Consumer Behaviour (CB)

Terms used in CB
Customer Consumer Buyer Behaviour

Definition
Engine of marketing Consumer Behaviour can be defined as the behaviour that consumers display in searching for, purchasing, evaluating, and disposing of products and services that they expect will satisfy their needs. Focuses on how individuals make decisions to spend their available resources on consumption

Consumer Behaviour includes

What ? Why? How? When? Where? How often?

Scope of Consumer Behaviour

Describes two kinds of entities Personal Consumer Organizational Consumer

Development of the discipline of Consumer Behaviour

Consumer Behaviour is rooted in marketing concept which evolved through several approaches Production Concept- product availability at low prices than in features Product Concept-Products with high quality, best performance and features. This concept leads to marketing myopia.

Marketing myopia
Focus on product rather than on consumer needs. Causes company to ignore changes in market place

Contd
Selling Concept-Consumers would not buy the product unless they are aggressively persuaded to do so. Fails to focus on customer satisfaction Marketing Concept-Needs and wants of consumers is the primary focus of the firm.

Nature of Consumer Behaviour

Overall Model Of Consumer Behavior

Applications of Consumer Behaviour

Marketing Strategy Regulatory Policy Social Marketing-Application of marketing strategies and tactics to alter or create behaviours that have a positive effect on targeted individuals or society as a whole. Informed Individuals

Marketing Strategy and Consumer Behavior

To survive provide value to customers than competitors Customer Value=Benefits from productCost of acquiring benefits Understanding CB is the basis of marketing strategy formulation

Marketing Strategy and Consumer Behavior

MARKET ANALYSIS

MARKET SEGMENTATION

MARKETING STRATEGY

CONSUMER DECISION PROCESSES

OUTCOMES

Market Analysis Components

Consumers Firms Competitors Conditions (environment)

Market Segmentation
Product-related need sets Segments: customers with similar needs and responses Segment description Segment selection

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Marketing Strategy
Target market selection is not possible without formulating a marketing strategy Marketing strategy is determining how to provide superior value to target market. This requires formulation of consistent marketing mix which constitute elements of marketing strategy

Elements in Marketing Strategy

Product Price Distribution/Place Promotion Service- (Primary & Auxiliary)

CONSUMER DECISION PROCESSES

Intervenes between Marketing strategy and outcomes Firm can succeed only if consumer goes through process of decision making

Outcomes
Firm
Product position Sales Customer satisfaction

Society
Economic Physical environment Social welfare

Individual
Need satisfaction Injurious consumption (Occurs when individuals/groups make consumption decisions that have negative consequences for their long run well-being. Eg: Alchohol)

Marketing Strategy and Consumer Behavior

Consumer Modeling
What is a Model?
A simplified representation of reality. Models are described
Verbally Diagrammatically Mathematically

Models can be
Specific Comprehensive

Use of Consumer Behaviour Model

A Model

Facilitate learning of what is known of Consumer Behaviour Assist on constructing a theory that can guide research in Consumer Behaviour

Identifies the Relevant Variables Indicates their Characteristics

Specify their InterRelationships

Consumer Behaviour Models

Economic Model Psychoanalytical Model Sociological Model Howard Seth Model Nicosia Model Engel Blackwell Model VALS

Economic Model
Synthesized by Alfred Marshall based on the Theory of Marginal Utility and Micro-Economic Theory. The Focus is on the Act of Purchase of an Average Consumer. Explains What a Consumer would purchase and In What Quantity.
Individuals allocate their resources to maximize satisfaction of their needs and wants

Basic Assumptions
Individual needs are unlimited Individual needs cannot be fully satisfied Individual is completely aware of his needs Individual is a rational buyer Individual has the perfect information about the utility of products available in the market The utility of a product or service gets reduced with each subsequent purchase Price of goods are the sole sacrifice involved in obtaining a product or service Market is a collection of homogeneous individuals

Criticism to Economic Model

Economic Models ignores the effect of
o o o o o o o

Perception Attitude Motivation Personality Learning Process Social Class Culture

Psychoanalytical Model of Consumer Behaviour

Psychoanalytic theory is attributed to the work of eminent psychologist Sigmund Freud. Introduced personality as a motivating force in human behaviour . Mental framework of a human being is composed of three elements
The Id The Superego The Ego

The ID
Original and basic system of human personality Leads to strong drives and urges Instinctive, pleasure seeking element Represents a storehouse of all instincts Warehouse of primitive or instinctual needs for which individual seeks satisfaction Morals, beliefs, goodness, and even evil are nonexistent to the knowledge of the primitive Id Id is largely childish, irrational, never satisfied, demanding and destructive of others

The Super-Ego
Noblest thoughts, ideas, feelings that are acquired by a person from his parents, teachers, friends, religion, organization and colleagues Primary concern of super ego is to determine whether the action proposed by ego is right or wrong and to ensure the limitations of satisfactions of the id Individuals internal expression of societys moral and ethical codes of conduct Driven by authorities, parents, and other moral officials in society Function of the super ego is to inhibit the desires of the Id

The Ego
Individuals conscious control that balances the demands of the Id and Super-Ego Processes are entirely conscious because it is concerned with the perception of the outside world

Contd..
Id is what an individual is born with. Super-ego are formed out of the values Ego acts as a balance between the Id and the Super-ego Id remains at the core of each need Individuals show behaviour as a gratification to their Id

Criticism to Psychoanalytical Model

All the behaviours cannot be attributed to satisfaction of Id. This model views consumers as individuals with minimal influence of the family, society, reference groups, or other social and group influences. Values of individual are liable to change over a period of time through changes created in perception, learning, attitude building which this model ignores.

