CONSUMER behavior
Introduction
JOHN B. AGBUYA, BSA, MBA
Consumer behavior
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Consumer Behavior is the study of when, why, how
and where people do or do not buy a product. It
basically depends on the psychology of the
consumer. It attempts to understand the buyer
decision making process both individually & in
groups. It studies the individual consumers such as
demographics & behavioral aspects to understand
the people’s wants.
In the study of Consumer behavior main focus is
the customer satisfaction because customer is the
only person with whose presence businesses
actually exists
Consumer Behavior
“ Buyer behavior is
the decision process
and actions of people
involved in buying
and using a product”
Consumer Behavior
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Consumer behavior is those activities directly
involved in
Obtaining
Consuming and
Disposing
of products and Services( including the
decision process that precedes and follow
these actions)
Consumer Behavior -Engel, Blackwell &
Miniard – Eight Edition 1995
Why should a marketer study
consumer buyer behavior
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As per the marketing concept, marketer
has to identify the needs and wants of the
consumer and satisfy them through the
supply of goods and services
If the marketer has to identify the needs
and wants, understanding the consumers
behavior will help a lot in that process
If marketer understands the consumers
reaction( behavior) to marketers
Marketing Mix ( 4 ps), marketer can offer
the best mix that suits the consumer.
Definition of a need
Desired State
GAP =
Need
Current State
Needs
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The Gap between the Current Status and the
Desired Status is called the need. It is also
called a state of deprivation
When there is a need usually a consumer can
do one of the following
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(1) Look for means of satisfying the need
(2) Reduce the level of desired stat (suppress)
Marlow's Theory of needs Hierarchy
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Prof. Abraham T. Maslow did research on how
humans satisfy their needs
He found that humans have simple to complex
needs
It is organized as a hierarchy ( one after the other)
He says that humans may have many needs but will
try to satisfy the most important need first.
Then they will try to satisfy the next most important
need
Maslow’s Needs hierarchy
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Physiological Needs
These include the most basic needs that are vital
to survival, such as the need for water, air, food
and sleep. Maslow believed that these needs are
the most basic and instinctive needs in the
hierarchy because all needs become secondary
until these physiological needs are met.
Security Needs
These include needs for safety and security.
Security needs are important for survival, but they
are not as demanding as the physiological needs.
Examples of security needs include a desire for
steady employment, health insurance, safe
neighborhoods and shelter from the environment.
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Social Needs
These include needs for belonging, love and affection. Maslow
considered these needs to be less basic than physiological and
security needs. Relationships such as friendships, romantic
attachments and families help fulfill this need for companionship
and acceptance, as does involvement in social, community or
religious groups.
Esteem Needs
After the first three needs have been satisfied, esteem needs
becomes increasingly important. These include the need for
things that reflect on self-esteem, personal worth, social
recognition and accomplishment.
Self-actualizing Needs
This is the highest level of Maslow’s hierarchy of needs.
Self-actualizing people are self-aware, concerned with personal
growth, less concerned with the opinions of others and
interested fulfilling their potential.
We all have needs - dialogue
Consumer needs and wants
Needs are fundamental –
such as basic needs
Wants are the means of expressing
a need – such as rice and curry,
bread, noodles, dosai, pittu, string
hoppers etc
Want will depend on the
individuals
culture, taste,
ability,
social
status,
availability and circumstances
Demand
 Demand in economic or
marketing terms
is not just
having the need
A
need
backed
by
the
purchasing power
is called
demand. It is also called the
effective demand
 The purchasing power includes
the
financial ability plus the
authority to buy
Types of consumer
Consumer
Ultimate
Consumer
Buyer
Institutional
Buyer
Customer
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Consumer: According to International Dictionary of
Management “Consumer is a purchaser of goods
and services for immediate use or consumption”.
Buyer: He is the person who purchase goods either
for resale or for use in production or for use of
somebody else.
Customer: He is the one who purchases goods for
his own use or for the use of others or else he is
regular customer of a particular product and he is a
regular customer of particular shop.
Institutional buyer: These are either govt. institutions
or private organizations.
Characteristics of consumer
behavior
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It is a process where consumer decide what to buy, when to
buy, how to buy, where to buy & how much to buy.
It comprises of both mental and physical activities of consumer.
Consumer behavior is very complex and dynamic which
keeps on changing constantly.
Individual buying behavior is affected by various internal
factors like his needs, wants, attitudes & motives and also by
external factors like social groups, culture , status,
environmental factors etc.
Consumer behavior starts before buying and even after
buying.
Importance/Need of study of
consumer behavior
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To make better strategies for increasing profits.
To take into consideration customer’s health,
hygiene & fitness.
To know the buying decisions and how consumer
make consumption.
Consistent change in Consumer’s tastes or
preferences.
Consumer behavior study is necessary to make
pricing policies.
To avoid future market failures.
Types of Consumer
behavior
Simple Model of Consumer Buying Behavior
Problem Recognition
Internal Search
Information Search
External Search
Evaluation of Alternatives
Abandon /Postpone
Purchase Decision
Post Purchase Evaluation
How to select a phone ?
Problem Recognition
A need may arise as an internal stimuli such as hunger
or an external
stimuli such as seen a nice dress
displayed in a showroom window.
