CONSUMER BEHAVIOUR

FACTORS INFLUENCING PURCHASE DECISION OF A CONSUMER

Submitted to: Ms Mariyam Fatima

Submitted by: Dishant Ahuja BBA 2nd Sem

NATIONAL P.G. COLLEGE (DEPARTMENT OF MANAGEMENT STUDIES)

INDEX
NAME OF TOPIC PAGE NO.

Acknowledgement Certificate Introduction to consumer buying behaviour Factors influencing consumers Conclusion Bibliography

ACKNOWLEDGEMENT
I wish to express my heartfelt gratitude towards my teacher Ms. Mariyam Fatima for her guidance and encouragement in completing my project. This project would not have been in its present for if Ms. Mariyam Fatima would not have helped me and provided one with relevant data. Last but not the least I am indebted towards my group members whose idea and co-operation enriched this learning procedure.

DATE: 29.feb.08 PLACE: Lucknow SIGNATURE

CERTIFICATE

It is certified that Dishant Ahuja has been allotted the topic

Factors influencing buying behaviour for project work towards

partial fulfillment of BBA 2nd semester course.

NAME OF SUBJECT:Consumer Behaviour SIGN OF SUB-TEACHER DATE: 29.feb.08 NAME OF THE TEACHER:

Ms. Mariyam Fatima

INTRODUCTION TO CONSUMER BUYING BEHAVIOUR

Consumer buyer behavior refers to the buying behavior of final consumers individuals and households who buy goods and services for personal consumption All of these final consumers combine to make up the consumer market

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1. Need/Want/Desire is Recognized
In the first step the consumer has determined that for some reason he/she is not satisfied (i.e., consumer s perceived actual condition) and wants to improve his/her situation (i.e., consumer s perceived desired condition). For instance, internal triggers, such as hunger or thirst, may tell the consumer that food or drink is needed. External factors can also trigger consumer s needs. Marketers are particularly good at this through advertising, in-store displays and even the intentional use of scent (e.g. , perfume counters). At this stage the decision-making process may stall if the consumer is not motivated to continue (see Motivation above). However, if the consumer does have the internal drive to satisfy the need they will continue to the next step.

2. Search for Information

Assuming consumers are motivated to satisfy his or her need, they will next undertake a search for information on possible solutions. The sources used to acquire this information may be as simple as remembering information from p ast experience (i.e., memory) or the consumer may expend considerable effort to locate information from outside sources (e.g., Internet search, talk with others, etc.). How much effort the consumer directs toward searching depends on such factors as: the importance of satisfying the need, familiarity with available solutions, and the amount of time available to search. To appeal to consumers who are at the search stage, marketers should make efforts to ensure consumers can locate information related to th eir product. For example, for marketers whose customers rely on the Internet for information gathering, attaining high rankings in search engines has become a critical marketing objective.

3. Evaluate Options
Consumers search efforts may result in a set of options from which a choice can be made. It should be noted that there may be two levels to this stage. At level one the consumer may create a set of possible solutions to their needs (i.e., product types) while at level two the consumer may be evaluating particular products (i.e., brands) within each solution. For example, a consumer who needs to replace a television has multiple solutions to choose from such as plasma, LCD and CRT televisions Most importantly, marketers must determine which criteria consumers are using in their selection of possible options and how each criterion is evaluated. Returning to the television example, marketing tactics will be most effective when the marketer can tailor their efforts by knowing what benefits are mo st important to consumers when selecting options (e.g., picture quality, brand name, screen size, etc.) and then determine the order of importance of each benefit.

4. Purchase
In many cases the solution chosen by the consumer is the same as the product whose evaluation is the highest. However, this may change when it is actually time to make the purchase. The intended purchase may be altered at the time of purchase for many reasons such as: the product is out-of-stock, a competitor offers an incentive at the pointof-purchase (e.g., store salesperson mentions a competitor s offer), the customer lacks the necessary funds (e.g., credit card not working), or members of the consumer s reference group take a negative view of the purchase (e.g., friend is cri tical of purchase). Marketers whose product is most desirable to the consumer must make sure that the transaction goes smoothly. For example, Internet retailers have worked hard to prevent consumers from abandoning online purchase (i.e., online shopping carts) by streamlining the checkout process. For marketers whose product is not the consumer s selected product, last chance marketing efforts may be worth exploring, such as offering incentives to store personnel to talk up their product at the checkout line.

