Consumer Behavior

Consumer Behavior
 “ Buyer behavior is the
decision process and
actions of people
involved in buying and
using a product”
(Baker)
Consumer Behavior

 Consumer behavior is those activities directly

involved in
 Obtaining Consuming and Disposing
 of products and Services( including the
 decision process that precedes and follow
 these actions)
Consumer Behavior -Engel, Blackwell &
Miniard – Eight Edition 1995

 Why should a marketer study
consumer buyer behavior
 As per the marketing concept, marketer
has to identify the needs and wants of the
consumer and satisfy them through the
supply of goods and services
 If the marketer has to identify the needs
and wants, understanding the consumers
behavior will help a lot in that process
 If marketer understands the consumers
reaction( behavior) to marketers
Marketing Mix ( 4 ps), marketer can offer
the best mix that suits the consumer.
Definition of a need
Desired State

GAP =
Need

Current State
Needs
 The Gap between the Current Status and the
Desired Status is called the need. It is also
called a state of deprivation
 When there is a need usually a consumer can
do one of the following
 (1) Look for means of satisfying the need
 (2) Reduce the level of desired stat (suppress)
 Marlow's Theory of needs
Hierarchy
 Prof. Abraham T. Maslow did research on how
humans satisfy their needs
 He found that humans have simple to complex
needs
 It is organized as a hierarchy ( one after the other)
 He says that humans may have many needs but will
try to satisfy the most important need first.
 Then they will try to satisfy the next most important
need
Maslow’s Needs hierarchy
 Physiological Needs
These include the most basic needs that are vital to
survival, such as the need for water, air, food and
sleep. Maslow believed that these needs are the
most basic and instinctive needs in the hierarchy
because all needs become secondary until these
physiological needs are met.

 Security Needs
These include needs for safety and security.
Security needs are important for survival, but they
are not as demanding as the physiological needs.
Examples of security needs include a desire for
steady employment, health insurance, safe
neighborhoods and shelter from the environment.
 Social Needs
These include needs for belonging, love and affection. Maslow
considered these needs to be less basic than physiological and
security needs. Relationships such as friendships, romantic
attachments and families help fulfill this need for companionship
and acceptance, as does involvement in social, community or
religious groups.
 Esteem Needs
After the first three needs have been satisfied, esteem needs
becomes increasingly important. These include the need for
things that reflect on self-esteem, personal worth, social
recognition and accomplishment.

 Self-actualizing Needs
This is the highest level of Maslow’s hierarchy of needs.
Self-actualizing people are self-aware, concerned with personal
growth, less concerned with the opinions of others and
interested fulfilling their potential.
Consumer needs and wants
 Needs are fundamental – such as
hunger,
 Wants are the means of expressing a
need – such as rice and curry, bread,
noodles, etc.

Want will depend on the individuals
culture, taste, ability, social status,
availability and circumstances
Demand
 Demand in economic/marketing terms
is not just having the need
 A need backed by the purchasing power
is called demand. It is also called the
effective demand
 The purchasing power includes the
financial ability plus the authority to buy
Consumer and Customer

 Customer is the person takes the

buying decision and he may consume
the product too.
 Consumer is an individual or
organization who may consume the
product not necessarily involved in the
buying decision.
 Both are important for the marketers.
 Simple Model of Consumer Buying
Behavior

Problem Recognition

Internal Search

Information Search

External Search

Evaluation of Alternatives

Abandon /Postpone
Purchase Decision

Post Purchase Evaluation

How to select a phone ?
 Problem Recognition
A need may arise as an internal stimuli
such as hunger or an external stimuli
such as seen a nice dress displayed in
a showroom window.
 Marketers study this behavior and use
different stimuli to initiate need for their
products)
 Information search- Depending on the
nature and value of the product,
information search may differ.
 Internal search – remembering previous experience
of buying or using the product or had heard about
the product from others ( searching the information
from memory)
External search – obtaining information from friends,


newspapers, catalogues, TV or Radio ads or from

internet etc.
 Evaluation of alternatives
 After gathering information, the consumer will evaluate the
alternatives in order to make a decision
 Items that he found will be placed in one of three categories
 Evoked set – Alternative products that will be a seriously
considered.
 Inert set – alternatives that the consumer is neutral Inept
 set – alternatives that consumer will reject

