Consumer BehaviourConsumer BehaviourConsumer BehaviourConsumer BehaviourJalaj MathurJalaj Mathur

WHAT INFLUENCES CONSUMER BEHAVIORThe aim of marketing is to meet

and satisfy target customers’ needs and wants better than competitors. Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Gaining a thorough indepth consumer understanding helps to make sure that the right products are marketed to the right consumers in the right way.

WHAT INFLUENCES CONSUMER BEHAVIOR?

Metrosexual – Straight urban man who enjoys shopping and using grooming products

Model of Buying Behavior

Buyer’s decisionprocess

Problem recognitionInformation searchEvaluationDecisionPostpurchase behavior

Otherstimuli

EconomicTechnologicalPoliticalCultural

Buyer’scharacteristics

CulturalSocialPersonalPsychological

Buyer’s decisions

Product choiceBrand choiceDealer choicePurchase timingPurchase amount

Marketingstimuli

ProductPricePlacePromotion

Characteristics Affecting Consumer Behaviour

CULTURAL

SOCIALPERSONAL

PSYCHOLOGICAL

Culture

Subculture

Social Class

Reference Groups

Family

Roles & Status

Age

Occupation

Economic Situation

Lifestyle

Personality

Motivation

Perception

Learning

Beliefs & Attitude

Culture

Cultural Factors

Subculture

Social Class

BuyerBuyer

Culture• Culture is the basic values, perceptions, wants & behaviours

learned by a member of society from family &other important institutions . E.g. An American bride wears a white dress on her wedding while a white dress is worn on occasion of mourning in India.

• The cultural shift toward greater concern towards health & fitness has created a huge industry for health & fitness services, exercise equipment &clothing And lower fat and more natural foods.

• Subculture : A group of people with shared value systems based on common life experiences & situations. Subcultures include nationalities, religions, racial groups &geographic regions. E.g. Punjabi, Bengali, Marathi.

• Social Class: Relatively permanent &ordered divisions in a society whose members share similar values, interests & behaviour. Determined by income, occupation, education, wealth & other variables. Social classes show distinct product & brand preferences in areas such as clothing, home furnishing, leisure activities & automobiles. E.g. upper Class, Middle class

WHAT INFLUENCES CONSUMER BEHAVIOR?

Social classes, relatively homogeneous and enduring divisions in a society that are hierarchically ordered and whose members share similar values, interests, and behavior

Social classes have several characteristics:

Those within a class tend to behave more alike than persons from two different social classes.

Persons are perceived as occupying inferior or superior positions according to social class.

Social class is indicated by a cluster of variables (occupation, income, etc.) rather than by any single variable.

Individuals can move up or down the social-class ladder.

Social Factors

ReferenceGroups

ReferenceGroups

Roles &Statuses

Roles &StatusesFamilyFamily

WHAT INFLUENCES CONSUMER BEHAVIOR?

Social Factors

In addition to cultural factors, a consumer’s behavior is influenced by such social factors as reference groups, family, and social roles and statuses.

A person’s reference groups consists of all the groups that have a direct (face-to-face) or indirect influence on his/her attitudes or behavior.

Groups having a direct influence on a person are called membership groups.

Some memberships groups are primary groups such as family, friends, neighbors, and co-workers with whom the person interacts fairly continuously and informally.

Some membership groups are secondary groups such as religious, professional groups that tend to be more formal.

WHAT INFLUENCES CONSUMER BEHAVIOR?

People are significantly influenced by their reference groups in at least three ways:

Reference groups expose an individual to new behaviors and lifestyles, influencing attitudes and self-concept.

They create pressures for conformity that may affect actual product and brand choices.

People are also influenced by groups to which they do no belong:

Aspirational groups are those a person hopes to join.

Dissociative groups are those whose values or behavior an individual rejects. The buyer evaluates these elements together with the monetary cost to form a total customer cost.

WHAT INFLUENCES CONSUMER BEHAVIOR?

Manufacturers of products and brands where group influence is strong must determine how to reach and influence opinion leaders in these reference groups.

