UNIT-I

INTRODUCTION: CONSUMER BEHAVIOUR

1.1 MEANING OF CUSTOMER
A customer is a person who buys goods and services regularly from the seller and pays for it
to satisfy their needs. Many times when a customer who buys a product is also the consumer,
but sometimes it’s not. For example, when parents purchase a product for their children, the
parent is the customer, and the children are the consumer. They can also be known as clients
or buyers.
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
Customer Examples
 A business that purchases textiles to make clothing to resell is a customer.
 A manufacturing company buys parts to build a car. The manufacturing company is a
customer.
 A chef who buys produce at the grocery store to cook at their restaurant is a customer.
 A customer purchases a bed for their dog at a pet store.
 A customer that purchases software for themselves to use at work is also a consumer.
Types of Customers
In business, customers play a vital role. In fact, customers are the actual boss and responsible
for a company to make a profit. A few different types of customers are:
 Loyal Customer- They are less in numbers but increase more profit and sales as they
are completely satisfied with the product or service.
 Discount Customers- They also regular visitors but buy when they are offered
discounts or they purchase only low-cost goods.
  Impulsive Customers- These types of customers are hard to convince, as they don’t
go for a specific product, but buy whatever they feel is good and fruitful at that
particular point of time.
 Need-Based Customers- These customers buy only those products which they are in
need of or habituated with.
 Wandering Customers- These are the least valuable customers as they themselves
don’t know what to purchase.

1.2 MEANING OF CONSUMER

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.
All individuals who engage themselves in the economy is a consumer of the product. For
instance, when a person buys goods from a grocery store for their family, you become a
customer, as you are only purchasing the commodities. But, when they feed the grocery to
other members of the family, they become the consumer.
Consumer Examples
 A consumer goes to a library to use the free wifi.
 A consumer receives a birthday gift from a friend.
 An employee that uses software at their job to complete day-to-day duties is a
consumer.
 Someone who gets a free sample when visiting a store is a consumer.
Customer to Consumer Examples
 A customer that buys groceries from the store to cook for themselves and their family
is also a consumer.
 A customer that buys new furniture for their home is also a consumer.
 A customer who purchases a movie ticket and then watches a movie is also a
consumer.
Types of Consumers
A service or product producing firm has to recognise different types of consumers when they
target them with its product to gain profits. Some of the different types of consumers are:
  Commercial Consumer- They buy goods in large numbers whether they need the
product or not and sometimes associate special needs with their purchase orders.
 Discretionary Spending Consumers- they will consider spending a significant
amount of money on only a few specialized products, such as cosmetics, jewelry, or
clothing
 Extroverted Consumer- They prefer brands that are unique and become a loyal
consumer once they gain that trust as a customer. They will almost certainly continue
with them and attempt to become loyal. They have a good probability of becoming
brand supporters if they are presented with high-quality items and services. These
people seek unique brands for purchase and can become loyal customers for that
brand if they find quality products and services.
 Inferior Goods Consumer- Consumer having low-income buy goods having low
price.
Why consumers are important?
The importance of consumers in various avenues is presented below:
1. Encourage Demand- They are the main root for the demand of any product. All
manufacturers of goods and services produce various things according to the demand
in the market.
2. Create Demand for Various Products- Different consumers have several varieties
of demand or an individual consumer can also demand various types of goods. These
encourage the manufacturer to deliver various products in the market.
3. Increase Demand for Consumer Goods- It creates demand for various consumer
goods, like long-lasting, semi-durable and biodegradable goods.
4. Enhance Service Diversification – Consumers not only utilise different types of
 1.3 Difference between Customer and Consumer.

Customer Consumer

Definition

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

Ability to resell

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

Need for purchase

Customers need to purchase a product or For a consumer purchasing a product or

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

Motive of buying

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

Is payment necessary

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

Target group

Individual or Company Individual, family or group

Relationship between Customer and Consumer

Customer and consumer can be used interchangeably – quite simply because a customer and
consumer can be the same person. Buying groceries for oneself is a great example.
A person buying groceries from the supermarket for himself becomes the customer of the
supermarket – they are paying for the groceries provided by the supermarket. Upon
consuming the groceries, the customer also becomes the consumer.
But this is just one case where an individual can be both, the customer as well as the
consumer. But they differ – hence why there are two terms, customer and consumer.

