Unit- II Consumer behavior

Definition
According to Walters and Paul, “Consumer behavior is the process whereby individuals
decide what, when, where, how and from whom to purchase goods and services”.

According to American Marketing Association (AMA), “Consumer behaviour as “The

dynamic interaction of cognition, behaviour and environmental events by which human
beings conduct the exchange aspect of their lives.”

The “consumer” more generally refers to anyone engaging in any of the activities
(evaluating, acquiring, using or disposing of goods and services) used in the definition
of consumer behaviour.

Consumer behaviour is a decision process and physical activity individuals engage in

when evaluating, acquiring, using or disposing of goods and services.

Consumer Buying Process

In consumer buying process, generally, the purchaser passes through five
distinct stages in consumer buying process namely need or problem recognition,
information search, alternative evaluation, purchase decision and post-purchase
behaviour.
1. Stage of Problem Recognition
2. Stage of Information Search
3. Stage of Alternative Evaluation
4. Stage of Purchase Decision
5. Stage of Post Purchase Behaviour
1. Stage of Problem Recognition

The recognition of a need is likely to occur when a consumer is faced with a ‘problem’.
A buying process starts when a consumer recognizes that there is a substantial
discrepancy between his current state of satisfaction and expectations in a
consumption situation.

2. Stage of Information Search

After need arousal, the behaviour of the consumer leads towards a collection of
available information about various stimuli i.e. products and services in this case from
various sources (personal, public, commercial, experiential) for further processing and
decision-making.

3. Stage of Alternative Evaluation

Once interest in a product(s) is aroused, a consumer enters the subsequent stage of

evaluation of alternatives.

When evaluating potential alternatives, consumers tend to use two types of

information:

1. A list of brands (or models) from which they plan to make their selection (the
evoked set)

2. The criteria they will use to evaluate each brand (or model).

Cognitive evaluation: When the consumer uses objective choice criteria.

Affective evaluation: Using emotional reasons for evaluating the alternatives.

4. Stage of Purchase Decision

Finally, the consumer arrives at a purchase decision. Purchase decisions can be one
of the three viz. no buying, buying later and buy now.

No buying takes the consumer to the problem recognition stage. A postponement of

buying can be due to a lesser motivation or evolving personal and economic situation.
If positive attitudes are formed towards the decided alternative, the consumer will make
a purchase.

There are three more important considerations in taking the buying decision:

 Attitude of others such as wife, relatives and friends.

  Anticipated situational factors such as expected family income, expected total
cost of the product and the expected benefits from the product.

 Unanticipated situational factors, like accidents, illness etc.

5. Stage of Post Purchase Behaviour

Post-purchase behaviour refers to the behaviour of a consumer after his commitment
to a product has been made.

So post-purchase behaviour leads to three situations, namely customer is satisfied;

customer is delighted and the customer is dissatisfied.

Cognitive dissonance: Buyer discomfort caused by postpurchase conflict.

Factors Influencing Consumer Behaviour

1. Cultural Factors

2. Social Factors

3. Personal Factors

4. Psychological Factors

5. Economic Factors
Cultural Factors

Culture: The set of basic values, perceptions, wants, and behaviours learned by a
member of society from family and other important institutions.

Consumers live in a complex social and cultural environment. The types of products
and services they buy can be influenced by the overall cultural context in which they
grow up to become individuals.

Below are some of the important cultural factors given:

 Culture

 Subculture

 Social Class

Social Factors

Social factors, in turn, reflect a constant and dynamic influx through which individuals
learn different consumption meanings. Below are some of the important social factors
given:

 Family

 Reference Groups

 Roles and status

Personal Factors

A person’s consumption behaviour is shaped by his personal characteristics. Below

are some of the important personal Factors given:

 Age

 Income

 Personality

 Self-concept

 Occupation

 Lifestyle

 Gender
Psychological Factors
Psychological factors also influenced consumers. Internal psychological factors also direct the
decision-making process. These factors influence the reason or ‘why’ of buying.

