Unit- 3

Consumer behavior
The success of any marketing campaign depends on how the targeted audience has
received it. Marketers are vying to grab consumers' attention and fulfil their needs and
wants. The main question here is, how can marketers understand the motivations of
consumers behind purchase decisions? The answer lies in the study of consumer
behaviour.

Marketers are facing aggressive competition in the market these days. Every
marketer wants to capture consumers' attention and build strong relationships with
them. This explains why companies are willing to spend a lot of money on marketing
research. Marketing research aims to understand consumer buying choices and the
motivation behind those choices. Consumer behaviour is the study of their buying
choices, i.e., why they buy or don't buy a specific product or service, the processes of
decision-making, and the motivations behind those decisions. One of the most critical
factors in marketing is understanding consumer behaviour. Knowing how consumers
make their purchase decisions would make a marketer's life so much easier as they can
design marketing campaigns that yield the most favourable results. However, it is easier
said than done, since many customers do not know how and why they make confident
buying decisions. Some even find it challenging to explain their buying process and the
motivations behind those decisions. Thus, the most challenging task for every marketer
is to answer why consumers buy. This is something consumer behaviour studies can
help.

 Consumer behaviour is the study of customers' buying choices and the

motivation behind those decisions.

 Marketers can determine consumers' preferences and buying patterns by

examining consumer buying behaviour.

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  Cultural, social, personal, and psychological factors could influence consumer
buying behaviour.

 Need identification, information search, checking alternatives, purchase

decision, and post-purchase behaviour are the steps in the purchase decision
process.

 Purchase behaviours are categorized into four types based on the extent of buyer
involvement and the extent of variations among brands: complex buying,
dissonance-reducing, habitual buying, and variety-seeking.

Three roles of Consumer Behaviour in Marketing

Overall, consumer behaviour has three main roles in marketing:

 Effective marketing campaigns - Consumer behaviour helps marketers to

understand the buying patterns of consumers. To an extent, it helps them to
design effective marketing campaigns i.,e, the message is delivered and taken
positively by the target audience.
 Suitable marketing channels - Marketers can select suitable marketing
channels for their campaigns through a better understanding of consumer
behaviour. For instance, online buying is a common practice now,
therefore, online marketing could be used to attract the target audience.
 Exploiting untapped markets - The assessment of consumers helps in
exploiting untapped markets. Marketers determine new trends and needs by
analysing consumer behaviour. It helps in developing products/services to cater
to the new needs and wants.

Factors influencing consumer behavior

Many factors could influence consumer buying behaviour. From cultural to
psychological factors, they reflect not just the buying choices but also the motivation
behind those choices. This section will explain each of these factors in detail.

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1. Cultural factors

Cultural factors are comprised of culture, subcultures, and social class. These factors
have a significant impact on consumer behaviour. Culture is one of the primary sources
through which human behaviours are formed. For a child, the household and societal
values and norms serve as guidelines for developing his values and perceptions. For
instance, the term – American dream is often discussed while discussing American
culture. It is because this term defines American culture, which is based on equal
opportunities for all. It is a culture where people can dream big and turn those dreams
into reality.

The smaller parts of a culture are subcultures.

 A subculture is a small cultural group within a culture, and it is formed by
people having similar value systems. Subcultures include religions, nationalities,
etc. Marketers often use these subcultures to target a specific audience by
providing them with customized products/services
 A social class represents the division of a society based on income, education,
occupation, etc. Marketers study these social classes because the people of a
particular social course tend to exhibit similar purchase behaviour.

2. Social factors

These factors comprise reference groups and family.

 A reference group is a group that a person identifies with and aspires to join. It
has a significant influence on a person's attitude and behaviour.
 Social groups are used to influence consumer buying decisions. For instance,
adventure sports athletes endorsing Red bull could affect people's perception of
that brand.
 The family also has a significant influence on a person buying behaviour. For
instance, children are more tech-savvy because of easy access to the latest

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 technologies. They are more involved in the buying decisions in a family. From
smartphones to cars, they help their parents in their buying decisions. As for
marketers, this shift is essential while devising marketing strategies.

3. Personal factors:

People sharing similar personal characteristics are likely to exhibit the same buying
behaviour. Personal factors include occupation, lifestyle, age, and economic
conditions. For instance, older people are less likely to experiment with new
products/services. They would want to continue buying the effects they have used
before. Marketers examine these personal factors to understand consumer buying
choices and effectively target the customers.