1.4 Meaning and Definition: 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.

Consumer behaviour is defined as “all psychological, social and physical behaviour of

potential customers as they become aware of, evaluate, purchase, consume, and tell others
about products and services”. In other words, consumer behaviour includes the acts of
individuals directly involved in obtaining and using economic goods.
These acts are the result of a sequence of decisions made by the buyer. These decisions are
influenced by various factors. Hence, consumer behaviour is the process by which individuals
decide whether, what, when, where, how, and from whom to purchase goods and services.

 What products and services do we buy?

 Why do we buy?
 How often do we buy?
 From where do we buy etc?
 Are the issues which are dealt with in the discipline of consumer behavior
The term consumer behaviour, individual buyer behaviour, end user behaviour and consumer
buying behaviour all stands for the same. Consumer behaviour is the study of how
individuals, groups and Organisation select buy, use and dispose of goods and services, ideas
or experiences to satisfy their needs and wants.

Consumer behaviour may be defined as the decision process and physical activity individuals
engage in when evaluating, acquiring, using or disposing of goods and services.
According to Belch and Belch "consumer behaviour is the process and activities people
engage in when searching for, selecting, purchasing, using, evaluating and disposing of
products and services so as to satisfy their needs and desires".

1.5 Nature of Consumer Behaviour:

Systematic process : Consumer behaviour is a systematic process relating to buying

decisions of the customers. The buying process consists of the following steps :

 Need identification to buy the product

 Information search relating to the product
 Listining and evaluating the alternative
 Purchase decision
 Post purchase evaluation by the marketer

Influenced by various factors : Consumer behaviour is influenced by a number of factors

the factors that influence consumers include marketing, personal, psychological, situational,
social and cultural etc.

Different for different customers : All consumers do not behave in the same manner.
Different consumers behave differently. The different in consumer behaviour is due to
individual factors such as nature of the consumer's lifestyle, culture etc.

Different for different products : Consumer behaviour is different for different products
there are some consumers who may buy more quantity of certain items and very low quantity
of some other items.

Vary across regions : The consumer behaviour vary across States, regions and countries.
For instance, the behaviour of urban consumers is different from that of rural consumers.
normally rural consumers are conservative (traditional) in their buying behaviour.

Vital for marketers : Marketers need to have a good knowledge of consumer behaviour
they need to study the various factors that influence consumer behaviour of the target
customers. The knowledge of consumer behaviour enables marketers to take appropriate
marketing decisions.
Reflect status : Consumer buying behaviour is not only influenced by status of a consumer
coma but it also reflect it. Those consumers who owned luxury cars, watches and other items
are considered by others as persons of higher status.

Result in spread effect : Consumer behaviour as a spread effect. The buying behaviour of
one person may influence the buying behaviour of another person. For instance, a customer
may always prefer to buy premium brands of clothing, watches and other items etc. This may
influence some of his friends, neighbours and colleagues. This is one of the reasons why
marketers use celebrities like Shahrukh Khan, sachin to endorse their brands.

Undergoes a change : The consumer behaviour undergoes a change over a period of time
depending upon changes in age , education and income level etc, for example, kids may
prefer colourful dresses but as they grow up as teenagers and young adults, they may prefer
trendy clothes.

Information search : Search for information is a common consumer behaviour. Consumers

cannot purchase goods and services if they are unaware that a good or service exists. When a
consumer decides to buy a certain item, his decision must be based on the information he has
gethered about what products our services are available to fulfill his needs. There might be a
product available that would be better suited to the consumers needs, but if he is an aware of
product, he will not buy it.

Brand loyalty: Brand loyalty is another characteristic of consumer behaviour. Brand loyalty
is the tendency of a consumer to buy product products or services from a certain company
that one likes or equates with having high quality goods and services. For example, if Naina's
first car was a Honda as a teenager and the car lasted 200,000 miles, she might have a
tendency to buy hondas again in the future due to her previous positive experience. This
brand loyalty may be so strong that she forgoes the information search all together when
considering for next vehicle.

