Consumer Behaviour

Chapter 3 An Overview of Consumer Behaviour and Duable Goods
3.1 Introduction
Consumers do not buy products and services; they buy dreams and
experiences (Brady, 2011). Every marketing activity starts with the consumer and
ends with the consumer (Agarwal & Kumar, 2011). It is very much necessary to
know who consumes products or services or play a role in buying decision and why
they do so. A human being by nature is very complex. It is very difficult to
understand the human behavior. It is the human brain which controls all the
activities of an individual. A person acts according to his needs. (Sridaran, 1998).
But, when it comes to choosing a particular product, the real problem is to identify
what he takes into consideration. Such a study is concerned with consumer
behaviour. The field of consumer‟s behaviour really began to develop in the early
1960s, when the Ford foundation commissioned a two year study of the state of
knowledge of marketing in American Business School (John A Howard, 1989).
Many theories about consumer behaviour have been evolved later and marketers use
those theories to develop new strategies and achieve the goals by satisfying the
needs and wants of the consumers.
3.2 Consumer Behaviour
Consumer behaviour is the study of behaviour of individuals, organizations and

groups to know how they purchase, select, use and dispose goods, services, experiences
or ideas to satisfy the needs and wants. (Philip kotler, Kevin Lane Keller, Abraham
Koshy, Mithileshwar Jha, (2009). It blends concepts from psychology, sociology, social
Consumer Behaviour for Consumer Durable Goods in Kerala 55

anthropology, marketing and economics. It tries to understand how emotions affect

buying behaviour both individually and in groups. It attempts in depth knowledge into
the various characteristics like demographics and behavioural variables of the
individuals in order to identify their needs. It also tries to exert influences on the
consumer from groups such as friends, family, reference groups, and society.
Customer behaviour study is based on consumer buying behavior in which

the customer plays three different roles of user, payer and buyer. (Engel, James,
Roger & Miniard, 1990). Research has revealed that consumer behaviour is very
difficult to predict even for experts in the field as it is irrational. Relationship
marketing is an influential asset for customer behaviour analysis as it has a keen
interest in highlighting the importance of the customer or buyer thereby bringing out
the true meaning of marketing.
3.2.1 Consumer Behaviour- Definitions
Some eminent authors defined consumer behaviour as:
“Consumer behavior refers to those acts of individuals directly involved in

obtaining and using economic goods and services including the decisions processes
that precede and determine these acts”-Engel, Blackwell and Kollat
“Buyer behavior is all psychological, social and physical behaviour of

potential consumers as they become aware of, evaluate purchase, consume and tell
other people about products and services”-Webster
“Consumer behavior can be defined as the activities and actions of people

and organizations that purchase and use economic goods and services, including the
influence on these activities and actions”- E.J.F. Engel
“Consumer buying behavior refers to the buying behavior of final consumers-

individual households who buy goods and services for personal consumption”-
Kotler & Armstrong
“The field of consumer behavior is the study of individuals, groups, or

organizations and the processes they are to select, secure, use and dispose off

products, services, experiences or ideas to satisfy needs and the impacts that these
processes have on the consumer and the society”-Hawkins, Best & Coney
3.2.2 Role of Consumer Behaviour in Marketing
Consumer behaviour refers to the study of buying tendencies of consumers.

(V. Radha, P.T.Oommen & N.S.Nair, (2005). An individual may go window-
shopping without buying anything. A consumer goes through several stages before
he decides to buy things available in the market. Several factors such as social,
cultural, personal or psychological may influence the individual‟s decision.
The basic factor marketers need to understand is the buying behaviour of

consumers for their products to succeed. It is essential for marketers to identify what
makes a consumer to purchase a particular product and what refrains him from
buying. A marketer must first of all find the different aspects which influence the
consumer to decide on a product. It depends on the demand caused by their income,
lifestyles, psychologies, spending capabilities etc.
3.2.3 Consumer
Any person who purchases goods and services from the market for his/her
ultimate use is called a consumer. (William & David, 1996). In simpler words a
consumer is one who consumes goods and services available in the market.
3.2.4 The Buyer Decision Process
A consumer goes through many stages prior to purchasing a product or service.
NEED
↓
INFORMATION GATHERING/SEARCH
↓
EVALUATION OF ALTERNATIVES
↓
PURCHASE OF PRODUCT/SERVICE
↓
POST PURCHASE EVALUATION
The buyer decision process includes Five Stages-: Need recognition,
information search, evaluation of alternatives, purchase decision, and post purchase

behaviour. (Schifman, Kanuk & Kumar 2010). It is clear that the decision to buy
starts long before the actual purchase and continues long after. Marketers have to
focus on the complete buying process rather than on just the purchase decision.
3.2.4.1 Need Recognition
The first stage of the buyer decision process is that the consumer recognizes a
problem or a need. Need is the most important factor which leads to buying of products
and services. The recognition of a need caters to the decision making of an individual.
3.2.4.2 Information Search
Once the consumer has identified a problem, they search for ways and means
to rectify the problem. The sources of information include experience and personal
sources and public and commercial sources. The tendency of consumers to collect
information on products, make it possible for researchers to predict the behavioural
pattern of consumers using brief descriptions of interested product. .
An individual can acquire information through any of the following sources:
(Philip kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha, 2009).
 Personal Sources - friends, family members, co workers and other

acquaintances.
 Commercial sources - Advertisements, sales people, dealers, Packaging,

