Consumer Behaviour Workbook

Meet the NEW CONSUMER and smile when you do

because she is your boss. It may not be the person you
thought you knew. Instead of choosing from what you have
to offer, she tells you what she wants.
You figure it out how to give it to her.
Fortune Editor
 Consumer Behaviour Workbook The Consumer defined

Who is a Consumer ?
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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.

t Example - Tom might purchase a tricycle for his

son or Mike might buy a shirt for himself. In these
examples, both Tom and Mike are consumers.
 Consumer Behaviour Workbook The Consumer defined

What is Consumer Interest ?

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Every customer shows inclination towards particular products and services.

Consumer interest is nothing but the willingness of consumers to purchase

products and services as per their taste, need and of course pocket.

Lets go through the following example:

u Both Maria and Sandra went to the nearby shopping mall

to buy dresses for themselves. The store manager showed
them the best dresses available with him. Maria immediately
purchased two dresses but Sandra returned home empty
handed. The dresses were a little too expensive for Sandra
and she preferred simple and subtle designs as compared to
designer wears available at the store.

In the above example Sandra and Maria had similar requirements

but there was a huge difference in their taste, mind set and ability to spend.

l Taste is defined as being able to distinguish the good of something from the bad
as far as quality and excellence is concerned (i.e. music, clothes).

l Mindset is defined as a persons attitude or a particular way of thinking.

l Ability to spend defines the purchasing power of the person.

 Consumer Behaviour Workbook Consumer Behaviour defined

Out of 11000 products launched by 77 companies, only 56% are present five years later.
Kuczmaski & Associates

Only 8% of new product concepts offered by 112 leading companies reached the market.
Out of this 83% failed to reach marketing objectives.
Group EFO Ltd., Marketing News, Feb 1, 1993, Pg 2

What is Consumer Behaviour ?

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Consumer Behaviour is the study which deals with the various stages a consumer goes through before purchasing
products or services for his end use.

Why do you think an individual buys a product ?

Need
Social Status
Gifting Purpose

Why do you think an individual does not buy a product ?

No requirement
Income/Budget/Financial constraints
Taste

When do you think consumers purchase products ?

Festive season
Birthday
Anniversary
Marriage or other special occasions

Understanding why people buy things is a matter of

psychology. The science of consumer behavior uncovers why
people make purchases. Understanding these behaviors help
both marketers and business owners influence the buying
process. If you have the knowledge to influence the buying
process, you can not only create better advertising and
marketing plans, but you can help increase your sales volume
and ultimately, your bottom line.
 Consumer Behaviour Workbook Influencing the Consumer

There are in fact several factors which influence buying decision of a consumer.
These range from:
l Cultural
l Personal
l Psychological
l Social

Culture factor
The cultural factor typically exerts the deepest
influence on consumer buying behaviors.
Culture may be described as how society
contributes to a persons basic values,
ideals, behaviors. Define some of these from
your experience.

Personal factor
A personal factor would be when an item has a personal value to the person.
Why is jewellery considered a sentimental item?

Psychological factor
Psychological factors affecting our purchase decision include motivation
(Maslows hierarchy of needs), perception, learning, beliefs and attitudes.

Social factor
A social factor would be when an item is very popular, many people tend to buy
them based on their popularity. Can you think of an example?
 Consumer Behaviour Workbook The study of Consumer Behaviour

Understanding and adapting to consumer motivation and behaviour is not an option

it becomes a necessity for competitive survival.

The study of consumer behaviour explains:

_____________________________________________________________________________
l Why and why not a consumer buys a product ?

l When a consumer buys a product ?

l How a consumer buys a product ?

During festive seasons, the buying tendencies of consumers increase as compared to other months. In the same way
during Valentines week, individuals are often seen purchasing gifts for their partners. Fluctuations in the financial
markets and recession decrease the buying capacity of individuals.

In a laymans language consumer behaviour deals with the buying behaviour of individuals.

The main catalyst which triggers the buying decision of an individual is the need for a particular product/service.
Consumers purchase products and services as and when a need arises.

What is the difference between Needs and Wants?

u Needs would be defined as goods or services that are required.

This would include the needs for food, clothing, shelter and health care.

u Wants are goods or services that are not necessary but that we desire or wish for.

Fill in the blanks:

One __________ clothes, but one may not ___________ designer clothes.

One does not ___________ toys, entertainment, gems, etc.

One _____________ food, but does not ______________ to have steak or dessert.
 Consumer Behaviour Workbook Consumer Decision Process

Consumer decision process

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When purchasing any product, a consumer goes through a decision process. The actual act of purchase is only one stage
in the process and is not the first stage. Not all decision processes, once initiated, lead to an ultimate purchase; the
consumer may terminate the process at any stage. Not all consumer buying decisions include all five stages.

