CONSUMER BEHAVIOUR

INTRODUCTION-

Consumer behaviour is the study of individuals, groups, or organizations and the

processes they use to select, secure, and dispose of products, services, experiences, or

ideas to satisfy needs and the impacts that these processes have on the consumer and

society. It blends elements from psychology, sociology, social anthropology and

economics. It attempts to understand the decision-making processes of buyers, both

individually and in groups. It studies characteristics of individual consumers such as

demographics and behavioural variables 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 behaviour can be defined as the decision-making process and

physical activity involved in acquiring, evaluating, using and disposing of goods

and services."

This definition clearly brings out that it is not just the buying of goods/services that

receives attention in consumer behaviour but, the process starts much before the goods

have been acquired or bought. A process of buying starts in the minds of the consumer,

which leads to the finding of alternatives between products that can be acquired with

their relative advantages and disadvantages. This leads to internal and external

research. Then follows a process of decision-making for purchase and using the goods,
and then the post purchase behaviour which is also very important, because it gives a

clue to the marketers whether his product has been a success or not.

Consumer behaviour is a complex, dynamic multidimensional process, and all marketing

decisions are based on assumptions about Consumer behaviour. 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. In formulating the marketing strategy, to sell the product

effectively, cost-benefit analysis must be undertaken. There can be many benefits of a product,

for example, for owning a motor bike one can be looking for ease of transportation, status,

pleasure, comfort and feeling of ownership. The cost is the amount of money paid for the bike,

the cost of maintenance, gasoline, parking, risk of injury in case of an accident, pollution and

frustration such as traffic jams. The idea is to provide superior customer value and this requires

the formulation of a marketing strategy. The entire process consists of market analysis, which

leads to target market selection and then to the formulation of strategy by juggling the product,

price, promotion and distribution, so that a total product (a set of entire characteristics) is

offered. The total product creates an image in the mind of the consumer, who undergoes a

decision process which leads to the outcome in terms of satisfaction or dissatisfaction, which

reflects on the sales and image of the product or brand.

OBJECTIVES-

To understand the likes and dislikes of the consumer, extensive consumer research

studies are being conducted.

These researches try to find out:

 What the consumer thinks of the company's products and those of its competitors?

 Flow can the product be improved in their opinion?

 How the customers use the product?

 What is the customer's attitude towards the product and its advertising?

 What is the role of the customer in his family?

LITERATURE REVIEW-

The study of customer behavior is multifaceted and crucial for businesses looking to

meet customer needs effectively. This literature review provides a foundational

understanding of the key concepts and areas of focus in this field.

Introduction to Customer Behavior:

Customer behavior is a vital area of study in marketing and business management. It

involves understanding how consumers make decisions, interact with products and

services, and the factors influencing their choices. The literature on customer behavior

encompasses various aspects such as perception, motivation, attitude, and decision-

making processes.

Factors Influencing Customer Behavior:

Psychological Factors: Research has shown that psychological factors, such as

perception and motivation, significantly impact consumer choices. Perception relates to

how individuals interpret and process information, while motivation drives their actions.
Social and Cultural Factors: Social and cultural influences play a crucial role in shaping

customer behavior. Family, peers, and cultural norms can affect what products or

services individuals choose.

Economic Factors: Economic factors like income, budget constraints, and pricing

strategies have a direct impact on consumer decisions. Economic theories like utility

theory and consumer surplus are often discussed in this context.

Consumer Decision-Making Models:

Several decision-making models are studied in the literature, including the consumer

decision-making process. These models typically include stages such as problem

recognition, information search, evaluation of alternatives, purchase decision, and post-

purchase evaluation.

Consumer Segmentation:

Marketers often segment the consumer market based on various criteria like

demographics, psychographics, and behavior. Understanding these segments is

essential for targeted marketing strategies.

Consumer Loyalty and Satisfaction:

Customer behavior research also explores topics related to customer loyalty,

satisfaction, and the post-purchase experience. Models like the Customer Satisfaction

Index (CSI) and the Net Promoter Score (NPS) are used to gauge customer sentiment.