Displays
 public sources - Newspaper, Radio, Magazine
 Experiential sources - Individual‟s own experience, prior handling of a

particular product.
3.2.4.3 Evaluation of Alternatives
During this stage, the products and brand that are in the evoked set of the
consumers are checked by them. The evoked set refers to the number of alternatives
that are considered by consumers during the decision making process. Consumers
evaluate alternatives in terms of the functional and psychological benefits that they
offer. (Jobber, 2001). The marketing organization needs to realize what benefits

consumers prefer and therefore which attributes are in demand as a decisive factor in
terms of making a decision.
3.2.4.4 Purchase Decision
Once the alternatives have been evaluated, the consumer is ready to make a
decision to purchase. But it may not necessarily result in an actual purchase. Here
the role of the marketing organization is to facilitate the consumer to put this
decision into action through a variety of techniques. The provision of credit or
payment terms may encourage purchase, or a sales promotion enticing the buyer
with a premium or enter a competition may provide an encouragement to buy
immediately. The important internal psychological process that is associated with
purchase decision is integration. Once it is achieved, it is easier for the organization
to influence the purchase decision.
3.2.4.5 Post purchase Evaluation
After making the purchase, the consumer may experience dissatisfaction that
comes from certain disquieting features or hearing favorable things about other
brands and will be alert to information that supports his or her decision. ( Jonathan
Groucutt, Peter Leadley, Patrick Forsyth Kogan,2004). Marketing communications
should supply beliefs and evaluations that reinforce the preference of consumers and
help him feel good about the brand.
Therefore, the marketer has a great responsibility in monitoring post purchase

satisfaction, post purchase actions and post purchase product uses.
3.2.5 Factors Influencing Consumer Behaviour
Consumer purchases are influenced strongly by cultural, social, personal, and

psychological characteristics. For most part, marketers cannot control such factors, but
they must take them into account. Cultural factors exert the broadest and deepest
influence on consumer behavior. The marketer needs to understand the role played by
the buyer‟s culture, sub culture, and social class.

3.2.5.1 Cultural Factors
Culture factors exert the broadest and deepest influence on the consumer
behavior the marketer needs to understand the role played by the buyer‟s culture,
subculture, and social class. (Philip Kotler, Gary Armstrong, 1997)
3.2.5.1.1 Culture
It is the most basic cause of a person‟s wants and behavior. The human
behavior is largely learned. Culture is the set of basic values, perception, wants and
behavior learned by the member of the society from family and other important
institutions.
3.2.5.1.2 Subculture
Each culture contains smaller sub cultures, or groups of people with shared
values systems based on common life experiences and situations. (George & Roy).
Subcultures include religions, nationalities, racial groups, and geographic regions.
3.2.5.1.3 Social class
Majority of any society has some form of social class structure. Such are
more or less permanent and ordered divisions in a society whose members are like-
minded sharing similar values, interests, and behaviors. (Philip Kotler & Kevin,
2006).
3.2.5.2 Social Factors
The behaviour of a consumer is influenced by social factors such as small

group of persons, family and social roles and status (Philip Kotler, Gary Armstrong,
(1997).
3.2.5.2.1 Group
A person‟s behavior is influenced by many small groups. Groups that have a

direct influence and to which a person belongs are called membership groups. There are
some primary groups with whom there is constant but informal interaction-such as
family, friends, neighbours, and co-workers. Whereas, some are secondary groups,

which are more formal and have less regular interaction. These include organizations
like religious groups, professional associations, and trade unions.
3.2.5.2.2 Family
The family members (husband, wife, and children) can strongly influence
buyer behavior. Studies have revealed that the family is the most important
consumer buying organization in Society. (Sherlekar, 2006).
3.2.5.2.3 Role and Status
A person belongs to many groups such as family, club and organizations. The
person‟s position in each group can be defined in terms of both role and status. Role
consists of the activities people are expected to perform according to the group they
belong to. Status reflects the general esteem given to it by the society. People choose
the products that show their status in the society.
3.2.5.3 Personal Factors
A buyer‟s decisions is also influenced by personal characteristics such as

the buyer‟s age life style, and life cycle stage, occupation ,economic situation ,
lifestyle , and personality and self concept.
3.2.5.3.1 Age and Life cycle stage
People‟s preference for the goods and services they buy over their lifetime
undergo change with their age. The various stages of family life cycle- through which
families might pass as they mature over the years are shown in Table 3.1.
Table 3.1 Family Life Cycle Stages

Young Middle aged Older
Single Single Older married
Married without children Married without children Older unmarried
Married with children Married with children
Divorced with children Married without dependent children
Divorced without children
Divorced with children
Divorced without dependent children
(Patrick E Murphy and William A Staples, 1979)

