UNIVERSITY OF MAKATI

J. P. Rizal Ext., West Rembo, Makati City

COLLEGE OF BUSINESS AND FINANCIAL SCIENCE
Department of Marketing Management
Course Title Title
Module
1
No. INTRODUCTION TO CONSUMER BEHAVIOR
CONSUMER
BEHAVIOR Module Leader PROF. GRACE B. VILLARUZ

This module aims to establish among students the knowledge and understanding of the dynamics of
consumer behavior as to its meaning, nature, importance, and identification of the areas of consumer
behavioral concepts.

The major topics covered in this module are:

1. The Meaning of Consumer Behavior

2. The Nature of Consumer Behavior such as complexity of its nature, its systematic process, and
the changing concepts, reflection of consumers status through his spending and buying decision,
how consumer behavior varies from region to region, and product to product, why customer
INTRODUCTION

behavior is vital for marketers, and how it improves the standard of living.
3. The Importance of Consumer Behavior. This major topic deals with how consumer behavior
contributes in increasing the sales of a company. It also helps in setting prices, designing sales
promotion methods, aids in studying competitive analysis. It also serve as a guide in forecasting,
targeting and segmentation, and designing product portfolio.
4. To Areas of Consumer Behavioral Concepts. Sub-topics include market research, environmental
scanning and analysis, market segmentation, product positioning, and marketing mix
development.

All the topics in this module can be best learned thorough lecture and discussion, with the students’
focus, attention, and participation such as reciting and asking questions during and after delivery of
the topics. An application exercise, learning feedback diary is required to be accomplished and
submitted strictly on due date. A short answer quiz will be given at the end of the module.
LEARNING OUTCOMES

By the end of this module you are expected to:

 DEFINE the meaning of consumer behaviour and its focus;

 DISCUSS nature of consumer behavior;
 EXPLAIN the importance of consumer behavior; and
 IDENTIFY the areas of consumer behavioral concepts;

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 1. THE MEANING OF CONSUMER BEHAVIOR

 Consumer behavior simply means how consumers behave in the market. It defines the way in which
consumers purchase products and services for satisfying their wants. It basically consists of likes and
dislikes of customer influence his decision while purchasing products.

 It is a concept which consists of many stages starting from arising of a need till purchase of a product
for end-use. Different consumers respond differently to the market. It is an important concept for every
business to understand its customers. This helps in better fulfilling or demands of the customers.
Businesses use customer relationship management technology to understand their consumers
properly. It is a database which collects and store different information about their customers.

2. THE NATURE OF CONSUMER BEHAVIOR

2.1 Complex In Nature

 Consumer behavior is complex in nature as all persons differ in their needs and wants. Each
individual has their own unique needs and accordingly, they behave differently in the market.
 It is a very difficult task for marketers to recognize the needs and patterns of each individual.
Therefore, it becomes an overall complex job for the business to identify each consumer’s
behavior and targets them accordingly.

2.2 Systematic Process

 Consumer behavior is a systematic process consisting of a series of steps involved in buying
decisions of consumers.
 It is related to how consumers make their buying decision. The buying decision of consumers
involves different steps which are: Need identification to buy product, searching for information
related with the product, making list and evaluating different options available, finally making a
purchase decision and at last post-purchase evaluation done by the marketer.

2.3 Keeps On Changing

 Consumer behavior is always changing concept and does not remain constant. It keeps on
changing with the time which is due to the following changing factors: age, income level,
education level of consumer.
 Same products may be liked by the same consumer who once hated them. For example, Kids
have more interest in toys during their childhood but as they grow up as teenagers they lose all
their interest.

2.4 Reflects Status

 The manner in which the consumer spends and makes buying decision reflects his status. Not
only the behavior of the consumer is influenced by its status but his behavior also reflects his
CONTENT

status in society.
 People who spend more and buy luxury items are considered rich and high-status people by
society. These high priced goods adds pride to their personality.

2.5 Varies From Region To Region

 Consumer behavior is different for different region, states and countries. It differs from place to
place. Rural populations tend to spend less and are basically conservative in nature.
 They do not like to spend on luxury items despite having enough funds due to their
psychological factors.
 They have a different approach from an urban population related to buying decision. However,
the rural population tends to spend more and buy luxury items. They even take loans to fulfill
their needs for luxuries if are short of funds.
 These activities should affect the psychology of customers directly & inducing them in buying.
Understanding their behavior will help in easy understanding of factors affecting customers
buying decisions.

