CONSUMER/INDUSTRIAL

BUYER BEHAVIOUR
MMM SEM IV (2014)
SYLLABUS
Introduction - why consumer behaviour including economics of consumer
behaviour?
Social psychology and its impact on marketing
Influence on consumer behaviour, environmental and individual determinants;
organizational influence.
Models and theories of consumer behaviour.

Consumer research and market segmentation.

Specifics of decision process:
(a) Problem recognition.
(b) Search and evaluation of alternatives.
(c) Purchase behaviour.
(d) Post purchase behaviour

Consumerism in India.

In our factory, we make
lipstick. In our advertising,
we sell hope.
~ Charles Revson
Revlon Cosmetics
Remember Me?
I'm the fellow who goes into a restaurant, sits down and patiently
waits while the waiter do everything but take my order. I'm the fellow
who goes into a department store and stands quietly while the sales
attendants finish their little chitchat. I'm the man who drives into a
petrol pump and never blows his horn, but waits patiently while the
attendant finishes reading his comic book.

"Yes, you might say, I'm a good guy. But do you know who else I am?
I am the fellow who never comes back, and it amuses me to see you
spending thousands of rupees every year to get me back into your
store, when I was there in the first place, and all you had to do to keep
me was to give me a little service; show me a little courtesy.

What Is Marketing?
Planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and
services to create exchanges that satisfy individual
and organizational objectives
Finding a need and filling it!
OR
Introduction - why consumer
behaviour including economics
of consumer behaviour?

Behavior occurs either for the individual, or in the
context of a group (e.g., friends influence what kinds of
clothes a person wears) or an organization (people on
the job make decisions as to which products the firm
should use).
Consumer behavior involves the use and disposal of
products as well as the study of how they are
purchased.
Product use is often of great interest to the marketer,
because this may influence how a product is best
positioned or how we can encourage increased
consumption.

Consumer behavior involves services and
ideas as well as tangible products.
The impact of consumer behavior on society is
also of relevance. For example, aggressive
marketing of high fat foods, or aggressive
marketing of easy credit, may have serious
repercussions for the national health and
economy.

Need to study ?
You cannot take the consumer for granted
any more
Therefore a sound understanding of
consumer behaviour is essential for the
long run success of any marketing program
Perspectives
Logical Positivism
1. Understanding and predicting consumer
behaviour
2. Cause and effect relationships that govern
persuasion and/or education
Post Modern to understand consumption
behaviour without any attempt to influence it
Why is this important?
Out of 11000 products launched by 77
companies, only 56% are present five years
later Kuczmaski & Associates
Only 8% of new product concepts offered by
112 leading companies reached the market.
Out of this 83% failed to reach marketing
objectives Group EFO Ltd., Marketing News, Feb 1, 1993, Pg 2
MEET THE NEW CONSUMER
and smile when you do because she
is your boss. It may not be the
person you thought you knew.
Instead of choosing from what you
have to offer, she tells you what she
wants. You figure it out how to give
it to her.
-Fortune Editor
A new product must satisfy
consumer needs, not the needs and
expectations of management.
Understanding and adapting to
consumer motivation and behaviour is
not an option it becomes a necessity
for competitive survival
Consumer Behaviour

The study of consumer behavior focuses on how
individuals make decisions to spend their
available resources (time, money, effort) on
consumption-related items (Schiffman and
Kanuk, 1997).
According to Solomon (1996), consumer behavior
is a study of the processes involved when
individuals or groups select, purchase, use, or
dispose of products, services, ideas, or
experiences to satisfy needs and desires.

Based on concepts from
Psychology
Sociology
Anthropology
Marketing
Economics
Failure rates of new products
introduced
Out of 11000 new products introduced by 77
companies, only 56% are present 5 years later.
Only 8% of new product concepts offered by
112 leading companies reached the market.
Out of that 83%reached the market failed to
meet marketing objectives.

Can Marketing be
standardised?
No. Because cross - cultural styles,
habits, tastes, prevents such
standardization
Customer vs. Consumer Behaviour

Customer behaviour:a broad term that covers
both individual consumers who buy goods and
services for their own use and organizational
buyers who purchase business products
Consumer behaviour: the process through
which the ultimate buyer makes purchase
decisions

Consumer behaviour
Consumer behaviour is the study of how people
buy, what they buy, when they buy and why they
buy.
It attempts to understand the buyer decision
making process, both individually and in groups.
It studies characteristics of individual consumers
such as demographics, psychographics, and
behavioural variables in an attempt to understand
people's wants.