3.2.5.3.2 Occupation
A person‟s occupation also affects the goods and services they bought. Blue
collar workers are practical and tend to buy more work clothes, whereas white-collar
workers buy suits and ties more suited for their job. Marketers try to identify the
occupational groups that have an above average interest in their products and services.
3.2.5.3.3 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.
If economic indicators point to a recession, marketers can take steps to redesign,
reposition, and reprice their products closely according to the need of the hour.
3.2.5.3.4 Life Style
A person‟s pattern of living as expressed in his/her psychographics. (Harper
& Sidney, 1967). It involves measuring consumers activities (work, hobbies,
shopping, sports, social events), interest, (food, fashion, family, recreation), and
opinions (about themselves, social issues, business, products).
3.2.5.3.5 Personality and self concept
Personality refers to the unique psychological characteristic that leads to
relatively consistent and lasting responses to his or her own environment.
Personality can be expressed in terms of traits such as self-confidence, dominance,
sociability, autonomy, defensiveness, adaptability, and aggressiveness. (R. C
Agarwal, 2009)
Many marketers use a concept related to personality, a person‟s self concept
or self image. The basic self-concept premise is that people‟s possessions contribute
to and reflect their identities. Thus, to know consumer behavior, the marketer must
first understand the relationship between consumer self-concept and possessions.
(Harold & Mary, 1981)
3.2.5.4 Psychological Factors
A person‟s buying is influenced by four major psychological factors:
motivation, perception, learning, and beliefs and attitudes. – (Philip Kotler, Gary
Armstrong, 1997)

3.2.5.4.1 Motivation
Motivation means all those drives induced by needs which incite an

individual to action and sustain the same till the need is satisfied or tension is
reduced. A need becomes motive only when the need is strong enough to drive the
person to act in a desired way. Abraham Maslow sought to explain why people are
driven by particular needs at particular times. (Abraham Maslow, 1954).
3.2.5.4.2 Perception
Perception is the way of seeing or understanding something. People can form

different perceptions of the same stimulus because of the three perpetual processes.
These are selective attention, selective distortion and selective retention. Selective
attention is the tendency for the people to screen out most of the information to
which they are exposed. Selective distortion describes the tendency of people to
perceive information in a way that will support what they already believe. Selective
retention tends to retain information that supports their attitudes and beliefs.
3.2.5.4.3 Learning
Learning brings changes in the individual‟s behavior arising from experience.

Most human behavior is learned. Learning occurs through the interaction of the
individual with peer group, society and responding to various situations thereby
gaining knowledge or skill.
3.2.5.4.4 Beliefs and Attitude
Belief is a descriptive thought a person hold about something. Attitude is a

person‟s way of thinking or behaving towards something or someone.
3.2.5.5 Economic factors
As far as consumer behaviour is concerned, economic factors are very

influencing and powerful one. With the limited resources, human being wants to
maximize his satisfaction. The basis of economic model is that the demand of the
product is affected by its price. Following are the main economic factors affecting
consumer behaviour.

3.2.5.5.1 Personal Income
Personal income is the most powerful economic factor.
3.2.5.5.2 Family Income
The buying behaviour of family members is influenced by the relationship

between family income and family size.
3.2.5.5.3 Income Expectation of the consumer
If the income expectation is weak, consumers spend less and save more.
3.2.5.5.4 Consumer Liquid Asset
Generally, liquid assets are used to purchase durable goods. Examples of

liquid assets are cash in hand, short term bank deposit, shares etc.
3.2.5.5.5 Consumer Credit
Consumers who don‟t have lump sum money with them would like to buy
durable goods on installment basis.
3.2.5.5.6 Establishing Living Standards
According to Dusenberg, “A consumer is not only influenced by his current

income but also by the living standard employed in past”.
3.2.6 Consumer Behaviour Theories
The major theories of consumer behaviour can be grouped with (a) Economic
theories, (b) Psychological theories (c) Psycho-analytical theories and (d) Socio
cultural theories. All the consumer behavioural theories are based on the basic law of
consumption i.e. when aggregate income increases, consumption also increases by
some smaller amount and is based on the assumptions like spending habits remain the
same, political conditions, remaining normal and economy is free and perfect.
3.2.6.1 Economic Theories
The economic theories on consumer behaviour focused on how consumers

allocate their income and how this determines the demands of various goods and
services. The basic economic theories include marginal utility theory, psychological

law of consumption, absolute, relative and permanent income hypothesis etc.

Marginal utility theory was developed by classical economists. According to them a
consumer will continue to buy such products that will deliver him the most utility or
maximum satisfaction at relative prices. This theory brought out two laws that are
said to govern consumer buying behaviour. These include law of Diminishing
marginal utility and law at Equi-marginal utility. As per the law of diminishing
marginal utility, a consumer satisfies his wants in the order of their urgency that he
consciously or unconsciously weighs in his mind and the price he has to pay for the
utility of each product he buys. In the case of Law of Equi-marginal Utility, so as to
maximize satisfaction, consumer arranges his expenditure in such a way that his
marginal utilities from different items are equalized. However, the economists only
partially accept this theory on the ground that economic factors alone cannot explain
variations in sales and decision of purchase by consumers, but it is influenced by
many psychological and sociological factors. On account of these, economists have
attempted to refine it by providing improvements and thereby formulated
indifference curve analysis and theory of revealed preferences. In the indifference
curve analysis, the overall consumer choice problem is structured as a relative
choice between product alternatives within constraints related to price, income and
the available budget. Similar type of refinement of the utility theory has also been
made by Samuelson in his Revealed preference theory and by Armstrong in his
Marginal Preference theory. (J.C. Gandhi ,1991), While the utility approach is micro
in character, there are important macro theories also.
3.2.6.2 Psychological Law of Consumption
Keynes‟s Psychological Law of Consumption is the basis to income theory.