5. After-Purchase Evaluation
Once the consumer has made the purchase they are faced with an evaluation of the decision. If the product performs below the consumer s expectation then he/she will re evaluate satisfaction with the decision, which at its extreme may result in the consumer returning the product while in less extreme situations the consumer will retain the purchased item but may take a negative view of the product. Such evaluations are more likely to occur in cases of expensive or highly important purchases. To help ease the concerns consumers have with their purchase evaluation, marketers need to be receptive and even encourage consumer contact. Customer service centers and follow-up market research are useful tools in helping to add ress purchasers concerns.

FACTORS INFLUENCING PURCHASE DECISION OF A CONSUMER

PSYCHOLOGICAL INFLUENCES

Perception:
The major psychological factor that influences consumer behavior is perception.Perception can be described as how we see the world around us . All the time we are receding messages through our five organs viz.., eyes, ears, nose, mouth and skin. The different sights, sounds, smells, tastes and sensations that we feel are known as stimuli. Each person recognizes, selects,organizes and interprets thes3e stimuli in his own individual manner based in his needs, values and expectations and this is known as perception. Since each individual s needs, motive and expectations are unique therefore each individual s perception is unique.Perception helps to explain the phenomenon of why different individuals respond differently to the same stimulus under the same condition. As a marketing manager, you are providing stimulus to your consumers through the physical shape, color, size, fragrance, feel, taste of your product, its package, advertisement and commercials. Your interest is to the stimuli so that you can highlight that particular stimulus of combination of stimuli, which evokes the most favorable perception in the maximum number of consumers. For example, generally consumers tend to perceive the quality of performs on the basis of package, brand name, price and manufacture s image. Everyday, every hour of our life we are being bombarded with a variety of stimuli. If we were to analyze and interpret each one of these stimuli, it may drive us crazy. But we al have an in built screening system which helps us to select and recognize only the relevant stimuli and ignore all the others. As a person involved in marketing, you would like to ensure that the consumers do not ignore the stimuli, which you are providing, but rather they are recognized, interpreted and retained in the consumer memory. In this context, there are three aspects of perception, which are of immediate interest to the marketer. These are selective exposure, selective distortion and selective retention.

Attitude:
In simple terms attitude refers to what a person feels or believes about something. Additionally, attitude may be reflected in how an individual acts based on his or her beliefs. Once formed, attitudes can be very difficult to change. Thus, if a consumer has a negative attitude toward a particular issue it will take considerable effort to change what they believe to be true. Attitudes or opinions are positive, neutral, or negative feelings about goods, services, firms, people, issues, and/or institutions. Success cannot normally be attained without posi-tive consumer attitudes. A belief is a descriptive thought that a person has about something. A person may believe that a certain coking oil X has the lowest fat content and is best for health. This belief may be based on some real facts or it may merely be a notion or opinion that the person has. The beliefs constitute the brand image about the brand. The marketer must ensure that consumers have relevant and correct information about the brand to facilitate formation of a positive brand Image.Attitude is a person s enduring feeling, evaluation and tendency towards a particular idea or object. Starting from childhood, attitude develops over the time with each fresh knowledge input, experience and influence. Attitudes get settled into specific pattern s and are difficult to change. It is easier to market product that fits in well with the existing patterns of attitudes rather than change the attitudes to fit a new product concept.

