Consumer behaviour notes

1. GL BAJAJ Institute Of Technology & Management
CONSUMER BEHAVIOR AND MARKETING COMMUNICATION
UNIT I
By
Diwakar Chaudhary
Assistant Professor
Department of Management Studies
GL BAJAJ Institute Management And Research

2. Introduction to Consumer Behaviour
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’.

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Introduction to Consumer Behavior in Marketing
The study of consumer behavior (CB) is very important
to the marketers because it enables them to understand
and predict buying behavior of consumers in the
marketplace.
It is concerned not only with what consumers buy, but
also with why they buy it, when and where and how they
buy it, and how often they buy it, and also how they
consume it & dispose it.
According to Professor Theodore Levitt of the Harvard
Business School, the study of Consumer Behavior is
one of the most important in business education,
because the purpose of a business is to create and
keep customers.

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Customers are created and maintained through
marketing strategies. And the quality of marketing
strategies depends on knowing, serving, and
influencing consumers.
In other words, the success of a business is to achieve
organizational objectives.
This suggests that the knowledge & information about
consumers is critical for developing successful
marketing strategies because it challenges the
marketers to think about and analyze the relationship
between the consumers & marketers, and the consumer
behavior & the marketing strategy.

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The term consumer behavior is defined as the behavior
that consumer display in searching for purchasing,
using, evaluating and disposing of product and services
that they expect will satisfy their needs.
Consumer behavior focuses on how individuals make
decisions to spend their available resources (time,
money, effort) on consumption related items.
This includes what they buy, why they buy it, when they
buy it, where they buy it, how often they buy it, how
often they use it, how they evaluate it after the purchase
and the impact of such evaluation on future, and how
they dispose of it.

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In another words, consumer behavior can be
define as the behavior of individuals in regards to
acquiring, using, and disposing of products,
services, ideas or experiences.
Consumer behavior also includes the acquisition
and use of information.
Thus, communication with consumers and
receiving feedback from them is a crucial part of
consumer behavior which is of great interest to
marketer.

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What is Marketing Mix?
Marketing Mix is a set of marketing tool or tactics, used to
promote a product or services in the market and sell it.
It is about positioning a product and deciding it to sell in the
right place, at the right price and right time.
The product will then be sold, according to marketing and
promotional strategy.
The components of the marketing mix consist of 4Ps Product,
Price, Place, and Promotion.
In the business sector, the marketing managers plan a
marketing strategy taking into consideration all the 4Ps.
However, nowadays, the marketing mix increasingly includes
several other Ps for vital development.

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Product in Marketing Mix
A product is a commodity, produced or built to
satisfy the need of an individual or a group.
The product can be intangible or tangible as it
can be in the form of services or goods.
It is important to do extensive research before
developing a product as it has a fluctuating life
cycle, from the growth phase to the maturity
phase to the sales decline phase.

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Price in Marketing Mix
Price is a very important component of the marketing mix definition.
The price of the product is basically the amount that a customer pays for
to enjoy it.
Price is the most critical element of a marketing plan because it dictates a
company’s survival and profit.
Adjusting the price of the product, even a little bit has a big impact on the
entire marketing strategy as well as greatly affecting the sales and
demand of the product in the market.
Things to keep on mind while determining the cost of the product are, the
competitor’s price, list price, customer location, discount, terms of sale,
etc.,
Place in Marketing Mix
Placement or distribution is a very important part of the marketing mix
strategy.
We should position and distribute our product in a place that is easily
accessible to potential buyers/customers.

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Promotion in Marketing Mix
It is a marketing communication process that helps the
company to publicize the product and its features to the
public.
It is the most expensive and essential components of
the marketing mix, that helps to grab the attention of the
customers and influence them to buy the product.
Most of the marketers use promotion tactics to
promote their product and reach out to the public or the
target audience.
The promotion might include direct marketing,
advertising, personal branding, sales promotion, etc.

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People in Marketing Mix
The company’s employees are important in marketing
because they are the ones who deliver the service to
clients.
It is important to hire and train the right people to
deliver superior service to the clients, whether they run
a support desk, customer service, copywriters,
programmers…etc.
It is very important to find people who genuinely
believe in the products or services that the particular
business creates, as there is a huge chance of giving
their best performance.
Adding to it, the organization should accept the honest
feedback from the employees about the business and

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Process in Marketing Mix
We should always make sure that the business process
is well structured and verified regularly to avoid
mistakes and minimize costs.
To maximize the profit, Its important to tighten up the
enhancement process.
Physical Evidence in Marketing Mix
In the service industries, there should be physical
evidence that the service was delivered. A concept of
this is branding.
For example, when you think of “fast food”, you think of
KFC. When you think of sports, the names Nike and
Adidas come to mind.