Buyer characteristics

Cultural
Social
Personal
Psychological
Buyers Decision
Product Choice
Brand Choice
Dealer Choice
Purchase Timing
Purchase Amount

Cultural factors
Culture

Sub culture

Social Class

Cultural Influences
Culture: values, beliefs, preferences, and
tastes handed down from one generation to the
next
It is important to recognize the concept of
ethnocentrism, or the tendency to view your
own culture as the norm, as it relates to
consumer behavior

Core Values in the Culture

While some cultural values change over time, basic
core values do not
Examples of core values include:

Importance of family and home life

Education

Youthfulness

Individualism

International Perspective on Cultural
Influences

Cultural differences are particularly important
for international marketers
Successful strategies in one country often
cannot extend to other international markets
because of cultural variations

Subcultures: subgroup of culture with its own,
distinct modes of behaviour
Cultures are not homogeneous entities with
universal values.
Subcultures can differ by:
Ethnicity or Nationality
Age or Gender
Religion
Social class or Profession

Social Influences

Group membership influences an individual's
purchase decisions and behavior in both overt and
subtle ways.
Norms : are the values, attitudes, and behaviours
that a group deems appropriate for its members
Status : is the relative position of any individual
member in a group
Roles define behaviour that members of a group
expect of individuals who hold specific positions
within the group

Reference groups: groups whose value
structures and standards influence a person's
behaviour
Requires two conditions:
The purchased product must be one that others can
see and identify
The purchased item must be conspicuous; it must
stand out as something unusual, a brand or product
that not everyone owns

Social classes: groups whose rankings are
determined by occupation, income, education,
family background, and residence location.
Upper-upper
Lower-upper
Upper-middle
Lower-middle
Working class
Lower class

Opinion leaders: trendsetters who purchase new
products before others in a group and then influence
others in their purchases
Family Influences
Autonomic role is when the partners independently
make equal numbers of decisions.
Husband-dominant role is when the husband makes
most of the decisions.
Wife-dominant role is when the wife makes most of the
decisions.
Syncratic role is when both partners jointly make most
decisions.



Children and Teenagers in Family
Purchases
Growing numbers are assuming responsibility
for family shopping
They also influence what parents buy
They represent sizeable consumers in their
own right

Personal Factors
Family Life Cycle
Occupation and Economic circumstances
Lifestyle
Personality and self - concept

Psychological Factors
Motivation
Perception
Learning
Beliefs and Attitudes

Buying Roles
Initiator
Influencer
Decider
Buyer
User

Buying Behaviour
Complex
Dissonance Reducing
Habitual
Variety seeking

Computer-Mediated Buying
Consumer computer-mediated buying, or online
buying, is the use of Internet technology to:
a. Seek information
b. Evaluate alternatives &
c. Make purchase decisions
This technology also allows marketers to customize
their offering to the specific needs of individuals,
thereby increasing customer value and satisfaction.
Post - Purchase Behaviour
Satisfaction
Actions
Use and Disposal

Cognitive Dissonance
Cognitive Dissonance is a feeling of post-
purchase psychological tension or anxiety.
To alleviate cognitive dissonance,
consumers often search for information to
reinforce their purchase decision.
Maslows Hierarchy of Needs
Perception
Process by which an individual selects,
organizes, and interprets information to form a
cohesive picture about an entity
Perceptions affect consumer behavior
However, remember that individuals can perceive
the same entity in different ways
Perception
Selective Retention: Though people fail to register
much information, they retain information that
supports their attitudes and beliefs
Remember good points about products we like and forget
good points about competing products
Works to the advantage of strong brands
Explains why marketers repeat messages for
reinforcement
Perception
Selective Distortion: Tendency to interpret/distort
information to be consistent with prior brand and
product beliefs
Taste tests: Blind taste tests showed equal split; Open
tests showed preferences
Can work to the advantage of marketers of strong brands
A car may seem to drive smoother
A beer may taste better
Subliminal Perception
Subliminal perception means that you see or hear
messages without being aware of them.
The presence and effect of subliminal perception
on behaviour is a hotly debated issue, with more
popular appeal than scientific support.