1.6 Scope 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 consumer’s 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 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 spent 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.
1.7 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 consumer’s 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 consumer’s 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.

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.

1.8 Disciplines Involved in the study of Consumer Behavior

Psychology: It is the study of the individual, which includes motivation, perception, attitudes,
personality and learning theories.

Sociology: It is the study of groups. The influences of group memberships, family and social
class on consumer behavior are important for the study of consumer behavior.

Social Psychology: It is a combination of psychology and sociology and studies how an

individual operates in a group. It also studies how peers, reference groups, their families and
opinion leaders influence individuals in their consumption behavior

Cultural Anthropology: It is the study of human beings in society. It explores the

development of core beliefs, values and customs that individuals inherit from their parents
and grandparents. This helps to compare consumers of different nationalities and cultures.

Economics: It is the study of how consumers spend their funds, how they evaluate
alternatives, and how they make decisions to get maximum satisfaction from their purchases.

1.9 CONSUMER INVOLVEMENT

Consumer involvement is the state of mind that motivates a consumer to make a purchase, or
the importance a consumer places on a product or service. There are different levels of
involvement a consumer can have in the decision-making process and different factors that
influence that involvement.
Levels of Involvement
 Low Involvement: These type of decisions are considered habitual decisions and are
products or services that a person buys on a regular basis and does not have to do any
research on. For example, a low-involvement decision can include groceries, laundry
 detergent, and household items that are purchased all the time, and the consumer
already knows what they want to buy.
 Medium Involvement: These type of decisions are considered simple decisions that
are made in the store and not over a long amount of time. A product or service that
only requires medium involvement can include a new pair of shoes. The consumer
will be more involved than they were with household products, but they are not
necessarily doing research on the new shoes they want to buy. They will go to a store
and try on different pairs of shoes until they find the pair they want.
 High Involvement: These types of decisions take time and require research.
Typically, the more money a consumer is going to spend on a product, the more
involved they will be in the decision-making process. These types of purchases can be
expensive jewelry, vacations, cars, and houses. The consumer will not make the
decision in an instant, but instead will compare products or services and eliminate
their risk.

Degrees of involvement depending upon the nature of the product or service.

Productor
Degree Examples
Service

Low involvement Short life Fast moving consumer goods.

Medium
Medium Furniture, crockery, ordinary medical treatment
involvement

Automobiles, surgery, purchase of immovable assets,

High involvement Long
insurance policy etc.

Distinguishing Between Low Involvement and High Involvement

Low Involvement High Involvement

Product Toilet paper Wedding dress

Hand soap Luxury vehicle
Light Bulbs Cruise/Vacation
 Chewing gum Designer sneakers
Photo copy paper Vacation property

Place Wide distribution Exclusive/Limited distribution

Price Competitive/Low Luxury/High

Push marketing; mass

Pull marketing; personal selling;
advertising; TV; radio;
Promotion email marketing; WOM;
billboards; coupons; sales
personalized communications
promotions

Information
None/Minimal Extensive
Search

Evaluation of
None/Minimal Considerable/Extensive
Alternatives

Purchasing Routine-response; automatic;

