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MARKETING MANAGEMENT MODULE 2

INDICATIVE NOTES
Module 2
Consumer behavior- buying roles and behavior; Individual
consumer behavior and institutional consumer behavior-- models
of buying decision; factors influencing buying decisioncultural,
social, personal and psychological factorsbuying process
consumer adaptation processchanging patterns of consumer
behavior.

Concept of Consumer Behaviour /What is Consumer Behaviour?/ Explain


or Elucidate Consumer Behaviour/Define Consumer Behaviour /
Consumer behavior is the study of understanding how the consumer makes decision
about spending his limited resources (e.g. time, effort, and money) for specific purchases.
Consumer behavior relates to what makes the consumer pick up particular services or
products and what makes him reject many other services and products on the offer. As
evident from the definition, the study of consumer behavior is primarily focused on:
the consumers who buy the products and services of the marketers
their process of deciding as to which products or services to buy from a mix of many
choices available
the places from where the consumers buy the products or services
the frequency of buying
the frequency of usages
Consumer choices are rational when they seek to satisfy their needs within their
disposable income range. In many situations, consumer choices are less rational and
more emotional. Emotional choice of a consumer can be traced to his/her attempt to
satisfy some sub-conscious desire. Consumer behavior is a dark alley. It is like an
unknown cerebral space. It is an ideal subject of research.
Factors Controlling Consumers Buying Motivation:
product/services
prices/offerings
advertisements
information
promotion
personal selling
pop display
influencers
opinion makers
reference groups

Importance of Consumer Behaviour / Significance of Understanding Consumer


Behaviour in Marketing / Why is consumer behaviour central to marketing? / Scope
and Objective of Consumer Behaviour in Marketing
The whole process of marketing is directed towards understanding of the consumer need,
matching the product to satisfy the need, and then making the consumer aware of the
product being available to meet his need. The following functions show the importance/
relevance of consumer behavior studies.
Analyzing Business and Marketing Potential
In terms of business and marketing potential, consumer behavior covers:
o purchase patterns
o usage and disposal of the products and services
o satisfaction levels
o likelihood of repeat purchases
o taste of the consumers, their likes and dislikes, fashions, prevailing lifestyles
o income and other demographics
o factors like opinion makers, influencers, decision makers and sources of satisfaction.
Identifying the Target Markets and Segments
o As part of target market and segment identification, the study of CB helps
to understand consumers needs, preferences, perceptions, purchase patterns,
consumption trends, attitude towards different products and expectations.
o Subsequently, the marketer matches the data so collected about his consumers with
his resources, capabilities and capacities.
o He can then take decisions about the markets and the market segments he would like
to service.
o He can evolve strategies to serve these markets.
Arriving at Decisions Relating to Marketing Mix
o The ultimate aim of consumers and their unique characteristics can be found out
through marketing research.
o Market research leads to a complete picture of the consumer: his needs, his buying
habits, his income levels, his other demographic characteristics, dreams, aspirations,
expectations, desires and satisfaction levels.
o The marketer can now plan and evolve his marketing mix viz. product, price, place
and promotion.

Models of Buying Behaviour / Consumer Behaviour Models / Models of


Buying Decisions / Theories of Consumer Behaviour:
Models of Buying Behaviour can be broadly divided into traditional models and
contemporary models.
Traditional Models of Buying Behaviour:
Economic Model, Stimulus-Response Model / SR Model / Learning Model,
Psychoanalytical Model of Buying Behaviour, Psychological Model, Psychological
Model
1) Economic Model
The economic model of consumer behavior focuses on the idea that a consumer's buying
pattern is based on the idea of getting the most benefits while minimizing costs. An
increase in a consumer's purchasing power will allow him to increase the quantity of the
products he is purchasing. The model is based on the belief that individuals are rational
and think of only economic benefits. The theory is based on demand and supply effect,
price effect, substitution effect, and income effect. The economic model does not
consider the influences of other environmental and social factors on human behavior
which affect a consumers buying decisions. The fact is that human beings do not limit
their thinking to economic benefits.
2) Stimulus-Response Model / SR Model / Learning Model
Behaviour is determined by experience through exposure to a set of stimuli and their
associations. There is a focus on human drives both primary and secondary.

This thought process of this model works on Ivan Petrovich Pavlovs (Russian
physiologist 1849-1936; Nobel Prize winner 1904) stimulus response (1927) which states
that in order to bring changes in the buyers behavior, one must change the drives, stimuli
and responses as per the buyers attitude or perceptions. A consumer has the capability to
learn, overlook and differentiate based on stimulus which is an internal drive.
The theory believes that consumers will get used to certain situations and conditions and
will respond to similar situations subsequently in the same fashion as earlier. The
consumers will associate an earlier good experience with the other products and services
of the same company. This was the origin of the development of family brand names,
similar discount offers, seasonal schemes, anticipating that the consumers will grab the
company offerings like the way they did in the past. The brand building activities, is an
example of stimulus. It impels action (response) in the form of repeat buying. Such
brand building activities will lead to a habit formation.
Marketing and other stimuli enter the buyers black boxand produce certain responses.
The stimuli on the left are of two types: marketing stimuli consists of the four Ps. Other
stimuli consist of major forces and events in the buyers environment. All these stimuli
pass through the buyers black box and produce the set of observable buyer responses
shown on the right. The marketers task is to understand what happens in the buyers
black box between the stimuli and responses, how the stimuli are changed into responses.
3) Psychoanalytical Model of Buying Behaviour
The model is based on Sigmund Freuds (1856-1939 Austrian neurologist who became
known as the founding father of psychoanalysis) psychoanalytical studies.
The learning model considers the consumer as an ape who does not have a choice of his
own based on the environment around him. Thus came the Psychoanalytical Model based
on the cerebral interaction of Id, Ego and Super Ego which are functions of the mind (not
parts).
Id is unconscious and is the dark and inaccessible part of our personality. It is filled with
energy reaching it from the instincts. Id is the source of all cerebral and psychic energy
that drives human to do something.
Super Ego refers to the internal representation and approval of what is correct socially
and will be approved by the society. It is the conscience.
Ego is the surface of the personality, the part usually shown to the world and governed by
a practical approach to the world. Ego represents reason and common sense whereas Id
contains the passions. Ego services three masters the external world, the super-ego and
the Id. It finds a balance between primitive drives and reality. Ego is driven by Id and
confined by super ego. Ego directs Id to behave in a socially acceptable manner.
When we apply this model to consumer behavior, let us take the example of a middle
income consumer who is interested in purchasing, say, a high priced car. S/he will be
facing the following cerebral dilemma on account of his inability to pay up the total cost
of the car upfront. His Id demands the use of liberal bank credit available nowadays to
buy that costly car. His super ego dissuades him from buying a car on equated monthly
installments as it may not be feasible at his level of regular income. Here his ego acts

