DEFINITION: CONSUMER BEHAVIOUR

-The Dictionary of Marketing & Advertising

The actions of consumers in the market place & the underlying motives for those actions. Marketers expect that by understanding what causes consumers to buy particular goods and services they will be able to determine which products are needed in the market place, which are obsolete, and how best to present the goods to the consumer.

-Louden-Dellabitta
Consumer behaviour is the process and physical activity individuals engage in when evaluating, acquiring, using, and disposing of goods and services

-Schiffman and Kanuck

Consumer Behaviour refers to the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. Study of Consumer Behaviour is the study of how individuals make decisions to spend their available resources like time, money and effort on consumption related items

WHY STUDY CONSUMER BEHAVIOUR

Marketings task is to identify consumer needs and wants, and develop products and services that satisfy them. To be successful, it is not enough simply to discover what consumers require, but to find out why it is required. Only by gaining a deep and comprehensive understanding of buyer behaviour can marketings goals be realised.

This understanding works to the advantage of both parties allowing marketer to become better equipped to satisfy consumer needs efficiently and establish a loyal group of customers with positive attitudes towards the companys products. Consumer Behaviour can be defined as: The acts of individuals directly involved in obtaining and using economic goods and services, including the decision processes that precede and determine these acts

Buyer behaviour is a system in which the individual consumer is the core, surrounded by an immediate and a wider environment that influences his or her goals that are satisfied by passing through a number of problem-solving stages leading to purchase decisions. The study and practice of marketing draws on many sources that contribute theory, information, inspiration and advice.

RESEARCH PERSPECTIVES ON CONSUMER BEHAVIOUR

PG-2

DECISION MAKING MODEL

The buyer/ decision process The adoption process Hierarchy of effects

THE BUYER/ DECISION PROCESS

AWARENESS

INTEREST

DESIRE

ACTION

AIDA model of buying behaviour

AIDA
It considers the steps leading to a purchase in the form of a sequential problem-solving process Products and services vary in the complexity of decision making involved in their acquisition

Robinson in 1967 put forward a model that viewed purchasing as a problem. This model describes the activities involved in the purchasing process.
PROBLEM RECOGNITION INFORMATION SEARCH EVALUATION OF ALTERNATIVES

PURCHASE DECISION
POST-PURCHASE BEHAVIOUR

THE BUYER / DECISION MODEL

 The more complex the product, the greater will be the info search The task of marketing is to ensure that the companys products receive high exposure during this info search period and that best points of the product are emphasized during the evaluation of alternatives phase. This will put the companys product in the best light prior to the purchase decision, coz even at that stage the consumer is still susceptible to further influences in relation to making the correct choice.

 Marketers must be aware of post-purchase behaviour as this can affect repeat business and as much importance should be attached to after-sales service as to the initial sale. This reduces the degree of dissatisfaction in case of genuine complaints.

THE ADOPTION PROCESS

Relates to new products..
AWARENESS INTEREST / INFORMATION EVALUATION TRIAL ADOPTION POST-ADOPTION CONFIRMATION

THE ADOPTION PROCESS

Awareness can come about as a result of the marketing effort of the company or simply by word of mouth communication If the product has potential interest and appeal, potential purchasers will seek further information Consumers then evaluate the new product against existing products and make an initial adoption by obtaining a trial sample, which might be free sample or a trial purchase.

Ctd
The adoption stage is when a decision is made whether to use the product. Post-adoption confirmation is when the product has been adopted and the consumer seeks reassurance about wisdom of the purchase After a major purchase dissonance is present in the sign of unease that what was thought to be value for money at the time of purchase may not, after all, turn out to be good value. Such kind of dissonance should be countered by follow-up

NEW PRODUCT PURCHASING DECISION PROCESS CONTINUED

SELF FAMILY ADOPTION ADOPTION

REFERENCE GROUPS

DISCONTINUANCE

KNOWLEDGE

PERSUASION

DECISION

CONFIRMATION

RELATIVE ADVANTAGE CULTURAL FACTORS MARKETING COMPATIBILITY

LATER ADOPTION

REJECTION
SOCIAL FACTORS COMPLEXITY TRIALABILITY OBSERVABILITY CONTINUED REJECTION

 A series of inputs feed into the knowledge base The self input includes psychological notions of perception, attitudes, motivation and learning Knowledge is then interpreted into a favourable situation of awareness Persuasion governs the rate of adoption that is affected by relative advantage, compatibility, complexity, trial opportunity and observability

