CONSUMER BEHAVIOUR CHAPTER 1 INTRODUCTION: What is the study of consumer Behaviour?

? It is the study of how individuals make decisions to spend their available resources: time, money and efforts. On consumption related items. This includes the study of : What they buy? Why they buy it? When they buy it? Where the buy it? How often they buy it? The answers to these questions are normally sought from market research consumer research. Consumer behaviour encompasses all types of behaviour or facets of behaviour and includes those in search of purchasing, using, evaluating, and disposing of products and services that they expects will satisfy their needs. Post purchase behaviour also forms one of the major aspects of consumer behaviour and has significant ramifications for various products and services such as automobiles, banking products etc. These experiences are put to use in creating the communications for promotional campaigns. Consumer behaviour is also studied in post purchase behaviour and use of the products and services. For example how consumers have used a particular product, do the use it for themselves or rent it or lease it out?

Two types of consumer:

a) Personal consumer and b) Organisational Consumer Personal consumer buys goods and services for his/her own use or consumption or for the use of household,(TV) or as a gift to be given ( marriage gift) They are normally termed as end users or ultimate Consumers. b) Organisational Consumer: These includes profit and non profit businesses, Government agencies (local,state,and National) and institutions (schools, hospitals, prisons etc) all of which buy products, equipment, services in order to run their organisation. End use consumptionis perhaps the most pervasive of all types of consumer behaviour for it involves every individual of every age and back ground, in the role of either buyer, user or both. The man who makes the purchase is not always is the user of the product or consumer, nor is the purchaser necessarily the decision maker. Consumer Behaviour Defined: American Management Association has defined consumer behaviour as The dynamic interaction or affect and cognition, behaviour, and the

environment by which human beings conduct the exchange aspects of their lives.

Reasons for studying consumer behaviour 1. As consumers: a great deal of insights are observed in consumption related decisions: what we buy, why we buy and how we buy? And the promotional influence that persuade us to buy. 2. As marketers it is important to recognise why and how consumer buy so that better strategic marketing decisions can be made. 3. When we understand consumer behaviour , we will be in a position to predict how consumers are likely to react to various informational and environmental cues, and are able to shape their marketing strategies. 4. What are the external and internal influences which impel them to act as they do, when individuals act in certain way. Consumer behaviour draws heavily from : Psychology (study of the individual), Sociology ( study of Groups) Social psychology(how an individual operates in groups),Anthropology ( The influence of Society on the individual) and Economics.

Marketing Managers wanted to know how people store, receive, and use consumption relation information so that they can design marketing strategies to influence consumption decisions. Use of shampoos, perfumes, or body sprays etc.

they regarded consumer behaviour as applied marketing science If they could predict consumer behaviour, they could influence it.... this approach has come be known as positivism The study of consumer behaviour simply from the point of understandingconsumption behaviour and the meanings behind such behaviour is called interpretivism also referred to as Post modernism. they have expaned the study to include subjective aspects such as effects of moods, emotions and types of situations orole of fantasy, of play, rituals consumer behaviour, and even of the sensory pleasures that certain products and services provide . Because of its focus on the consumption Experience, the interpretive approach is also known as Experientalism Development of field of Consumer Behaviour why did this develop as a separate marketing discipline

1. The size of the consumer market, and the different type of customer preferences has led to an increasing need to understand the consumers choice and their reasons for the same. 2. Changing consumer preferences and diversified interestets also became an important aspect in consumer behaviour analysis and understanding gaining ground among the marketing managers,researchers and academics as well. 3. Differentiated product usage and fashion and other non product attributes became more important in consumer decision making process as a result of which, understanding such a phenomenon was vital in creating marketing strategies. 4. To better the needs of specific groups of consumers, most marketers adopted a policy of market segmentation which is nothing but division of total market potential into smaller , homogenous segments for whcy they could design specific products and or promotional campaigns. 5. They also used promotional techniques to vary the image of their products so that they could be perceived as a better fulfilling the specific needs of cetain target segments process known as positioning
6. Lack of familiarity with the needs, preferences and consumption

habits of consumers in foreign markets. They now use cross-cultural consumer research studies as basis for product development and
promotional srateges to meet the needs of the targeted foreign customers. Ethics and Social Responsibility:

Number of companies have incorporated specific social goals into their mission statements and included programs in support of these goals as an integral components of their strategic planning. Most companies recognise that socially responsible activities improve their image amongst consumers, stockholders and financial community and other relevant publics. They increase sales and enhance favourable image of the company. Societal Marketing Concept. This requires that marketers adhere to principles of social responsibiity in the marketing of their products and services. That is, they must endeavour to satisfy the needs and wants of their target markets in ways that preserve and enhance the well being of

consumers and society as a whole.A serious deterrent to the wide spread implementation of this concept is the short term orientation embraced by most business managers who look for short term gains rather than a long term results. The definition of societal marketing concept calls for the marketers to fulfil the needs of he target audience in ways that improve society as a whole , while fulfilling he objectives of the organisation. This usually requires a long term perspective. Consumer Behaviour Applications in Marketing: 1. Analysing marketing Opportunity: Studying the unfulfilled needs and wants of consumers helps in development of products and services. This requires examining the trends and conditions operating in the market place, consumers life styles, income levels and emerging influences. This may reveal unsatisfied needs and wants. Increasing double incomes, single unit families, use of electronics in household chores, etc. 2. Selecting target market: review of market opportunities helps in identifying distinct consumer segments with distinct consumer needs and wants. Group needs also may be identified.
3. Marketing mix decisions: the marketer has to identify right mix

of product, price, distribution channel to reach them, and promotion once target market is selected. Consumer studies help in solving many problems related with decision making.
4. Product: designing the appropriate product and service is very

important. This concerns size, shape and needs. They also need to decide about packaging, important aspects of service, warranties,and accessories. Ex; food products; noodles, variants
5. Price: pricing becomes an important issue in entire product mix

decisions. They need to decide what price is to be charged as they influence the flow of revenue. How do they perceive a low price product? Low in quality? Expensive product is of high quality? Is the segment price sensitive? To understand this they have to know how consumers perceive the product, what is the importance of price in purchase decision of the consumer?
6. Promotion: marketers have to decide which promotion tools they

should adopt to reach the market segment of potential buyers. Should it be advertising alone or combined with sales promotion?

They need to know the target customer, their location, what media do they have access to and what are their media preferences.?
7. Distribution: how should they distribute the products? Do they

have their own show rooms or go for appointing retail outlets as franchisees? This is known only through consumer research.
8. Use in Social and Non Profit Marketing:

Consumer behaviour studies are also useful in designing marketing strategies by social, governmental and non profit organisation to make their programmes more effective. Such as Family Planning, Creating awareness of AIDS , Child Health, etc.s

CONSUMER DECISION MAKING In most general terms Decision Making is the selection of an option from two or more alternative choices. No choice does not constitute a decision, such a no choice decision is called Hobsons Choice. It is noticed that when a consumer is offered a choice of a second brand of a product the possibility of him choosing the first brand increases considerably. This is because he tends to evaluate both the brands before he decides upon a particular brand. He indulges in what is called as information search. There are various levels of consumer decision making depending upon the continuum of effort ranging from very high to very low. Three specific levels of consumer decision making are seen:
1. Extensive problem solving:

At this level the consumers have not established criteria for evaluating a product category or specific brand nor have they narrowed down the number to a small , manageable subset, their decision making efforts can be classified as extensive problem solving. At this level the consumer needs a great deal of information to establish a set of criteria on which to judge specific brands and details of different criteria for evaluation for each of them.

2. Limited Problem Solving: At this level consumers have already

established the basic criteria for evaluating the product category and various brands in that category, but have not established preferences concerning a select group of brands This search is like fine tuning. They need to gather additional information to discriminate among various brands. 3. Routinized Response Behaviour: Consumers have experience with the product category and a well established criteria to evaluate the brands that they are considering. They simply review

or need a little more information to satisfy themselves of what they know. MODELS OF CONSUMER DECISION MAKING: The term models of consumer decision refers to a general view or perspective as to how and why individuals behave as they do. The following are the 4 views: 1. An Economic View 2. A Passive View 3. A cognitive view 4. An Emotional View
1. An Economic View: The consumer has often been characterized