Below are some of the important psychological factors given:

 Motivation

 Learning

 Attitudes and Beliefs

 Perception

Economic Factors

Economic factor also has a significant influence on buying decision of consumer

behavior.
Below are some of the important economic factors given:

 Personal and Family Income

 Income Expectations

 Consumer Credit

 Liquid Assets

Importance of Consumer Behaviour

It is important for marketers to study consumer behaviour. This helps marketers to

investigate and understand the way in which consumers behave.

Below are some of the importance of consumer behaviour is given below:

1. Manufacturing policies

2. Price policies

3. Decision regarding channels of distribution

4. Decision regarding sales promotion

5. Exploiting marketing opportunities

6. Highly diversified consumer preferences

7. New Technological product

 Marketing Research
Definition:

Market research is defined as the process of evaluating the feasibility of a new product or
service, through research conducted directly with potential consumers. This method allows
organizations or businesses to discover their target market, collect and document opinions
and make informed decisions.

Market research can be conducted directly by organizations or companies or can be

outsourced to agencies which have expertise in this process.

The process of market research can be done through deploying surveys, interacting with a
group of people also known as sample, conducting interviews and other similar processes.

Three key objectives of market research

1. Administrative: Help a company or business development, through proper planning,
organization, and both human and material resources control, and thus satisfy all
specific needs within the market, at the right time.

2. Social: Satisfy customer’s specific needs through a required product or service. The
product or service should comply with the requirements and preferences of a customer
when it’s consumed.

3. Economical: Determine the economical degree of success or failure a company can have
while being new to the market, or otherwise introducing new products or services, and
thus providing certainty to all actions to be implemented.

Market research important

 Valuable information: It provides information and opportunities about the value of
existing and new products, thus, helping businesses plan and strategize accordingly.

 Customer-centric: It helps to determine what the customers need and want. Marketing
is customer-centric and understanding the customers and their needs will help
businesses design products or services that best suit them.

 Forecasts: By understanding the needs of customers, businesses can also forecast their
production and sales. Market research also helps in determining optimum inventory
stock.
  Competitive advantage: To stay ahead of competitors market research is a vital tool to
carry out comparative studies. Businesses can devise business strategies that can help
them stay ahead of their competitors.

Steps for conducting Market Research

Step #1: Define the Problem

Having a well-defined subject of research will help researchers when they ask questions. These
questions should be directed to solve problems and they have to be adapted to the project.
Make sure the questions are written clearly and that the respondents understand them.
Researchers can conduct a test with a small group to know if the questions are going to know
whether the asked questions are understandable and will they be enough to gain insightful
results.

Research objectives should be written in a precise way and should include a brief description
of the information that is needed and the way in which it will obtain it. They should have an
answer to this question “why are we doing the research?”

Step #2: Define the Sample

To carry out market research, researchers need a representative sample that can be collected
using one of the many sampling techniques. A representative sample is a small number of
people that reflect, as accurately as possible, a larger group.

 An organization cannot waste their resources in collecting information from the wrong
population. It is important that the population represents characteristics that matter to
the researchers and that they need to investigate, are in the chosen sample.

 Take into account that marketers will always be prone to fall into a bias in the sample
because there will always be people who do not answer the survey because they are
busy, or answer it incompletely, so researchers may not obtain the required data.

 Regarding the size of the sample, the larger it is, the more likely it is to be representative
of the population. A larger representative sample gives the researcher greater certainty
that the people included are the ones they need, and they can possibly reduce bias.
Therefore, if they want to avoid inaccuracy in our surveys, they should have
representative and balanced samples.

 Practically all the surveys that are considered in a serious way, are based on a scientific
sampling, based on statistical and probability theories.
There are two ways to obtain a representative sample:

 Probability sampling: In probability sampling, the choice of the sample will be made at
random, which guarantees that each member of the population will have the same
probability of selection and inclusion in the sample group. Researchers should ensure
that they have updated information on the population from which they will draw the
sample and survey the majority to establish representativeness.