 Relative advantage: how much better the service or product is over offerings in the marketplace Compatibility: degree to which the product or service conforms to the buyers purchasing needs Complexity: function of the product or service in that, for instance, a new brand of toothpaste is less complex than an innovative type of food processor

 Trialability: function of the product or service and it simply relates to how easy it is to try it out at as small a cost as possible. For instance, a new brand of toothpaste might be given free as a trial sample ot at a bargain introductory offer price. A new car can be demonstrated on a test drive, but it is quite often some time after the purchase has been made that real opinions about the newly purchased car are formed

 Observability: function of products in particular, because, like motor cars, they can be observed in use. However, a service like an insurance policy is a more abstract concept, so it rates low on this factor, as it relies upon description and other evidence for its sale.

ADOPTER CATEGORIES
Innovators: the 1st small segment to take on new product ideas, younger, well-educated, relatively affluent, high social status. Early adopters: the characteristics of innovators, but are likely to be part of local systems, acting as opinion leaders within their groups Early majority: above average in social class, rely on promotion of data, opinion of early adopters matter Late majority: adopt cause earlier groups have accepted it Laggards: more careful, older and lower socioeconomic standing

HIERARCHY OF EFFECTS
The model starts with awareness stage, although there is a stage prior to this which is when the potential purchaser is completely unaware of the product or service offering and it is through marketing communication that such awareness is made known

AWARENESS KNOWLEDGE

LIKING

PREFERENCE
CONVICTION

PURCHASE

THE INNOVATION / ADOPTION MODEL

CONSIDER THE MODELS. NOW CONSIDER 3 PHASES OF PURCHASING AS BEING: THE PRE-TRANSACTION, TRANSACTION AND POST-TRANSACTION PHASE. WHICH COMPONENT PARTS OF EACH MODEL FALL UNDER EACH OF THESE PURCHASING PHASES?

MODEL AIDA THE BUYER/ DECISION MODEL THE ADOPTION PROCESS

PRETRANSACTION Awareness, interest, desire Problem recognition, information search Awareness, interest, information

TRANSACTION Action Evaluation of alternatives, purchase decision Evaluation, adoption, trial

POSTTRANSACTION

Post-purchase behaviour

Post adoption confirmation

NEW PRODUCT PURCHASING DECISION PROCESS

THE INNOVATION/ ADOPTION MODEL

Knowledge

Persuasion, decision

confirmation

Awareness, knowledge

Liking, preference, conviction, purchase

THEORIES OF MOTIVATION
MASLOWS HIERARCHY OF NEEDS MCLLELANDS THEORY

MASLOWS HIERARCHY OF NEEDS

MCLLELANDS THEORY
each of us have three fundamental needs that exist in different balances. These affect both how we are motivated and how we attempt to motivate others. Need for achievement: Seeks achievement, attainment of goals and advancement. Strong need for feedback, sense of accomplishment and progress Need for affiliation: Need for friendships, interaction and to be liked. Need for power Authority motivated needs to influence and make an impact. Strong need to lead and to increase personal status and prestige. It seems that some people have a very strong need to achieve, whilst the majority of people are not motivated in this way. McClelland was so interested by this that he focussed his research on the need to achieve. In a famous experiment, people were asked to throw rings over a peg (like at a fair). The distance that one should throw from was not specified, and as a result most people threw their rings from random distances. However, people with a high need for achievement chose their location carefully so that they stood a realistic chance of getting the ring on the peg, but that it was not too easy. They set an achievable goal that would stretch them.

achievement motivated people set goals where they feel that they can influence the outcome and ensure that those goals are balanced between challenge and realism. An achievement motivated person sees the achievement of a goal as the reward; it is more satisfying than praise or monetary reward. Money is seen as good only in that it is seen as a measure of their achievement. This idea of feedback is essential to the achievement motivated person: the feedback needs to be informative to enable them to use it to improve their achievement. In addition there is an element of competition - it is important for the individual to be able to compare their achievement against others. The key differentiator between this group and others is that achievement motivated people frequently spend time thinking how things could be improved. Mclelland believed that these characteristics could be taught and developed training programmes. NEED-ach people make good business leaders and entrepreneurs their management style can suffer because they expect everyone to be motivated in the same way as themselves. It seems very destructive to have a need for power without a strong need to achieve as well.

