Consumer behavior

Consumer Behavior
Prepared by
Jitendra Patel
Assistant Professor Prestige
Institute of Management and
Research, Indore.

Module Description
• Consumer Market,
• Consumer buying and Industrial Buying,
• Types of consumers,
• Buyer behavior,
• Influences on buying behavior,
• Environmental Influence
• Customer loyalty, Customer delight.
3/22/2020 2Jitendra Patel, PIMR Indore

Definition Of Consumer Market
• “A consumer market is the very system that
allows us to purchase products, goods and
services. These items can be used for personal
use or shared with others. In a consumer
market, you make your own decisions about
how you will spend money and use the
products you purchase. The more people who
go out and actively purchase products, the
more active is the consumer market”.

Consumer Markets
• Markets dominated
by products and services designed for
the general consumer
• Consumer markets are typically split into
four primary categories:
– consumer products
– food and beverage products
– retail products,
– transportation products.

Types of Consumers
Seasonal Consumers
Organizational Consumer
Impulse Consumers
Need Based Consumers
Discount Driven Consumers
Habitual Consumer

Seasonal Consumers
• These are types of consumers who purchase
and consume products on seasonal basis.
• Examples
– Purchasing umbrellas during the rainy season
– Purchasing cold drinks during the hot seasons
– Going out for holiday during the Diwali season

Personal Consumers
• These types of consumers are individual
consumers who purchase goods for the sole
purpose of personal, family or household use.
• Examples
– Going to the supermarket and shopping for goods
which are to be used in the house
– Purchasing a car that you intend to use personally
– Purchasing clothes for personal use from a clothing
mall
– Purchasing a mobile phone to communicate with
people

Organizational Consumer
• Organizational consumers are consumers of
goods and services whose main intention is
not for immediate use but rather to use it for
things like production.
• Example: an organization may buy raw
materials that are aimed at producing other
goods which will later be offered for sale to
other consumers.

Impulse Consumers
• Impulse consumers or buyers are those who
make unplanned buying decisions. Impulse
buyers make swift buying decisions in that
they encounter products which they
immediately purchase after they fall in love
with the product and its features.

Need Based Consumers
• Need based consumers are those types of
consumers who buy goods and services when
they need them and not any other time.

Discount Driven Consumers
• Discount driven consumers are types of
consumers who purchase goods and services
primarily for the discounts on offer. They may
not engage in any buying activity for most of
the times only to act when they hear or see
large discounts being offered on products they
like. They are price sensitive and they would
rather wait and purchase products when they
come with discounts as opposed to when they
have no discount.

Habitual Consumer
• Habitual consumers are those who find it a
must or compelling to use certain type of
goods whenever they are presented with the
opportunity. It is just like a habit that they
can’t do without engaging in it.
• E.g. the cigarette smoker falls under this
category of consumers. The person would
smoke at any given time when he/she has a
cigarette.

The Consumer Buying Decision Process
• Engel, Blackwell and Kollat have developed in
1968 a model of consumer buying decision.
Need recognition / Problem recognition
Information search
Alternative evaluation
Purchase decision
Post-purchase behavior

Need recognition / Problem
recognition
• The need recognition is the first and most important
step in the buying process. If there is no need, there is
no purchase. This recognition happens when there is a
lag between the consumer’s actual situation and the
ideal and desired one.
• The recognition of a need by a consumer can be caused
in different ways. Different classifications are used:
– Internal stimuli (physiological need felt by the individual as
hunger or thirst) which opposes the external stimuli such
as exposure to an advertisement, the sight of a pretty
dress in a shop window or the mouth-watering smell of a
french “pain au chocolat” when passing by a bakery.

Need recognition / Problem
recognition
• Classification by type of needs:
– Functional need: the need is related to a feature or specific functions
of the product or happens to be the answer to a functional problem.
Like a computer with a more powerful video card to be able to play
the latest video games or a washing machine that responds to the
need to have clean clothes while avoiding having to do it by hand.
– Social need: the need comes from a desire for integration and
belongingness in the social environment or for social recognition. Like
buying a new fashionable bag to look good at school or choose a
luxury car to “show” that you are successful in life.
– Need for change: the need has its origin in a desire from the consumer
to change. This may result in the purchase of a new coat or new
furniture to change the decoration of your apartment.

