Consumer Behaviour Course Module

Chapter one
An overview of customer Behaviour

1.1 Concepts and scope of customer behaviour

The ultimate market that businesses cater for and care about is the consumer or customers of
their products or services. Consumer is the reason why business exists. They can survive, grow
and prosper if they have adequate market with purchasing power. Therefore, without customer
and ultimate consumer no company can survive or thrive. That is why the main purpose of a
company is to satisfy customer’s needs and wants.
Consumers can be individuals, family, or organisations. In this course we will be duelling more
on individual consumers. Look at yourself, family members, and fiends; individual consumers
are unique in themselves; they have needs and want which are varied and diverse from one
another; and they have different consumption patterns and consumption behaviour. Your job as a
marketer is identifying and understanding these needs and wants, and designing a marketing
strategy to meet them more effectively and efficiently than other competitors. The marketer helps
satisfy these needs and wants through product and service offerings.
Learning objectives:
At the end of this session the participants will be able to:
 Describe the nature of consumption and consumer behaviour
 Differentiate consumers, customers, clients, and beneficiaries
 Identify reason for studying consumer behaviour
 Understand the multidisciplinary nature of consumer behaviour
 Relate consumer behaviour to marketing strategy
1.1.1. Consumption
Consumption of goods and services, the behaviours the consumers exhibit, factors influencing
this process are what you are going to learn from this course. Consumption is not the act of using
a product or services. It is the process by which consumers use or derive value from a product
or service.

1
Consumption process is related to different types of individuals, purchaser, shopper or customer
and is generally used synonymously to indicate one who actively engaged in buying. The
consumption process involves three interrelated activities of decisions: determine personal or
groups wants, seek out and purchase products and employ products to derive benefits. In this
process the marketing mix, individual psychological, group, social, and cultural factors also
influence the consumption process and its outcomes.

1.1.2. Customer versus Consumer

The two terms are often considered as synonymous and used interchangeably, but they have
some differences. Consumer is the more general term and consumer may not be the customer.

Customer
The term “customer” is typically used to refer to one who regularly purchase from a particular
store or company. The “consumer” more generally refers to anyone engaging in any of the
activities (evaluating, acquiring, using or disposing of goods and services) used in the definition
of consumer behaviour (Schiefman, et al.,2012). Therefore, a “customer” is defined in terms of
specific firm while consumer is not. Customers are value maximizes within the bounds of search
costs, limited knowledge, mobility and income.
The most commonly thought of consumer situation where the consumer is buyer and customer is
that of an individual making a purchase with little or no influence of others. A consumer or buyer
in such a case is one who determines personal wants, buys products and uses those products. The
traditional viewpoint defines consumers strictly in terms of economic goods and services or one
who consumes goods.
A customer is also called client, buyer, shopper or purchaser, usually used to refer to a current or
potential buyer or user of the products of an individual or organisation, called the supplier, seller,
or vendor. In such cases the customer may be a mere purchaser, and may not even be an ultimate
user. For example in the case of family, even if one of them is purchaser; he/ she are may be not
the only user or user of that product or service at all.
The word customer is derived from ‘custom,’ meaning ‘habit’; a customer is someone who
frequented buy from a particular shop, who made it a habit to purchase goods or services rather
than elsewhere and with whom the shopkeeper had to maintain a relationship to keep his or her

2
“custom,” meaning expected purchases in the future. The slogans “the customer is king” or “the
customer is god” or “the customer is always right” indicate the importance of customers to
businesses - although the last expression is sometimes used ironically.

Consumer
Any individual who purchases goods and services from the market for his/her end-use is called a
consumer. In simpler words a consumer is one who consumes goods and services available in the
market. In other words, consumer is an ultimate user of a product or service. The term consumer
is often used to describe two different kinds of consuming entities personal consumer and
organisational consumer. Ultimate consumers are those individuals who purchases for the
purpose of individual or household consumption. Organisational consumers are those who buy
products and service for organizational use or further processing and resale. The “consumer”
more generally refers to anyone engaging in any of the activities used in our definition of
consumer behaviour. Therefore, a customer is defined in terms of specific firm while consumer
is not.

1.1.3. Multidisciplinary nature of consumer behaviour

Consumer behaviour a subject or field of study lies in marketing. It is a relatively new field of
study in the mid- to late 1960s. Its body of knowledge and practice is borrowed from other fields
of behavioural sciences. Therefore, consumer behaviour is simply a subset of larger field of
human behaviour and an extended field of marketing.
Consumer behaviour as a very new field and, as it grows; it is being influenced by many
different perspectives. Indeed, it is hard to think of a field that is more interdisciplinary. The
study of consumer behaviour draws on many different disciplines, from psychology and
economics to anthropology, sociology and marketing. Understanding why people make the
decisions they do forms part of a complex ongoing investigation.
As an interdisciplinary area of study, the subject borrows heavily from psychology, sociology;
social psychology; anthropology and, economics.
Psychology: is a field that studies the individuals, human thinking and behaviour. Customers’
behaviour borrowed heavily from psychology. This includes the study of the individual as well
as the individual determinants in buying behavior, viz., consumer perception, learning and

3
memory, attitude, self-concept and personality, motivation and involvement, attitudes and
attitudinal change and, decision making.
Social psychology: is a field that studies individuals’ behaviour as members of social groups.
What we have borrowed from social psychology includes the study of how an individual
operates in group/groups and its effects on buying behavior versus, reference groups and social
class influences.
Sociology: is a field that studies social institutions and group relationship. Its application in
consumer behaviour includes the study of groups as well as the group dynamics in buying
behavior, viz., family influences, lifestyles and values, and social group influences.
Anthropology: is a field that studies society’s values, beliefs, and practices within and across
culture. Anthropology contributed in the influence of society on the individual viz., cultural and
cross-cultural issues in buying behavior, national and regional cultures etc.
Economics: consumer behaviour has borrowed heavily from both microeconomics and
macroeconomics. Microeconomics is a field that study the allocation of family or individual
resources. Macroeconomics is a field that studies the market, the national resource allocation, the
national business cycle, and the consumers’ relationship with the market. This is the study of
income and purchasing power, and its impact on consumer behavior. The underlying premise is
that consumers make rational choices while making purchase decisions. While resources are
limited and needs and wants are many, consumers collect information, and evaluate the various
alternatives to finally make a rational decision