PERCEPTION
It is our way of looking at objects, individuals, events and world in general. Our sense organs keep on receiving messages such as sights, smells, sounds, tastes and sensations. All these are stimuli. We recognise these stimuli, select them and organise them. These are ultimately interpreted in our way, depending upon our expectations, needs and values. This process is known as perception. Since each individual is unique in his needs, expectations and motivations, each persons perception is also unique.

We observe that the responses to two individuals to the same set of stimuli may be different, because their perception may be different. Each product is a bundle of stimuli of shape, size, colour, fragrance, feel and taste. The promotion of a product- its packaging, advertising- is like providing stimulus to the consumer. If we understand the different perceptions with the above stimuli, we can emphasise those stimuli which provoke the most favourable response in most people.

Relevant stimuli are selected and recognised, to the exclusion of all others. Advertisers like to have the stimuli provided by them to be recognised, interpreted and retained in memory.

STAGES IN PERCEPTION
Stage 1: Selection Life is a process of selecting information/data We are confronted with millions of pieces of stimuli each day (1,500 advertisements alone) Factors That Influence Our Selection
A. Interest (College Basketball, Movies, Music) B. Need (lectures, traffic lights, buying 1st car) C. Aesthetics (noise, movement, color)
What advertisers, marketers, & designers do

D. Biology (sensation seeking)

Stage 2: Organization To eliminate the chaos of life (entropy) and help make sense of the world, we simplify and reduce our world We put our selected data in cognitive folders
Also called: Schematas OR Cognitive Frameworks

Three Principles of Organization:

A) Binary Opposition (all things in pairs)
male/female, short/tall, white/black, good/bad

B) Already formed social categories

UK basketball players, Italians

C) We also organize by similarities

size (big buildings), color (things that are purple), space (things from Hawaii), smell (things that make us hungry), function (computer, phone, TV, DVD, VCR, CD player, pager, palm)

Stage 3 Interpretation/Comprehension Next, we have to Evaluate the data in our folders

Larger files (more complete and accurate) Smaller files (simplistic and underdeveloped)

Our Comfort Zone:

Not Comfortable with New or Small Folders We like our old, Big Folders and avoid our small, underdeveloped folders College Forces Us To Make New Folders

Stage 4 Retention and Memory We Dont Retain All We Select! Factors That Influence Long-term Memory
A) Recency of Time (today vs. 10 years from now) B) Frequency of Use (names, TV channels) C) Importance (PIN number, anniversary) D) Emotional Connection (1st kiss, wedding) E) Weirdness/Uniqueness (sumo wrestlers, 500 lbs. Dancer)

BELIEF
Belief is the psychological state in which an individual holds a proposition or premise to be true. Beliefs form in a variety of ways.

 We tend to internalise the beliefs of the people around us during childhood.Political beliefs depend most strongly on the political beliefs most common in the community where we live. Most individuals believe the religion they were taught in childhood.

 People may adopt the beliefs of a charismatic leader, even if those beliefs fly in the face of all previous beliefs, and produce actions that are clearly not in their own self-interest.Is belief voluntary? Rational individuals need to reconcile their direct reality with any said belief; therefore, if belief is not present or possible, it reflects the fact that contradictions were necessarily overcome using cognitive dissonance.

 The primary thrust of the advertising industry is that repetition forms beliefs, as do associations of beliefs with images of sex, love, and other strong positive emotions. However, even educated people, well aware of the process by which beliefs form, still strongly cling to their beliefs, and act on those beliefs even against their own self-interest.

