Understanding Consumer

Markets

Session 6
 Consumer Behavior - Definition

What is Consumer Behavior?

Can anyone define it, at least loosely
 Defining Consumer Behavior

Consumer behavior is the

Process involved
When individuals or groups
Select, purchase, use, or dispose of
Products, services, ideas, or experiences to
Satisfy needs and desires.
What are the steps involved in CB, from
the consumers angle?
 Buyer Behavior
What is buyer behavior?
at a general level
What is consumer behavior?
at a more specific level
Factors to consider
Individual (Psychological)
External (Social and Group) Influences
Information
Situational factors
 Kurt Lewins Model
General Model
B = f (P, E)
P - Personal Influences
E - Environmental Forces
Consumer Behavior Model
B = f (I, E)
I - Individual (Psychological) Influences
E - External (Social, Group, Information,
Situational) Influences
 Buying Decision Process
Need (or Problem) Recognition
Choice of Involvement Level
Information Search and Identification of
Alternatives
Evaluation of Alternatives
Purchase and related decisions (including
the purchase Act)
Consumption experience and behavior
(post-purchase evaluation)
 Variations on the Process

Consumers can withdraw at any stage

Some stages may be skipped
Stages are generally of varying length
Some stages may be performed subconsciously
Level of involvement affects the process
Significant effect of purchase situation
extent to which all stages are followed depends on the
circumstances of the purchase situation
Consumer Behaviour - Definition

Thus, CB involves the entire gamut of

activities - from need recognition to post-
purchase processes like word-of-mouth and
disposal
Reading two consumers
 Comments on Handout

Do you have any comments?

How does this relate to CB?
 Comments on Handout

The reading reflects Js lifestyle, which

affects choice of products and brands
For example, Js choice of brands
It reflects her family life cycle stage - if she
were single, or without kids, she would act
differently
It reflects her Motivation - what makes her
buy certain things?
 Comments on Handout

It reflects her attitudes - for instance, her

attitude towards cooking, Toyota Crysta
It reflects her self-concept - the car, for
instance
It reflects her learning - for instance, her
cooking habits
 Comments on Handout

And so on
In general, it reflects how she searches
for, acquires and uses products
Characteristics of Consumer Behavior
Interesting
Why different consumers purchase different
products?
Best way for a consumer to purchase a
particular product
Advertising's influence on consumer
preferences
Relevant personally and professionally.
It is all around us.
Major contributor to society.
 Need Recognition
May be internal or an external stimulus
Will consider needs and wants
Consumer perceives a need and becomes motivated
Gap between current state and desired state.
Changes in desired state
Need circumstances activated
New product opportunities
Purchases of other products
Changes in current state
Depletion of stock
Dissatisfaction with current stock
Decreases in finances
Increases in finances
 Level of Involvement
Influences the amount of effort devoted to the
purchase decision process
Involvement is higher when
Consumer lacks information about purchase
Product or service is considered important
Risk of a bad decision is perceived to be high
Product or service is socially important
Product or service has potential to provide significant
benefits
Impulse buying is low-involvement
 Involvement and Types of
Decision Making
Low-purchase involvement High-purchase involvement

Routine decision making Limited Problem Solving Extended Problem Solving

Problem recognition Problem recognition Problem recognition
Selective Generic Generic

Information search Information search

Information search
Internal Internal
Limited internal
Limited external External

Alternative evaluation Alternative evaluation

Few attributes Many attributes
Simple decision rules Complex decision rules
Few alternatives Many alternatives

Purchase Purchase Purchase

Post purchase Post purchase Post purchase

No dissonance No dissonance Dissonance
Very limited evaluation Limited evaluation Complex evaluation
 Identification of Alternatives

Search for alternatives

options close at hand or wider
Sometimes, only one alternative is considered
Search for alternatives is influenced by:
information available
past experience and other internal information
confidence in the information
expected benefit or value of additional information
 Evaluation of Alternatives

Alternatives must be evaluated

varying degrees of depth
Criteria for evaluation of alternatives
Can vary in importance across consumers
Come from several sources
own experience
opinions of others
Purchasing and Related Decisions

Decision to buy
beginning of a more complex decision process
What should marketers do?
What are some of the additional decisions
that consumers need to make?
Patronage motives
Why should consumers shop at a store?
 Simple Decision Rules