1.1.4. Consumer Behaviour: Definitions

Consumption process whether it refers individual, group, or organization as a consumption unit
is a process that involves people. Every human being is unique and behaves in his own way.
Therefore; it is not easy to predict the human behaviour. Human being differs in their taste,
needs, wants and preferences. But one constant thing is that we are all consumers.
Consumer Behaviour is a vast and complex subject that studies consumers and the consumption
process. If every human being is unique then understanding consumers behaviour and “knowing
consumers’’ is not that simple. It is almost impossible to predict with one hundred per cent
accuracy, how consumer(s) will behave in a given situation. This makes the marketers’ job
challenging but very important to every businesses’ success. Marketers have to exert efforts to

4
understand consumers. For this, they are interested in watching people shopping, flirting,
parading, playing, entertaining, as they are keenly interested in the wide variety of behaviours
they display. The efforts of all marketers are to influence the behaviour of consumers in a desired
manner. The success or failure in this pursuit determines the difference between success and
failure of marketing efforts or even the business itself.
Consumer behaviour explains the reasons and logic that underlie purchasing decisions and
consumption patterns; it explains the processes through which buyers make decisions.
Consumer Behaviour may be defined as the interplay of forces that takes place during a
consumption process, within a consumer's self and his environment (Schiffman, 2012).
The following are some more definitions of consumer behaviour provided in major text books of
consumer behaviour.
1. “The behaviour that consumers display in searching for, purchasing, using, evaluating and
disposing of products and services that they expect will satisfy their needs.”- Schiffman and
Kanuk
2. “…..the decision process and physical activity engaged in when evaluating, acquiring, using or
disposing of goods and services." - Loudon and Bitta
3. “The study of consumers as they exchange something of value for a product or service that
satisfies their needs”- Wells and Prensky
4. “Those actions directly involved in obtaining, consuming and disposing of products and
services including the decision processes that precede and follow these actions”. -Engel,
Blackwell, Miniard
5. “The dynamic interaction of effect and cognition, behaviour and the environment by which
human beings conduct the exchange aspects of their lives” - American Marketing Association
The study of individuals, groups, or organizations and the processes they use to select, secure,
use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that
these processes have on the consumer and society (Solomon,et. al., 2016 ).
The above definitions, reveals that the study includes within its purview, the interplay between
cognition, affect and behaviour that goes on within a consumer during the consumption process:
selecting, using and disposing of goods and services, and the effects this process have on the
consumer himself and the society.
A more complete definition is the one given by Michael R. Solomon. He defined it as follows.

5
“Consumer behavior reflects the totality of consumers' decisions with respect to the
acquisition, consumption, and disposition, of goods, services, activities, experience, people,
time, and ideas by decision making units over time”

The definition encompasses certain important aspects. The definition tells us that Consumer
behavior involves more than just how a person buys tangible products like :laundry detergent,
Cell phones, or automobiles rather it also includes consumers’ use of services, activities,
experiences, and ideas such as going to the doctor, visiting a festival, signing up for yoga classes,
taking a trip, donating to NGOs, etc. In addition, consumers make decisions about people, such
as: voting for politicians, reading books written by certain authors, seeing movies on which
certain actors are starring, and attending concerts featuring favorite bands or singer. Consumer
behavior also involves choices about the consumption of time, such as: whether to watch a
certain television program or watch something online (and for how long) the use of time shows
who we are and how we are different from others.
Because consumer behavior includes the consumption of many things, marketers use the term
offering to encompass all these entities.
The definition also tells us that consumer behavior involves more than just buying. Buying only
represent one type of acquisition behavior. Although buying is one of the important aspects to
marketers, it is not the only thing of interest to them. Marketers are also intensely interested in
consumer behavior related to using and disposing of an offering
Consumer behavior involves:
a) Acquiring: we acquire an offering through trading, renting or leasing, bartering, gift finding,
theft and borrowing.
b) Using (consuming): After a product or service has been acquired, it will typically be used in
some manner. Usage transmits some message to marketers: First, why we use certain products
can symbolize something about who we are, what we value, and what we believe. Second,
understanding consumers' usage of products and services can guide marketing strategy and
tactics. Usage can also influence others’ behavior.
c) Disposing: Consumer behavior involves understanding consumer disposition behavior- that is,
how consumers get rid of an offering they have previously acquired. For instance Eco-minded
consumers often seek out biodegradable products made from recycled materials or choose goods

6
that do not pollute when disposed of. Understanding consumers' disposition behavior can have
extremely important implications for marketers.
Another important aspect of consumer behavior the definition states is that Consumer behavior is a
dynamic process. Consumer behavior involves understanding that acquisition, consumption, and
disposition can occur over time in a dynamic sequence. In other words, usage of an offering is
often a logical outcome of acquisition; disposition, in turn, follows from a certain level of usage;
and finally, disposition sets the stage for future acquisitions. The time period that describes this
sequence could occur over a matter of hours, days, weeks, months, or even years.
To illustrate the sequence,
A family can use (drive) a new car after they have acquired it. Usage of the car provides
information (such as it drives well, is reliable, impresses others, and is good for the
environment) this information affects when, how, and why they will dispose of the car (sells,
trade, or junk it). Because a family always has needs for transportation, disposition of the car
will likely affect when how, and why they acquire another car in the future.

