CONSUMER BEHAVIOUR

1. CONSUMER BEHAVIOUR BY PROF. SHEETAL CHHABRA

2. DEFINATION Consumer behavior can be defined as: "The decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services."

3. WHO IS CONSUMER? A "consumer" is anyone who typically engages in any one or all of the activities described in our definition. A "customer" is one who actually purchases a product or service from a particular organization or shop.

4. Some Consumer Behavior Roles Role Description InitiatorThe person who determines that some need or want is not being met. Influencer The person who intentionally/unintentionally influences the decision to buy the actual purchase and/or use of product or service. Buyer The person who actually makes the purchase. User The person who actually uses or consumes the product or service.

5. DECISION PROCESS example of a father, we call Mr. Bannerjee. buying a TV for his family. It is possible that the consumer behavior involving mental processes and activities may have taken place in the following sequence and manner. Mr. Bannerjee's teenage daughter sees a new colour TV at her friend's house. She then raises the issue of buying a colour TV to replace then existing black and white TV. The next day Mr. Bannerjee discusses the matter with his friend and colleague, Mr. Chandra. He also finds out more about the various brands, prices and quality of different brands, from her sister who recently purchased a colour TV. In the next few days the entire Bannerjee family makes it a point to carefully study any advertisements of colour TV that appear in the newspaper, magazine or TV. The dealer offered them a special five per cent discount and a free antenna along with free installation. The information that this company would soon he offering a VCR at a reasonable price clinched the decision in favour of other TV. The activity and thought process which resulted in the final purchase of TV started well before the actual purchase took place and was spread over a period of two to three weeks. This entire process forms part of consumer behavior.

6. SCOPE OF CONSUMER BEHAVIOUR

7. This framework is made up of three main sections-the decision process as represented by the inner-most circle, the individual determinants on the middle Circle and the external environment which is represented by the outer circle. The study of all these three sections constitutes the scope of consumer behaviour.

8. Problem recognition thus occurs when the consumer recognizes that he has an unfulfilled need. The desire to fulfil this need triggers off the other steps of information; search and evaluation and finally result in the purchase process. However, not all situations of problem recognition automatically lead to the next step of information search and evaluation.

9. A consumer may recognize the need for a vehicle to cover the long distance from his home to office and back. But if he doesn't have the means to buy a vehicle for himself, then his need would remain a need, and despite his recognition of the problem, the ensuing steps will not take place. The constraints can be lack of availability or lack of ability to buy.

10. Only if there are no constraints preventing further behavior, the consumer will set out to search for information relevant to the problem. The information search can take place without the consumer even being aware of it or it may take the form of a deliberate, prolonged search. To replenish the stock of toothpaste, a regular customer knows from memory and past experience the brand, the package size he wishes to buy, and the place from where he would like to buy. Of course, if it is a first time customer for toothpaste then he, would search for information from the external environment, such as his friends, shopkeepers, and advertisements

11. Having gathered the relevant information, the consumer needs to evaluate it to arrive at the decision regarding which toothpaste best fulfils his need. Having arrived at the decision, he set's out to make the purchase. At this point the consumer has to make a choice regarding which outlet to by from. After the purchase when the consumer uses the product he either feels satisfied with-it and concludes that he has made the right decision or the feels dissatisfied and decides that his decision was not correct. This dissatisfaction-set in motion a search for alternative choices and fresh evaluation. It is thus a continuing cycle of decision process.

12. INDIVIDUAL DETERMINANTS The specific variables unique to each individual, which influence his behavior as a consumer. These variables are psychological in nature • Motivation and Involvement • Attitude • Personality and Self-concept • Learning and Memory • Information Processing

13. Motivation and Involvement All of us are consumers, within a given society all of us have the same alternatives to choose from and yet no two consumers may exhibit identical consumer behaviour. The reason for this is that each one of us is a unique individual with a unique set of needs, desires and motivation. Motivation is that internal force which arouses or activates some need and provides direction of behaviour towards fulfilment of the need.

14. Attitude • Attitudes are our learned predispositions towards objects, people and events. Attitudes guide our orientation towards these. It is our attitudes which influence how we respond to different products and services. Attitudes are not inborn or innate in us. Rather they are learnt from people around us. • Till a few years ago most housewives had a negative attitude towards frozen, dehydrated or instant food. But today, with more women joining the work force, such products are viewed as a convenience and instant, quick to cook meals are looked upon favorably.