Learning:
When people act they learn .Learning involves changes in an individual s behavior arising from experience.Most human behavior is learned. Learning theorists believe that learning is produced through the interplay of drives, stimuli,cues, responses and reinforcement.A drive is a strong internal stimulus impelling action. Cues are minor stimuli determine when, where and how a person respond. Learning occurs through: Drives : Internal stimulus that calls for action Stimuli :Objects that move drive to motive Cues: Minor stimuli that affect response Reinforcement :Feedback on action

Motivation:
Motivation relates to our desire to achieve a certain outcome. Many internal factors we have already discussed can affect a customer s desire to achieve a certain outcome but there are others. For instance, when it comes to making purchase decisions customers motivation could be affected by such issues as financial position (e.g., can I afford the purchase?), time constraints (e.g., do I need to make the purchase quickly?), overall value (e.g., am I getting my money s worth?), and perceived risk (e.g., what happens if I make a bad decision). Motivation is also closely tied to the concept of Involvement, which relates to how much effort the consumer will exert in making a decision. Highly motivated consumers will want to get mentally and physically involved in the purchase process. Not all products have a high percentage of highly involved customers (e.g., milk) but marketers who market products and services that may lead to high level of consumer involvement should prepare options that will be attractive to this group. For instance, marketers should make it easy for consumers to learn about their product (e.g., information on website, free video preview) and, for some products, allow customers to experience the product (e.g., free trial) before committing to the purchase.

SOCIO-CULTURAL INFLUENCES

Reference groups:
As a consumer, your decision to purchase and use certain products and services, is influenced no only by psychological factors, your personality and life- style, but also by the people around you with whom you interact and the various social groups to which you belong. The groups with whom you interact directly or indirectly influence your purchase decisions and thus their study is of great impor -tance to marketer to understand are: I) Primary and secondary groups: a primary group is one with which an individual interacts on a regular basis and whose opinion is of importance to him, family, neighbors, close friends, col-leagues and co- workers are examples of primary groups. Secondary groups are those with which an individual interacts only occasionally and does not consider their opinion very impor-tant. II) Formal and informal groups: Rotary, lions, Jaycees are some of the well known social groups in our society. Labor union s, social clubs and societies are other types of formal groups to which individuals may belong. A formal group has a highly defined structure, specific roles and authority positions and specific goals. In contrast, an informal group is loosely defined and may have no specified roles and goals. Meeting your neighbors over lunch once a month for friendly exchange of news is an instance of an informal group. III)Membership and symbolic groups: A membership group is one to which a person belongs or qualifies for membership. All workers in a factory qualify for membership to the labor union. A symbolic group is one which an individual aspires to belong to, but is not likely to be received as a member. Ahead clerk in an office may act as if he belongs to the top membership and symbolic groups influence consumer behaviors but membership groups have a more direct influence. Primary, informal and small groups exert the maximum influence on consumers and are of great interest for marketers. Any of these groups can sever as a reference group for a consumer if it serves as a point of reference or comparison ion the formation of the values, attitudes and behavior. Different kinds of groups, whether small or large, formal or reference group is a very wide one and includes both direct and indirect or group influences. Indirect reference groups comprise those individuals or groups with whom an individual dews not have any direct face to face contact, such as film stars, TV stars, sportsman, politicians. Reference groups are used in advertising to appeal to different market segments, group situation with which potential customers can identify are used to promote products and services. Hidden in this appeal is the subtle inducement to the customer to identify himself with the user the product in question. The three types of reference groups appeals most commonly used are: a) Celebrities, b) Experts, and c) The common man

Family:
The family is the most important of all these groups and we shall discuss it in detail. The family, as a unit, is an important of all these groups and we shall discuss it in detail. The family, as I unit, is an important consumer for many products which are purchased for consumption by all family members. It is a source of major influence on the individual members buying behavior. We can identify two families which shape an individual s consumption behavior .one is the family of orienta -tion that is the family in which you are born and consists of your parents, br others and sisters. It is from parents that we imbibe most of our values, attitudes, beliefs and purchase behavior patterns. Long after an individual has ceased to live with his parents, their influence of the sub conscious mind still continues to be grea t. In our country, where children continue to live with parents even after attain adulthood, the latter s influence is extremely important. The second type of family is the family of procreation consisting of the consumer s spouse and children. Within the family, different member play different roles. Marketers are interested in finding out exactly the role played by individual members so that they can appropriately design their promo-tion strategy to suit these differing roles. Traditionally, it has been the wife s role to purchase food,clothing and other household sundries, while the husband played a dominant role in the purchased of automobiles and life insurance. But with the emergence of the working -women, these lines of tradi-tional role demarcation have been getting increasingly blurred. Husbands now have to shoulder a greater part of the household duties while women are asserting themselves in areas so far treated as the husband s domain. Thus, the same decision, in different families may be made eit her by the husband or wife, or both may have an equal voice. Children are also beginning to exert their influence on the family s purchase decisions. This is especially true in case of products such as television,stereo music systems, records, personal com puters, etc. where the children are likely to have more updated information about various brands and product attributes .