Extended problem-solving
Behaviour impulsive

Purchasing
High/Regular basis Low-seldom/Special occasion
Frequency

1.10 Types of consumer involvement in buying

Certain factors affect the degree of involvement of buyers in making purchase decisions.
These include their level of knowledge, information, psychology, culture, lifestyle, social
system, etc. Even for the same product or service the degree of involvement of an individual
may vary depending upon the circumstances. There are five types of involvement.
1. Ego involvement: Ego involvement is intended to satisfy one’s ego. For example, all the
members of the family involve themselves in purchasing a product for a single member
belonging to that family. Wife involves herself in the purchase of garments for her husband
and husband involves himself in the purchase of cosmetics for his wife. Sons and daughters
of the family significantly influence the purchase of laptop, TV, car, household furniture, etc.
The ego of each family member is satisfied by consulting him/her before the purchase.
2. Commitment: Commitment is another important form of involvement. When a member of
the family falls sick, the other family members are committed to arrange medical treatment
for the suffering members. Similarly, functions like marriages entail the commitment of the
entire family.
3. Communication in involvement: Communication involvement signifies sharing the
available information with others in the family or organization. If one member has some
information on the subject matter of decision, he should communicate it with the other
members before arriving at a decision.
4. Purchase importance: Involvement of individuals depends upon the degree of importance
of purchase. Suppose e flat costing lakhs of rupees is purchased, then the purchase decision
assumes a great deal of importance in respect of location and area of the flat. The title deeds
should be free from encumbrance.
5. Extent of information: Once the consumer recognizes the need, he then engages in a
search process. Search means acquisition of information from the environment. The extent of
information search is part of purchase importance. When the purchase is important,
information is sought from all possible sources. But in the case of routine purchase of
products and services, information search will be rather minimum.

1.11 TYPES OF CONSUMER BUYING BEHAVIOR based on the degree of buyer

involvement and the degree of differences among brands.
Different consumers follow different steps in making their choice of products and services.
There is a substantial degree of variation in the choice processes depending upon two key
factors, namely the level of involvement and degree of the perceived difference between
different alternatives in the market.
1. Complex Buying Behavior.
2. Dissonance- Reducing Buying Behavior.
3. Habitual Buying Behavior.
4. Variety-Seeking Buying Behavior.
Types of consumer buying behaviour are determined by:
1. Level of consumer involvement
2. Length of time to make decision
3. Costs of the goods and services
4. Degree of information search
5. Number of alternatives considered

1. Routinized Response Behavior (RRB)/ Habitual Buying Behavior: This is the

simplest type of consumer behavior. This occurs when the consumer already has
some experience of buying and using the product. Usually, this kind of behavior is
adopted for the purchase of low cost, frequently used items. In such cases the buyers
do not give much thought, or search and also do not take a lot of time to make the
purchase. Most of the time the buyer is familiar with the various brands available and
the attributes of each and has a well-established criteria for selecting their own brand.
The buyers are well aware of the product class, know the brands and also have a clear
preference among the brands.
The degree of involvement in buying such products is low. In such a case, the
marketer has to ensure two tasks:
(a) The marketer must continue to provide satisfaction to the existing customers by
maintaining quality, service and value.
(b) He must try to attract new customers by making use of sales promotion techniques
like points of purchase displays, off-price offers, etc., and also introduce new features
to the products.
2. Limited Problem Solving (LPS)/ Dissonance Reducing Buying Behavior: In this
type of buying behavior, the consumer is familiar with the product and various brands
available, but has no established brand preference. Here the buyer is more complex as
compared to routine buying behavior because the consumer is confronted with an
unfamiliar brand in a familiar product class. The consumer would like to gather
additional information about the brands to arrive at his brand decision. For instance, a
housewife buys refined vegetable oils for her cooking and she may be familiar with
the concept of vegetable oil, vanaspati and ghee. She may also know about some of
the leading brands available. But to establish her choice of brand, she would like to
check with her friends and regular store about the attributes of each. This buying
behavior as described limited problem solving because the buyers are in a situation
where they are fully aware of the product class but not familiar with all the brands and
their features.

