management

1. Consumer Behavior
PGDM- PHM – SEM - 2
Specialization Core ( SC) subject (3 credits)
Marks – 100 (Formative Assessment (40) & Summative Assessment (60))
By – Prof. Kiran Patil

2.  Definition, Meaning and Importance of Consumer Behaviour
 Difference between Consumer and Customers,
 Dimensions of Consumerism
 Scope of Consumer Behavior and its Applications in Marketing
 Need of study of Consumer Behaviour
 The Internet, e-commerce, and information technology and the
changing consumer marketplace
 Use of Market Segmentation in Consumer Behavior
2 Unit 1
Introduction to Consumer Behaviour

3. Consumer Behavior -
Consumer behavior is a process whereby individuals decide What, When, Where, How and
from Whom to purchase goods and services.
Culture is related to the dominant cultural beliefs, values & customs of a society irrespective of
the different traits of the multiple subcultures within that culture which has strong impact on
behavior.
A person should aware of social class to a certain extent, which gives an idea of their status.
Social class is a reality of life. It reflects on the marketing behaviour of consumers. Family
decision-making is the process by which decisions is directly or indirectly involve two or more
family members which is also one of the important factor.
In buying process, the consumer deliberates with himself and is also influenced by many
marketing mix, outside factors before it finally makes any purchase decision.
Introduction

4. Basic concepts in Consumer Behavior
While studying Consumer behavior it is prior to understand some concepts, which are given as follows.
A) Consumer:
Traditionally, consumers have been defined very strictly in terms of economic goods and services wherein
monetary exchange is involved. This concept, over a period of time, has been broadened.
Consumer Behaviour is defined as the behaviour displayed by consumers in searching for, purchasing, using,
evaluating and disposing of products and services that they expect will satisfy theirneeds
Meaning of Consumer:
The 'consumer' is a person who generally engages in the activities search, select, use and dispose of
products, services, experience, or ideas.
Definitions of Consumer:
1) Civil Code:
A consumer is a natural person concluding a contract with a professional and whose aim in concluding the
contract is not directly connected to their (the consumer`s) business activity.
2) Bill:
A “consumer” as “an individual acting for purposes that are wholly or mainly outside that person’s trade,
business, craft or profession”.

5. Basic concepts in Consumer Behavior
Types of Consumer:
1) Personal Consumer:
It buys goods and services for her or his personal use (such as cigarettes or haircut), or for household
consumption (such as sugar, furniture, telephone service etc.), or for just one member of the family (such as a
pair of shoes for the son), or a birthday present for a friend (such as a pen set). In all these instances, the goods
are bought for final use, referred as “end users’ or “ultimate consumers.
2) Organisational Consumer:
It includes profit and not-for-profit organisations. Government, agencies and institutions buy products, equipment
and services required for running these organisations. Manufacturing firms buy raw materials to produce and sell
their own goods. They buy advertising services to communicate with their customers. Similarly, advertising
service companies buy equipment to provide services they sell. Government agencies buy office products
needed for everyday operations.
Personal
Consumer Organisational
Consumer

6. Basic concepts in Consumer Behavior
B) Customer:
The term 'customer' is specific in terms of` brand, company, or shop. It refers to person who customarily or
regularly purchases particular brand, purchases a particular company's product, or purchases from a particular
shop.
Meaning of Customer:
Customer is anyone who regularly makes purchases from a store or a company is termed as “customer” of that
store or the company.
Definition of Customer:
Hayden Noel:
An individual, or business that purchases the goods or services produced by a business. The customer is the
end goal of businesses, since it is the customer who pays for supply and creates demand. Businesses will often
compete through advertisements or sales in order to attract a larger customer base.

7. Consumerism:
The term 'consumerism' is different from the term 'consumer' which can be stated as consumerism is a social
movement seeking to argument the rights and powers of buyers in relation to sellers. Consumerism is a
movement designed to improve the rights and powers of the consumers in relation to the sellers of products
and services.
Thus, a consumer is a person who buys goods and services for consideration or hires the services for a
consideration, which has been paid or promised while consumerism is a social force within the environment
design to aid and protect the consumer by exerting legal, moral, and economical pressure on business.
Consumer behavior is multidimensional in nature and it is influenced by the following subjects −
1) Psychology is a discipline that deals with the study of mind and behavior. It helps in
understanding individuals and groups by establishing general principles and researching
specific cases. Psychology plays a vital role in understanding how consumers behave while
making a purchase.

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2) Sociology is the study of groups. When individuals form groups, their actions are sometimes
relatively different from the actions of those individuals when they are operating
individually.
3) Social Psychology is a combination of sociology and psychology. It explains how an
individual operates in a group. Group dynamics play an important role in purchasing decisions.
Opinions of peers, reference groups, their families and opinion leaders influence individuals in
their behavior.
4) Cultural Anthropology is the study of human beings in society. It explores the development
of central beliefs, values and customs that individuals inherit from their parents, which influence
their purchasing patterns.