like a mediator and reminds him of the next increment which will take away his financial
pressure. Here, the self-image of a consumer generated through ego is a great motivating
force inducing him to buy certain products. Id is the persuader: I must buy the car
bank credit available. Super Ego is the dissuader: Yes, but difficult to pay EMI. Ego
is the mediator: Yes, I will manage by next salary increase. Everyone else is doing the
same. Another good example is the scooter marketing campaigns in the teenage girl
segment, particularly Why should boys have all the fun.
4) Psychological Model
Buying motives are complex. For example, someone who buys a Rolex watch may say
that the motive is for the precision of its timekeeping while the real reason is to display
social status. Consumers are not always prepared or willing to say what their deeper
psyche is really wanting.
Model of Hierarchy of Needs / Maslows Theory of Motivation
The starting point in the psychological model is the model of Hierarchy of Needs
developed by Abraham Maslow in the 1940s. It is also known as Maslows theory of
motivation.
According to Maslow, human beings are wanting animals . They have innate desire to
satisfy a given set of needs. Each of us is motivated by needs. Our most basic needs are
inborn, having evolved over tens of thousands of years. Maslow's Hierarchy of Needs
states that we must satisfy each need in turn, starting with the first, which deals with the
most obvious needs for survival itself. Only when the lower order needs of physical and
emotional well-being are satisfied are we concerned with the higher order needs of
influence and personal development.
These needs are arranged in a hierarchy of importance, with the most basic needs at the
foundation of the hierarchy. The three sets of needs at the bottom of the hierarchy are
called deficiency needs because they must be satisfied for the individual to be
fundamentally comfortable. The top two sets of needs are termed growth needs because
they focus on personal growth and development. In this model, only a few people get to
satisfy their higher level needs.

Maslows hierarchy is now seen to be overly simplistic for marketing analysis, however
in several respects, he appears to be relevant even more than 40 years. Today we have
become a society defined by our Hierarchy of Wants. On the one hand we madly run after our
wants and on the other hand, some of our fundamental needs are not even being met .

For

example, in India train passengers have access to online booking and paperless mobile ticketing.
However, the same passengers do not have access to the basic need of bio toilets and have to put
up with infection-rich crude track-flushing.

Like any simple model, Maslow's theory is not a fully responsive system - it's a guide
which requires some interpretation and thought, given which, it remains extremely useful
and applicable for understanding, explaining and handling many human behaviour
situations. Maslow's Hierarchy of Needs will be a blunt instrument if used as such. The
way you use the Hierarchy of Needs determines the subtlety and sophistication of the
model.
For example: the common broad-brush interpretation of Maslow's famous theory
suggests that that once a need is satisfied the person moves onto the next, and to an extent
this is entirely correct. However an overly rigid application of this interpretation will
produce a rigid analysis, and people and motivation are more complex. So while it is
broadly true that people move up (or down) the hierarchy, depending what's happening to

them in their lives, it is also true that most people's motivational 'set' at any time
comprises elements of all of the motivational drivers.
For example, self-actualizers (level 5 - original model) are mainly focused on selfactualizing but are still motivated to eat (level 1) and socialize (level 3).
Similarly, homeless folk whose main focus is feeding themselves (level 1) and finding
shelter for the night (level 2) can also be, albeit to a lesser extent, still concerned
with social relationships (level 3), how their friends perceive them (level 4), and even
the meaning of life (level 5 - original model).
5) Sociological Model
The sociological model primarily considers the idea that a consumer's buying pattern is
based on his role and influence in the society. A consumer's behavior may also be
influenced by the people s/he associates with and the culture that her/his society exhibits.
His buying decisions are influenced and directed by social considerations and
compulsions. These social considerations can come from immediate family, intimate
groups, peers, and seniors, friends, opinion makers, thought influencers, social leaders,
social icons and the social media.
For instance, a manager and an employee may have different buying behaviors given
their respective roles in the company they work for, but if they live in the same
community or attend the same church, they may buy products from the same company or
brand.
The sociological model helps the marketer in categorizing and segmenting consumers in
different social and demographical groups. The model helps in identifying the
environmental factors that can affect the individuals buying decisions. The marketers,
by using this model, find it easier to identify the opinion makers and opinion leaders who
can act as leaders in getting the innovations accepted. Accordingly, they address all their
communications and advertisings to the opinion makers and opinion leaders.
Contemporary Models of Buying Behaviour:
Howard Sheth Model (Integrated Model) of Buying Behaviour
John Howard and Jaddish Sheth (Howard was Sheths mentor) presented their integrated
model of buyer behavior in 1960. They introduced the term buying behavior (and not
consumer behavior).
The Integrated Model builds the framework for the formation of the buying behavior
forming inputs namely learning, perception, attitude, loyalty, discontentment and
eventual switching of the brands by the consumers. Buying is a problem solving process.
The model assumes that satisfaction leads to brand loyalty and that dissatisfaction can
lead to switching of the brands by the consumers. The Howard Sheth Model of buying
behavior operates on the following logics:

Stimuli/Input variables

Internal/individual
factors
Social/cultural factors
Elements of marketing
mix
External environmental
factors
Personal purchasing
power

Processing/Analysis
(Catalysts that triggers the
desired consumer response)
Problem
Solving/Decisionmaking process
Wants/desires
Information search
Evaluating alternatives
Reaching buy/do not
buy decision

