Unit-1

Consumer Behaviour
An organization should responsive to the consumer needs to get success in the market. To
understand the needs and wants of the customers sellers should understand the customers
behaviour while they buying. Having an in-depth understanding of consumer’s behaviour in
different segments is of utmost importance in order to successfully market products and
services to the markets. Consumer’s behaviour does not remain static for all kinds of
purchases; rather it varies from one product category to another. So, organizations need to be
vigilant while drawing out generalizations about consumer behaviour across products and
market segments.
The study of consumer behaviour enables marketers to understand and predict consumer
behaviour in the marketplace. It is not only with what consumers buy but also with why, when,
where, how and how often they buy it. Consumer research is the tool used by marketers to
collect the information on consumer behaviour. In the modern marketing world Consumer
behaviour has become an integral part of strategic market planning.
Consumer Behaviour-Meaning
According Schiffman and Kanuck “Consumer behaviour that consumers display in searching
for, purchasing, using, evaluating and disposing of products and services that they expect will
satisfy their needs.”
Belch and Belch define consumer behavior as “the process and activities people engage in
when searching for, selecting, purchasing, using, evaluating, and disposing of products and
services so as to satisfy their needs and desires.”
Consumer behavior is the study of how people buy, what they buy, when they buy and why
they buy. It includes elements from psychology, sociology, socio-psychology, anthropology and
economics. It studies characteristics of individual consumers such as demographics,
psychographics, and behavioural variables in an attempt to understand people's needs and
wants. It attempts to understand the buyer decision making process, both individually and in
groups. It also tries to assess influences on the consumer from groups such as family, friends,
reference groups, and society in general.
By analyzing the above definition, it reveals that the study includes within its purview, the
interplay between cognition, affect and behaviour that goes on within a consumer during the
consumption process: selecting, using and disposing off goods and services.
a) Cognition: This includes within its ambit the “knowledge, information processing and
thinking” part; It includes the mental processes involved in processing of information, thinking
and interpretation of stimuli (people, objects, things, places and events). In our case, stimuli
would be product or service offering; it could be a brand or even anything to do with the 4Ps.
b) Affect: This is the “feelings” part. It includes the favourable or unfavourable feelings and
corresponding emotions towards stimuli (towards a product or service offering or a brand).
These vary in direction, intensity and persistence.
c) Behaviour: This is the “visible” part. In our case, this could be the purchase activity: to buy
or not to buy (again specific to a product or service offering, a brand or even related to any of
the 4 Ps).
Characteristics/Nature of Consumer Behaviour
Consumers are nowadays known as the god of market. They should be treated
or worshiped by quality products and services. A satisfied customer brings profit consistently.
So the marketer should understand the customer properly. Marketer has to understand how
one customer behaves in the purchasing time. Characteristics of consumer behavior are:
1) Consumer Behaviour is a Process: Consumer behaviour is a systematic process relating to
buying decisions of the customers. The buying process consists of the following steps;
a) Need identification to buy the product.
b) Information search relating to the product.
c) Listing of alternative brands.
d) Evaluating the alternative (cost-benefit analysis)
e) Purchase decision.
f) Post-purchase evaluation by the marketer.
2) Influenced by various factors: Consumer behavior is influenced by a number of factors. The
factors that influenced consumer are as follow; marketing, personal, psychological,
situational, social, cultural etc.
3) Different for different customers: All consumers do not behave in the same manner.
Different consumers behave differently. The difference in consumer behavior is due to
individual factors such as nature of the consumer’s life style, culture, etc.
4) Different for different products: Consumer behavior is different for different products.
There are some consumers who may buy more quantity of certain items and very low/no
quantity of some other items.
5) Various across regions: The consumer behavior very across states, regions and countries.
For instance, the behavior of urban consumers is different from that of rural consumers.
Normally, rural consumers are conservative (traditional) in their buying behavior.
6) Vital for marketers: Marketers need to have a good knowledge of consumer behavior. They
need to study the various factors that influence consumer behavior of their target customers.
The knowledge of consumer behavior enables marketers to take appropriate marketing
decisions.
7) Reflects Status: -Consumers buying behavior is not only influenced by status of a consumer,
but it also reflects it. Those consumers who own luxury cars, watches and other items are
considered by others as persons of higher status.
8) Result in spread-effect: Consumer behavior has a spread effect. The buying behavior of one
person may influence the buying behavior of another person. For instance, a customer may
always prefer to buy premium brands of clothing, watches and other items etc. this may
influence some of his friends, neighbors, colleagues. This is one of the reasons why marketers
use celebrities like sharuk khan, sachin to endorse their brands.
9) Improves Standard of Living: Consumer buying behavior may lead to higher standard of
living. The more a person buys the goods and services, the higher is the standard of living.
