MODULE IVSTUDYING CONSUMER BEHAVIOUR

Buying Behaviour For Consumer Markets & Business/Industrial Markets

CONSUMER BUYER BEHAVIOUR refers to the buying behaviour of final consumers-individuals and households who buy goods & services for personal consumption.All of these final consumers combine to make up the consumer market. World Consumer market consists of more than 6.2 billion people. Consumer around the world vary tremendously in age, income, education level,

and tastes. They also buy an incredible variety of goods and services.

MODEL OF CONSUMER BEHAVIOUR

Marketing & Other Stimuli Marketing Other

Product Economic Price Technological Place Political Promotion Cultural

Buyer’s Black Box

• Buyer Characteristics

• Buyer decision process

Buyer Responses • Product Choice• Brand Choice• Dealer Choice• Purchase timing• Purchase Amount

Types of Buying Situations

Complex Buying Behaviour Consumers undertake this type of behaviour when they are highly involved in a purchase

and perceive significant differences among brands. Consumers may be highly involved when the product is highly expensive , risky, purchased

infrequently, and highly self-expressive. Consumer has much to learn about the product category. For example, a personal computer buyer may not know what attributes to consider. Many

product features carry no real meaning: a ‘Pentium chip’ , ‘super VGA resolution’, ‘megs of RAM’.

Consumer will pass through a learning process, first developing beliefs about the product , then attitudes, and then making a thoughtful purchase choice.

Dissonance-Reducing Buying Behaviour Consumer take this type of behaviour when they are highly involved with an expensive,

infrequent, or risky purchase, but see little difference among brands. For example, Consumer buying carpet may face a high-involvement decision because

Carpeting is expensive and self-expressive. Buyers may consider most carpet brands in a given price range to be the same. Because perceived brand differences are not large, buyers may shop around to learn what is

available, but buy more quickly. They may respond primarily to a good price or to purchase convenience.

HABITUAL BUYING BEHAVIOUR This type of behaviour occurs under conditions of low consumer involvement and little

significant brand difference . For example, salt- consumer have little involvement in this product category –they

simply go to store and reach for a brand. If they keep reaching for the same brand , it is out of habit rather than strong brand loyalty.

Consumers appear to have low involvement with most low-cost , frequently purchased

VARIETY-SEEKING BUYING BEHAVIOUR Consumers undertake this type of behaviour in situations characterized by low consumer

involvement but significant perceived brand differences. In such cases, consumers often do a lot of brand switching. For example, when buying cookies, a consumer may hold some beliefs , choose a cookie

brand without much evaluation, then evaluate that brand during consumption.

But the next time, the consumer might pick another brand out of boredom or

simply to try something different. Brand switching occurs for the sake of variety rather than because of dissatisfaction.

FOUR TYPES OF BUYER BEHAVIOUR

High involvement Low involvement

Significant differences

between brands

Few differences

between brands

Complex buying behaviour

Variety-seeking behaviour

Dissonance –reducing buying behaviour

Habitual buying behaviour

FACTORS AFFECTING CONSUMER BEHAVIOUR

Cultural

Culture

Subculture

Social Class

Social

Reference groups

Family

Role & Status

Personal

Age & life-cycle stage Occupation Economic situationLifestyle

Personality &self-

concept

Psychological

Motivation

Perception

Learning

Beliefs and attitudes

Buyer

CULTURAL FACTORS

Culture –set of basic values, perceptions, wants, and behaviours learned by a member of society from family and other important institutions.

Subculture- A group of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions.

Many subcultures make up important market segments and marketers often design

products and marketing programs tailored to their needs.

Social classes- Relatively permanent and ordered divisions in a society whose members share similar values, interests , and behaviours.

Social class is measured as a combination of occupation, income, education,

wealth and other variables.

SOCIAL FACTORS

Groups – Two or more people who interact to accomplish individual or mutual goals.

Reference groups serve as direct (face-to-face) and indirect points of comparison

or reference in forming a person’s attitudes or behaviour.Family- Family members can strongly influence buyer behaviour.

Family is the most important consumer buying organization in society.

