Consumer Behavior

Study of consumer behavior, a vital part of marketing as marketing aims to meet the needs and wants of the consumer

Understanding the Consumer is Important

Give the Consumer what she wants serves as the evergreen dictum for smart marketing In mass marketing understanding what each individual requires is not possible. How does the consumer make the value selection and goes for a particular Brand. Lot of research done on the Psychological process that guides consumer behavior. E.g. The value buyer seeks in a Car Functional value, Social value, Status value, Economic value

Understanding Consumer is Complex Task

Lot of theories but no conclusion, since a consumer does not go by set rules. He may take long time or be impulsive. The task is difficult especially in present time complexity, information overload. Consumer may follow the Economic, Psychology or Sociology factors/models or a combination. Consumer keeps the marketer guessing.

Buying Behavior
Consumer Characteristics Buying Habits Buying Motives
Psychological process Underlying Buyer behavior

BUYING BEHAVIOR

Stages in Buying process Participants & roles

1. Consumer Characteristics influencing Buying Behavior

1.

2.

Personal Factors a. Personal Demographics b. Personal Psychographics Socio Cultural Factors a. Cultural b. Social Groups/Personal Groups

Psychographic and Demographic

Age, Sex
Selfconcept Lifestyle Values Personality Life cycle stage

Occupation
Wealth

Demographics of the Consumer

Includes Age, Sex, Stage in Life Cycle, Education, Occupation, Economic Position etc. His Personal Bio Data, decides what & where he will buy.
Income related example Tea (A buyer from a low income group may buy an unbranded local product from a ration shop, lower middle class low priced A1 tea from a corner shop, middle class reasonable good brand from Subiksha chain, an upper middle class may go for Tata from a high end retail store.)

Sex Men and women differ in their preference of perfume / Deodrant Age Preference of TV channels may vary according to age Occupation Formal Clothes may be purchased according to the occupation

The Family Life Cycle

Stages in family life cycle

Bachelor stage Income is comparatively low, few financial burdens, relatively high discretionary income, spending on food, clothing, entertainment and vacation Newly married Characterized by purchase of consumer durables Full nest I This stage is typically characterized by increased expenses with the arrival of child. Drastic reduction in availability of finances. Main purchase relating to baby food, toys, medicines, furniture etc. Full nest II Improving financial conditions due to growth in career. Money spent for education of children, vehicle purchase, food items etc Empty Nest Financial position stabilizes. Expenses on luxury goods, medicines and hobies

Psychographics of the Consumer

Individuals may differ based on Personality, Lifestyle, self concept, value system, etc which impact buying behavior. Difficult to understand. 1. Personality: Extrovert (impulsive, easily swayed by friends and peer opinions), Introvert (slow in taking decisions, likes to be alone) and ambivert. Compliance individuals (prefer known brands and like to conform to accepted norms) , Aggressive individuals (like to attract attention by using specific brands ) and Detached individuals (no particular pattern). Determinants of personality are heredity, environment, and situations 2. Life Style: Life Aspirations. Status & material prosperity. Pace of life e.g. Club, Hotel, Dress, Jewelry purchase will be affected by life style factors.

3. Values A child growing up in U.S is exposed to the

following values: freedom, material comfort, humanitarianism etc. A child growing up in India is exposed to integrity, respect for elders etc 4. Self Concept How we view ourselves. Consumers choose brands that are consistent to their self concept. A housewife may hesitate buying readymade curries because it may be inconsistent with her concept of herself being a hardworking housewife.

Lifestyle Influences of current generation

Multi-tasking

Time-starved
Money-constrained

Bank of Baroda

The bank is the first among Public Sector Banks in India, to introduce and implement extended working hours like 12-Hour Banking and 24-Hour Banking. 8 a.m. to 8 p.m. services have been started in more than 510 branches in major cities in the country. 11 AM to 8 PM Banking: This flexi-timing service is introduced for the convenience of traders in the market area branches. A novel customer centric initiative -24- hour Human Banking has been introduced at 9 metro branches in the country Happy Hour Banking: This has been designed to encourage customers to avail certain services during lean business hours of the branch by providing them incentives, gifts as well as concessions in service charges etc. This facility is available from 5 p.m. to 8 p.m. at 24 hour banking branches and from 6 p.m. to 8 p.m. at 8 am to 8 pm branches.