This law is a statement of very common tendency that when income increases,
consumption also increases, but not to the same extent as the increase in the income.
This law depends upon three related prepositions, (i) when the aggregate income
increases, consumption expenditure also increases, but a smaller amount. (ii) an
increment of income will be divided in some ratio between saving and spending.(iii)
an increase in income is unlikely to lead either to less spending or less saving than
before. This theory highlights the fact that consumption essentially depends upon

income and that income earners always have a tendency to spend less on
consumption than the increment in income. However there are critics against this
theory stating that there are many other non income factors which influence
consumption spending especially in the short run.
3.2.6.3 Economic Theories of Spending Behaviour
The three general theories on the determinants of total consumer spending

are; (a) The Absolute Income Hypothesis, (b) The Relative Income Hypothesis, (c)
The Permanent Income Hypothesis, and (d) The Life Cycle Hypothesis. Each theory
was put forward originally in terms of individual behavior and then generalized to
aggregate behaviour and each hypothesis postulates a relationship between
consumption and income, though the concepts underlying these terms may vary
substantially.
3.2.6.3.1The Absolute Income Hypothesis
The first statement of this theory is perhaps made by Keynes in the General
Theory. (R.D. Gupta,1994). Its subsequent development is primarily associated with
James Tobin and Arther Smithies. This theory states that the short run relationship
between consumption and income is non-proportional but the time-series data show
the long run relationship to be proportional. This theory was criticized on the ground
of its inability to reconcile data on saving with observed long term trends and as an
answer to this inconsistency the relative income hypothesis was developed.
3.2.6.3.2 Relative Income Hypothesis
This hypothesis was propounded by Dorothy Brady Rose Friedman and

James Duesenberry. Its underlying assumption is that saving rate depends on the
level of income, but on the relative position of the individual on the income scale.
(R.D. Gupta, 1994) As such, Relative Income Hypothesis implies the assumption
that spending is related to a family‟s relative position in the income distribution of
approximately similar families. James. S. Duesenberry supplied psychological
support to the relative income hypothesis noting that there is a strong tendency in
our social set up for people to emulate their neighbours and at the same time to

strive constantly towards a higher standard of living. According to him,

consumption expenditure of an individual is determined not only by his current
income, but also by the standard of living enjoyed by him in the past. This idea is
known as Duesenberry hypothesis.
3.2.6.3.3 The Permanent Income Hypothesis
The Permanent Income Hypothesis was developed by Prof. Milton Friedman.

Like Relative Income Theory, it holds that the basic relationship between
consumption and income is proportional, but the relationship here is between
permanent consumption and permanent income. He replaced the concept of current
income to permanent income. According to him, “Permanent income is to be
interpreted as the mean income regarded as permanent by the consumer unit in
question which in turn depends on its farsightedness”. (R.D. Gupta, 1994) It
concludes that the long run, consumption income relationship is proportional.
Changes in permanent income give rise to proportional changes in permanent
consumption. However critics argue that, this theory puts too much stress on the
expectations and long range planning of consumer units, while in reality consumer
units change their consumption behavior frequently.
3.2.6.3.4 Life Cycle Hypothesis or (MBA Approach)
This hypothesis was propounded by Modigliani, Albert Ando and later by

Branberg. This approach is essentially a permanent wealth hypothesis rather than
permanent income hypothesis (R. D. Gupta, 1994). According to Life Cycle Theory,
the consumption in any period is not the function of current income of that period
but of the whole life time expected income. In the MBA hypothesis, consumption is
taken as a function of wealth and age and not of simple current income. It also
emphasizes that consumption function is strictly proportional to total wealth. The
above economic theories highlight the short run and long run consumption function
of consumers based on their income, savings, wealth and life cycle.

3.2.6.4 Psychological Theories
The essence of psychological theories (learning theories) lies in the fact that
people learn from experience and the results of experience will modify their actions on
future occasions. (Dr. N. Rajan Nair and Sanjith R. Nair, 1998)The importance of
brand loyalty and repeat purchase makes learning theory more relevant in the field of
marketing. Among the learning theories stimulus response theories and cognitive
theories are important. Contributors of stimulus response theories include Purlon,
Skinner Thorindike and Kotlew. According to them learning occurs as a person
responds to some stimulus and is rewarded with need satisfaction for a correct
response. They proved that most frequent and recent stimuli are remembered and
responded. This approach is the basis of reported advertisements. The cognitive theory
was propounded by Festinger mainly to explain certain post buying behavior.
According to it stimulation and want are conditioned by a consumer‟s knowledge, his
perception, beliefs and attitudes. The theory further states that even after a well
thought out purchase the consumers undergo some sort of discomfort, fear or
dissonance. This post decision anxiety is caused by „nice‟ (cognitive dissonance)
arising from doubts on the decisions taken. Though the theory was developed to
explain a „post decision‟ phenomenon, it is suitable for explaining pre-decisions
anxiety also. The advertisements and personal selling aimed to reduce cognitive
dissonance on the part of the buyer. Gestalt theory, coined by German Psychologist
Christian Von Ehrenfels viewed personality as the result of the interaction between the
person and the total environment and the two must be considered together as a
patterned event. (J.C. Gandhi, 1991). Consumers, in making market decisions, strive
to reduce tension and conflict between themselves and their environmental
perceptions.
3.2.6.5 Psycho-Analytic Theories
This theory developed from the thoughts of Sigmund Freud. He postulates