An opinion leader is the person in informal, product-related communications who offers advice or information about a specific product or product category.

Marketers try to reach opinion leaders by identifying demographic and psychographic characteristics associated with opinion leadership, identifying the media read by opinion leaders, and directing messages at opinion leaders.

WHAT INFLUENCES CONSUMER BEHAVIOR?

Family

The family is the most important consumer-buying organization in society, and family members constitute the most influential primary reference group.

We can distinguish between two families in the buyer’s life.

The family of orientation consists of parents and siblings.

A more direct influence on everyday buying behavior is the family of procreation –namely, one’s spouse and children.

Role & Status

• A role consists of the activities people are expected to perform according to persons around them e.g. you are somebody’s daughter/son at home, student in an institution, friend in an informal setting with friends. Tomorrow you will play the role of a husband/ wife

• Each role carries a status reflecting the general esteem given to it by society. People choose products to show their status in society. E.g. Scorpio for a CEO and ESTEEM for a VP.

Influences on Consumer Behavior

Personal InfluencesPersonal Influences

Age and Family Life Cycle Stage

Age and Family Life Cycle Stage LifestyleLifestyle

Occupation &Economic Circumstances

Occupation &Economic Circumstances

Personality & Self-Concept

Personality & Self-Concept

PERSONAL FACTORS• Age & Life Cycle

Stage: tastes in food, clothing, furniture & recreation are age related. Buying is also shaped by stage of the family life cycle. E.g. Gen Y ( under 25), Young Professionals, DINKS (25 to 34), Families (35 to 54).

Personal factors• Occupation: A Person’s occupation effects the

goods & services bought.• Economic Situation: Income, savings &

Borrowing power determine what kind of products a person buys.

• Lifestyle: A person’s pattern of living as expressed in his or her activities, interests and opinions. – Activities :-work, hobbies, shopping, sports,

social events– Interests:-food, fashion, family, recreation– Opinions:- About themselves, social issues,

business, products

WHAT INFLUENCES CONSUMER BEHAVIOR?

Personality and Self-Concept

Each person has personality characteristics that influence his or her buying behavior.

Personality: A set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli.

•The idea is that brands have personalities and consumers are likely to choose brands whose personalities match their own.

WHAT INFLUENCES CONSUMER BEHAVIOR?

We define brand personality as the specific mix of human traits that may be attributed to a particular brand. Jennifer Aaker identified the following five traits:

Sincerity (down-to-earth).

Excitement (daring).

Competence (reliable).

Sophistication (upper-class).

Ruggedness (outdoorsy).

Consumers also choose and use brand that have a brand personality consistent with their own actual self-concept (how one views themselves).

Although in some cases, the match may be based on the consumer’s ideal self-concept (how we would like to view ourselves).

Others self-concept (how we think others see us).

Simplified Model

WHAT INFLUENCES CONSUMER BEHAVIOR?

Lifestyles and Value

People from the same subculture, social class, and occupation may lead quite different lifestyles. A lifestyle is a person’s pattern of living in the world as expressed in activities, interests, and opinions.

Lifestyle portrays the “whole person” interacting with his or her environment.

Marketers search for relationships between their products and lifestyle groups.

Lifestyles are shaped partly by whether consumers are money-constrained or time-constrained.

Psychological Factors

PerceptionPerception LearningLearning

Beliefs &AttitudesBeliefs &Attitudes

MotivationMotivation

KEY PSYCHOLOGICAL PROCESSES

KEY PSYCHOLOGICAL PROCESSES

The starting point for understanding consumer behavior is the stimulus-response model.

•The marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions.

Model of Consumer Behavior

KEY PSYCHOLOGICAL PROCESSES

Motivation: Freud, Maslow, Herzberg

A person has many needs at any given time. Some needs are:

•Biogenic (arise from physiological states of tension such as hunger).

•Others are psychogenic and arise from a need for recognition, esteem, or belonging.

•A motive is a need that is sufficiently pressing to drive the person to act.