Consumer Behavior in the Digital Age:

With the rise of e-commerce and digital marketing, the literature also delves into how

customer behavior is influenced by online platforms, social media, and digital

advertising.

MARKET ANALYSIS

Market analysis requires an understanding of the 4-Cs which are consumer, conditions,

competitor and the company. A study is undertaken to provide superior customer value, which is

the main objective of the company. For providing better customer value we should learn the

needs of the consumer, the offering of the company, its competitors and the environment which

is economic, physical, technological, etc. A consumer is anyone who engages himself in

physical activities, of evaluating, acquiring, using or disposing of goods and services. A

customer is out who actually purchases a product or service from a particular organization or a

shop. A customer is always defined in terms of a specific product or company. However, the

term consumer 1st broader term which emphasizes not only the actual buyer or customer, but

also its users i.e., consumers. Sometimes a product is purchased by the head of the family and

used by the whole family, i.e., a refrigerator or a car. There are some consumer behaviour roles

which are played by different members of the family.

Initiator The person who determines that some need or want is to be met (e.g. a daughter

indicating the need for a colour TV). Influencer The person or persons who intentionally or

unintentionally influence the decision to buy or endorse the view of the initiator. Buyer The

person who actually makes a purchase. User The person or persons who actually use or

consume the product.

Consumer Behavior Rules

Consumer Behavior Rules are classified into two categories:

Compensatory and Non-Compensatory.

Compensatory Behavior Rule:

 A shopper evaluates store or brand alternatives in respect of each salient

attribute and assigns weight or summated score for each store or brand in a
consideration set.
 The computed value reflects the store’s relative edge as a potential purchase
choice.
 The shopper will choose the store or brand that has the highest score.
 The positive effect of a store or brand compensates for or offsets the
negative effect.

Non Compensatory Decision Rule:

 Do not allow customers to balance positive assessment of store on one

dimension against a negative evaluation on another dimension.
 Positive attributes won’t compensate for the negative attribute of a store or
product.

CHARACTERISTIC FEATURES OF INDIAN CONSUMER :-

The Competition In the analysis of the market, a study of the strengths and weaknesses of the
competitors, their strategies, their anticipated moves and their reaction to the company’s moves
and plans is to be made. The company after getting this information reacts accordingly and
changes its marketing mix and the offering is made in a manner which can out do the
competitor. 'This is a very difficult process, and it is easier said than done. To have correct
information about the competitors and to anticipate their further moves is the job of the
researcher. The Conditions The auditions under which the firms are operating have also to be
seriously considered.

The factors to be studied are the economy, the physical environment, the government
regulations, the technological developments, etc. 'These affect the consumer needs, i.e. the
deterioration of the environment and its pollution may lead to the use and innovation of safer
products. People are health conscious and are concerned with their safety. Hence, in this case,
safer products have a better chance with the consumer. In case of recession the flow of money
is restricted greatly. This leads to the formulation of different marketing strategies.

Market Segmentation The market divided into segments which are a portion of a larger
market whose needs are similar and, they are homogenous in themselves. Such segments are
identified with similar needs.
 Need Set By need set, it is meant that there are products which satisfy more than one need.
An automobile can fill the transportation needs, Status need, fun needs or time saving needs.
So the company tries to identify the need sets which its product can fulfill. Then we try to identify
the groups who have similar needs. i.e., some people need economical cars, others may go or
luxury cars.

Demographic mid Psychographic Characteristics These groups are identified and they are
described in terms of their demographic and Psychographic characteristics. The company finds
out how and when the product is purchased and consumed.

Target Segment After all the above preliminary work is done, the target customer group
known as the target segment is chosen, keeping in mind how the company can provide superior
customer value at a profit. The segment which can best be served with the company's
capabilities at a profit is chosen. It has to be kept in mind that different target segments require
different it marketing strategies and, with the change in the environmental conditions the market
mix has to be adjusted accordingly.