Limited problem solving also takes place when a consumer encounters an unfamiliar
or new brand in a known product category. The housewife, who buys refined
vegetable oil, on her next visit to the market, sees a new brand of vegetable oil. Apart
from buying a new brand, this brand of oil also claims the unique attribute of being
low in cholesterol. To arrive at a decision, whether or not to buy this brand, the
housewife needs to gather information about the new brand, which will allow her to
compare it with the known brands. Here the marketer’s job is to design a
communication programme, which will help the buyer to gather more information,
increase his brand comprehension and gain confidence in the brand.
3. Extensive Problem Solving (EPS)/Complex Buying Behavior: This buying is
referred to as a complex buying behavior because the consumer is in an unfamiliar
product class and is not clear about what criteria to consider for buying. Extensive
problem solving occurs when the consumer is encountering a new product category.
He needs information on both the product category as well as the various brands
available in it. This kind of decision is the most complex type.
For instance, you may become interested in purchasing a Color Television set to
replace the existing black and white one. You may have heard of the various brand
names, but lack clear brand concepts. You do not know what product attributes or
features to consider while choosing a good television set. So yours is an extensive
problem solving. The marketing strategy for such buying behavior must be such that
 it facilitates the consumer’s information gathering and learning process about the
product category and his own brand. The marketer must understand the information
gathering and evaluation activities of the prospective consumers. They have to
educate the prospective buyers to learn about the attributes of the product class, their
relative importance and the high standing of the marketer’s brand on the more
important brand attributes. The marketer must be able to provide his consumer with a
very specific and unique set of positive attributes regarding his own brand, so that the
purchase decision is made in his favor. In other words, the marketing communications
should be aimed at supplying information and help the consumer to evaluate and feel
good about his/her brand choice.
The concept of EPS is most applicable to new products. The product may be new at
the generic level or it may be an established product concept but new for a particular
consumer. In case of a new product concept the entire consumer universe is
unfamiliar with the product. The marketer has to spend large amounts of money in
educating the consumers about his product. The consumer in turn need a great deal of
information before they can take a decision; and the decision process takes a longer
time.
On the other hand, you may have the situation where the product concept is well
understood by a majority of the consumers, but it is being bought or used by a
particular consumer for the first time. To take a very simple example, a tribal who is
exposed to the concept of toothpaste for the first time in his life will seek a lot of
information and take a long time to decide. Because for him, buying a toothpaste is an
EPS behavior whereas for most of us it is simply routinized response behavior.
4. Variety Seeking: Consumers often express satisfaction with their present brand but
still engage in brand switching. The motive is variety seeking, which occurs most
often when there are many similar alternatives, frequent brand shifts, and high
purchase frequency. It can occur simply because someone is bored with his or her
current brand choice, or it can be prompted by external cues as store stock outs or
coupons that promote switching. Take the example of chocolates. The consumers has
some beliefs about chocolates chooses a brand of chocolates without much evaluation
and evaluates the product during consumption. Next time, the consumer may reach for
another brand out of a wish for a different taste. In this case the brand switching
occurs for the sake of variety rather than dissatisfaction.
1.12 FACTORS DETERMINING THE LEVEL OF CONSUMER INVOLVEMENT
The level of involvement in the purchase depends on the following factors:
Previous experience: When consumers have had previous experience with a good or service,
the level of involvement typically decreases. After repeated product trials, consumers learn to
make quick choices. Because consumers are familiar with the product and know whether it
will satisfy their needs, they become less involved in the purchase.
Interest: Involvement is directly related to consumer interests, as in cars, music, movies, or
electronics.
Perceived risk of negative consequences: As the perceived risk in purchasing a product
increases, so does a consumer’s level of involvement.The types of risks that concern
consumers include:
Financial risk is exposure to loss of wealth or purchasing power.
Social risks occur when consumers buy products that can affect people’s social
opinions of them.
Psychological risks occur if consumers believe that making the wrong decision might
cause some concern or anxiety.
Social visibility: Involvement also increases as the social visibility of a product increases.
Products often on social displays include clothing, jewellery, cars, and furniture. All these
items make a statement about the purchase

1.13 CONSUMER BUYING PROCESS

In consumer buying process, generally, the purchaser passes through five distinct stages in
consumer buying process namely,
1. Stage of Problem Recognition
2. Stage of Information Search
3. Stage of Alternative Evaluation
4. Stage of Purchase Decision
5. Stage of Post Purchase Behaviour
1. Problem Recognition
The recognition of a need is likely to occur when a consumer is faced with a ‘problem’. A
buying process starts when a consumer recognises that there is a substantial discrepancy
between his current state of satisfaction and expectations in a consumption situation.