Abraham Maslow Sigmund Freud's

KEY PSYCHOLOGICAL PROCESSES

Freud’s Theory

Sigmund Freud assumed that the psychological forces shaping people’s behavior are largely unconscious, and that a person cannot fully understand his or her own motivations.

A technique called laddering can be used to trace a person’s motivations from the stated instrumental ones to the more terminal ones.

Motivation researchers often collect “in-depth interviews” to uncover deeper motives triggered by a product.

Projective techniques such as word association, sentence completion, and role-playing are used. Customer 2 is mixed profitability.

KEY PSYCHOLOGICAL PROCESSES

Maslow’s Theory

Abraham Maslow sought to explain why people are driven by particular needs at particular times.

Maslow’s answer is that human needs are arranged in a hierarchy, from the most pressing to the least pressing.

In order of importance, they are:

Physiological needs.

Safety needs.

Social needs.

Esteem needs.

Self-actualization needs.

Maslow’s Hierarchy of Needs.

KEY PSYCHOLOGICAL PROCESSES

Herzberg’s Theory

Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers (factors that cause dissatisfaction) from satisfiers (factors that cause satisfaction). The absence of dissatisfiers is not enough; satisfiers must be present to motivate a purchase.

Herzberg’s theory has two implications:

Sellers should do their best to avoid dissatisfiers.

Sellers should identify the major satisfiers or motivators of purchase in the market and supply them. These satisfiers will make the major difference as to which brand the customer buys.

Motivational Hygiene

A similar point (with Maslow’s) is made in Herzberg's “motivational hygiene” theory, according to which demotivators (or "hygiene factors") have to be reduced as well as motivators (or incentives) increased, to develop positive motivation (Herzberg 1966):

KEY PSYCHOLOGICAL PROCESSES

Perception

How the motivated person actually acts is influenced by his or her view or perception of the situation.

•Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world.

•Perception depends not only on the physical stimuli, but also on the stimuli’s relation to the surrounding field and on conditions within the individual.

•The key point is that perceptions vary widely among individuals exposed to the same reality.

•In marketing, perceptions are more important than the reality, as it is perceptions will affect consumers’ actual behavior.

KEY PSYCHOLOGICAL PROCESSES

Selective Attention

It has been estimated that a person is exposed to over 1,500 ads or brand communications a day. Because a person cannot possibly attend to all of these, most stimuli will be screened out—a process called selective attention.

Selective attention means that marketers have to work hard to attract consumers’ notice.

People are more likely to notice stimuli that relates to a current need.

People are more likely to notice stimuli that they anticipate.

People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli.

KEY PSYCHOLOGICAL PROCESSES Selective Distortion

Selective distortion is the tendency to interpret information in a way that will fit our preconceptions. Consumers will often distort information to be consistent with prior brands and product beliefs.

Examples of branded differences can be found with virtually every type of product.

Selective distortion can work to the advantage of marketers with strong brands when consumers distort neutral or ambiguous brand information to make it more positive.

KEY PSYCHOLOGICAL PROCESSES

Selective Retention

•People will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs.

•Because of selective retention, we are likely to remember good points about a product we like and forget good points about competing products.

KEY PSYCHOLOGICAL PROCESSES

Memory Processes: Encoding

Memory encoding refers to how and where information gets into memory.

Memory encoding can be characterized according to the amount or quantity of processing that information receives at encoding and the nature or quality of processing that information receives at encoding. The quantity and quality of processing will be an important determinant of the strength of an association.

•In general, the more attention placed on the meaning of information during encoding, the stronger the resulting associations in memory will be.

Perception• All of us learn by the flow of information

through our five senses: sight, hearing, smell, touch & taste. However each of us receives, organizes, interprets this sensory information in an individual way.

• Perception is the process by which people select, organize & interpret information– Selective Attention- the tendency of people to screen

out most of the information to which they are exposed.

– Selective Distortion- interpret info. That supports their set beliefs.

– Selective Retention- retain info. That supports their attitudes & beliefs.

