1

CHAPTER-1
INTRODUCTION OF CONSUMER
BEHAVIOR

2
3
 Remember Me?
I'm the fellow who goes into a restaurant, sits down and
patiently waits while the waitresses do everything but take
my order. I'm the fellow who goes into a department store
and stands quietly while the sales clerks finish their little
chitchat. I'm the man who drives into a gasoline station 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 dollars 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."

Source: From a Better Business Bureau bulletin submitted by An

Arkansas Reader to Dear Abby
4
 Buyer Behavior
Buyer behavior focuses primarily on buyers
and buying.

But, often you buy for others (significant others,

spouses, friends, children)

To buy, you have to engage in activities other than

buying e.g., searching, learning to search, using,
knowing how to use, and disposing.

so buyer behavior cannot be the whole story

5
Consumption and Consumer Behavior
Consumption
Activities, thoughts and feelings (of individuals
and groups) directed toward achieving satisfaction
(often using market offerings).

Consumers
Those who engage in consumption activities

Consumer Behavior (Brief definition)

How consumers go about achieving satisfaction.

6
 Examples of Consumption
(and why it is just not buying)

Ulusaba South African Private Game Reserve

$10000 per night, up-close and personal with wild game

Nimmo Bay British Columbia

$26000 for 3-6 guests, 4 days/nights.
Helicopter and Chef on demand, exclusive fishing, dining.
Cant keep the fish though!

Personal Perfume
Created for you, and only you.
Based on your style, taste, activities etc.
Only $32,000

7
What Does it Mean to Study Consumer
Behavior?
It is a study of the feelings, thoughts, and behaviors of
consumers.

Specifically, from a managerial point of view, it is a study of

how people respond to marketing entities such as products,
advertisements, promotion, price etc.

This study is aimed at increasing the likelihood and frequency

of the marketing exchange.

8
 What is Marketing Exchange?
Marketing is an exchange process between the consumer and
the producer benefits are exchanged for profits; more
concretely, goods and services exchanged for money.

Goods & Services

Marketer Consumer
Money
Marketing strategies are activities geared toward increasing
the probability and frequency of the exchanges so that the
exchange is profitable and satisfying.

9
Why should Consumer Behavior be
Studied
Suppose, your product is not selling well. Should you
decrease the price, increase advertising, offer
consumer promotions?

If you dont know how consumers respond to these

marketing actions, how can you make the decision?

Hence, for marketing strategies to be successful,

understanding consumer behavior is absolutely
important.

10
How to Study Consumer Behavior:
A Real World Application of
How Studying Consumer Behavior Facilitates Marketing Exchanges
Activebuyersguide.com is a website which
assesses your goals, preferences, what you
like and dont like about the features of
products and then creates a list of products
that fit your needs.

It provides the degree of fit between your

preferences and the product features,
descriptions of features etc.

It encourages/facilitates marketing exchange 11

 A Correction
In this course, our study of consumer behavior
will also focus on:
consumer satisfaction.
consumer well-being.

sometimes these goals may have little to do with

the probability/frequency of marketing exchange.

12
Returning to Consumer Behavior
What do we study?
Primarily, three aspects
Affect/Cognition:
Feelings (I love the restaurant)
Thoughts (Rs.20.99 for a bowl of soup? Why is it so expensive?)
Behavior:
Action (Going to the restaurant)
Environment:
Context (The lighting in the restaurant)
In other words, we will be examining consumers affective/cognitive and
behavioral responses in the environmental context.

13
Consumer Behavior Perspectives

Human Thought and

Action

Field of Study

14
Consumer Behavior as Human Behavior

Consumer behavior is the set

of value seeking activities that
take place as people go about
addressing realized needs.

15
 Exhibit 1.1
The Basic Consumption Process

ANTOINE ANTONIOL/BLOOMBERG VIA GETTY IMAGES

16
 Consumption
Process by which goods, services or ideas are
used and transformed into value.

THOMAS BARWICK/PHOTOGRAPHERS CHOICE/GETTY IMAGES

17
 Macro or Micro?

Economists study consumer behavior from

a macro, or broad, perspective.

Consumer behavior researchers study

consumer behavior on a micro, or more
individual, level.