Cultural factors:
Cultural factors have a significant impact on customer behavior.Culture is the most basic cause of a person s wants and behavior. Growing up, children learn basic values, perception and wants from the family and other important groups. Marketers are always trying to spot cultural shifts which might point to new products tha t might be wanted by customers or to increased demand. For example, the cultural shift towards greater concern about health and fitness has created opportunities (and now industries) servicing customers who wish to buy: y Low calorie foods y Health club memberships y Exercise equipment y Activity or health-related holidays etc.

Similarly the increased desire for leisure time has resulted in increased demand for convenience products and services such as microwave ovens, ready meals and direct marketing service busi-nesses such as telephone banking and insurance. Each culture contains sub-cultures groups of people with share values. Sub -cultures can include nationalities, religions, racial groups, or groups of people sharing the same geographical location. Sometimes a sub-culture will create a substantial and distinctive market segment of its own. Forexample, the youth culture or club culture has quite distinct values and buying characteristics from the much older gray generation Similarly, differences in social class can create customer groups. In fact, the official six social classes in the UK are widely used to profile and predict different customer behavior. In the UK s socioeconomic classification scheme, social class is not j ust determined by income. It is measured as a combination of occupation, income, education, wealth and other variables .

PERSONAL FACTORS

Knowledge:
Knowledge is the sum of all information known by a person. It is the facts of the world as he/she knows it and the depth of knowledge is a function of the breadth of worldly experiences and the strength of an individual s long -term memory. Obviously what exists as knowledge to an individual depends on how an individual s perceptual fil ter makes sense of the information it is exposed to.

Marketers may conduct research that will gauge consumers level of knowledge regarding their product. As we will see below, it is likely that other factors influencing consumer behavior are in large part shaped by what is known about a product. Thus, developing methods (e.g., incentives) to encourage consumers to accept more information (or correct information) may affect other influencing factors.

Personality:
An individual s personality relates to perceived personal characteristics that are consistently exhibited, especially when one acts in the presence of others. In most, but not all, cases the behaviors one projects in a situation is similar to the behaviors a person exhibits in another situation. In this way personality is the sum of sensory experiences others get from experiencing a person (i.e., how one talks, reacts). While one s personality is often interpreted by those we interact with, the person has their own vision of their personality, called Self Concept, which may or may not be the same has how others view us.

For marketers it is important to know that consumers make purchase decisions to support their self concept. Using research techniques to identify ho w customers view themselves may give marketers insight into products and promotion options that are not readily apparent. For example, when examining consumers a marketer may initially build marketing strategy around more obvious clues to consumption beha vior, such as consumer s demographic indicators (e.g., age, occupation, income). However, in-depth research may yield information that shows consumers are purchasing products to fulfill self concept objectives that have little to do with the demographic category they fall into (e.g., senior citizen may be making purchases that make them feel younger). Appealing to the consumer s self concept needs could expand the market to which the product is targeted.

Lifestyle:
This influencing factor relates to the way we live through the activities we engage in and interests we express. In simple terms it is what we value out of life. Lifestyle is often determined by how we spend our time and money. Products and services are purchased to support consumers lifestyles. Marketers have worked hard researching how consumers in their target markets live their lives since this information is key to developing products, suggesting promotional strategies and even determining how best to distribute products. The fact that lifestyle is so directly tied to marketing activity will be further examined as we discuss developing target market strategies.

Age and Life cycle Stage:

Like the social class the human life cycle can have a significant impact on consumer behaviour. The life cycle is an orderly series of stages in which consumer attitude and behavioural tendencies evolve and occur because of developing maturity, experience, income, and status. Marketers often define their target market in terms of the consumers present lifecycle stage

Occupation And Income:

Today people are very concerned about their image and the status in the society which is a direct outcome of their material prosperity. The profession or the occupation a person is in again has an impact on the products they consume. The status of a person is projected through various symbols like the dress, accessories and possessio ns.

