AN OVERVIEW OF THE CONCEPT OF CONSUMER BEHAVIOUR

Introduction
Consumer behaviour is defined as the study of the consumers actions in searching for
purchasing, using, evaluating and disposing of products and services that they expect will
satisfy their needs. It focuses on how the consumers make decisions to spend their individual
resources (time, money, effort) on the above mentioned consumer related issues. The
consumer entities can be categorized into two groups:
Personal consumer- The consumer who buys goods and services for his or her own
use or for other household purposes is classified as a personal consumer. The products
are bought for final use by the individuals.
Organizational consumer- The consumer who runs non-profit businesses, government
agencies and institutions, all of which purchases services in order to run their
organizations is classified as organizational consumer.
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The four main applications of consumer behaviour are:
The most important reason is for marketing strategy i.e. for making better marketing
campaigns. For e.g. the marketers should understand that new products advertised are
first used by very few consumers and then spreads across the whole market. This
helps to understand that companies which introduce new products must be well
financed so that they have an established position in the market and their products
turn out to be a huge commercial success.
The second application is public policy. For e.g. in case of certain medicines which
can be injurious to health due to overdose, companies may show very graphic images
of the consequences of taking that medicine.
Understanding the consumer behaviour might also prove useful in cases where ideas
can be gained from the attitude of a major section of consumer for social marketing.
For e.g.: To prevent the transmission of diseases through illegal drug use, the best
solution would be to stop the illegal drug users, especially the sharing of needles.
Through consumer attitude, it was found that the goal of encouraging the cleaning of
needles in bleach before sharing them was a more realistic idea.
Studying consumer behaviour can make people better consumers. For e.g. in case
where 1 kg of rice costs a certain price, consumer should be aware that buying two
packets of 0.5 kg of rice will cost him more. For this reason the consumer will be
more aware of checking the price label before making a selection and determine
whether it is profitable for him or not.
Consumer Behaviour and Marketing
The study of consumers helps firms and organizations improve their marketing strategies by
understanding consumer related issues such as:

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http://consumers-behaviour.blogspot.in/2011/08/introduction-to-consumer-behaviour.html
Psychology of how reason and select between different alternatives (e.g.: brands,
products and retailers).
Psychology of how the consumer is influenced by his or her own environment (e.g.:
family, culture, media).
Behaviour of consumer while making decisions during shopping.
How consumer decision strategies differ between products that differ in their level of
importance that they entail for the consumer.
How marketers can adapt and improve their marketing campaigns and marketing
strategies to reach more effectively to the consumers.
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Consumer behaviour and quality of goods
With the flexible prices of goods in the market, it acts as a measure of quality. The factors
which affect the quality of products are- income, household size and price level on the
demand.
Price Variations: There are two points of view relating to price variations. For e.g. the same
food product may be labelled at different prices and also different household may have
different willingness to pay varied prices for a product. There is a generalized quality of the
commodity. For e.g. many varieties of rice may be consumed but with the increase in income
of the consumer, he will purchase better quality of rice. Larger households tend to purchase
more of goods than smaller ones. Price of the product varies with regional and seasonal
variations. In urban areas, more ration shops are present due to which price varies and a
consumer has more opportunities to choose from as compared to rural areas where the
presence of less number of shops makes it inevitable for the consumer to purchase from those
limited number of shops at that definite price. Also there is the issue of price discrimination
which usually arises from the monopolistic behaviour but is deeply rooted in the social status.
In case of luxuries, the higher income groups are not negatively affected by the increase in
price of such products wherein the demand for such products by a lower income group of
consumers may decline.
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Consumer behaviour: Indian approach
If we were to borrow products from abroad and adopt means of advertising from any western
country, it would be like making erroneous decisions because of the following reasons- The
degree of importance attached to a particular product in Indian household varies from that in
the Western household. The kind of product which a certain socio-economic class in a
Western country can afford to buy, the same class may not have such a purchasing power in
India. The advertisement which may seem lucrative enough for the youth section of America
or Britain to purchase a particular product may not suit the socio-cultural background of
Indian youth. Thus, it depends entirely on the consumer to work out how far one can stray