15. Personality and Self-concept • Personality is the sum total of the unique individual characteristics that make each one of us what we are. It provides a framework within which a consistent behaviour can be developed. Self-concept or self-image is the way we perceive ourselves in a social framework. We always tend to buy only those products and services which we think fit or match with our personality. • Gwalior Suitings uses Nawab of Pataudi for promoting its suitings, to project an image of class and exclusivity and perceives that this image would match well with the self-concept of their target consumers.

16. Learning and Memory • Everyday we are exposed to a wide and diverse range of information. But we can barely recall a small fraction of it the next day. • We only remember that which is of relevance and importance to us, or where we have a motivation to remember. • Consider a situation where a family is viewing a TV programme and the accompanying advertisements. Out of the 15-20 advertisements, the seven year old daughter may remember the advertisement for Barbie dolls, the husband (who drives the car) may remember the advertisement of radial car tyres and the wife may remember the advertisement for a new model of mixer-grinder. • This is because each one of them has a motivation for different products.

17. Information Processing • This refers to the process and activities which consumers engage in while gathering, assimilating and evaluating information. • we only attend to selective information. The manner in which we assimilate and evaluate this selective information is determined by our motives, attitudes and personality and self-concept. • A half-filled glass elicits the response "a half-empty glass from, one consumer while another reacts by saying it is "half-full".

18. EXTERNAL ENVIRONMENT All the variables emanating from the society within which an individual lives and interacts and which bear a strong influence on his consumer behaviour. • Cultural Influences • Sub-cultural Influences • Social Class Influences • Social Group Influences • Family Influences • Personal Influences

19. Culture is defined as the complex, sum total of knowledge, belief, traditions, customs, art, morals, law and any other habits acquired by people as members of a society. • Within a given culture, there are many groups or segments of people with distinct customs, tradition and behaviour, which set them apart from other people. All Indians share one common cultural heritage, but the Hindu Brahmins of Tamil Nadu are very different from the Hindu Bengalis of Calcutta in the same way as Kashmiri Hindus are different from the Hindus of Gujarat.

20. Social class is a group consisting of a number of people who share more or less equal position in a society. Within a social class people tend to share same values, beliefs, and exhibit similar patterns of behavior and consumption. • Social classes may be defined by parameters such as income and occupation. The belongingness to a social class influence dicisions such as choice of residence, type of holiday, means of entertainment and leisure.

21. A social group is a collection of individuals who share some common attitudes and a sense of relationship as a result of interaction with each other. Social groups may be primary where face-to-face interaction take place frequently, such as families, work groups and study groups. Secondary groups are those where the relationship is a more formalized and less personal in nature. Examples of primary groups are associations of professionals members of a political party, and social groups such as Rotary, Lions, Jaycees etc.

22. Family is a social group which can be defined as a primary group. It needs to be studied in great detail as it is one of the strongest sources of influences on consumer behavior. • Each individual is influenced by the family, social class, sub-cultural and cultural group to which he belongs, and yet has his own distinct personality which influences his decisions and behavior as a consumer.

23. APPLICATIONS OF CONSUMER BEHAVIOUR • Analyzing Market Opportunity. • Selecting the target Market. • Determining the Product Mix. • Use in non profit and social networking. • CBRM UNIT1(PDF) PG 10

24. Pre-Purchase Process: Need Recognition Search for Information Pre-Purchase Evaluation of Alternatives Purchase Consumption Post-Consumption Evaluation Divestment

25. Pre-Purchase Process: Need Recognition Search for Information Pre-Purchase Evaluation of Alternatives Purchase Consumption Post-Consumption Evaluation Divestment

26. Pre-Purchase Process: Need Recognition Memory Need Recognition Influences Culture Motivation Social Class Knowledge Family Attitude Situation Personality

27. Pre-Purchase Process: Search For Information Culture Social Class Family Need Recognition Situation Search Motivation Memory Knowledge Attitude Personality

28. Pre-Purchase Process: Information Processing Exposure Attention Comprehension Acceptance Retention

29. Exposure • Exposure is the first step of communication. • Once exposure occurs one or more senses is activated and preliminary processing begins. Attention • After exposure, the next step is to allocate or not allocate information processing capacity to the incoming information.

