Consumer Behaviour

Introduction to Consumer Behaviour

THE DEFINITION & SCOPE OF CONSUMER BEHAVIOUR:
The term consumer behaviour is defined as the behaviour that consumer display
in searching for, purchasing using, evaluating and disposing of products and
services that they expect will satisfy their needs.
Consumer behaviour focuses on how individuals make decisions to spend their
available resources (time, money, effort) on consumption-related items that
includes what they buy, why they buy, when they buy it, where they buy it, how
often they buy it, how often they use it, how they evaluate it after the purchase
and the impact of such evaluations on future purchases, and how they dispose
of it.
Two different kinds of consuming entities: the personal consumer and the
organizational consumer.
Personal Consumer Buys goods and services for his or her own use, for the
use of the household or as a gift for a friend. The products are bought for final
use by individuals, who are referred to as end users or ultimate consumers.
Organizational Consumer Includes profit and non-profit businesses,
government agencies (local, state, national) and institutional (e.g. schools,
hospitals, and prisons), all of which buy products, equipment, and services in
order to run their organizations.
DEVELOPMENT OF THE MARKETING CONCEPT AND THE
DISCIPLINE OF CONSUMER BEHAVIOUR:
MARKETING CONCEPT, A BUSINESS ORIENTATION:
The field of consumer behaviour is rooted in the marketing concept, a business
orientation that evolved in the 1950s through several alternative approaches
towarddoing business referred to respectively: -
1) The Production Concept.
2) The Product Concept.
3) The Selling Concept.
4) The Marketing Concept.
5) The Societal Marketing Concept.
1) THE PRODUCTION CONCEPT:
The production concept assumes that consumers are mostly interested in product
availability at low prices; its implicit marketing objectives are cheap, efficient
product and intensive distribution.
It makes sense when consumer are more interested in buying whats available
rather than wait for what they really want.
The main objective is to expand the market.
2) THE PRODUCT CONCEPT:
The product concept assumes that consumers will buy the product that offers
them the highest quality, the best performance, and the most features.
It ensures the company to improve the quality of its product and add new
features.
The product concept often leads to marketing myopia that is focusing on the
product rather than the customer needs.
3) THE SELLING CONCEPT:
The assumption of the selling concept is that consumers are unlikely to buy the
product unless they are aggressively persuaded to do so mostly through hard
sell approach.
The problem in this concept is that it fails to satisfy a customer.
Promotion can be done through advertisement, sales promotion and public
relation.
Today the selling concept is utilize be marketers of unsought products that is
which people are not willing to buy it (such as life insurance).
4) THE MARKETING CONCEPT:
It started in 1950s when some marketers realized we can sell more products by
determining what consumer would buy.
Consumer need and wants became the firms primary focus.
The marketers should made product what t can sell, instead of what it has made.

STARTING POINT FOCUS MEANS ENDS
SELLING CONCEPT
Factory Product Selling & Promotion Profit through
sale volume
MARKETING CONCEPT
Market Needs Marketing Profit via customer
satisfaction

