National Aviation College

Course Title: Consumer behavior

Course Instructor: Teketel Fetene

 COURSE OUTLINE

Course Description

This course presents an in-depth discussion of consumer needs and motivations, exploring
both the rational and emotional bases of consumer actions. It further discusses the impact
of full- range personality theories on consumer behavior, examines learning theories and
cognitive learning theories, limited and extensive information processing and the
application of consumer involvement theory in marketing practices.

Course Objectives:
To equip learners with skills and knowledge on Consumer Behavior as a core function in
business growth and development.
CHAPTER 1:BASICS OF CONSUMER BEHAVIOR (6 HRS)
1.1 Definition and characteristics of consumer behavior
1.2 Nature of consumer behavior
1.3 Importance of studying consumer behavior
1.3 Model of consumer behavior
CHAPTER 2: CONSUMER DECISION PROCESSES (9 HRS)
2.1 Consumers buying behavior

2.3 Consumer decision making Process

CHAPTER 3: CONSUMER AS AN INDIVIDUAL.
3.1 Consumer need & motivation
CHAPTER FOUR: PERSONALITY AND CONSUMER BEHAVIOR (3 HRS)
CHAPTER FIVE: CONSUMER PERCEPTION (3 HRS)
CHAPTER SIX: LEARNING AND CONSUMER INVOLVEMENT (6 HRS)
CHAPTER SEVEN: THE NATURE OF CONSUMER ATTITUDE (6 HRS)

CHAPTER EIGHT: INDIVIDUAL DIFFERENCES IN INNOVATIVENESS (3 HRS)

CHAPTER NINE: THE CONSUMER AS A GROUP

9.1 The influence of culture and social class on consumer behavior (3 hrs)
CHAPTER TEN: REFERENCE GROUP AND FAMILY INFLUENCES (3 HRS
 CHAPTER 1
BASICS OF CONSUMER
BEHAVIOR
 • How do consumer characteristics
influence buying behavior?
• What major psychological processes
Learning influence consumer responses to the
marketing program?
objective • How do consumers make purchasing
s decisions?
• In what ways do consumers stray
from a deliberative, rational decision
process?
 1 . 1 DEF IN IT ION & CH AR A C TER IS TIC S O F C ONS U ME R B E H AV I O R

Who is consumer?

B2C
• Individual
• Household
• Personal consumption
B2B
• Business
• Government
• Institutions
 1 . 1 D E F IN I T I O N & C H A R A C T E R I S T I C S O F C O N S U ME R B E H AV I O R

• Whatever else we may be in our lives we are all consumers.

• We buy and use goods and services constantly: to eat, to wear, to read, to watch, to
play, to travel or at least better educated.
• The act of consumption is therefore an integral and intimate part of our daily
existence whether we have a lot of money to spend on it or very little.
• In this unit we will raise the basic questions about:
How and why people behave as consumers as well as ways in which this behavior
might be studied.
How marketing as a discipline came about, and
why understanding consumer behavior is at the heart of effective marketing.
 1.1 DEFINITION & CHARACTERISTICS OF CONSUMER BEHAVIOR

There are many questions to be addresses in this course:

 What is consumer behavior?
 Which sectors constantly target consumers?
 How do sectors research consumers to gain insights into their
behavior?
 How do consumers decide from abundant alternatives?
 How do marketing activities impact consumers?
 What is an appropriate framework to study consumer behavior?
 1.1 DEFINITION & CHARACTERISTICS OF CB

• The behavior that consumers display in

What is searching for, purchasing, using,
consume evaluating and disposing of products,
services and ideas.
r
behavior • A discipline dealing with how and why
? consumers purchase (or do not
purchase) goods and services.
 1.1 DEFINITION & CHARACTERISTICS OF CB

• Can be thought of as the actions, reactions, and consequences

that take place as the consumer goes through a decision-
making process, reaches a decision, and then puts the product
What is to use.
consume • The dynamic interaction of affect and cognition, behavior, and
r environmental events by which individuals conduct.
• The definitions reveal two central themes about CB
behavior • It is a process of actions covering purchase, usage and/or
? disposal.`
• It involves individual or group consumers in goods, services,
ideas and experiences.
• Affect The emotional or feeling segment of an attitude
• Cognation The opinion or belief segment of an attitude
• Behavioral: An intention to behave in a certain way
toward someone or something
 1.1 DEFINITION & CHARACTERISTICS OF CB

• The mental and physical acts of individuals,

households or other decision-making units
concerned with ultimate consumption
What is involving the acquisition, own production, use
and, in some cases, the dispossession of products
consume and services
r • Is the study of how individual customers, groups
behavior or organizations select, buy, use, and dispose
? ideas, goods, and services to satisfy their needs
and wants.
• The actions of the consumers in the marketplace
and the underlying motives for those actions.
 1.1 DEFINITION & CHARACTERISTICS OF CB

What is consumer behavior?

• Some scholars feel strongly that consumer behavior must have
the three elements of acquisition, usage and disposal.
• This seems to be a rigid view of consumer behavior. Is it not
consumer behavior when you search for information but do not
buy; when you buy a gift and do not personally use the purchase;
and when you do not dispose of your purchase?
While you would discard many goods such as supermarket
perishables and worn out furniture,
 1.1 DEFINITION & CHARACTERISTICS OF CB

What is consumer behavior?

