Module 1

Consumer Behaviour (CB)

What is consumer Behaviour (CB)?
• Consumer behavior is the actions and decisions that
people or households make when they choose, buy, use,
and dispose of a product or service.
• It is a multi-stage process that involves identifying
problems, collecting data, exploring options, making a
decision to buy and evaluating the experience afterward.
• Consumers may be impacted during these stages by
things including:
– Their personal views and values,
– social conventions,
– marketing campaigns,
– product features
– environmental conditions etc.
 Why is it important to study consumer
behaviour (CB)?
• Understanding consumer behavior is essential
for businesses to:
– Create marketing plans that work
– To supply goods and services that satisfy customers’
wants and needs.
– To see trends and patterns,
– Forecast demand
– Make wise choices regarding product design, price,
promotion, and distribution
– Launch, relaunch or withdraw a product
– To achieve sustained and profitable growth
 CB in Marketing
• Consumer behavior is important in marketing because
it explains how consumers make decisions about:
– What products to buy
– When to buy them
– Whom to buy them.
• By understanding CB, Marketers can develop effective
marketing strategies that:
– Target the right consumers
– With the right message
– At the right time
 How does CB impact Marketing?
• Segmentation
– CB research helps marketers identify the behavioral
segment markets.
– Marketers can modify their marketing messages and
strategies to better appeal to each demographic by
recognizing these segments.
• Product design
– Understanding CB can also aid in product development.
– Marketers can create products that better meet consumer
needs and preferences by analyzing customer
requirements and tastes.
– This can lead to increased sales and higher customer
satisfaction.
 How does CB impact Marketing?
• Pricing Strategies
– Marketers can use consumer behavior data to
determine the price points at which customers are
willing to pay for a product
– CB can also help in formulating the price points that
are most likely to appeal to different market segment.
• Branding
– Consumer behavior research helps in the development
of branding strategies.
– Marketers can create brand messages and strategies
that resonate with consumers and build brand loyalty
by understanding consumer attitudes and perceptions
towards the brand.
 Why is CB so important?
• Better marketing and communications
– Understanding the factors that affect customers’
buying habits helps organizations design their
messaging accordingly.
– Thus, having insights into consumers’ purchase
behavior can help marketers in meeting their
objectives.
• Improve Customer Retention
– It is always beneficial to retain an existing
customer than to gain new customers.
– CB helps brands gain insights into factors that
impact retention
 Why is CB so important?
• Increase Customer Loyalty
– Understanding customer behavior helps in finding
out ways to boost customer loyalty.
– Improved Loyalty will lead to higher sales and a
hence a strong brand.
• Better Inventory Planning
– Researching CB helps companies plan inventory
and stock raw materials.
– This data can help marketers to achieve a better
balance between balance demand and supply.
 Why is CB so important?
• Knowing and analysing competition
• Studying consumer buying behavior helps in
understanding the competitive market.
– CB can help in finding answers to questions like:
– Is the customer already using a competitor brand?
– What drives a consumer to buy from your
competitor?
– Are potential customers happy with the
competitor brands?
– What are the gaps between your products and
that of competitors?
Some important information
before we move ahead
 Who is a consumer?
• Any individual who purchases products or services
for his personal use and not for manufacturing or
resale is called a consumer.
• A consumer is one who is the decision-maker
whether or not to buy an item at the store or
someone who is influenced by advertisement and
marketing.
• Consumer refers to any person who purchases some
goods for a consideration that has been either paid
or promised to pay or partly paid and partly
promised.
 Who is a customer?
• A customer is a person or business that buys
goods or services from another business.
• Customers are crucial because they generate
revenue.
• Without customers, businesses would go out
of business.
 Are they both same?
Head Customer Consumer
She is the one who
Definition Is the end user
purchases the goods.
Ability to resell Can resell Cannot sell further
Has to purchase to Not essential to have
Need for purchase
use/sell it one
Resell or self-
Buying Motive Self consumption only
consumption
May/may not be paid
Paid by self
by self
Individual, Family or
TG Individual or company
group
Factors that influence CB
Personal
factors