as making a rational decision in the field of theoretical economics, which portrays a world of perfect competition. This model called Economic man theory has been criticised for the following reasons. a) consumers is aware of all the available product alternatives b) he is capable of correctly ranking each alternative in terms of costs and benefits. c) He is able to identify the best alternative. The classical economic model is unrealistic for the following reasons: 1. people have limitations in skills, habits, and reflexes 2. have limitations of values and goals. 3. have limited knowledge . Consumers operate in an imperfect world. The do not maximise their decisions in terms of economic considerations such as Price Quantity relationship ,marginal utility . He will normally settle for one that is good enough or a satisfactory decision. Hence this model is often rejected as too Idealistic and simplistic. 2. Passive View: This is quite opposite to the economic view. In this model consumers are perceived as irrational and impulsive purchasers, ready to yield to the aims and arms of the marketers. The sales men can sell to any consumer through his hard selling appeals. The principle limitation of the passive view model is that it fails to recognise that the consumer plays an equal, if not dominant role in many buying situations. Sometimes he seeks information of the product at other times he makes an impulsive buying decision.
4. A Cognitive View: This model portrays the consumer as a thinking

problem solver. The consumer is either receptive to or actively searching for products that fulfil their needs and enrich their lives. The cognitive model focuses on processes by which consumers seek and evaluate information about selected brands and retail outlets. Within this model the consumers are viewed as Information

processors. Information process leads to the formation of preferences and ultimately to purchase intentions. In contrast to the Economic View, The Cognitive View , recognises that the consumer is unlikely to even attempt to seek information, once they perceive That they have the required information about some of the alternatives to make a satisfactory decision. Consumers develop short cut decision rules called, Heuristics to facilitate decision making process . The cognitive or problem solving model describes a consumer who falls somewhere between extremes of the economic and passive views, who does not have total knowledge about available product alternatives, and hence cannot make perfect decisions, but who nonetheless actively seeks information and attempts to make satisfactory decisions. The cognitive modeil seems to capture the essence of a well educated and involved consumer who seeks information on which to base consumption decisions.
5. An Emotional View :consumers are likely to associate deep feelings

or emotions such as joy, hope, love , fantasy etc with certain purchases or possessions. These feelings are likely to be highly involving. Possessions also serve to preserve a sense of the past anr d act as a familiar transitional objects when one is confronted with uncertain future. Rather than carefully searching, deliberating, and evaluating alternatives before buying, many if the purchase are made on impulse because they are emotionally driven. Less emphasis is made on search for prepurchase information,when emotional purchases are made,more emphasis is made on current mood and feelings. Choice of one brand over other has little to do with rationality. Many consumers buy designers wear because status labels make them feel better, not that they look better. When a women chooses a dress , she would choose the one which would make her look and feel better. Consumer Moods are also important to decision making. Mood can be defined as a feeling State or State of Mind. Unlike emotion which is a response to a particular environment. A mood is typically unfocussed, pre-existing state- already present at the time a consumer experiences an advertisement, a retail environment, a brand or a product.

External Influences
INPUT Environment Social Class Firms Mktg Efforts Product,Promotion Socio Cultural Family, Info Source,

Price, Channels of Dist -------------------------------------------------------------------------Consumer Decision Making Process Need Recognition ty,attitude.

Sub culture and culture Psychological field Motivation,perception, Learning,personali

Evaluation of alternatives ----------------> Experience -----------------------------------------------------------------------------Post Purchase Behaviour I Output I ---------------------------------------I I I I I Post purchase evaluation ----------------------------------------------------------------I Purchase: 1. Trial 2. repeat purchase I I I

------------------------------------------------------------------------------------------------------------------Simple model of consumer decision making.

RESEARCHING THE CONSUMERS -

According to A.f.Firat and Alladi Venkatesh, most studies on consumer behaviour are based on a set of beliefs and assumptions called positivism or Modernism. Researchers who support or approve the assumptions of modernism are referred to as positivists. Positivists research methods consists of experiments, survey techniques and observations. The findings of positivist research are descriptive, empirical and can be generalised to larger population. The nature of data collected is quantitative for which sophisticated statistical analysis can be used. Positivism takes the view that if it cant be proved in the laboratory, the data are not useful and that only information derived from scientific methods should be used in decision-making. Motivation Research: Earnest Ditcher, a Vinnese psyschoanalyst, began to use Freudian psychoanalytic techniques in 1939 to uncover the unconscious motivations of the consumers which by 1950 came to be known as Motivation Research Motivation research is widely used in advertising agencies and consists of projective techniques and depth interviews. It falls in the realm of qualitative research and is primarily used to identify and obtain new ideas for promotional campaigns. Many agencies combine quantitative and qualitative research. Qualitative is used to gain consumer insights and new ideas and Quantitative research to Predict consumer action based on different promotional inputs. Interests in consumer Experiences has originated the terms Experientialism or Post Modernism. Experientialism uses qualitative and other research methods to understand consume behaviour and is complementary approach to positivism. Researchers who endorse the assumptions of experientialism are called experientialists or Postmodernists. Other names given are naturalism, humanism, and post positivism. Postmodernists: tend to view knowledge as being time, culture and context dependent and consumption is viewed as a symbolic system as much as or more than economic system. The carry out