Information search
• Then the consumer will seek to make his opinion
to guide his choice and his decision-making
process with:
– Internal information: this information is already
present in the consumer’s memory. It comes from
previous experiences he had with a product or brand
and the opinion he may have of the brand.
– External information: This is information on a product
or brand received from and obtained by friends or
family, by reviews from other consumers or from the
press. Not to mention, of course, official business
sources such as an advertising or a seller’s speech.

• Consumer will evaluate their attributes on two aspects.
• The objective characteristics (such as the features and
functionality of the product)
• Subjective (perception and perceived value of the
brand by the consumer or its reputation).
The process will then lead to what is called “evoked set”.
“The evoked set” (aka “consideration set”) is the set of
brands or products with a probability of being
purchased by the consumer (because he has a good
image of it or the information collected is positive).

• On the other hand, “inept set” is the set of
brands or products that have no chance of being
purchased by the shopper (because he has a
negative perception or has had a negative buying
experience with the product in the past)
• The higher the level of involvement of the
consumer and the importance of the purchase
are stronger, the higher the number of solutions
the consumer will consider will be important.

Purchase decision
• Consumer Buying Decision Process and his
decision process may also depend or be
affected by such things as the quality of his
shopping experience or of the store (or online
shopping website), the availability of a
promotion, a return policy or good terms and
conditions for the sale.

Post-purchase behavior
• He will feel either a sense of satisfaction for
the product (and the choice). Or, on the
contrary, a disappointment if the product has
fallen far short of expectations.
• The post-purchase evaluation may have
important consequences for a brand. A
satisfied customer is very likely to become a
loyal and regular customer.

The decision Making Unit
• The decision Making Unit (DMU) is a
collection or team of individuals who
participate in a buyer decision process.
• There are a number of key players in this
process

The decision Making Unit

Influencers
• Influencers are those who may have a persuasive
role in relation to the deciders. They may be
specialists who make recommendations based
upon experience and their knowledge of products
and services.
• Examples are consultants employed by businesses
to help deciders make a final decision
• There are also informal influences such as family
and friends, and people that you meet at trade
associations or informal gatherings.3/22/2020 23Jitendra Patel, PIMR Indore

Initiators
• Initiators are the players who recognize that
there is a need to be satisfied or a problem to
be solved. This might come from a drive for
efficiency due to the fact that some
equipment will need replacing. There could be
many reasons which stimulate the initiation

Gatekeepers
• Gatekeepers are individuals who press the stop/go
button in the process. Often gatekeepers will be
proactive in searching for information and delivering
recommendations for those decision-makers further up
the line. On other occasions gatekeepers can be seen
stalling the flow of the decision-making process.

Buyers
• Buyers are the professional function within an
organization generally responsible for
purchasing. They are given a brief with a
series of criteria against which to judge
potential products or services, and their
suppliers. They tend to be responsible for
sourcing and negotiation.

Deciders
• Deciders in a large organization certainly are
responsible for making the final deal or
decision. Their role carries the responsibility
of placing the final order. They might be senior
managers or agents acting on behalf of an
organization in the market.

Users
• Users are those who put the service or
product into operation once the deal has been
clinched. Their opinions will be important
especially if they are using manufacturing
equipment, flying aircraft, using software to
improve customer satisfaction, and so on.
Users will be heavily involved in the post-
purchase evaluation phase of the buyer
decision process.

Customer loyalty
• Customer loyalty is both an attitudinal and
behavioral tendency to favor one brand over
all others, whether due to satisfaction with
the product or service, its convenience or
performance, or simply familiarity and
comfort with the brand.

Types of Loyalty
• Monogamous vs. Polygamous Loyalty
– We live in a world of polygamous, not monogamous
loyalty
– For example, a person might shop at Safeway, Thrifty
Foods and Save-on-Foods and unfailingly shop at all
three. The person is then loyal to them, but not to
others, and yet 100% loyal to none.
– For example, a customer may tend to purchase Brand
A 70 percent of the time, Brand B 20 percent, and
Brand C 10 percent of the time” (p.90). The point
here is that, in the real world, 100% loyal customers
are rare.

Types of Loyalty
• Behavioral and Attitudinal Loyalty
– . If a person made most purchases in a given product
category from one supplier, regardless of the reason,
the person was defined as loyal. A majority of
existing loyalty programs follow these measures to
reward behavioral loyalty. That is, the more you
spend with the company, the more rewards you earn.
– This second element of loyalty focuses on how strong
the psychological commitment or attachment is to the
brand. By itself, it too has limitations. For example,
how loyal are people who rave about a product and
promote it to their friends, but then for whatever
reason fail to buy it regularly themselves?

