences the people in the family to buy more. When there is a
surplus income available for the family, the tendency is to buy more luxury items which otherwise a
person might not have been able to buy.

iii. Savings: A consumer is highly influenced by the amount of savings he/she wishes to set aside
from his income. If a consumer decided to save more, then his expenditure on buying reduces.
Whereas if a consumer is interested in saving more, then most of his income will go towards buying
products.

Consumer Buying Decision Process:

The consumer decision process also called the buyer decision process, helps markets identify how
consumers complete the journey from knowing about a product to making the purchase decision.

Consumers go through 5 stages in deciding to purchase any goods or services. 5 Stages of the
consumer decision process (buyer decision process) are;

1. Problem Recognition or Need Recognition: Recognizes the need for a service or product

2. Information Search: Gathers information

Roopa Ajwal, Assistant Professor,DSATM Page 8

 Marketing Management 20MBA15

3. Evaluation of Alternatives: Weighs choices against comparable alternatives

4. Purchase Decision: Makes actual purchase

5. Post-Purchase Evaluation: Reflects on the purchase they made

1. Problem recognition: The first step of the consumer decision-making process is recognizing the
need for a service or product. Need recognition, whether prompted internally or externally, results
in the same response: a want. Once consumers recognize a want, they need to gather information to
understand how they can fulfill that want, which leads to step 2.

2. Information search: During this stage, a consumer who recognizes a specific problem or need will
then likely be persuaded to search for information, whether it be internally or externally. This is also
when the customer aims to seek the value in a prospective product or service. During this time, the
options available to the consumer are identified or further clarified.

3. Alternatives evaluation: At this point in the consumer decision-making process, prospective

buyers have developed criteria for what they want in a product. Now they weigh their prospective
choices against comparable alternatives. Alternatives may present themselves in the form of lower
prices, additional product benefits, product availability, or something as personal as color or style
options. Your marketing material should be geared towards convincing consumers that your product
is superior to other alternatives. Be ready to overcome any objections––e.g., in sales calls, know
your competitors so you can answer questions and compare benefits.

4. Purchase decision: This is the moment the consumer has been waiting for: the actual purchase.
Once they have gathered all the facts, including feedback from previous customers, consumers
should arrive at a logical conclusion on the product or service to purchase.

5. Post-purchase evaluation

This part of the consumer decision-making process involves reflection from both the consumer and
the seller. As a seller, you should try to gauge the following:

• Did the purchase meet the need the consumer identified?

Roopa Ajwal, Assistant Professor,DSATM Page 9

 Marketing Management 20MBA15

• Is the customer happy with the purchase?

• How can you continue to engage with this customer?

Buying Roles:

Buying roles refer to the activities that one or more person(s) might perform in a buying decision. Six
buying roles can be distinguished:

1. Initiator: the person who first suggests or thinks of the idea of buying the particular product or
service

Influencer: a person whose views influence other members of the buying center in making the final
decision

3. Decider: the person who ultimately determines any part of or the entire buying decision-whether
to buy, what to buy, how to buy, or where to buy;

4. Buyer: the person who handles the paper work of the actual purchase

5. User: the person(s) who consumes or uses the product or service

6. Gatekeeper: the person(s) who controls information or access, or both, to decision makers and
influencers.

Buying Motives:

Buying motives are the motive to persuade the desires of people so that they buy a particular good
or service. Buying motives relate to the feelings and emotions of people which generates a desire to
purchase.

Roopa Ajwal, Assistant Professor,DSATM Page 10

 Marketing Management 20MBA15

Buying Motives is as follows

1. Need: Need might be the most immediate buyer motive. If a prospect has a problem that you can
solve, they're inherently motivated to consider your offering.

2. Acceptance: Acceptance, as a buyer motive, is essentially the byproduct of consumer FOMO or

"fear of missing out." It's when prospects are interested in buying a product or service because
everyone else around them seems to be buying it as well.

3. Fear: Fear is a powerful catalyst for action in almost any situation, and sales is no exception. No
one wants to let problems they're afraid of go unaddressed. That's why so many companies lean on
scare tactics subtle or overt to create urgency behind their messaging and sales efforts.

4. Health: Many consumers are interested in taking steps to protect their personal wellbeing, so if
you can create the impression that your product or service will make them live better or longer,
they'll be inclined to learn more at the very least.

5. Impulse: People don't always give a ton a thought to the purchases they make. Everyone is guilty
of falling under the spell of this motive at some point. A lot of consumers will get caught up in the
heat of the moment and buy for the sake of buying.