The five stages decision process:

Stage 1: Problem recognition

u This stage occurs when a buyer becomes aware of a difference between a desired state and an actual condition.
u Recognition speed can be slow or fast.
u Individual may never become aware of the problem or need. Marketers may use sales personnel, advertising,
and packaging to trigger recognition of needs or problems.

Stage 2: Information search

u After the consumer becomes aware of the problem or need, he or she searches for information about products
that will help resolve the problem or satisfy the need.
u There are two aspects to an information search:
a) In the internal search, buyers first search their memories for information about products that might solve
the problem.
b) In the external search, buyers seek information from outside sources.
(1) An external search occurs if buyers cannot retrieve enough information from their memories for a
decision.
(2) Buyers seek information from friends, relatives, public sources, such as government reports or
publications, or marketer-dominated sources of information, such as salespeople, advertising, websites,
package labeling, and in-store demonstrations and displays. The Internet has become a major information
source.
u Repetition, a technique well known to advertisers, increases consumers learning. Repetition eventually may
cause wear-out, meaning consumers pay less attention to the commercial and respond to it less favorably than
they did at first.

Stage 3: Evaluation of alternatives

u A successful information search within a product category yields a consideration set (aka evoked set), which is a
group of brands that the buyer views as possible alternatives.
a) The consumer establishes a set of evaluative criteria, which are objective and subjective characteristics
that are important to him or her.
b) The consumer uses these criteria to rates and ranks brands in the consideration set.
u Marketers can influence consumers evaluations by framing the alternativesthat is, by the manner in which
they describe the alternatives and attributes.

Stage 4: Purchase decision

u Purchase selection is based on the outcome of the evaluation stage and other dimensions.
a) Product availability, seller choice, and terms of sale may influence the final product selection.
u The buyer may choose to terminate the buying decision process, in which case no purchase will be made.

Stage 5: Post purchase behaviour

u After purchase, the buyer begins to evaluate the product to ascertain if the actual performance meets expected
levels. Evaluation is based on many of the same criteria used when evaluating alternatives.
u Cognitive dissonance is a buyers doubts that arise shortly after a purchase about whether it was the right
decision.
 Consumer Behaviour Workbook Situational Influences

Situational Influences on the Buying Decision Process

Situational influences are factors that result from circumstances, time, and location that affect
the consumer buying decision process.

u Can influence a consumers actions in any stage of the buying process

u Can shorten, lengthen, or terminate the buying process.

Situational factors can be divided into five categories:

u Physical surroundings include location, store atmosphere, aromas, sounds, lighting, weather,
and other factors in the physical environment in which the decision process occurs.
Give an example of this.

u Social surroundings include characteristics and interactions of others who are present
during a purchase decision or who may be present when the product is used or consumed (e.g.
friends, relatives or salespeople), as well as conditions during the shopping environment (e.g. an
overcrowded store may cause the buyer to terminate the buying decision process).

u The time dimension influences the buying decision process in several ways, such as the
amount of time required to become knowledgeable about a product, to search for it, and to buy
and use it.

Time plays a role as the buyer considers the possible frequency of product use, the length
of time required to use the product, and the length of the overall product life. Other time
dimensions influence purchases, including time of day, day of the week or month, seasons, and
holidays. A customer under severe time constraints is likely either to make a quick purchase
decision or to delay a decision.

u The reason for the purchase raises the questions of what the product purchase should
accomplish and for whom. For example, people who are buying a gift may buy a different
product from one they would buy for themselves.
Explain this with an example.

u The buyers momentary moods or conditions (e.g., fatigue, illness, having cash) may have a
bearing on the consumer buying decision process. Any of these moods or conditions can affect
a persons ability and desire to search for information, receive information, or seek and evaluate
alternatives. They can also significantly influence a consumers post-purchase evaluation.
 Consumer Behaviour Workbook Consumer search for information | Buying decisions

Consumer search for information

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Whenever a need arises, a consumer searches for several information which would help him in his purchase.

Following are the sources of information:

u Personal Sources
u Commercial Sources
u Public Sources
u Personal Experience
u Perception also plays an important role in influencing the buying decision of consumers.

Consumer buying decisions

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Buying decisions of consumers also depend on the following factors:

Motive
A motive is an internal energizing force that orients a
persons activities toward satisfying a need or achieving a
goal. Consumers actions are effected by a set of motives,
not just one. If marketers can identify motives then they can
better develop a marketing mix.