Need or Problem
Recognition
 Need recognition
happens when the
consumer learns that
his actual
state (physical or
emotional) is not
lower than his ideal
state.
 Functional needs
pertain to
performance of a
product or service eg
does your raincoat
keep you dry.
 Psychological
needs pertain to
personal gratification
eg how you feel
when you buy
yourself a $5000 pair
of shoe.
Need or Problem
Recognition
 Need recognition
happens when the
consumer learns that
his actual
state (physical or
emotional) is not
lower than his ideal
state.
 Functional needs
pertain to
performance of a
product or service eg
does your raincoat
keep you dry.
 Psychological
needs pertain to
personal gratification
eg how you feel
when you buy
yourself a $5000 pair
of shoe.
Need or Problem
Recognition
 Need recognition
happens when the
consumer learns that
his actual
state (physical or
emotional) is not
lower than his ideal
state.
 Functional needs
pertain to
performance of a
product or service eg
does your raincoat
keep you dry.
 Psychological
needs pertain to
personal gratification
eg how you feel
when you buy
yourself a $5000 pair
of shoe.
 Need recognition happens when the consumer learns that his actual state (physical or
emotional) is not lower than his ideal state.
 Functional needs pertain to performance of a product or service eg does your raincoat
keep you dry.
 Psychological needs pertain to personal gratification eg how you feel when you buy
yourself a $5000 pair of shoe.
2. Information Search
After need arousal, the behaviour of the consumer leads towards a collection of available
information about various stimuli i.e. products and services in this case from various sources
(personal, public, commercial, experiential) for further processing and decision-making.
Once the need has been recognized, consumer tries to look for ways to satisfy the need.
 Internal search – he searches his memory to identify ways to satisfy the need.
  External search – talk to salespeople, family members or through ads etc. And
gather information to satisfy the need.
Factors affecting amount of information search a consumer will engages in
 The cost of information search – consumer’s weight the cost vs., the benefit of
information search before engaging in search.
 Their locus of control – people with internal locus of control (believe they have
control over their actions) engage in more information search than people with
external locus of control (those who believe fate determines all outcomes)
Level of Actual or Perceived Risk

o Performance/
Functional Risk
o Financial Risk
o Psychological Risk
o Physical Risk
o Social Risk
o Time Risk
 Type of Product or
service
o Convenience good
o Shopping good
o Specialty good
Step 3 Evaluate
Alternatives
 Consumer does a
pro/con analysis and
decides which
alternative to select.
 Sometimes
consumers use
short-cuts in decision
making which are
called
decision heuristics
e.g. Price, Brand
name, Product
presentation or
country
of origin to decide
whether to buy or
not.
Step 4 Purchase and
Consumption
 Make a product
choice based on step
3.
Step 5 Post Purchase
Evaluation
 After the
purchase the
consumer does a
post-purchase
mental evaluation to
evaluate the
goodness of his
decision.
 Sometimes
consumers go
through a post
purchase doubt faze
in which they
experience buyer’s
remorse or post-
purchase
dissonance.
 It is important for
marketers to get rid
of buyer’s remorse
of dissonance so
that the consumer
will make a repeat
purchase.
 Consumers may
do negative word-of-
mouth advertising if
the dissonance is
not removed
 Performance/Functional Risk
 Financial Risk
 Psychological Risk
 Physical Risk
 Social Risk
 Time Risk
Type of Product or service
 Convenience good
 Shopping good
 Specialty good
3. Alternative Evaluation
Once interest in a product(s) is aroused, a consumer enters the subsequent stage of evaluation
of alternatives.
When evaluating potential alternatives, consumers tend to use two types of information:
 a list of brands (or models) from which they plan to make their selection (the
evoked set)
 the criteria they will use to evaluate each brand (or model).
Cognitive evaluation: When the consumer uses objective choice criteria.
Affective evaluation: Using emotional reasons for evaluating the alternatives.
 Consumer does a pro/con analysis and decides which alternative to select.
  Sometimes consumers use short-cuts in decision making which are called decision
heuristics e.g. Price, Brand name, Product presentation or country of origin to decide
whether to buy or not.
4. Purchase Decision
Finally, the consumer arrives at a purchase decision. Purchase decisions can be one of the
three viz. no buying, buying later and buy now. No buying takes the consumer to the problem
recognition stage. A postponement of buying can be due to a lesser motivation or evolving
personal and economic situation. If positive attitudes are formed towards the decided
alternative, the consumer will make a purchase.
There are three more important considerations in taking the buying decision:
 Attitude of others such as wife, relatives and friends.