6. Pleasure: By and large, consumers don't strictly buy the bare necessities. Sometimes, they make
superfluous purchases that are less than essential. People like to enjoy themselves, so they buy
products and services that suit wants — not needs — from time to time.

7. Financial Gain: Several prospects — particularly in B2B sales — are spending money to make
money. Their primary motive is to leverage your product or service to improve their business
operations. They might want to boost employee productivity.

Aspiration: Some consumers are buying based on aspirations for self-improvement. They want to
change for the better and are leveraging that dollar to help support those efforts.

Types of Buying motives based on Purchase Intentions

Buying motives can be categorized into 2 types as follows:

1) Product Buying Motives

2) Patronage Buying Motives

Product Buying Motives

Roopa Ajwal, Assistant Professor,DSATM Page 11

 Marketing Management 20MBA15

These are the factors or characteristics of a product that persuade a person to purchase only that
product instead of other products available in the market. The factors can be physical appearance
like design, size, color, price, shape etc. or can be psychological features like status, desire to reduce
danger etc. These are divided into two categories: Emotional and Rational.

1. Emotional Product: If a person purchases a product without thinking much rationally (i.e. with
less reasoning) then he or she is said to have persuaded by emotional product buying motives. There
are around ten kinds of this type: prestige, imitation, affection, comfort, ambition, distinctiveness,
pleasure, hunger and thirst, habit.

2. Rational Product: If a person purchases a product after thinking rationally (i.e. logically deciding)
then he or she is said to have persuaded by rational product buying motives. There are around eight
kinds of this type: security, economy, low price, suitability, utility, durability, convenience.

Patronage Buying Motives

These are the factors or characteristics that influence a person to purchase a product from particular
shop instead of purchasing from other shops selling the same product. It can be divided into two
categories: Emotional and Rational

1. Emotional Patronage: If a person purchases a product from a particular shop without thinking
much about other shops, then he or she is said to have persuaded by emotional patronage buying
motives.

There are around six kinds of emotional patronage buying motives: ambience of shop, showcase of
products, recommendations by others, prestige, habit, imitation.

2. Rational Patronage: If a person purchases a product from a shop after complete analysis and
reasoning then he or she is said t have persuaded by rational patronage buying motives.

There are around eight rational patronage buying motives: convenience, low price, credit
availability, more services, efficiency of the seller, wide variety, treatment, reputation.

Black Box Model of Consumer Behaviour: This is a simple model of consumer behavior, in which the
input for the customer is the firm’s marketing effort (the product, price, promotion and place) and
the social environment. The social environment consists of the family, reference groups, culture,
social class, etc. which influences the decision-making process. Both these factors together
constitute the input in the mind of the consumer.

Roopa Ajwal, Assistant Professor,DSATM Page 12

 Marketing Management 20MBA15

The above figure shows three stages in terms of the stimuli buyer’s black box and buyer’s response.
The consumer gets the input from the marketing effort of the firm (4 Ps) and the other stimuli like-
wise macro marketing environment factors. This input is processed in the mind (Black Box), which
constitutes the characteristics of the buyer like cultural, personal, social factors and the process of
decision-making involving steps of need recognition, information search, Alternative Evaluation,
purchase intention and decision and post - purchase behavior.. Once the buyer has decided to buy
then, he/she responds in terms of his/her choice of product, brand, dealer, timing and amount.

The black box model of consumer behaviour

• Nicosia Model

• Howard Sheth Model

• Engel Kollat Blackwell Model

Roopa Ajwal, Assistant Professor,DSATM Page 13

 Marketing Management 20MBA15

Roopa Ajwal, Assistant Professor,DSATM Page 14

 Marketing Management 20MBA15

The model proposed by Francesco Nicosia in the 1970s, was one of the first models of consumer
behavior to explain the complex decision process that consumers engage in during purchase of new
products. Instead of following a traditional approach where the focus lay on the act of purchase.

Nicosia tried to explain the dynamics involved in decision making. Presenting his model as a flow-
chart, he illustrated the decision-making steps that the consumers adopt before buying goods or
services; decision aiming was presented as a series of decisions, which follow one another.

The various components of the model are seen as interacting with each other, with none being
essentially dependent or independent; they are all connected through direct loops as well as
feedback loops. Thus, the model describes a flow of influences where each component acts as an
input to the next. The consumer decision process focuses on the relationship between the marketing
organization and its consumers; the marketing organization through its marketing program affects
its customers; the customers through their response to the marketer's action, affects the
subsequent decisions of the marketer; the cycle continues.

Roopa Ajwal, Assistant Professor,DSATM Page 15

 Marketing Management 20MBA15

Roopa Ajwal, Assistant Professor,DSATM Page 16