Response/Output Variables

Purchase behavior:
Attention,
comprehension, attitude,
intention
Either buy or do not buy
Produce use behavior
Post- purchase reflection
Satisfaction or otherwise

The shortcomings of the Model are:


Multi-faceted and hence difficult to comprehend
The variables mentioned have not been clearly defined.
Nicosia Model (Conflict Model) of Buying Behaviour
In 1966, a well-known consumer motivation and behavior expert Mr. Francesco Nicosia
presented the first buying behavior model from a marketing managers point of view.
The model analyses how all the marketing activities that a firm undertakes influence the
consumer and compel him to buy. The model states that the messages influence the
consumer towards the product; he develops a certain attitude towards the product
depending on the situation. It prompts the consumer to search for the product features.
Such an exercise can get a positive response from the customer and hence he may decide
to buy the product. The Nicosia Model classifies these activities into four fields:
Field One: the firms attributes and the consumers attributes. The interaction of the two
sets of attributes becomes the input for the field two.
Field Two: Stimulates the consumer to search. The consumer evaluates the product and
the alternatives. A positive motivation becomes the input for field three.
Field Three: Physical act of purchase
Field Four: use of the purchased item. It generates feedback of sales results to the firm.
The model gives importance to the communication undertaken by the marketing firm for
communicating with the customer to change his attitude towards the product and the firm.
The model is fully dependent on the ad releases from the firm, and does not mention
about the external influences and opinions that help a consumer form an attitude and
decide on accepting or rejecting any of the products.

Engel, Blackwell and Miniard Model (EBM Model)


This model came up in the 1980s. Buying decision making process is based on market
information input. The decision-making by the consumer takes place by way of input
absorption and processing which in turn lead to the five stages of decision process about
consumer behavior, namely need recognition, search, alternative evaluation, purchase and
outcomes.
The model does not show what factors shape items, such as personality, values and
culture. It fails to find out why different types of personality produce different decisionmaking.
Webseter and Wind Model of Organization Buying Behaviour
Webster and Wind developed the model in 1972. Four sets of variables affect the buying
decision making process in an organization. They are environmental, organizational,
buying centre, and individual determinants.
The model fails to explain the specific influences each key variable can exert on buying
behavior.
Sheths Industrial Buying Model (1973)
The model focuses on the purchase policies and processes of the organization. It also
covers the psychological aspects of the decision making in the industrial buying behavior.
The model has four major aspects namely:
Decision-making process and its psychological aspects
Individual buyer and decision-making process
Situational Factors (unforeseen)
Product characteristics and the buying process

Classification of Buyers in Consumer Market (Buyer Types/Buyer Roles) - Ansiya


Philip Kotler in his book Marketing Management has identified several types who can
play a role in an overall buying decision in a consumer market.
The Initiator
The Influencer
The Decider
The Buyer
The User

who can first suggest the idea of buying a product or service.


whose personal authority or knowledge can influence the outcome
of the buying decisions
who finally decide on whether to buy, what to buy, where to buy
from, and how to buy
who actually makes the buying transaction
who actually uses the product or consumes the service

Example: 1
A kindergarten girl needs to buy colour crayons to use in class.
i)
Initiator:
The girl
ii)
Influencer:
Her teacher or her classmates
iii)
Decider:
Either of the parents
iv)
Buyer:
Either of the parents or a sibling.
v)
User:
The girl herself.
Example 2:
The mother is a housewife; she loves watching TV when her husband and children go for
work. She has been complaining that the present TV set at home has been giving
problem. She also says that the model is now an old one and that that the family
should own a new model.
i)
Initiator:
The lady
ii)
Influencer:
Her neighbors and friends.
iii)
Decider: Joint: Her husband, she herself and the children.
iv)
Buyer:
Husband or son or daughter or herself.
v)
User:
The family.
Example 3:
A student enters college and needs a laptop for doing assignments
i)
Initiator:
The student himself/herself
ii)
Influencer:
His/her friends and classmates
iii)
Decider:
The student himself/herself
iv)
Buyer:
The student himself/herself
v)
User:
The student himself/herself.
A marketer can shape his marketing programs around these buyer types. We see, for
example, huge effort expended on marketing toys to children during childrens television
commercial breaks. The child may not be the decision-maker or buyer; but s/he is most
certainly going to be the initiator, possibly the influencer; here, the child is certainly the
final user.

Factors Influencing Consumer Buying Behaviour / (Factors Influencing Consumers


Purchasing/Buying Decision) Vineesha VM
A consumer will search for, select and purchase a product or service for use and disposal
based on personal wants and needs. Various factors influence purchasing habits
including personal, social, psychological and cultural factors. Businesses and
researchers study consumer behavior to get a better understanding about the factors
that influence consumer purchasing decisions.
Cultural Factors
Consumer purchasing decisions are often affected by factors that are outside of their
control but have direct or indirect impact on how they live and what they consume.
Cultural factors belong to this category. Of all the factors that affect consumer decision
making, cultural factors exert the broadest and deepest influence.

Culture is the essential character of a society that distinguishes it from other societal
groups. The cultural factors influencing buying decisions include:
basic values, language, myths, beliefs, customs, rituals, laws, ideals, material artefacts
or products.
Cultural factors are either transmitted from one generation to the next or are developed
midway by globalisation, internet and media reach, and mobile revolution. Cultural
influences on purchasing vary from country to country. Inside one culture, there are subcultures and social classes. Sub-cultures include for example nationalities, religions and
geographic regions.
Cultural factors cover all the things consumers do without conscious choice because their
cultures values, customs, and rituals are part of their daily habits. The rapid growth of
technology in todays world has accelerated the rate of cultural change. Television has
changed entertainment patterns and family communication and has heightened public
awareness of political and other news events. Automation has increased the amount of
leisure time we have and in some ways has changed the traditional work ethics.
As part of their efforts to convince customers to purchase their products, marketers often
use cultural representations, especially in promotional appeals. The objective is to
connect to consumers using cultural references that are easily understood and often
embraced by the consumer. By doing so the marketer hopes that the consumer feels more
comfortable with or can relate better to the product since it corresponds with their cultural
values. Additionally, smart marketers use strong research efforts in an attempt to identify
differences in how sub-culture behaves. These efforts help pave the way for spotting
trends within a sub-culture, which the marketer can capitalize on through new marketing
tactics (e.g., new products, new sales channels, added value, etc.).
Globalisation has tremendously influenced the cultural aspects of buying behaviour. For
example, the global work environment in IT industry in India has deeply influenced the
metro and even non-metro spending habits. The Chinese influence in the restaurant menu
in different parts of the world is another example. The acceptance of Yoga has also
popularised vegetarianism in different parts of the world. Islamic Banking is a wonderful
example of cultural influence on consumer behaviour in terms of various banking
products.
Social Factors
Social Factors influencing consumer buying decision can be classified as under:
1) Reference Groups
Reference groups comprise of people that individuals compare themselves with. Coworkers, family members, relatives, neighbours, friends and seniors at workplace
often form reference groups. Reference groups are generally of two types primary
and secondary.
The Primary Reference Group consists of individuals one interacts with, on a regular
basis. The primary reference group includes friends, family members, relatives and
co-workers.
Many individual go through the following stages and show a different buying need in
each stage:

Bachelorhood: purchases alcohol/beer, bike, mobile handsets (spends lavishly)


Newly Married: tend to purchase a new house, car, household furnishings. (spends
sensibly)
Family with Children: purchases products to secure his as well as his familys
future.
Empty nest (children getting married)/retirement/old age: medicines, health
products, and other necessary items.
The Secondary Reference Groups Secondary groups share indirect relationship with
the consumer. These groups are more formal and individuals do not interact with
them on a regular basis, Example religious associations, political parties, clubs etc.
2) Role and Status in the Society
Each individual plays a dual role in the society depending on the group he belongs
to. An individual working as Chief Executive Officer with a reputed firm is also
someones husband and father at home. The buying tendency of individuals
depends on the role he plays in the society.
An individual from an upper middle class would spend on luxurious items whereas an
individual from middle to lower income group would buy items required for his/her
survival. A person's role in life, for example as a manager and the status that comes
with the position, determine certain purchasing choices.
Smart business means smart understanding of consumer behaviour of which social
factors play a fast growing networking role. Smart technology comes only next. Today
people live in networks and networks determine how people influence each other. The
web is continually rebuilt around the people. Obviously, businesses need to re-orient
around people networks in a continual manner too. Today people have multiple
independent groups of friends college friends, family, surfing friends, local friends and
so on. People have different types of relationships temporary ties, weak ties, strong
ties. These networks determine how people influence each other. One significant area of
the network influence is the consumer buying behaviour. We often look to others when
making buying decisions. We are increasing our reliance on social networking sites in
our purchase journey from eyeball to awareness to considerations to preference to buying
action to brand loyalty to shifting loyalty.
The impact of growing access to communication and media in rural India is a classic
example for the significance of social factors in purchase decisions. Growing income
levels, purchasing power and networked awareness has influenced rural households to
purchasing a wide range of productscars, mobile, flat-screen televisions, DTH, bike,
hair oil, toothpastes, shampoo, shaving cream, talcum powder and so on.
Personal Factors
1. Occupation
For example, a CEO of an organization tends to wear something really elegant and
unique for others to look up to him. A senior professional can never afford to wear
cheap labels and local brands, to work. An individuals designation and his nature of
work influence his buying decisions. You would never find a low level worker
purchasing business suits for himself. An individual working on the shop floor cannot
afford to wear premium brands everyday to work. College goers and students would

prefer casuals as compared to professionals who would be more interested in buying


formal shirts and trousers.
2. Age
Age and human lifecycle also influence the buying behaviour of consumers.
Teenagers would be more interested in buying bright and loud colours as compared to
a middle aged or elderly individual who would prefer decent and subtle designs. A
bachelor would prefer spending lavishly on items like beer, bikes, music, clothes,
parties, clubs and so on. A young single would hardly be interested in buying a house,
property, insurance policies, gold etc. An individual who has a family, on the other
hand would be more interested in buying something which would benefit his family
and make their future secure.
Age determines the changes in purchasing choices made over a lifetime. For example,
personal tastes in clothing, food, furniture and recreation change over the years and
shape the buying habits of the consumer.
3. Economic Condition
Individuals with high income would buy expensive and premium products as
compared to individuals from middle and lower income group who would spend
mostly on necessary items. You would hardly find an individual from a low income
group spending money on designer clothes and watches. He would be more interested
in buying grocery items or products necessary for his survival.
4. Lifestyle
Lifestyle refers to the way an individual stays in the society. An individuals lifestyle
is something to do with his style, attitude, perception, his social relations and
immediate surroundings. It is really important for some people to wear branded
clothes whereas some individuals are really not brand conscious. An individual
staying in a posh locality needs to maintain his status and image.

5. Personality & Self-Concept


An individuals personality also affects his buying behaviour. Every individual has
his/her own characteristic personality traits which reflect in his/her buying behaviour.
A fitness freak would always look for fitness equipments whereas a music lover
would happily spend on musical instruments, CDs, concerts, musical shows etc.
Psychological Factors
Psychological factors that influence consumer purchasing include factors such as
perception, motivation, learning, beliefs and attitudes.
1. Perception
Perception is the process by which people select and interpret information to form
purchasing decisions. Individuals with the same needs might not purchase similar
products due to difference in perception. For someone a Dell laptop might be the best
laptop. For others, the same brand laptop could be just one of the best brands
available.
Take for another example, a couple working in the IT field. After a longer work day,
on the way back home, the husband orders a large chicken pizza with French fries
and coke while the wife prefers two plates of oil-rich poori. Though both have the
same motivation (hunger), but the products they purchase are entirely different. Here,
the wife also likes pizza but she has a more favourable perception about poori,

