Consumer behaviour

What is Consumer Behaviour - Meaning and Important Concepts

Before understanding consumer behaviour let us first go through few more terminologies: Who is a Consumer ? Any individual who purchases goods and services from the market for his/her end-use is called a consumer. In simpler words a consumer is one who consumes goods and services available in the market. Example - Tom might purchase a tricycle for his son or Mike might buy a shirt for himself. In the above examples, both Tom and Mike are consumers. What is consumer Interest ? Every customer shows inclination towards particular products and services. Consumer interest is nothing but willingness of consumers to purchase products and services as per their taste, need and of course pocket.

Let us go through the following example:
Both Maria and Sandra went to the nearby shopping mall to buy dresses for themselves. The store manager showed them the best dresses available with him. Maria immediately purchased two dresses but Sandra returned home empty handed. The dresses were little too expensive for Sandra and she preferred simple and subtle designs as compared to designer wears available at the store.
In the above example Sandra and Maria had similar requirements but there was a huge difference in their taste, mind set and ability to spend.

What is Consumer Behaviour ?

Consumer Behaviour is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use.
Why do you think an individual buys a product ?

• Need
• Social Status
• Gifting Purpose

Why do you think an individual does not buy a product ?

• No requirement
• Income/Budget/Financial constraints
• Taste

When do you think consumers purchase products ?

• Festive season
• Birthday
• Anniversary
• Marriage or other special occasions

There are infact several factors which influence buying decision of a consumer ranging from psychological, social, economic and so on.
The study of consumer behaviour explains as to:

• Why and why not a consumer buys a product ?
• When a consumer buys a product ?
• How a consumer buys a product ?

During Christmas, the buying tendencies of consumers increase as compared to other months. In the same way during Valentines week, individuals are often seen purchasing gifts for their partners. Fluctuations in the financial markets and recession decrease the buying capacity of individuals.
In a layman’s language consumer behaviour deals with the buying behaviour of individuals.
The main catalyst which triggers the buying decision of an individual is need for a particular product/service. Consumers purchase products and services as and when need arises.
According to Belch and Belch, whenever need arises; a consumer searches for several information which would help him in his purchase.
Following are the sources of information:

• Personal Sources
• Commercial Sources
• Public Sources
• Personal Experience

Perception also plays an important role in influencing the buying decision of consumers.
Buying decisions of consumers also depend on the following factors:

• Messages, advertisements, promotional materials, a consumer goes through also called selective exposure.
• Not all promotional materials and advertisements excite a consumer. A consumer does not pay attention to everything he sees. He is interested in only what he wants to see. Such behaviour is called selective attention.
• Consumer interpretation refers to how an individual perceives a particular message.
• A consumer would certainly buy something which appeals him the most. He would remember the most relevant and meaningful message also called as selective retention. He would obviously not

Stages in Consumer Decision Making Process

An individual who purchases products and services from the market for his/her own personal consumption is called as consumer. To understand the complete process of consumer decision making, let us first go through the following example: Tim went to a nearby retail store to buy a laptop for himself. The store manager showed him all the latest models and after few rounds of negotiations, Tim immediately selected one for himself. In the above example Tim is the consumer and the laptop is the product which Tim wanted to purchase for his end-use. Why do you think Tim went to the nearby store to purchase a new laptop ? The answer is very simple. Tim needed a laptop. In other words it was actually Tim’s need to buy a laptop which took him to the store. The Need to buy a laptop can be due to any of the following reasons:

• His old laptop was giving him problems.
• He wanted a new laptop to check his personal mails at home.
• He wanted to gift a new laptop to his wife.
• He needed a new laptop to start his own business.

The store manager showed Tim all the samples available with him and explained him the features and specifications of each model. This is called information. Tim before buying the laptop checked few other options as well. The information can come from various other sources such as newspaper, websites, magazines, advertisements, billboards etc.

This explains the consumer buying decision process.

A consumer goes through several stages before purchasing a product or service.

NEED
↓
INFORMATION GATHERING/SEARCH
↓
EVALUATION OF ALTERNATIVES
↓
PURCHASE OF PRODUCT/SERVICE
↓
POST PURCHASE EVALUATION

1. Step 1 - Need is the most important factor which leads to buying of products and services. Need infact is the catalyst which triggers the buying decision of individuals.

An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst. However in such cases steps such as information search and evaluation of alternatives are generally missing. These two steps are important when an individual purchases expensive products/services such as laptop, cars, mobile phones and so on.

2. Step 2 - When an individual recognizes his need for a particular product/service he tries to gather as much information as he can.