• Would you get rid of an expensive watch or diamond? You may keep
such purchases for life. Some consumers also have a habit of not
disposing drinking cups and food wrappers in bins at fast food
outlets.
• Hence, a more suitable definition to cover different consumer
situations would be:
Consumer behavior is about how consumers behave in situations
involving goods, services, ideas and experiences.
• The situations could cover pre-purchase, purchase and post-purchase.
• The situations could be for trying something new (for example, a
new food item offered by a sales promoter in a supermarket), buying
 1.1 DEFINITION & CHARACTERISTICS OF CB

Definition of consumer behavior

• According to Engel, Blackwell, and Mansard, ‘consumer

behavior is the actions and decision processes of people who
purchase goods and services for personal consumption’.
• According to Louden and Bitta, ‘consumer behavior is the
decision process and physical activity, which individuals engage
in when evaluating, acquiring, using or disposing of
goods and services
 1.2 NATURE OF CONSUMER BEHAVIOR

Nature of It is influenced by different factors

consumer
behavior Under goes a constant change
Varies from consumer to consumer
Varies from region to region, country to country
Information on CB is important for marketers
Varies from product to product
Improves standard of living
Reflects status
 1.3 IMPORTANCE OF STUDYING CB

Importance of studying consumer behavior

• To understand modern marketing philosophy and produce
consumer-oriented goods to satisfy needs.
• To ensure a company’s survival, profitability, & growth in a
highly competitive marketing environment that helps in
achieving marketing goals.
• Useful for dealers & salesmen for improving performance of
the entire distribution system
• To implement relevant marketing program consisting of
product, price, promotion & distribution decisions
• Adjusting marketing program over time based on consumers
response pattern on a continuous basis
 1.3 IMPORTANCE OF STUDYING CB

Importance of studying consumer behavior

• Predicting market trends projecting the future
• Consumer deafferentation to understand segments of different
products
• Creation & retention of consumers
• Useful in improving competitive strength of a business in the market
• Use to developing new products in respect of the needs of consumers
in the market
• It helps managers to be dynamic , alert and active in satisfying
consumers
• Assists managers effective use of productive resources
1. Briefly explain consumer behavior
2. List down the nature of consumer behavior
3. Explain the importance of studying consumer
behavior
4. Who is consumer?
 PROJECT WORK 20 – 25%

• Case study
• Factors affecting consumer behavior
• Organizational buying behavior
• Family influence on buying
• Buyer’s behavior
 CHAPTER TWO

CONSUMER BUYING DECISION PROCESSES

 CLASS DISCUSSION

1. Consumer buying behavior on the basis of the product

they are buying
2. Consumer buying decision/ stages of purchasing
process. Discuss about the process
3. Factors influencing consumer behavior. Discuss each of
the factors
4. Theories of motivation Maslow's hierarchy of needs.
5. Consumer perception elements
 2. 1 CO N S UM E R BU YI N G BEH AVI O R

Consumer buying behavior on the basis of products they go buying:

Dissonance-reducing
Complex buying behavior buying behavior
Consumer
buying
behavior
A variety seeking behavior Habitual buying behavior
 2.1 CONSUMER BUYING BEHAVIOR

Complex buying behavior

Which is visible when a consumer needs to buy Dissonance-reducing buying behavior. Here
an expensive product. In this type involvement also buyer shows high involvement but has
of buyer is very high as risk is high because of to choose from limited choices because of
big amount involved. Buyer goes for proper scarcity of the product and not much
scrutiny of information and does lot of research alternatives
work.

Variety seeking behavior

Buying low priced products where large variety is
available with very less difference.
Habitual buying behaviour
Consumer makes small comparison among the
When consumer goes for buying products of products available and buys the one which is more
routine goes for convenience as products here economical.
are of low value. available. Loyalty for a particular brand does not exist and
consumer keeps changing preference depending on
the offers available.
 2.2 CONSUMER BUYING DECISION PROCESS

Need The buyer recognizes a need, triggered by internal or external

Stages of purchasing process

recognition stimuli
The buyers seeks out information about products or services with
Information potential to satisfy the need (information sources personal,
search commercial, public, experiential)
Evaluation of The consumer process information in order to arrive at brand
alternatives choices

Purchase The consumer forms a purchase intention and ultimately makes the
decision actual purchase
Post- Following purchase the consumer will engage in a variety of post-
purchase purchase behavior including satisfaction, formation of purchase
behavior intention and loyalty intentions
 2.2 CONSUMER BUYING DECISION PROCESS

Summary 1. Need
Stages of purchasing process recognition

5. Post 2.
purchase Information
evaluation Consumer search
decision
making
process

3.
4. Evaluation
Purchase of
alternatives
 2.3 TYPES OF CONSUMER DECISION MAKING

Consumers have no established or set criteria for evaluating a

product in a particular category.
Extensive Here consumers have not narrowed the number of brands from
problem which they would like to consider and so their decision making
solving efforts can be classified as extensive problem solving.
In this particular set of problem solving phase, the consumer needs
a lot of information to set a criteria on the basis of specific brands.

Limited The buyers seeks out information about products or services with
problem potential to satisfy the need (information sources personal,
solving commercial, public, experiential)

Routinized Consumers have experience with the product and they have set the
response criteria for which they to evaluate the brands they are considering
 2.4 FACTORS INFLUENCING CONSUMER BUYING
BEHAVIOR

• Marketing factors such as product design, price,

promotion, packaging, positioning and distribution
Factors • Personal factors such as age, gender, education &
influencin income level.
g
• Psychological factors such as buying motives,
consumer
behavior perception of the product and attitudes towards the
product
 1.4 FACTORS INFLUENCING CONSUMER BEHAVIOR

• Situational factors such as physical

surroundings at the time of purchase,
social surroundings and time factor.
Factors influencing • Social factors such as social status,
consumer behavior reference groups and family.
• Cultural factors, such as religion,
social class caste and sub-castes.
 2.4 FACTORS INFLUENCING CONSUMER DECISION
MAKING
Determinant of consumer behavior in decision making

Cultural Social Personal Physiological Economical

Culture Family Age Motivation Personal income

Sub-
culture Reference Income Perception Family income

Social Income
class Role & status Occupation Learning expectations

Life style Liquid asset

Belief &
attitude
Government
personality policy
 CHAPTER THREE

CHAPTER 3: CONSUMER AS AN INDIVIDUAL.