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http://www.consumerpsychologist.com/
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2,3,18,19 Quality Effects in Consumer Behaviour
away from an effective advertising approach if one of the above mentioned points deviates
from its true sense.
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Consumer behaviour and economic theory
Traditional utility theory: This theory takes off from given individual preferences. If this
theory is not efficient in determining the consumer behaviour, then there are three
possibilities to improve it. The theory can be enlarged or reformed. The second possibility is
of discarding the entire theory and proposing a new set of principles. The third possibility of
using the utility theory is in a case where a consumer can safely assume that changes in
preferences are not so important to determine the entire consumer behaviour. The advantage
of utility theory relies on the base that it explains demand for a commodity in its relation to
demand for all other commodities.
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Consumer behaviour under conditions of incomplete information
Under conditions of incomplete information, prices generate rational expectations concerning
the quality of goods supplied in the market and thus act as indicators of quality. Incomplete
information on quality emerges especially when consumption choice concerns agricultural
products, because they are characterized by wide variations of attributes due to differing
producing environment and also the markets lack of information on the production
techniques of these products.
When consumers approximate the levels of product quality with prices, and prices enter the
utility function, then income and substitution effects, starts functioning i.e. with the increase
of income, the demand for inferior goods decreases and vice-versa and with the increase in
price of one commodity, the demand for substituted commodity increases and vice-versa. The
quality effect has a value that depends on the marginal utility of the income spent on
consumption. This explains that, an increase in income is followed by a decrease in its
marginal utility then the quality effect, other conditions remaining equal, tends to become
increasingly more evident.
In order to make the functioning of the market more effective, the range of consumption
choice should be introduced by introducing the problem of incomplete information on the
quantity, price and quality of product. Under conditions of incomplete information on quality,
the consumer has two different approaches: Firstly, while purchasing fresh agricultural
products, where the quality of the product is unknown due to various attributes, the consumer
may apply standard criteria of purchasing which he/she uses to purchase a product whose
quality is unknown. Secondly, while purchasing durable goods or goods with proper trade
mark, where the quality of the product is certified on the label of the product itself and in
which the consumer may spend a considerable part of his income, a careful search for the
quality of such good is recommended.
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5 Consumer behaviour and marketing: Towards an Indian approach?
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3 Consumer behaviour and economic theory: A comment
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2,4,5,15 Consumer Behaviour under conditions of incomplete information
Consumer behaviour and Market Advertising
The behaviour of a consumer can be gathered from his movement through several stages such
as his need for a particular commodity, information about it, its evaluation and the final
decision of purchasing it. To understand the optimal advertising strategies it becomes
essential to find the behavioural variables in which advertising campaigns go on for a certain
period of time, stops for a while and then comes back. The modern theory explains that in the
beginning, the advertisements capture the minds of consumers to such an extent that they are
compelled to purchase the commodity and gradually with the overuse of that particular
product, the companies stop advertising for a while, so that when after a certain period of
time the advertisement is back again, the consumers may be willing again to purchase that
product.
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Consumer Behaviour and Brand Recognition
Competitive markets are filled with homogenous products. The critical issue faced by most of
the companies is that how to maintain their position in the market in long run. The only
solution to survive in these markets is to produce differentiated products in the market. Brand
management is the differentiation strategy in such competitive markets. For consumers,
brands have immense social and emotional value. Consumers have brand images in mind that
enables them to identify a particular mind. It is available for consumers to determine product
quality and to trigger their consuming behaviour.
Brands have also been found to exert positive and negative effects on the perception of
effectiveness of products. Consumers assign a lesser product value to commodities without
brands or with weaker brand reputations and a higher value to commodities perceived to have
a higher social value. Further, consumers involvement with products affects their purchase
behaviours. Different product attributes cause different degrees of involvement in consumer
minds. These differences of involvement result in differences when consumers make
decisions while purchasing.
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Role of risk undertaking in consumer behaviour
The central problem of consumer behaviour is choice. Since the outcome of a choice can only
be known in the future, the consumer is forced to deal with uncertainty or risk. Any choice
situation involves two aspects of risk: uncertainty about the outcome and uncertainty about
the consequences. Uncertainty about the outcome can be reduced by acquiring complete
information, while uncertainty about the consequences can be dealt with by putting off the
choice. In a choice situation, risk can be interpreted in terms of possible loss. The loss can be
in terms of social or economic terms or a combination of both.
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Factors influencing consumer behaviour

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2,7 Consumer behaviour and optimal advertising
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questia.com
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The role of risk in consumer behaviour by James W. Taylor
Environmental factors: Various factors such as cultures, sub cultures, social classes
and lifestyles affect the behaviour of a consumer.
Group influence: The social groups present around a consumer e.g. family plays an
important role in affecting the choice of a consumer.
Individual determinants: Various internal and external factors such as consumer
perception and learning, personal attitudes and personality, affect the behaviour of the
consumer.
Social status: The position of a person in the society according to his income plays a
major role in determining his behaviour related to a particular product.
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Conclusion
The analysis on Consumer Behaviour helps to understand the two fold purposes of its
study. From the producers point of view, it becomes essential to understand the consumer
behaviour to provide a consumer with the choice of his goods and services. This will result in
the increase in sale of the producers and thus more profit. By studying the behaviour of the
consumers, the producers will understand better who their core customers are and also by
gaining the confidence of their consumers they can develop better marketing strategies.
From the consumers point of view, the customers have various choices available to them,
and based upon their reasoning, perception and other attributes they can select the
commodities of their choice. There are various factors, as discussed above that affect the
choice of a consumer and accordingly a consumer demands for that particular commodity.
Hence, by understanding this concept of consumer behaviour, it becomes easier to
understand the market concepts of demand and supply, both from producers and consumers
point of view.


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22, 23 www.scribd.com Notes on consumer behaviour