CHAPTER 1

An Introduction to
Consumer Behavior
A frame work of consumer behavior
 Internal influences
 External influences
Internal influences
 Personality
 Self concept
 Life style
 Attitude
 Perception
 Values
 Beliefs
External influences
 Family
 Friends
 Relatives
 Social groups
 Cultural groups
 Reference groups
 Avoidance groups
 Aspiration groups
Decision process
 Types of decisions
 Simple
 Complex
 Models of behavior
 Extensive problem solving
 Limited problem solving
 Routinized buying behavior
 Consumer Behavior Is
Interdisciplinary
 Psychology
 Sociology
 History & Geography
 Anthropology
 Economics
Anthropology

 The study of people

within and across
cultures
 Emphasis on cross-
cultural differences
 Questioning of
assumptions within own
culture
Economics

 Basic economic issues

 Supply and demand
 Rational decision making
 Perfect information
 Emphasis on predicting
behavior
 Complications in real life
 Behavioral economics—e.g.,
“mental accounting”
History and Geography

 Origins of behavior,
perspectives, and traditions
 Impact of geography on
individuals
 Isolation
 Language development
 Climate
 Geographic determinism
Psychology

 Study of human thinking

and behavior
 Some issues
 Personality
 Personal development
 Cognition (thinking),
perception
 Attention and its limitations
 “Learning”—e.g., acquired
tastes
Sociology

 Cultural and
interpersonal influences
on consumption—e.g.,
 Fads, fashions
 Diffusion of innovation
 Popular culture
Application Areas of Consumer Behavior: PERMS

 Environmental Analysis
 Market Research
 Segmentation of the Marketplace
 Product Positioning and Product
Differentiation
 Marketing-Mix Development
Product Positioning . . .
. . . is influencing how consumers perceive a
brand’s characteristics relative to those of
competitive offerings

 Goal is to influence demand by creating a product with

specific characteristics (i.e. brand attributes) and a
clear image that differentiate it from competitors
Product Differentiation . . .

. . . is the process of manipulating the marketing

mix so as to position a product in a manner that
allows consumers to perceive meaningful
differences between a brand and its competitors
Environmental Analysis . . .

. . . is the assessment
of the external forces
that act upon the firm
and its customers, and
that create threats and
opportunities
Components of the External Environment

 Demographic  Technological

 Economic  Political

 Natural  Cultural
MARKET RESEARCH . . .

. . . is applied consumer research designed to

provide management with information on factors
that impact consumers’ acquisition,
consumption, and disposition of goods, services,
and ideas
Marketing-Mix Development

. . . involves the development and

coordination of activities involving
the:

 Product  Pricing

 Promotion  Distribution
Promotional Strategy

 Advertising
 Personal Selling
 Sales Promotion
Applications
 Public Relations
Price Changes
 Predicting the likely impact of price changes on
consumers is an important consumer behavior area.
 How will consumers react when companies raise or
lower the price of a product?
 Principles of perception can be applied to analyze if
consumers will notice a difference in price and if so,
what effect it has
Product Distribution . . .

. . . will be impacted by
understanding how
consumers make their
purchasing decisions.
**Example: low
involvement decision
(e.g., purchase soft drink),
must use extensive
distribution.
Market Segmentation . . .

. . . involves subdividing the

market place into distinct
subsets of customers having
similar needs and wants,
each of which can be
reached with a different
marketing mix
Consumerism &Consumer movement

 What it is?
 When in started?
 What is the result?
Concerns of consumers – government regulations

 John F. Kennedy’s Message to Congress on

March 15, 1962
 Four basic rights
 Right to safety
 Right to be informed
 Right to choose
 Right to be heard
Consumer protection frame work
 Consumer protection Act 1986
 Three tier structure
 District Forum
 State Forum
 National Forum
 What is What?
 Role of non governmental organizations
Consumer responsibility
 Consumers need to tread cautiously in the market
place. While buying a product, ask yourself these
questions :
 Do you really need this product?
 For how long would you like to use it? Will it last as
long as you would like it to?
 What are the health fallout of that product? If it is a
food product, does it give you any health benefits?
Check the labeling of the product to see the nutritional
chart of the product.
Others
 Responsibility towards safe waste disposal
 Responsibility to endorse safer products
 Junk Food and Young Consumers
Changing face of the consumer behavior

 Under the scenario of globalization

 Global consumer
 Changes in needs, preferences
 Increase in standard of living
 Changing values
 Cross cultural impact
Continued …..
 Technological changes
 High end products
 Aiming at more Convenience in shopping
 New retailing environment
 Shoppertainment
 Specialized stores to hyper markets
 Customer convenience is new mantra
 E-tailing