that personality has three basic dimensions, the id, the ego and the super ego. ( Dr.
N.Rajan Nair and Sanjith R. Nair,1998) It follows that consumer behaviour is a
function of the interaction of these three systems. Here the id urges an enjoyable

act, the super ego presents the moral issues involved and the ego acts as the
arbitration in determining whether to proceed or not. This has led to motivational
research and has proved useful in analyzing buyer‟s behaviour. This in turn has
contributed some useful insights in the advertising and packaging field.
3.2.6.6. Socio Cultural Theories
The credit of formulation of this theory goes to Thorstein veblem (1899) and
is known as Veblenian model. He asserted that a man is primarily a social animal
and his wants and behaviour are largely influenced by the group of which he is a
member. (Dr. N.Rajan Nair and Sanjith R. Nair, (1998). He argued that people
have a tendency to fit in a society in spite of their personal likes and dislikes.
Culture, sub culture, social classes reference groups, family are the different factor
groups that influence buyer behaviour. All the above theories give guidelines to the
marketing managers how a consumer behave in a particular situation and what are
the factors which influence their decision making process.
3.2.7 Different Types of Consumer Behaviour Models
Following are the important models on consumer behaviour.
3.2.7.1 Nicosia Model (Conflict Model)
Francesco Nicosia was the first to develop consumer behaviour model in the
early 1960s This model shows the inter-relationship between the firm‟s marketing
communications, attributes of the consumer, the consumer‟s decision process and
the feedback of the consumer‟s response to the firm. (S.A.Sherlekar, 2003). Nicosia
presented his model in flow chart format, resembling the steps in a computer
programme. Also, all variables are viewed as interactive, with none being inherently
independent or dependent. Thus, the model describes a circular flow of influences
where each component provides input to the next. The model is viewed as
representing a situation where a firm is designing communications (products, ads
etc.) to be delivered to consumers and in turn consumers‟ responses influence
subsequent actions of the firm.

The model contains four major fields or components: (FIELD-I) the firm‟s
attributes and and consumer‟s psychological attributes, (FEELD-II) the consumer‟s
search for and evaluation and of the firm‟s outputs and other available alternatives,
(FIELD-III) the consumer‟s motivated act of purchase, and (FIELD-IV) the
consumer‟s storage or use of the product (Nicosia, 1966).
Limitations of Model:
The Nicosia model offers no detail explanation of the internal factors, which
may affect the personality of the consumer, and how the consumer develops his
attitude toward the product. Nicosia Model is shown in Figure 3.1.
Figure 3.1 Nicosia Model
3.2.7.2 Howard-Sheth Model
The model distinguishes among three levels of learning namely, extensive

problem solving, limiting problem solving and routionised response behaviour.
(AGARWAL& KUMAR, 2011)

 Extensive Problem Solving: This occurs when a consumer‟s knowledge and

benefits about brands are very limited or non- existent, and he does not have
specific brand preference. The consumer seeks information actively about
several alternative brands.
 Limited Problem Solving: In this situation the consumer‟s knowledge and

beliefs about brands are only partially established and he does not have any
specific beand preference.. The consumer seeks some comparative brand
information, although the decision criteria are quite likely to be fairly
established.
 Routinised Response Behaviour: This refers to a situation when the

consumer has well-established knowledge and beliefs about the brand and
other alternatives in the category and is predisposed to purchase a specific
brand.
The model has four major sets of variables:
1. Inputs
2. Perceptual and Learning Constructs
3. Outputs
4. External Variables
 Inputs.
These variables include three distinct types of information sources (stimuli)

present in the consumer‟s environment. Significative stimuli represent the
brand‟s physical attributes, the marketer provides the Symbolic stimuli in the
form of brand information and could be visual or verbal, and the third kind of
information is furnished by consumer‟s social environment.
 Perceptual and Learning Constructs
The central element in the Howard-Sheth Model includes psychological

variables that are assumed to operate when the consumer is involved in

decision-making process. (Howard & Sheth 1969). These psychological

variables are treated as simply ideas, and are not defined operationally or
evaluated directly. Some of these variables are perceptual in nature and focus
on how the consumer receives and processes information gained from input
and other parts of the model
 Learning constructs
It performs the function of consumer‟s concept formation and include her/his

goals, information about the brands in the evoked set, criteria for evaluating
alternatives, and intentions to buy. The proposed interaction (shown with
arrows and solid and dotted lines) between various perceptual and learning
variables and the variables in other segments of the model give the Howard-
Sheth Model a distinct character.
 Outputs
The model shows a series of outputs that are similar in name to some of the
perceptual and learning construct variables that include attention, brand
comprehension, attitudes, intentions, and finally the act of purchase.
 External Variables
These variables are not directly involved in the decision-making process. The
relevant external variables include importance of the purchase, consumer‟s
personality traits, time pressure, and availability of funds. The Howard-Sheth
Model is shown in Figure 3.2.