An individual can acquire information through any of the following sources:

• Personal Sources - He might discuss his need with his friends, family members, co workers and other acquaintances.
• Commercial sources - Advertisements, sales people (in Tim’s case it was the store manager), Packaging of a particular product in many cases prompt individuals to buy the same, Displays (Props, Mannequins etc)
• Public sources - Newspaper, Radio, Magazine
• Experiential sources - Individual’s own experience, prior handling of a particular product (Tim would definitely purchase a Dell laptop again if he had already used one)
2. Step 3 - The next step is to evaluate the various alternatives available in the market. An individual after gathering relevant information tries to choose the best option available as per his need, taste and pocket.
3. Step 4 - After going through all the above stages, customer finally purchases the product.
4. Step 5 - The purchase of the product is followed by post purchase evaluation. Post purchase evaluation refers to a customer’s analysis whether the product was useful to him or not, whether the product fulfilled his need or not?

Cultural Factors affecting Consumer Behaviour

Consumer behaviour deals with the study of buying behaviour of consumers. Consumer behaviour helps us understand why and why not an individual purchases goods and services from the market. There are several factors which influence the buying decision of consumers, cultural factors being one of the most important factors. What are Cultural Factors ? Cultural factors comprise of set of values and ideologies of a particular community or group of individuals. It is the culture of an individual which decides the way he/she behaves. In simpler words, culture is nothing but values of an individual. What an individual learns from his parents and relatives as a child becomes his culture. Example - In India, people still value joint family system and family ties. Children in India are conditioned to stay with their parents till they get married as compared to foreign countries where children are more independent and leave their parents once they start earning a living for themselves.

Cultural factors have a significant effect on an individual’s buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture.
Let us understand the influence of cultural factors on buying decision of individuals with the help of various examples.
Females staying in West Bengal or Assam would prefer buying sarees as compared to Westerns. Similarly a male consumer would prefer a Dhoti Kurta during auspicious ceremonies in Eastern India as this is what their culture is. Girls in South India wear skirts and blouses as compared to girls in north India who are more into Salwar Kameez.
Our culture says that we need to wear traditional attire on marriages and this is what we have been following since years.
People in North India prefer breads over rice which is a favorite with people in South India and East India.

Subcultures

Each culture further comprises of various subcultures such as religion, age, geographical location, gender (male/female), status etc.

Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc)

A Hindu bride wears red, maroon or a bright colour lehanga or saree whereas a Christian bride wears a white gown on her wedding day. It is against Hindu culture to wear white on auspicious occasions. Muslims on the other hand prefer to wear green on important occasions.
For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely relish the same. Eating pork is against Muslim religion while Hindus do not mind eating it.
A sixty year old individual would not like something which is too bright and colorful. He would prefer something which is more sophisticated and simple. On the other hand a teenager would prefer funky dresses and loud colours.
In India widows are expected to wear whites. Widows wearing bright colours are treated with suspicion.

Status (Upper Class, Middle class and Lower Class)

People from upper class generally have a tendency to spend on luxurious items such as expensive gadgets, cars, dresses etc.You would hardly find an individual from a lower class spending money on high-end products. A person who finds it difficult to make ends meet would rather prefer spending on items necessary for survival. Individuals from middle class segment generally are more interested in buying products which would make their future secure.

Gender (Male/Female)

People generally make fun of males buying fairness creams as in our culture only females are expected to buy and use beauty products. Males are perceived to be strong and tough who look good just the way they are.

Social Factors affecting Consumer Behaviour

Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use. Social factors play an essential role in influencing the buying decisions of consumers. Human beings are social animals. We need people around to talk to and discuss various issues to reach to better solutions and ideas. We all live in a society and it is really important for individuals to adhere to the laws and regulations of society. Social Factors influencing consumer buying decision can be classified as under: Reference Groups Immediate Family Members Relatives Role in the Society Status in the society

1.       Reference Groups

Every individual has some people around who influence him/her in any way. Reference groups comprise of people that individuals compare themselves with. Every individual knows some people in the society who become their idols in due course of time.

Co workers, family members, relatives, neighbours, friends, seniors at workplace often form reference groups.

Reference groups are generally of two types:

1. Primary Group - consists of individuals one interacts with on a regular basis.

Primary groups include:

• Friends
• Family Members
• Relatives
• Co Workers

All the above influence the buying decisions of consumers due to following reasons:

They have used the product or brand earlier.

They know what the product is all about. They have complete knowledge about the features and specifications of the product.

Tim wanted to purchase a laptop for himself. He went to the nearby store and purchased a Dell Laptop. The reason why he purchased a Dell Laptop was because all his friends were using the same model and were quite satisfied with the product. We tend to pick up products our friends recommend.