qualitative research and use Ethonography, semiotics and depth interviews. a) Ethnography is a technique in which the researchers gets located in the society under study in an attempt to grasp the meaning of various cultural practices. Ethnogaphy makes it easy to study all kinds of behaviour, including how individuals buy products and services. b) Simiotics: is the study of symbols and the meanings they convey and the researchers uses it to discover the meanings of various consumptions behaviour and rituals. It is important to understand what non verbal symbols hold for the target audience ex: Sun symbol means life in Indian culture, Moon is love, Stars are Destiny. This knowledge help in designing more persuasive messages and avoiding mistakes that may be counterproductive.
c) Depth Interviews: are an important part of the

postmoderist research process. The findings in each case of interview are the outcome of specific researcher/respondent interaction and the researchers interpretation are unique. DATA COLLECTION METHODS:
a) Depth Interviews

b) Focus Groups c) Projective Techniques d) Laddering.

A) Depth Interviews: This is the most important methods of

qualitative motivational research . It is designed to determine deep seated or repressed motives. It is lengthy,unstructured and informal and is between a respondent and a researcher. The research keeps his participation to the minimum level possible. Questions are general and respondents are encouraged to talk freely about their activities, interests , needs, desires, motives,emotions,and attitudes in addition to the product or brand under study. Questioning is sometimes indirect for ex: why do you think that your friends Wear Nike shoes?

Such studies furnish valuable ideas about product design,insights for product positioning and advertisement testing. A new method calledauto driving ex poses respondents to photographs,videos and audio recordings of their own behaviour. It is thebelieved to make qualitative data more meaningful. Interviews are interpreted by trained professionals and are subjective in nature rather than quantitative, hence increased possibility of bias. Samples are small and may not be representative of entire population.
c) FOCUS GROUPS: Is a popular technique for exploratory research

and brings together about 8 or 10 people with similar backgrounds to meet with a moderator/analysts for a group discussion. The discussion is focused on a product, service for which the research is conducted. Moderator guides the discussion encouraging the participants to freely discuss their interests, attitudes, reactions, motives, lifestyles, feelings about the product and usage experience etc. the session lasts for 2 hours is videotaped and recorded. Help in: a) generating hypothesis about consumers and market conditions b) suggesting refreshing new ideas c) Checking advertisements,product packages, concepts to determine flaws d) Understanding consumer motivations,lifestyles, beliefs e) Doing a post mortem of failed products. d) Projective Techniques: Projective tests require the respondent to decide what the other person would do in a certain situation. These techniques explore the underlying motives of individuals who consciously or unconsciously get involved in rationalisations or concealment because they may be reluctant to admit certain weaknesses or desire. These techniques involve variety of disguised ambiguous stimuli such as untitled pictures, incomplete pictures, word associations etc. The respondent taking the test is required to describe, complete or explain the meaning of different ambiguous stimuli. It is believed that respondents inner feelings influence their perceptions of ambiguous stimuli. They project their inner thought when they take the test,revealing their underlying needs, wants, aspirations, fears and motives, without they knowing that they are revealing them. The following are some of the Projective techniques:

1. Thematic Appreciation Test:(TAT) Respondents are shown pictures or cartoons concerning the product or the topic under study and asked to describe what is happening in the picture. In doing so, respondents actually reveal their own motivations, attitudes, personalities, and feelings about the situation. 2. Word Association Test: respondents are asked to read a series of words or phrases, once at a time and asked to answer quickly with the first words that comes into their mind after hearing each one. By responding in quick succession, they indicate what they associate with the word most closely and reveal their true feelings. 3. Sentence Completion Test: The interviewer reads the beginning of a sentence and the respondent is required to finish it. It is useful in uncovering the images consumers have about product and stores. This helps in developing promotional campaigns. 4. The Third person Technique: The respondent is asked to describe a third person.He is given some information about the third person. In describing the neighbour they express their own attitudes or motives as they infer the attitudes and motives of someone else.