ATTITUDE
An attitude is a hypothetical construct that represents an individual's degree of like or dislike for an item. Attitudes are generally positive or negative views of a person, place, thing, or event-- this is often referred to as the attitude object. People can also be conflicted or ambivalent toward an object, meaning that they simultaneously possess both positive and negative attitudes toward the item in question.

FAMILY LIFE CYCLE

People go through several phases in their lives. FLC refers to the series of life stages through which individuals proceed over a period of time (process of family formation and dissolution)

Each life cycle stage differs from previous stages in terms of a) Structure b) Financial position c) Consumption pattern d) Product need and preference

TRADITIONAL/ CONVENTIONAL FLC

FLC is a progression of several stages 1. Young and single bachelor stage The career has just started. However, the absence of burdens, they are free to spend as they wish. They tend to buy personal consumption items of food and clothing, are fun-loving and buy entertainment, have time to be on vacations and tours, move about on bikes, mobikes and other two wheelers, read novels and thrillers. They buy some basic utensils and furniture.

2. Newly married couples Have household burdens and go through an expenditure phase in life. They generally buy consumer durables like furniture, wall paints, refrigerators, TVs etc. 3. Young married with child Directs their income to bringing up the child. They buy toys, medicines, tonics, baby foods, formula milk etc. 4. Older, married with child Are fairly stable income wise. They like food products, music, educational services and a wide variety of other products

5. Older married with dependent children Have high income, but do rational purchases. There is replacement buying. 6. Older, married with no children Become interested in self-education, saving schemes, hobbies, luxury appliances, magazines, health products 7. Old, single, retired People lead an economic life style. They are interested in health care and other services. Theyve budget constraints.

REVISED FLC CONCEPT FOR THE 2010s

Family was considered a single unit throughout the life-time of an individual. However this assumption is not true these days. There are families due to second marriages, with a legacy of children from previous marriages. There are deserted wives. There are divorcees. Several families are single parent family, where the parent could either be a father or a mother. The working woman makes the traditional FLC model invalid.

DIMENSION OF INDIAN FAMILIES IN 2010s

YOUNG, MARRIED, WITH CHILD AND DUAL INCOME Here both the husband and the wife work, and get two income cheques. The pace of the life is faster and there is less time for children and also for one another. The consumption pattern therefore shows preference for convenience goods like washing machines, grindermixers, rice cookers, etc. Women manage on two fronts- domestic chores and work. Husbands share the responsibilities of running the house to some extent. Instant foods, crches etc. appeal to such families. To compensate for the time babies miss with parents, there is a tendency to buy costly garments for kids, games for kids,etc

 SINGLE PARENT FAMILIES The single parent family needs security and buys all the products that offer physical and psychological and financial securities- e.g: burglar alarms, teddy bears, insurance, saving certificates etc. When the child grows, he may be put in a boarding school/ public school.

 DIVORCED They buy money saving products, lease or rental housing, child care, time saving appliances, instant foods. They are short of cash. OLDER PEOPLE, MARRIED OR SINGLE They are also cash poor, and health conscious. They need security. They also need recreation. MIDDLE-AGED They buy childrens lessons (dance, music), dental care, furniture, autos, houses, dining out. If there are no children, they are interested in luxuries, travels, gift products etc. Their cash position is good.

PERSONALITY AND SELF CONCEPT

The sum total of unique individual characteristics make up a personality. It is what we are. It is the frame-work within which a consistent behaviour is shown.

Self-image or self-concept is our perception of ourselves in social context. The products should match our selfconcept. Product image should be close to self-image of target consumers, e.g., royalty endorsing suitings project an image of class and exclusivity. This matches well with the self-concept of the target consumers.

PERSONALITY
Personality can be defined as a dynamic and organized set of characteristics possessed by a person that uniquely influences his or her cognitions, motivations, and behaviors in various situations. The word "personality" originates from the Latin persona, which means mask.

SELF CONCEPT
The self-concept is the accumulation of knowledge about the self, such as beliefs regarding personality traits, physical characteristics, abilities, values, goals, and roles. Beginning in infancy, children acquire and organize information about themselves as a way to enable them to understand the relation between the self and their social world. This developmental process is a direct consequence of children's emerging cognitive skills and their social relationships with both family and peers. During early childhood, children's self-concepts are less differentiated and are centered on concrete characteristics, such as physical attributes, possessions, and skills.