unmindful of the fact that she is taking excessive oil in her own menu. Individuals
think differently and their perceptions do not match. There are three different
processes which lead to difference in perception:
a. Selective Attention - Selective attention refers to the process where individuals
pay attention to information that is of use to them or their immediate family
members. An individual in a single day is exposed to numerous advertisements,
billboards, hoardings etc but he is interested in only those which would benefit
him in any way. He would not be interested in information which is not relevant at
the moment. For example an Apple i-phone aspirant dreaming of buying the next
release shortly is, all eyes on Apple ads.
b. Selective Distortion - Consumers tend to perceive information in a way which
would be in line with their existing thoughts and beliefs. For example an Arrow
shirt fan, keeping the distorted belief that no other brand is as appealing as Arrow.
c. Selective Retention - Consumers remember information which would be useful to
them, everything else they forget in due course of time. For example, a fresh
MBA, on getting the first salary wants to purchase a Tissot watch and
automatically recalls the Tissot ad which he had seen several days ago.
2. Motivation
Motivation is the drive that pushes a person to seek satisfaction through the purchase
of a product. For example, a Kudumbasree worker in Kerala whose husband is a
perpetual work-shy drunkard, after a full forenoon of waste collection and disposal
work, queues up in front of the fair price shop to buy grocery at concessional rates.
Here the motivating factor is that she wants to make both ends meet for her children,
being faced with meagre income. A health-conscious senior citizen on a longdistance air journey compromises his usual decision not to drink unhealthy bottled
products and goes for Pepsi and chicken burger. Here the motivation is to battle
hunger till the journey is over.
3. Learning
Learning refers to the changes that occur in a consumer's purchasing choices, arising
from experience. Learning comes through experience. An individual comes to know
about a product and service only after he/she uses the same. An individual who is
satisfied with a particular product/service will show a strong liking for buying the
same product again. For example, an IT professional learns through painful
experience that, for long hours of regular work, a desk top computer is better than a
laptop. In Kerala, several fresh aspirants joining English speaking courses learn from
experience that the course has been a waste of time, money and effort.
4. Beliefs and Attitude
Beliefs are the descriptive thoughts a person has about a product, and attitudes are
the person's feelings and tendencies toward a product. Beliefs and attitude play an
essential role in influencing the buying decision of consumers. Individuals create a
certain image of every product or service available in the market. Every brand has an
image attached to it, also called its brand image.
Consumers purchase products/services based on their opinions which they form
towards a particular product or service. A product might be really good but if the
consumer feels it is useless, he would never buy it. For example, there are thousands
of parents in Kerala who consider that their children should join some private English
medium schools and that the government schools are useless. However, the fact is

that in several cases, the quality of Government school teachers is much better than
that of private school teachers.

Buying Process / Buying Decision-Making Process / Stages of Buying Process /


Stages of Buying Decision Process /
Steps Involved in Evaluating and Responding to Consumer Buying Process
The buying process is the set of steps that a customer chooses to go through, with the
goal of satisfying a need. Marketing is aimed at the alignment of organizational
objectives with the buying process. Following are the various stages in the buying
process. These stages explained as below, include, Philip Kotlers five-stage model.
Recognize the Need/Want/Problem (Awareness of a Need or Want)
Most typical buying processes start when an individual becomes aware of a need or a
want s/he would like to satisfy. For example, a beverage in a clear container shows
when it is getting low, or a sticker on a car window reminds customers when it is
time for an oil change.
Frame the Need/Want
The need/want frame helps the brain focus on certain details and ignore others.
Information consistent with the frame is accepted. Information inconsistent with
the frame is ignored or rejected.
Research the Framed Mind (Information Search)
Collect information that helps the prospect understand the need and how it can be
satisfied. Identify options for satisfying the need.
The information sources are:
Personal source
- family neighbours, acquaintances
Commercial sources - sales persons, dealers, packaging displays
Public sources
- mass media, consumer-rating organizations
Experiential sources - handling, examining or using the product
Define Decision Criteria
Identify potential criteria that will help the prospect make a decision.
Select and prioritize criteria that will be further researched for a set of alternatives.
Narrow the Alternatives (Evaluation of Alternatives)
Identify all alternatives the prospect wants to consider
Understands how each alternative meets the criteria
Narrow down the alternatives based on the criteria.
The consumer may evaluate brands on the basis of price, product design, colour,
packaging, after-sales service, etc.
Select an Alternative
Conclusively answer all of the prospects questions and concerns.
Visualize the purchase, ownership, and use experience.

Make the Purchase (Purchase Decision)


Select a purchase/product channel.
Complete the purchase in the selected channel.
In executing a purchase intention, the consumer may take up to five purchase subdecisions;
A brand decision (brand A)
Vendor decision (dealer 2)
Quantity decision (1 computer)
Timing decision (weekend)
Payment method decision (cash/credit)
Re-evaluate the Decision (Post-Purchase Behaviour)
Compare the realized product experience with the expected product experience.
Return / complain about the product if their experience with the product does not meet
their needs or expectations.

Choice Criteria / Evaluative Criteria


Choice criteria / Evaluation criteria are the consumers reference scale on which s/he
judges the various aspects relating to the brand loyalty which made him/her to be loyal to
the particular brand. The choice criteria specify those dimensions which the consumer
perceives to be important enough to be met in his choice of alternatives. A purchase
(unless it is a purely an emotional purchase) will not be usually made unless these
specifications like the physical product, price, quality, reputation et al are manifested in
the brand manufacturing them. These criteria have their source in the consumers selfconcept, his attributes and his set of values. The social and cultural environment also
affect the choice criteria. The choice criteria can be objective, for example the specific
physical features like price, quality. They can also be subjective, for example the
newness, trendiness, youthfulness of the brands. Brand choices are based on
information/emotion, product attributes, gains and losses.