Marketers are interested in the roles and influence of husband, wife, and children

on the purchase of different products & services. Role & Status- A role consists of activities people are expected to perform

according to the persons around them.

Each role carries a status reflecting the general esteem given to it by society.

People often choose products that show their status in society

PERSONAL FACTORSAge & Life-cycle Stage

- People change the goods and services they buy over their lifetimes.

-Tastes in food, clothes, furniture, and recreation are often age related.

-Buying is also shaped by the stage of family life cycle- the stages through

which families might pass as they mature over time.

- Marketers define their target markets in terms of life-cycle stage and develop

appropriate products and marketing plans for each stage. Occupation

- A person’s occupation affects the goods & services bought.

- Marketers try to identify the occupational groups that have an above-average

interest in their products & services.

- A company can even specialize in making products needed by a given occupational

group.

For e.g.- Computer software companies will design products for brand managers,

accountants , engineers, lawyers, and doctors.

Economic situation

- A person’s economic situation will affect product choice.

- Marketers of income-sensitive goods watch trends in personal income , savings,

and interest rates.

for e.g.- if economic indicators point to a recession , marketers can take steps to

redesign, reposition, and reprice their products closely. Lifestyle- Lifestyle is person’s pattern of living as expressed in his or her

psychographics.

Selected Segmentation Variables

Economy-minded people

Enthusiasts

Outdoors

Status Seekers

For e.g.- Whether a customer is style oriented or value oriented. A customer can choose between Kawasaki Ninja if he thinks about style or a Maruti Alto if he thinks of economy(5 people sitting capacity) that come will within same price range.

It involves measuring consumer’s major AIO dimensions-

Activities- work, hobbies, shopping, sports, social events

Interests - food, fashion, family, recreation

Opinions – about themselves, social issues, business productsLifestyle Classification- SRI Consulting’s Values and Lifestyles

(VALS) Typology

VALS – Two major dimensions-1. Self-orientation

2. Resources

Self-Orientation-

# Principle-oriented consumers who buy based on their views of world.

# Status-oriented buyers who base their purchases on the actions and

opinions of others.

# Action-oriented buyers who are driven by their desire activity , variety, and risk taking.

Resources-

# Abundant Resources-high levels of income

# Minimal Resources- low levels of income

Personality & Self-Concept

-Personality refers to the unique psychological characteristics that lead to relatively

consistent and lasting responses to one’s own environment.

- It is usually described in terms of traits such as self-confidence, dominance,

sociability, autonomy, defensiveness, adaptability and aggressiveness.

- Personality can be useful in analysing consumer behaviour for certain products or

brand choices.

For e.g.- Coffee marketers have discovered that heavy coffee drinkers tend to be

high on sociability.

PSYCHOLOGICAL FACTORS Motivation

Motive- A need that is sufficiently pressing to direct the person to seek satisfaction

of the need.

Motivation research collect in-depth information from small samples of consumers

to uncover the deeper motives for their product choices. Perception- The process by which people select, organize and interpret

information to form a meaningful picture of the world.Learning- Changes in an individual’s behaviour arising from experience.

Learning occurs through the interplay of drives, stimuli, cues, responses, and

reinforcement.Belief- A descriptive thought that a person holds about something.Attitude- A person’s consistently favourable or unfavourable evaluations, feelings,

and tendencies toward an object or idea.

People have attitude regarding religion, politics, clothes, music, food, and almost

everything else.

BUYER DECISION PROCESS

1. Need recognition

2. Information search

3. Evaluation of alternatives

4. Purchase decision

5. Post-purchase behaviour

Need Recognition

Information Search

Evaluation of alternatives

Purchase Behaviour

Post-Purchase Behaviour

STEP I- NEED RECOGNITIONThe first stage of the buyer decision process , in which the consumer recognizes a

a problem or need.Need can be triggered by internal stimuli when one of the person’s normal needs-

hunger, thirst, shelter- rises to a level high enough to become a drive.A need can also be triggered by external stimuli.

STEP II- INFORMATION SEARCH The stage of buyer decision process in which the consumer is aroused to search for

more information; the consumer may simply have heightened attention or may go into active information search.