 During middle childhood, the self-concept becomes more integrated and differentiated as the child engages in social comparison and more clearly perceives the self as consisting of internal, psychological characteristics. Throughout later childhood and adolescence, the self-concept becomes more abstract, complex, and hierarchically organized into cognitive mental representations or selfschemas, which direct the processing of selfrelevant information.

LIFESTYLE
Lifestyle forms the basis for both segmentation and advertising. Life-style is a mode of living , and helps us to understand those who are in the market in terms of their behaviour. The products which are often sold by this approach are cars, womens clothing, cigarettes, alcohol, cosmetics & furniture.

 To use this segmentation, data are first collected for developing a profile of the consumer. One such approach is to make use of data concerned with three major characteristicsactivities, interests and opinions (called AIO inventories).This is in addition to demographic characteristics.

Example
ACTIVITIES WORK LIKINGS, HOBBIES RECREATION ENTERTAINMENT SHOPPING INTERESTS JOB HOME FOOD MEDIA COMMUNITY OPINIONS CULTURE SOCIAL ISSUES POLITICS EDUCATION DEMOGRAPHICS AGE EDUCATION INCOME OCCUPATION FAMILY SIZE LIFE CYCLE GEOGRAPHY

 The researcher makes the consumer respond to a number of AIO statements, and then uses statistical techniques to group consumers into similar categories. The grouping facilities marketerss job of composing relevant profiles of users/ non-users. For example, the user of a lipstick can be described as: Younger, better educated, working woman who is appearance-conscious, cosmopolitian and future-oriented.

 Thus the marketer gets valuable input for media selection and advertising content. In addition, we can identify likely uses of related products- the products which are consistent with this lifestyle.

TYPES OF BUYING BEHAVIOUR

Complex buying behaviour is where the individual purchases a high value brand and seeks a lot of information before the purchase is made. Habitual buying behaviour is where the individual buys a product out of habit e.g. a daily newspaper, sugar or salt. Variety seeking buying behaviour is where the individual likes to shop around and experiment with different products. So an individual may shop around for different breakfast cereals because he/she wants variety in the mornings! Dissonance reducing buying behaviour is when buyer are highly involved with the purchase of the product, because the purchase is expensive or infrequent. There is little difference between existing brands an example would be buying a diamond ring, there is perceived little difference between existing diamond brand manufacturers.

THE ADOPTION PROCESS

defined as the mental process through which an individual passes from first hearing about an innovation to final adoption. Whenever a new product or an idea is introduced in the market a lot of planning is required to manage the resistance to adopt the new innovation, because the adoption of an innovation is a process involving a change in the attitude and perception of the buyer.

STAGES OF ADOPTING A NEW PRODUCT

AWARENESS
INTEREST

EVALUATION

TRIAL
ADOPTION

THE REVISED ADOPTION PROCESS

EXISTENCE OF PRIOR CONDITIONS: FELT NEEDS, SOCIO-ECONOMIC STATUS & PERSONALITY KNOWLEDGE PERSUASION DECISION

ADOPTION

REJECTION

CONTINUE ADOPTION

LATER ADOPTION

DISCONTINUE

CONFIRMATION

IMPLEMENTATION

ADOPTERS CATEGORIES
INNOVATORS 2.5% EARLY ADOPTERS 13.5% EARLY MAJORITY 32% LATE MAJORITY 32% LAGGARDS 20%

DIFFUSION PROCESS
Innovation is the act of converting a new concept or new idea into a product or a process. Innovation passes through 3 stages: 1. New concept or new idea 2. Implementation of the idea or converting idea into a product/ service 3. Market acceptance or diffusion process

 3rd stage is most crucial Market acceptance of the new product will only take place if there is effective communication mix to motivate, influence abd induce the prospective customers to adopt innovation The diffusion process is concerned with how innovations spread and how they are assimilated with a market. Diffusion process is similar to PLC