 Non-probability sampling: In a non-probability sampling, different types of people are

seeking to obtain a more balanced representative sample. Knowing the demographic
characteristics of our group will undoubtedly help to limit the profile of the desired
sample and define the variables that interest the researchers, such as gender, age, place
of residence, etc. By knowing these criteria, before obtaining the information,
researchers can have the control to create a representative sample that is efficient for
us.

Step #3: Carry out data collection

First, a data collection instrument should be developed. The fact that they do not answer a
survey, or answer it incompletely will cause errors in research. The correct collection of data
will prevent this.

Step #4: Analyze the results

Each of the points of the market research process is linked to one another. If all the above is
executed well, but there is no accurate analysis of the results, then the decisions made
consequently will not be appropriate. In-depth analysis conducted without leaving loose ends
will be effective in gaining solutions. Data analysis will be captured in a report, which should
also be written clearly so that effective decisions can be made on that basis.

Step #5: Make the Research Report

When presenting the results, researchers should focus on: what do they want to achieve using
this research report and while answering this question they should not assume that the
structure of the survey is the best way to do the analysis. One of the big mistakes that many
researchers make is that they present the reports in the same order of their questions and do
not see the potential of storytelling.

Step #6: Make Decisions

A market research helps researchers to know a wide range of information, for example,
consumer purchase intentions, or gives feedback about the growth of the target market. They
can also discover valuable information that will help in estimating the prices of their product
or service and find a point of balance that will benefit them and the consumers.

Take decisions! Act and implement.

 Sales Promotion
A sales promotion is a marketing strategy that involves offering a short-term incentive to increase brand
awareness, demand sales for a particular product or service. Companies typically use this type of strategy to
introduce new products to their targeted demographic, attract new customers, and temporarily increase sales.

Definition: The Promotion Mix refers to the blend of several promotional tools used by the business to create,
maintain and increase the demand for goods and services.

The fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses on creating the awareness
and persuading the customers to initiate the purchase. The several tools that facilitate the promotion
objective of a firm are collectively known as the Promotion Mix.

The Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion, Public Relations and
Direct Marketing. The marketers need to view the following questions in order to have a balanced blend of
these promotional tools.

Philip Kotler, “A company’s total marketing communication mix also called promotion mix consists of specific
blends of advertising, personal selling, sales promotion, public relations and direct marketing tools that the
company use to pursue its advertising and marketing objectives.”

Elements of Promotion Mix

1. Advertising: The advertising is any paid form of non-personal presentation and promotion of goods
and services by the identified sponsor in the exchange of a fee. Through advertising, the marketer tries
to build a pull strategy; wherein the customer is instigated to try the product at least once. The
complete information along with the attractive graphics of the product or service can be shown to the
customers that grab their attention and influences the purchase decision.
 2. Personal Selling: This is one of the traditional forms of promotional tool wherein the salesman
interacts with the customer directly by visiting them. It is a face to face interaction between the
company representative and the customer with the objective to influence the customer to purchase
the product or services.
3. Sales Promotion: The sales promotion is the short term incentives given to the customers to have an
increased sale for a given period. Generally, the sales promotion schemes are floated in the market at
the time of festivals or the end of the season. Discounts, Coupons, Payback offers, Freebies, etc. are
some of the sales promotion schemes. With the sales promotion, the company focuses on the
increased short-term profits, by attracting both the existing and the new customers.
4. Public Relations: The marketers try to build a favourable image in the market by creating relations with
the general public. The companies carry out several public relations campaigns with the objective to
have a support of all the people associated with it either directly or indirectly. The public comprises of
the customers, employees, suppliers, distributors, shareholders, government and the society as a
whole. The publicity is one of the form of public relations that the company may use with the intention
to bring newsworthy information to the public.
E.g. Large Corporates such as Dabur, L&T, Tata Consultancy, Bharti Enterprises, Services, Unitech and PSU’s
such as Indian Oil, GAIL, and NTPC have joined hands with Government to clean up their surroundings, build
toilets and support the swachh Bharat Mission.