CONSUMER AS AN INDIVIDUAL. INDIVIDUAL
PERSPECTIVE
 TEST- 2…………………15%

Q1.Which one of the following is correct about goals

a) Goals are generic and product specific in nature
b) The goal of individuals in the market the fulfilment of their
needs &wants
c) Goals of marketers are quite different from consumers
d) All are correct
Q2. Which one of the following is incorrect about the Maslow hierarchy of needs
a) Self actualization is the lowest level of need that individuals need to strive
b) Safety & security needs rise immediately after fulfilling the lowest
physiological needs
c) Esteem need reflects prestige and feeling of accomplishment
d) None
Q3. Consumer perception is affected by
d) Geography B) Advertising C) Public relations D) Social
media
e) All except A
 T E S T- 2…… … ……… … 15%

Q4. Identify the correct statement from the given alternatives

a) Consumer perception is affected by advertisement and social medias
b) Consumer perception is vital for marketers
c) Consumer perception is a three stage process that translates raw stimuli
into meaningful information
d) All are correct
Q5. According to Maslow theory, “Esteem needs” describes the desire for:
e) Respect from others and self-respect.
f) Food ,clothing and shelter.
g) Maximize whatever potential an individual possess
h) Free from harm, including both bodily and economic disaster
 T E S T- 2 … … … … … … … 1 5 %

II. Short answer question

1. Identify and list five basic levels of human need which rank in
order of priority from lower level to higher level needs.
2. Explain the difference between needs and wants of individuals.
Support your answer by examples
3. List down the four elements of perception
4. Define motivation and determine the basis for consumer
motivation
 T E S T- 2 … … … … … … … 1 5 %

III True false questions

1. Selective consumer perception is a tendency of people to screen out
most of the information to which they are exposed in the market
2. Selective retention is the tendency to remember good points made about
a brand
3. Needs are the core of the marketing concept that drives motivation and
purchasing decision
4. Needs can not be associated with motivation of individuals in market
exchange or buying of products
5. Absolute threshold as elements of perception is the lowest level at
which an individual can experience a sensation
Consumer as individual
Consumer motivation,
Consumer perception,
Personality and self concept,
Consumer attitudes and changing attitudes,
Consumer learning and information processing
 3 . 1 C O N S U ME R M O T I VAT I O N

• Needs are the core of the marketing concept.

• The study of Motivation refers to all the processes that drives in a
person to perceive a need and pursue a definite course of action to
fulfill that need
• Needs: Every individual has needs that are required to be fulfilled.
Primary needs are food, clothing, shelter & secondary needs are
society, culture etc.
• Wants: Needs are the necessities, but wants are something more in
addition to the needs. Example, food is a need & type of food is our
want.
 3 . 1 C O N S U M E R M O T I VAT I O N

• Goals: Goals are the objectives that have to be fulfilled.

• Goals are generic and product specific in nature.
• Generic goals are general in nature, whereas product specific
goals are the desires of a specific nature.
• Needs fulfillment are the basis of motivation.
• Change takes place due to both internal as well as external
factors.
• Sometimes needs are satisfied and sometimes they are not due to
individual’s personal, social, cultural or financial needs.
 3. 2 T HE O RIE S O F MO TIVATI ON

• Maslow’s Theory of Need Hierarchy Based on the notion of a

universal hierarchy of human needs Dr Abraham Maslow, a
clinical psychologist formulated a widely accepted theory of
human motivation.
• This identifies five basic levels of human need which rank in
order of importance from lower level needs to higher level needs.
• This theory signifies the importance of satisfying the lower level
needs before higher level needs arise.
• According to this theory, dissatisfaction motivates the consumer.
 3.2 THEORIES OF MOTIVATION

Maslow’s Hierarchy of Needs

Physiological Needs: • Physical safety, security, stability
• Food, clothing, air, & shelter & protection are the security
are the first level needs. They needs
are known as the basic Social Needs:
necessities or primary needs. • After the safety needs are
Safety or Security Needs: satisfied, consumers expect
• Once the first level needs are friendship, belonging,
satisfied, consumers move to attachment. They need to
the next level. maintain themselves in a society
and try to be accepted.
 3 . 2 T H E O R I E S O F M O T I VAT I O N

Esteem Needs:
• Self-esteem, status, prestige. In
this stage individuals want to
rise above the general level as
compared to others to achieve
mental satisfaction.
Self-Actualization:
• The highest stage of the
hierarchy. People try to excel
in their field & improve their
level of achievement. They are
known as self actualizers.
 3.3 PERCEPTION

The process of selecting, organizing, and

interpreting sensation into a meaningful
and coherent picture of the world
How we see the world around us
What is
perception? Two individuals may be exposed to the
same stimuli but recognize, select,
organize &interpret them differently
based on their own needs, values and
expectations
 3.3 PERCEPTION

A marketing concept that encompasses a

customer's impression, awareness and/or
consciousness about a company or its
offerings.
Consumer Customer perception is typically affected
perception by advertising, reviews, public relations,
social media, personal experiences and
other channels.
Consumer perceptions are vital to
marketers & often underlie the success or
failure of products in the marketplace
 3.3 PERCEPTION

Perception and belief

• Selective perception: It is the tendency of people to screen
out most of the information to which they are exposed
• Selective distortion: Is the tendency for people to interpret
information in a way that will support what they already
believe.
• Selective retention: Is the tendency to remember good points
made about a brand
 3.3 CONSUMER PERCEPTION

 Consumer perception refers to the process by which a customer selects,

organizes, and interprets information/stimuli inputs to create a
meaningful picture of the brand or the product.
 It is a three stage process that translates raw stimuli into meaningful
information.
 Each individual interprets the meaning of stimulus in a manner consistent
with his/her own unique biases, needs and expectations.

Exposure Attention Interpretation

 It is how a customer see's a particular brand he or she has been able to

understand by watching the products, its promotions, feedback etc. It is
the image of that particular brand in the mind of the customer
 3.3 CONSUMER PERCEPTION

Sensation
Absolute threshold
Sensory impression
Elements
of
perception
Subliminal Differential
perception threshold
 3.3 PERCEPTION

Sensation
The immediate and direct Absolute threshold
response of the sensory Is the lowest level at
organs to stimuli which an individual can
A stimuli is any unit of experience a sensation
input to any of the senses

Subliminal
Differential threshold
The idea that stimuli
The minimal difference
presented below the level
that can be detected
of conscious awareness
between two similar
might influence behavior
stimuli
and feelings
 CHAPTER 4

Consumer behavior- personality & self

respect
 LEARNING OBJECTIVES

 To Understand How Personality Reflects Consumers’

Inner Differences.
 To Understand How Freudian, Neo-Freudian, and Trait
Theories Each Explain the Influence of Personality on
Consumers’ Attitudes and Behavior.
 To Understand How Personality Reflects Consumers’
Responses to Product and Marketing Messages.