Figure 3.2 The Howard-Sheth Model
3.2.7.3 The Engel – Kollat – Blackwell Model
This model talks of consumer behaviour as a decision making process in the

form of five step (activities) which occur over a period of time. Apart from these
basic core steps, the model also includes a number of other related variables.
 Decision – process stage
 Information input stage
 Information processing stage and
 Variable influencing the decision process (Engel & Miniard, 1986).
The five steps (activities) involved in the decision process stage are briefly
explained below:
 Problem Recognition: The consumer will recognize a difference between his

or her actual state and what the ideal state should be. This may occur on

account of external stimuli. It may be noted that the consumer must perceive
a sufficiently large discrepancy between actual and ideal states in order to be
activated, recognize a problem and find a way to solve it.
 Information Search: Initially the information available with the consumer

may be consistent to the beliefs and attitudes held by him or her. While being
involved in an information seeking or search stage, the consumer will try to
gather more information from various sources. These sources could be sales
persons, personal or friends or neighbours or mass communication media.
The information processing takes place in various stages. The individual gets
exposure of the stimuli which may catch his or her attention, be received and
stored or retained in memory. This method of information processing is
selective in nature and the consumer will accept the information which is
conclusive to what is perceived by them.
 Alternative Evaluation: Now the individual will evaluate the alternative

brands. The methods used for evaluating the various products will be
dependent on the consumers underlying goals, motives and personality. The
consumer also has certain (predetermined) beliefs about the various brands in
terms of the characteristics associated with the different brands. Based on
these beliefs the consumer will respond either positively or negatively
towards a particular brand.
 Choice: The consumer‟s choice will depend on his or her intention and
attitude. The choice will also depend upon normative compliance and
anticipated circumstances. ( S.A.SHERLEKAR,2003). Normative
compliance relates to the extent to which the consumer is influenced by other
people like friends, family members etc. Thus normative compliance and
anticipated circumstances will attempt to influence the individual. The
person‟s choice of the product can also be dependent on the sensitivity of the
individual to handle unanticipated circumstances like losing the job, funds
diverted for another urgent cause etc.

 Outcome: The outcome may be either positive or negative. If the end result
is positive, the outcome will also be positive. Conversely, if there is
dissonance, that is, a feeling of doubt experienced by the consumer, about
the choice made by him or her outcome will not be positive. Now the
consumer will search for more information to support his or her choice. The
above mentioned Engel-Kollat-Blackwell model has taken into consideration
a large number of variables which influences the consumer. The Engel –
Kollat – Blackwell Model is shown in Figure 3.3.
Figure 3.3 The Engel – Kollat – Blackwell Model
3.2.7.4 Sheth-family decision making model
Sheth family decision-making model suggests that joint decision making

tends to prevail in families that are middle class – newly married and those who are
close knit with few prescribed family roles ( R S N PILLAI & BAGAVATHI,2005).
In terms of product specific factors, it suggests that joint decision making is more
prevalent in situations of highly perceived risk or uncertainty, when the purchase
decision is considered to be important and when there is ample time for decision
making.

3.2.7.5 Bettman's Information Processing Model of Consumer Choice
Bettman, in the 1970s introduced a consumer behavior model that bases itself
on the information processing that takes place within a consumer. (John Wilmshurst,
1995) According to him, the consumer is central to a host of information processing
activities. He receives a large amount of information externally from the marketer,
competitors and the environment. He also has a large store of information within him
as a database that he builds over time from his learning, experiences, social influences
etc. With a huge amount of information that he is exposed to, the processing becomes
difficult and unmanageable. According to him, consumers‟ possess a limited capacity
for processing information. Thus Bettman concluded that consumers use certain
simplifying strategies to process information. The consumer information process is
depicted through several flowcharts, which depict the various components of the
model and the interrelationships between them. The main components of the model
are processing capacity, motivation, attention, information acquisition and evaluation,
decision process, consumption and learning processes.
 Processing capacity:
Bettman assumes that while the information processing capacity varies across
people, it is limited for each one of us. Every person has a limited capacity to
process information. Thus, consumers are not interested in extensive
information processing, and select strategies that make product selection an easy
process. They try to bypass their limits by being selective towards information
receptivity, ignoring certain information that they consider irrelevant or
incomprehensible, prioritizing information that is required and is in use etc.
 Motivation:
The decision making choice process within a consumer is provided strength,

intensity and direction through motivation. There exists a hierarchy of goals‟
mechanism that provides different sub-goals to simplify the choice selection
(William H Cunningham& Isabella C M, 1987). Depending upon the goal
hierarchy (priority of goals), this component acts as the powerful and
imposing component that controls directly not only the subsequent processes
of attention, information acquisition and evaluation, decision processes and

the consumption and learning processes, but also controls indirectly the
various sub-processes in the model via the main process components.
 Attention and Perceptual Encoding:
According to Bettman, attention could be voluntary as well as involuntary in

nature. When a consumer actively consciously seeks attention to achieve his
goals, it is referred to as a voluntary attention. Non-voluntary or involuntary
attention is the short term attention that he provides before deciding whether
he should process the information that he has been exposed to and as to
whether he should provide a voluntary attention. Perceptual encoding occurs
when the person integrates the information that he has processes into his
already existing perceptual network or database.
 Information acquisition and evaluation:
The consumer decides on the kind of information as well as the quantum of

