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The Indian Institute of Planning & Management

hutConsumer Behavior Consumer behavior is the study of how people buy, what they buy, when they buy and why they buy. It blends elements from psychology, sociology, socio-psychology, anthropology and economics. It attempts to understand the buyer decision processes| buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Consumer behavior also called as Consumer Psychology is a branch of applied Psychology, marketing and Organizational Behavior. It examines consumer decision making process and ways in which they gather and analyze information from the environment. See the consumer behavior article for an overview. Consumer behavior is a multidisciplinary field which is integral to Industrial Psychology and aspects of household economy studied in microeconomics. Consumer behavior also means the actions shows by consumers while making decision to select household and consumer items. Belch and Belch define consumer behavior as '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'.

Basic model of consumer decision making also referred to as EKB model (Engel, Kollat & Blackwell) Stage Brief description The consumer perceives a need and becomes motivated Problem recognition Motivation to solve a problem. The consumer searches for information required to make Information search Perception a purchase decision Information Attitude The consumer compares various brands and products evaluation formation Decision The consumer decides which brand to purchase Integration Post-purchase The consumer evaluates their purchase decision Learning evaluation

Problem recognition Problem recognition is that result when there is a difference between one's desired state and one's actual state. Consumers are motivated to address this discrepancy and therefore they commence the buying process. Sources of problem recognition include:

An item is out of stock

Prof. Rabinder Singh

The Indian Institute of Planning & Management


Dissatisfaction with a current product or service Consumer needs and wants Related products/purchases Marketer-induced New products

The relevant internal psychological process that is associated with problem recognition is motivation. A motive is a factor that compels action. Belch and Belch (2007) provide an explanation of motivation based on Maslow's hierarchy of needs and Freud's psychoanalytic theory. Information Search Once the consumer has recognized a problem, they search for information on products and services that can solve that problem. Belch and Belch (2007) explain that consumers undertake both an internal (memory) and an external search. Sources of information include:

Personal sources Commercial sources Public sources Personal experience

The relevant internal psychological process that is associated with information search is perception. Perception is defined as 'the process by which an individual receives, selects, organizes, and interprets information to create a meaningful picture of the world' The selective perception process Stage Description Selective exposure consumers select which promotional messages they will expose themselves to. Selective attention consumers select which promotional messages they will pay attention to Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences Selective retention consumers remember messages that are more meaningful or important to them You should consider the implications of this process on the development of an effective promotional strategy. First, which sources of information are more effective for the brand and second, what type of message and media strategy will increase the likelihood that consumers are exposed to our message, that they will pay attention to the message, that they will understand the message, and remember our message. Information evaluation At this time the consumer compares the brands and products that are in their evoked set. How can the marketing organization increase the likelihood that their brand is part of the consumer's evoked (consideration) set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer. The marketing organization needs to understand what benefits consumers are seeking and therefore which attributes are most important in terms of making a decision.

Prof. Rabinder Singh

The Indian Institute of Planning & Management


The relevant internal psychological process that is associated with the alternative evaluation stage is attitude formation. Belch and Belch (2007, p.117) note that attitudes are 'learned predispositions' towards an object. Attitudes comprise both cognitive and affective elements - that is both what you think and how you feel about something. The multi-attribute attitude model explains how consumers evaluate alternatives on a range of attributes. Belch and Belch (2007) identify a number of strategies that can be used to influence the process (attitude change strategies). Finally, there is a range of ways that consumers apply criteria to make decisions. Belch and Belch (2007) explain how information is integrated and how decision rules are made including the use of heuristics. The marketing organization should know how consumers evaluate alternatives on salient or important attributes and make their buying. Purchase decision Once the alternatives have been evaluated, the consumer is ready to make a purchase decision. Sometimes purchase intention does not result in an actual purchase. The marketing organization must facilitate the consumer to act on their purchase intention. The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. The relevant internal psychological process that is associated with purchase decision is integration. Post purchase evaluation The EKB model was further developed by Rice (1993) which suggested their should be a feedback loop, Foxall (2005) further suggests the importance of the post purchase evaluation and that the post purchase evaluation is key due to its influences on future purchase patterns. Consumer Behavior

Based on concepts from


Psychology Sociology Anthropology Marketing Economics

Why do we need to study Consumer Behavior? -Because no longer can we take the customer/consumer for granted. Failure rates of new products introduced

Out of 11000 new products introduced by 77 companies, only 56% are present 5 years later. Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives.

All managers must become astute analysts of consumer motivation and behavior

Prof. Rabinder Singh

The Indian Institute of Planning & Management

Can Marketing be standardized? No.


Because cross - cultural styles, habits, tastes, prevents such standardization.

Unless Managements actsThe more successful a firm has been in the past, the more likely it is to fail in the future.

Why? Because people tend to repeat behavior for which they have been rewarded. Language Problems

Please leave your values at the desk - Paris hotel Drop your trousers here for best results - Bangkok laundry The manager has personally passed all water served here - Acapulco restaurant Because of the impropriety of entertaining guests of the opposite sex in the bedroom, it is suggested that the lobby be used for the purpose. - Zurich hotel Ladies are requested not to have children in the bar.- Norway bar

Come alive with Pepsi


Come alive out of the grave - Germany Pepsi brings your ancestors back from the grave - China

Buyer Behavior :
Consumer 4Ps Marketing Environment Buyer Characteristics Buyer Decision Process Buyer

Prof. Rabinder Singh

The Indian Institute of Planning & Management


Decision

Marketing Stimuli
4 Ps Product Price Place Promotion

Other Stimuli
Marketing Environment Economic Technological Political Cultural

Buyer characteristics

Cultural Social Personal Psychological

Buyers Decision Process


Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Consumption Post purchase behavior

Prof. Rabinder Singh

The Indian Institute of Planning & Management Buyers Decision


Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount

Cultural factors

Culture Sub - culture Social Class

Social factors

Reference Groups Family Roles and Status

Personal Factors

Family Life Cycle Occupation and Economic circumstances Lifestyle Personality and self - concept

Psychological Factors

Motivation Perception Learning Beliefs and Attitudes

Buying Roles

Initiator Influencer Decider Buyer User

Buying Behavior

Complex

Prof. Rabinder Singh

The Indian Institute of Planning & Management


Dissonance - Reducing Habitual Variety seeking

Buying Process

Problem Recognition Information Search Evaluation Alternatives Purchase Decision

Post - Purchase Behavior


Satisfaction Actions Use and Disposal

Prof. Rabinder Singh