Heuristics
Relying on product signal role of inference
Relying on market beliefs price/quality
relationship
Country of origin as a heuristic
Choosing familiar brands
Consumer inertia
Brand loyalty
 Decision Rules

NON
COMPENSATORY
COMPENSATORY
Simple Additive Lexicographic
Elimination by Aspects
Weighted Additive
Conjunctive Rule
Disjunctive Rule
 Consumption Experience

Consumer learning through the process

of buying
Will affect future purchases
Cognitive dissonance
not sure whether the decision was right
What affects cognitive dissonance?
How can they reduce cognitive dissonance?
Information and Purchase Decisions

Consumer search for additional information

depends on current knowledge level
Information sources
Commercial or social/interpersonal sources
Advertising, sales people, e-mail and the Web
Word-of-mouth
 Post Purchase

Usage
Disposal
Commitment
Repurchase
Discontinue
 Social And Group Influences

Cultural Influences
Reference Group Influences
Family and Household Influences
 Cultural Influences

Definition of culture
A complex group of symbols and artifacts
created by a given society and handed down
from generation to generation as determinants
and regulators of human behavior
Sum total of learned beliefs, values, and
customs that serve to direct the consumer
behavior of members of a particular society
Rate of change
Cultural Differences
Sub-cultures
 Another View of Culture

Frameworks for
action and understanding
that enables one to operate in a manner
acceptable to other members.
Frameworks incorporate
Language, norms, values, etc.
Frameworks vary between cultures
Values, norms, and other cultural elements can
differ between cultures.
 Aspects of Culture
Dimensions of Variability
Power distance
Uncertainty avoidance
Masculinity/femininity
Individualism
Beliefs and Practices
Shared meanings that govern existence
Learning own
Enculturation
Learning other
Acculturation
 Aspects of Culture (Continued)
Values
Broad beliefs about desirable outcomes
Norms
Informal, usually unspoken rules that govern behavior.
Customs
Norm derived from traditional way of doing things
Mores
Norm with strong moral implications
Conventions
Norms regarding the conduct of everyday life
 Regional Subcultures

North East, East, South, West and

North
Differences in:
weather patterns
population growth
age composition
ethnic mix
 Age and Consumer Identity

Age Cohort Identity

Shared Experiences
Developmental experiences
Life experiences
Shared Memories
Nostalgia Appeal
 Social Influences and social class
Social influence
All Interactions with and Influences resulting from both formal and
informal group memberships other than the family are included
Social class
the division of members of a society
into a hierarchy of distinct status classes
so that members of all other classes have
either more or less status.
Social Class membership can affect both
life-style and
purchasing behavior
Small group effects
Innovators and Opinion Leaders.
 SEC System in India

Education of chief earner

Urban SEC grid
Occupational level of chief earner
7 grids A1 to E2
Rural SEC grid
Type of house Pucca, semi-pucca, Katcha
4 groups R1 to R4
 SEC Grid

Education Code 1 2 3 4 5 6 7
Occupation Code Illiterate School Upto 4 School 5-9 SSC Some College but Graduate/ P.G. Graduate/ P.G.
Years Years HSC not graduate General Prof.
Unskilled Workers 1 E2 E2 E1 D D D D
Skilled Workers 2 E2 E1 D C C B2 B2
Petty Traders 3 E2 D D C C B2 B2
Shop Owners 4 D D C B2 B1 A2 A2
Businessman / Industrialist With No. of Employees:

None 5 D C B2 B1 A2 A2 A1
1-9 6 C B2 B2 B1 A2 A1 A1
10+ 7 B1 B1 A2 A2 A1 A1 A1
Self Empl Professional 8 D D D B2 B1 A2 A1

Clerical / Salesman 9 D D D C B2 B1 B1
Supervisor Level 10 D D C C B2 B1 A2
Offi / Exe Jnr 11 C C C B2 B1 A2 A2
Offi / Exe Mid / Snr 12 B1 B1 B1 B1 A2 A1 A1
 New SEC grid in India

Education of chief earner

Number of durables (11 items)
Electricity connection, Fan, LPG Stove, Two
wheeler, Color TV, Refrigerator, Washing machine,
Computer, Car/Jeep/Van, Air Conditioner,
Agricultural land (rural)
 Groups
Groups: two or more individuals who
share a set of norms,
have role relationships, and
experience inter-dependent behaviors
Status
persons relative position in a group
Roles
what members of the group expect of the individual
Reference groups
Groups whose value structures and standards influence a persons
behavior
Membership groups
Aspirational groups
Disassociative group
 Nature of Reference Groups