information required for the choice decision. Based on heuristics, he assesses
the importance and availability of information. If he has the necessary
information in a sufficient quantum in his memory, he goes ahead with the
next stage. Memory is the source for the internal search for information. If he
feels that the information that he has in his memory is insufficient, he
acquires more information through external search. After acquiring
information, the consumer evaluates the information for utility and
sufficiency, and then moves on to make decision choices.
 Decision Process:
After information search and evaluation, the consumer takes a decision; the
final decision of the brand is based not only on the acquired and evaluated
information, but also his personal characteristics, demographics,
psychographics (motivation, learning and experiences, attitude, personality,
perception, etc), social influences and situational factors. This stage is also
affected by the scanner and interrupts mechanisms. If the purchase is a routine
purchase, the decision making is faster and often repeat; in other cases, it may
take time. Bettman's Information Processing Model is depicted in Figure 3.4.

Figure 3.4 Bettman's Information Processing Model

3.2.8 Types of Buying Behaviour
Differences in consumers buying behaviour depends on the type of product

the consumer is purchasing. A behaviour model consists of four different buying
behaviour was designed by Kotler (Kotler, Armstrong, Saunder & Wong, 1999)
Complex buying occurs when there is high involvement from the consumer
to a product and significant differences between the brands. This means that before a
consumer purchase a high quality brand, he searches for a lot of information about
that brand.
Dissonance-reducing behavior happens when a consumer is highly involved

in purchasing a product because of the purchase is expensive or infrequent. There is
little difference between existing brands.
Variety seeking buying behaviour happens in those situations where there is

low consumer involvement but significant perceived brand differences.
Habitual buying bahaviour occurs when there is low involvement from the
consumer and few significant perceived brand differences.

The types of buying behaviour is shown in Table 3.2

Table 3.2 Types of Buying Behaviour
High Involvement Low Involvement
Significant differences Complex buying Variety-seeking
between brands behaviour behaviour
Few differences between Dissonance-reducing Habitual buying
brands behaviour behaviour
Kotler et al (1999)
3.2.9 E-Consumer Behaviour
Consumers (cyber consumers) can‟t be seen or met (K.K.Srivastava& Sujata

Khandai,2003). E-Business or Electronic business has brought a revolution in many
fields. It has also changed the entire concept of selling and buying. It has changed
the thinking of the consumer. It has changed the decision-making of consumer and
the physical activities associated with the decision making process have been
reduced tremendously. Consumers using the internet can improve the execution of
their business. They can generate and exploit business opportunities with greater
efficiency and speed. They can produce business value. It gives the consumer more
chances of getting better quality products by using interconnected networks, greater
consumer satisfaction and delight for less pricey is guaranteed. It saves time and
ascertains quicker transactions and delivery. These changes are not only in the
thinking of the consumer, but also bring vast changes in the consumer behavior.
Consumer behavior is the decision-making process and physical activity engaged in,
while evaluating, acquiring, using and disposing off goods and services.
Information based transactions are therefore creating new business opportunities and
innovative ways of conducting business. The need for E-Business arose for better
computing, better interaction between sellers and buyers both inside and outside the
business organization. A number of functions are performed including advertising,
sales, customer service and marketing.
Web can perform various tasks like servicing existing consumers via customer
service and support functions, developing new markets and new distribution channels
for existing products, developing new information based products. It also includes brand
name management, exhibiting product catalogues and sales information and new

product announcements. It is useful in customer interaction that would otherwise be

handled by a service representative. It can handle many customer oriented tasks.
Software can be delivered from one computer to another, within no time. Customers can
monitor their personal bank accounts; check their balances and recent transactions
which help to make better and quick decisions.
3.2.10 International Consumer Behaviour
The marketing concept holds that marketing programs will be more effective
if tailored to the unique needs of each targeted customer group (Philip Kotler, Gary
Armstrong, 1997). If this concept applies within a country, it should apply even
more in international markets where demographic, economic, political and cultural
conditions vary widely. Consumers in different countries differ widely in their
needs, demands, spending power, product preferences, and shopping patterns.
Because most marketers believe that these differences are hard to change, they adapt
their products, prices, distribution channels, and promotion approaches to fit
consumer desires in each country.
However, some marketers don‟t like this adaptation; rather they like to
supply standardized products all over the world. This is because, they believe that
global standardization will lead to lower costs and prices, causing more goods to be
snapped up by price-sensitive consumers. The question of global standardization or
adaptation is best is still debatable. Companies are justified in looking for more
standardization to help keep down costs and prices and build greater global brand
power. But they must remember that although standardization saves money,
competitors are always ready to offer more of what consumers want in each country.
Some international marketers suggest that companies should “think globally but act
locally”. In short, the companies make sure that their market plans and programmes
should able to meet the unique cultures and needs of consumers in various markets.
3.3 Consumer Durable Goods
Durable goods or hard goods are goods that does not wear out quickly and
yield utility over a period of time. (Goderage, 1975) .With the continuous inflow of

disposable income and the advancement of technology, the need for the varied
consumer durable goods are increasing. This in turn is leading to a strong competition
among the different consumer durable brands available in the nation as well as the
price gap between the same consumer goods of different companies are narrowing
down. Day by day these goods are becoming cheaper. The rural and urban market of
consumer durables has been growing at a rate of around 15 % on an average.
The consumer durables industry can be divided into two. They are: Consumer
Electronics and Consumer Appliances or White Goods. The key products under each
segment are shown table 3.3.
Table 3.3 Consumer Durable Goods