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2.6 Differs From Product To Product

 Consumer behavior varies from product to product. Same product may be attractive for one
group of consumers but not for another group.
 A consumer may have more interest and buys more quantity of one product and buys less or
even no quantity of another product. Teenagers like to spend heavily on bikes, cars, cell phones
and branded clothes to look attractive, but they would not spend much on their academics.
2.7 Vital For Marketers
 Consumer behavior is crucial for marketers to perform their duties effectively. Marketers should
have perfect knowledge of their target customers buying behaviour. It will help them in
understanding their likes and dislikes and also the factors influencing their buying decisions.
 Marketer can take appropriate actions accordingly to attract customers. It helps the companies
in developing the products as per peoples demand by providing information collected by them.

2.8 Improves Standards Of Living

 Consumer behavior has an important role in improving the standards of living of people. When
consumers spend more on buying different products and services, their standard of living is
improved.
 Higher is the spending of a person, higher is the standard of living of a person. On the other
hand, despite having enough funds if a person spends less than his standard of living is low.
Therefore, the level of spending directly influences a person’s living standards.

3. THE IMPORTANCE OF CONSUMER BEHAVIOR

3.1 Increase Sales

 Consumer behaviour study helps the businesses in understanding their customers. They have
full information about their customer’s likes & dislikes. This helps in satisfying the wants of their
customers properly & efficiently.

 Business will offer the right product to its customers. Customers will become loyal if getting the
right product. This will increase sales & revenue for business.
CONTENT

3.2 Setting Prices

 Setting prices is one of the important & difficult task for any business. It directly influences the
demand for its products in the market. By understanding consumer behaviour, it becomes easy
to determine whether the customer is price concerned or quality concerned.
 There are some customers in the market who buys products only because they are cheaper.
Understanding their behavior will help companies to produce as per their price

3.3 Designing Sales Promotion Methods

 Sales promotion activities are the different methods used for inducing customers to buy a
product. Promotion activities are effective if they present clearly the features of the product as
per customer needs.
 These activities should affect the psychology of customers directly & inducing them in buying.
Understanding their behavior will help in easy understanding of factors affecting customers
buying decisions.

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3.4 Helps In Competitive Analysis

 Facing competition in today’s market is a very tough job for every business. There is a large
number of competitors available in the market offering the same products. It becomes difficult to
attract customers towards your products.
 Understanding their behavior helps in analyzing the reasons for which they are going for
competitors’ products. It helps in understanding the advantages that competitors are
possessing. This help in facing the competition in a better way.

3.5 Helps In Forecasting

 Forecasting helps in taking competitive advantages from the businesses. If the business is able
to forecast about the future it can easily take several advantages. Consumer behaviour enables
the businesses in easy forecasting of sales & demand forecasting.
 It helps companies in saving their resources, time & cost. They can easily predict future
demands & focus on their operations.

3.6 Helps In Targeting & Segmentation

 Segmentation and Targeting helps in serving customers properly. It segments the customers
according to their taste & class. Segmentation helps in serving the customer better. It helps
businesses to focus on customers as per their needs.
 After understanding consumer behavior, it becomes easy to segment different customers into
different classes.

3.7 Helps In Designing Product Portfolio

 Product portfolio refers to a set of different products offered by businesses. Every business
product portfolio must consist of all class of products. It should have products for all class of
peoples in the market.

Understanding customer behavior helps the businesses in easy understanding demand of market. This
will help in proper designing of product portfolio for the businesses

4. THE AREAS OF BEHAVIORAL CONCEPTS

4.1 MARKET RESEARCH

 It is an applied research design to provide marketing professionals with information that affects
consumer’s acquisition and disposition of goods and services. The research issues must
provide insights and information about the customer’s attention on advertisements, promotional
perceptions, attitudes, and the decision process in the buying of goods. Marketing
organizations must know the impact of the findings along the following areas:

Information Processing and Behavioral Learning

It refers to the customer’s access exposure to various advertising media and the attention and
comprehension on its messages. It pertains further to the consumer’s level of product
involvement and their sensory perception of taste, smell and other product attributes.
Behavioral learning has something to do with

Factors that reinforce product acceptance or consumer’s perception of rejections. It identifies

the characteristics of the product that elicit favorable or unfavorable emotional reactions.

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  Personality and Motivation
Personality refers to the development of the measures of personal characteristics for product
segmentation and the message design that will appeal to the particular type of consumer.
Motivation shall be measured in terms of its appeal to satisfy human needs and wants. Lifestyle
of individual consumer affects the buying behavior.

 Decision Making and the Influence of Groups

This refers to the consumer’s decision making process that will develop the total marketing
strategy to meet customer demand. The word of mouth among groups of consumers affects
decision dominance. It shall focus on the beliefs, attitudes, and behavior of individuals and
groups. It must pinpoint the segments and identify positioning and marketing mix strategy.

 The Level of Customer Satisfaction

This refers to the level of satisfaction in the use of product or service and its attendant
perceived value. It shall measure the behavioral responses and the tendencies to engage in
the compulsive consumption of the product. It must focus on the physical and behavioral
responses.