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Marketing Mix Product
All products can be broadly classified into 3 main categories.
These are : -
Tangible products: -These are items with an actual physical
presence such as a car, an electronic device, and an item of
clothing or a consumer good.
Intangible products: - These are items that have no physical
presence but can be felt indirectly. An insurance policy is an
example of this. Online items such as software, applications or
even music and video files are also intangible products.
Services: - Services are also intangible products but they are the
result of an economic activity that does not result in ownership.
It is a process that creates benefits for customers. Services
depend highly on who is performing them and remain difficult to
reproduce exactly.

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Application of Consumer Behavior Knowledge in
Marketing
Marketing is the entire process of researching
customer needs and preferences, developing product
and service solutions to match, and promoting the
benefits to targeted customers.
Understanding basic buyer behavior and the steps
consumers follow in making purchase decisions helps
significantly in developing effective marketing plans.

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There are Four Main Applications of Consumer Behavior
Companies that introduce new products must be well
financed so that they can stay afloat until their products
become a commercial success and
It is important to please initial customers, since they will in
turn influence many subsequent customers brand choices.
A second application is public policy. In the 1980s, Accutane,
a near miracle cure for acne, was introduced. Unfortunately,
Accutane resulted in severe birth defects if taken by pregnant
women. Although physicians were instructed to warn their
female patients of this, a number still became pregnant while
taking the drug. To get consumers’ attention, the Federal Drug
Administration (FDA) took the step of requiring that very
graphic pictures of deformed babies be shown on the
medicine containers.

17. 4. Social marketing involves getting ideas across to consumers
rather than selling something. Marty Fishbein, a marketing
professor, went on sabbatical to work for the Centers for Disease
Control trying to reduce the incidence of transmission of diseases
through illegal drug use.
The best solution, obviously, would be if we could get illegal drug
users to stop.
This, however, was deemed to be infeasible. It was also
determined that the practice of sharing needles was too ingrained
in the drug culture to be stopped.
As a result, using knowledge of consumer attitudes, Dr. Fishbein
created a campaign that encouraged the cleaning of needles in
bleach before sharing them, a goal that was believed to be more
realistic.

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Consumer
We define consumer, as a person who is the end user of the product. The word
consumer is made from the word ‘consume’ which means ‘to use’. In this way, the
word consumer means a person who purchases the product or service for his own
use or consumption.
As per the Consumer Protection Act, 1986, it does not include the person who
purchases the commodity for the purpose of adding value or resale for any
commercial purpose.
However, a person can use those goods or services to earn livelihood or self-
employment. Any type of user, other than the buyer who purchases goods,
consumes the goods by taking permission of the buyer will also come under the
category of Consumer. It includes the person who avails the services for any
consideration.
Moreover, the beneficiary of such services will also be regarded as the consumer.
There are three Consumer protection council in India: -
At national level: Central Protection Council
At state level: State Protection Council
At district level: District Protection Council

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Customer
The word customer is derived from the term ‘custom’ which means
‘practice’, so the word customer means the individual or entity who
purchases product or services from a seller at regular intervals. It can also
be known as client or buyer. They are divided into two categories: -
Trade Customers: - The customers who purchase goods in order to add
value and resell them. These include Manufacturers, Wholesalers,
Distributors, Retailers etc.
Final Customer: - They are the customers who purchase it either for their
own use or to hand over it to the final user.
The customers are regarded as the king, in every business because they
help in earning revenue. The businesses focus on converting shoppers into
buyers. They also try to maintain a good relationship with the customers in
order to keep the business going. Below given are the three kinds of
customers: -
Former customers or ex-customers
Existing customers
Prospective customers

20. CUSTOMER CONSUMER
Meaning
The purchaser of goods or
services is known as the
Customer.
The end user of goods or
services is known as a
Consumer.
Resell
A customer can be a
business entity, who can
purchase it for the purpose
of resale.
No
Purchase of goods Yes Not necessary
Purpose Resale or Consumption Consumption
Price of product or
service
Paid by the customer
May not be paid by the
consumer
Person Individual or Organization
Individual, Family or Group of
people
Comparison Between Customer and Consumer

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Consumer Behavior in the Contemporary Environment
Consumerism is the organized form of efforts from different
individuals, groups, governments and various related organizations
which helps to protect the consumer from unfair practices and to
safeguard their rights.
The growth of consumerism has led to many organizations
improving their services to the customer.
Consumer is regarded as the king in modern marketing. In a market
economy, the concept of consumer is given the highest priority, and
every effort is made to encourage consumer satisfaction.
However, there might be instances where consumers are generally
ignored and sometimes they are being exploited as well.
Therefore, consumers come together for protecting their individual
interests.
It is a peaceful and democratic movement for self-protection
against their exploitation. Consumer movement is also referred
as consumerism.

