Consumer Behaviour – Introduction

Consumer is the King.

In today’s digitized commerce world, consumer has got more powerful

sources than ever before: They can use intelligent, virtual agents to locate best
prices, best deals for products and services; they can bid on various marketing
offerings, bypass middlemen and can directly shop from manufacturers.

Consumers as well as marketers both have more access to information than

ever before: Various digital technologies enable marketers to collect and
analyse various massive data of consumers that define their buying patterns and
characteristics etc.

Marketers can offer more products and services than ever before: Sellers
can customize the products and services according to consumer demands. The
marketers can also send customized promotional messages directly to existing
customers as well as potential customers.

The exchange between marketer and consumer is increasingly interactive

and spontaneous unlike traditional advertising: Example Amazon

Convergence culture has drastically changed the way we decide to make

purchase. There are some technologies like TiVo digital recorders that allow
the viewers to control what they watch on TV. Viewers can record many hours
of TV programming and can easily skip the advertisements.

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Under such dynamic and divergent marketing conditions, can marketers reduce
the advertising expenditure on the major TV networks? Can they insist the
broadcasters to develop new measurement systems? Or should they invest more
on digital marketing than mainstream? Or can we give more focus on
advertisements for products that supplied through direct distribution instead of
retailers or middlemen through customized offerings? Are we going to say that
branding and competitive differentiation will become meaningless in this virtual
marketing world?

We can try to answer all the questions and understand each and every situation
by learning about consumer behaviour.

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Simply to ask you, what is the key task of a marketer? The task of marketer is
to identify the consumers’ needs and wants accurately and then develop
products and services that will satisfy those needs and wants.

Example:

Since 1990s, especially when the liberalization polices allowed FDI, more and
more MNCs, brands, products and services entered India with superior quality
and offerings. This scenario has created a positive notion that satisfying
customers with quality products and services are the foundations for success to
survive in this highly competitive market. The marketing concept itself suggests
that in order to be more profitable, an organization must satisfy its consumers’
needs and wants.

In order to implement this concept / logic the organizations should stay close to
their customers, understand them and their spending capacities, and provide
them with product and services that suits their needs. For marketers to excel
well in this, it is not sufficient to simply ascertain what they need. But one
should understand why they need that particular product. Thus gaining
such a profound and all-embracing comprehension of buyer behaviour will help
the marketer to gratify the needs more professionally thereby bring a positive
attitude in the consumers towards the company’s products and enhance the
goodwill.

Stay in proximity (close) to consumer is new mantra for many successful

organizations to offer consumers the Value for money spent. It’s not just the
marketing department, but also the design, engineering, production, HR,
finance, Supply chains etc., all are focusing on their jobs to add more value to
the products being purchased. Patanjali is one good example for this.

Providing customers with value; Ensuring Customer Satisfaction – to build

loyal customers; Building customer trust; Securing Customer retentions –
elaborate on loyal customers

But why are the companies / firms so concerned to serve the consumers well?
Perhaps because of the remarkable success of the popular Japanese companies
Toyoto, Sony etc., those are focusing on Value Driven Products to their
customers.

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Nokia Failure

When Microsoft acquired Nokia in 2013, Nokia’s CEO Stephen Elop ended his
speech with the following words.“We didn’t do anything wrong, but somehow,
we lost.” Many opined that Nokia technically did nothing wrong, it was their
refusal to change and learn new things that ultimately lead to their demise.
“They missed out on learning, they missed out on changing, and thus they lost
the opportunity at hand to make it big. Not only did they miss the opportunity to
earn big money, they lost their chance of survival.”

GOLD SPOT, Sony Erricsson (lost to apple, Samsung), Kodak, Maruthi

800, sony Walkman, Telegram etc.

This example itself shows how dynamically the needs and wants of consumer
are shifting and how alert a company should be in designing its products. A
smartphone few years back was a want. But now it is a need.

Why Kellogs Corn Flakes had a tough time for its survival, but when
Maggy was launched it was a success.

In short, many successful companies understand the importance of consumers,

and use different approaches (which you will learning in future classes) and
developed a detailed data to worked on with various marketing strategies. Thus
consumer behaviour emerged as a new subject.