Factors Influencing Choice Criteria / Factors Driving Consumer Choice can be


approached in terms of the following factors:
Goals
Goals clearly affect the criteria that will drive a consumers choice. For example a mall
visitor trying to choose between having chips or carrot sticks for a snack, focuses on
different criteria depending on his goal. If the goal is to eat something that is on the diet,
the choice will be with carrot stick. On the other hand, if the goal is to eat something
that makes the visitor feel good, the choice will be mostly chips. The same chips fan
going for higher-prized branded chips may go for lower priced but trendy versions if
chips is served for a beer party because he needs a large quantity.
Consumers goals may change during the decision process. For example, before you go
to a store, you may be less certain about what you want to buy; but once you are in the
store, your goals may become more certain and concrete.
The goals can be prevention-focused or promotion-focused. Prevention-focused
consumers are risk-averse. For example, a fast food fan who is faced with high
cholesterol report tends to avoid junk food in order to prevent the possibility of heart
ailment. Promotion-focused consumers want to maximize gains and positive outcome.
For example, a teenager in first love goes for the most trendy hair style according to the
perception of his love, irrespective of the fact whether the style matches him or is
effective enough in giving him a more handsome look.
Time
Timing of a decision also affects which criteria drive our choice. If the decision is about
something we will buy or do immediately (.e.g. which restaurant to go to right now), our
choices tend to be based on specific concrete elements such as how close it is to home,
how much dinner will cost there, and who is coming along. The opposite is true for
decisions we anticipate making later: our criteria tend to be more general and abstract
(e.g. which restaurant will create the best dining experience).
Framing
Framing relates to the way in which the task of decision is defined or represented.
Decision framing can affect how important a criterion is to our choice. For example, a
frame for a car purchase might be (a) buy an economical car I can afford or (2) buy a car
that will impress my friends. Clearly different criteria will be used in these two situations.
Frame serves as the initial anchor in the decision process. All subsequent information is
considered in light of that frame. For example, targeting immigrants Western Union
reframed the use of its money-transfer services to emphasize the emotional aspects of
sending money to family members still at home rather than focus on the speed or cost of
the transaction.
Goals, decision-timing and framing have important implications for positioning and
market segmentation.

Choice criteria can also be captioned as follows:


Technical Criteria:
relates to performance of the product and include reliability, durability, comfort and
convenience.
Economic Criteria:
Relates to the income, purchasing power and cost aspects of purchase like price and
running costs.
Social Criteria:
Concerns the impact that the purchase makes on the persons perceived relationships with
other people and influence of social norms on the person.
Personal & Emotional Criteria
Psychological factors like self-image and moods belong to this category.
Risk Aversion Criteria
Some people are risk-averse and choose safe brands. They will only buy established
brands with a safe image. Some consumers are averse to brands with ethnic
incompatibility. For example, Arabs in the case of brands with Jewish connection.

Individual Consumer Buying Behaviour


(with Particular Reference to India)
In the case of India particularly, domestic consumption has been a key driver of the
overall economic growth. Consumers in India (along with China) are the new kings and
queens of the global economy. There will be nearly one billion middle-class consumers in
China and India by 2020. The growth in turn has deeply and widely influenced the
buying behavior of individual consumers of Indian urban middle class. This in turn has
its spillover effects on rural middle class and even low income urbanites. Urbanization
and rising household income is the main reason for the consumption dichotomy.
Following is an analysis of the changing trends in consumer buying behavior:
Asia the Growth Machine
Today, Asia accounts for about a quarter of the worlds consumer banking revenue, up
from a sixth in 2000. Unsurprisingly, China, India and the continents other emerging
nations are driving this growth. Consumers are less loyal and more demanding. They
value personalised shopping experience.
Consumption Dichotomy
There is a consumption dichotomy in India which involves mass consumption (majority
of the urban population who are still in the early stage of buying products that exceed
their basic needs) and new mainstream consumption (upwardly mobile urban middle
class - more individualistic in spending choices, more loyal to certain brands and giving
high importance to emotional benefits in spending; their priorities are scale, speed and
simplicity). Mass consumption intake has been heavily impacted by high inflation rates.

Mainstream consumption uses increasing gold purchase as a weapon to hedge the risks of
high inflation.
Basic functional benefits appeal to mass consumers. For example, two third of the mass
consumers mention durability as one of their top five buying factors for a washing
machine, whereas only half of mass consumers look at durability as a top buying factor.
When hundred mainstream consumers look at low price as a major consideration for
products ranging from smart phones to instant noodles, double that number of mass
consumers have the same consideration.
Shift of Expenditure Density from Food to Non-Food
According to the survey conducted by Credit Suisse on Indian consumerism in 2011, the
average monthly expenditures of Indians on various categories are:
14% of incomes on housing
23% on food
4% on entertainment
7.5% on education
5% on autos
6% on Health Care
7.5% on education
6% on HPC Products (household personal care)
2% on mobile phones
17% on other miscellaneous stuff
Shift from Cereal item to non-Cereal
Kerala is widely considered to be a testing ground for changing trends in urban consumer
behavior. The State has witnessed a significant shift in the food basket from cereals to
non cereal items.
Generational Shift to More, Better Now
Indian consumers have fast-changing tastes and appetites. They are transforming the
world with their consumption. They are demanding more, better, now for themselves
and their children.
Impact of Digital Technology on Day-to-Day Consumption Pattern
Indians have adopted new digital technologies, particularly mobile telephony into
everyday lives. There is a big shift in eyeballs away from the TV screen to mobile
screens. The consumers are now well-integrated with the market and hence their buying
behavior is influenced by the dynamic market trends. For example, digital retailing is
spreading fast in India as a result of internet-enabled mobile phones. (The growing
popularly of www.ebay.in, www.flipkart.com, www.myntra.com are examples of digital
retailing)
Mobile Optimization
Mobile-based payment systems are approaching critical scale through mobile wallets.
Customers have this technology enabled on their smart phones, they only need a phone,
instead of a credit card, to make a purchase.
Increasing expenditure on travel, eating out and communication services
Economic Times Feb 12, 2013 report suggests a shift in consumption pattern, with
Indian consumers scaling back spending on clothing and footwear for the first time in