Entire markets are designed around linking .one consumer’s disposition decision will create
opportunity to other consumers' acquisition decisions. For example, when consumers buy used
cars, they are buying cars that others have disposed of. Organizations like, antique stores, and
used item stores are all examples of businesses that link one consumer's disposition behavior
with other' acquisition behavior.
Consumer behavior can involve many people. Consumer behavior does not necessarily reflect
the action of a single individual; instead it also reflects the action of groups

For instance a group of friends, a few coworkers, or an entire family may plan a birthday party
or decide where to have lunch. (Although, each member might have different responsibility in the
purchase process)
Consumer behavior involves decisions as well. Consumer behavior involves not just
understanding what consumers acquire, use, or disposes or. It also includes understanding why,
when, where, how, how much, how often, and how long consumers will buy, use, or dispose of
an offering.

7
1.1.5. Reason for studying consumer behaviour
Influencing customers is the ultimate aim of marketing mix. Without understanding customers,
no business can succeed. The success of marketing strategy is measured by the consumers’
preference of the company’s products, sales volume, their satisfaction, repeated purchase, and
their loyalty among others.
The study of consumer behaviour deals with basic questions related to buying such as: what we
buy, why we buy and how we buy. Consumer decisions are affected by their behaviour.
Therefore, consumer behaviour is said to be an applied discipline. It involves understanding
consumer for the purpose of helping a firm or organization to achieve its objectives. All the
Managers in different departments are keen to understand the consumer. Consumers strongly
influence what will be the product, what resources will be used and it affects our standard of
living.
The study of consumer behaviour makes us aware of the subtle influences that persuade us to use
the product or services of our choices we do.
The most obvious application of consumer behaviour is for deriving marketing strategy.
Marketing strategy is the game plan which the firms must adhere to, in order to outdo the
competitor or the plans to achieve the desired objective. Marketing starts with the needs of the
customer and ends with his satisfaction. When everything revolves round the customer then the
study of consumer behaviour becomes a necessity. It starts with buying of goods. Goods can be
bought individually, or in groups.
Consumer behaviour knowledge is applied in Marketing Management. A sound understanding of
the consumer behaviour is essential to the long-term success of any marketing programme. It is
the corner stone of marketing concept which stress on consumer wants and needs, target market
selection, integrated marketing and profits through the satisfaction of the consumers.
Consumer behaviour is also important in non-profit and social organizations. Such organizations
are government agencies, religious organizations, universities and charitable organizations.
These organizations also have customers, clients, or beneficiaries. They have start with
understanding their beneficiaries’ needs and wants. They should design and deliver their
products, utilities, and services and ensure that the beneficiaries are satisfied with them.

8
The study helps the marketer in: a) Analyzing the environment: identifying opportunities and
fighting threats b) Segmenting, targeting and positioning c) Designing the marketing-mix d)
Designing the marketing strategy
.
Therefore, marketing students have to study consumer behaviour, learn how to do consumer
research to identify consumer needs and wants, opportunities and threats; segment the consumer
in to homogeneous groups, select the most relevant segment as its target market, develop
products that meets the segment’s requirement, determine the distribution, pricing, and
promotion mix to position the distinct attributes of the product, create awareness and image, and
succeed in outcompeting others. Without consumer behaviour knowledge you cannot become a
very good, competent and successful marketer.
1.1.6. Consumer behaviour and marketing strategy
Without knowledge of consumer behaviour, an exercise of marketing strategy is like building a
house without foundation. The key assumption underlying the marketing concept is that to be
successful a company must determine the needs and wants of specific target markets and deliver
the desired satisfactions better than the competition. The marketing concept according to
Schiffman, et al. (2012:5) is based on the assumption that “to be successful a company must
determine the needs and wants of specific target markets and deliver the desired satisfactions
better than the competition.” They have to analyze the market, segment, target, and position. The
study helps marketers in:
a) Consumer research
b) Segmenting, targeting and positioning
c) Designing the marketing-mix and finally
d) Designing the marketing strategy

a) Consumer Research
The knowledge of consumer behavior can be applied to help identify opportunities and fight
threats. The opportunities could be in terms of
Spotting newer customers and /or new markets: By tracking how consumers’ preferences
evolve over time, businesses can identify emerging trends and position themselves ahead

9
Example: If there is growing consumer interest in wellness or sustainability, businesses can
innovate by introducing eco-friendly products or services that cater to health-conscious
consumers.
Fulfilling unmet needs: By analyzing consumers' behaviors and pain points, businesses can
identify gaps in the market where consumer needs are not fully addressed
Example: If consumers express dissatisfaction with existing mobile apps, identifying common
complaints or desires (e.g., ease of use or added functionality) can guide businesses in
developing new, improved versions of their products or services.
Product Innovation: Analyzing consumer behavior allows businesses to recognize the specific
features that consumers desire in a product. This helps in the design and development of
innovative products that directly cater to these desires.
Example: If consumers show a strong interest in technology integration, companies can create
smart, tech-enhanced products (e.g., smart refrigerators or wearable tech).

The threats could be fought by developing and implementing appropriate marketing strategies to
best fit the environment. This could be in terms of:
Anticipating Shifts in Consumer Preferences: Understanding consumer behavior allows
businesses to foresee changes in consumer preferences or attitudes
For example if consumers start showing increased concern about privacy, businesses can adapt
by implementing stronger data protection policies and transparent privacy practices to avoid
losing trust and customer loyalty.
Identifying and Addressing Negative Perceptions: By monitoring consumer feedback, social
media, and other behavioral indicators, businesses can identify negative perceptions or emerging
dissatisfaction early on
Example: If a company notices a decline in consumer sentiment about a particular product
feature, they can adjust the product design or marketing message before it impacts sales
significantly.
Competitive response: Understanding consumer behavior also allows businesses to track
competitors' actions and adapt accordingly

10
Example: If a competitor launches a successful product with a feature consumers prefer, a
business can adapt its own offering to include similar features or emphasize its unique selling
points that align with consumer preferences.