18
Exhibit 1.2: Consumer Behavior and Closely Related
Disciplines

19
Describe how consumers get
treated differently in various
types of exchange
environments.

20
10
 How are Consumers Treated?

Local

AP IMAGES/DENVER POST, CYRUS MCCRIMMON

Fine
restaurant
UPPERCUT IMAGES/GETTY IMAGES

M. Usman Aleem 21
Questions to Consider

How competitive is the marketing

environment?

How dependent is the marketer on

repeat business?

M. Usman Aleem 22
Some Terminology

Consumer
Market
(customer)
orientation
orientation

Relationship
Touchpoints
Marketing

M. Usman Aleem 23
 Explain the role of consumer
behavior in business and society.

M. Usman Aleem 24
14
Why Study CB?

Input to business/marketing
strategy

Force that shapes society

Input to making responsible

decisions as a consumer

M. Usman Aleem 25
Exhibit 1.3 How Old are These
Companies?

Source: All dates taken from company websites. Samsung was originally founded in 1938 but as a Korean food exporter. In 1969,
Samsung Electronics was created.

M. Usman Aleem 26
 Exhibit 1.4
Different Ways of Doing Business

M. Usman Aleem 27
LO3 CB and Society
As this billboard shows, attitudes toward smoking have
certainly changed over the last few decades. Smoking
isnt so cool.

IMAGE COURTESY OF THE ADVERTISING ARCHIVES

28
CB and Personal Growth

Studying CB helps consumers make better decisions

by understanding:

Consequences of
Role of emotions
poor budgeting

Avenues for redress Social influences

Environmental
effects

M. Usman Aleem 29
LO5 Trends

Internationalization

Technological Changes

Changing Communications

Changing Demographics
MIKE KEMP/RUBBERBALL/JUPITERIMAGES

Changing Economy

M. Usman Aleem 30
LO5 Internationalization

Starbucks is
everywhere!

YONATAN POMRENZE/NBC NEWSWIRE VIA AP IMAGES

M. Usman Aleem 31
 Defining Consumer Behavior

Consumer Behavior is the Process

Involved When Individuals or
Groups Select, Use, or Dispose of
Products, Services, Ideas or
Experiences (Exchange) to
Satisfy Needs and Desires.

M. Usman Aleem 32
 What is Consumer Behavior?
The study of individuals, groups, or organizations and the
processes they use to select, secure, use, and dispose of
products, services, experiences, or ideas to satisfy needs and
the impact that these processes have on the consumer and
society
-- Hawkins, Best, and Coney 2004
The study of the cognitive, emotional, and physical
activities associated with the perception, evaluation, choice,
acquisition, use, and disposition of goods and services.

M. Usman Aleem 33
M. Usman Aleem 34
 Why Study Consumer Behavior?
The Marketing Concept:
Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas,
goods, and services to create more satisfying exchanges
than the competition.

Corollary:
Success in the marketplace requires: knowing, then
attracting, satisfying, and retaining customers.

M. Usman Aleem 35
Influences on Consumer Behavior

Psychological core
Culture: External Influences
Process of Making Decisions
CB Outcomes
 Groups Interested in Consumer
Behavior Issues

Marketing Managers

Consumers

Regulators and public

policy makers

Ethicists
Why Study Consumer Behavior?

Marketing applications of
consumer behavior:
Market segmentation
Target market selection
Positioning
Product or service decisions
Pricing decisions
Distribution decisions
Promotion decisions
Issues During Stages in the
Consumption Process

39
 Consumers Impact on Marketing
Strategy
Understanding consumer behavior is good
business.
Firms exist to satisfy consumers needs, so
Firms must understand consumers needs to satisfy
them.
The Process of Marketing Segmentation:
Identifies Groups of Consumers Who are Similar to
One Another in One or More Ways, and
Devises Marketing Strategies that Appeal to
One or More of These Groups.

40
 Segmenting Consumers by
Demographic Dimensions
Demographics are Statistics That Measure Observable Aspects of a
Population Such As:

Geography Age

Race and
Ethnicity Gender

Social Class
Family Structure
and Income
41
 Consumers Impact On Marketing
Strategy: Building Bonds With Consumers
Relationship Marketing occurs when a company
makes an effort to interact with customers on a
regular basis, and gives them reasons to maintain
a bond with the company over time.

