Chapter 1

Introduction to

Consumer Behavior

Consumer BehaviorDefinition

“The decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services”.

Customer A person or organization that buys goods or

services from a store or other business.A customer can also be someone purchasing

from a particular store or shop.

e.g. Tesco, Metro, Refreshment Center etc

Consumer A consumer is a person or group of people

who are the final users of products and or services.

An individual who buys products or services for personal use and not for manufacture or resale.

e.g. A Household.

Ultimate ConsumerIndividuals purchasing for the purpose of

individual or household consumption.

e.g. for personal use or in a house.

Not for commercial or industrial use.

e.g. not for mess or canteen.

The Individual BuyerAn individual making a purchase with little or no influence from others.

A number of people can also be jointly involved in a purchase decision.

For example. Planning a vacation or deciding on a new car can involve an entire family.

Some Consumer Behavior RolesInitiator: The individual who determines

that some need or want is not being met and authorizes a purchase to rectify the situation.

Influencer: A person who by some intentional or unintentional word or action influences the purchase decision, the actual purchase, and / or the use of the product or service.

Buyer: The individual who actually makes the purchase transaction.

User: The person most directly involved in the consumption or use of the purchase.

ExamplesA wife may ask her husband to pick up a box

of Chocolates on his shopping trip because their child said she wanted it.

At another time the husband is purchasing a health spa membership for himself.

Roles Played!Example 1

Wife (initiator and influencer)Husband (buyer)Child (user)

Example 2

Husband (initiator, buyer and user)

The Decision ProcessConsumer behavior involves a mental

decision process along with physical activity.Decision process dictates what is to be

bought and why????

•Quality •Price •Quantity •After sales service

•Recommendations •Advertisement Effects•Dissatisfaction

Consumer Behavior As a Subset of Human Behavior

Factors affecting individuals in their daily lives also influences their purchase activities.

Following disciplines also help to understand.Psychology (Study of behavior and mental processes)Sociology (Behavior of people in Groups)Economics (Study of people’s Production, exchange and consumption)Anthropology (Study of people in relation to culture)

WHY STUDY CB?Significance in Daily Lives.

How consumers spend time?Looking at things and buying them?Who advices them?How much ads affect?How are bought things used?

Application to Decision Making

Micro Perspective Helping an individual firm achieve its

objectives. E.g. increase sales or profits etc.Societal PerspectiveMacro or Aggregate.Determines what is to happen in the society.Constructing flats.Moving to Suburbs.How we run our daily lives (what we eat, where we

shop and how we are entertained) Owning private cars etc.Helps in solving Problems of the Society.

Consumer Behavior and Marketing Management

Understanding of CB is essential to run marketing programs.

1. Consumers Wants and Needs

2. Company objectives

3. Integrated Strategies

Market-Opportunity AnalysisUnderstanding consumers lifestyle and income levels.Then satisfying unmet needs and wants.

e.g. Fitness trend in the market.

Result : Exercise machines and fitness products.

Target Market Selection

Identifying distinct group of consumers.

Offer a unique product or service.

e.g. Soft drinks markets.Diet vs. RegularBottle vs. Tinned Packed vs. Fountain freshVending machines vs. Retail outlets

Niche Marketing????

Marketing Mix DeterminationThe 4P’s

Product

Price

Place

Promotion

Select Any Product????

1. Product What Shape, Size and Features?

Packaging?

Any service required?

Warranties?

Accessories offered?

2. PricePrice awareness?

Price sensitivity?

Price reduction needed during sales

promotion?

Cash payment discounts?

3. Place Type of Retail outlet?

Location and no. of outlets?

Arrangements needed to distribute products?

Tight Control in channel of distribution?

4. Promotion Method of promotion?

Gaining consumer attention?

Repetition of advertisement?

Best method to convey intended message?

CB and Nonprofit and Social MarketingIncludes:Governmental Agencies.Religious Organizations.Charity Organizations

Uses to:To create awareness.To Donate.To Help people.

Examples:Combating Aids.

Anti Polio.

Anti Cancer.

CB and Governmental Decision MakingTo create a softer image for the decisions

made by Govt.

Chipped NADRA ID Card.

Ads of Metro bus service (Working Phase).

Using Seatbelts.

Avoiding Over speeding.

CB and DemarketingAnti Smoking Campaigns.

Drug Abuse.

CB and Consumer EducationTo educate the Consumer for his rights.To reduce impulse buying.How to compare things with money.Better return for Dollar. Courses are even offered.

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