Eg. Discuss and example of a person who wants to buy a
mobile phone with a camera below Rs. 12500
 Pros and cons of different alternatives will be
weighed. Feature, benefits, after sales service,
guarantees, price etc will be analysed
(If evaluation does not lead to selection of the product, buyer
might abandon the purchase or postpone the purchase or
may go for information search again to select a product)
 Finally the closest product to the sought benefits
and the budgeted price will be selected.
 ( Intention to purchase)
 Purchase Decision
 The purchase intention may always not
result in making a purchase decision.
 The closeness of the sales outlet,
attitude of the sales staff, product
availability, availability of credit, opinion
of others, situational factors may have
an influence on the final buying decision
 Post Purchase Evaluation
 Buyer will have an evaluation of the product on its
actual performances while or after using.
If a customers gets what he expected or more from


the product customer will tell others as well as

repurchase the product
On the contrary, if the product does not live up to


the expected level, consumer will tell others not to

buy and will not repurchase the product
After sales services, follow up procedures will help


to adjust customer dissatisfaction

 Cognitive Dissonance
 This is a psychological status of the buyer in the post
purchase evaluation
 This happens when the chosen product have some
drawbacks but the rejected product have some positive
elements”
 E.g.. Although you selected phone by paying a higher
price, the rejected lower priced one has better picture
quality in the camera
 You would be asking from yourself ” Did I make the
correct decision”
 Reinforcing advertising and after sales services may help
to reduce the Cognitive dissonance.
 Why consumers decision making
process is important to marketers

 Marketer can influence the consumer

behavior in different stages
 Can reduce cognitive Dissonace by way
of reinforcing information
 Marketer can direct various
communications at each stage the
consumer goes through
Organisational Buyer Behavior
 Businesses buy products from other
businesess to resell, use in their
processes to add value or as
consumables. It is called Business to
Business Market ( B to B)
Decision Making Unit (DMU) and
Organisational Buyer Behavior
 In an organisation, such as a company,
an individual will not usually make the
decision alone to buy products.
 Usually there is a Committee or a
Team . It is called the decision Making
Unit or simply DMU
In a typical DMU you could get
following categories of persons

 Users- These are the people who really uses

the product. Data Entry Operators may be
using computers. Telephone Operator may be
using an internal telephone exchange system.
Their comments are important
 Influencers- They may advise as to
specifications and influence the buying
decision. E.g.. Computer software/hardware
Manager
 Buyers- Member of the DMU who negotiates with sellers. Who
goes in search of quotations and physically takes the approved
order and take the delivery of the goods
 Deciders- he is the member of the DMU that has the authority
to decide what to buy and from whom to buy. It could a senior
person to a member of the company’s Director Board depending
of the value and risk involved with the purchase of the product

 Gate keepers – Any member of the DMU who could regulate

information from suppliers to the other members of the DMU
e.g.. Receptionist, Security Officer, Secretary
 Major types of buying
situations
 New Task purchase : buyer buys for the first time. So
much of information may be required to take a
decision as the supplier is new and risk is high.
Marketer should strive to influence all the members
of the DMU.
 Straight re-buy : buyer routinely orders without any
modification to the order. It could be from the list of
suppliers that the buyer is having.
 Modified re-buy : buys the product with changes in
product specifications, prices, delivery or terms of
credit etc.
 Need
Problem Product Supplier
recognition Description Specification Search

Order routine Proposal

Performance Specifications Supplier
Solicitation
review ( purchase) Selection
Key characteristics of Business
buying behavior
 Organisational buyers differ from individual buyers in many
ways
 Fewer buyers Larger buyers Relationship Derived
 demand
 Demand inelasticity ( comparatively) Demand fluctuation
 Professionalism ( Team – rules A/R’s and F/R’s) Multiple
 Buying Influence
 Direct purchasing Motive of purchase