Crisis Management: Consumer behavior data can be vital in crisis situations. If a company
faces a scandal or public relations issue, understanding consumer emotions, loyalty levels, and
buying behaviors helps devise appropriate responses and recovery strategies.
Example: After a product recall, understanding how consumers react to the situation (whether
they are angry, confused, or forgiving) helps in crafting the right messaging to restore
confidence and prevent damage to the brand.
The marketing strategies need to be dynamic and constantly evolving keeping in view the
uncertainty in the environment. Environmental uncertainty is a function of complexity and
dynamism. Complexity is defined in terms of the number, strength and interrelatedness of the
various factors in the environment that a firm has to deal with. Dynamism relates to how quickly
the changes take place in the environment.

b) Segmentation, targeting and positioning:

The study of consumer behavior may be applied to segment the market, select the target market
and position the product or service offering. Market segmentation is the process of dividing a
market into subsets of consumers with common needs or characteristics. Market targeting is
selecting one or more of the segments identified for the company to pursue. Identifying the target
segment, understanding their needs, providing the right product and service offering and
communicating about the offering; all of these help a marketer succeed in the long term and
ensure his survival and success in a changing environment.
a) Segment the market: The marketer needs to identify distinct customer groups with needs and
wants, classify them on basis of descriptive characteristics and behavioural dimensions. The
descriptive characteristics may take forms of age, gender, income, occupation, education, family
size, family life cycle, gender, lifestyle, personality, religion, generation, geography, nationality,
and social class. The behavioural dimensions take forms of benefits, uses, use occasion, usage
rates, and loyalty status.

11
b) Select target market: The marketer then selects one or more markets to enter. The segment(s)
that should be targeted should be viable; there should be a fit between the market attractiveness
and the company’s objectives and resources. The marketer would be able to assess the viability
of a segment on the basis of the following criteria, viz., measurability, substantial-ability,
accessibility, differentiability, and action-ability. Based on the consumer research results and
segments; chooses the segment that the company better serves than its competitors. The selected
segment is the target segment that the company chose to serve.
c) Position the product offering in the mind of the customers: The marketers should be able to
communicate the distinct and/or unique product characteristics. Positioning is developing a
distinct image for the product or service in the mind of the consumer, an image that will
differentiate the offering from competing ones and squarely communicate to consumers that the
particular product or service will fulfil their needs better than competing brands

c) Designing the Marketing mix decision:

Consumer behavior plays a key role in shaping marketing mix decisions. By understanding
consumer preferences, needs, and purchasing patterns, businesses can tailor their marketing mix
strategies to effectively meet market demands
a) Product: both tangible products and intangible services. The issues to address consist of name
(brand), size, shape, features, labelling, packaging, accessories and supplementary products,
terms of sale and services, after sales etc. Insights into consumer behavior enable companies to
develop products that align with consumer needs and desires
b) Price: the pricing of the product offering. The major components include, form of payment,
terms and conditions of payment, discounts, price sensitivity, differential prices and customer
reaction, imagery (price increase and customer reaction, price decrease and customer reaction).
c) Place and Distribution: the marketing channel, and comprises decisions regarding choice of
channel (direct or indirect), location, accessibility and availability of product offering,
wholesaling, retailing, logistics etc. Understanding where consumers prefer to shop—be it
online, in physical stores, or through mobile apps—guides businesses in selecting appropriate
distribution channels.

12
d) Promotion: the marketing communication, and the major issues comprising decisions on
communication/promotion mix, the message and media strategy (the content, appeal and
context), the advertising, sales promotion, public relations and sales efforts designed to build
awareness of and demand for the product or service. Promotion is the means of changing the
attitudes of the consumer. Consumer behavior insights inform promotional tactics by identifying
the most effective communication channels and messages.
The choice these marketing mix elements depends on consumer needs and target segments.
Therefore; there exists interrelatedness between the Consumer, the Environment and the
Marketing strategy.
a) Consumer: The consumer has his needs and wants as well as product preferences; Thus, there
exists an interplay of Cognition (knowledge about products and alternatives), Affect (feelings of
favourableness and unfavourableness) and Behavior (action: buy or not to buy).
b) Environment: This refers to forces in the environment, which make the environment complex
and dynamic.
c) Marketing strategies: This implies setting up of goals and then achieving them through the
design of an appropriate marketing mix.

d) Designing the Marketing Strategy:

The marketers develop a marketing strategy to succeed in meeting the target markets
requirement. Strategies are formulated to provide superior customer value. In formulating market
strategies, the 4 Ps are directed at the target market.
The Marketing Strategy should be designed to influence consumers (Cognition, Affect and
Behavior) and be influenced by them. It should be flexible and ever evolving with changes in the
customer needs and wants; as well as, changes in the environment in which it operates. The
knowledge of consumer behavior can be applied to develop a “best fit” between consumer needs
and wants, the environment in which the firm operates; and, the firms’ goals and objectives.