 Anticipated situational factors such as expected family income, expected total cost of
the product and the expected benefits from the product.

 Unanticipated situational factors, like accidents, illness etc.

5. Post Purchase Behaviour
Post-purchase behaviour refers to the behaviour of a consumer after his commitment to a
product has been made.
After the purchase the consumer does a post-purchase mental evaluation to evaluate the
goodness of his decision.
 Sometimes consumers go through a post purchase doubt faze in which they
experience buyer’s remorse or post-purchase dissonance.
 It is important for marketers to get rid of buyer’s remorse of dissonance so that the
consumer will make a repeat purchase.
 Consumers may do negative word-of-mouth advertising if the dissonance is not
removed
So post-purchase behaviour leads to three situations, namely customer is satisfied; customer
is delighted and the customer is dissatisfied.
Cognitive dissonance: Buyer discomfort caused by post purchase conflict.
1.14 PARTICIPANT IN BUYING PROCESS
Consumer behaviour is influenced not only by consumer personali- ties and motivations, but
also by the various participant in the buying process. Consumer decision making is an
intricate process.
To understand how consumers actually take the decision to buy a product, it is important for
marketers to identify who makes and has input in the decision-making process. In a buying
process there are various participants involved, their roles are explained as follows:
 Initiator
 Influencer
 Gatekeeper
 Decider
 Buyer
 Users
Initiator
Initiator is the individual who determines that some need or want is not being fulfilled and
hence initiates a purchase. An initiator is a person who first identifies an existing problem or
need that can be resolved by making a purchase.
For example, in case of a family, a housewife can be the initiator. As housewife knows what
is required in the home.
Influencer
Influencer is a person who influences the buying decision, actual purchase or the use of
product or service. Influencer can be a technical expert, consultant or anyone who provides
input for the buying decision. For example, a salesperson might influence you to buy a
product.
Gatekeeper
A gatekeeper is the one who Influences the processing of information. The gatekeeper may
possess a greater expertise in acquiring and evaluating the information.
For example, in a family a homemaker may be the gatekeeper who will disseminate
information.

Decider
A decider may not have the formal authority to decide upon a purchase decision, but has
sufficient weight in the buying decision process of products or services. A decider is the one
who vets what to buy, how to buy, when to buy and from where to buy.
For example, in family generally it is the male head of the family who gives assent to buy.
Buyer
A buyer is the one who is involved in the physical activity of making a purchase and
conducts the final transaction or exchange. At the time of purchasing the buyer can negotiate
on the price.
For example, housewife may be the buyer who actually buys all the foodstuffs, rations and
toiletries of the family.
Users
They are the ones who are reaping the benefit of the product/service acquired. For instance,
the family members who use or consume a particular product or service.

1.15 APPLICATION OF CONSUMER BEHAVIOUR IN MARKETING

1. Analyzing market opportunity
2. Selecting target market
3. Marketing mix decisions
4. Use in Social and Non-profits Marketing
Analyzing 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 and income levels. This may reveal some of the unsatisfied needs and wants of the
consumers.
The trend towards increasing number of dual income household and greater emphasis on
convenience and leisure have led to emerging needs for household gadgets such as washing
machine,mixer grinder, vacuum cleaner and childcare centres etc.
Selecting target market
A review of market opportunities often helps in identifying distinct consumer segments with
distinct and unique wants and needs. Identifying these groups, learning how they behave and
how they make purchase decision enables the marketer to design and market products or
services particularly suited to their wants and needs.
For example, consumer studies have revealed that many existing and potential shampoo users
did not want to buy bigger shampoo packs and would rather prefer a low-priced sachet
containing enough quantity for one or two washes. This finding led companies to introduce
the shampoo sachet, which became 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. The answers to these questions are
obtained by consumer behaviour research.
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, pulse polio, safe driving etc.