Evidence suggests that subliminal messages
have some effect on behavior. If so, is their use
an ethical practice
Perceived Risk
Perceived Risk represents anxieties felt because the
consumer cannot anticipate the outcomes of a
purchase but believes that there may be negative
consequences.
Perceptions of greater perceived risk are usually
accompanied by a more extensive external
information search concerning a purchase.
Types of Perceived Risk:
financial
physical
psychosocial
Attitudes
A persons enduring favorable or unfavorable
evaluations, emotional feelings, or action
tendencies toward some object or idea
Attitude components:
Cognitive
Affective
Behavioural

Changing Consumer Attitudes
Attempt to produce consumer attitudes that will
motivate the purchase of a particular product
Evaluate existing consumer attitudes and then
make the product characteristics appeal to them
Modifying the Components of Attitude
Attitudes change in response to inconsistencies
among the three components
Marketers can work to modify attitudes by
providing evidence of product benefits and by
correcting misconceptions

Learning
An immediate or expected change in behavior
as a result of experience.
The learning process includes the component
of:
Drive
Cue
Response
Reinforcement

Brand Loyalty
Brand Loyalty is a favorable attitude toward and
consistent purchase of a single brand over time.
It results from positive reinforcement of previous
actions.
There is evidence of brand loyalty in many
commonly purchased products in the U.S. and
the global marketplace.
Personal Determinants of Consumer
Behaviour - Needs and Motives
Need: an imbalance between a consumer's
actual and desired states
Motives: inner states that direct a person
toward the goal of satisfying a felt need
Shaping : process of applying a series
of rewards and reinforcements to permit more
complex behavior to evolve over time

Self-Concept: A persons multifaceted picture
of himself or herself, composed of the:
Real self
Self-image
Looking-glass self
Ideal self

Buying Process
Problem Recognition
Information Search
Evaluation Alternatives
Purchase Decision

Problem or Opportunity Recognition
Consumer becomes aware of a significant
discrepancy between the existing situation and
the desired situation
Motivates the individual to achieve the desired
state of affairs

Search
Consumer gathers information related to their
attainment of the desired state of affairs
Identifies alternative means of problem solution
May cover internal or external sources
of information
Brands that a consumer actually considers buying
before making a purchase decision are known as
the evoked set

Driving Search
Need More
Information
More Risk
Less knowledge
Less product experience
High level of interest
Less Risk
More knowledge
More product experience
Low level of interest
Need Less
Information
Evaluation of Alternatives
Consumer evaluates the evoked set
Difficult to completely separate the second and
third steps, since some evaluation takes place as
the search progresses
Outcome of the evaluation stage is the choice of a
brand or product (or possibly a decision to renew
the search)
Evaluative criteria : features that a consumer
considers in choosing among alternatives

Purchase Decision and Purchase Act
Consumer narrows the alternatives down to
one
The purchase location is decided

Post purchase Evaluation
After the purchase, consumers are
either satisfied or experience post-purchase
anxiety
Cognitive dissonance:
Post-purchase anxiety that results from an
imbalance among an individuals knowledge,
beliefs, and attitudes after an action or decision
is taken

TYPES OF CONSUMER BUYING
BEHAVIOUR
There are four types of consumer buying
behavior, they are :
Routine Response/Programmed Behaviour
Limited Decision Making
Extensive Decision Making
Impulse buying


ROUTINE
RESPONSE/PROGRAMMED
BEHAVIOUR
Buying low involvement, frequently
purchased, low cost items.
Examples : Soft drinks, snack foods, milk etc.
LIMITED DECISION MAKING
Buying product occasionally.
That is when you need to obtain information
about unfamiliar brand in a familiar product
category.
Example: Clothes--know product class but not
the brand.


EXTENSIVE DECISION MAKING
Complex high involvement, unfamiliar,
expensive and infrequently bought products.
Spend a lot of time seeking information and
deciding. High degree of risk.
Example: Cars, homes, computers, education.


IMPULSE BUYING
No conscious planning.
The purchase of the same product does not always elicit the
same Buying Behaviour. Product can shift from one
category to the next.
For example: Going out for dinner for one person may be
extensive decision making (for someone that does not go
out often at all), but limited decision making for someone
else. The reason for the dinner, whether it is an anniversary
celebration, or a meal with a couple of friends will also
determine the extent of the decision making.