Marketers study this behavior and use different stimuli to
initiate need for their products.
Information searchDepending on the nature and value of
the product, information search may
differ.
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Internal search – remembering previous experience
of buying or using the product or had heard about
the product from others ( searching the information
from memory)
External search – obtaining information from
friends, newspapers, catalogues, TV or Radio ads
or from internet etc.
Evaluation of alternatives
• After gathering information, the consumer will
evaluate the alternatives in order to make a
decision
• Items that he found will be placed in one of three
categories
 Evoked set – Alternative products that will
be a seriously considered.
 Inert set – alternatives that the
consumer is neutral
 Inept set – alternatives that consumer
will reject
• Pros and cons of different alternatives will be
weighed. Feature, benefits, after sales service,
guarantees, price etc. will be analyzed.
(If evaluation does not lead to selection of the product,
buyer might abandon the purchase or postpone the
purchase or may go for information search again to
select a product)
• Finally the closest product to the sought
benefits and the budgeted price will be
selected.
Purchase Decision
• The purchase intention may always not result in
making a purchase decision.
• The closeness of the sales outlet, attitude of the
sales staff, product availability, availability of
credit, opinion of others, situational factors may
have an influence on the final buying decision
Post Purchase Evaluation
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Buyer will have an evaluation of the product on its
actual performances while or after using.
If a customers gets what he expected or more
from the product customer will tell others as well
as repurchase the product.
On the contrary, if the product does not live up to
the expected level, consumer will tell others not to
buy and will not repurchase the product
After sales services, follow up procedures will help
to adjust customer dissatisfaction
Cognitive Dissonance
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This is a psychological status of the buyer in the post
purchase evaluation
This happens when the chosen product have some
drawbacks but the rejected product have some positive
elements”
E.g. Although you selected phone by paying a higher
price, the rejected lower priced one has better picture
quality in the camera
You would be asking yourself ”Did I make the
correct decision?”
Reinforcing advertising and after sales services may help
to reduce the Cognitive dissonance.
Why consumers decision making
process is important to marketers
Marketer can influence the
consumer behavior in different
stages
Can reduce cognitive Dissonace by
way of reinforcing information
Marketer can direct various
communications
at
each
stage the
consumer goes
through
Organisational Buyer Behavior
Businesses buy products from other
businesess to resell, use in their
processes to add value or as
consumables. It is called Business to
Business Market ( B to B)
Decision Making Unit (DMU) and
Organisational Buyer Behavior
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In an organisation, such as a company, an
individual will not usually make the decision alone
to buy products.
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Usually there is a Committee or a Team . It is
called the decision Making Unit or simply DMU
In a typical DMU you could get
information from the following
categories of persons
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Users- These are the people who really uses
the product. Data Entry Operators may be
using computers. Telephone Operator may be
using an internal telephone exchange system.
Their comments are important
Influencers- They may advise as to
specifications and influence the buying
decision. E.g.. Computer software/hardware
Manager
Buyers- Member of the DMU who negotiates
with sellers. Who goes in search of quotations
and physically takes the approved order and
take the delivery of the goods
Deciders- he is the member of the DMU that
has the authority to decide what to buy and
from whom to buy. It could a senior person to
a member of the company’s Director Board
depending of the value and risk involved with
the purchase of the product
Gate keepers – Any member of the DMU
who could regulate
information from
suppliers to the other members of the DMU
e.g.. Receptionist, Security Officer, Secretary
Major types of buying situations
 New Task purchase : buyer buys for the first time.
So much of information may be required to take
a decision as the supplier is new and risk is high.
Marketer should strive to influence all the
members of the DMU.
 Straight re-buy : buyer routinely orders without
any modification to the order. It could be from
the list of suppliers that the buyer is having.
 Modified re-buy : buys the product with
changes in product specifications, prices,
delivery or terms of credit etc.
Buying Motives
According to D.J.Ducan, “Buying Motives
are those influences or considerations
which provide the impulse to buy, induce
action or
determine choice in the
purchase of goods and services”.
Types of Buying Motives
Inherent & Learned motives
1. Inherent motives are those which come
from physiological & basic needs such as
hunger, thirst, sleep etc. If these motives are
not satisfied then consumer feels dissatisfied
and feels mental tension.
2. Learned motives are those which are
learned
or acquired by a person from
environment and education like social status,
acceptance, fear, security etc.
Physiological & Social buying Motives
1.
Physiological motives are those which
are driven by learning, perception or
attitude.
2.
Social buying motives are those which
are influenced by the society in which the
consumers live.
Factors influencing consumer
behavior
Psychological factors
1. Consumer needs &
motivation (Maslow’s need
hierarchy theory
2. Perception
3. Learning
4. Beliefs & attitudes
Cultural factors
1. Culture
2. Sub culture
3. Social class
Social Factors
1. Reference group
2. Role and status
3. Family
Personal factors
1. Age
2. Stages in life cycle
3. Occupation in economic
status
4. Life style
5. Personality
Economic factors
1.Personal income
2.Family income
3.Income expectations
4.Savings
5.Liquidity position
6.Consumer credit
Environmental Factors
1.Political situation
2.Legal forces
3.Technological advancement
4.Ethical considerations