10) Undergoes a change: - The consumer’s behavior undergoes a change over a period of time
depending upon changes in age, education and income level. Etc, for instance,, kids may prefer
colorful dresses, but as they grow up as teenagers and young adults, they may prefer trendy
clothes.
Why study consumer behavior? /Importance of Consumer Behaviour
Consumer behaviour is interdisciplinary; that is, it is based on concepts and theories about
people that have been developed by scientists in such diverse discipline as psychology,
sociology, social psychology, cultural anthropology, and economics. Understanding
consumer behaviour has assumed much importance in the present day business world. The
success or failure of any organization profit making or nonprofit making depends on their
under understanding of consumer. As the economy develops the importance of consumer
behaviour analysis increases. Following are the importance of consumer behaviour analysis:
a) The study of consumer behaviour enables marketers to understand and predict
consumer behaviour in the marketplace.
b) It helps in business planning and decision making.
c) Helps in increasing organizational profit.
d) Consumer behaviour analysis helps in communication between firm and society.
e) Consumer behaviour analysis facilitates the development of business.
f) Volume of production depends upon the successful performance of the marketing
operations.
g) Understanding of consumer behaviour helps marketer to convert potential demand
into actual demand.
h) Based on needs and wants of consumers marketer can develop customized offerings
to it target customers.
i) Consumer behaviour analysis reveals the customer expectations regarding product, so
marketer can design effective promotional programmes to reach the customers.
j) In the modern business world consumer behaviour has become an integral part of
strategic planning.
k) Consumer behaviour analysis helps marketers to compete with competitors.
Differences between Personal Consumer and Organizational Consumer
Organizational or business markets are made up of customers who make purchases to
contribute to ongoing business activities. Consumer markets include particular groups of
householder consumers who buy products for household or personal use. Some companies
target both types, while others market to one or the other.
Consumption: Organizations and consumers buy for very different reasons. Consumers
usually buy for personal or family consumption. This means they use goods and services to
meet personal needs or for enjoyment or quality of life benefits. Organizations typically make
purchases based on business needs. In general, companies buy products or supplies that help
them either improve performance or reduce costs of doing business.
Size: Another major difference between the two types of markets is the potential order size
or purchase volume. Consumers normally buy items in smaller quantities, since individuals or
families typically consume or use products more gradually. Organizations often buy products
and supplies for tens, hundreds or thousands of people. While selling to an organizational
market may take longer, the volume of the sale often makes up for the additional time
invested.
Budgets: While there are wealthy consumers, organizational budgets are most often much
greater than those of individual consumers. This correlates with the ability to make larger
single purchases or the aforementioned higher-volume orders. Large commercial equipment
is often targeted to businesses based on size or capacity and their ability to invest more in
higher-priced products or performance equipment. Organizations commonly allocate specific
budget amounts to each functional department.
Decision Process: Organizational buying processes often take longer than consumer decision-
making processes. This is due, in part, to the riskier investments companies often make. Plus,
consumers are often emotionally motivated by purchase decisions, which tends to produce
more spontaneous, instinctive or impulsive buys. Organizational buyers usually like to crunch
numbers, weigh costs and benefits and feel confident in purchases because of the
ramifications of making a mistake with company money.
Difference between Consumer & Customer
Customer
By Customer, we mean a person who buys the goods or services and pays the price thereof.
The word customer is derived from the term ‘custom’ which means ‘practice’, so the word
customer means the individual or entity who purchases product or services from a seller at
regular intervals. It can also be known as client or buyer.
Consumer
Consumer is a person who is the end user of the product. The word consumer is made from
the word ‘consume’ which means ‘to use’. In this way, the word consumer means a person
who purchases the product or service for his own use or consumption.
The fundamental differences between customer and consumer, in marketing are described
below:
1) The person who buys the goods or services from a seller is known as the Customer.
The person who uses the goods or services is known as a Consumer.
2) The customer is also known as buyer or client whereas the Consumer is the ultimate
user of the goods.
3) The customer can be an individual or a business entity while a Consumer can be an
individual or a family or a group of people.
4) Customer pays the price of the product or service however he may recover it from the
other party, in case if he had purchased it on behalf of any person. Conversely,
Consumer not necessarily pays the price of the product, like in case the goods are
gifted or if they are purchased by the parents of a child.
5) The customer purchases the goods for the purpose of resale or to add value or for his
personal use or on behalf of another person. In contrast to Consumer, who purchases
the goods for the purpose of consumption only.
Nature and Characteristics of Indian Consumers
Forces operating on the Indian consumer are far different from those that operate on his
Western counterparts. Apart from cultural factors, there are socio-economic differences that
distinguish India from the Western countries. As a developing country India is characterized
by vast disparities in incomes, poverty, illiteracy, exploding population which have a bearing
on the consumption pattern as well as on the consumer movement.