Defining Consumer Behaviour

According to Belch and Belch " Consumer behaviour can be defined as the
behaviour that consumers display/ show in searching for, purchasing, using,
evaluating, and disposing of products and services that they expect will satisfy
their needs. “

Consumer behaviour focuses on how an individual consumer, or family, or

organization make decisions to spend their available resources (time, money
and effort) on consumption related items. That includes all the details like --
what they buy, why they buy it, when they buy it, where they buy it, how often
they buy it, how they evaluate it after the purchase and consumption, what is the
impact of such evaluation on future purchases, and how they are going to
position/rank the product etc.

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While all consumers are unique, nevertheless on of the most important constants
among us is that consumption of certain products and services happens on a
regular basis like food, clothing, shelter, transportation, education, medical
facilities, lifestyle related issues, materialistic comforts, vacations, certain
luxuries and even ideas.

Each purchase decision that you are making will have a great impact and affect
the demand for basic raw-materials, for transportation, man-power for
production, banking for purchase transactions, employment of workers,
deployment of certain resources, success of some industries, failure of some
etc… overall there is an impact on nation’s economy.

Hence, the only way to keep the business in limelight is to understand the
decisions of the consumer, and the reasons behind those decisions and then act
accordingly.

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
 Listening 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.

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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, 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.

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The importance of consumer behaviour in marketing management is also
known as the significance of consumer behaviour. It includes various points
such as:\
1. To design production policies-
This is the first importance of consumer behaviour and it means that all the
production policies have designed taking into consideration the consumer
preference so that product can be successful in the market.
In every business, the main motive is to enhance the production and as well as
sales of the company and to do all these, any company or business has to win
the trust of its customers and studying about their tastes, likings, and
preferences.

2. Know the effect of price on buying-

This is the second consumer behaviour importance and it means
that consumer behavior can help in understanding the effect of price on
buying. Whenever the price is moderate on cheap more and more customer will
buy the product.
After the time of production, there comes a time in which the company has to
decide what the price of our product will be because it helps to divide the
categories of the customer and also helps to attain more sales.

3. Exploit the market opportunities-

This is the third importance or significance of consumer behaviour and it
means that the change in consumer preference can be a good opportunity for the
mark to bring something which cannot as a revaluation in the market. For
Example– When palm pops introduced in the market, it was successful due to
the stylish and sleek design.
4. Design marketing mix-
This is the fourth importance of consumer behaviour and it means
that consumer behavior is very much vital in designing and approaching
marketing mix to be chosen (product, price, place, and promotion).
The product should be valuable, the price should be moderate, place distribution
should be intensive and an appropriate. Promotion mechanism should be there.
5. Implement STP Strategies-
This is the fifth importance of consumer behaviour and it means that
the segmentation, targeting, and positioning strategies are implemented by
understanding the behaviour of consumers towards the various brands.
The products are targeted grouping the customers having common taste and
preference and finally positioned in the market. Thus, building a positive image
of the product of a company related to the competitors and as well as help to
beat them also.

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6. Helps in understanding diversified preferences

This is the sixth importance of consumer behaviour and it means that the
consumer preferences are diversified in nature and their keep on changing over
a particular period of time. Nowadays consumers are more value conscious and
they want to extract the maximum benefits from a particular product of a brand.
7. Understanding of various roles played by consumers-
This is the seventh importance and it means that there are various roles played
by the consumers in the consumer decision-making process. These roles are
initiators, influencers, decider, users, buyers, and gatekeeper. The steps of
the consumer decision-making process can be described are as follows:-
1. Need Recognition,
2. Information Search,
3. Evaluation of Alternatives,
4. Purchase Decisions,
5. Post Purchase Behaviour.

8. Results in customers satisfaction-

This is the eighth importance of consumer behaviour and it means when the
designed product is matching the expectations of the customer than they result
in customer satisfaction. In case the product is exceeding the expectations of the
customer then its result in customer delight.
In an organization, there are various departments like purchase, personnel,
finance, production, marketing and all departments have a motive to satisfy the
customer needs and wants.

Case Study: SUGAM invertors and stabilizers