nearly a decade and increasing the expenditure on travel, eating out and communications
services. The data for 2011-12, which shows a decline in the percentage of income spent
on clothing, suggests a shift to discretionary spending along with the decline in the spend
on food with the rise in disposable incomes. There is a substantial increase in spending
on processed food and eating out across categories
Consumer the King, in the Midst of Harassments
In terms of consumer protection rights, Indian consumer is getting a bad treatment. The
sad part is that the private sector ventures harass the consumer more than the public
sector enterprises.
For example, the quality and safety of food in KTDC outlets is by and large better than
their counterparts in the private sector in Kerala. One more example, private bus services
in Kerala is more accident-prone than KSRTC services. Private banks in India harass the
customers with several hidden charges compared to nationalized banks.
Organizational Buying Behaviour (Sowmya)
Organizational Buying Behaviour means the decision-making process by which formal
organizations establish the need for purchased products and services and identify,
evaluate and choose among alternative brands and suppliers. The emphasis is on the
decision process rather than on a single act of placing an order. Organization buying
behaviour is obviously more complex than consumer buying behaviour.
Steps involved in an organizational buying decision process:
Need recognition
Definition of the characteristics and quantity of items needed
Development of the specifications to guide the procurement
Search for and qualification of potential sources
Acquisition and analysis of proposals
Evaluation of proposals and selection of suppliers
Selection of an order routine
Performance feedback and evaluation
Factors Influencing Organizational Buying Decisions / Behaviour
(akhila, chitra, prajitha)
External Environmental Factors
1) Economic Conditions: The fluctuations in the money markets and the interest rates
have a major impact on the buying strategies. The interest rates and organizational buying
have an inverse relation; in most cases, an increase in the interest rates may bring about a
drop in the buying.
2) Regulatory Changes: Any changes in the corporate laws, rules and regulations will
also influence how, when and what the organizations buy. There are also regulatory
changes that may affect only a particular industry and accordingly the related
organizations will change their buying patterns to stay in-line with the new regulations.

3) Political Environment: A change of the government or policy has a direct impact on


the economic scenario, and this ultimately translates into a shift in the organizational
buying patterns as well.
4) Social Environment: Societies and cultures are ever evolving, and every business has
to change its practices and procedures to meet up with the societal changes. For instance
with the rise in the number of animal lovers, pure leather suppliers have seen a slump in
their business. The clothing and footwear manufacturers have shifted to artificial leather
suppliers. This points out how the social environment can affect the buying patterns of
organizations.
5) Competition: Todays business is all about beating competition and staying ahead. So
when an organization's competitors move on to a newer product or service, or if they get
to enjoy a competitive edge because of their suppliers, it's very likely for the organization
to change its trends too and thus its buying pattern will change accordingly.
The external environment is the first of the four major factors that influence
organizational behavior.
Internal Organizational Factors
More than the external factors, the internal organizational factors influence organizational
buying. These internal factors are the:
1) Organization's Goals and Objectives: The goals and objectives of an organization are
major determinants as to how and what the organization will purchase. An organization
that wants to capture a bigger chunk of the market by selling cheaper stuff is more likely
to look for suppliers who can supply larger quantities at a low price. However, a company
whose goal is to deliver quality products may have a very contrasting buying pattern, and
they will focus more on the quality issues than on the price advantage.
2) Organizational Structure: Hierarchical and management structures vary from one
organization to another. While some organizations have a well-established purchase
department, others may assign this job to the HR or Administration department. There are
also organizations where the purchase decisions must be taken collectively by all
concerned departments. The organizations also have well-defined guidelines as to which
purchase decisions can be made by which management level. The internal setup and how
authority and responsibility flow through it, play an important role in the organizational
purchasing.
3) Policies and Procedures: How the purchase order is routed, depends on the
organization's policies. How does the buying procedure begin, who will participate and
who has the ultimate authority to decide on the purchase are all dependent on the policies
and procedures of the organization. Some organizations prefer to invite public bids, while
others may contact only the few suppliers on their list. There are also budgetary policies
that have a say in the purchase decisions, for instance while some organizations may have
a flexible policy to make purchases as and when the need arises, others may have to wait
till the allocation of the annual or biannual budget.
4) Technological Levels: Whenever making new purchases, organizations take into
consideration their current technology. Some purchases are meant to replace the current
technology with a newer version, so their buying decision will be influenced by what
level of technology they currently own. Also, organizations try to ensure that all new

purchases being made are technologically compatible with their existing technology. So,
one way or the other an organization's existing technology has a major influence on its
future purchases.
5) Manpower Skills: Whether the organization has the skilled manpower to make proper
and optimum use of the new purchases being made, especially equipment and machinery,
is another issue that influences organizational buying.
Interpersonal and Individual Factors
Since organizational buying decisions are never a one man show, interpersonal
relationships among the decision makers plays a vital role. These factors are:
1) Participation and Authority: In organizational buying situations, there are always redefined rules as to who can participate in the purchase decision and who the ultimate
deciding authority is.
2) Interpersonal Conflict: Interpersonal conflicts and conflicts of interest amongst the
decision makers often results in delays and changes. Thus, the kind of thinking and the
kind of relationship the decision makers share have a major role to play in corporate
buying.
3) Education and Awareness: The educational background of the decision makers and
their level of awareness have a major bearing on what type of purchases they will make.
4) Risk-Taking Ability: If the buying committee constitutes high risk takers, they will not
be averse to the idea of choosing the latest technology or new suppliers. While on the
other hand, decision makers with a low risk taking tolerance are more likely to stick to
proven and tested technology or to well-known and well-established suppliers.
5) Individual Factors: Individual factors such as age, cultural background and social
status, of the members on the buying team, also influence the buying decisions.
Situational Factors
In this final section we will take a look at some of the situational factors that can
influence organizational buyers.
1) Time Factor: Sometimes, organizations do not have all the time to follow the detailed
buying procedure. If the organization needs a replacement for equipment that broke down
suddenly, it may decide to place its order with some existing supplier or a supplier that is
at close proximity.
2) Current Financial Situation: If the organization is crunched for cash, it may decide to
place its order with one of its existing supplier who offers extended credit. Also, if the
organization cannot spare out enough money for a certain purchase, it may opt for a
readily available cheaper version that fits into its budget.
3) Availability: Some buying decisions can wait while others cannot, thus if the supplier
cannot make available the exact product by the desired date, the organizational buyers
may shift to a new supplier or to a more readily available alternative.