Consumers in India are very heterogeneous in composition, both in terms of social and
cultural aspects and economic status. India is the second largest country in the world, the
population figure being over 120 crore according to the 2011 census. Of these only 21% live
in urban areas and 79% in rural areas. Of this about 40% live below poverty line. As a result
India is faced with a terribly low standard of living and a galloping population growth.
1) Indian Cultures
India is said to be a country of multicultural. It is because of long history of many years. At
different times, different rulers ruled over the country. Further, at the same time there had
been different rules in different parts of India. Then, there was invasion from outside
especially from Arab countries; and then many years India was under the British rule.
In certain part of the country for sometimes there had been French and Portuguese rule. The
different rulers had different systems of governance and social practices. All these factors left
a deep imprint on culture. In olden days, the means of transport and communication were
very poor; large numbers of languages, systems, habits etc. are followed. These facts of history
made India a multicultural nation.
2) Language
India is a Multilanguage country. There are eighteen languages officially recognized in the
constitution which are spoken or used in different parts of the country. Besides the recognized
languages, English is the official language in most private offices and for interstate
correspondence.
Besides official language, there are many other languages which are quite popular in certain
parts of the country, like Bhojpuri in certain part of UP and Bihar, Marwari in certain parts of
Rajasthan, Dogri in J and K etc. The local languages have great influence on consumers
especially in rural areas.
3) Religion:
Religion has great impact on culture and buying behaviour of consumers. In India, there are
major religions Hindus, Muslims, Sikhs, Christians, Jains, etc. Every religion has its own values,
faith, beliefs, and greatly affect consumer behaviour For instance, Hindus by and large are
vegetarians.
4) Education:
The level of education has great impact on knowledge. It also affects values, faiths and beliefs.
The poor educated country has greater faith in superstitions and traditions, because one
believes more on luck, fate, staunch believer in God. Since there is less education, tribes
should be properly studied and researched to find out consumer behaviour and about
preferences for their products and services.
According to 2001 census, India has a population of 102.7 crore, on March 2001, of which
65.38 percent were literate. The literacy is the highest in Kerala which has reduced its birth
rate to the lowest and helped migration of persons to other states in India and abroad. All
these factors influence behaviour of customers and should be properly taken into
consideration by marketer.
5) Respects to Elders:
In Indian culture all those, who are elders in age than oneself, are not only given respects but
also often what they say is accepted and acted. A son does what his father says; a younger
brother or sister give respect to their elder brothers and sisters; and often are willing to act
on their advice. This respect is powerful in purchasing high value items, like land, buildings
etc.
6) Care for Tomorrow:
Indians think more deeply for tomorrow, they save a good percentage of their income for
future, (around 20-22% in 2000-01); for their children’s education, marriage, etc. Because of
sense of insecurity, people do not enjoy life but care more for their children than for
themselves.
Though certain cultural factors are common to all countries, there are other attributes which
differ widely from country to country, like, beliefs, languages, food habits, concept of beauty,
attitudes etc. So, marketers take these facts into consideration, otherwise, he may lose the
market rather than increase its share.
7) Morality and Sex:
There are wide differences on morality and sex from country to country. The laws of America,
Europe, Japan, Australia, India etc. provide equal opportunity of education and job to ladies
and gents. However, there are certain restrictions on their education and job.
Even today in India everyone wants at least one male child; and in rural India, girls are not
given same opportunities for learning.
9) Profile of the Indian Consumer:
India being very vast, consumers here are naturally scattered over a vast territory. As the
country is also marked by great diversity in climate, religion, language, literacy-level, customs,
lifestyle, economic status etc. here the consumers present a complex group. The
heterogeneity holds many implications for a marketer, especially to those going in for national
marketing.
According to the Census 2001, the population of India stood 1,027 million, of which 742
million lived in rural areas and 285 million in urban areas. And according to the census 2001,
the nation’s average literacy rate is 65.4%.
On the one hand, India has the highest concentration of illiterates in the world and on the
other hand, it has the second highest concentration of literates and the third largest pool of
educated and technically trained manpower in the world. India has a strong pool of engineers,
scientists, and technically educated persons. In modem fields like information technology,
India has been displaying its strength very clearly in recent years.
10) Diversity:
Indian consumers are marked by great diversity; diversity in religion, language, culture,
tradition, dress, food-habit, custom etc. The people of India belong to different religious
groups—Hindus, Muslims, Christians, Sikhs, Jains, Buddhists and Parsee. Further there are
sects, sub-sects, castes and sub-castes.
Each caste has its own customs established over generations. In birth and death, in marriage
and family-life, the individual is entangled in the chores of his religion. What is welcome for
one religion is taboo for the other and something totally banned in one religion is an accepted
practice in another.