52
 PERSONALITY AND SELF RESPECT

Why is Personality important in consumer behavior?

• To understand the buyer habits and his priorities,
• To understand inner psychological characteristics that
reflect how a person reacts to his environment.
• Personality shows the individual choices for various
products and brands.
• Understanding it helps the marketers in deciding when &
how to promote the product & formulate marketing
strategies.
• To understand individual traits, likes, dislikes etc.
• Personality is static, it can change due to major events such
marriage and can also change gradually with time.
 PERSONALITY AND SELF RESPECT

• Trait Theory
Outgoing
• Traits are the features of an
Imaginativ Happy
individual or tendency of an e go lucky
individual in a particular manner.
• Traits help in defining the behavior Self
of consumers. assured Common Practical
traits
• According to the Trait theorists, an
individual’s personality make-up Relaxed Sad
stems out of the traits that he
possesses,
Serious Stable
• Identification of traits is important.
 PERSONALITY AND SELF RESPECT

Simple Trait Theories

In simple trait theories, a limited number of traits are identified,
& people are categorized and classified on the basis of these
traits.
General Trait Theories
In general trait theories, a large variety of traits are identified.
The Psychoanalytic Theory of Freud Sigmund Freud, the father
of psychology, became famous with his psychoanalytic theory of
personality. In fact, the theory is regarded as the cornerstone of
modern psychology.
 PERSONALITY AND SELF RESPECT

Sigmund based his theory on certain assumptions which is as

follows:
Unconscious needs or drives lie at the heart of human motivation
and personality.
The socialization process that takes place within people in a
social set up has a huge impact on individual behavior.
Freud explained much of how the psyche or the mind operates,
and proposed that, human psyche is composed of parts within
our awareness and beyond our awareness. He said that all
behavior within an individual cannot be explained, much lies in
the subconscious.
 PERSONALITY AND SELF RESPECT

Id: According to Freud’s psychoanalytic theory of personality,

the id operates based on the pleasure principle, which stresses on
immediate fulfillment of needs. The id is the personality
component made up of unconscious psychic energy which
satisfies basic urges, needs, and desires.
Ego: Ego is that state of awareness which thinks of you as
separate from the other. It always thinks of the glories of the past
and hopes of the future and focuses on guiltiness. It always
thinks of what was and what could be.
Super Ego: The superego provides guidelines for making
judgments. It is the aspect of personality that holds all our moral
standards and ideals that we acquire from both parents and
society.
 PERSONALITY AND SELF RESPECT

Neo-Freudian Theory There were a group of psychologists who

believed that social interaction and resultant relationships
formed the basis for the growth and development of personality.
Here, they disagreed with their contemporary, Freud, who
believed that personality was:
Biological and rooted in genetics, and
Was groomed as a result of early childhood experiences. This
group of researchers who laid emphasis on the process of
socialization came to be known as the Neo. To form a
personality, social relationships are very important.
 PERSONALITY AND SELF RESPECT

Based on this, consumers are classified into three personality

types:
Complaint Personalities: They prefer love and affection and so
they move towards them and so they prefer known brands.
Aggressive Personalities: They tend to move against others and
they show off their need for power, success etc which is quite
manipulative.
Detached Personalities: They are not much aware of brands and
are more self reliant and independent. Marketers also tend to use
Neo-Freudian theories while segmenting markets and
positioning their products.
 4.1 PERSONALITY AND SELF RESPECT

Brand personality: Specific set of human traits that can be matched to a brand

Brand personality traits identified in some research

Sincerity: down-to-earth, honest, wholesome and cheerful

Excitement: daring, spirited, imaginative and up-todate

Competence: reliable, intelligent an successful

Sophistication: upper-class and charming

Ruggedness: outdoorsy and tough

 4.1 PERSONALITY AND SELF RESPECT

Self Concept
Self concept is defined as the way, in which we think, our
preferences, our beliefs, our attitudes, our opinions arranged in a
systematic manner and also how we should behave and react in
various roles of life.
Self concept is a complex subject as we know the understanding
of someone’s psychology, traits, abilities sometimes are really
difficult.
Consumers buy and use products and services and patronize
retailers whose personalities or images relate in some way or
other to their own self-images Traditionally, individuals are
considered to be having a single self-image which they normally
exhibit.
 4.1PERSONALITY AND SELF RESPECT

What is self concepts?

Self-Concept is Organized
We all have various views about ourselves. We all may think we are
kind, calm, patient, selfish, rude and what not.
It doesn’t matter what perception you have about yourself, but the
one perception that facilitates all these insights is organized self
concept.
When a person believes in something that matches his self concept
he sticks to his view and does not agree to change the same and
even if does, it takes a lot of time.
 4.1PERSONALITY AND SELF RESPECT

Self concept is learned and no person is born with a self concept.

It develops as and when we grow old.
Our self concept is built when we meet people socially and interact
with them.
Example: If an individual thinks, he is very generous & helpful, it
may not necessarily be the case with others. Others may see him as
a selfish person.
Self-Concept is Dynamic that change with instances that take place
in our lives.
Self-concept is the composite of ideas, feelings, emotions &
attitudes that a person has about their identity and capabilities
 4.1 PERSONALITY AND SELF RESPECT

Real self is a more

realistic appraisal of
how they are.
A belief a person Products play a
holds about his or pivotal role defining
her own attributes self concept
Self and how they
concept evaluate these
qualities. Real and
Ideal Selves Ideal self is a persons
conception of how
they would like to be.
 4.2 CONSUMER LEARNING

According to Kotler’s Definition, learning involves changes in an

individual’s behavior arising out of the experience. Most of the
human behavior is learned over time, out of the experience.