5. Direct Marketing: With the intent of technology, companies reach customers directly without any
intermediaries or any paid medium. The e-mails, text messages, Fax, are some of the tools of direct
marketing. The companies can send emails and messages to the customers if they need to be informed
about the new offerings or the sales promotion schemes.
E.g. The Shopper stop send SMS to its members informing about the season end sales and extra benefits to
the golden card holders.

Thus, the companies can use any tool of the promotion mix depending on the nature of a product as well as
the overall objective of the firm.
Objectives for promotion mix
1. Build Awareness:
New products and new companies are often unknown to a market, which means initial promotional efforts
must focus on establishing an identity. In this situation the marketer must focus promotion to effectively reach
customer and tell the market who they are and what they have to offer.

2. Create Interest:
Moving a customer from awareness of a product to making a purchase can present a significant challenge.
Consumer buying behaviour depends on the type of customer so the customer must first recognize they have
a need before they actively start to consider a purchase.
The focus on creating messages that convince customers that a need exists has been the hallmark of
marketing for a long time with promotional appeals targeted at basic human characteristics such as emotions,
fears, humor, etc.

3. Provide Information:
Some promotions are designed to assist customers in the search stage of the purchasing process. In some
cases, such as when a product is so novel it creates a new category of product and has few competitors the
information is simply intended to explain what the product is and may not mention any competitors.
In other situations where the product competes in an existing market, informational promotion may be used
to help with a product positioning strategy.

4. Stimulate Demand:
The right promotion can drive customers to make a purchase. In the case of products that a customer has not
previously purchased or has not purchased in a long time, the promotional efforts may be directed at getting
the customer to try the product.
This is often seen on the internet where software companies allow for free demonstrations or even free
downloadable trials of their products. For customer base products, promotion can encourage customers to
increase their purchasing by providing a reason to purchase products sooner or purchase in greater quantities
than they normally do.

5. Reinforce the Brand:

Once a purchase is made a marketer can use promotion to build a strong relationship that can lead to the
purchaser becoming a loyal customer. For instance, many retail stores now ask for a customer’s email address
so that follow-up emails containing additional product information or even an incentive to purchase other
products from the retailer can be sent in order to strengthen the customer marketer relationship.
Media selection
The advertising medium refers to the means through which the advertiser can convey his message to
audience. Proper selection of the media enables the advertiser to achieve the desired results.
Hence, advertising media selection is vital for the success of an advertising campaign.

An advertising medium is any object or device that carries the advertising message. It should be capable of
accomplishing following three objectives:
1. To reach the largest number of people possible.
2. To gain their attention.
3. To be less expensive.
The character of the medium is largely determined on the objective and factual basis such as whether the
coverage of the medium should be national, regional or only local.

Factors affecting Advertising Media Selection

 Class of the audience
 Extent of coverage
 Nature of the product
 Nature of the competition
 Reputation of the medium
 Cost of the media
 Time and location of buying decisions
 Level of education

CHARACTERISTICS OF IMPORTANT MEDIA

 Mural advertising:- Mural or outdoor advertising has long life. It has a general and wide appeal. It can
attract attention of numerous people; it is good to remind prospects. An advertiser has ample scope to
use his skill and art in advertising.
However, outdoor advertising has certain limitations. It cannot .have a long message. It is not useful in
selective advertising or for specialized products. It has a low retention value. Its effectiveness cannot
be accurately measured and it may lead to considerable wastage also. Bill boards and hoarding are not
welcome today on the highways due to adverse public opinion. (They spoil the natural beauty and
environment).

 Press Advertising
 Film Advertising
 Radio Advertisements
 Television Advertisement
 Transit Advertising
 Direct Mail
 Advertising Specialties
 Point-of-Purchase Advertising