Apart from the recognized languages, specified in the Constitution of India, there are
hundreds of dialects. And many amalgams of languages have been formed as a result of
shifting of population. This linguistic diversity is a big challenge to a marketing man.
11) Changes in Lifestyles:
The Indian consumer is not a single homogenous entity and is not possible to draw a
generalized characteristic of Indian consumers. Indian population has different religious
groups. Each religion, subset and caste has its own culture and customs and given rise to
different behaviour towards their consumption, use and purchase of products and services.
Culture and subculture vary from region to region. The North Indian culture is vastly different
from South Indian. Social marketing also varies from region to region and place to place.
Therefore, marketing companies cannot make a composite single marketing programme and
strategy for the Indian consumers but will have to make changes in the marketing programme
depending upon consumer characteristic based on geographical and religious consideration.
12) Classification of Indian Consumers:
The classification of Indian consumers based on economic status is suitable for the present
study. Accordingly, we may divide Indian consumers into four classes—Wealthy Class, Middle
Class, Lower Middle Class and Poor Class.
a) Wealthy Class: The senior successful top business executives drawing salary of Rs. one lakh
or more per month fall in this class. The persons in this group often believe in showing their
new acquired richness. They buy high priced cars, house, get best education for their children
and get treatment in the best hospitals etc. This class wants to have best enjoyment of life and
looks for the future of their family.
b) Middle Class: The next class according to economic status is middle class, whose mean
income in India varies between Rs. 10,000 and Rs. 20,000 per month, though some have
higher income. They are mostly junior executives. They are white collar- or workers but also
include blue collar persons and small traders.
c) Lower Middle Class: Though their purchasing power is low, their size is very large. NCEAR
has found that 75% of the purchases, like, cooking oil, tea, detergent cake, bath soap, tooth
powder, footwear, transistors, mobile phones, etc. are made by this class. In recent years, this
group is receiving the benefits of several social, educational and economic programmes. Over
time, a good part of this group may advance economically and join the upper middle class.
Already, a good part of this group is a part of the upper middle class.
4. The Poor Class: The ‘below the poverty line’ (BPL) is large in size. They are consumers of
un-brand products. However, this class is coming up and emerge as consumers of branded
consumer products.
Consumerism and Consumer Movement
Consumerism
According to Philip Kotler and G. Amstrong, "Consumerism is an organized movement of
citizens and government to impose the rights and powers of buyers in relation to sellers."
In the word Consumerism, "Consumer" means the user or customer and "ism" means
movement", and hence, consumer movement is popularly known as "Consumerism. It is an
organized and collective movement of consumers. This movement started in the year 1920 to
protect the interest of the consumers.
The main object of this movement is to educate and unite consumers and to fight for the
protection of their rights. Consumer movement is similar to trade unions because it is a
collective approach to solve the malpractices and injustice done by any organization.
It is a movement of the consumers, for the consumers and by the consumers because it is a
social movement of consumers and it has come into existence to educate and unite consumers
to fight for their rights. In short the process of uniting consumers is nothing but Consumer
Movement.
Rights of Consumers
Today consumers face various problems on account of competition in the market, misleading
advertisements, availability of inferior quality of goods and services, etc. Hence protection of
consumers’ interest has become a matter of serious concern for the Government as well as
public bodies. To safeguard the interest of consumer’s, government has recognized certain
rights of consumers. Various rights of consumers that are recognized by Government of India
are:
a) Right to safety: Consumers have a right to be protected against marketing of goods which
are injurious to health and life.
b) Right to be informed: Consumers also have the right to be informed about the quantity,
quality, purity, standard or grade and price of the goods available so that they can make proper
choice before buying any product or service.
c) Right to choose: Every consumer has the right to choose the goods needed from a wide
variety of similar goods.
d) Right to be heard: This right has three interpretations. Broadly speaking, this right means
that consumers have a right to be consulted by Government and public bodies when decisions
and policies are made affecting consumer interests.
e) Right to seek redressal: If and when any consumer has a complaint or grievance due to
unfair trade practices like charging higher price, selling of poor quality or unsafe products, lack
of regularity in supply of services etc.
f) Right to consumer Education: To prevent market malpractices and exploitation of
consumers, consumer awareness and education are essentially required.
Consumer Responsibilities
There is a well-known saying that ‘there cannot be rights without responsibilities’. Having
examined the consumer rights and the purpose served by them, it is necessary to consider
whether consumers should also be responsible enough to be entitled to exercise their rights.
Specifically, the responsibilities of consumers may include the followings:
a) Responsibility of self-help: It is always desirable that a consumer should not depend
on the seller for information and choice as far as possible. As a consumer, you are
expected to act in a responsible manner to protect yourself from being deceived.
b) Proof of Transactions: The second responsibility of every consumer is that the proof of
purchase and documents relating to purchase of durable goods should be invariable
obtained and preserved.
c) Proper claim: Another responsibility that consumers are expected to bear in mind is
that while making complaints and claiming compensation for loss or injury, they should
not make unreasonably large claims.
d) Proper use of Product/services: Some consumers, especially during the guarantee
period, make rough use of the product, thinking that it will be replaced during the
guarantee period.