Consumer learning is a process. A process which

continually changes & acquires new knowledge

Features of This knowledge can be obtained from reading,

consumer discussing, observing, thinking, etc
learning
Newly acquired knowledge or personal
experience, both serve as feedback
 4.2 CONSUMER LEARNING

Motivation

Responses:
Elements of
consumers
learning
reaction
Reinforcement:
increases
response
 4.2 CONSUMER LEARNING

Elements of consumer learning

Motivation: Is the driving force of all important things to be
learnt.
• Motives allow individuals to increase their readiness to respond to
learning.
• It also helps in activating the energy to do so.
• Motives encourage learning & cues stimulate the direction to these
motives.
• Cues are not strong as motives, but their influence in which the
consumer responds to these motives.
For example, in a market, the styling, packaging, the store display,
prices all serve as cues to help consumers decide on a particular
 4.2 CONSUMER LEARNING

Elements of consumer learning

Response: Signifies how a consumer reacts to the motives or even
cues.
The response can be shown or hidden, but in either of the cases
learning takes place.
Often marketers may not succeed in stimulating a purchase but the
learning takes place over a period of time and then they may
succeed in forming a particular image of the brand or product in
the consumer’s mind.
Reinforcement: is very important as it increases the probability of a
particular response in the future driven by motives and cues.
 4 . 3 C O N S U M E R L E A R N I N G B E H AV I O R

Psychological factors
• Motive A need that is sufficiently pressing to direct the person to
seek satisfaction.
• Perception: The process by which people select, organize &
interpret information to form a meaningful picture of the world.
• Learning: Changes in individuals behavior arising from
experience Newly acquired knowledge or personal experience,
both serve as feedback
• Belief and attitude: Belief: A descriptive thought that a person
holds about something.
• Attitude: A person’s consistently favorable or unfavorable
evaluations, feelings and tendencies towards an object or idea
 4.4 CONSUMER ATTITUDE

Attitude
• Is defined as, “a learned pre-disposition to respond in a
consistently favorable or unfavorable manner with respect to a
given object”.
• Consumer attitude refers to the evaluative judgement of an
individual towards a product.
• An individual with a positive attitude to a product is more
likely to buy a product.
• Consumer attitude is a way a person feels about a commodity
(products & services)
• Mental state to like or dislike a product or a services
• Attitude has three components belief, affect and behavioral
 4 . 4 C O N S U M E R AT T I T U D E

Attitude comprises the following three components

ten ti on to b e h a v e in a
An in
tain w a y to w ard so meone
cer
or something

The opinion or Cognitive

belief segment of The emotional or
an attitude feeling segment of
Affective an attitude

-71
 4 . 4 C O N S U M E R AT T I T U D E

Cognitive Component: Consists of an individual’s

knowledge or perception towards few products or
services through personal experience or related
information from various sources.
This knowledge, usually results in beliefs, which a
consumer has, and specific behavior.
Attitude Belief: plays a vital role for consumers because, it can
be either positive or negative towards an object.
For example, some may say tea is good and relieves
tension, others may say too much of tea is not good for
health. Human beliefs are not accurate and can change
according to situations.
 4 . 4 C O N S U M E R AT T I T U D E

Affective Component:
This consists of a person’s feelings, sentiments, and
emotions for a particular brand or product.
They treat them as the primary criteria for the purpose
of evaluation. The state of mind also plays a major role,
like the sadness, happiness, anger, or stress, which also
Attitude affects the attitude of a consumer.
Feelings: Consumers have certain specific feelings
towards some products or brands. Sometimes these
feelings are based on certain beliefs and sometimes
they are not. For example, an individual feels uneasy
when he thinks about cheese burst pizza, because of the
tremendous amount of cheese or fat it has
 4 . 4 C O N S U M E R AT T I T U D E

Conative Component:
-The last component is conative component, which
consists of a person’s intention or likelihood towards a
particular product.
-It usually means the actual behavior of the person or
his intention
Attitude Behavioral intentions show the plans of consumers
with respect to the products.
This is sometimes a logical result of beliefs or feelings,
but not always.
For example, an individual personally might not like a
restaurant, but may visit it because it is the hangout
place for his friends.
 4. 4 CO N S U ME R ATTI TUD E

Functions of attitude
 Adjustment Function: Attitudes helps people to adjust to different situations
and circumstances.
 Ego Defensive Function: Attitudes are formed to protect the ego.
 Value Expression Function:
Attitudes usually represent the values the individual posses.
Our value system encourages or discourages us to buy certain products.
For example, our value system allows or disallows us to purchase products such
as cigarettes, alcohol, drugs, etc.
 Knowledge Function: Individuals’ continuously seeks knowledge &
information.
When an individual gets information about a particular product, he creates and
modifies his attitude towards that product.
 4.5 INFLUENC E OF C ULTUR E AND SOCIAL CLASS

The set of basic values, perceptions, wants &

Culture behaviors learned by a member of society from
family and other important institutions

Cultural A group of people with shared value system

groups based on consumer life experience and situation

Social Relatively permanent and ordered division in a

class society whose members share similar values,
interests and behavior
 4 . 5 I N F L U E N C E O F C U LT U R E A N D S O C I A L C L A S S

4.5.1Culture
 -Culture is an important aspect to understand the behavior of a consumer.
 -An individual decides to behave in a certain manner because of his culture.
 -Every individual has different sets of values as compared to others, what
they see from their childhood
 -Culture does vary from individual to individual, region to region, & country
to country, so the marketer needs to pay a lot of attention in analyzing the
culture
 -Throughout the process, the consumer is under influence of his culture as
his friends, family, society, & his prestige influence him.
 4 . 5 I N F L U E N C E O F C U LT U R E A N D S O C I A L C L A S S

4.5.2 Social class

• The social groups to which an individual belongs are the social classes that
influence him.
• In the social classes, we usually find people with similar values, lifestyle and
behavior.
• Social perception is a very important attribute that influences the buying
behavior of an individual.
• Example: A person from a low-income group may focus on price while
making the purchase while a person from a higher income group may
consider the quality and uniqueness of the product.
 4 . 5 I N F L U E N C E O F C U LT U R E A N D S O C I A L C L A S S