Learning• Learning describes changes in an individual’s

behavior arising from experience.• Most human behavior is learned. Learning

occurs through the interplay of drives, stimuli, cues, responses & reinforcement.

• A person has a drive for esteem. His drive becomes a motive when it is directed toward a stimulus object , which can be a big car. When Hyundai announces its Gold coin offer it is giving a cue to buy now. If the person goes ahead a buys a Hyundai, it is a response. If he enjoys the experience of the car, his response is reinforced

Beliefs & Attitude• Through doing & learning, people acquire beliefs &

attitudes, which in turn effect his buying behaviour.• A belief is a descriptive thought that a person holds

about something.• Beliefs may be based on real knowledge, opinion or

faith and may or may not carry an emotional charge.

• Beliefs make up a product or brand image which effects buying behaviour.

• People have attitudes regarding religion, politics, clothes, music, food & almost everything else.

• Attitude describes a person’s relatively consistent evaluations, feeling & tendencies toward an object or idea.

• Attitude put people in a frame of mind of liking or disliking things. E.g. Chinese goods

Four Types of Buying Behavior

ComplexBuying

Behavior

Dissonance-Reducing Buying

Behavior

Variety-SeekingBehavior

HabitualBuying

Behavior

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

HighInvolvement

LowInvolvement

Types of Buying Decision Behaviour

Complex Buying Behaviour

Variety Seeking buying Behaviour

Dissonance reducing Buying Behaviour

Habitual buying behaviour

• Complex buying Behaviour: Consumer buying behaviour in situations characterized by high consumer involvement in a purchase and significant perceived differences among brands. E.g. Car, House, TV

• Dissonance Reducing buying Behaviour: CBB in situations characterized by high involvement but few perceived differences among brands e.g. Paints, Cement,

• Habitual Buying behaviour: CBB in situations characterized by low consumer involvement & few significant brand differences. E.g. Detergents, Toothpaste

• Variety Seeking Buying Behaviour: CBB in situations characterized by low consumer involvement but significant perceived brand differences. E.g. Biscuits, Snacks

High involvement

Low Involvement

Significant diff. b/w brands

Few Diff. b/w brands

Selectivity

Selective attention – Marketers have to work hard to get consumer’s notice – consumers are more likely to notice stimuli of current need, stimulithey anticipate, stimuli whose deviations are large e.g. $25 off $100 rather than $5

Selective distortion – tendency to twist information into personal meanings thatwill fit our preconceptions e.g. A customer of LG may interpret an advertisement saying that they are No. 1 company in Microelectronics tobe No.1 company in all of consumer durables

Selective Retention – consumers likely to remember good points of products theylike and forget good points of competing products e.g. a user may remember that Pears soap is the only soap good for dry skin though in the market Dove and Mysore Sandal Gold is also good for dry skin

Maslow’s Hierarchyof Needs

Psychological needs(food, water, shelter)

Psychological needs(food, water, shelter)1

Safety needs(security, protection)

Safety needs(security, protection)

2

Social needs(sense of belonging, love)

Social needs(sense of belonging, love)3

Esteem needs

(self-esteem, recognition)Esteem needs

(self-esteem, recognition)4

Self-actualization

(self-developmentand realization)

Self-actualization

(self-developmentand realization)

5

Consumer BuyingProcessProblemProblem

recognitionrecognition

Informationsearch

Evaluation ofalternatives

Purchasedecision

Postpurchasebehavior

TotalSet

Decision Making Sets

Aware-nessSet

Consid-eration

Set ChoiceSet Decision

1-43

Successive Sets Involved in Customer Decision Making

Indian Demographic Trends

• Nuclear Families: In Urban areas, the no. of nuclear families is on the rise.

• Working Women• Smaller Families: one child or two• Educated Women• Delayed marriages• Dispersion of Population: Metros, Bangalore,

Hyderabad, Chennai Pune, Gurgaon, Noida• Uneven Economic Growth Rate: south India,

Maharashtra, Gujarat, Punjab• Diverging Consumer Markets: Rich getting

richer & on shopping spree. Poor getting Poorer

• Ageing Population