30. Comprehension (understanding) • If attention is attracted the message is further analyzed against categories of meaning stored in memory. Acceptance • Once comprehension occurs the message can be accepted. Retention • Finally new information to be accepted and stored in memory.

31. Examples • Chocolate Chantico Increases Starbucks Appeal to non coffee drinkers. • New product innovations can activate need recognition by changing consumers desired state (iPod). • Colgate Total advertisement activates selective need recognition. • Colgate Total advertisement activates selective need recognition.

32. Post-Purchase Process: Nonuse Purchase Dissonance Usage Complaint Evaluation Satisfaction Repeat Purchase Increased Use Repeat Purchase

33. Post purchase dissonance is consumption guilt. • It occurs when negative emotions or guilt feelings are aroused by the use of a product or a service. • For many products and services, the decision to purchase and to consume are made simultaneously. • A person who orders a meal in a restaurant is also deciding to eat the meal at that time. However a decision to purchase food at a supermarket requires a second decision to prepare and consume the food. Thus nonuse can occur because the situation or the purchaser changes between the purchase and the potential usage occasion. • Advertisements can encourage purchases, consumption of previously purchased items, or both.

34. Expectation, Performance & Satisfaction

35. Determinants of Satisfaction & Dissatisfaction • Core Service Failure • Dry cleaners ruined wedding dress. • Service encounter failure • Heterogeneous services. • Pricing • Inconvenience • Responses to service failure. • Attraction by Competitors. • Switching

36. Three types of Consumption Experiences • Positive Reinforcement • Negative Reinforcement • Punishment

37. POSITIVE REINFORCEMENT Positive Reinforcement

38. NEGATIVE REINFORCEMENT Negative Reinforcement

39. PUNISHMENT Punishment

40. Ethnography • Ethnography involves describing and understanding consumer behavior by interviewing and observing consumers in real world situations. • Ethnographic techniques used by IDEO, a design firm. • Shadowing: Observing People using products, shopping. • Behavioral Mapping: Photographing people within a space such as a hospital waiting room.

41. Ethnography • Consumer Journey: Keeping track of all the interactions a consumer has with a product, service or space • Extreme user interviews: Talking to people who really know or know nothing about a product or service and evaluating their experience using it.

42. Post Consumption Evaluation • It influences repeat buying. • It shapes word of mouth. High Customer Satisfaction Low High Level of Price

43. Satisfaction • Product Performance • Consumption Feeling • Expectations.

44. CB - Model • Howard –Sheth Model. (PDF File) • Nicosia Model. (Word File) • Engel- Blackwell & Miniard Model. (Word File)

45. Demographics • Demographics defined as the size, structure and distribution of a population. • According to David Foot “ Demographics explain two thirds of everything. They help predict which products will be in demand and which type of crime can be expected to increase.” • Marketers use demographic analysis in two ways as Market Segment Descriptors and in Trend Analysis.

46. Demographic Analysis & Social Policy • Demographic analysis is useful in analyzing policy question related to Macro marketing, the aggregate performance of marketing in society. • Macro marketing evaluates marketing from society’s perspective and seeks to understand the consequences of marketing actions & transactions in a society. • How much food will be required to feed the population of a country in the future? If tax cut is proposed how will it affect consumer spending? Should consumers be encouraged to buy remarketed homes & cars instead of new.

47. Demographic Breakdown • 25 would be living on $ 1 a day. • 47 would be living on $ 2 a day. • 46 would live in urban area. • 17 would live in substandard housing • 41 would be without basic sanitation • 14 would not be able to read • 13 would be malnourished • 4 would be internet users • 8 would be personal computer users • 2 would be college graduate.

48. How long will people live • Life expectancy has increased. • Today white females have the longest life expectancy at 79.9 years and black males the shortest at 68.8 years. • As people live longer the need for in home health care , senior activity centers and special products increases.

49. Occupation • Someone’s occupation provides status and income. • Occupation is strongly associated with education and income. • The type of work one does and the type of individual works with over time also directly influence one’s values, lifestyle and all aspect of consumption process.

50. Occupation influence on consumption