4. Psychological factors

Human needs arise due to biological factors and psychological factors. To fulfill those
needs, human seeks satisfaction sometimes by buying a specific product/service.
Psychological factors include motivation, perception, learning, etc.

Maslow's hierarchy of needs theory presents the different stages of conditions in a

person's life. A person, who does not have money, would first worry about fulfilling
basic needs such as hunger before fulfilling other requirements. Another critical factor
is perception, i.e., how we perceive information. Two people would have different
perceptions about a brand when exposed to the same marketing stimuli.

Buying decision process:

The most basic and important requirement for the marketer is to understand how
consumers make choices. According to Ajzen and Fishbein “human beings are usually
quite rational and make systematic use of information available to them. People

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consider the implications of their actions before they decide to engage or not to engage
in a given behavior”.

The buying decision process, or customer decision journey, is the steps that lead a
customer to purchase a product or service. The buying decision process is present in
many industries, from retail to e-commerce. This journey flows through three stages:
before, during, and post-purchase.

Every buying decision involves an element of active reasoning. Broadly, in making a

purchase decision the consumer goes through the following stages.

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1. Need Recognition:
The buying process starts with need recognition. As the person is
motivated to act only when he has some unsatisfied need. If some needs are not
in activated stage then they can be made activated by providing the information
about the product. For example: working women feel the for washing machine.
This recognition of need will activate her to search for any washing aid and it
will result in some decision.

2. Pre-Purchase information Search:

After recognizing the need, the person is involved in gathering the information
about the product or service. Search may be of two types: Internal search refers to
recalling the relevant information stored in the memory. External search refers to
the deliberate and voluntary seeking of new information regarding the product
under consideration. After collecting the information from different sources, the
person shows the interest in these products.

3. Evaluation of Alternatives:
Once the interest in the product is aroused, the person makes final decision using
certain evaluative criteria like product attributes, the relative importance of each
attribute to the consumer brand image, attitude towards the different brands etc. the
evaluation stage represents the stage of mental trial of the product.

4. Purchase Decision:
After evaluation, the consumer develops the intention either to purchase or reject
the product. The final purchase will however, depend on the strength of positive
intension that is, the intension to buy.

5. Post Purchase Behavior:

After making the purchase decision the person shows the response of the purchase.
It is called as post purchase behavior. It may be positive or negative. If a consumer

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 is buying something for the first time then from the behavioral viewpoint of it may
be regarded as a trial. The trial enables the person to gain learning about the product
purchased. If the learning is positive, then it results in repeat purchase and if it is
negative then it results in discontinuation.
In case of consumer durable products, the person’s learning does not result in repeat
purchase or discontinuation because these products are one time purchase products.
In these cases the learning is being stored and then it serves as influence for the
decision of the reference group members.

Organizational Consumers & their Buying Decision Making

Process:

An organizational consumer is a business, government, or other institution that buys

goods and services for use in operations, production, or resale. Examples of
organizational consumers include manufacturers, wholesalers, and retailers.

Organizational buying differs from consumer buying in several ways:

Purpose

Consumers buy goods and services for personal use, while organizational consumers
buy for business purposes.

Decision-making

Organizational buying is more rational and based on economic criteria, while

consumer buying can be influenced by emotions and brand loyalty.

Requirements

Organizational buyers often have specific requirements for products, while consumer
markets generally have standardized products.

Risk
Organizational buying can be more complex and involve multiple decision-makers,
which can lead to a higher perceived risk.

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Organizational buyers may need to justify their purchases through cost-benefit analyses
and life-cycle costing. When targeting organizations, businesses should present clear,
quantifiable benefits of their products or services.

Organizational buying process refers to the process through which industrial

buyers make a purchase decision. Every organization has to purchase goods and
services for running its business operations and therefore it has to go through a complex
problem solving and decision making process. The behaviour that the industrial buyers
exhibit while making a purchase decision, is known as Organizational buying
behaviour and the sequential steps taken by buyers to make a purchase decision is
known as organizational buying process.

Steps in Organizational Buying Process:

A Buying Centre consisting of members of the organization participate in the

purchase process and take relevant decisions according to different buying
situations.