MASLOW Hierarchy of Needs

The motivating techniques delve into the conscious, subconscious and the unconscious of the human mind.

u Physiological
u Safety
u Love and Belonging
u Esteem
u Self Actualization

Psychologist Abraham Maslow conceived a

theory of motivation; Maslows hierarchy of
needs organizes human needs into five levels.
Humans try to satisfy these needs starting with
the most basic. Once needs at one level are
met, humans move on to fulfilling needs at the
next level.
 Consumer Behaviour Workbook Consumer Buying decisions

Consumers do not always purchase for logical reasons.

Much of the time, they buy for emotional ones.

Other psychological factors include:

Perception
Perception is the process of selecting, organizing, and interpreting information inputs to
produce meaning.

Information inputs are sensations received through sight, taste, hearing, smell, and touch.
Perception is highly complex, leading markets to increasingly take a multi-sensory approach.

Perception is a three-step process:

u Selective attention
Not all promotional materials and advertisements excite a consumer. A consumer does not pay
attention to everything he sees. He is interested in only what he wants to see. Such behaviour
is called selective attention. Consumer interpretation refers to how an individual perceives a
particular message. A consumer would certainly buy something which
appeals to him the most.

u Selective distortion
Selective distortion is changing or twisting currently received information;
it occurs when a person receives information inconsistent with personal
feelings or beliefs.

u Selective retention
Selective retention is when a consumer remembers the most relevant
and meaningful message. He would obviously not remember something
which has nothing to do with his need.

Favorable consumer perceptions spell success for a business.

The perceptions consumers have of a business and its products
or service have a dramatic effect on buying behavior.

u What is your perception of the brand True Religion after seeing the
advertisement on the right?
 Consumer Behaviour Workbook Consumer Buying decisions

Consumers are funny, you must capture their heart and mind
before capturing their wallet.

Learning
Consumers learn about products indirectly through information from salespeople, friends, relatives,
and advertisements. Learning refers to changes in a consumers thought processes and behaviors
caused by information and experience.

The learning process is strongly influenced by the consequences of a consumers behavior;

behaviors with satisfying results tend to be repeated.

Inexperienced buyers may use different, more simplistic, types of information than experienced
shoppers familiar with the product and purchase situation.

Marketers help inexperienced buyers learn about their products by helping them gain experience
with them, perhaps through free samples, in-store demonstrations, and test drives.

For example: Market wine from South Africa...Did you know South Africa produces wine? No?
Enlighten consumers about the wine industry in South Africa. Also educate consumers about
changes in South Africa. Need to sell a whole new country. Brand awareness can help the
product stand out on crowded shelves.
 Consumer Behaviour Workbook Consumer Buying decisions

Inexperience buyers often use prices as an indicator of quality more than those who have knowledge of
a product.

If you are purchasing non-alcoholic beer below, which brand would you choose for quality and why?

$$$ $ $

Buying Habits
Studies have shown that consumers decide more quickly from among a number of options that includes
one known brand than they decide with a set that includes only unfamiliar ones. Upon exposure to
other brands, the instances of selecting the original based on awareness declined, but most still chose
the same high-awareness brand they picked initially.

Implications
Building brand awareness can increase market share in a number of ways. Being the first to get a brand
implanted in customers minds increases the barrier to entry that other brands may face later. If your
industry is more competitive or already has established players, youll likely have to be more aggressive
in your approach, but you still can become one of the brands consumers consider if they become more
aware of your name.

Techniques
To build brand awareness, ensure the target market is exposed to your products and recognizes them in
multiple ways. An identifiable logo and distinct brand message can present the repetition that can make
your brand or product name memorable. Getting your brand exposed to the audience can take place via
multiple distribution platforms, from direct marketing to traditional advertising to social media to public
relations.

What do you think

of when you see
this brand?
 Consumer Behaviour Workbook Consumer Buying decisions

Attitudes
An attitude is a consumers enduring evaluation of, feelings about, and behavioral tendencies
toward a tangible or intangible object or idea.

An individual learns attitudes through experience and interaction with other people.

Consumer attitudes toward a firm and its products greatly influence the success or failure of the
firms marketing strategy.

Consumer attitudes toward prices, package designs, brand names, advertisements, salespeople,
repair services, store locations, features of existing or proposed products, and social responsibility
activities should be keenly measured.

Attitudes and attitude change are influenced by consumers personality and lifestyle.

Consumers screen information that conflicts with their attitudes. Distort information to make it
consistent and selectively retain information that reinforces their attitudes.
How would you explain this? Is this brand loyalty?

Several methods help marketers gauge consumer attitude.

Direct questioning of consumers. The Internet and social networking sites have become valuable tools.