Socio Cultural Factors

Cultural Factors: Acquired mostly in the Childhood. Culture includes religion, Caste, Language, Tradition etc. Influences buying behavior deeply. Cultural diversity operates in dress, eating habits, marriage practices, festivals etc. Specially in the rural areas. Culture influences Individuals life style. Subculture (caste, sub sect) influences the individual more deeply.

Social Factors/Reference Group

Man is influenced by the society and he influences the Society. Performs different Roles in the family, at office, as a part of a professional group etc. Three Consumer Reference Groups 1. Intimate Group 2. Secondary Group

Opinion Leaders

3. Large Social Class

Social Factors/Reference Group

1. Intimate Group: Family (family of orientation and family of procreation), Peer Group, friends, close colleagues. face to face & Frequent interaction. Deep influence. 2. Secondary Group: Larger & less intimate. Occupation, Professional group, Place of Residence, Club etc. May exhibit similar buying habits. Opinion leaders: Influence buying behavior in the group, specially new products. & technology. Play vital role in Rural Marketing. 3. Larger Social Class: Influence of Income Class, Occupation, Position, Area etc. Similar buying behavior.

2. Psychological Process
Consumer decision is in response to some stimulus. Psychological Process pertaining to decision making, including -Motivation (Springs from his motives) -Perception (his interpretation) -Learning (what he understands) -Memory (Stays in his mind)

Key Psychological Processes

Motivation Perception

Learning

Memory

Motivation Process
Motives are aroused needs. Goal oriented. e.g. Person buying a house.

Motivation
Freuds Theory Behavior is guided by subconscious motivations Maslows Hierarchy of Needs Behavior is driven by the lowest, unmet need Herzbergs Two-Factor Theory Behavior is guided by motivating and hygiene factors

Maslows Hierarchy of Needs

Herzbergs Two-Factor Theory

Perception

A motivated person is ready to act next comes how the consumer views the market place. Her perception is more important than the reality Buyer makes sense out of the information she receives. E.g. House the information coming from builder, upcoming projects, feedback from friends etc. People are selective in 3 aspects with respect to perception. - Selective in Attention (voluntary and involuntary attention, an average person is exposed to about 1500 brand communications) - Selective in Distortion (tendency to interpret the information in a way that suits our preconceptions) - Selective in Retention

Learning

Learning induces changes in our behavior.

Marketer has a great role to play. Biased approach success to themselves and failure to external causes

Memory

All info gets deposited and comes as a flash back with the stimuli. Lot of research done by marketers. Catchy & Repeat messages.

3. Buying Habits/Shopping Behavior

How, when and where do they buy. The types of consumer goods Purchased - Convenience Goods - Shopping Goods - Specialty Goods

Types of Consumer Goods

Convenience goods: Purchased often as a routine. Not planning involved. Recurring need. Many outlets. Substitute brand is possible. Shopping goods: Not required so frequently. Clothes, Shoes, electrical appliances. Considerable expenditure. Limited outlets. Specialty goods: High Priced e.g. cars, Jewelry, Club Membership etc. Very limited outlets, mostly direct. Customer gives lot more thought and time. Selective distribution and Showrooms. Entire family may be involved in decision making

Buying Habits & Shopping Behavior

Store Loyals shop at the same outlet most of the time Store Switchers shop at different stores Cherry Pickers extremely price sensitive, they are out and out for saving money. The shop at many outlets to get the best bargains. Empty nesters prefer convenience of home delivery / direct marketing

4. Stages the Consumer goes through in Buying Decisions 8 stage model

1. 2. 3. 4. 5.

6.
7. 8.

Problem Recognition (Need) Awareness (Information Search) Comprehension (evaluate the alternatives) Attitude (favorable or unfavorable) Legitimization (actually go for it or not) Trial Adoption (Purchase decision) Post Purchase decision (restlessness)
e.g. Bike or a house (or college selection).

This model works more for high volume purchase, which is more complex, Individual buyer and buying situation.

Stages in Consumer buying

Consumer Behavior in adopting New Products

Innovators Early Adaptors Early Majority Late Majority Laggards

5. Participants in the Buying Decisions & their Roles.

Initiators Influencers Deciders Payer Users

Role of tweens

6. Buying Motives

1. 2.

1. 2.

Product Motives Emotional product motives Rational product motives Patronage motives Emotional patronage motives Rational patronage motives

Important questions

What are the personal demographic and psychographic factors which affect a consumers buying behavior? What are the consumer reference groups? Who is an opinion leader? What are the types of consumer goods? What are the stages that consumer goes through in buying decisions? List the consumer behavior types as far as adopting new products is concerned.