Sociological Model
Individual is a part of the society & various groups Buying Behaviour of an individual is influenced by these groups

family, friends and close associates exert the maximum influence

Opinion Leader influences the life-style and buying behaviour of an individual Individual depicts the role to conform the style and behaviour pattern of his / her social class

Sociological Model

STIMULUS (INPUT)

PROCESSING (ANALYSIS)

RESPONSE (OUTPUT)

Criticism to Sociological Model

Sociological Model does not specify the effect of feedback on each of the component.

Howard Sheth Model

Attempt to explain rational brand choice behavior within the constraints of
Limited Individual Capacities Incomplete Information

Howard Sheth Model

EXOGENUOUS INPUTS

VARIABLES OUTPUTS

PERCEPTUAL & LEARNING CONSTRUCT

Howard Sheth Model

Inputs Postulates four sets of concepts / constructs or variables Outputs Hypothetical construct
Perceptual Construct Learning construct

Exogenous variables

Howard Sheth Model - Inputs

Input Variables consist of three distinct stimuli (information sources) The marketer furnishes
Physical brand characteristics (significative stimuli) Verbal or visual product characteristics (symbolic stimuli).
a) b) c) d) e) a) b) c) d) e) Significative Quality Price Distinctive Service Availability Symbolic Quality Price Distinctive Service Availability

The third type is family, reference group, and social class. All three types of stimuli provide inputs concerning the product class or specific brands to the

Social a) Family b) Reference Group c) Social Class

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Howard Sheth Model - Hypothetical Constructs

It is the central part of the model Deals with the Psychological Variables Involved with the consumers decision reflection Perceptual Variables are concerned with
Consumer receipt of Information from Input Stimuli and Other Parts of the Model Consumers understanding of the information

Interaction between the different variables in the Perceptual and Learning constructs and other sets give the Model its distinctive advantage.
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Perceptual Construct
Pertain to the way the individual deals with information
How the Consumer Receives Information How Consumer Understands Information Stimulus ambiguity
Significative Inputs

Overt Search

Perceptual bias

When the consumer does not understand the message from the environment

Symbolic Inputs

Stimulus Ambiguity

When the consumer distorts the information received so that it fits his or her established needs or experience

Attention Perceptual Bias

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Learning Construct
Learning Construct
Motives Brand Comprehension Satisfaction
Confidence

Intention

Attitude

Motive

Brand Comprehension
Choice Criteria

Perceptual Bias
Satisfaction

Howard Sheth Model - Output

The outputs are the results of the perceptual and learning variables How the consumers will response to these variables
Purchase Attitude Intention Attention Brand Comprehension
Intention Purchase

Intention Attitude
Brand Comprehension

Attention

Howard Sheth Model

Exogenous Variables
Variables

which are not explained but have a bearing on some or all constructs that influence the output.

The

Exogenous Variable include:

Importance of purchase Personality variables Social class Culture Organization Time Pressure Financial Status

Criticism to Howard Sheth Model

The Howard Sheth has only been partially tested. It does not explain the non- systematic behaviour. The Howard Sheth does recognizes the exogenous factors but explains little on the same.

Nicosia Model
This Model concerns with the Inter-relationship between:
The firms marketing communications The attributes of the consumer The consumers decision process including Search and evaluation process Actual decision process The feedback of the consumers response to the firm

This is a Dynamic Model.

Nicosia Model

Nicosia Model Field 1

Field 1
Sub Field 1 Product Attribute Sub Field 2

Sub Field 1
Product Attribute Companys Communications to the Targeted Audience.

Message Exposure Consumer

Attribute

Represents the output of a commercial message from the firm in the form of advertising or other forms of promotion and its effect on consumer

Sub Field 2
Consumer Attribute What the consumer makes out of the Communications and other Inputs

Nicosia Model Field 2

Companys Input (Field 1) creates certain Attitude Evaluation of the advertised product and other alternatives takes place
Field 2 Attitude Search & Evaluation (of Means, Ends, Relations) {Pre- Action Field} Motivation

If the process results in motivation to buy, it becomes the input for Field 3

Nicosia Model Field 3

Field 3 represents the act of purchase Transformation of the motivation into the act of buying Act of Purchase (or Non Purchase) leads to certain purchasing behaviour Evaluation of Options leading to Motivation would result in Action

Motivation

Field 3
Decision (Act of Purchase) {Action}

Purchasing Behaviour

Nicosia Model Field 4

Retention of the experience by the consumer as an influence on future purchase Feedback of sales to firm
Experience Field 4
Consumption