4.2 ENVIRONMENTAL SCANNING AND ANALYSIS

It consist of the assessment of the external forces that act upon the marketing organization and
its target consumer. This refers to the threats and the opportunities in the marketing of the
product or service. This process is performed by either the marketing research department or
an independent marketing organization.

 The External Forces of the Environment

The research analysis should cover all the external forces of the environmental aspects that
interplay in the development of consumer behavior. The research goal should be able to
predict the changes in these environments and how it influences the consumer buying behavior.
The research activities will determine the opportunities and the liabilities of the marketing
organization as it relates to the demographic, group and situational environment.

 The Economic Environment

The area of economics has particular relevance to consumer behavior. The economic
environment consists of the monetary, natural and human resources. These factors influences
the individual or groups in the buying patterns. The money supply and economic conditions
prevailing in the country and the income index of the population is a great determinant of
consumer buying behavior.
CONTENT

 The Behavioral Economics

It is the study of the economic decisions made by individual consumers and its behavioral
determinants. While the law of supply and demand applies in the behavioral patterns of
consumers, the changing attitudes, motives, and experiences can be drawn as predictable
factors in consumer analysis. It will determine the consumer’s influence in the total aggregate
economy of the country.

 The Natural Environment

The features of the natural environment are important determinants of consumer behavior.
These factors are:

o Availability of raw materials – This refers to the supply of important inputs to

production like oil, and other natural products like wood, cements and other natural
products.
o Pollution index of the area – This refers to the different pollutants in the air, garbage
disposal system and pollutants in rivers and water ways.
o Weather conditions such as typhoon and draught – this refers to the destruction of
crops cause by typhoons and the planting season during the time of long summer
season.
o Health and social conditions – This refers to the various diseases and the social and
economic conditions both in the urban and rural areas .

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  The Technological Environment
Technology is an important factor in the analysis of consumer behavior as it is the contributory
component in the introduction of new and innovative product in the market. It can dramatically
affect the lifestyle of the consumer. T he consumer analysis needs to anticipate the various
changes in the process of product development and how this will influence the lifestyle and the
consumption patterns of the consumer.

4.3 MARKET SEGMENTATION

It is the division of the market into distinct subsets of customers having similar needs and
wants. This segment could be reached with the different marketing mix strategies. The
following market characteristics should be present to properly identify the target market:

 Accessibility
It refers to the distance of distribution on how customers will be able to avail of the product or
service. The market that cannot be reached by advertisement or promotional activities and
would have difficulty in the distribution system is not a viable market.

 Sustainability
The market size must be substantial enough to make reasonable investments. The income of
the population that will be covered must be within the price of the product. It must be affordable
and within the economic reach of the target consumer.

4.5. PRODUCT POSITIONING AND DIFFERENTIATION

It refers to the organization’s influence on how consumer perceived a brand characteristic

relative to those in the market that is offered for the sale to the same population segments. The
goal of product positioning is to influence demand by creating a product with specific
characteristics and the clear difference from its competitors.
CONTENT

Product differentiation is the process of manipulating the marketing mix to position a brand.
The customer must be able to differentiate a particular brand to the other in terms of packaging,
uses and effectiveness or usability. The manipulation process could be through promotion and
market testing.

Two (2) types of positive strategies:

 Specific Positioning
It is the strategy where the marketing organization emphasis is on the product attributes,
qualities and benefits without comparing it with the competing brand. The emphasis is to create
in the mind of the target consumer a strong product image that links with the purchasing
decision and develop favorable consumer behavior.

 Competitive Positioning
This positioning strategy is usually employed when the new brand of products is competing
with the leading brand in the market. The goal is to position the product in terms of attributes
and benefits that is perceived to be of better quality. Competitive advertising and promotion is
done to align the new brand to that existing in the market. The goal is to attempt for the product
to stand above the competition and change the consumer buying behavior.

4.6 MARKETING MIX DEVELOPMENT

The theories and concepts of consumer behavior can be applied into four areas of the new
product development.

 Development of New Product

The principles of consumer behavior can be applied into four area of the new product
development.
o Idea Generation
This phase has the greatest impact on consumer behavior, as the proponent think of
attitude, lifestyle changes, situational factors and the cultural influences in
conceptualizing the product idea. In the concept testing, the product must appeal to
the greater number of users against the competing brand in terms of use and benefit.