D) Laddering (means end chain model) This is a new method used for data collection. It is used during in depth interviews to understand the deeper basis of consumer decisions by attending to the various consequences of choice for data collection. The assumption is that very specific product attributes are linked at levels of increasing abstraction to terminal values. The consumer has highly valued end states and chooses among alternative means to attain these goals, and therefore products are valued as the means to an end. To illustrate how laddering works consider a consumer who intends to purchase a diamond ring for his would be wife. Tangible attributes of diamond such as size, and brilliance are projected into abstract and emotional values of love and self-esteem. Diamond sellers keep the price of diamond artificially high through associating the size of the diamond and price to the size of your love and self worth. The belief that consumption of the products is instrumental in attaining more abstract values is central to the application of this method.

CHAPTER 2 CONSUMER NEEDS AND MOTIVATION: Motivation can be described as a driving force within individuals that impels them to action. This driving force is produced by a state of tension, which exists as a result of an unfulfilled need. Individuals strive consciously and unconsciously to reduce this tension through behaviour that they anticipate will fulfil their needs and thus relieve them of the stress they feel. The specific goals they select and the pattern of action they undertake to achieve their goals are the result of individuals thinking and learning. MODEL OF MOTIVATION PROCESS LEARNING I I Tension-> Drive I -> Behaviour I I I I I I I I I Processes Cognitive I I I

Unfulfilled Needs wants ---- need And desires fulfillment

Goal or

I I I I I I

I I I

Needs: Every individual has needs Some are Acquired others are Innate Innate needs are Physiological or biogenic such as need for food, water, clothing. These needs are primary needs or motives as they sustain lives. Acquired Needs are those that we learn in response to our culture or environment. The may include needs such as self esteem, for prestige,for affection , for power, and for learning. Since they are Psychological they are considered Secondary. GOALS: Are the sought after results of motivated behaviour. Marketers are concerned with consumers Product-specific goals , that is they select branded or labelled products. There are different goals for different needs. This depends upon personal experience, physical capacity, prevailing norms and values, and the goal accessibility in the physical and social environment. An individuals own perception of himself also serves to influence the specific goals selected. The product a person owns or does not own are often perceived in terms of how closely they reflect or congruent with the persons self image. At product that is perceived as matching a consumers self image has a greater probability of being selected than one that is not. PSYCHOGRAPHICS: PERSONALITY, LIFESTYLE AND SELF CONCEPT: When marketers speak of personality, they refer to a dynamic concept describing the growth and development of an individuals whole psychological system,which looks at the aggregate whole that is greater than the sum of the parts. Gordon W.Allport defines personality as Personality is the dynamic organisation within the individual of those psychological systems that determines his unique adjustment to environment Personality characteristics helps us to describe and differentiate between individuals. It is generally believed that personality is made up of his or her inherited characteristics and the interaction with environment and moderated by situational conditions.

It is a composite total result of a persons psychological characteristics,motives,beliefs,attitudes,habits and overall outlook. 3 distinct properties of personality:- in the context of application in marketing 1) Personality is used to account for differences between individuals rather than the similarity. However all individuals may not differ in every respect., they are similar in a single personality trait. This helps marketers group people in a single or a few common traits. 2) Personality is believed to be consistent and enduring over time and tends to carry to a variety of situations. Marketing people attempt to influence specific consumer responsesby appealilngto specific personality traits. Although personality is consistent, yet consumption behaviour of individuals often varies due to specific motives, attitudes, group pressures and even product introductions may influence individuals behaviour. 3) despite the fact personality is consistent and enduring, it may change due to major events in life such as marriage, birth of a child, death of a near or dear one, process of ageing, changes in economic conditions etc.

THEORIES OF PERSONALITY: There are many personality theories and these theories mainly focus on the definition of which personality characteristics are most important. Marketers have focused on 4 main theories of personalities. Which vary greatly in their approach to measuring personality. 1. Self Concept (self image) theory 2.Psychoanalytic Theory 3.Social/cultural (non freudian) theory 4. Trait Theory. 1. Self Concept Theory: It is the popular approach for marketers as it focuses on how the self image of individual consumers influences the purchase behaviour. Self concept is defined as the totality of the individuals thoughts and feelings having reference to himself as an objects.

Each one of us has a self concept. Each one has certain attributes and qualities and values them. According to M.Joseph Sergy, there are 4 specific types of self images
a) What Consumers buy or own is a reflection of what they think and

believe who they are . This represents their Actual Self. b) What they would like to be is their ideal Self

c) How they feel other see them is their Social self

d) How they would like other to see them is their Ideal Social Self.

Research has identified one more kind of Self-Image. Expected Self which means how consumers expect to see them selves sometimes in the future.