They should stick to the agreement made with manufacturers, traders and service providers.
They should make timely payment in case of credit purchases. They should not tamper with
the media of services, like electric and water meters, bus and train seats, etc. They should
remember that they can exercise their rights only when they are willing to fulfill their
responsibilities.
Consumer Movement in India
India has an ancient history of consumer protection. Consumer protection was part of its
ancient culture and formed the core of its administration. Kautilya's ‘Arthasasthra‘ was the
basic law of ancient India and the same was strengthened with provisions to protect
consumers. The people in different parts of the country today celebrate in different ways the
dates dedicated to the remembrance of ancient periods during which, it is believed, people's
welfare was the first concern of the rulers. 'Onam' in Kerala is one such example. The folk
songs relating to Onam celebrate the fact that during the rule of King Mahaballi, people were
not at all exploited in any manner.
1) Development of Co-operatives
Consumer Co-operatives are sometimes mentioned as the starting point of the Consumer
Movement. In general, consumer co-operatives have been successful in halting some of the
abuses of the monopolies and in improving conditions of the lower-income classes. They have
undertaken consumer education, elementary product improvement and other projects of
interests to members as well as to other low income consumers.
Consumer co-operatives are very important for improving the distribution of essential goods
through Public Distribution System (PDS) and combating inflation. It has been announced that
10 to 20% of the supplies of baby foods, bicycles, blades, cloth and students needs etc. would
be through co-operatives. At present, in the distribution of consumer goods the co-operatives
under P.D.S. account for about 28% of retail outlets (fair price shops) in rural areas. Nearly
51,000 village societies and their various branches distributed Rs. 2500 crores worth of
consumer articles in rural areas.
The co-operative movement treaded its path among the consumers and as was the case in
the West, in India too the co-operative movement was not organized as a measure for
consumer protection of the modern type.
Consumer movement did not make its presence felt in India till the 1960's when organized
consumer groups came up.
2) Consumer Movement in the Modern Period
The first stage of movement was more representational in nature, i.e., to make consumers
aware of their rights through speeches and articles in newspapers and magazines and holding
exhibitions. The second stage was direct action based on boycotting of goods, picketing and
demonstration. However, direct action had its own limitations that led to the third stage of
professionally managed consumer organizations. It has played a role in hastening the process
of passing the Consumer Protection Act, 1986 which has led to the fourth stage. The Act
enshrines the consumer rights and provides for setting up of quasi-judicial authorities for
redressal of consumer disputes.
3) Consumer Organizations
Consumer movement in India had its beginning in the early part of this century. The first
known collective body of consumers in India was set up in 1915 with the 'Passengers and
Traffic Relief Association' (PATRA) in Bombay. These associations deal in three important areas
like-Consumer protection, Consumer education, Representation. Few Important Consumer
Organizations in India are:
• The Indian Association of Consumer (LAC) was set up in Delhi in 1956
• Consumer Guidance Society of India (CGSI)-1966
• Karnataka Consumer Services Society‘(KCSS) formed in 1970.
• Visaka Consumers Council (VCC) started in 1973
• Akhil Bhartiya Grahak Panchayat (ABGP) started in 1974 in Pune, Mumbai Grahak
Panchayat (MGP) in 1979 in Mumbai and Grahak Panchayat in 1979 in
Jamshedpur.
• Consumer Education and Research Centre (CERC) which started in Ahmedabad in
1978.
• Consumer Unity and Trust Society (CUTS) started in Jaipur, Rajasthan, in March
1984,
• In 1990 the Federation of Consumer Organizations (FEDCOT) was established in
Tamil Nadu
• In 1992, consumer groups of Gujarat joined hands to form a federation, Gujarat
State, Federation of Consumer Organisation (GU SFECO).
• Confederation of Indian Consumer Organization (CICO), New Delhi, formed in
February 1991 and Consumer Coordination Council (CCC), New Delhi, formed in
April 1992.
4) Statutory Regulation
Govt. has armed itself with a number of statutory weapons to control the production, supply,
distribution, price and quality of a large number of goods and services. It enacted following
acts to protect the consumers
• The sale of goods act 1930
• Standards of weights and measurements act 1976
• MRTP act 1969
• Prevention of food adulteration act 1954
• Fruit products order 1955
• The consumer protection act 1986
Consumer Decision Making
A consumer purchase is actually a response to a problem. Consumer Decision Making pertains
to making decisions regarding product and service offerings. It may be defined as a process of
gathering and processing information, evaluating it and selecting the best possible option so
as to solve a problem or make a buying choice. Consumer Decision Making pertains to the
following decisions:
a) What to buy: Products and Services (and the Brands?)
b) How much to buy: Quantity
c) Where to buy: Place
d) When to buy: Time
e) How to buy: Payment terms.
