What is Consumer Behavior ?

“Those activities directly involved in

obtaining, consuming, and disposing
of products and services, including
the decision processes that precede
and follow these actions”
Why study Consumer
Behavior ?
REASON 1
REASON 2
REASON 3 Multiple Participants in the
Buying Decision Process
Initiators

Users Deciders

Influencers
(Gatekeeper)
Consumer Behavior Model
Simplified Model

Marketing
Stimuli

Black Box
Target
Audience
Response
Expanding the Black Box
PSYCHOLOGICAL SOCIAL
SITUATIONAL INFLUENCES INFLUENCES
INFLUENCES • Roles
• Perception
• Physical/Social • Family
Surroundings • Motives
• Time • Learning • Reference Groups
• Purchase Use • Attitudes • Social Classes
• Buyer’s Condition
• Personality • Culture

Consumer Decision Process

Problem Post
Recognition Purchase
Why Study Consumer Behavior?
• Helps marketers to understand, ‘What,
Where, When & How’ of marketing mix.
• To understand complex influences on
consumption processes.
• To increase a manager’s confidence to
predict consumer responses to their
marketing strategy.
• To avoid “the Self-Reference Criterion”.
Consumer Decision
Process (Buying Decision
Process)
Problem or Need Recognition

Existent Gap Desired

State State
Need Recognition
• When a current product
isn’t performing properly.

• When the consumer is

running out of an product.

• When another product

seems superior to the one
currently used.
Major Causes of Need
Recognition
 Science and Technology Advancements
• New Products.
• New Information.

 Changing Consumer Circumstances &

Expectations
• Improved Education.
• Family Life Cycle.
• Income Adjustments.
Strategies to Influence Need
Recognition
• To activate consumers’ needs, change their
desired state. eg. Develop and promote new styles,
designs or other innovations.
• Altering consumers’ perceptions about their actual
state. eg. Educating them for current products eg
virus in personal computers.
• Reminding consumer of a need. eg doctor calling
up for vaccination date.
• Making efforts to activate generic need recognition.
eg TV, milk.
Information Search
Information Search
• Search may be INTERNAL (retrieving
knowledge from memory) or
EXTERNAL (collecting information from
peers, family and market place.
• Search may be PASSIVE by being
receptive to information around or
ACTIVE searching on net or going to
shopping malls or other retail outlets.
Information Sources
1. INTERNAL SOURCES (Psychological)
 Experience
 Memory Storage/Retrieval
 Mental Processing
2. EXTERNAL SOURCES
a) Non Marketer - Dominated
i. Social
• Family
• Friends
• Professionals
Information Sources
a) Non Marketer - Dominated
ii. Public Sources
• Government Studies
• Product Testing Magazines
• Media Stories

b) Marketer – Dominated
i. Commercial Sources
• Advertising
• Sales People
• Product Pamphlets
Information Processing
• As consumer is exposed to information resulting
from external search, he or she begins to
process the stimuli, in following steps :
1) Exposure.
2) Attention.
3) Comprehension.
4) Acceptance.
5) Retention.
Benefits of Understanding Consumer
Search
• Consumer search helps marketers understand and
take decisions on the product mix.
• By understanding the emphasis given to the price by
consumer during the search, marketers get help on
deciding prices of their various products.
• Consumer search helps marketers understand the
areas, where the promotional efforts should be
focused (because they know where consumers are
more likely to search).
• It is also important for a company to understand the
relationship between search and a particular brand
purchased.
Evaluation of Alternatives
Evaluations of Alternatives
 Consumer seeks answers to questions like :
• What are my options ?
• Which is best ?
 Consumers think of :
• Salient Attributes :
a) Price
b) Reliability
c) Factors that vary little between similar types of
products.
• Determinant Attributes :
a) Style, Finish etc.
b) Brand choice, Store choice etc.
Entering the Consideration Set
 Consideration set (also known as evoked set) is
composed of those alternatives considered during
decision making.
 Ways to enter the consideration set :
 Requesting the consideration is common in market place.
 Design your offer in a way so that it stands out in crowd.
 Offer incentives for consideration. eg. It could be free demo/
trial of a car or a coupon offering prize reduction.
 In extreme cases companies might have to change/ modify
products for being considered.
 A great retail environment affects the consideration set of
consumer.
 Purchase
Decision(s)

WHO ?
WHAT?
WHEN?
WHERE?
AND WHY?
What to buy ?
While deciding what to buy, consumer
can :
 Fully plan purchase : Both brands and
product are chosen in advance.
 Partially plan purchase : Intent to buy product
is there but brand choice is deferred until
shopping.
 Unplanned purchase : Both the product and
brand are chosen at point of sale.
Where to buy ?
• Internet.

• Direct Mail.

• Catalog.

• Location based retailers

(dealers).
Purchase through Retail
 Here the consumer moves in two phases :
• First phase : Consumer chooses the
• (a) The form of retailing (Internet, catalog, direct sales)
• (b) One retailer over the other.
• Second phase : Involves in store choices
• (a) Influenced by sales person
• (b) Influenced by product display
• (c) POP - Point of purchase adv.