Consumer Electronics Consumer Appliances/White Goods
Television Air conditioners
Audio and video systems Refrigerator
Electronic accessories Washing machine
PCs Sewing machine
Mobile phone Electric fans
Digital camera Cleaning equipments
DVD Microwave Ovens
Camcorder Other domestic appliances
Source: Edelweiss report on industrial production, Aug 2007
3.3.1 Trends Favouring Growth of Consumer Durable Industry
One of the key reasons for the growth of durable industry has been the
increasing penetration of organized retail. Advanced technology and increasing
competition is narrowing the price gap between products in this sector, which has
driven demand and enabled high growth. Apart from steady growth in income of
consumers, consumer financing has become a major driver in the consumer durables
industry.
The key trends that impact the Indian Consumer Durables Industry today are
reflected in the diagram 3.5

INCOME GROWTH GROWTH OF

AND AVAILABILITY ORGANISED
OF FINANCING RETAIL SECTOR
INDIAN
CONSUMER
DURABLE INDUSTRY
FALLING PRICES INCREASED

INREASES COMPETITION
APPRECIATION OF
AFFORDABILITY DUE TO ENTRY OF
THE RUPEE
LARGE PLAYERS
Figure 3.5 Trends Favouring Growth of Consumer Durable Industry

Source: India Brand Equity Foundation-www.ibef.in
3.3.2 Conclusion
In India, the consumer durables industry is put for continuous growth over a
period of long time, stimulated by encouraging consumer demographics, growth in
services and industrial sectors and infrastructure development in urban, sub urban
and rural areas. Many Indian and Multi National players are looking forward to
reinforce their presence in India to exploit this opportunity. Success in the long-term
will require firms to develop wide channels of distribution, product differentiation in
areas of importance to the consumer and innovative ideas in the areas of promotion,
product financing, etc. The product and approach to market need to be customized to
match the unique needs of the Indian market.

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Chapter 3 An Overview of Consumer Behaviour and Duable Goods

3.2 Consumer Behaviour

Consumer behaviour is the study of behaviour of individuals, organizations and

Consumer Behaviour for Consumer Durable Goods in Kerala 55

anthropology, marketing and economics. It tries to understand how emotions affect

Customer behaviour study is based on consumer buying behavior in which

3.2.1 Consumer Behaviour- Definitions

Some eminent authors defined consumer behaviour as:

“Consumer behavior refers to those acts of individuals directly involved in

“Buyer behavior is all psychological, social and physical behaviour of

“Consumer behavior can be defined as the activities and actions of people

“Consumer buying behavior refers to the buying behavior of final consumers-

“The field of consumer behavior is the study of individuals, groups, or

Consumer Behaviour for Consumer Durable Goods in Kerala 56

3.2.2 Role of Consumer Behaviour in Marketing

Consumer behaviour refers to the study of buying tendencies of consumers.

The basic factor marketers need to understand is the buying behaviour of

3.2.4 The Buyer Decision Process

A consumer goes through many stages prior to purchasing a product or service.

Consumer Behaviour for Consumer Durable Goods in Kerala 57

3.2.4.1 Need Recognition

3.2.4.2 Information Search

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

 Personal Sources - friends, family members, co workers and other

 Commercial sources - Advertisements, sales people, dealers, Packaging,

 public sources - Newspaper, Radio, Magazine

 Experiential sources - Individual‟s own experience, prior handling of a

3.2.4.3 Evaluation of Alternatives

Consumer Behaviour for Consumer Durable Goods in Kerala 58

3.2.4.4 Purchase Decision

3.2.4.5 Post purchase Evaluation

Therefore, the marketer has a great responsibility in monitoring post purchase

3.2.5 Factors Influencing Consumer Behaviour

Consumer purchases are influenced strongly by cultural, social, personal, and

Consumer Behaviour for Consumer Durable Goods in Kerala 59

3.2.5.1 Cultural Factors

3.2.5.1.3 Social class

3.2.5.2 Social Factors

The behaviour of a consumer is influenced by social factors such as small

A person‟s behavior is influenced by many small groups. Groups that have a

Consumer Behaviour for Consumer Durable Goods in Kerala 60

3.2.5.2.3 Role and Status

3.2.5.3 Personal Factors

A buyer‟s decisions is also influenced by personal characteristics such as

3.2.5.3.1 Age and Life cycle stage

Table 3.1 Family Life Cycle Stages

Consumer Behaviour for Consumer Durable Goods in Kerala 61

3.2.5.3.3 Economic Situation

Consumer Behaviour for Consumer Durable Goods in Kerala 62

Motivation means all those drives induced by needs which incite an

Perception is the way of seeing or understanding something. People can form

Learning brings changes in the individual‟s behavior arising from experience.

3.2.5.4.4 Beliefs and Attitude

Belief is a descriptive thought a person hold about something. Attitude is a

3.2.5.5 Economic factors

As far as consumer behaviour is concerned, economic factors are very

Consumer Behaviour for Consumer Durable Goods in Kerala 63

3.2.5.5.1 Personal Income

Personal income is the most powerful economic factor.