1.2. Characteristics, theories and model of buying behavior

There are many factors which influence the decision-making of consumers. There are various
consumers’ models which help us in the understanding of consumer behaviour.
Learning objectives:

13
After reading this part the students will be able to:
 Identify and differentiate the models of consumer behaviour
 Recognise the factors that influence consumer decision making
 Use them in analysing consumers behaviour and designing marketing strategy

1.2.1. Economic Model

Early research regarded man as entirely rational and self-interested, making decisions based
upon the ability to maximise utility whilst expending the minimum effort. In this model,
consumers follow the principle of maximum utility based on the law of diminishing marginal
utility. The consumer wants to spend the minimum amount for maximising his gains.
Key assumptions of the model are utility maximization, rational decision making, diminishing
marginal utility and budget constraint.
Economic man model is based on certain predictions of the buying behaviour. These are:
 Price effect: Lesser the price of the product more will be the quantity purchased.
 Substitution effect: Lesser the price of the substitute product, lesser will be the utility
of the original product bought.
 Income effect: When more income is earned, or more money is available, more will
be the quantity purchased.
This model assumes the homogeneity of the market, similarity of buyer behaviour and
concentrates only on the product or price. It ignores all the other aspects such as perception,
motivation, learning, attitudes, personality and socio-cultural factors. It is important to have a
multi-disciplinary approach, as human beings are complex entities and are influenced by external
and internal factors. Thus, price is not the only factor influencing decision-making and the
economic model has shortcomings.

1.2.2. Psychological Model

Psychologists have been investigating the causes which lead to purchases and decision-making.
This has been answered by A.H. Maslow in his hierarchy of needs. The behaviour of an
individual at a particular time is determined by his strongest need at that time. This also shows
that needs have a priority. First they satisfy the basic needs and then go on for secondary needs.

14
The purchasing process and behaviour is governed by motivational forces. Motivation stimulates
people into action. Motivation starts with the need. It is a driving force and also a mental
phenomenon. Need arises when one is deprived of something. A tension is created in the mind of
the individual which leads him to a goal directed behaviour which satisfies the need. Once a need
is satisfied, a new need arises and the process is continuous.

1.2.3. Pavlovian Learning Model

This model is a classical behaviourist model named after the Russian Physiologist Ivan Pavlov.
He experimented on a dog and observed how it responded on the call of a bell and presenting it
with a piece of meat. The responses were measured by the amount of saliva secreted by the dog.
Learning is defined as the changes in behaviour which occur by practice and, based on previous
experience. This is important to marketers as well. The learning process consists of the following
factors:
(a) Drive: This is a strong internal stimulus which impels action. Because of the drive, a
person is stimulated to action to fulfil his desires. Drives Can be innate (in-born) which
stem from physiological needs, such as hunger, thirst, pain, cold, sex, etc. Learned drives
such as striving for status or social approval.
(b) Causes are weak stimuli that determine when the buyer will respond. Triggering Cues:
these activate the decision process for any purchase. (b) Non-triggering Cues: These
influence the decision process but do not activate it. These are of two kinds: (1). Product
cues are external stimuli received from the product directly, e.g., colour of package,
weight, style, price, etc. 2. Informational cues are external stimuli which provide
information about the product, like advertisement, sales promotion, talking to other
people, suggestions of sales personnel, etc.
(c) Response is what the buyer does, i.e., buy or does not buy.
(d) Reinforcement is anything that strengthens the buyer’s tendency to make a repeated
purchase. Thus, when a person has a need to buy, say clothing, and passes by a
showroom and is attracted by the display of clothing, their colour and style, which acts as
a stimulus, and he makes a purchase. He uses it, and if he likes it, enforcement takes
place and he is happy and satisfied with the purchase. He recommends it to his friends as
well, and visits the same shop again.

15
 Learning thus is an important part of buyer behaviour and the marketer tries to create a good
image of the product in the mind of the consumer for repeat purchases through learning.

1.2.4. Sociological Model

This is concerned with the society. A consumer is a part of the society and may be a member
of many groups in a society. His buying behaviour is influenced by these groups. Primary
groups of family and friends have shown a lot of influence on his buying. A consumer may
be a member of a political party where his dress norms are different. As a member of an elite
organisation, his dress requirements may be different, thus he has something that confirm to
his lifestyle in different groups.

1.2.5. Input, Process and Output Model

This is a simple model of consumer behaviour, 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. Need recognition when one is aware of a want, tension is
created and one chooses a product to satisfy his needs. There is also a possibility that a

16
 person may be aware of a product before its need is recognised. This is indicated by the
arrows going both ways from the need to the product and vice versa.

Figure 1: Buyer’s Black Box Model

The above figure shows three stages in terms of 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.
This input is processed in the mind (Black Box), which constitutes the characteristics of the
buyer and the process of decision-making. Once the buyer has decided to buy then, he responds
in terms of his choice of product, brand, dealer, timing and amount. The post-purchase behaviour
of being satisfied or dissatisfied is also important, and is shown in the decision-making process.

1.2.6. Howard- Sheth Model

The Howard-Sheth Model was introduced by John Howard and Jagdish Sheth in 1969. It is a
comprehensive framework that examines how various social, psychological, and marketing
factors influence consumer behavior. It integrates these influences into a coherent sequence of
information processing, aiming to explain consumer behavior through cognitive functioning.

This model is slightly complicated and shows that consumer behaviour is complex process and
concepts of learning, perception and attitudes influence consumer behaviour. This model of
decision-making is applicable to individuals. It has four sets of variables which are: (i) Input
parameters (ii) Perceptual and learning constructs (iii) Output parameters (iv) Exogenous or
external variables.

17
Input: Some inputs are necessary for the customer for making decisions: These inputs are
provided by three types of stimuli as shown in Fig. 2 below (a) Significative stimuli: These are
physical tangible characteristics of the product. These are price, quality, distinctiveness, services
rendered and availability of the product. These are essential for making decisions. (b) Symbolic
stimuli: These are the same as significative characteristics, but they include the perception of the
individual, i.e., price is high or low. Quality is up to the mark or below average. How is it
different from the other products, what services can the product render and, what is the position
of after sales service and how quickly or easily is the product available and, from where? (c)
Social stimuli: This is the stimulus provided by family, friends, social groups, and social class.
This is important, as one lives in society and for the approval and appreciation of the society,
buying habits have to be governed

Figure 2:Howarth Sheth Model

Perceptual and learning constructs: These constructs are psychological variables, e.g., motives,
attitudes, perception which influence the consumer decision process. The consumer receives the
stimuli and interprets it. Two factors that influence his interpretation are stimulus-ambiguity and
perpetual bias. Stimulus ambiguity occurs when the consumer cannot interpret or fully
understand the meaning of the stimuli he has received, and does not know how to respond.
Perceptual bias occurs when an individual distorts the information according to his needs and
experiences.