 Consumer might move first phase as per

plan but sometimes deviates in second
phase.
Factors Affecting Retail Purchase
• Location.
• Assortment Depth.
• Price.
• Advertising & Promotion.
• Sales Personnel.
• Services Offered.
• Physical Store Attributes.
• Nature of store clientele.
• POP Displays
• Consumer Logistics.
Factors Affecting Retail Purchase
 Consumer Logistics : is the speed and ease with
which consumers move through the retail and
shopping process.
• ie from the time they begin the shopping process to the
time they take the products home.
Consumer logistics may be divided into seven
stages :
• Preparation to shop.
• Arriving at the store.
• Entering the store.
• Movement through the store.
Factors Affecting Retail Purchase
Consumer logistics may be divided into seven
stages :
• Checkout.
• Travel home & home warehousing.
• Inventory stock outs (which prompt
repurchase).
Effect of E-Commerce on ‘Purchase’
Customers now shop electronically
when:
• Not being able to go to a store when store is
open.

• Need special products that are not carried by

many retailers.

• Can search wide variety of global information.

• When the same order is repeated and consumer

is familiar with the product.
PURCHASE
INTERVENING
INTERVENINGFACTORS
FACTORS

Attitudes Unexpected Perceived

of others situational Risk
factors

Change/Postpone
Change/Postponeof
ofPurchase
PurchaseDecision
Decision
Post-Purchase
Behavior
Post-Purchase Behavior
Consumption
• Consumption behavior can be
characterized along the following important
dimensions :
1) When does consumption occur ?
2) Where does consumption occur ?
3) How is the product consumed ?
4) How much is consumed ?
‘Norms’ & Ritual Consumption
• Rituals are patterns of behavior tied to
events that we consider important in our
lives:
– They have some special symbolic meaning
– They occur in a fixed or predictable manner
– They are repeated with some regularity
• Ritual consumption is the consumption of
goods and services that are tied to specific
rituals.
Compulsive Consumption
• It refers to a response to an uncontrollable drive or
desire to obtain, use, or experience a feeling,
substance, or activity that leads the individual to
repetitively engage in behavior that will ultimately
cause harm to the individual and/or others. eg of
possible causes may include family history of alcohol.

• Forms of Comp. Consumption :

Drive to browse in market
Compulsive Shopping regardless of whether
something is purchased.

Compulsive Buying Drive to purchase something.

Drive to dispose of one’s

Compulsive Spending
money.
Expectation and Satisfaction
• Product experiences can be classified into
three types based on the degree to which
consumer expectations are fulfilled or not :
– Simple confirmation: the purchase performs
as expected (satisfaction).
– Positive disconfirmation: when performance is
better than expected (much higher satisfaction).
– Negative disconfirmation: when the purchase
falls short of expectations (dissatisfaction).
How is/was the experience ?
• Three types of results of the experiences:
1) Positive reinforcement : Occurs when
consumer receives some positive outcome
from product usage. eg rides at amusement
park.
2) Negative reinforcement : Occurs when
consumption enables consumers to avoid
some negative outcome. eg eye drops used to
remove burning feeling.
3) Punishment : occurs when consumption leads
to negative outcome. eg cosmetic surgeries.
Post Consumption Evaluations
Cognitive Dissonance
Lack of confidence (doubts) about the
correctness of a prior purchase decision
and efforts to reconcile doubts.
Did I Do the Right
Thing?
Cognitive Dissonance
• Causes :
• High financial commitment.
• High involvement level.
• Low social visibility.
• Information Overload.
• Perceived Risk.
• Performance risk.
• Physical risk (wear-out).
Reducing Dissonance
 What consumers do :
• Try to find ways to reinforce the desirability of the choice
made.
• Try to make the “losing” choices look weaker.
• Try to lessen the importance of the choice decision than
they had originally thought.
 What marketers must do :
• Match their products with the appropriate target
consumers.
• Offer clear communication, return policies, warranties, in-
store demonstrations. Do not raise consumer expectations
beyond the actual benefits that the product offers.
• Make salespeople available to answer questions. Can start
some 365 x 24 helpline.
DIVESTMENT - Product
Disposition
It is the process of reselling,
recycling, trashing,
repairing, trading and the
like associated with the
physical product, packaging,
and its promotional
materials when no longer
perceived as useful by the
consumer or marketer.
Product Disposition
 Role of the consumer
– Recycle, donate, repair, pass on to others,
conserve resources, consider “efficiency
ratings” of products, reuse shopping
containers, etc.
 Role of the marketer
– Use more (easily) recyclable materials.
– Encourage and support recycling.
– Use resources more efficiently.
– Demarketing.
– Green marketing.
Post Purchase Need

Evaluation
Recognition

Search
Internal
search Environmental
Exposure Evaluation of Influences
Alternatives •Culture
• Social Class
Stimuli Attention • Family
• Marketer Purchase • Situation
dominated Memory
Comprehension
& other. Consumption Individual
Differences
Acceptance •Consumer
Post-Consumption Resources
• Motivation
Retention Evaluation • Knowledge
• Attitudes
• Personality,
Dissatisfaction Satisfaction Values, Lifestyle

External
search
Divestment
Positive Post-purchase Behavior

• Positive post purchase behavior is evident

from :
Customer Loyalty : a feeling of
“commitment” on the part of the consumer
to a product, brand, marketer, or outlet that
results in high levels of repeat purchase
or outlet visit.
Loyalty develops over time through positive
market experiences.
Negative Post-Purchase Behavior

• Passive : Lack of repeat purchase or

recommendations to other consumers.
• Active : Potentially damaging to the
reputation and future sales of the product.
• Types of negative post-purchase behavior:
– Negative word-of-mouth.
– Rumor.
– Complaint behavior (private action, public
action).
Marketer Actions to Reduce
Dissatisfaction
• Build realistic expectations.
• Demonstrate or explain
product use.
• Stand behind the product.
• Encourage customer
feedback.
• Periodically make contact
with customers.