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(1) Problem/Need recognition – It starts with realization of need or problem
within the organization. It may be need for a new computers, printers etc. or
problem like inventory shortage and under-production which can be solved
by procuring more stock and buying new machines in the latter case.
(2) Definition of characteristic and quantity needed – This stage involves
clearly defining then the problem in hand and laying down the general
characteristics of a product or service that may solve the problem. For e.g.
deciding the cost, type, quantity and quality computer, stock or machine to
be bought. This may be done by a purchase committee, production manager,
technical manager or the top management.
(3) Development of product specification – Once the general specifications
have been laid down, the buyers look for information about various product
alternatives and lays down well defined product specifications that is to be
bought. This is generally done by the department or group or individual who
will use or distribute the product. For e.g. an engineer may develop technical
specifications of PC`s to be bought or the production manager may take
decisions on different items that are to be stocked on the basis of brand,
quality, demand of products.
(4) Search and qualification of potential sources – After product
specifications have been laid down, the buyers enter the marketplace and
make trails and collect samples. Buyers also conduct a value analysis and
determine various cost reduction and standardization techniques that will
effective solve the problem. The buyers them determine various sellers that
have the ability to provide the required quantity and good quality of product
needed.
(5) Acquisition and analysis of proposal – This step involves getting
quotations from different sellers and floating tenders. The offers received by
various parties are then scrutinized against the previously developed criteria
and few sellers are shortlisted who can satisfy all requirements.
(6) Evaluation and selection of suppliers – The shortlisted suppliers are then
evaluated on the basis of:

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  Past reputation
 Quality of product
 Delivery and Payment terms
 Guarantees, Warranties, Discounts, Assurance offered by the seller
 Price of the product
 After sale services etc.

Suppliers are reviewed again and again and then one or more than one supplier may
be selected.

(7) Selection of an order routine – At this stage the buyers place the final order
with the chosen supplier or suppliers specifying all the technical
specifications, quantity needed, expected delivery time, payment and return
terms, installation or after sale services etc. required.

(8) Performance feedback and evaluation – The last stage involves deciding
whether to re-order, modify the order or drop the seller. The buyers evaluate their
satisfaction with the product and the seller(s) and communicate the response to
the seller(s). An order schedule is prepared for a month, quarter or year and the
organization enters into a contract with the seller.

Consumer satisfaction:

Meaning of consumer satisfaction:-

Customer satisfaction is defined as a measurement that determines how happy

customers are with a company's products, services, and capabilities. Customer
satisfaction information, including surveys and ratings, can help a company determine
how to best improve or changes its products and services.

Consumer satisfaction refers to the degree of contentment or fulfilment that a

consumer experiences after making a purchase or using a product or service. It is a

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subjective assessment of whether the product or service met, exceeded, or fell short of
the consumer's expectations.

Several factors contribute to consumer satisfaction:

1. Product or Service Performance: The primary factor influencing consumer

satisfaction is the actual performance of the product or service. If it functions as
expected, meets quality standards, and fulfils the consumer's needs, it is likely to result
in satisfaction.

2. Customer Service: Positive interactions with customer service

representatives can significantly impact consumer satisfaction. Prompt and helpful
responses to inquiries, efficient issue resolution, and overall positive customer service
experiences contribute to satisfaction.

3. Value for Money: Consumers assess whether the perceived value of the
product or service justifies the cost. If they feel they received good value for the money
spent, it enhances satisfaction.

4. Reliability and Durability: Products that are reliable, durable, and have a
longer lifespan contribute to higher satisfaction. Consumers appreciate products that
require minimal repairs or replacements.

5. Convenience: Convenience in terms of product availability, ease of purchase,

and accessibility can contribute to satisfaction. Convenient shopping experiences, user
friendly interfaces, and hassle-free processes enhance satisfaction.

6. Brand Reputation: Consumers often associate satisfaction with the

reputation of the brand. Positive brand perceptions, trustworthiness, and a history of
delivering quality products or services contribute to overall satisfaction.

7. Communication and Transparency: Clear and transparent communication

from the company regarding product features, pricing, and policies can positively
impact satisfaction. Consumers value honesty and openness in their interactions with
businesses.

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 8. Innovation: Consumers may derive satisfaction from innovative features or
improvements in products or services. Companies that stay ahead of the curve and offer
something new and exciting can enhance customer satisfaction.

9. Customization and Personalization: Tailoring products or services to

individual preferences contributes to satisfaction. Personalized experiences,
recommendations, and customizable options can create a positive impression.

10. Post-Purchase Support: Adequate support after the purchase, such as

warranty services, product support, and follow-up communications, can contribute to
long-term satisfaction.

Monitoring and understanding consumer satisfaction is crucial for businesses as

satisfied customers are more likely to become repeat customers, recommend the brand
to others, and contribute positively to the company's reputation. Regular feedback,
surveys, and assessments help businesses identify areas for improvement and maintain
high levels of customer satisfaction.

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