18
These two factors influence the individual for the comprehensions and rating of the brand. If the
brand is rated high, he develops confidence in it and finally purchases it. Output By output we
mean the purchase decision. After purchase there is satisfaction or dissatisfaction. Satisfaction
leads to positive attitude and increases brand comprehension. With dissatisfaction, a negative
attitude is developed. The feedback shown by the dotted line and the solid lines shows the flow
of information.
Exogenous or external variables: These are not shown in the model, and do not directly influence
the decision process. They influence the consumer indirectly and vary from one consumer to
another. These are the individual’s own personality traits, social class, importance of purchase
and financial status. All the four factors discussed above are dependent on each other and
influence the decision-making process. The model though complicated, deals with the purchase
behaviour in an exhaustive manner. The model emphasizes that consumer behavior is a dynamic
process influenced by a complex interplay of external stimuli and internal cognitive processes.
By understanding these components, marketers can develop strategies that effectively address
consumer needs and preferences.

1.2.7. Engel-Kollat-Blackwell-(EKB) Model

This model highlights the factors that influence how consumers gather information, evaluate
options, and make final choices regarding purchases.
This model consists of four components: (i) Information processing, (ii) Central control unit, (iii)
Decision process, and (iv) environmental influences.
Information processing: A shown in the diagram the information processing consists of
exposure, attention, comprehension and retention of the marketing and non-marketing stimuli.
For successful sales, the consumer must be properly and repeatedly exposed to the message. His
attention should be drawn, such that he understands what is to be conveyed and retains it in his
mind.
Central control unit: The stimuli processes and interprets the information received by an
individual. This is done by the help of four psychological factors. (a) Stores information and past
experience about the product, which serves as a standard for comparing other products and
brands. (b) Evaluative criteria which could be different for different individuals. (c) Attitudes or

19
the state of mind which changes from time to time, and helps in choosing the product. (d) The
personality of the consumer which guides him to make a choice suiting his personality.
Decision process: This consists basically of problem recognition, internal and external search,
evaluation and the purchase. The decision outcome or the satisfaction and dissatisfaction are also
an important factor which influences further decisions.

Figure 3: Engel-Kollat-Blackwell model of buyer behaviour

The decision process may involve extensive problem solving, limited problem solving or
routinized response behaviour. This depends on the type and value of the product to be
purchased.

20
Environmental influences: The environmental influences are also shown in a separate box and
consist of income, social class, family influences, social class and physical influences and other
considerations. All these factors may favour or disfavour the purchase decisions.
The EKB model is particularly useful for marketers in understanding how consumers make
decisions. This allows them to tailor marketing strategies to influence behavior at different stages
of the decision-making process.

1.2.8. Model of Family Decision-making

In a family decision-making model, it is important to understand how the family members
interact with each other in the context of their consumer decision-making. There are different
consumption roles played by various members of the family. These roles are as follows:
(i) User: The person who actually uses or consumes the product. The product can be
consumed individually or jointly by all members of the family. For e.g.; use of car by
the family members, use of refrigerator, TV, etc.
(ii) Influencer: The member who influences the purchase of the product by providing
information to the family members, the son in a family may inform the members of a
new fast food joint. He can influence the family members to visit the joint for food
and entertainment.
(iii) Preparer: is the person who gives the product its final shape in which it is actually
going to be used by the users in the family(getting it ready for application or
consumption such as assemble items, setup devices and so on
(iv) Gate keeper: These members control the flow of information for a product or brand
that they favour and influence the family to buy the product of their choice. They
provide the information favourable to themselves and, withhold information about
other product which they do not favour.
(v) Buyer: the person who actually buys the product
(vi) Decider: the person in the family who has the money to buy a product or service
chosen for purchase. They have the upper hand in the purchase decision.

The roles that the family members play are different from product to product. Some products do
not involve the influence of family members—vegetables bought by the housewife. She can play

21
many roles of a decider, preparer as well as the user. In limited problem solving or extensive
problem solving there is usually a joint decision by family members. The diagram shows the
predisposition of various family members, which when influenced by other factors leads to joint
or individual decisions. These factors are shown in the diagram__ below.

Figure 4: Model of family decision making

1.2.9. Nicosia Model
This model of consumer behavior was developed in 1966 by Francesco Nicosia. The model
focuses on the relationship between the firm and its potential customers. The model suggests that
message from the firm (advertisements) first influences the predisposition of the consumer
towards the product or service)

This model explains the consumer behaviour on the basis of four fields shown in the diagram__
below. The output of field one becomes the input of field two, and so on.
Field one consists of subfields one and two. Subfield one is the firm’s attributes and the
attributes of the product. The subfield two is the predisposition of the consumer and his own

22
characteristics and attributes, which are affected by his exposure to various information and
message, and is responsible for the building of attitude of the consumer.
Field two is the pre-action field, where the consumer goes on for research and evaluation and
gets motivated to buy the product. It highlights the means and end relationship. Field three is the
act of purchase or the decision-making to buy the product. The customer buys the product and
uses it. Field four highlights the post-purchase behaviour and the use of the product, its storage
and consumption.