Consumer can obtain information from any of several sources such as

Personal sources –Family, friends, neighbours, acquaintances

Commercial sources- Advertising, salespeople, dealers, packaging, displays

Public sources- Mass media, Consumer-rating organizations

Experiential Sources- Handling, Examining, Using the product

STEP III- EVALUATION OF ALTERNATIVESConsumer uses information to evaluate alternative brands in the choice set. Consumers do not use a simple and single evaluation process in all buying

situations.

STEP IV- PURCHASE DECISIONThe buyer’s decision about to which brand to purchase.

STEP V- POSTPURCHASE BEHAVIOUR Consumers take further action after purchase , based on their satisfaction and

dissatisfaction.

What determines whether the buyer is satisfied or dissatisfied with a purchase?

Answer: Relationship between the consumer’s expectations and the product’s perceived performance.

* Larger the gap between expectations and performance, the greater the consumer’s dissatisfaction.

CONSUMER ADOPTION PROCESS

Adoption Process

“ The mental process through which an individual passes from first hearing about an innovation to final adoption.”

Stages In Adoption Process Awareness: Consumer becomes aware of the new product , but lacks information

about it. Interest: Consumer seeks information about the new product.Evaluation: Consumer considers whether trying the new product makes sense.Trial: Consumer tries the new product on a small scale to improve his or her

estimate of its value.Adoption: Consumer decides to make full and regular use of the new product.

BUSINESS BUYER BEHAVIOUR refers to the buying behaviour of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others. It also includes the behaviour retailing & wholesaling firms that acquire goods

for the purpose of reselling or renting them to others at a profit.

MODEL OF BUSINESS BUYER BEHAVIOUR

The Environment

Marketing Other stimuli stimuli

Product Economic Price Technological Place Political Promotion Cultural Competition

Buying Organization

The buying Centre

(interpersonal and individual influences)

(organizational influences)

Buying decision process

Buyer Responses

Product or service choice

Supplier choice

Order quantities

Delivery terms and times

Service terms

Payment

TYPES OF BUYING SITUATIONS

STRAIGHT REBUY- A business buying situation in which the buyer routinely reorders something

without any modifications. It is usually handled on a routine basis by the purchasing department.Based on past buying satisfaction, the buyer simply chooses from the various

supplier on its list.“In” suppliers try to maintain product and service quality. “Out” suppliers try to offer something new or exploit dissatisfaction so that the

buyer will consider them.

MODIFIED REBUY- A business buying situation in which the buyer wants to modify product

specification , prices, terms, or suppliers.Modified rebuy usually involves more decision participants.“In” suppliers may become nervous and feel pressured to put their best foot

forward to protect an account.“Out” suppliers may see the modified rebuy situation as an opportunity to make

a better offer and gain new business.

NEW TASKA company buying a product or service for the first time faces a new-task

situation.Greater the risk or cost, the larger the number of decision participants and the

greater their efforts to collect information will be.New-task situation is the marketer’s greatest opportunity and challenges.

MAJOR INFLUENCES ON BUSINESS BUYER BEHAVIOUR Environmental

Economic developments

Supply conditions

Technological Change

Political & regulatory

developments

Competitive developments

Culture & customs

Organizational

Objectives

Policies

Procedure

Organizational Structures

Systems

Interpersonal

Authority

Status

Empathy

Persuasiveness

Individual

AgeEducation

Job positionPersonality

Risk Attitudes

Buyers

BUSINESS BUYING PROCESS

Problem Recognition Someone in the company recognizes a problem or need that can be met by acquiring a good or service.

General Need Description

Company describes the general characteristics and quantity of a needed item.

Product Specification Buying organization decides on and specifies the best technical product characteristics for a needed item.

Supplier Search

Buyer tries to find the best vendors

Proposal Solicitation

Buyer invites qualified suppliers to submit proposals

Supplier Selection

Buyer reviews proposals and selects a supplier or suppliers.

Contd….

Order-routine specificationBuyer writes the final order with the chosen supplier (s), listing the technical specification, quantity needed, expected time of delivery, return policies, and warranties.

Performance Review

Buyer rates its satisfaction with suppliers , deciding whether to continue , modify, or drop them.