Database Marketing involves tracking consumers

buying habits very closely, and crafting products
and messages tailored precisely to peoples wants
and needs based on this information.

42
 Marketings Impact on Consumers:
The Meaning of Consumption

Types of Relationships a Person May Have With a

Product:

Self-Concept Attachment
Helps to Establish the Users Identity

Nostalgic Attachment
Serves as a Link With a Past Self

Interdependence
Part of the Users Daily Routine
Love
Elicits Bonds of Warmth, Passion, or Other
Strong Emotion

43
 Marketings Impact on Consumers:
Consumption Typology
Consumption Typology Explores the Different
Ways That Products and Experiences Can Provide
Meaning to People.
There Are 4 Distinct Types of Consumption
Activities:
An Emotional or Aesthetic
Consuming as Experience
Reaction to Consumption Objects

Consuming as Integration Express Aspects of Self or

Society

Consuming as Classification Communicate Their Association

With Objects, Both to Self/ Others

Consuming as Play Participate in a Mutual Experience

and Merge Self With Group 44
 Marketings Impact on Consumers
Marketing and Culture
Popular Culture
Intangible and Tangible Objects

The Global Consumer

Global Consumer Culture

Virtual Consumption
Business to Consumer Selling (B2C Commerce)
Consumer to Consumer Selling (B2B Commerce)
Virtual Brand Communities

Blurred Boundaries: Marketing and Reality

45
 Marketing Ethics

Business Ethics are Rules of

Conduct That Guide Actions in the
Marketplace - the Standards Against
Which Most People in a Culture
Judge What is Right and What is
Wrong, Good or Bad.

46
 Other Marketing Ethics Issues
Do Marketers Create Artificial Needs?
Response: Marketing attempts to create awareness
that these needs do exist, rather than to create them.

Are Advertising and Marketing Necessary?

Response: Yes, if approached from an information
dissemination perspective.

Do Marketers Promise Miracles?

Not if they are honest; they do not have the ability to
create miracles.

47
 The Dark Side of Consumer
Behavior
Compulsive Consumption Addictive Consumption
>Behavior is Not Done by Choice
> Gambling
>Gratification is Short-Lived
>Strong Feelings of Regret or
Guilt Afterwards

Illegal Activities Consumed Consumers

> Consumer Theft (Shrinkage) > People Who Are

>Anti-consumption Exploited for
Culture Jamming Commercial Gain in the
Cultural Resistance Marketplace.

48
 Interdisciplinary Influences
Individual Focus

Experimental Psychology
Clinical Psychology
Developmental Psychology
Human Ecology
Microeconomics
Social Psychology
Sociology
Macroeconomics
Semiotics/Literary Criticism
Demography
History
Cultural Anthropology
Social Focus
49
Two Perspective on Consumer
Research
Positivist Interpretivist
Approach Approach

Socially
Objective
Constructed

Prediction Understanding

Independent Contextual

Simultaneous
Real Cause
Shaping

Separation Interaction
50
 Taking it From Here:
Saba (II), ____ (III), And cr (IV)
Section II: Consumers As Individuals

Section III: Consumers As Decision Makers

Section IV: Consumers and Subcultures

Section V: Consumers and Culture

51
The Wheel of Consumer Behavior

52
 Exercise # 1
Out of Class Exercise

Home Work: Vacation Fantasy Consumption Story

Surf the web, and based on information available
in the web, and create an imaginary vacation,
complete with details about the vacation (Rs
50,000 budget). Describe the vacation as if it
were a story (2 pages, 10 points).

To be handed in class next Wednesday.

Type written, double-spaced, 1-inch margins on all
sides, times-roman 12-point font only.

53
 8

Chapter # 2
How Consumers Analysis Affects Business
Strategy

M. Usman Aleem 54
 9

From Market Analysis To Market Strategy

Market Analysis
Analysis of market trend, company potentials,
competitive forces, micro and macro environments.
Market Segmentation
Identify groups with similar preferences.
Marketing Mix Strategies
Developing the four Ps of marketing on the basis of
analysis and segmentation

M. Usman Aleem 55
 10

Implementation

Efficiently and effectively transforming the strategies

into practical designs Which shall reveal the desire
results.

The Seven Rs of the Marketing Mix:

These Rs help marketers understand their target

markets requirements.