An attitude scale is a means of measuring consumers attitudes by gauging the intensity of individuals reactions to
adjectives, phrases, or sentences about an object.

Marketers may try to change negative attitudes toward an aspect of a marketing mix to make them more favorable,
but this is generally a long, expensive, and difficult task and may require extensive promotional efforts
 Consumer B

Personality
Personality is all the internal traits and behaviors that make a person unique, uniqueness arises
from a persons heredity and personal experience. Examples include:

Workaholism
Compulsiveness
Self confidence
Friendliness
Adaptability
Ambitiousness
Dogmatism
Authoritarianism
Introversion
Extroversion
Aggressiveness
Competitiveness

Traits effect the way people behave. Marketers try to match the store image to the perceived
image of their customers.

There is a weak association between personality and Buying Behavior, this may be due to
unreliable measures.

Consumers buy products that are consistent with their self concept.
Advertisements may be aimed at certain personality types, usually focusing on positively valued
personality characteristics.

Self-concept, or self-image, is a perception or view of oneself.

a) Buyers purchase products that reflect and enhance self-concept.
b) A persons self-concept may influence whether he or she buys a product in a specific
product category and may have an impact on brand selection.
 Consumer Behaviour Workbook Consumer Buying decisions

Lifestyles
A lifestyle is an individuals pattern of living expressed through activities, interests, and opinions.

Lifestyle patterns include the way people spend time, extent of interaction with others, and
general outlook on life and living.

People partially determine their own lifestyle, but lifestyles are influenced by other factors such as
personality and demographics.

Lifestyles strongly impact the consumer buying decision process, including product needs.

The VALS program

Developed by SRI Consulting Business Intelligence
One of the most popular frameworks for exploring consumer lifestyles. It divides consumers
into eight groups: innovators, thinkers, achievers, experiencers, believers, strivers, makers
and survivors.
 Consumer Behaviour Workbook Consumer Buying decisions

Social Factors

Social factors play an essential role in influencing the buying decisions of consumers.

Human beings are social animals. We need people around to talk to and discuss various issues
to reach to better solutions and ideas. We all live in a society and it is really important for
individuals to adhere to the laws and regulations of society.

Social Factors influencing consumer buying decision can be classified as under:

Reference Groups
Immediate Family Members
Relatives
Role in the Society
Status in the society

u Reference Groups
Every individual has some people around who influence him/her in any way. Reference groups
comprise of people that individuals compare themselves with. Every individual knows some
people in the society who become their reference in due course of time.

Co workers, family members, relatives, neighbours, friends, seniors at workplace often form
reference groups.

Reference groups are generally of two types:

Primary Group
Secondary Group

Primary Group - consists of individuals one interacts with on a regular basis.

Primary groups include:

Friends
Family Members
Relatives
Co Workers

All the above influence the buying decisions of consumers due to following reasons:
They have used the product or brand earlier. They know what the product is all about. They
have complete knowledge about the features and specifications of the product.

Tim wanted to purchase a laptop for himself. He went to the nearby store and purchased a
Dell Laptop. The reason why he purchased a Dell Laptop was because all his friends were using
the same model and were quite satisfied with the product. We tend to pick up products our
friends recommend.

A married individual would show strong inclination towards buying products which would
benefit not only him but also his family members as compared to a bachelor. Family plays an
important role in influencing the buying decisions of individuals.
 Consumer Behaviour Workbook Consumer Buying decisions

A consumer who has a wife and child at home would buy for them rather than
spending on himself. An individual entering into marriage would be more interested
in buying a house, car, household items, furniture and so on. When an individual gets
married and starts a family, most of his buying decisions are taken by the entire family.

Every individual goes through the following stages and shows a different buying need
in each stage:

Bachelorhood: Purchases Alcohol, Beer, Bike, Mobile Handsets (Spends Lavishly)

Newly Married: Tend to purchase a new house, car, household furnishings. (Spends
sensibly)
Family with Children: Purchases products to secure his as well as his familys future.
Empty nest (Children getting married)/Retirement/Old Age: Medicines, Health
Products, and Necessary Items.
A Ford Car in the neighbourhood would prompt three more families to buy the same
model.

u Secondary Groups
Secondary groups share indirect relationship with the consumer. These groups are
more formal and individuals do not interact with them on a regular basis, Example -
Religious Associations, Political Parties, Clubs etc.

u Role in the Society

Each individual plays a dual role in the society depending on the group he belongs to.
An individual working as Chief Executive Officer with a reputed firm is also someones
husband and father at home. The buying tendency of individuals depends on the role
he plays in the society.

u Social Status
An individual from an upper middle class would spend on luxurious items whereas an
individual from middle to lower income group would buy items required for his/her
survival.