TYPES OF CUSTOMER LOYALTY
PROGRAM USERS
• Never customers are those who are not affected by
loyalty programs and their reward incentives in any
way.
• Light loyalty program users are ones defined as having
reward program memberships and being influenced by
their incentives, but only moderately.
• Heavy loyalty program users are consumers who are
active and highly influenced members of reward
programs.
• Extreme loyalty program users are those consumers
who are virtually addicted to or obsessed with loyalty
programs.

Influences on buying behavior
1. Internal or Psychological factors
2. Social factors
3. Cultural factors
4. Economic factors
5. Personal factors

1. Internal or psychological factors
a) Motivation
– 1. Biogenic needs:
They arise from physiological states of tension such as
thirst, hunger
– 2. Psychogenic needs:
They arise from psychological states of tension such as
needs for recognition, esteem
b) Perception
1. Subjectivity
2. Categorization
3. Selectivity
4. Expectation

2. Social factors
a) Family
– i) The family influence on the individual personality, characteristics,
attitudes and evaluation criteria and
– ii) The influence on the decision-making process involved in the
purchase of goods and services.
b) Reference Groups
– A reference group is a group of people with whom an individual
associates. It is a group of people who strongly influence a person’s
attitudes values and behavior directly or indirectly. Reference
c) Roles and status
– A person participates in many groups like family, clubs, and
organizations. The person’s position in each group can be defined in
tern of role and status. A role consists of the activities that a person is
expected to perform. Each role carries a status.

3. Cultural factors
a) Culture
b) Sub culture
c) Social class.

4. Economic Factors
a) Personal Income,
b) Family income,
c) Income expectations,
d) Savings
e) Liquid assets of the Consumer,
f) Consumer credit,
g) Other economic factors.

5. Personal factor
a) Age
b) Occupation
c) Income
d) Life Style

What Is Customer Delight?
• Customer delight happens when you surprise
a customer (or client) by exceeding
expectations. When expectations are met, you
have customer satisfaction. When
expectations are exceeded, you achieve
customer delight.

Opportunities For Customer Delight
 What happens when you first interact with a customer?
 What occurs to build a relationship?
 Do you spend more to get new customers than on enhancing
the relationship with current customers?
 What makes you unique?

• To be able to keep your customers and keep them
satisfied, you have to know them
– Who they are?
– What do they want?
– What do they need? (But not necessarily want,
yet.)
– Why do they like you?
– Is there something they don’t like about you?

What determines Customer Satisfaction
Customer
Satisfaction
Perceived
Service
Expected
Service

Levels of Customer Satisfaction
Perceived
Service
Expected
Service
Customer
Satisfaction
Much Better than expected
As expected
Worse/Different than expected
Delighted *
Satisfied
Dissatisfied
Loyal
Vulnerable
Walk & Talk

Example of Customer Delight
• I decided to order a sound bar speaker system from Crutchfield
because it was in-stock, and reasonably priced. It was shipped
within 24 hours, for free. That’s already remarkable because the
item weighed over 50lbs. Unfortunately, I wasn’t entirely satisfied
with the product.
• Good – Free shipping on a large and heavy item!
• Great - When I called in, two quick phone tree selections put me in
touch with a customer service representative that was both kind
and attentive.
• Delight – Fully expecting to cover the cost of shipping the product
back to Crutchfield, I was delighted to find out that if you’re going
to purchase a replacement item from Crutchfield, your return
shipping is also free. The representative mailed me a pre-paid
shipping label while we were on the phone.

References
1. Aakar, D. A. (2012), “Strategic Market Management” 9th Edition,
New Delhi, India, Wiley India.
2. Boone and Kurtz , Contemporary Marketing, 16th edition,
Cengage Learning, 2014
3. D. Chandra Bose (2010.) “Modern Marketing Principles and
Practices” PHI Learning, 1st Edition.
4. O. C. Ferrell and Michael Hartline (2012 ). “Marketing Strategy,
Text and Cases” , South Western Cengage Learning, sixth edition.
5. Philip Kotler, Kelvin Lane, Keller, Abraham Koshi, Mitihlesh Jha,
Principles of Marketing Management, South Asian Perspective,
Pearson Education, 14th Edition 2011.
6. Philip Kotler and Gary Armstrong “Principles of
Marketing”, New Delhi, Prentice Hall of India, 15th Edition, 2013.

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