UNIT - 6

Consumer BEHAVIOUR
Learning Objectives

• To understand Consumer
Behaviour for effective marketing
of financial products
The customer corridor
• A useful technique for consumer behavior and successful
relationship management is to map out the whole life cycle of a
customer’s interactions with a company and its services.

• The life cycle can be symbolized as a corridor like the one

illustrated here for a retail bank.

• Customers enter the bank at one end and each arrow along the
top of the passage represents a doorway or interaction with the
bank, beginning with the account application.

• The model can also show the frequency of those interactions.

 The customer corridor
• In many industries, including banking, insurance and other service
industries, the customer corridor has a second set of doorways made
up of the major changes in a customer’s private life, shown here –
along with competitors’ efforts to lure the customer away – by the
arrows below the corridor.
• Career moves, relocations, life style changes and family events such
as marriage, birth, divorce or death can be opportunities to deliver
additional value to the customer.
• In fact, if companies fail to tailor services to such events, defections
are almost inevitable. Banks which have analyzed defection
frequencies find that changes of this kind increase defection
probabilities by between 100 - 300%.
The Importance of
Understanding Consumer
Behavior

Explain why
marketing managers
should understand
consumer behavior
Understanding
Consumer
Behaviorconsumers make
purchase decisions

Consumer
behavior =
HOW
consumers use and
dispose of
product
 The Consumer
Decision-Making Process

Analyze the
components
of the consumer
decision-
making process
 Consumer
Decision-Making Process

Consumer
Decision-Making
Process A five-step process used
by consumers when
buying goods or services.
Consumer Decision-
Making Process
Need Recognition
Need
Recognition

Result of an imbalance between

actual and desired states.
Need Recognition

Preferred
Present State
Status

Marketing helps consumers recognize

an imbalance between present status
and preferred state.
 Stimulus
Stimulus

Any unit of input affecting

one or more of the five senses:
•sight
•smell
•taste
•touch
•hearing
 Recognition of
Unfulfilled Wants
• When a current product isn’t performing
properly

• When the consumer is running out of a

product

• When another product seems superior to the

one currently used
 Information Search

Internal Information Search

• Recall information in memory

External Information search

• Seek information in outside environment

• Nonmarketing controlled
• Marketing controlled
 External
Information Searches
Need Less Need More
Information Information

Less Risk More Risk

More knowledge Less knowledge
More product Less product
experience experience
Low level of interest High level of
Confidence in decision interest Lack of
confidence
 Search Dynamics
• By gathering information, the consumer learns about competing
brands and their features.
• Consumers move through from developing an initial set of
brands to consider to making a final decision.
• The first box in the diagram shows the total set of brands
available.
• The individual consumer will come to know a subset of these,
the awareness set.
• Only some, the consideration set, will meet initial buying criteria.
• As the consumer gathers more information, just a few, the
choice set, will remain strong contenders.
• The consumer makes a final choice from these.
Consideration Set in Purchase
Decision
 Evoked Set

Evoked Set

Group of brands, resulting from an

information search, from which a
buyer can choose
Evaluation of Alternatives
and Purchase
Evoked Set Analyze product
attributes

Use cutoff
criteria

Rank attributes by
Purchase! importance
 Purchase

To buy
or not to buy...

Determines which attributes

are most important
in influencing a
consumer’s choice
Postpurchase Behavior

Explain the consumer’s

postpurchase
evaluation process
Cognitive Dissonance

Cognitive Inner tension that a

Dissonance
consumer experiences
after recognizing an
inconsistency between
behavior and values or
opinions.
Postpurchase Behavior
Consumers can reduce dissonance by:
 Seeking information that reinforces positive
ideas about the purchase
 Avoiding information that contradicts the
purchase decision
 Revoking the original decision by returning
the product

Marketing can minimize dissonance through effective

communication with purchasers.
Types of Consumer Buying
Decisions and Consumer
Involvement

Identify the types of

consumer buying
decisions and discuss
the significance of
consumer involvement
Consumer Buying Decisions
and Consumer
Involvement

Routine Limited Extensive

Response Decision Decision
Behavior Making Making

Less More
Involvement Involvement
 Involvement

Involvement is…
the amount of time and effort a buyer invests in the
search, evaluation, and decision processes of
consumer behavior.
Continuum of Consumer
Buying Decisions
 Routine
Response Behavior
 Little involvement in selection
process

 Frequently purchased low cost

goods

 May stick with one brand

 Buy first/evaluate later

 Quick decision
Limited Decision Making
 Low levels of involvement

 Low to moderate cost goods

 Evaluation of a few alternative

brands

 Short to moderate time to

decide
Extensive Decision Making
 High levels of involvement

 High cost goods

 Evaluation of many brands

 Long time to decide

 May experience cognitive

dissonance
Factors Determining the Level
of Consumer Involvement
Previous Experience

Interest

Perceived Risk of
Negative Consequences

Situation

Social Visibility
Marketing Implications
of Involvement

High-involvement Extensive and informative

purchases require: promotion to target
market

In-store promotion,
eye-catching package
Low-involvement design, and good
purchases require: displays.
Coupons, cents-off,
2-for-1 offers
The steps of the consumer decision-making process in order are:

A) need recognition, information search, evaluation of

alternatives, purchase, and postpurchase behavior

B) need recognition, alternative aggregation, reevaluation,

purchase decision, postpurchase behavior

C) need positioning, stimulus response reactions, evaluation

of alternatives, purchase decision, postpurchase behavior

D) need positioning, alternative aggregation and divestment,

purchase decision, postpurchase evaluation
The steps of the consumer decision-making process in order are:

A) need recognition, information search, evaluation of

alternatives, purchase, and postpurchase behavior

B) need recognition, alternative aggregation, reevaluation,

purchase decision, postpurchase behavior

C) need positioning, stimulus response reactions, evaluation of

alternatives, purchase decision, postpurchase behavior

D) need positioning, alternative aggregation and divestment,

purchase decision, postpurchase evaluation
Pawan Kumar is looking into purchasing a scooter as gas prices continue to
rise. He needs a reasonably priced, comfortable, and safe scooter with room
to store his books. He is not familiar with scooters, and this is a major
purchase for him. The purchase will probably involve:

A) low-involvement problem solving

B) limited decision making

C) extensive decision making

D) dedicated cognitive behavior

Pawan Kumar is looking into purchasing a scooter as gas prices continue to
rise. He needs a reasonably priced, comfortable, and safe scooter with room
to store his books. He is not familiar with scooters, and this is a major
purchase for him. The purchase will probably involve:

A) low-involvement problem solving

B) limited decision making

C) extensive decision making

D) dedicated cognitive behavior

 Factors Influencing Buying
Decisions

Cultural Social
Factors CONSUMER
Factors DECISION- BUY /
MAKING DON’T BUY
PROCESS
Psycho-
Individual
logical
Factors
Factors
 Cultural Influences on
Consumer Buying Decisions

Identify and
understand the
cultural factors that
affect consumer
buying decisions
Components of Culture
Values

Language

Myths

Customs

Rituals

Laws

Material artifacts
Culture is. . .

Pervasive

Functional

Learned

Dynamic
 Value

Valu Enduring belief that a

e specific mode of conduct
is personally or socially
preferable to another
mode of conduct.
 Understanding Cultural
Differences
•A firm has little chance of selling products in a
culture that it does not understand.
• Like people, products have cultural value.

In China In U.S.
Color of
mourning
Brides wear
 Subculture

A homogeneous group
Subculture
of people who share
elements of the overall
culture as well as cultural
elements unique to their
own group.
 Social Class

A group of people in a society

Social Class who are considered nearly equal
in status or community esteem,
who regularly socialize among
themselves both formally and
informally, and who share
behavioral norms.
India’s Social Classes

SOURCE: Adapted from Richard P. Coleman, “The Continuing Significance of Social Class to Marketing,” Journal of Consumer Research, December 1983, 267; Dennis Gilbert and
Joseph A. Kahl, The American Class Structure: A Synthesis (Homewood, IL: Dorsey Press, 1982), ch. 11.
 Social Class
Measurement
s
Occupation

Education
 The Impact of
Social Class on Marketing

 Indicates which medium to use for

advertising

 Helps determine the best distribution for

products
 Social Influences on
Consumer Buying Decisions

Identify and
understand the
social factors that
affect consumer
buying decisions
Social Influences
Reference
Groups

Opinion

Leaders

Family
Members
Types of Reference Groups
 Influences of
Reference Groups

 They serve as information sources and influence

perceptions.

 They affect an individual’s aspiration levels.

 Their norms either constrain or stimulate

consumer behavior.
 Opinion Leaders

Opinion Leaders
An individual who influences
the opinion of others.
 Opinion Leaders…
…are the first to try new products
and services out of pure
curiosity.
…can be challenging to locate.

Marketers are increasingly using blogs,

social networking, and other online
media to determine and attract opinion
leaders.
 Family

Purchase Process Roles

in the Family
• Initiators

• Influencers

• Decision Makers

• Purchasers

• Consumers
 Individual Influences on
Consumer Buying Decisions

Identify and
understand the
individual factors
that affect consumer
buying decisions
Individual Influences

Personality
Age
Gender Self-Concept
Life Cycle
Lifestyle
 Age and Family Life
Cycle Stage
• Consumer tastes in food, clothing, cars,
furniture, and recreation are often age
related.

• Marketers define target markets

according to life cycle stages such as
“young singles” or “young married with
children.”
 Personality, Self-Concept,
and Lifestyle
• Personality combines psychological
makeup and environmental forces.
• Human behavior depends largely on self-
concept.
• Self-concept combines ideal self-image
and real self-image.
Psychological Influences on
Consumer Buying
Decisions

Identify and
understand the
psychological
factors that affect
consumer
buying
decisions
Psychological Influences

Perception

Motivation

Learning

Beliefs & Attitudes

 Perception

Selective Consumer notices certain stimuli

Exposure and ignores others

Consumer changes or distorts

Selective
information that conflicts
with feelings or beliefs
Distortion
Consumer remembers only
Selective
that information that
Retention
supports personal beliefs
Marketing Implications
of Perception
 Important attributes
 Price
 Brand names
 Quality and reliability
 Threshold level of perception
 Product or repositioning changes
 Foreign consumer perception
 Subliminal perception
 Motivation

Maslow’s
Hierarchy
of
A method of classifying human
Needs
needs and motivations into five
categories in ascending order of
importance.
Maslow’s Hierarchy of Needs
SYMPATHY VS EMPATHY
 Types of Learning

Experientia An experience changes

l behavior

Conceptual Not learned through direct

experience
Beliefs and Attitudes

An organized pattern of
knowledge that an individual
Belief
holds as true about his or her
world.

A learned tendency to respond

Attitude consistently toward a given
object.
 Changing Beliefs

• Change beliefs about the brand’s attributes

• Change the relative importance of these
beliefs
• Add new beliefs
Questions?