Situational Psychologic
factors al factors

CB
Cultural Social
factors factors

Marketing
factors
 Personal Factors
• Age

• Gender

• Education

• Income level

• Personality

• Occupation

• Lifestyle
 Psychological Factors
• Motivation
– What motivates a person to buy/not buy a particular
brand
• Perception
– What an individual thinks about a particular product or
service is his/her perception towards the same.
• Learning
– Learning from the past experience has an impact on the
buying behaviour of a person
• Beliefs & Attitudes
– Individuals create a certain image of every product or
service available in the market.
– Basis this image, they either buy or don’t buy a brand
 Social Factors
• Reference Groups
– Whom are you generally seen with or spend most
of your time with
• Immediate Family Members
– Married, bachelor, widowed
• Relatives
– Numbers, types and closeness
• Role in the Society
• Status in the society
– Lower, Middle, upper or ultra upper class
 Marketing Factors
• Product design
• Price
• Promotion
• Packaging
• Positioning
• Distribution
 Cultural (& Sub-cultural) Factors
• Cultural factors comprise of set of values and
ideologies of a particular community, group or
casete of individuals.
• Sub-cultural
– Religion, caste and sub-caste
– Class status
– Gender
 Situational Factors
• Reference Groups
– Whom are you generally seen with or spend most of
your time with
• Immediate Family Members
– Married, bachelor, widowed
• Relatives
– Numbers, types and closeness
• Role in the Society
• Status in the society
– Lower, Middle, upper or ultra upper class
 How has CB changed over time?
(Especially due to the recent Digital Revolution)
 The Disruptors
5 “bigger-than-nuclear” attacks in India
• 1995
• VSNL
• 2004
• Facebook
• 2006
• Google
• 2009
• Smartphone
• 2016
• Jio
 Just to recap…
• What is Consumer Behaviour?
It is the study of how individuals/organisations
– Select > buy > use > dispose
– Goods / Services to
– Satisfy their needs and wants
Factors Affecting Buying Behaviour
• Cultural
– Cultural / Sub-Cultural / Social Class
• Social
– Classes / Family Influences / Status
• Personal
– Age / Occupation / Financial Status / Lifestyle
• Psychological
– Motivation / Perception / Learning / Beliefs
• Marketing
• Situational
Theories governing CB - Motivation

• Freud’s Theory of Motivation

– An unknown force makes people take the decision
unconsciously.
Theories governing CB - Motivation

• Herzberg’s 2-factor Theory of Motivation

– It proposes that hygiene factors will not motivate, but,
– If they are not there, they can lower motivation.
– Identify & reduce dissatisfiers and promote satisfiers
Theories governing CB - Motivation

• Maslow’s Hierarchy of Needs.

Maslow’s Hierarchy of Needs
 Perception
• Selective attention
– People are more likely to notice a stimuli that
relates to their current needs
– People are more likely to notice stimuli they
anticipate.
– Larger stimuli is noticed better than smaller ones
• Selective distortion
– The tendency for people to interpret information
in a way that supports previously established
beliefs or perceptions.
 Perception
• Selective Retention
– The inclination for people to be more likely to
remember information that closely aligns with
their needs, beliefs, interests, and values.
• Subliminal Perception
– Messages can influence customers unconsciously
 Learning
• Behaviour inspired from our learning.

Memory
• Short-term memory
• Long term memory
• Brand Associations
 The Buying Process

Post-
Problem Information Evaluation of Purchase
Purchase
Recognition Search Alternatives Decision
Behaviour

Post Purchase
Experience
 Moment of Truth
Moment of Truth
– Is the instance when the customers/user interacts
the brand to form/change her impression about
the brand.
First, Second & Third Moment of Truth
Zero Moments of Truth (ZMOT)