9. Environmental Influence on Consumer
Behavior
Introduction:
Consumer behavior is the study of the
behavior that consumers display during
the processes of searching for
purchasing, using, evaluating, and
disposing of products and services that
they expect will satisfy their needs.
External factors do not affect the decision
process directly, but percolate or filter
through the individual determinants, to
influence the decision process as shown
in Fig. The arrow shows how the external
influences are filtered towards the
individual determinants to affect the
decision process.

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Customer:
Customer is a person who buys the goods or services and pays the price
thereof. 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.
Consumer:
Consumer is 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.

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BASIS FOR
COMPARISON
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

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Key Differences Between Customer and Consumer
The fundamental differences between customer and consumer are described below:
1. The person who buys the goods or services from a seller is known as the Customer.
The person who uses the goods or services is known as a Consumer.
2. The customer is also known as buyer or client whereas the Consumer is the
ultimate user of the goods.
3. The customer can be an individual or a business entity while a Consumer can be an
individual or a family or a group of people.

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Key Differences Between Customer and Consumer
4. Customer pays the price of the product or service however he may recover it from
the other party, in case if he had purchased it on behalf of any person. Conversely,
Consumer not necessarily pays the price of the product, like in case the goods are
gifted or if they are purchased by the parents of a child.
5. The customer purchases the goods for the purpose of resale or to add value or for
his personal use or on behalf of another person. In contrast to Consumer, who
purchases the goods for the purpose of consumption only.

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Consumer Behaviour
Consumer Behaviour or the Buyer Behaviour is referred to the behaviour that is displayed by the
individual while they are buying, consuming or disposing any particular product or services.
These behaviours can be affected by multiple factors.
Moreover, it also involves search for a product, evaluation of product where the consumer
evaluate different features, purchase and consumption of product. Later the post purchase
behaviour of product is studied which shows the consumer satisfaction or dissatisfaction where it
involves disposal of product (Solomon, 2009).
The customers while buying a product goes through many steps. The study of consumer
behaviour helps to understand how the buying decision is made and how they look for a product.
Moreover, the understanding of consumer behaviour also helps marketers to know the what,
where, when, how and why of the consumption of product consumption (Kumar, 2004). These
help marketers or organizations to know the reason behind the purchase of product by
consumers and how it satisfies them.

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WHY MARKETERS SHOULD ANALYSE BUYER BEHAVIOUR?
• Buyers reactions to a firms marketing strategy have an impact on the
firm’s success.
• The marketing concept stresses that a firm should create a marketing mix
that satisfies customers.
• To find out what satisfies customers, marketers must examine the main
influences on WHAT, WHERE, WHEN and HOW consumers buy.
• By gaining a better understanding of the factors that affect buying
behaviour, marketers can better predict how consumers will respond to
marketing strategies.

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Importance of Consumer Behaviour to business managers
The main purpose behind marketing a product is to satisfy demands and wants of the
Consumers. Study of consumer behaviour helps to achieve this purpose.
As consumers are the most important people for a marketer or sales person, therefore it
is important for them to consider the likes and dislikes of the consumers so that they
can provide them with the goods and services accordingly (Solomon, 2009).
The more careful analysis helps in more exact prediction about the behaviour of
consumers of any product or services.

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The study of consumer behaviours helps business manager, sales
person and marketers in the following ways:
• To design the best possible product or service that fully satisfies consumer's
needs and demands.
• To decide where the service or product would be made available for easy access
of consumers.
• To decide the price at which the consumers would be ready to buy that product
or service.
• To find out the best method of promotion that will prove to be effective to
attract customers to buy a product.
• To understand why, when, how, what and other factors that influence buying
decision of the consumers.

18. Best method of promotion
⚫It can be very interesting for marketers as they can as they can use every
emotion as a marketing tool to strike a chord with the target audience
⚫Ex. Showing happy face in the morning to throw positive vibes, freshness &
happiness by ‘Colgate Fresh’, inducing romantic / intimate emotions by ‘Close-
Up’

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Importance of Consumer Behaviour to Marketers
It is important for them to know consumers as individual or groups opt for, purchase,
consume or dispose products and services and how they share their experience to
satisfy their wants or needs (Solomon, 2009).
This helps marketers to investigate and understand the way in which consumers
behave so that they can position their products to specific group of people or targeted
individuals.
In regard to the marketer's view point, they assume that the basic purpose of marketing
is to sell goods and services to more people so that more profit could be made.
However, today, as the consumers are more aware about the use of product and other
information of the product, it is not easy to sell or attract customer to buy the product
(Kumar, 2004).