4.5.3 Family
• As we, all know family plays a very important role in making a
purchase.
• The family is responsible for shaping up the personality of an
individual.
• Our attitude, perception and values are inculcated through our family.
• An individual tends to have similar buying habits & similar taste &
preference & consumption patterns as he gets to see within the family.
• Perception & family values have strong influence on the buying
behavior of an individual which they tend to keep constant.
 4 . 5 I N F L U E N C E O F C U LT U R E A N D S O C I A L C L A S S

4.5.4 Social status

• A social status of an individual usually comprises of an individual’s
attitude, class and prestige.
• It depends on the way he carries himself socially or the position at
which he is in his work or family or even in his group of friends.
• The social status of an individual influences his consumption pattern.
• Example: A CEO may want to have a celebration and give a party to his
colleagues, friends and family, so for his social status he may want to
book a five-star hotel, something like skylight or capital instead of any
other normal hotel.
5. RELATIONSHIP MARKETING AND
REFERENCE GROUP
 R E L AT I O N S H I P M A R K E T I N G

Brain Consumer Potential purchasers of

storming products and services from
different stores

Customer Refer to some one who

regularly purchases from a
particular store or company

What does the marketer do Offers orientation about

to retain customers in the benefits of using products
long run? Provide quality products
 REFERENCE GROUP

-Groups that influence buyers

-Influence a lot in buying decision
Referenc -Could be large or small groups
e group -Family members & close friends
-They are of two types
Primary and secondary groups
 REFERENCE GROUP

-People whom you meet them everyday

-Family & close friends
-Have strong impact on life & buying decision
Primary
-People that gives you honest and clear advice
-Help in buying decision when confused of
purchase
Reference
group
-Usually formal and they speak less frequently
-They might be professionals, your collogues,
Secondary your seniors at work
-The power to influence people is quite less as
compared to primary reference groups
6. MODELS OF CONSUMER
BEHAVIOR
 6 . 1 M O D E L S O F C O N S U M E R B E H AV I O R

Model of consumer behavior

 6 . 1 . 1 I N D U S T R I A L & I N D I V I D U A L C O N S U M E R B E H AV I O R M O D E L S

 Understanding buyer behaviors plays an important part in marketing.

There are two types of buyers:
Industrial (organizational) buyer
Individual consumer
 Organizational buying behavior has many distinctive features:
Occurs in a formal organization which is caused by budget & cost.
In some conditions, joint decision-making process may occur,
Finally, conflict occurs and they are hard to avoid in the joint decision
making process.
 6 . 1 . 1 I N D U S T R I A L & I N D I V I D U A L C O N S U M E R B E H AV I O R M O D E L S

 In order to understand the organizational buying behavior, we first consider

who will be involved in the buying process and what are their expectations.
 At least, purchasing agents and final consumers will participate in the buying
process.
• In this model, there are five different sets of variables determining the
expectations of the individual:
The individuals' background,
Information sources, vigorous search,
The selective bend of the information based on their previous information and
Expectations, satisfaction with previous purchase.
 6.1.1 INDUSTRIAL & INDIVIDUAL CONSUMER BEHAVIOR MODELS

 The second part of the model is the industrial buying processes:

Independent decision delegated to one department,
Joint decision processes.
The product-specific factors (perceived risk, type & time of pressure)
The company-specific factors (Company size, & degree of centralization) will
determine the type of buying.
 The greater the apparent risk, the more preferred to joint decision
 If it is a life-time capital buy, the more likely the joint decision will take place.
 If the decision has to be made in emergency, it is likely to entrust to one party.
 A small and privately-owned company with product or technology orientation will
lean towards independent decisions.
 6 . 1 . 1 I N D U S T R I A L & I N D I V I D U A L C O N S U M E R B E H AV I O R M O D E L S

External influence
Culture
Subculture Experience &
Demographics acquisition
Social status
Reference group Consumer decision process
Family Problem recognition
Self concept & life Need
Marketing Information search
style
Desire Alternate evaluation & selection
Internal influence Outlet selection & purchase
Perception Post purchase
Learning
Movies Experience &
Memory acquisition
Personality
Emotions
Attitude Individual & Industrial model
 6.1.2 ECONOMIC MODEL

Economic man model

 In this model, consumers follow the principle of maximum utility based
on the law of diminishing marginal utility.
 Economic man model is based on the following effects:
Price Effect: Lower the price of the product more will be the quantity
purchase.
Substitution Effect: Lower the price of the substitute product, lower will
be the utility of the original product purchase.
Income Effect: When more income is earned, or more money is
available, quantity purchased will be more.
 6.1.2 ECONOMIC MODEL

• This model suggests that human behavior is based on some core concepts
Drive: A strong internal stimulus which compels action.
Stimuli: These are inputs which are capable of arousing drives or
motives.
Cues: It is a sign or signal which acts as a stimulus to a particular drive.
Response: The way or mode in which an individual reacts to the stimuli.
If the response to a given stimulus is “rewarding”, it reinforces the
possibility of similar response when faced with the same stimulus or cues.
Applied to marketing if an informational cue like advertising, the buyer
purchases a product (response)
 6 . 1 . 2 P S Y C H O A N A LY T I C M O D E L

• The Psychoanalytic Model: The model suggests that human needs

operate at various levels of consciousness. His motivation which is in
these different levels, are not clear to the casual observer.
They can only be analyzed by vital and specialized searching.
• Sociological Model: This is concerned with the society.
A consumer is an element of the society and he may be a member of many
groups and institutions in a society.
His buying behavior is influenced by these groups.
Primary groups of family friend’s relatives and close associates extract a
lot of influence on his buying.
6.1.3 IMPLICATION OF MARKETING MODEL ON CONSUMER BEHAVIOR

Implication of marketing model on consumer behavior

Word of mouth
• Has powerful pressure on buying behavior
• Marketing strategies are designed to influence
word of mouth

Social media
• Helps marketers to spread message about their
products services
• Consumers wish to reduce the risk of decisions they
make and will spend more time in researching the
purchase decisions
 6 . 1 . 3 I M P L I C AT I O N O F M A R K E T I N G M O D E L O N C O N S U M E R B E H AV I O R