A married individual would show strong inclination towards buying products which would benefit not only him but also his family members as compared to a bachelor. Family plays an important role in influencing the buying decisions of individuals.

A consumer who has a wife and child at home would buy for them rather than spending on himself. An individual entering into marriage would be more interested in buying a house, car, household items, furniture and so on. When an individual gets married and starts a family, most of his buying decisions are taken by the entire family.

Every individual goes through the following stages and shows a different buying need in each stage:

• Bachelorhood: Purchases Alcohol, Beer, Bike, Mobile Handsets (Spends Lavishly)
• Newly Married: Tend to purchase a new house, car, household furnishings. (Spends sensibly)
• Family with Children: Purchases products to secure his as well as his family’s future.
• Empty nest (Children getting married)/Retirement/Old Age: Medicines, Health Products, and Necessary Items.

A Ford Car in the neighbourhood would prompt three more families to buy the same model.

2. Secondary Groups - Secondary groups share indirect relationship with the consumer. These groups are more formal and individuals do not interact with them on a regular basis, Example - Religious Associations, Political Parties, Clubs etc.

2.       Role in the Society

Each individual plays a dual role in the society depending on the group he belongs to. An individual working as Chief Executive Officer with a reputed firm is also someone’s husband and father at home. The buying tendency of individuals depends on the role he plays in the society.

3.       Social Status

An individual from an upper middle class would spend on luxurious items whereas an individual from middle to lower income group would buy items required for his/her survival.

Personal Factors affecting Consumer Behaviour

Consumer Behaviour helps us understand the buying tendencies and spending patterns of consumers. Not all individuals would prefer to buy similar products. Consumer behaviour deals with as to why and why not an individual purchases particular products and services. Personal Factors play an important role in affecting consumer buying behaviour. 1.       Occupation The occupation of an individual plays a significant role in influencing his/her buying decision. An individual’s nature of job has a direct influence on the products and brands he picks for himself/herself. Tim was working with an organization as Chief Executive Officer while Jack, Tim’s friend now a retired professor went to a nearby school as a part time faculty. Tim always looked for premium brands which would go with his designation whereas Jack preferred brands which were not very expensive. Tim was really conscious about the clothes he wore, the perfume he used, the watch he wore whereas Jack never really bothered about all this.

That is the importance of one’s designation. As a CEO of an organization, it was really essential for Tim to wear something really elegant and unique for others to look up to him. A CEO or for that matter a senior professional can never afford to wear cheap labels and local brands to work.

An individual’s designation and his nature of work influence his buying decisions. You would never find a low level worker purchasing business suits, ties for himself. An individual working on the shop floor can’t afford to wear premium brands everyday to work.

College goers and students would prefer casuals as compared to professionals who would be more interested in buying formal shirts and trousers.

2.       Age

Age and human lifecycle also influence the buying behaviour of consumers. Teenagers would be more interested in buying bright and loud colours as compared to a middle aged or elderly individual who would prefer decent and subtle designs.

A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, clubs and so on. A young single would hardly be interested in buying a house, property, insurance policies, gold etc.An individual who has a family, on the other hand would be more interested in buying something which would benefit his family and make their future secure.

3.       Economic Condition

The buying tendency of an individual is directly proportional to his income/earnings per month. How much an individual brings home decides how much he spends and on which products?

Individuals with high income would buy expensive and premium products as compared to individuals from middle and lower income group who would spend mostly on necessary items. You would hardly find an individual from a low income group spending money on designer clothes and watches. He would be more interested in buying grocery items or products necessary for his survival.

4.       Lifestyle

Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way an individual stays in the society. It is really important for some people to wear branded clothes whereas some individuals are really not brand conscious. An individual staying in a posh locality needs to maintain his status and image. An individual’s lifestyle is something to do with his style, attitude, perception, his social relations and immediate surroundings.

5.       Personality

An individual’s personality also affects his buying behaviour. Every individual has his/her own characteristic personality traits which reflect in his/her buying behaviour.A fitness freak would always look for fitness equipments whereas a music lover would happily spend on musical instruments, CDs, concerts, musical shows etc.

Role of Consumer Behaviour in Marketing

Consumer Behaviour refers to the study of buying tendencies of consumers. An individual who goes for shopping does not necessarily end up buying products. There are several stages a consumer goes through before he finally picks up things available in the market. Various factors, be it cultural, social, personal or psychological influence the buying decision of individuals. Marketers need to understand the buying behaviour of consumers for their products to do well. It is really important for marketers to understand what prompts a consumer to purchase a particular product and what stops him from buying. What marketers need to understand ? The psychology of consumers (what they feel about a particular product and their brand on the whole). How consumers are influenced by their immediate surroundings, family members, friends, co workers and so on.