5) THE SOCIETAL MARKETING CONCEPT:
Developing that product which benefits the society. Doing marketing in such a
way that it helps you in increasing your production & also giving benefits to
society.
The organization should determine the needs, wants and interest of target
markets and deliver the desired satisfaction more effectively and efficiently
then do competitors in a way that maintains or improves the customers and
societys well being.
IMPLEMENTING THE MARKETING CONCEPT:
To identify unsatisfied consumer need, companies had to engage in
extensivemarketing research. The marketing concept underscored the
importance of consumer research.
The strategic tools that are used to implement the marketing concept include
segmentation, targeting, positioning and the marketing mix.
THE ROLE OF CONSUMER RESEARCH:
Consumer research describes the process and tools used to study consumer
behaviour.
Two theoretical perspectives that guides the development of consumer research:
-
Positive Approach It tend to be objective and empirical, to seek caused for
behaviour, and to conduct research studies that can be generalized to larger
population.
Interpretivists the research done by Interpretivists, on the other hand tends to
be qualitative and based on small samples.
SEGMENTATION, TARGETING, AND POSITIONING:
MARKET SEGMENTATION:
Dividing a market into distinct groups of buyers with different needs,
characteristics or behavior who might require separate products or marketing
mixes.
Market consists of buyers and, buyers differ in one or more ways. They may
differ in their wants, resources, locations, buying attitudes, and buying
practices.
MARKET POSITIONING:
Formulating competitive positioning for a product and a detailed marketing mix.
Developing a distinct image for the product or service in the mind of the
consumer, that will differentiate with the competitors.
MARKET TARGETING:
The process of evaluating each market segments attractiveness and selecting one
or more segments to enter.
MARKETING MIX:
The marketing mix consists of a companys service and/or product offerings to
consumers and the methods and tools it selects to accomplish the exchange. The
marketing mix consists of four elements:
1) The product or service that is the features, designs, brands, and packaging
offered, along with post purchase benefits such as warranties and return
policies.
2) The price the list price, including discounts, allowances, and payment
methods.
3) The place the distribution of the product or service through specific store
and non store outlets.
4) Promotion The advertising, sales promotion, public relations, ad sales
efforts designed to build awareness of and demand for the product or
service.
CUSTOMER VALUE, SATISFACTION, AND RETENTION:
Savvy marketers today realize that in order to outperform competitors they must
achieve the full profit potential from each and every customer. The three drivers
of successful relationship between marketers and customers are customer value,
high levels of customer satisfaction, and building a structure for customer
retention.
1) PROVIDING CUSTOMER VALUE:
Customer value is defined as the ratio between the customerss perceived
benefits (economic, functional and psychological) and the resources (monetary,
time, effort, psychological) used to obtain those benefits. Perceived value is
relative and subjective.
Example: McDonalds Corporation to deliver the companys four core
standards; quality, service, cleanliness, and value.
2) CUSTOMER SATISFACTION:
Customer satisfaction is the individuals perception of the performance of the
product or service in relation to his or her expectations.
The linked levels of customer satisfaction with customer behavior identified
several types of customers: -
Loyalists Who keeps purchasing, they are satisfied completely.
Apostles Whose experiences exceed their expectations and who provide very
positive word of mouth about the company to others.
Defectors Who feel neutral or merely satisfied and are likely to stop doing
business with the company.
Terrorists Who have had negative experiences with the company and who
spread negative word of mouth.
Hostages Who are unhappy customers who stay with the company because
of a non polistic environment or low prices and who are difficult and costly to
deal with because of their frequent complaints?
Mercenaries Who are very satisfied customers but who have no real loyalty
to the company and may defect because of a lower price else where or on
impulse, defying the satisfaction-loyalty rationale.
The researches purpose that companies should strive to create apostles, raise the
satisfaction of defectors and turn them in to loyalist avoid having terrorists or
hostages and reduce the number of mercenaries.
3) CUSTOMER RETENTION:
Customer retention makes it in the best interest of customers to stay with the
company rather than switch to another firm.
Loyal customers buy more products.
Loyal customers are less prices sensitive and pay less attention to
competitors advertising.
Servicing existing customers, who are familiar with the firms offerings and
processes, is cheaper.
Loyal customers spread positive word of mouth and refer other customer.
Customer profitability-focused marketing tracks costs and revenues of
individual customers ad then categorizes them into tiers based on consumption
behaviors that are specific to the companys offerings.
Recent Study advocates using customerpyramid where customers are grouped
in 4 ties:
1) The Platinum Ties Includes heavy users who are not price sensitive and
who are willing to try new offerings.
2) The Gold Tier It consists of customers who are heavy user but not as
profitable because they are more price sensitive than those in the higher ties.
Ask for discount and buy from several providers.
3) The Iron Tier It consists of customers whose spending volume ad
profitability do no merit special treatment from the company.
4) The Lead Tier It includes customers who actually cost the company
money because they claim more attention than is merited by their spending.
MARKETING ETHICS & SOCIAL RESPONSIBILITY:
The societal marketing concept It is very important components of
organizational effectiveness. It helps us to build good image and also increase
in sales. The converse is also true Perceptions of a companys lack of social
responsibility or unethical marketing strategies negatively effect consumer
purchase decision.
CONSUMER BEHAVIOUR & DECISION MAKING ARE
INTERDISCIPLINARY:
Consumer Behavior was a new field in the mid of late 1960, because the
marketing theorists borrowed the concepts from other scientific disciplinary that
is :-
Psychology The study of the individual, Sociology The study of
groups, Social Psychology The study of how an individual operates in
groups, Anthropology The influence of society on the individual,
and Economics To form the basis of the new marketing discipline.
Many Early theory based on economic theory on the notion that individuals are
rationally to maximize their benefits.
A SIMPLIFIED MODEL OF CONSUMER DECISION MAKING:
The process of consumer decision making can be viewed as three distinct but
interlocking stages: the input stage, the process stage, and the output stage.
The Input Stage Influences the consumers recognition of a product need
and consists of two major sources of information, the firms marketing efforts
(the product itself, its price, its promotion and where it is sold) and the external
sociological influences on the consumers.
The Process Stage It is the model focuses on how consumers make
decisions. The psychological factors inherent in each individual.
The Output Stage It is the consumer decision making model consists of two
closely related post decision activities.