Figure 5: Nicosia model

The feedback from field four is fed into the firms attributes or field one, and the feedback from
the experience is responsible for changing the pre-disposition of the consumer and later his
attitude towards the product. Nicosia Model is a comprehensive model of dealing with all aspects

23
of building attitudes, purchase and use of product including the post-purchase behaviour of the
consumer.

1.2.10. A Model of Industrial Buyer Behaviour

The purchases made in an industrial organisation involve many more people of different
backgrounds and it is more complex. There are three main features in this model:
1. There are different individuals involved who have a different psychological make up.
2. Conditions leading to joint decision-making by these individuals.
3. Differences of opinion on purchases or conflicts that have to be resolved to reach a decision.
These are shown in Fig. 6 below as (1), (2) and (3).

Figure 6: Model of industrial buyer behaviour

The persons involved in the decision-making are from quality control, manufacturing, finance,
research and development and other possible areas. These may be named as purchase agents,
engineers, and users, as referred to in the model. These constitute a purchasing committee. They

24
have: (1a) Different backgrounds (1b) Different information sources (1c) Undertake active
search (1d) They have perceptual distortion (1e) Satisfaction with past purchase.
With these characteristics, they develop certain expectations from the product to be bought. The
obvious ones are product quality, delivery time, quantity of supply, after sales service and price.
These are known as explicit objectives. There are other objectives as well, which are the
reputation of the supplier, credit terms, location of the supplier, and relationship with the
supplier, technical competence and even the personality, skill and lifestyle of the salesman.
These are known as implicit objectives.
Different individuals in the purchasing committee give emphasis on different aspects of the
product. Engineers look for quality and standardisation of the product. Users think of timely
delivery, proper installation and after sales service. Finance people look for maximum price
advantage. Thus, there are conflicting interests and view that have to be resolved. If autonomous
decisions are made, these issues do not surface. There are conditions leading to autonomous or
joint decisions.
(2a) Product specific factors: are perceived risk, type of purchase, and time pressure.
 Perceived risk: With higher risks joint decisions are favoured.
 Type of purchase: Items involving heavy investments are made jointly, routine and less
costly decisions can be made independently.
 Time pressure: If goods are urgently required, individual decisions are favoured.
(2b) Company specific factors: company size and orientation
 Size of the organisation: Larger the size of the organisation, the more the emphasis laid
on joint decision.
 Organisation orientation: In a manufacturing organisation, the purchases are dominated
by production personnel and in a technology oriented organisation, the decisions are
based on engineers.
(3) The conflict that arises for buying decision has to be resolved. The resolution can be done
by: (a) Problem solving (b) Persuasion (c) Bargaining (d) Politicking.
(4) The fourth aspect is the influence of situational factors which must be considered. These are
economic conditions such as inflation, recession or boom, price contracts, rationing foreign
trade, strikes or lock outs. Organisational change such as a merger, acquisition change of key
personnel, etc. Sometimes these factors outweigh the realistic criteria of decision-making. This

25
model explains how purchase decisions are made in an industrial organisation. All the models
discussed in this part of the module give us an idea of the buying behaviour in diverse situations.
An understanding of these models gives the marketers clues to formulate his strategies according
to the target audience, e.g., an individual, a family or an industry, etc.
1.2.11. A simplified model of Consumer Behaviour
Just to sum up the nature and scope of consumer behaviour considering a simplified model of
consumer behaviour may help you in integrating the consumption process and factors affecting
it. Consumers are unique individuals with their own individual differences, preferences and
wants. The consumption process that involves decision making about what to buy, when, where,
etc to buy is affected by internal psychological factors of a person (demography, motivation,
perception, learning, personality, attitude and life style of a person); external socio-cultural
factors (culture, sub-culture, social class, group, and family), and the marketing mix elements.

Figure 7: a simplified model of consumer behaviour

The model shows that though individual consumer is a person with his own individual characters
that affects his preferences and choices, he is member of a group, society, family, etc. that
influences his consumption decisions.

26
In this consumption process, the firms marketing efforts has influence on the internal/
psychological factors and external/ social factors and is influenced by them. Consumers search
for information, one of the sources of product information is promotion or advertisement. The
marketers have to understand consumers’ environmental and internal factors, and use it as an
input in crafting their marketing mix. The marketing created after consumer research,
segmentation, and positioning are meant to influence the consumers purchase decision.
Therefore, marketers need to understand each one of these factors and their implication for
marketing, and use them in their marketing practices.

Managerial Implications
Marketers must search, collect and get by themselves information about their consumers’
behaviour or have access to data concerning consumers, buying habits and which kinds of media
they favour, in order to develop convincing communication programs. By deeply analysing
different consumer behaviour models marketers can understand that consumer behaviour
concepts influence the development of marketing communication strategies. By using these
models they can assess the information needed to identify and select target markets. These
models also help different marketing strategies like positioning and market segmentation.
Consumer is the king in the market. All marketing decisions are based on the assumptions about
consumer behaviour. In order to create value for consumers and profits for organizations,
marketers need to understand why consumers behave in certain ways to a variety of products and
services offered. The consumer behaviour refers to those actions and related activities of persons
involved specifically in buying and using economic goods and services. An understanding of the
consumer behaviour will help us in understanding different market segments and evolve
strategies to effect penetration with these markets

1.3. Classification of consumer goods and managerial implication

1.3.1. Classification of Consumer Goods
A consumer product is any tangible product meant for sale that is used by a consumer or
household for non-business purposes. To determine whether an item is a consumer product or
not requires an accurate finding on a case by case basis. This will vary from one jurisdiction to
another.

