What is Consumer behaviour?

Consumer behaviour is the study of when, why, how, and where people do or do not buy a product. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. It is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services. All marketing decisions are based on assumptions and knowledge of consumer behavior," (Hawkins and Mothersbaugh, 2007). Researching consumer behavior is a complex process, but understanding consumer behavior is critical to marketers.

Why People Buy

Marketers spend millions of dollars trying to understand why people buy products and services. Sometimes it seems that there is no reason for a purchase, but in reality there is always a reason. Many factors are involved in a customers' buying decision, any one of which can become the deciding factor, such as: Conspicuous consumption: Lavish spending for the purpose of displaying wealth or social status; preference for buying increases with price. Snob effect: Desire to buy something nobody else has; preference for buying increases with rarity or scarcity. Bandwagon effect: Desire to buy something everybody else is buying; preference for buying increases with perceived popularity. Economic-To enhance their lifestyle or to fulfill two of Maslow's needs: physiological (food, shelter) and Safety and Security.

Psychological-This is the study of how people interact with their environment, products are consumed to enhance their well being, for example air fresheners, furniture and convection ovens.

Value and Relationship Quality

Consumers choose goods and services based on the assumption that they will be rewarded with value and satisfaction. Consumption is the process by which goods and services are used and assigned a level of value by the consumer. Quality + Price + Customer Service = Value and Satisfaction

what is meant by 'Quality?'

Quality is a product or service's ability to meet the customers' need or want. Quality is difficult to define, and varies with each consumer, however we can take a look at some of the components of quality for products and services:
Products

Performance-The product does what it is supposed to do. Features-The product includes all the specifications that it says it has or that are required, this includes safety measures. Reliability-The product performs consistently. Durability-When the product is being used it has to last under the conditions of normal use. Serviceability-The product is easy to maintain or repair either by the consumer or by providing a warranty which says the company will provide repairs. Aesthetics-This is important to consumers, products have to look good, and this contributes to a brand equity and identity. Perception-Even if the product has good quality, if the customer does not think so, then it won't sell. The customer has to have positive feelings about the product, the company, the brand name and the employees.

Services

Responsiveness-Services are performed in a prompt manner. Reliability-The service is performed right, the first time, and all subsequent times. Assurance-Knowledgeable and friendly employees are essential as customers will equate employees behavior with the entire company. If a customer has a bad experience with an employee, they will be less likely to purchase from the entire company's offerings. Customers expect technical competence and professionalism from salespeople. Empathy-Providing individualized attention to customers will make them feel special and keep them coming back. Tangibles-Some services provide physical evidence that they occurred, for example a restaurant cooks (service) and provides the food (product).

Segmentation, Demographics and Behavior

Segmentation is the process of breaking down the intended product market into manageable groups; it can be broken down by:

Relationship Customer Type Product Use Buying Situation Purchasing Method Behavior Geographic Location Demographics Psychographics

Relationship

Kind of relationship weak, strong, arms length dealing, close partnership.

Customer Type

Type of customer manufacturer, service, government, military, non profit, wholesaler, retailer, end user.

Product Use

How customers use product installation, components, accessories, raw material, eaten, professional service.

Buying Situation

Buying situation rebuy, modified rebuy, new purchase.

Purchasing Method

Purchasing methods Internet, long term contract, warranty, financing, cash on demand.

Behavior

Needseconomic, functional, psychological, social. Benefits--quality, service, economy, convenience, speed. Attitude toward product--Enthusiastic, positive, indifferent, negative, hostile. User status--Nonuser, ex user, potential user, first time user, regular user. Loyalty status--None, medium, strong, absolute. Brand Familiarity-Unaware, aware, informed, interested, desirous, intending to buy. Occasion--Regular occasion; special occasion, convenience, comparison shopping, unsought product. Type of problem solving needed-routine, limited, extensive. Information required-low, medium, high.

Geographic Location

Region of world, country North America, South America, Africa, Asia, Europe. Regions within that country (For Example USA) Pacific Northwest, South, Midwest, New England. Size of city population under 5,000 people to 4 million or more. Urban vs. rural country, city, large city = more resources, more independence; country=more dependence on neighbors and pooling resources. Climate cold, hot, rainy, desert, beaches, mountains.

Demographics

Income under $5,000 to $250,000+ a year. Gender male, female, neither, both. Age Infant, toddler, preschool, tween (age 8 to 12), teen, college age, 20, 30, 40, 50, 60, 70-90. Family size 1 person, 2, 3, 4, 5 or more. Family life cycle young, single, engaged, DINKS (double income no kids), SINKS (single income no kids), married with kids (babies, toddler, elementary school age, teen, older), recently divorced, empty nester (children have moved out), same-sex couples, single parents, extended parents (grandparents raising their grandchildren), retired (either wealthy or Medicare dependent/poor). There are also Boomerang Kids (adult children have moved back home), Cougar/Silver Fox (Cougar is a 40-60 year old weathly, single, career driven woman seeking a younger man; Silver Fox is a 4060 year old wealthy, single, career driven man seeking a younger woman). Job unemployed, housewife, part-time, full-time, student, professional, craftsperson, farmer, retired. Education grade school or less, some high school, high school graduate, some college, college graduate, graduate degrees. Religion Christian, Jewish, agnostic, atheist, Muslim, Islam etc. Race White, Black, Asian, Hispanic, Native American, mixed race, etc. Culture/nationalityAmerican, French, English, African, Russian, Indian etc. Generation (For Example USA) GI Generation, Silent, Matures, Baby Boomer, Gen X, Gen Y, Boomlets.

Psychographics

Lifestyle interests, hobbies, activities, interests, opinions, values, media preferences. Everyone has two lifestyles, the one they are in now, and the one they desire to be in, which is usually better than the current one. Almost all decisions are influenced by the buyers current and desired lifestyle. Personality traits o Sincerity. o Excitement. o Competence. o Sophistication. o Ruggedness. Social class Lower, middle-low, middle, middle-upper, upper, upper-upper, working class, blue collar.