NEEDS ARE NEVER FULLY SATISFIED:


Most human needs are never fully or permanently satisfied. E.g: Drinking water
again and again, you fell thirsty you drink water again and again.


Most people regularly seek companionship and approval from others to satisfy
their social needs. Even more complex psychological needs are rarely fully
satisfied.


NEW NEEDS EMERGE AS OLD NEEDS ARE SATISFIED:


Some motivational theorists believe that a hierarchy of needs exists and that new
higher-order needs emerge as lower-order needs are full-filled. For example,
Maslow hierarchy of needs that is a man who has satisfied his physiological needs
may turn to social and esteem needs.



SUCCESS & FAILURE INFLUENCE GOALS:

Individuals who successfully achieve their goals usually set new and higher
goals that are they raise their level of aspiration. This is due to the fact that they
succeed in reaching their lower goals, so that makes them confident to reach higher
goals. On the other hand one who cannot reach their goals sometimes lowers their
level of aspiration.

E.g: If your target grade is B, if you achieve it than at next you target higher
grades.

If you achieve your goal, your inspirational will increase and you will set new
goals. But always set goals that are achievable.


SUBSTITUTE GOALS:


When individual set goals cannot achieve, then the behavior may be directed to
another goal that is substitute goal.


Although the substitute goal may not be as satisfactory as the primary goal, it
may be sufficient to dispel uncomfortable tension.


E.g: A man who cannot prefer BMW may convince himself that a Mazda Miata
has an image he clearly prefers.


FRUSTRATION:

Failure to achieve goal often results in feelings of frustration. Regardless of the
cause, individuals react differently to frustrating situations. Some people
manage to cope up by selecting substitute goal, others are less adaptive and may
frustrate for not achieving the goal.



DEFENCE MECHANISMS DIFFERENT TYPES OF FRUSTRATION:

There are different types of frustration that may occur after not succeeding to
achieve a goal: -


Aggression In response to frustration, individuals may resort to aggressive
behavior in attempting to protect their self-esteem. E.g: A batsman got out he
took frustration by hitting the bat to the ground.

Rationalization People sometimes resolve frustration by inventing plausible
reasons for being unable to attain their goals. E.g: Not having enough time to
practice.

