Consumer Buyer Behavior

Book Code MB0030 Smita Choudhary

Unit 5

Contents
Introduction Characteristics affecting consumer behavior Types of buying decision behavior: Henry Assael Model Consumer buying decision process Buyer decision process for new products Buying motives Buyer behavior models

Introduction
Consumers are individuals, households or businesses who use the products. The characteristics of consumers are different in different countries. Hence, marketers must understand the needs and buying behavior of consumers before developing product and marketing program.

Learning Objectives
After studying this unit, you will be able to Indentify the characteristics that affect consumer behavior. Explain different types of buyer behavior Analyze the consumer decision making process Discuss the consumer decision process for new products. Examine the buying motives and behavioral models

Characteristics Affecting Consumer Behavior

Cultural, social, personal and psychological factors affect consumer behavior. These factors are beyond the control of the company. I. Cultural factors 1. Culture It is a mix of customs, beliefs and values of consumers of a particular country. 2. Subcultures Subcultures are part of culture consisting of geographic regions, religions, nationalities and racial groups. The values of these groups are different from each other. 3. Social class These are permanent groups in the society whose members have common likings. As per the McKinsey consumer report, Indian consumers can be classified into five categories. They are deprived, 5

a) Deprives Deprived are people whose annual income is

less than Rs. 90,000. This group is also known as below poverty line. They earn their living through seasonal work. They perform less skilled or semi skilled work. Aspires These are families whose annual income is between Rs. 90,000 to Rs. 200,000. This group consists of small shop keepers, industrial workers and small farmers. Seekers These are families whose annual income is between Rs. 200,000 to Rs. 500,000. This group consists of fresh workers, middle level employees, government employees and business people. Strivers The annual income of this group is between Rs. 500,000 to Rs. 1,000,000. This group contains business people, large farmers, senior government officials and professionals. They lead the consumption growth in India. Global Indians The annual income of this group more than Rs. 1,000,000. It consists of senior government officials, professionals, business people and top business executives. They purchase international brands and take 6 international food.

b)

c)

d)

e)

II Social factors Human beings are social animals. They live and interact with each other. Hence, they are influenced by each other. Marketers try to find such influential persons or groups of consumer. These influential groups are classified into two main groups namely reference groups and family. Reference groups - Reference groups are groups that people refer to when evaluating their own qualities, circumstances, attitudes, values and behaviors. ---- William Thompson and Joseph Hickey Family Indian culture gives high importance to family. People discuss with their families before purchasing any valuable item. Therefore, companies use either whole family or kids in their promotional programs.

III Personal factors

Individual factors like age, occupation, lifestyle and personality affect the consumer decision making. Personality is the image of peoples traits. These traits that form personality are self confidence, dominance, autonomy, defensiveness, adaptability and aggressiveness. Many companies use these concepts in their marketing communication.

Psychological factors Motivation Abraham Maslows Need Hierarchy Theory

Self

Esteem

Social

Safety

Physiological
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i.

Physiological needs These are essential for supporting life. The main physiological needs are food, water, shelter, sleep, medicine, etc. Maslow believed that until these basic needs are not satisfied, no other motivating factor will work. ii. Security or safety needs These are the needs to be free of physical danger and free of the fear of losing a job, property, food or shelter and the protection against emotional harm. iii. Social needs These needs include need for affection, acceptance and friendship. iv. Esteem needs These needs appear after social needs are satisfied. These needs include need for power, prestige, status and self-confidence. v. Need for self-actualization It is the highest need in the hierarchy. It is the power to become what one is capable of becoming. It includes growth, achieving ones potential and self-fulfillment.
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Perception
It is the process of acquiring, interpreting, selecting and organizing sensory information. Marketers conduct a research on consumer profile and communicates the product or service messages through radio, demo or television. The consumers see, hear and experience the product or service and develop an image in the mind. The message passed by the company passes through three different selection procedures. Selective attention: It is the habit of people to analyze the information completely. They form the perception about the product or service only after complete analysis. This group is very difficult to handle as they always want more information. Selective distortion: It is the experience where consumers will have tendency to interpret the information as they like it. Selective retention: It is the concept where the consumer will not remember all the points communicated by the company. He/she may remember the good points and forget the negative points of the company.
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Types of Buying Decision Behavior: Henry Assael Model

High Involvement Significant difference between brands Few differences between brands Complex buying behavior Dissonance reducing buying behavior Low Involvement Variety seeking buying behavior Habitual buying behavior

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Complex buying behavior

Customers with complex buying behavior are highly involved in the purchase of the product or service. The difference between the brands is also very high. The marketer should first develop the belief about the brand, provide the information and differentiate the company brand from others. This is the behavior of customers when there is high involvement in product purchase but there are very few differences between brands. The disadvantage of this behavior is that customer will show disagreement after purchasing the product which is very difficult to control.
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Dissonance reducing buying behavior

Variety seeking buying behavior

This is the behavior of consumers when there are major differences between the brands but the involvement in purchasing is low. In this situation the marketer should take following steps: The market leader should encourage customers to buy repeatedly. Make the product available and visible to customer in shopping places. Firms that are not market leaders should follow sales promotion techniques to encourage customers to buy the product.