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Features of Consumerism
Protection of Rights: - Consumerism helps in building business
communities and institutions to protect their rights from unfair
practices.
Prevention of Malpractices: - Consumerism prevents unfair
practices within the business community, such as hoarding,
adulteration, black marketing, profiteering, etc.
Unity among Consumers: - Consumerism aims at creating
knowledge and harmony among consumers and to take group
measures on issues like consumer laws, supply of information
about marketing malpractices, misleading and restrictive trade
practices.
Enforcing Consumer Rights: - Consumerism aims at applying
the four basic rights of consumers which are Right to Safety,
Right to be Informed, Right to Choose, and Right to Redress.

23. The two driving forces of consumerism: -
Advertising: - Here, it is connected with the ideas and
thoughts through which the product is made and the
consumer buys the product.
Through advertising, we get the necessary information
about the product we have to buy.
Technology: - It is necessary to check the environment
on a daily basis as the environment is dynamic in nature.
Product should be manufactured using new technology
to satisfy the consumers.
Old and outdated technology won’t help product
manufacturers to sustain their business in the long run.

24. Buying Decision Process
Consumer buying behavior is the study of an individual or a household that purchases products for personal
consumption. The process of buying behavior is shown in the following figure: -

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Stages of Purchasing Process
Stage 1 − Needs / Requirements
It is the first stage of the buying process where the
consumer recognizes a problem or a requirement that
needs to be fulfilled.
The requirements can be generated either by internal
stimuli or external stimuli.
In this stage, the marketer should study and
understand the consumers to find out what kinds of
needs arise, what brought them about, and how they led
the consumer towards a particular product.

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Stage 2 − Information Search
In this stage, the consumer seeks more information. The
consumer may have keen attention or may go into active
information search.
The consumer can obtain information from any of the several
sources.
This include personal sources (family, friends, neighbors, and
acquaintances), industrial sources (advertising, sales people,
dealers, packaging), public sources (mass media, consumer-
rating and organization), and experiential sources (handling,
examining, using the product).
The relative influence of these information sources varies with
the product and the buyer.

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Stage 3 − Evaluation of Alternatives
In this stage, the consumer uses information to evaluate
alternative brands from different alternatives.
How consumers go about evaluating purchase alternatives
depends on the individual consumer and the specific buying
situation.
In some cases, consumers use logical thinking, whereas in other
cases, consumers do little or no evaluating; instead they buy on
aspiration and rely on intuition.
Sometimes consumers make buying decisions on their own;
sometimes they depend on friends, relatives, consumer guides,
or sales persons.

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Stage 4 − Purchase Decision
In this stage, the consumer actually buys the product.
Generally, a consumer will buy the most favorite brand,
but there can be two factors, i.e., purchase intentions
and purchase decision.
The first factor is the attitude of others and the second
is unforeseen situational factors.
The consumer may form a purchase intention based on
factors such as usual income, usual price, and usual
product benefits.

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Stage 5 − Post-Purchase Behavior
In this stage, the consumers take further steps after
purchase based on their satisfaction and
dissatisfaction.
The satisfaction and dissatisfaction depend on the
relationship between consumer’s expectations and the
product’s performance.
If a product is short of expectations, the consumer
is disappointed.
On the other hand, if it meets their expectations, the
consumer is satisfied. And if it exceeds their
expectations, the consumer is delighted.

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The larger the gap between the consumers’ expectations and
the product’s performance, the greater will be the consumer’s
dissatisfaction.
This suggests that the seller should make product claims that
faithfully represent the product’s performance so that the buyers
are satisfied.
Consumer satisfaction is important because the company’s
sales come from two basic groups, i.e., new
customers and retained customers.
It usually costs more to attract new customers than to retain
existing customers and the best way to retain them is to get
them satisfied with the product.