Regression An individual may react to a frustrating situation with childish or
immature behavior. E.g:

Withdrawal Frustration may be resolved by simply withdrawing from the
situation. E.g:

Projection An individual may redefine a frustrating situation by projecting
blame for his or her own failures and inabilities on other objects or persons.
E.g: A student got bad marks and he blame teacher for it.

Autism Autistic thinking is thinking dominated by needs and emotions with
little effort made to relate to reality such as daydreaming, or fantasizing enable
the individual to achieve its goals. E.g: Daydreaming about to score double
hundred in next match.

Identification People resolve their frustration by matching their failures with
others. E.g: If an individual friend is fail and he is also, than he resolves his
frustration in this way.

Repression Another way that individuals avoid the tension arising from
frustration is by repressing the unsatisfied need. If you cannot achieve you goal
than try to divert your attention to some other thing. E.g:




MULTIPLICITY OF NEEDS:

Consumer behavior often fulfills more than one need. In fact, it is likely that
specific goals are selected because they fulfill several needs. E.g: We buy
clothing for protection and for a certain degree of modesty; in addition, our
clothing fulfills a wide range of personal and social needs, such as acceptance
or ego needs.


NEEDS AND GOALS VARY AMONG INDIVIDUAL:

People have different needs may seek fulfillment through selection of the same
goal; people with the same needs may seek fulfillment through different goals.
E.g: In a group the needs, goals, reasons, idea may differ from people to people.


AROUSAL OF MOTIVES:






The arousal of any particular set of needs at a specific moment in time may be
caused by internal stimuli found in the individuals physiological, emotional,
cognitive and environment.



Internal Stimuli What you say, what you want or desire.



External Stimuli See any advertisement of McDonalds, then you eat it.






1) PHYSIOLOGICAL AROUSAL:






Bodily needs at one specific moment in time are based on the individuals
physiological condition at that moment. E.g: Person feeling cold so he wear
warm clothes.



Most of these physiological cues are involuntary; however, they arouse related
needs that cause uncomfortable tensions until they are satisfied.






2) EMOTIONAL AROUSAL:






Sometimes daydreaming results in the arousal or stimulation of latent needs.
People who are bored or who are frustrated in trying to achieve their foals
engage in daydreaming (autistic thinking), in which they imagine themselves in
all sorts of desirable situations.






3) COGNITIVE AROUSAL:


Some times random thoughts can lead to a cognitive awareness of needs.

4) ENVIRONMENTAL AROUSAL:






The set of needs an individual experiences at a particular time are often
activated by specific cues in the environment. Without the cues, the needs
might remain dormant. E.g: The 60clock news, the slight or smell of bakery
goods and other.



When people live in a complex and highly varied environment, they experience
many opportunities of need arousal. Conversely when there environment is poor
or deprived, fewer needs are activated.



There are two opposing philosophies concerned with the arousal of human
motives. The behaviorist school considers motivation to be a mechanical
process; behavior is seen as the response to a stimulus, and elements of
conscious thought are ignored. The cognitive school believes that all behavior
is directed at goal achievement. Need and past experiences are reasoned,
categorized, and transformed in to attitudes and beliefs that act as predisposition
to behavior.


TYPES & SYSTEMS OF NEEDS:



HIERARCHY OF NEEDS:



Dr. Abraham Maslow, a clinical psychologist, formulated a widely accepted
theory of human motivation based on the notion of a universal hierarchy of
human needs.

The Maslow hierarchy of needs are give below: -






1) PHYSIOLOGICAL NEEDS:




These are the basic needs for sustaining human life itself. Such as food, water,
warmth, shelter and sleep. Maslow took the position that until these needs are
satisfied to the degree necessary to maintain life, other needs will not motivate
people.


2) SECURITY OR SAFET NEEDS:

These are the needs to be free of physical danger and of the fear of losing a job,
property, food, or shelter, Stability.



3) SOCIAL OR AFFILIATION OR ACCEPTANCE NEEDS:
Since people are social beings, they need to belong, to be accepted by others
affection, friendship, and belonging).