M. Usman Aleem 56
 11

Organization Consumer

Research Conduct Participate

Rate Distribution Shopping
Resources Commit Payments
Retailing Selected Outlets Expected Outlets
Reliability Channel Efficiency Conformance
Reward Loyal Consumers Consumption
Relationship Channel, Consumers Brand, Shops

M. Usman Aleem 57
 12

Consumer Loyalty & Retention Strategies

Consumer Loyalty Program

Strengthening Consumer Relationship

M. Usman Aleem 58
 13

Global Marketing Strategy

Global Market Analysis and Strategy

Can Marketing be Standardized
Companies use Glocal approach
Intermarket Segmentation
Localization Base on Differences

M. Usman Aleem 59
 14

Chapter # 3
The Consumer Decision Process

M. Usman Aleem 60
 15

Consumer Decision Process Model

Need Recognition
Search For Information
Pre-Purchase Evaluation
Purchase
Consumption
Post-Consumption Evaluation
Divestment

M. Usman Aleem 61
 16

Consumer Decision Process Model

Need Recognition

Influence memory
Memory is influenced by Environmental
Influences and Individual Differences
Environmental Influences are Culture, Social
Class, Personal Influences, Family and Situation
Individual Differences are Consumer Resources,
Motivation, Knowledge, Attitudes, Personality,
Values and Lifestyle
M. Usman Aleem 62
 17

Search For Information

Depending on the intensity of need recognition, consumers
enter into search
Search is initially done through information already existing
in memory
External source is used when consumers are not confident on
internal source
External source follow the sequence Stimuli, Exposure,
Attention, Comprehension, Acceptance, Retention
Stimuli is either marketer dominated or non marketer
dominated
Retention then in future become internal source

M. Usman Aleem 63
 18

Pre-Purchase Evaluation of Alternatives

Search identifies different alternative

solutions to consumers
Search is dominated by external source if
internal source is not adequate
Individual differences play an important role
at Pre-Purchase Evaluation Stage

M. Usman Aleem 64
 19

Purchase
Individual differences/ Preferences play the most
important role at the time of purchase
Pre-Purchase evaluation of Alternative also help
consumers prioritize the alternative at the time of
purchase
At this stage consumers select particular retail
outlet for purchasing purpose
A consumer may switch retailers based upon
schemes, sales, or right assortment of brands
A consumer may buy an entirely different product
or brand due to Point of Purchase Influences or
salesmanship
M. Usman Aleem 65
 20

CONSUMPTION

Consumption can occur immediately or be delayed

due to schemes, sales or other incentives

How consumption is done will determine the

performance of a product

How carefully consumers use a product will

determine its durability

M. Usman Aleem 66
 21

Post-Consumption Evaluation

This stage analysis the satisfaction level of

consumers
When performance falls short of expectation,
consumers are dissatisfied

When performance meets expectation, consumers

are satisfied

When performance exceeds expectation,

consumers are highly satisfied or delighted

M. Usman Aleem 67
 22

DIVESTMENT

At this stage consumers decide to remarket,

trade in, recycle or dispose it outright

In developing societies remarketing of S.M.C.G

Products play an important role in their
purchase decision

In F.M.C.G Products packaging and its

environmental friendliness is very important

M. Usman Aleem 68
 23

How Organizations Use CDP Model

Identify relationships between variables

that affect consumer decision making

Identify topics for additional research

Develop and implement marketing mix

strategies

M. Usman Aleem 69
 24

CONSUMER PROBLEM SOLVING

Extent Of Problem Solving (EPS)

When decisions have to be taken on complex issues
which require extensive time and effort, usually when
purchasing the product for the first time. (Automobile)

Midrange Problem Solving (MPS)

Moderate time and effort is given for these products
(Selection Of Movies)

Limited Problem Solving (LPS)

Minimum time and effort is required when deciding for
these products (Toothpaste)

M. Usman Aleem 70
 25
CONSUMER REPEAT PURCHASE

It depends upon satisfaction or dissatisfaction extent of

consumers.
Repeat purchases may also occur in habitual buying
procedures

Repeat purchases are also influenced by EPS, MPS and

LPS

Impulse and variety seeking behaviors influence

purchasing

Purchasing is influenced by Degree Of Involvement,

Perceptions of differences among brands, consumer state
mood and time availability

M. Usman Aleem 71