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o Product Development
This phase comes when the idea was found to be feasible and profitable. This
involved developing the product, testing, the product and its packaging appeals. It
must be favorable in the changes of perceptual process in consumer behavior.

o Market Testing
This process involved placing the product in the market in limited distribution to identify
the market potential and test the total marketing mix. The consumer behavior is tested
on their effective reactions and determines their buying incentives. This could be done
through post-purchase surveys. The goal of the marketing organization is to
determine that the marketing strategy points to customer satisfaction and the
development of favorable consumer behavior.
CONTENT

o Advertising and Promotional Strategy

The behavior of the consumer is enhanced and developed with effective advertising
and promotional strategy. Advertising aims to instill certain beliefs in the consumer
about the product attributes and benefits. An understanding of attitude formation on
consumer behavior must develop messages that will ensure effective development of
favorable response.

o Pricing and Distribution

One major application of consumer behavior principle is in the area of pricing. Price
has a great impact in the switching of product patronage as it plays a perceptual on
the economic advantage when the product is price lower than the prevailing brand in
the market.

The price-quality relationship must be analyzed in conformance with consumer

attitudes and perception about the product. Price and distributions are interrelated on
how consumer makes their purchase decisions. The customer intensity search for the
products has great impact on distribution strategy.

A. Review Questions:
1. Define the following terms:

a. Consumer Behavior
b. Environmental Scanning
c. Economic Environment
d. Market segmentation
ASSIGNMENT

e. Competitive Positioning
f. Market Testing
f. Product Development

2. What are the factors to consider in environmental scanning?

3. What are the types of positioning strategies?
4. What are the stages in product development?
5. What are the factors to consider in market segmentation?

B. Application Exercises:
Give your personal on how marketers can understand the consumers buying behavior.
C. Learning Reflection #1

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 RUBRICS FOR WRITTEN
ASSIGNMENT
LEVEL OF ASSESSMENT

INADEQUATE=1 ADEQUATE=2 ABOVE EXEMPLARY=4

(BELOW (MEETS AVERAGE=3 (FAR EXCEEDS
CRITERIA STANDARD) STANDARD) (EXCEEDS STANDARD)
STANDARD)
Organization Writing lacks logical Writing is coherent Writing is Writing shows high
organization. It shows and logically coherent and degree of attention to
some coherence but organized. Some logically logic and reasoning of
ideas lack unity. points remain organized with points. Unity clearly
Serious errors. misplaced and stray transitions used leads the reader to the
from the topic. between ideas conclusion and stirs
Transitions and paragraphs thought regarding the
evident but not to create topic.
used throughout coherence.
essay. Overall unity of
ideas is present.

Level of Shows some Content indicates Content Content indicates

thinking and thinking and indicates synthesis of ideas, in-
RUBRICS

Content reasoning but most reasoning applied original depth analysis and
ideas are with original thinking and evidences original
underdeveloped thought on a few develops thought and support for
and unoriginal. ideas. ideas with the topic.
sufficient and
firm evidence.

Development Main points lack Main points are Main points well Main points well
detailed present with limited developed with developed with high
development. Ideas detail and quality quality and quantity
are vague with little development. Some supporting support. Reveals high
evidence of critical critical thinking is details and degree of critical
thinking. present. quantity. Critical thinking.
thinking is
weaved into
points

Completion Student did not Some of the Most of the All of the assigned
hand-in homework assigned work is assigned work is work is complete.
complete. complete.

Timeliness Homework was Homework was Homework was Homework was

received 7 or more received 3 or more received 1 day received more than 30
days late. days late. late. days late.

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 RUBRICS FOR DISCUSSION TOPIC

NAME: _________________________________
TOPIC: _________________________________
CRITERIA 2 1 0
Participation Student participated Student participated Student did not
at least three times 1-2 times during the participate.
during class discussion.
discussion. Participation was
Participation was relevant, productive
relevant, productive and appropriate
and appropriate

Reference to the text Student referred Student referred to Student did not refer
directly to the text at the text vaguely but to the text
least once in their with paraphrasing or
contents citing was unable to
specific topic and provide exact topic
page number. and page number

Response to a Peer Student responded Student responded Student did not refer
direct to a peer’s vaguely to a peer’s to a peer’s
comments by directly comments but did comments.
agreeing or not specify if they
disagreeing with agreed or disagreed
what they said and and/or did not
referring to that reference the student
student by name. by name.

Reflection Student completed Student completed Student did not

the reflection with the reflection but complete the
specific examples answers were vague reflection
from discussion and did not refer to
the discussion.

REFLECTION

1. What is one strength you showed during this discussion? (Example: I was able to refer
directly to the text/ I quoted page ___ when I talked about____).

2. What is one improvement you can make during our next discussion? (Example: I did not
responded to my peers. Next time I can actively listen so that I can agree or disagree with
their statements and contribute productively to the discussion.

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 Reference book:
Consumer Behavior (A Practrical Approach to Consumer Understanding) Dr. Pedrito Pereda, Dr. Purisima
REFERENCES

Pereda, Dr. Raymond Arcega

Internet Links:

https://commercemates.com/nature-of-consumer-behaviour/#Nature_of_Consumer_Behaviour
https://searchcio.techtarget.com/definition/product-development-or-new-product-development-NPD

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