4) ESTEEM OR EGO NEEDS:
According to Maslow, once people begin to satisfy their need to belong, they tend
to want to be held in esteem both by themselves and by others. This kind of need
produces such satisfaction as power, prestige, status and self-confidence.






5) SELF-ACTUALIZATION NEEDS:
Maslow regards this as the highest need in his hierarchy. It is the desire to become
what one is capable of becoming to maximize ones potential and to accomplish
something.





















SEGMENTATION & PROMOTIONAL APPLICATIONS:

Maslows need hierarchy is readily adaptable to market segmentation and the
development of advertising appeals because there are consumer goods designed to
satisfy each of the need levels and because most needs are shared by large
segments of consumer.

For example: Individuals buy healthy foods, medicines, and low-fat and diet
products to satisfy physiological needs. They buy insurance, preventive medical
services, ad home security systems to satisfy safety and security needs. They buy
cosmetics, mouthwash, saving cream as well as clothes to satisfy social needs.
They buy computers or sound system or big cars, expensive furniture to fulfill ego
needs. The college education, hobby-related products and physically challenging
adventure trips are sold as ways of achieving self-fulfillment.
POSITIONING APPLICATIONS:
Advertisers may use the need hierarchy for positioning products that is,
deciding how the product should be perceived by prospective consumers. The key
to positioning is to find a niche an unsatisfied need that is not occupied by a
competing product or brand.

The need hierarchy is very versatile tool for developing positioning strategies
because different appeals for the same product can be based on different needs
included in this framework. For example: ad for soft drink stress social appeal.











A TRIO OF NEEDS:

Some psychologists believe in the existence of a trio of basic needs; the needs for
power, for affiliation, and for achievement. These needs can each be subsumed
within Maslows need hierarchy; considered individually; however, each has a
unique relevance to consumer motivation.

1) POWER:
The power need relates to an individuals desire to control his or her
environment. It included the need to control other persons and various objects.
This need appears to be closely related to the ego or esteem needs, in that many
individuals experience increased self-esteem when they exercise power over
objects or people.

2) AFFILIATION:

Affiliation related to need for friendship, acceptance and belonging. People with
high affiliation needs tend to be socially dependent on others. The affiliation need
is very similar to Maslows social need.

3) ACHEIVEMENT:

Achievement is the need for personal accomplishment. It is closely related to
egoistic and self-actualization needs. People with a high need for achievement tend
to be more self-confident, enjoy taking calculated risks, and actively research their
environments and value feedback.









THE MEASUREMENT OF MOTIVES:

There are three commonly used methods for identifying and measuring human
motives: observation and inference, subjective reports and qualitative research.
None of these methods are completely reliable by it. Therefore, researches often
use a combination of two or three techniques is tandem to assess the presence or
strength of consumer motives.



MOTIVATIONAL RESEARCH:

Qualitative research designed to uncover consumers subconscious or hidden
motivations. Consumers are not always aware of, or may not wish to recognize, the
basic reasons underlying their actions.


THE DEVELOPMENT OF MOTIVATIONAL RESEARCH:
This school of thought follows Freuds psychoanalytic theory, assuming that
consumer motivations are often subconscious and hidden. Dr. Ernest Dichter,
formerly a psychoanalyst in Vienna, adapted Freuds techniques to the study of
consumer buying habits. Up to this time, marketing research had focused on what
consumers did (that is quantitative, descriptive studies). Dichter used qualitative
research methods to find out why they did it.


By the early 1960s however marketers realized that motivational research has a
umber of draw backs. Because of the intensive nature of qualitative research,
samples necessarily were small thus; there was concern about generalization
findings to the total market,



Despite its criticisms, motivational research is still regarded as an important tool
by marketers who want to gain deeper insights in to the whys of consumer
behavior than conventional marketing research techniques can yield with
developing new ideas and new copy appeals.