Consumer Decision Process The decision-making process consists of a series of steps

which the consumer undergoes. First, the decision is made to solve a problem of any kind. This
may be the problem of creating a cool atmosphere in your home. For this, information search is
carried out, too find how the cool atmosphere can be provided, e.g. by an air-conditioner or, by
a water-cooler. This leads to the evaluation of alternatives and a cost benefit analysis is made to
decide which product and brand image will be suitable and can take care of the problem suitably
and adequately. Thereafter the purchase is made, and the product is used by the consumer.
The constant use of the product leads to the satisfaction or dissatisfaction of the consumer,
which leads to repeat purchases, or to the rejection of die product. The marketing, strategy is
successful if consumers can see a need which a company's product can solve and, offers the
best solution to the problem. For a successful strategy the marketer must lay emphasis on the
product/brand image in the consumer’s mind. Position the product according to the customers,
likes and dislikes. The brand which matches the desired image of a target market sells well.
Sales are important and sales are likely to occur if the initial consumer analysis was correct and
matches the consumer decision process. Satisfaction of the consumer, after the sales have
been affected, is important for repeat purchase. It is more profitable to retain existing customers,
rather than looking for new ones.

CULTURE AND CONSUMER BEHAVIOUR-

TYPES OF CULTURE :

IT CAN BE IDENTIFIED ON THE BASIS OF:

 race  nationality  religion  age  geographic location  gender  social class Etc.

How Culture Is Learned 1. There are three distinct forms of learning: a) Formal learning—
adults and older siblings teach a young family member “how to behave.” b) Informal learning—
a child learns primarily by imitating the behavior of selected others. c) Technical learning—
teachers instruct the child in an educational environment as to what, how, and why it should be
done.

2. Advertising and marketing communications can influence all three types of cultural learning.
a) It most influences informal learning by providing models of behavior to imitate. b) This is
especially true for visible or conspicuous products that are evaluated in public settings, where
peer influence is likely to play an important role.

3. The repetition of advertising messages creates and reinforces cultural beliefs and values.

4. Cultural meaning moves from the culturally constituted world to consumer goods and from
there to the individual consumer by means of various consumption-related vehicles (e.g.,
advertising or observing or imitating others’ behavior.)

Cross-cultural marketing is defined as “the effort to determine to what extent the

consumers of two or more nations are similar or different. This will facilitate marketers to

understand the psychological, social and cultural aspects of foreign consumers they wish to

target, so as to design effective marketing strategies for each of the specific national markets

involved.”

FACTORS AFFECTING CONSUMER BEHAVIOUR-

Consumer behavior is influenced by a wide range of factors, and understanding these

factors is crucial for businesses to effectively market their products and services. Some

of the key factors that influence consumer behavior in more detail:

1)Cultural Factors:

Culture: A person's culture, including their values, beliefs, customs, and traditions, has a

significant impact on their preferences and choices.

Subculture: Within a larger culture, there are subcultures, such as ethnic or religious groups,

which can influence consumer behavior.

Social Class: People often identify with specific social classes, and these classes can affect

their buying decisions.

2)Social Factors:

Reference Groups: People are influenced by reference groups (family, friends, colleagues) who

can affect their purchasing choices and decisions.

Social Roles and Status: A person's role in society and their perceived status can influence

what they buy and how they buy it.

3)Personal Factors:

Age and Life Stage: Different age groups have varying needs and preferences. Life events,

such as marriage, childbirth, or retirement, also influence consumer choices.

Occupation: A person's job and occupation can impact their purchasing behavior.

Economic Situation: Income, savings, and overall financial situation play a significant role in

determining what consumers can afford.

Lifestyle and Personality: A person's lifestyle and personality traits can affect their choices. For

example, an adventurous person might be more inclined to try new products.

4)Psychological Factors:

Motivation: The underlying reasons and needs that drive individuals to make specific choices.

Perception: How people interpret and perceive information, which can influence their buying

decisions.