Situational influences :
Specific circumstances often influence consumer behavior. For example, consumers in a rush are likely to take the most convenient product available. Consumers whose attention is demanded elsewhere are likely to disregard commercial messages. Consumers shopping for a special occasion (e.g., a wedding) may buy different products.

CONSUMER DECISION MAKING

Consumer decision making comes about as an attempt to solve consumer problems. A problem refers to "a discrepancy between a desired state and an ideal state which is sufficient to arouse and activate a decision process." Thus, problems can be major (e.g., a consumer has been fired and is without a job) or minor (e.g., the consumer lacks an eraser necessary to take an exam the next day), and the broader and more ambiguous a problem is, the more potential solutions are generally available (see class slides for examples).

Consumer Problem Recognition : Consumers often note problems by comparing their current, or actual, situation, explicitly or implicitly, to some desired situation. In terms of the "big picture," what is compared may be the totality of one s lifestyle. Once a discrepancy is found, a determination is found as to whether this is large enough to warrant action, in which case a search for solutions is initiated. Problems come in several different types. A problem may be an active one (e.g., you have a headache and would like as quick a solution as possible) or inactive-- you are not aware that your situation is a problem (e.g., a consumer is not aware that he or she could have more energy with a new vitamin). Problems may be acknowledged (e.g., a consumer is aware that his or her car does not accelerate well enough or unacknowledged (e.g., a consumer will not acknowledge that he or she consumes too much alcohol). Finally, needs can be relatively specific (generic), as in the need for enjoyment (which can be satisfied many different ways), or specific, as in the need for professional attire to wear at a new job. Creating problems for consumers is a way to increase sales, albeit a questionably ethical one. One way to create new problems, and resultant needs, is to create a new ideal state. This is often done quite arbitrarily in the fashion industry, as skirt lengths and the appropriate number of buttons on a suit often change arbitrarily up and down. It may also be possible to create dissatisfaction with current states --e.g., a firm may publicize current crime statistics to increase the sales of handguns and alarms. Many vocational training schools advertise that better careers than the consumer s current one are available upon graduation (a promise on which, by the way, they may not deliver in th e end).

CONCLUSION
Psychologists have long been interested in the topics of buying and shopping behaviour. Some major perspectives in psychology such as behaviourism and cognitivism have formulated different theories to explain buying motivation and behaviour. The stress the process of operant conditioning and individual s history of reinforcement, while the approach puts its accent on individual s free will and intentional, volunta ry action. The views of these two perspectives can be examined in terms.

With regard to the nature of buying behaviour, the behaviourists consider it as a response to a reinforcer. One of the famous behaviourists, Alhadeff (1982), represents buying behaviour as the outcome of the relative strengths of conflicting approach and escape behaviours, each of which is determined by its own reinforcers. Etc. On the other hand, the cognitive perspective views buying behaviour as more voluntary, rational and intentional in nature rather than mere response to the environment. People buy what they want to buy and their reasons for buying embrace "whatever consideration induced, inclined, weighed with or decided them to buy" (Beck, 1975). Etc.

To conclude, the behaviouristic and cognitive perspectives may have certain strengths as well as weaknesses in their arguments. The behavioural perspective gives a clear and concrete picture of consumer behaviour, with the manifest account of reinforcement contingencies and the effects of environmental factors. However, it attributes buying behaviour solely to environmental stimuli and finds no explanation of consumer s perceptions, curiosity, attitudes and intentions which we do observe to exist in real life. The cognitive approach, on the contrary, places a strong emphasis on individual s free will, intention and purpose. However, the explanation of the choice of purchase is criticized to be too mechanistic since the decision to buy is described to undergo consideration of many reasons and social factors and the actual decision may not be so complex every time. On the whole, the two perspectives can be studied in complement (relation?) to each other and their different claims have contributed much to our understanding of bu ying behaviour

BIBLIOGRAPHY

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Consumer behaviour - Matin Khan www.google.com www.ask.com www.wikipedia.org