20. Scope of Consumer Behaviour:
 1) Consumer behaviour and marketing management: Effective business managers
realise the importance of marketing to the success of their firm. A sound understanding of
consumer behaviour is essential to the long run success of any marketing program.
 The essence of the Marketing concept is captured in three interrelated orientations -
consumers’ needs and wants, company integrated strategy.
 2) Non-profit and social marketing: In today's world even the non-profit organisations like
government agencies, religious sects, universities and charitable institutions have to market
their services for ideas to the "target group of consumers or institution.“
 3) Consumer behaviour and government decision making: In recent years the
relevance of consumer behaviour principles to government decision making. Two major
areas of activities have been affected: Government services & consumer protection.
 4) consumer education: Consumer also stands to benefit directly from orderly
investigations of their own behavior. This can occur on an individual basis or as part of more
formal educational programs. E.g. - grocery products or Shopping.
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21. Applications of consumer behavior:
 1) Analyzing market opportunity: Consumer behavior study help in identifying the unfulfilled
needs and wants of consumers. This requires examining the friends and conditions operating
in the Marketplace, consumer’s lifestyle, income levels and energy influences. This may reveal
unsatisfied needs and wants.
 2) Selecting target market: Review of market opportunities often helps in identifying district
consumer segments with very distinct and unique wants and needs. Identifying these groups,
behave and how they make purchase decisions enable the marketer to design and market
products or services particularly suited to their wants and needs.
 3) Marketing-mix decisions: Once unsatisfied needs and wants are identified, the marketer
has to determine the right mix of product, price, distribution and promotion. Where too,
consumer behavior study is very helpful in finding answers too many perplexing questions. The
factors of marketing mix decisions are:
i) product ii) price iii) promotion iv) distribution
 4) Use in social and non-profits marketing: Consumer behavior studies are useful to design
marketing strategies by social, governmental and not for profit organizations to make their
programs more effective such as family planning, awareness about AIDS.
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22. Need for studying consumer behaviour
 1. To satisfy need of customers - Consumers respond favorably while evaluating the products
that best satisfy their needs. A marketer studies how consumers spend their available resources
on the consumption of related items. It includes the study of what they buy, when they buy it,
where they buy it and how often they use it. So, a knowledge of consumer behavior will be of
immense help to the marketer which will help to satisfy their needs.
 2.Helps to understand consumer psychology - The study of consumer behavior enables the
marketer to understand the psychology of consumers. Consumer psychology is based on
his knowledge, attitude, intention and motive.
 The psychology of customer develops on the basis of knowledge he has. Sales promotion plays
an important role to provide the knowledge of the product to consumers.
 3. Helps to understand consumer motives - A study of the behavior of a consumer is
essential to understand his/her buying motives. All these motives may not have the same
intensity of purchase. Only a few motives prompt the consumer to buy a product or service.
 4. Helps to understand consumer choices - It is important for the marketer to understand
how consumers make their choices. Human beings are usually very rational. They make
systematic use of information available to them before they buy.
 5. Helps to understand consumer preferences - A business firm which is ignorant of
consumer preferences cannot succeed in the market place.
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23. Impact of Internet / Ecommerce on Consumer Behavior
 The influences on consumer behavior are often made between external and internal factors.
External factors are come from the environmental conditions, and internal factors are usually
from the consumer’s mind. There are many factors could influence consumer’s behaviors.
 The functional motives are mostly about the time, shopping place and consumer’s needs,
which could be like one-stop shopping to save time.
 Consumer shopping habits have changed drastically over the last few years thanks to the
explosion of eCommerce. Where shopping in a store was once the predominant way to shop,
online shopping is quickly becoming a preferred way to shop for consumers around the globe.
 Generally, there are Four main models of ecommerce that businesses can be categorized into:
 Business-to-Consumer (B2C)
 Business-to-Business (B2B)
 Consumer-to-Consumer (C2C)
 Consumer-to-Business (C2B)
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24. eCommerce / Internet has changed consumer shopping habits
 Mobile is Blurring the Line Between Online and Offline Shopping
 Customers Expect More Personalized Experiences
 Shopping Has Become a Social Activity
 Shoppers Are Becoming Their Own Salespeople
 The Evolution Continues
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25. eCommerce / Internet has changed consumer
shopping habits
Selective exposure
People look for pleasant messages & avoid
threatening ones
Inf luenceof TV
People try to avoid any message that may go against their
strong belief orattitude
Use of social media, online transactions, smart phones

26. use of market segmentation in consumer behaviour
 Market segmentation can help you to define and better understand your target audiences
and ideal customers. If you're a marketer, this allows you to identify the right market for your
products and then target your marketing more effectively. ...
 Market segmentation allows you to target your content to the right people in the right way, rather
than targeting your entire audience with a generic message. This helps you increase the
chances of people engaging with your ad or content, resulting in more efficient campaigns and
improved return on investment (ROI).
 market segmentation is the practice of dividing your target market into approachable
groups. Market segmentation creates subsets of a market based on demographics, needs,
priorities, common interests, and other psychographic or behavioural criteria used to better
understand the target audience.
 Types of Market Segmentation
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Thanks