Habitual buying behavior

It is the behavior of customers when there is low involvement in purchase and few differences between the brands. In this situation the marketer should follow these strategies: Use price and sales promotion to encourage product trial. 14 Use more visual elements than words in the advertisement.

Consumer Buying Decision Process

1. Need recognition 2. Information search

3. Evaluation of alternatives

4. Purchase decisions

5. Post purchase decisions

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1. Need recognition
A customer is guided by two types of stimuli internal stimuli and external stimuli. The examples of internal stimuli are customers desire, attitude or perception. The examples of external stimuli is advertising. Both stimuli help the customers to understand the need for the product. Marketer must understand the needs of the customer and highlight those needs in the communication strategy.
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2. Information search
After identifying his needs, the customer searches for information about the product, place, price and point of purchase. This information can be collected from Personal sources: Family, friends and neighbors Commercial sources: Advertising, sales people, dealers, packaging and displays Public sources: Mass media and consumer rating agencies Experiential sources: Demonstration, examining the product At this stage, the marketer should provide detailed information about the product. 17 The marketing communication should focus on the

3. Evaluation of alternatives
At this stage the consumer compares different brands on attributes which he/she requires in the product. Normally, the Indian consumer evaluates the product on the basis of the following factors:

Price Features Availability Quality Durability

Now, the marketer should provide advertisements that compare different brands. The advertisement should be different for different segments and focus on the attributes according to the segment.

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4. Purchase decision

At this stage, the consumer buys the brand that he thinks is the best. In India, affordability has a very important role at this stage.
When consumers use the product they experience some satisfaction and some dissatisfaction. The consumer takes some actions after purchasing the product which are of interest to the marketer. If the performance of the product is not as expected, it causes dissatisfaction to the consumer. Marketers should notice how consumer uses and throws away the product. For durable goods, the Indian consumer wants some resale value also.

5. Post purchase behavior

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Buyer Decision Process for New Products

Awareness Interest

Evaluation

Trial

Adoption
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There is a difference in decision making of buyers for existing products and new products. In existing product decision making, the buyer searches for information and evaluates it. But in new products this option is not available. Adoption is the mental process through which an individual passes from first hearing about an innovation to final adoption ---- Philip Kotler The adoption process can be explained as follows:

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Adoption Process
Awareness: The consumer becomes aware of the product but does not have proper information about it. Interest: At this stage, the consumer shows interest to collect information about the product. Evaluation: After collecting the information, the consumer analyzes how the new product is better than the existing products or substitutes and decides whether to buy or not. Trial: The consumer tries the product on a small scale to improve his views about the product. Adoption: At this stage, the consumer decides to make full 22 and regular

Adoption rate
Consumer innovators (2.5%):
These are consumers who adopt any new product that enters the market. These people are very status conscious. For such consumers, marketers must highlight how the new product will add to the esteem of the consumer.

Early adopters (13.5%): Early majority (34%): Late majority (34%):

products at affordable prices.

Such consumers observe the advantages of the new product and when the price of the product falls and becomes affordable they buy the product. This group of customers are attracted towards the benefits of the product. They make sure that there are no technical or general problems with the product. This group of customers wants quality

Laggards (16%):

Such customers are traditional and price conscious. They take a lot of time to adopt the product.

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Buying Motives
The thoughts, feelings, emotions and instincts that encourages customer to buy a product are known as buying motives. Buying motives are those influences or considerations which provide the impulse to buy, induce action and determine choice in the purchase of goods and services. ---- Prof D.J. Duncan

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Classification of Buying Motives Buying Motives

Product Buying Motives

Emotional product buying motive

Patronage Motives
Emotional patronage buying motive

Rational product buying motive

Rational patronage buying motive

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1. Product buying motives

These are influences and reasons that encourage a buyer to select a particular product over other product. The influence or reason may be design, shape, dimension, size, color, packaging, etc. Product buying motives are classified as Emotional product buying motive Rational product buying motive

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a) Emotional product buying motives Here, the buyer purchases a product without thinking logically and carefully. The buyer takes decision on the basis of emotions. The factors that affect the emotional product buying motives are
Costumers pride is associated with the product. Customer tries to copy from others. Purchase goods for affection of family member. Product that provide comfort are purchased on emotions. Sexually appealing products are purchased on emotions. Recreational, hunger or habitual products are purchased emotionally. Products that provide uniqueness or individuality.