27
Learning objectives:
At the end of this part of the course the students will be able to
 Identify different ways of classifying consumer goods
 Recognize the marketing implication of this classification
The United States Consumer Product Safety Act (CPSA), enacted in 1972 by Congress, has an
extensive definition of consumer product: "any article, or component part thereof, produced or
distributed (i) for sale to a consumer for use in or around a permanent or temporary household or
residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or
enjoyment of a consumer in or around a permanent or temporary household or residence, a
school,in recreation, or otherwise; but such term does not include any article which is not
customarily produced or distributed for sale to, or use or consumption by, or enjoyment of, a
consumer". It then goes on to list eight additional specific exclusions and some further
miscellaneous details. Examples of consumer products are DVD players, TVs, smart phones,
shoes, designer clothing, children's toys, and handbags, cosmetics etc.
Researchers in marketing have expended a great deal of effort in attempts to classify products
into various categories so that specific marketing strategies could be developed for each
category. Marketing academics have termed this approach the "commodity" school of thought in
marketing (Sheth et al. 1988). From the early work of Copeland (1923), who generally has been
credited with introducing the idea of categorizing goods as either shopping, speciality or
convenience goods, to more recent efforts of Murpliy and Enis (1986) for products and Lovelock
(1983) for services, marketers have been using the classification of products as a means of
formulating marketing strategies.
Consumer goods are broadly classified as: convenient products, shopping products, speciality
products, unsought products,
Based on the useful life, consumer goods consist of: durables & non-durables. Durables
Consumer durables refers to any type of products purchased by consumers that are manufactured
for long-term use.
Examples: furniture, household appliances such as washing machine, stove, refrigerator ,
electronics.
Often such products are sold with some type of warranty or service contract that helps to ensure
the appliance will continue working for a substantial period of time.

28
Non-durable goods have a shorter useful life. They usually run out once we consume.
Examples are food and drink, cleaning supplies.
The value of this classification lies in its integration of marketing mix decisions for strategy
formulation and the founding of this strategy upon consistent notions of buyer behavior with
respect to different types of products. The classification should aid both the manager in
formulating marketing strategy.

a. Convenience products
A convenience good is one that requires a minimum amount of effort on the part of the
consumer. Widespread distribution is the primary marketing strategy of convenience products.
The product must be available in every possible outlet and must be easily accessible in these
outlets. Vending machines typically distribute convenience goods. These products are usually of
low unit value, are highly standardized, and are often nationally advertised. Yet, the key is to
induce resellers, i.e. wholesalers and retailers, to carry the product. If the product is not available
when, where, and in a form desirable by the consumer, the convenience product will fail. From
the consumer's viewpoint, little time, planning, or effort go into buying convenience goods.
b. Shopping products
Goods that consumers will want to be able to compare and contrast with others goods before they
decide to purchase are shopping products. Since little planning or effort goes into buying goods,
marketers need to establish a high level of brand awareness and recognition. Since shopping
goods are highly researched by buyers, a retailer’s ability to differentiate themselves becomes
important. With shopping goods, retailers try to provide strong promotions to swing the buyer.
They also expect strong support from manufacturers.
c. Specialty Products
In the case of the convenience good, the pattern is that the most accessible brand will be
purchased. In the case of a specialty good, the pattern is that only a specific brand will be
purchased. For example, if the customer utilizes an outlet as it is most accessible, it would be
considered, for that customer at least, a convenience store. If consumers shop at a store even if
they have to go considerably out of their way to get there, it would be considered a specialty
store that sells specialty goods. From the point of view of consumers, specialty goods are so
unique that they will go anywhere to seek out and purchase them. Almost without exception,

29
price is not a principle factor affecting the sales of specialty goods. Although these products may
be custom-made or one of a kind, it is also possible that the marketer has been very successful in
differentiating the product in the mind of the consumer. Examples of specialty goods include
designer clothes, high-end cars, exotic perfumes, famous paintings, fancy foods, hi-fi
components, sporting equipment, photographic equipment, men's suits etc.
d. Unsought Products
Unsought Goods are goods that the consumer does not know about or does not normally think of
buying. Purchasing of unsought goods may arise due to danger or the fear of the danger. The
classic examples of known but unsought goods are funeral services, encyclopaedias, fire
extinguishers etc. In some cases, even airplanes and helicopters can be cited as examples of
unsought goods. The purchases of these goods may not be immediate and can be deferred.
Hence, unsought goods require advertising and personal selling support and extensive marketing
in other areas as well. In the past, new products such as frozen food items were unsought—why
buy frozen when you can buy fresh?—until they were advertised innovatively and broadly. Once
the consumer is well-educated about the product, the good goes on to become a sought good.

1.3.2. Types Consumer Goods and Marketing Consideration

Besides knowing consumer behaviour; understanding classification of consumer goods is very
important in crafting the marketing mix and effectively marketing them. Table__ provides a
marketing consideration for each type of consumer goods.
One purpose of any product classification scheme is to guide managerial decision making. A
comprehensive and consistent marketing strategy should be based upon product characteristics as
perceived by buyers. The product classification suggested here provides a managerial road map
for strategy development: buyers' perceptions, marketers' objectives and basic strategy, and
specific strategies for each element of the marketing mix. Table 1 below outlines the discussion
of each of these managerial implications.

30
Table 1: Types of consumer products

As seen in the table above, the buyers’ perception of a product differ by consumers products
classification. A buyer views a given product as a "bundle of satisfactions" to be obtained in
return for certain price considerations-classified as effort and risk. Thus, for convenience
products, the buyer perceives the product as being worth only low effort and is subject to only
low risk, so his/her behavior evolves into largely habitual impulse-driven (for industrial buyers-
automatic reorder). For preference or shopping products, the buyer perceives low effort but
medium risk, so the behavior becomes "routine" or "straight rebuy" with brand loyalty for
industrial products. Shopping products are perceived to be worthy of moderate to high levels of
effort and risk. The resulting behavior is thus "limited problem solving" for consumers or an
industrial "modified rebuy." Finally, specialty products are high in both effort and risk, so the
behavior is "extensive problem solving" or an industrial "new task."

31