Norms
Rules and standards of conduct.
Values
Shared beliefs about behavior
Largely defined by cultures and sub-cultures
Roles
Functions that individuals assume
Status
Position that the individual occupies within the group
 Family and Household Influences

Family
is a unit having at least two people related by blood or
marriage living together
Household
Any group of people who occupy a housing unit
Degree of family Influence
Familys role in purchase decisions
Influencer, decision maker, buyer, user, etc.
Role played by other family members
Children, teens, other relatives
The Traditional Family Life Cycle

Young singles
Newly married
Full nest 1
Full nest 2
Full nest 3
Empty nest 1
Empty nest 2
Solitary survivor
 Nontraditional Household Life Cycles

Sequence 1
Young married couple with children
Young divorced parent
Single parent with older children
Older, unmarried
Sequence 2
Young couple without children
Middle-aged married couple without children
Older married couple without children
Nontraditional Household Life Cycles

Sequence 3
Young married couple with children
Middle-aged divorced parent
Middle-aged married parent with
children and step-children
 Characteristics of Family
Families make and spend money continuously, day
after day, for many years.
Family decisions are made within a private, intimate,
social group.
Family consumption decisions are often not
independent from one another.
Families have multiple decision makers.
Family decision making differs by the type of product
or service being studied.
Families differ significantly from each other.
 Household Decision Making

How do households make decisions?

Consensual -
family members share the same goal but the
details need to be settled
Accommodative -
family members have different goals, thus conflict
resolution must occur
 Psychological Influences

Motivation
Perception
Learning
Personality
Attitudes
Values and lifestyles
 Motivation

What are needs?

Basic requirements - could be utilitarian or hedonistic
Needs Vs. Wants
Needs are basic whereas wants are needs for specific products (or
brands)
Different Motives
Needs from physiological states of tension
Needs from psychological states of tension
What are Motives?
Inner state that directs a person toward the goal of satisfying a need
 Motivation

Drive theory
Expectancy theory
Expectancy that the act will be
followed by a given consequence
Expectancy X Value theory
Rational versus emotional motives
Latent and manifest motives
 Motivation

Stimulated Needs Aroused tensions Goal-directed

Behavior

lack of something uncontrollable action taken by an

necessary to the feeling activated individual to reduce
well-being of by internal and/or aroused tensions and
an individual external stimulus satisfy stimulated
needs
 Perception
What is Perception?
process by which people select, organize, and interpret stimuli
How does Perception occur?
interaction between external stimulus factors and internal individual
factors
Perceptual Selectivity
Consumers need to select stimuli for further processing
Selective attention, distortion, retention
Perceptual Organization
Closure
consumers tend to perceive an incomplete picture as complete.
Similarity
consumers tend to group objects together.
Figure-ground
part of stimulus will dominate
 Learning and Self-concept

What is Learning?
Behavioral Learning
Classical and instrumental conditioning
Drives and cues
Reinforcement and learning
Role of Memory
Associative learning
 Personality
A persons unique inner psychological
makeup
Which consistently influences the way the
person
Responds to his or her environment.
Nature of Personality
Personality reflects individual differences
Personality is consistent and enduring
Personality can change
 Self-concept

Who are we?

has four parts
how you see
Looking
yourself
glass self
Self-image
Ideal Self

How you
Real-self would like
How you think the way you to be
others see you actually are
 Attitudes

What are Attitudes?

a learned pre-disposition
to respond favorably or unfavorably to stimuli
based on relatively enduring evaluations of
people, objects, and issues
Three Components of Attitude
Cognitive what I believe
Affective what I feel
Behavioral how I respond
Attitude Change
 How Attitudes Are Formed

Standard Learning Hierarchy

Cognition, affect, behavior
Low Involvement Hierarchy
Cognition, behavior, affect
Experiential Hierarchy
Affect, behavior, cognition
 Values and Life-style

Values ideals about what is desirable

Life-style refers to
How people live
How they spend their money
And how they allocate their time
Life-style results from
Personality
Plus income
Plus culture
 Situational Influences

Time effects
Where consumers buy - shopping Environment
How consumers buy - Terms and conditions of
purchase
Conditions under which consumers buy - states
and mood
Why consumers buy