 Consumer involvement influence how consumers collect, understand and

convey information, make buying decisions and make post-purchase
evaluation.
 As the level of consumer participation increases, the consumer has better
motivation together, comprehend, elaborate, justify and understand the
information. Thus, a marketer needs to understand the process in a proper
manner and design his marketing mix in a manner that can trigger the
involvement process in his favor
 6 . 1 . 4 C O N S U M E R E X P E C TAT I O N

• Companies and marketers must have an in-depth knowledge of the

customer’s expectations to delight the customer. These includes:
• Core elements of the products and services.
• The core elements of a product are
Its shape,
Quality,
Price,
Packaging,
Brand name differentiation etc.
 The customer should be provided with what he expects
 6 . 1 . 4 C O N S U M E R E X P E C TAT I O N

The core elements of services are:

-Reliability,
-Fulfillers and responsiveness to specific needs
-Acceptability etc. from the service provided.
However, services being intangible and their characteristics which
are intangible, inseparability, perishability etc. must be kept in mind.
The customer generally expects
-Essential benefits from products
-Performance of products not blank promises.
-Competency of products
 6 . 1 . 4 C O N S U M E R E X P E C TAT I O N

A customer normally looks for the following services:

-Consistency, which is the capacity to perform the
promised services, reliably and accurately.
-Tangibility or the form of physical facilities, equipment,
workforce and other materials.
-Reaction – the reaction to an inquiry or to a call.
 6 . 1 . 5 W O R K I N G T O WA R D S E N H A N C I N G C U S T O M E R S AT I S F A C T I O N

Enhancing customer satisfaction & delight is not an easy job.

Therefore marketers must:
-Attempt continuously to provide additional customer value in every
transaction.
-Try to provide surprise benefits.
-Constantly express the expectations that the customer has around
your product.
-Treat the customer exclusively.
-Look for expectations and performance gaps in order to identify
opportunities to delight.
6 . 1 . 5 W O R K I N G TO WA R D S E N H A N C I N G C U S TO M E R S AT I S FA C T I O N

Desired service level

• Wished for level of service quality that customer believes can
and should be delivered

Adequate service level

• Minimum acceptable level of service

Predicted service level

• Service level that customer believes firm will actually deliver

Zone of tolerance level

• Acceptable range of variations in service delivery
 C L A S S E X E R C I S E - 2 - C O N S U M E R B E H AV I O R PA S T & P R E S E N T

Write down some points that come to your mind with reference to
consumer of yesterday and today.
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
4. _________________________________________________
 C L A S S E X E R C I S E - 2 - C O N S U M E R B E H AV I O R PA S T & P R E S E N T

Answer
1. Consumer of yesterday didn’t had choices to choose from
2. They have to go to different shops to shop to fulfil their needs
3. Consumers had low buying power, and were more cost conscious
as compared to brand / quality conscious
4. The Focus Yesterday was to fulfil the basic need instead of
impressing others
 MODEL QUESTIONS

1.Market consists of
a) People with money
b) People with money to spend and the willingness to spend it
c) People with money to spend & the willingness and ability to spend it d) All
2. The buying process consumers go through to purchase most products and services are
d) Considerably less complex than they may appear
e) Determined by the marketing activities
f) The outcomes of the socio-cultural influences d) None of the above.
3. Consumer behavior can be divided into
g) Couple of very distinct stages c) Four very distinct stages
h) Many distinct stages d) Three very distinct stages.
4.Buying act means
a) Creating new users c) Discovering new uses
b) The physical exchange of money for goods and services d) All
5. Pre-purchase behavior is
c) What the consumer does before making a purchase
d) Determining what the decision will be c) Both a & b d) None
6. Identify a factor determining a pre-purchase behavior?
e) Type and nature of the need c) Time pressure on buying
f) Financial involvement d) All of the above.
7. Which of the following is a step of the pre-purchase stage ?
a) Becoming aware of both a need to be satisfied and the availability of the
product or service
b) Obtaining information about how particular need can be satisfied
c) Analyzing the information collected d) All of the above
8. The primary concern with post-purchase behavior is
d) Making sure that customer needs are satisfied through the product’s use
e) Making sure that customer recommend others to buy the product
f) Both a & b d) None of the above.
9. Which of the following question is being answered by the consumer
behavior field?
a) What are the products people buy? c) Why they buy them?
b) How they buy them? d) All of the above.
10. The decision process that the consumers undergo is shaped by
a) Broad social or cultural forces
b) Close interactions with different people and organizations
c) The personal characteristics of the individuals d) All
11. Cultural environment is the complex set of
a) Values and ideas created by people to shape human behavior
b) Attitudes, and other meaningful symbols created by people to shape
human behavior
c) Both a & b d) None of the above.
12. Consumers are affected in their purchase decisions by
d) Government
e) Their social class standing, reference group, and family
f) Other customers d) None of the above.
ANSWER

1 2 3 4 5 6 7 8 9 10 11 12
C A D B C D D A D D C B
Reading assginment
• Market
• Type of markets
• Market segmentation
• Requirements for successful segmentation
• Basis or variables for marketing segmentation
 WHAT IS A MARKET

 A market is a place where buyers and sellers can meet to facilitate the
exchange or transaction of goods and services.
 Markets can be physical like
 a retail outlet, or virtual like an e-retailer.
 Other examples include illegal markets, auction markets, and financial
markets.
 Markets establish the prices of goods and services that are determined
by supply and demand.
 Features of a market include the availability of an arena, buyers and
sellers, and a commodity.
 MARKETS

Types of markets
1. Consumer Intend to consume or benefit, but not to make a profit.
2. Organizational/Business For:
Resale
Direct use in production
general daily operations.
 PHYSICAL AND VIRTUAL MARKETS

Physical Markets
Virtual Markets
 Markets represented by physical
 Internet-based stores and auction
locations where transactions are sites such as Amazon and eBay are
made. examples of markets where
 These include retail stores and transactions can take place entirely
other similar businesses that sell online.
individual items to wholesale  The parties involved never connect
markets selling goods to physically.
distributors.
 Involves physical interaction b/n
sellers and buyers
 R E Q U I R E M E N T F O R S U C C E S S F U L M A R K E T S E G M E N TAT I O N