Use of Purchased Item including

Use and Storage of the Product by the Consumer

Act of Purchase
Purchasing Behaviour

Feedback

Nicosia Model
Field 1
Sub Field 1 Product Attribute Sub Field 2

Field 2 Attitude Search & Evaluation (of Means, Ends, Relations) {Pre- Action Field} Motivation Field 3 Decision (Act of Purchase) {Action}

Message Consumer Exposure Attribute

Experience Field 4
Consumption

Feedback

Purchasing Behaviour

Arguments Against Nicosia Model

Incomplete in a number of aspects, including the influences and inter-relationships among the consumer attributes A number of assumptions have been made that question the validity of this model, for instance:
What type of consumer are we talking about? The company and the consumer have an existing relationship? What type? Is this for a new product? Is this the first exchange the consumer has had with the producer?

The EBM model

Contd.
First Stage-Problem recognition, search for alternatives, alternate evaluation purchase, and outcomes. The central focus of the model. (Decision Process) Second stage- consumer gets information from marketing and non-marketing sources (Information Input)

Contd..
Third stage- consists of the consumers exposure, attention, perception, acceptance, and retention of incoming information. (Information Processing) Fourth stage-consists of individual and environmental influences that affect all five stages of the decision process. (variables influencing the decision process)

The VALS (Value Attitude Lifestyles)

A way of viewing people on the basis of their attitudes, needs, wants, beliefs, and demographics. Methodology used for psychographic market segmentation Introduced in 1978 by Arnold Mitchell and revised in 1989.

Contd..
Provide a systematic classification of people into eight distinct consumer segments. VALS is based on enduring psychological characteristics that correlate with purchase patterns.

VALS
VALS classifies consumers on the basis of two dimensions: Self-orientation (primary motivation)- horizontal dimension represents primary motivations Resources the vertical dimension segments people based on the degree to which they are innovative and have resources such as income, education, self confidence, intelligence, leadership skills, and energy. The combination of motivations and resources determines how a person will express himself or herself in the marketplace as a consumer.

Self Orientation (Primary Motivation)

The concept of primary motivation explains consumer attitudes and anticipates behavior. SRIC-BI identified 3 primary self orientations Principle-oriented consumers (Ideals)- individuals guided by their beliefs and principles rather than by feelings. Status-oriented consumers (Achievement)-individuals guided by the actions, approval and opinions of others. Action-oriented consumers (Self-expression)individuals guided by a desire for social or physical activity, variety, and risk taking.

Resources
Reflects the ability of individuals to pursue their dominant self orientation. A person's tendency to consume goods and services extends beyond age, income, and education. Energy, self-confidence, leadership, and self-importance play a critical role. These psychological traits in conjunction with key demographics determine an individual's resources. Various levels of resources enhance or constrain a person's expression of his or her primary motivation.

On the basis of 2 dimensions SRIC-BI identified 8 general psychographic segments

Fulfilleds Believers Achievers Strivers Experiencers Makers Actualizers Strugglers

VALS
Principle Oriented

Actualizers Status Oriented

High Resources High Innovation

Action Oriented

Fulfilleds

Achievers

Experiencers

Believers

Strivers

Makers

Strugglers

Low Resources Low Innovation

Actualizers/Innovators
Actualizers are successful, people with high self-esteem. Have abundant resources and exhibit all three primary motivations in varying degrees. Very active consumers Image is important to them as an expression of their taste, independence, and personality.

Strugglers/Survivors
Live narrowly focused lives. These consumers have the lowest incomes. Have few resources and are thus located below the rectangle. They are the oldest of all the segments, with a median age of 61. They are comfortable with the familiar and are primarily concerned with safety and security.

Principle Oriented
Fulfilleds/Thinkers Motivated by ideals Mature, satisfied, comfortable , and reflective people who value order, knowledge, and responsibility Tend to be well educated and actively seek out information. Open to consider new ideas. Although their incomes allow them many choices, they are conservative, practical consumers look for durability, functionality, and value in the products they buy.

Believers
Believers are motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes. Believers are predictable; they choose familiar products and established brands.

Status oriented
Achievers Motivated by the desire for achievement and a deep commitment to career and family. Active consumers. Image is important They favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of time-saving devices.

Strivers
Strivers are trendy and fun loving. motivated by achievement concerned about the opinions and approval of others. active consumers because shopping is both a social activity and an opportunity to demonstrate to peers their ability to buy. As consumers, they are as impulsive as their financial circumstance will allow.

Action Oriented
Experiencers are motivated by selfexpression. Experiencers seek variety. Experiencers spend a comparatively high proportion of their income on fashion, entertainment, and socializing. Their purchases reflect the emphasis they place on looking good.

Makers/Survivors
Makers are practical people who have practical skills and value self-sufficiency.

Suspicious of new ideas. Respect authority but resentful of government intrusion on individual rights.
Unimpressed by material possessions other than those with a practical or functional purpose. Survivors are cautious consumers. They are loyal to favorite brands, especially if they can purchase them at a discount.

Practical application of VALS

Commercialization Positioning Communications