What a consumer thinks when he goes out for shopping ?

A marketer needs to first identify his target consumers and understand their lifestyles, psychologies, income, spending capabilities, mentalities to offer them the right product.
Individuals from lower income group would never be interested in buying expensive and luxurious products. He would first fulfill his basic physiological needs like food, air, water etc. Trying to sell a Mercedes or a Rado watch to someone who finds it difficult to make ends meet would definitely be a disaster.
Kellogg’s K special would hardly find any takers in the low income group. In this segment, individuals would be more interested in buying fresh fruits, vegetables, pulses which are necessary for their survival rather than spending on health supplements.
It is really essential for the marketers to understand the needs of consumers. Find out what they are actually looking for?
There are ideally two different ways which enable marketers to understand their consumers.

• Primary Research
• Secondary Research

Primary Research - Primary Research refers to a research methodology where marketers interact with consumers directly and gather as much information as they can. Information is generally collected through surveys, questionnaires, feedback forms, interviews etc.
Secondary Research - Secondary Research often refers to relying on information which has been collected by others at some point of time.
The background and family status of an individual also influence his/her buying behaviour.
Selling a laptop to an individual who is not much educated would be pointless. Remember consumers would show interest in your products only if they are of any use to them or their immediate family members. A low grade worker would never be interested in purchasing business suits or formal shirts.
Canned juices are a hit among middle and higher income group where individuals are really conscious about their health and fitness. Individuals who live hand to mouth would never spend on sugar free tablets, health supplements, or for that matter “Diet Coke”.
It is also important to give complete information to end-users. Do not hide anything from them. It is not ethical. All tobacco products come with a warning. Individuals should be familiar with not only the benefits but also the side effects of the products.
Marketers must also take into account:

• Age group of consumers
• Geographical location
• Lifestyle of consumers
• Social Status of consumers

Funky designs, loud colours would be a hit among teenagers whereas middle aged and elderly people would prefer subtle colours and sophisticated designs.
Salwar Suits are extremely popular in North India whereas females prefer saris and skirt blouses in eastern and southern parts of India.
Individuals from posh localities and good jobs would show keen interest towards buying exclusive and unique products as compared to individuals who do not come from an affluent background.

Role of Consumer Behaviour in Advertising

Marketers need to understand the buying behaviour of consumers while designing their advertisements for the desired impact. Advertisements play an essential role in creating an image of a product in the minds of consumers. Advertisements must be catchy and communicate relevant information to consumers. Understanding the needs of the consumer is really important when it comes to creating the right advertisement for the right audience. Remember it is only through advertisements; individuals are able to connect with your brand. Identify your target audience. The advertisement in some way must touch the hearts of the end-users for them to buy the product. It is really essential to show what the consumers like. Meet your target audience and find out what they expect from your product and brand on the whole. Do not show anything which might offend any religious group or community. Make sure the message is relevant and crisp. Overload of information nullifies the effect and the advertisement might go unnoticed. Don’t try to confuse the consumers. They will never buy your product. Understand their psychologies well.

The advertisement must show what the product is all about. It should, in a way give some kind of information about its price, benefits, usage, availability and so on.

Consumers perceive Women Horlics as a health and energy drink which is a must for all working women as well as expecting mothers for their overall well -being. A Horlics advertisement with a male model does not make sense as the target audience would never be able to connect with the product. A lean and inactive office going female drinking Women’s Horlics and thereafter beaming with energy and confidence would be the ideal concept for the advertisement. Through advertisements, the company actually tries to win over the confidence of consumers who would not mind spending on their product.

A Tag Heuer, Omega, Mercedes, I phone advertisement ought to be classy for people to recognize these products as status symbols. Use expensive props, unique concepts and well known faces for all premium and exclusive brands.

Advertisements meant for younger people (college goers, young professionals) ought to be colourful and trendy for them to be able to relate themselves with the product. Serious advertisements do not go very well with the youngsters. It is essential to understand the mindsets, attitudes and preferences of target audience.

Advertisements for insurance plans, medical benefits, hospitals ought to be sensible as they convey much serious information and target a mature segment of individuals altogether.

The time slot of commercials also needs to be taken care of. Advertisements for products meant for children should ideally be aired during afternoon or early evening hours as this is the time when they watch maximum television. Understand the lifestyle of your target audience. Prime time commercials are the ones which are viewed by maximum people.

Choose the right theme for your advertisement. The advertisements ought to create the need among the consumers for them to buy the product. Commercials ought to give complete information to the consumers. All tobacco and alcohol commercials must show the warning message.