The requirements for successful segmentation are

 Homogeneity within the segment
 Heterogeneity between segments
 Segments are measurable and identifiable
 Segments are accessible and actionable
 Segment is large enough to be profitable . . . . .
Eg. The market for Laptops can be segmented into – Students,
Business Executives, IT professionals – both backend and front end
 C R I T E R I A N E E D E D F O R S E G M E N TAT I O N

Criteria Needed for Segmentation are:

1. Segments must have enough profit potential to justify developing and
maintaining a Marketing Mix
2. Consumer must have heterogeneous (different) needs for the product.
3. Segmented consumer needs must be homogeneous (similar)
4. Company must be able to reach a segment with a Marketing Mix
 B A S E F O R S E G M E N TAT I O N

• Geographic variables - dividing • Demographic Variables - is a shorthand

term for ‘population characteristics
the market into zones or
geographical regions Age
Gender
Region of the world or
country Family size
Family life cycle
Country size
Income
Climate
Occupation
Education
Socioeconomic status
 B A S E F O R S E G M E N TAT I O N

• Psychographic variables are any • Behavioral variables – are any

attributes relating to: attributes relating to the behavior
Personality, or pattern of use of a product by
the consumers.
values,
Benefit sought
attitudes,
Product usage rate
interests, or lifestyles.
Brand loyalty
They are also called IAO
variables (Interests, Attitudes, and Product end use
Opinions). Readiness-to-buy stage
Decision making unit
 U N D E R S TA N D I N G C O N S U M E R B E H AV I O R I N M A R K E T I N G

• To ensure stable growth, a business has to meet consumer needs.

• This means:
Adapting to emerging trends in the market,
Understanding ever-changing consumer demands and needs,
Experimenting with strategies that work, and continually looking for
ways to engage with consumers and potential clients.
• To optimize consumer engagement, marketers need to understand
buying behavior, purchase decisions, and other psychological factors.
 C O N S U M E B E H AV I O R M A R K E T S E T

• Consumer behavior
 W H AT I S C U S T O M E R L O YA LT Y ? HOW DO YOU BUI LD L O YA LT Y ?

 A consequence of consumer behavior is customer loyalty,

 Customer loyality is a measure of a customer’s likelihood to continue to
do business with a company or continue to purchase a product or service
as regards a brand.
 Customer satisfaction leads consumers to make repeated purchases, which
also affects the overall value of the product.
 Thus, customer retention and customer acquisition go hand in hand in
understanding how deep a customer’s loyalty is to a brand or a company.
 Customer loyalty arises when companies or brands pre-emptively meet
consumer needs and expectations.
 W H AT I S C U S T O M E R L O YA LT Y ? HOW DO YOU BUI LD L O YA LT Y ?

 Loyal customers lead to the following:

Higher conversion rates that increase with time and help a brand increase its
public value and image
Boosts overall company profit
Helps the company effectively plan and understand consumer behavior by studying
data
 1. Least the 5 major factors that
influence consumer behavior
2. What are the Individual
determinants of consumer behavior
DISCUSSION ISSUES
3. Five stages of consumer behavior
 SUMMARY

• Here are 5 major factors that influence consumer behavior:

Psychological Factors.
Social Factors.
Cultural Factors.
Personal Factors.
Economic Factors.
 I N D I V I D U A L D E T E R M I N A N T S O F C O N S U M E R B E H AV I O R

• Economical determinants • Sociological determinants

Personal income- individual purchasing power Reference groups
Family income total purchasing power of the Immediate family members
family
Relatives
Future income expectation
Availability of liquid assets which can be Status in the society
converted in to cash
• Psychological determinants and
• This leads to the 5 steps
Motivation
buying process
Perception
Learning
Attitude or belief system
 S U M M A RY

• Five stages of consumer behavior

• The consumer decision-making process involves five basic steps.
• This is the process by which consumers evaluate making a purchasing
decision.
• The 5 steps are:
 problem recognition,
information search,
alternatives evaluation,
purchase decision and
post-purchase evaluation.
 T R A D I T I O N A L M E T H O D O F A D V E RT I S I N G

• Before the advent of the Internet, smartphones and other modern

methods of communicating, businesses primarily used
Print materials,
Broadcast,
Outdoor and promotional advertising methods.
• These methods of getting your message to your potential customers and
clients are still effective,
 T R A D I T I O N A L M E T H O D O F A D V E RT I Z I N G

• Modern methods of promotion and advertising include

Digital marketing,
 Social media marketing,
Influencer marketing,
Content marketing,
E-mail marketing, and mobile marketing .
• These methods are designed to reach consumers through the channels
where they spend their time online and on mobile devices.
WHICH METHOD DO YOU THINK IS
CONVENIENT IN INFLUENCING
CONSUMER BEHAVIOR?
 H O S P I TA L I T Y I N D U S T RY

• Hospitality industry provides both products and services to customers

• The hospitality industry is a large subsection within the service industry
and is comprised of four main areas:
Food & beverage,
Travel & tourism,
Lodging, and recreation.
• As examples, the F&B category includes
restaurants,
bars and food trucks;
 H O S P I TA L I T Y I N D U S T RY

• Travel & tourism covers

Different forms of transportation and travel agencies;
lodging varies from hotel resorts to hostels;
• Recreation refers to leisure activities such as
sports,
wellness and entertainment. 
 H O S P I TA L I T Y I N D U S T RY

• Service characteristics, the hospitality industry is known for its

 intangibility (services cannot be touched or seen),
perishability (services cannot be stored),
 inseparability (services are produced and consumed simultaneously),
heterogeneity (services are unique and vary from one provider to
another) and
customer participation (customers are involved in the production
process
• The core elements of a product are
Product shape,
Quality,
Price,
Packaging,
Accessibility
Brand name differentiation etc
1. How do buying influences on a public sector firm differ from that of a
private sector firm within the same industry,
2. What do you mean by a Consumer perception. What are the factors
influencing the consumer perception about a particular brand?
3. Enumerate in detail the significance of the Consumer perceptions in
the Service sector?
1. .