All purchase decisions are not similar. The effort put into each decision making is different.
Consumer/Buyer Decision Making Process
Marketer’s success depends on how well they understand the consumer behaviour. This is
because, the marketer must know, how the customer collects the information and what
motivates him to buy. This is an important process which has a vital role in consumer
behaviour study. Following are stages of consumer decision making process:
1. Problem recognition
2. Information search
3. Evaluation of alternative
4. Purchase decision
5. Post-purchase evaluation
1) Problem Recognition: The consumer decision process begins when consumer recognize
they have an unsatisfied need and want to go from their actual, needy state to a different,
desired state. The problem recognition arises in the situations like, out of stock,
dissatisfaction, need, new product, related products etc.
2) Information Search: This is the second step in consumer decision making. Once consumer
perceives a problem or a need that can satisfy him, he starts searching for information needed
to make a purchase decision. The initial search is known as internal search. Trying to recall the
memory or the past experience or the knowledge acquired by various methods is known as
internal search. In External search, buyer seeks information outside his or her personal
knowledge base to help buying decision. Magazines, consumer reports, commercial reports,
government report, newspapers, advertisements, reference groups, dealers, agents etc are
external source of information.
At the active information search level, a person surfs the Internet, talks with friends, and visits
stores to learn more about the product. Consumer information sources include:
• Personal sources (family, friends, neighbors, acquaintances)
 • Commercial sources (advertising, Web sites, salespersons, dealers, packaging,
displays),
• Public sources (mass media, consumer-rating organizations), and
• Experiential sources (handling, examining, using the product).
3) Evaluation of Alternative: Once a consumer has recognized a problem and explored the
possible options, he or she must sift through the choices available and evaluate alternatives.
Alternative evaluation often occurs while consumer is engaged in the process of information
search. At this time the consumer compares the brands and products that are in their evoked
set. Consumers evaluate alternatives in terms of the functional and psychological benefits
that they offer. The marketing organization needs to understand what benefits consumers
are seeking and therefore which attributes are most important in terms of making a decision.
At this stage, the advertisement must emphasize the factor used by consumer for evaluation
of brands. Though the customer has many attributes to consider, he may concentrate only on
limited, selected attributes for evaluation.
4) Purchase Decision: In this stage the consumer decides which brand to purchase. Once the
alternatives have been evaluated, the consumer is ready to make a purchase decision.
Sometimes purchase intention does not result in an actual purchase. The marketing
organization must facilitate the consumer to act on their purchase intention. The provision of
credit or payment terms may encourage purchase, or a sales promotion such as the
opportunity to receive a premium or enter a competition may provide an incentive to buy
now.
5) Post-purchase Evaluation: The final step of consumer decision process is post-purchase
behaviour. Marketers are particularly interested in post-purchase behaviour because it
entails actual rather than potential customers. In the post-purchase situation there will be
two possibilities, namely:
• Post purchase satisfaction
• Post-purchase dissatisfaction
Satisfaction occurs when the customer’s exceptions are either met or exceeded.
Dissatisfaction results when the performance is below exception. Satisfied customers, whom
marketers hope to create, become loyal, purchase again, and spread positive word of mouth,
so they are quite important. Unfavourable outcome may lead to customer developing
negative attitude.
Buyer Decision Making Process

Levels of Decision Making

While decision making is defined as the selection of an alternative to solve a problem, the
time and effort required to complete the process varies across buying situations. We may
define three kinds problem solving spread over a continuum; these are referred to as the
levels of consumer decision making;
1) Extensive problem solving (EPS)
2) Limited problem solving (LPS)
3) Routinized problem solving (RPS) or routinized response behavior.
These are explained as follows:
1) Extensive problem solving (EPS)
In EPS, the consumer is unfamiliar with the product/service category; he is not informed of
the product or service offering, and thus, the situation requires extensive information search
and evaluation. The consumer is not aware:
• About the various decision criteria used to evaluate the product or service offering.
• Of the various brands that are available and from which to evaluate.
The result is that the purchase process involves significant effort on part of the consumer. He
has to gather knowledge about (i) the decision criteria; (ii) the brands available; and (iii) make
a choice amongst the brands.
The types of products and / situations where we generally have EPS:
• These goods are ones of high involvement; they are expensive; they are infrequently
bought; there is considerable amount of risk involved.
• These are generally first time purchases
Examples: Jewellery, electronic goods, Real estate and property etc.
