Consumer Buying Behavior

What makes people consumers?

 1-3

What is Consumer Behavior?

Consumer behavior:
the study of the
processes involved
when individuals or
groups select,
purchase, use, or
dispose of products,
services, ideas, or
experiences to satisfy
needs and desires.
Consumer behavior
 5

Understanding Consumer Behavior

consumers make purchase

decisions

Consumer
behavior =
HOW
consumers use and
dispose of product
Wheel of Consumer Behavior
Shift to Thrift
Redefining Value
Small Wonders
Small Perk Me Up Products
‘Mummy ka Magic’
Stays Intact
Eating ‘Out’ at Home
Evolving Home Delivery Model
Taste Bhi, Health Bhi
A very strong co-relation
 Food On The Go
Instant Pick Me Up
 Eco Conscious
A light shade of green
Eco Conscious
Food As Discovery
More Experimenting
The Food ‘Connect’
Use of Social Media
POP will remain
Supreme
The final test
What does this mean for food companies?

• Deepen Understanding of Consumer

• Offer Greater Value
• Offer Convenience
• Move to a Dialogue, as opposed to a Monologue
• Product & Packaging Innovation
• POP Emphasis
How We Will View Consumer Behavior

Marketing mixes All other stimuli

Person Making Decision

Psychological
Economic needs Social influence Purchase
variables
•Economy of •Family situation
•Motivation
purchase •Social class •Purchase reason
•Perception
•Convenience •Reference •Time
•Learning
•Efficiency in use groups •Surroundings
•Attitude
•Dependability •Culture
•Personality/
lifestyle

Consumer decision process

Person does or does not purchase (response)

Stages in the Consumption Process
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Consumer
Decision Making
Model
The purchase decision process consists of
five stages

5-25
Problem Recognition
 Decision-making Process
Bill realizes that
Problem Recognition he is fed up with
his b/w TV

Bill talks to a
Information Search few of his friends
about a new TV

Bill goes shopping

Evaluation of Alternatives to compare TVs
of different brands

Bill chooses one

Product Choice model/brand for its
features and price

Bill takes the TV

Post-purchase Evaluation home and becomes
a couch potato
Low involvement High involvement
Not Important
Different Levels of Involvement Important

Involvement
Continuum
Low Involvement High Involvement

Problem Recognition Problem Recognition Problem Recognition

Information Search Information Search

Evaluation of Alternatives Evaluation of Alternatives

Product Choice Product Choice Product Choice

Post-purchase Evaluation Post-purchase Evaluation Post-purchase Evaluation

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Continuum of Consumer Buying

Decisions
Evaluation Type
IMPORTANT
▫ Compensatory: Decision based on overall
value of alternatives (good attribute can
outweigh bad ones)
▫ Non-compensatory: Absolutely must
meet at least one important criterion (e.g., car
must have automatic transmission)
▫ Hybrid: Combination of the two (e.g., one
non-compensatory measure, then
compensatory tradeoffs on other attributes
▫ Abandoned strategy: Consumer finds
initial criteria unrealistic and proceeds to less
desirable solution

LESS
IMPORTANT
 35

Decision Rule Mental Statement

Hypothetical Use of Decision Rules
Compensatory rule I selected the netbook that came out best when I
balanced the good ratings against the bad ratings

Conjunctive rule I selected the netbook that had no bad features

Disjunctive rule I picked the netbook that excelled in at least one

attribute

Lexicographic rule I looked at the feature that was most important

to me and chose the netbook that ranked highest
on that attribute

Affect referral rule I bought the brand with the highest overall rating

35
 Mental accounting
Tversky & Kahneman 1981

Imagine that you have decided to see a play where admission is $10 per ticket. As
you enter the theater you discover that you have lost a $10 bill.
Would you still pay $10 for a ticket for the play?
Yes 88% No 12%

Imagine that you have decided to see a play and paid the admission price of $10 per
ticket. As you enter the theater you discover that you have lost the ticket. The seat
was not marked and the ticket cannot be recovered. Would you pay $10 for another
ticket?
Yes 46% No 54%
 Gains & Loses
Q1. Imagine that you face the following pair of
concurrent decisions. First examine both decisions
and then indicate the options that you prefer.

Decision I: Choose between

A. A sure gain of £2,400
B. A 25% chance to gain £10,000, and a 75% chance
to gain nothing

Decision II: Choose between

C. A sure loss of £7,500
D. A 75% chance to lose £10,000, and a 25% chance
to lose nothing
 Gains and losses
Q1. Imagine that you face the following pair of concurrent decisions. First
examine both decisions and then indicate the options that you prefer.

Decision I: Choose between

A. A sure gain of £2,400
B. B. A 25% chance to gain £10,000, and a 75% chance to gain nothing

Decision II: Choose between

C. A sure loss of £7,500
D. D. A 75% chance to lose £10,000, and a 25% chance to lose nothing

Most people choose A and D – hardly anyone prefers B and C. They like the sure gain in Decision I and
dislike the certain loss in Decision II. But the pair of choices B and C is much better than A and D.

If you combine the outcomes of the two choices you can add the sure gain of £2,400 to the risky outcomes in
D. So, A and D gives you
A and D. 25% chance to gain £2,400, and
75% chance to lose £7,600
Similarly, B and C can be combined – the sure loss of £7,500 in C can be subtracted from the risky outcomes
from B
B and C. 25% chance to gain £2,500, and
75% chance to lose £7,500

With B and C the chances of winning and losing are the same as in A and D but the amount you might win is
more and the amount you might lose is less.
 Framing

You are the CEO of a company faced with a

difficult choice. Because of worsening economic
conditions, 6000 people will need to be fired to
reduce the payroll costs and avoid serious
financial problems. Two alternatives programs
to combat the firings have been proposed to
you. The estimates of the consequences of the
programs are as follows:
 Version A

If Program A is adopted, 2000 jobs will be saved.

If Program B is adopted, there is a one-third

probability that 6000 jobs will be saved, and a
two-thirds probability that no jobs will be saved.

Which of the two programs would you select?

A B
 Version B

If Program A is adopted, 4000 people will be fired.

If Program B is adopted, there is a one-third

probability that nobody will be fired, and a two-thirds
probability that 6000 will be fired.

Which of the two programs would you select?

A B
 43

Cognitive Dissonance
Cognitive Inner tension that a consumer
Dissonance experiences after recognizing an
inconsistency between behavior
and values or opinions.
 44

Postpurchase Behavior

Consumers can reduce dissonance by:

• Seeking information that reinforces positive ideas about the

purchase

• Avoiding information that contradicts the purchase decision

• Revoking the original decision by returning the product

Marketers can minimize through:

Effective Communication
Follow-up
Guarantees
Warranties
 45

Consumer post purchase evaluation process

How Customers Use or Dispose of
Products