Learning: The process of gaining knowledge and experience can impact consumer behavior.
Beliefs and Attitudes: Personal beliefs and attitudes toward products or brands can shape

consumer preferences.

5)Situational Factors:

Purchase Context: The immediate situation in which a purchase decision is made, such as time,

place, and surroundings.

Purchase Purpose: Whether the purchase is for personal use, a gift, or for resale can affect

consumer choices.

6)Marketing Mix:

Product: The design, quality, and features of a product.

Price: The cost of a product or service.

Promotion: Marketing and advertising efforts, including campaigns and messages.

Place: The distribution and availability of products.

Understanding these factors and how they interplay is essential for businesses to tailor their

marketing strategies to meet the needs and desires of their target consumers effectively.

Consumer behavior is a complex and dynamic field, and these factors are interconnected and

can change over time, making it important for businesses to continuously adapt their strategies.

MARKETING MIX

The marketing mix, often referred to as the 4Ps, is a fundamental concept in marketing

that outlines the key elements a business can control to influence consumer behavior
and achieve its marketing objectives. The 4Ps stand for Product, Price, Promotion, and

Place (Distribution). Let's delve into each of these components in more detail:

1)Product:

This refers to the tangible good or intangible service that a company offers to its target market.

Product decisions involve aspects like product design, quality, features, branding, packaging,

and warranty.

Understanding customer needs and preferences is essential in creating a product that will

satisfy the target market.

2) Price:

Price is the amount of money customers are willing to pay for the product or service.

Pricing decisions include setting the initial price, discounts, and determining the perceived value

of the product in the market.

Pricing strategies can vary, including penetration pricing (setting a low initial price to gain market

share) or premium pricing (charging a higher price to convey exclusivity or quality).

3) Promotion:

Promotion encompasses all the activities used to make the product or service known to the

target audience and persuade them to buy it.

Elements of promotion include advertising, public relations, sales promotions, personal selling,

and online marketing.

The choice of promotional channels and the content of the messages are crucial to reach the

target audience effectively.

4)Place (Distribution):

Place refers to the distribution and availability of the product, which ensures that customers can

access and purchase it conveniently.

Distribution decisions involve selecting distribution channels (such as direct sales, retailers, e-

commerce), The goal is to make the product accessible to the target market in the right place

and at the right time.

In addition to the original 4Ps, the marketing mix has been expanded to include three additional

elements: managing inventory, and determining the physical locations where the product is sold.

***People:

This highlights the role of people, both employees and customers, in delivering and

experiencing the product or service.

Staff training, customer service, and the overall interaction with the customers are essential

aspects.

***Process:

Process refers to the systems and procedures that a company employs to deliver its products

and services.

It involves optimizing to enhance the customer experience and ensure efficient delivery.

***Physical Evidence:

Physical evidence pertains to the tangible and intangible cues that communicate the quality of

the service.
It includes aspects like the physical environment, branding, and other elements that influence

how customers perceive the service.

The marketing mix is a dynamic framework, and businesses must continuously adjust and fine-

tune these elements to meet changing consumer preferences and market conditions.

Successful marketing strategies often involve finding the right balance among the 4Ps (or 7Ps)

to create a compelling value proposition that resonates with the target audience.

CONCLUSION-

In conclusion, the study of consumer behavior is essential for businesses to understand

and adapt to the dynamic and complex factors that influence purchasing decisions. By

recognizing the impact of cultural, social, personal, and psychological elements, as well

as the interplay of the marketing mix, companies can develop effective strategies to

meet customer needs and preferences. Consumer behavior is not a static concept but a

continuously evolving field, and staying attuned to these influences is vital for long-term

success in the marketplace.

REFERENCES USED-

*ResearchGate
*renaissance college of commerce and management- notes on consumer

behaviour

*ChatGPT

NAME: ANURAG VAIDYA

PRN NO. 1182230110

BBA LLB (HONS.) 1ST YEAR

DIVISION A