2) Limited problem solving (LPS)
The consumer is familiar of the product or service offering; but he is unaware of the various
brands. The case is one where the buyer is familiar with the product category but unfamiliar
with the brands.
The consumer: -
• is aware of some brands and also of the various criteria used to evaluate the product
or service offering.
• is unaware of the new brands that have been introduced.
• has not evaluated the brands amongst the awareness set and has not established
preferences amongst the group of brands.
The result is that the purchase process is more of a recurring purchase and it involves only a
moderate effort on part of the consumer. He has to gather knowledge to add/modify the
existing knowledge that he has in his memory. Thereafter he has to make a decision
The types of products and / situations where we generally have LPS:
• These goods are ones of low involvement; they are generally moderately priced; they
are frequently bought; there is lesser amount of risk involved.
• These are generally recurring purchases.
Examples: A laptop replacing a desktop, a second TV for the home.
3) Routinized problem solving (RPS) or routinized response behavior
The consumer is well informed and experienced with the product or service offering. The
consumer is aware of both the decision criteria as well as the various brands available. Here,
the goods are ones of low involvement; they are inexpensive; they are frequently bought;
there is no risk involved. These are routine purchases and are a direct repetition, where the
consumer may be brand loyal. The result is that the purchase process involves no effort on
part of the consumer. It is simple and the process is completed quickly; purchases are routine
and made out of habit. The types of products and / situations where we generally have RPS:
• These goods are ones of low involvement; they are inexpensive; they are frequently
bought; there is no risk involved.
• These are routine purchases and the consumer is brand loyal.
Examples: Staples, Cold drinks, Stationery etc.
Four Views of Consumer Decision Making
Numerous decisions are made daily concerning every aspect of our lives. These decisions are
often made without stopping to think how we make them, or what is involved in the decision
making itself. In the most general terms, a decision is the selection of an action from two or
more alternative choices, i.e. there must be a choice of alternatives available.
The four views refers to the general view or perspective why individuals behave as they do.
1) An economic view: In a world of perfect competition, the consumer is often portrayed as
economic - the one who makes rational decisions. Consumers rarely have enough information,
or sufficient information, or even an adequate degree of involvement or motivation, to make
perfect decisions. Consumers operate in an imperfect world and often "settle" instead of
maximizing price-quantity, marginal utility or indifference curves.
2) Passive view: The opposite of economic view is the view that consumers as passive,
basically submissive to the self-serving and promotional efforts of marketers.
3) A cognitive view: This view portrays the consumer as a thinking problem solver. Risk is the
key component the problem solver tries to dispel the risk associated with many product
choices. When 'enough' information is gathered, the consumer stops seeking information to
make 'satisfactory decisions', eg. motor vehicle adverts or high capital expenditure ads.
4) An emotional view: Consumers may associate deep feelings or emotions (fun, fear, love,
prestige, hope, sexiness, fantasy or a bit of magic). Mr price store with price tags "go for it!".
Consumers buy clothes not because they look better but they feel better. Advertisers are
recognizing the renewed importance of emotional advertising.
The firms marketing activities is a direct attempt to reach, inform and persuade consumers to
buy and use its products. These inputs to the consumer decision making process constitute
the product itself - including its packaging, size, guarantees, mass media advertising, personal
selling, and other promotional efforts, pricing policy, selection of distribution channels to
move product from the manufacturer to the consumer.
The impact of the firms marketing efforts is governed largely by the consumers perception of
these efforts and therefore must be alert to consumer perceptions and must not solely rely
on the intended impact of marketing messages.
A strategic marketing plan that has researched the needs of the consumer and positions itself
so the consumer’s decision becomes less risky will have the desired effect to influence the
consumer to purchase the product.
Types of Buying Behavior
Consumer decision-making varies with the type of buying decision. There are great
differences between buying toothpaste, a tennis racket, a personal computer, and a new car.
Complex and expensive purchases are likely to involve more buyer deliberation and more
participants.
Involvement is the perceived importance or personal relevance of an object or event. It is
about the degree to which the consumer feels attached to the product or brand, and the
loyalty felt towards it. Involvement has both cognitive and affective elements: it plays on both
the brain and the emotions.
1) Complex Buying Behaviour: Consumers go through complex buying behaviour when they
are highly involved in a purchase and aware of significant differences among brands.
Consumers are highly involved when the product is expensive, bought infrequently, risky and
highly self-expressive. Typically the consumer does not know much about the product
category and has much to learn.
2) Dissonance-Reducing Buying Behaviour: Sometimes the consumer is highly, involved in a
purchase but sees little difference in the brands. The high involvement is again based on the
fact that the purchase is expensive, infrequent, and risky. In this case, the buyer will shop
around to learn what is, available but will buy fairly quickly because brand differences are not
pronounced. The buyer may respond primarily to a good price or to purchase convenience.