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b) Rational product buying motives

When buyers understand the advantages and disadvantages of purchasing a product and then takes a decision, it is known as rational product buying motive. For taking rational decisions, the buyer takes following factors into consideration:

The safety or security features of the product. The value for money provided by the product. Suitability and utility of the product. Durability of the product Convenience of the product

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2. Patronage buying motives

These are reasons that make a buyer favor a particular shop in preference to other shops while buying a product. Patronage buying motives are classified into two categories Emotional patronage buying motives Rational patronage buying motives

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a) Emotional patronage buying motives

These are favoring a particular shop for purchase without any logical thinking or reason. The factors that affect emotional patronage buying motives are:
Appearance of the shop Visual merchandising in the shop Reference groups influence about a particular shop Shopping in a big mall is a prestige issue. Copying other reference groups members

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b) Rational patronage buying motives

These motives arise after the buyer analyzes the shop carefully and provides the information to reference group members. Rational patronage buying motives include the following:
Convenience of the shop to the buyers. Value for money provided by the shops. Financial schemes and facilities provided by the shop. Availability of wide range of goods. Reputation of the shop in the area. Services provided by the sales executives.

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Buyer Behavior Models

The affect of social science on buyer behavior has encouraged marketing experts to propose some models for explaining buyer behavior. They include
The economic model The learning model The psychoanalytical model Sociological model

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1) The Economic Model

According to the economic model of buyer behavior, the buyer is a logical man and his buying decisions are controlled by the concept of utility. When the buyer has some purchasing power, some needs to be fulfilled and some products to choose from, he will distribute the amount over the products in a very rational manner to maximize the utility or benefits.

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2) The Learning Model

The learning model takes ideas from Ivan Pavlovs stimulus response theory. According to this model buyer behavior can be influenced by controlling the drives, stimuli and responses of the buyer. The model is based on mans ability at learning, forgetting and discriminating. The stimulus response theory states that a relationship develops between the behavior producing stimulus and a behavior response due to conditioning of behavior and formation of habits. In terms of consumer behavior, an advertisement would be a stimulus and purchase would be a response.
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Learning process
According to the stimulus-response theory, learning depends on drive, cue (stimulus), response and reinforcement. Cue or stimulus is any object in the environment recognized by the individual. The marketing people try to find out and create a cue that is important to drive stimulus or get favorable responses. Response is an answer to a drive or cue. Response includes attitudes, familiarity, and perception. Response may be generalized or discriminatory.

Cue:

Response

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Reinforcement Reinforcement or rewards means decrease in drive and stimulus. Reinforcement is defined as events that increase the possibility of occurrence of responses. When consumption of a product leads to satisfaction of need, there is reinforcement. The change in behavior that increases the possibility of an act being repeated is known as learning. Reinforcement increases the rapidity (speed) and vigor (energy) of learning.

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3) The Psychoanalytical Model

This model takes ideas from Freudian psychology. This model states that the individual consumer has some deep motives that drive him to make certain buying decisions. The buyer has some hidden fears, hidden desires and subjective longings (personal wishes ). His buying action can be affected by appealing to these desires. The psychoanalytical theory is credited to the work of noted psychologist Sigmund Freud. Freud introduced personality as a motivating factor in human behavior. According to this theory, the mental framework of a human being consists of three elements, namely:
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The id or the instinctive, pleasure seeking element: It is the group of inborn desires that a man is born with. It includes the aggressive, destructive and sexual drives of man. The superego or the internal filter: It presents to the individual the behavioral expectations of society. The ego or the control device that maintains a balance between the id and the superego.

The theory believes that a person is not able to satisfy all his needs within the boundaries of the society. These unsatisfied needs create tensions in an individual which have to be taken care of.

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4) The Sociological Model This model believes that an individual is influenced by society and close groups and social classes. The buying decisions of individuals are not totally based on utility, he has a desire to follow the environment. 5) The Nicosia Model The Nicosia Model and the Howard Sheth Model belong to the category of systems model, where a human being is analyzed as a system with stimuli as the input to the system and behavior as the output of the system. The Nicosia model of buyer behavior was proposed by Francesco Nicosia, an expert in consumer behavior and motivation, in 1966.

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