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Attribution Theory
Attribution theory assumes that people draw upon their
past experiences when facing a new situation.
People assess the quality of a product as they are using
it.
Regardless of whether they are happy or disappointed
with its performance, people draw conclusions about
the product, the manufacturer, or perhaps the country of
origin.
When the consumer sees a similar product on the
market, his past experience will influence his future
purchase decisions.

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Personality Influences
People influence the personality of others through their daily
interactions. This influence extends to purchase decisions.
As an example, an office manager prefers a certain mode of
dress, such as wearing skirts every day instead of slacks.
Other women in the office will start to dress similarly in the hope
of impressing her enough for a promotion.
The women’s past experience taught them that bosses usually
promote people who are similar in appearance and interests.
This past experience influences the present decision to buy
skirts rather than slacks.

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Role Playing
Attribution and role-playing are related. People learn the
responsibilities and expectations of different roles. Their
purchasing behavior can be attributed to those expectations.
For example, an advertising executive will drive an expensive,
late-model car and pay hefty membership fees to the best
country club.
He must exude success to convince the client that his
advertising firm is the best choice for the product campaign.
Businesses marketing high-end products, including cars and
golf clubs, gear their advertising to consumers who need the
products or services for the roles they play.

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Product Value
Consumers attribute a value to a product they are considering
purchasing. They consider the brand name, or lack of brand
name, as some prefer name brands while others are willing to
try generics.
Price is another factor in attributing value, as some consumers
may attribute poor quality to a product with an exceptionally low
price.
The third factor in product value is the consumer’s peer group.
Most people prefer to fit in with their peers.
Marketing experts consider product value when recommending
pricing and packaging for a new line. If the target group is young
singles.
For example, then advertising will depict people in their 20s.

35. DIFFUSION OF INNOVATION
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The diffusion of innovation is the process by which new products are adopted (or not) by their intended
audiences. It allows designers and marketers to examine why it is that some inferior products are successful
when some superior products are not.
The idea of diffusion is not new; in fact it was originally examined by Gabriel Tarde, a French sociologist, in the
19th century. However, it wasn’t until the 1920s and 1930s that the phenomenon began to be investigated in
depth by researchers.

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The Process for Diffusion of Innovation
Rogers’ draws on Ryan and Gross’s work to deliver a 5 stage
process for the diffusion of innovation: -
1. Knowledge
The first step in the diffusion of innovation is knowledge.
This is the point at which the would-be adopter is first exposed
to the innovation itself.
They do not have enough information to make a decision to
purchase on and have not yet been sufficiently inspired to find
out more.
At this stage marketers will be looking to increase awareness of
the product and provide enough education that the prospective
adopter moves to the 2nd stage.
As it was once said (by whom we’re not sure); “If the user can’t
find it, it doesn’t exist.”

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2. Persuasion
Persuasion is the point at which the prospective
adopter is open to the idea of purchase.
They are actively seeking information which will inform
their eventual decision.
This is the point at which marketers will be seeking to
convey the benefits of the product in detail.
There will be a conscious effort to sell the product to
someone at this stage of the diffusion of innovation.

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3. Decision
Eventually the would-be adopter must make a decision. They
will weigh up the pros and cons of adoption and either accept
the innovation or reject it.
It is worth noting that this is the most opaque part of the
process.
Rogers cites this as the most difficult phase on which to acquire
intelligence. This is, at least in part, due to the fact that people
do not make rational decisions in many instances.
They make a decision based on their underlying perceptions and
feelings and following the decision they attempt to rationalize
that decision.
Thus, obtaining an understanding of the decision making
process is challenging – the reasons given following a decision
are not likely to be representative of the actual reasons that a

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4. Implementation
Once a decision to adopt a product has been made the product
will, in most cases, be used by the purchaser.
This stage is when the adopter makes a decision as to whether
or not the product is actually useful to them.
They may also seek out further information to either support the
use of the product or to better understand the product in context.
This phase is interesting because it suggests that designers and
marketers alike need to consider the ownership process in detail.
How can a user obtain useful information in the post-sale
environment?
The quality of the implementation experience is going to be
determined, to a lesser or greater extent, by the ease of access to
information and the quality of that information.

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5. Confirmation
This is the point at which the user evaluates their decision and
decides whether they will keep using the product or abandon
use of the product.
This phase can only be ended by abandonment of a product
otherwise it is continual.
(For example, you may buy a new car today – you are highly
likely to keep using the car for a number of years – eventually,
however, you will probably sell the car and buy a new one).
This phase will normally involve a personal examination of the
product and also a social one (the user will seek confirmation
from their peers, colleagues, friends, etc.)

41. THANK YOU