3) Habitual Buying Behaviour: Many products are bought under conditions of low consumer
involvement and the absence of significant brand differences. Consider the purchase of salt.
Consumers have little involvement in this product category. They go to the store and reach
for the brand. If they keep reaching for the same brand, it is out of habit, not strong brand
loyalty.
4) Variety-Seeking Buying Behaviour: Some buying situations are characterized by low
consumer involvement but significant brand differences. Here consumers are often observed
to do a lot of brand’ switching. An example occurs in purchasing cookies. The consumer has
some beliefs, chooses a brand of cookies without much evaluation, and evaluates it during
consumption. But next time, the consumer may reach for another brand out of boredom or a
wish for a different taste. Brand switching occurs for the sake of variety rather than
dissatisfaction.

Motivation as a Psychological Force

Motivation is the driving force within individuals that impels them to action. Motivation refers
to the process that leads people to behave as they do. It occurs when a need is aroused. Needs
are the essence of the marketing concept. Marketers do not create needs but can make
consumers aware of needs.
Types of Needs
1) Innate Needs: Innate Needs are Physiological (or biogenic) needs that are considered
primary needs or motives. This can be called as primary needs.
2) Acquired Needs: Acquired Needs are learned in response to our culture or environment.
Are generally psychological and considered secondary needs. This can be called as secondary
needs.
Goals
A goal or objective is a projected state of affairs that a person or a system plans or intends to
achieve—a personal or organizational desired end-point in some sort of assumed
development. It is the sought-after results of motivated behavior.
Types of goals:
a) Generic goals: are general categories of goals that consumers see as a way to fulfill
their needs
b) Product-specific goals: Are specifically branded products or services that consumers
select as their goals
Selection of Goals
The goals selected by individuals depend on their personal experiences, physical capacity,
prevailing cultural norms and values and the goal’s accessibility in the physical and social
environment. An individual’s own perception of himself or herself also served to influence the
specific goals selected.
Interdependence of Needs & Goals
Needs and goals are independent, neither exists without the other. However, people are often
no as aware of their needs as they are of their goals. Individuals are somewhat aware of their
physiological needs rather than psychological needs
Positive and Negative Motivation
1) Positive motivation: Positive motivation is a response which includes enjoyment and
optimism about the tasks that you are involved in. Positive motivation induces people to do
work in the best possible manner and to improve their performance. Under this better
facilities and rewards are provided for their better performance. Such rewards and facilities
may be financial and non-financial.
2) Negative motivation: Negative motivation aims at controlling the negative efforts of the
work and seeks to create a sense of fear for the worker, which he has to suffer for lack of good
performance. It is based on the concept that if a worker fails in achieving the desired results,
he should be punished. Negative motivation involves undertaking tasks because there will be
undesirable outcomes, eg. failing a subject, if tasks are not completed.
Almost all students will experience positive and negative motivation, as well as loss of
motivation, at different times during their life at University.
Both positive and negative motivation aim at inspiring the will of the people to work but they
differ in their approaches. Whereas one approaches the people to work in the best possible
manner providing better monetary and non-monetary incentives, the other tries to induce the
man by cutting their wages and other facilities and amenities on the belief that man works
out of fear.
Rational versus Emotional Motives
1) Rational Motives: Rationality implies that consumers select goals based on totally objective
criteria such as size, weight, price, or miles per gallon. A conscious, logical reason for a
purchase. A motive that can be defended by reasoning or logical argument
2) Emotional Motives: Emotional motives imply the selection of goals according to personal
or subjective criteria. A feeling experienced by a customer through association with a product.
The Dynamic Nature of Motivation
Motivation is a highly dynamic construct that is constantly changing in reaction to life
experiences. Needs and goals change and grow in response to an individual’s physical
condition, environments, interactions with others and experiences. As individuals attain their
goals they develop new ones. If they don’t attain they strive for old goals or build substitute
goals.
1) Needs are Never Fully Satisfied: Most human needs are never fully or permanently
satisfied. E.g: Drinking water again and again, you fell thirsty you drink water again and again.
Most people regularly seek companionship and approval from others to satisfy their social
needs. Even more complex psychological needs are rarely fully satisfied.
2) New Needs Emerge As Old Needs Are Satisfied: Some motivational theorists believe that
a hierarchy of needs exists and that new higher-order needs emerge as lower-order needs are
full-filled. For example, Maslow hierarchy of needs that is a man who has satisfied his
physiological needs may turn to social and esteem needs.
3) Success & Failure Influence Goals: Individuals who successfully achieve their goals usually
set new and higher goals that are they raise their level of aspiration. This is due to the fact
that they succeed in reaching their lower goals, so that makes them confident to reach higher
goals. On the other hand, one who cannot reach their goals sometimes lowers their level of
aspiration.
Unit-2