4) Special Offers: Special offers being given by a supplier may also be one of the
situational factors affecting the buying decision.
As a supplier, now that you know what factors influence organizational buyers, you can
work up your business to business sales strategies to manipulate organizational buying
activities and thus procure more orders for your supply business.
Consumer Adaptation Process (pooja, sridanya)
We live in an era of risk and instability. Globalization, new technologies and greater
transparency have combined to throw up a lot of marketing challenges and uncertainties
along with opportunities. Consumer Adaptation Process considers both the uncertainties
and opportunities. Converting a consumer from a browser to a buyer is a challenging
journey in consumer adaptation process.
Following are the basic adaptation skills:
Adapt to Change
Change is the breeding ground for innovation. To be successful in marketing means to
read and act on signals of change, to become more agile (pro-active to change).
It took the telephone roughly 70 years to make it into 90% of the US households. Color
TV and the cell phone did it in 15 years. Back in 2007, the original iPhone took 73 days
to cross the million mark. The iPad managed the same feat in just 28 days, about 2
times as fast as the first iPhone. Apple is the obvious example of a company that not only
knows how to adapt to change, but also create changes in the marketplace.
Adapt to Choice
Customers have more choices today than ever before. More information, more touch
points, and more options are changing the way they purchase. To remain competitive in
todays business world, organizations must adapt to these changing customer behavior.
For example, today the Internet is everywhere and touches every part of our lives. The
Internet led to an explosion of customer touch points. No other channel has created so
many different touch points in such a short time including:
Email
Websites
Mobile apps and mobile web
Call centers
Kiosks
Search engines like Google, Bing or Yahoo
Social networks like Facebook, Twitter or Google+
Game Consols
Electronic shelf labels
Individuals increasingly use the Internet both on their PCs and mobile devices to
research product information, make purchases, and rate their experiences. In addition,
consumers interchangeably use a variety of devices such as PCs, smartphones, and
tablets to interact. One day they may connect to a website via their PC, the next via
their smartphone or iPad. The range of devices is expected to grow as individuals
increasingly turn to tablet and notebook devices, as well as stream the Internet through
their TVs, cars, and home appliances.

( Find out how your organization can quickly adapt to changing consumer behaviors by
visiting www.hybris.com).
Ability to Experiment:
It is very important that if a company wants to be successful in customer adaptation
process, it needs to experiment with:
products and services
business models and processes
strategies, new approaches and technologies especially in virtual environments
innovative ideas faster, at lower cost, and with less risk than their competitors can.
For example, Procter & Gamble. More than 80% of P&Gs new-business initiatives now
make use of its growing virtual toolbox.
Ability to Manage Complex Multi-company Systems:
With an increasing amount of economic activity occurring through outsourcing, offshoring etc. we need to think about strategies not only for individual companies but also
for business systems across the continents. Toyotas kaizen feedback mechanism is an
early example of adaptive systems. EBays complex network of sellers and buyers is
another example. If the experience curve and the scale curve were the key indicators of
success, Nokia was an early mover and leader in the smart phone market; but Nokia was
attacked by an entirely different kind of competitor: Apples adaptive system of suppliers,
telecom partnerships and numerous independent application developers, created to
support the iPhone. Googles Android operating system, too, capitalized on a number of
hardware partners and application developers.
Ability to Mobilise:
For example, Netflix believes that a great workplace is full of stunning colleagues.
Netflix model is to increase employee freedom as the company grows, rather than limit
the freedom; to continue to onboard innovative people aimed at long-term success.
Changing Patterns of Consumer Behaviour (srilaxmi, gaya)
Self-Empowered Consumers
The middle and upper class all over the world have access to data and information
leading to product and service solutions for themselves, without waiting for the marketer.
Consumers in IT to insurance to tourism and so on, are often ahead of the marketing and
salespeople who are helping them. Today, the informed consumers have a deep
understanding of their problem and solution.
Solution to Insight
The modern consumers are informed and want to be more and more empowered. They
are not happy with just product/services solution. They demand product/services insights.
Insights are highly dynamic and in a state of constant changes. Today customers move to
those insight sellers who coach the customers with insights on how to buy. Solutions
give customers support whereas insights give them empowerment. Todays consumer is
clear about the solution/s that s/he is seeking. For example, in interior designing,
customers have a clear picture about the solutions they seek. The marketer need not sell
the solutions. What the marketer needs to sell is a series of insights. The customer will
evaluate the insights and together with the marketer, transform the insights into tailor-

made solutions that meet the customers expectations. Solution marketing is giving way
to insight marketing. Accordingly the marketers need to facilitate a competitive
purchasing process rich in newer insights.
Brand Awareness
According to a study of Google India, seven out of ten buyers know the exact brand and
model they want to buy even before entering the physical/virtual store, with the help of
online research.
Internet Impact on Final Purchase Decisions
The Google India study reveals that Internet is substantially impacting decisions of final
purchases particularly in tier II cities. Mobile devices, particularly smart phones are
emerging as a strong medium to connect to the Internet.
Physical Stores for Look and Feel Value
Todays middle class consumers visit physical retail stores to get a look and feel of the
product, check out deals, negotiate for price, get details on guarantee, get more information
on the selected model and some installation advice. Armed with the look and touch-driven
insight, consumers tend to revert to online formats.
Consumer Loyalty Dip
According to a market study reported in HBR May 2012, only 23% of consumers have a
relationship with a brand. Relationships are reserved for friends, family and colleagues, not
brands!
Relationship Shift from Interaction to Shared Value
Harley Davison goal is to fulfil dreams through the experience of motor cycling, It is a
typical example of promoting shared value.
New Consumer Slogan Less Brand Information & Interaction
To modern consumers, being exposed to company and brand interaction is like carrying
luggage information luggage. Less luggage is more comfort. No consumer enjoys
interaction overload.

No price leadership without cost leadership


Mobile phone is widely used by consumers to compare prices. Thus, the retailer who
actually offers the lowest prices has a competitive advantage.
Regionalization and standardization
There is a clear market advantage for retailers who offer regionally or even locally
tailored offerings. This is a stimulus for tailored store formats and offerings.
Customers trust customers
Customer reviews and word-of-mouth publicity are gaining significance as marketing
instruments. Retailers can also use customer feedback to optimize their product offerings.
Cherry-picking rather than customer loyalty
The Internet is making the market more and more transparent. It is making the consumers
increasingly empowered. Blanket loyalty to brands is disappearing fast. Consumers are
enabled to find competitive offerings like ordering and pickup services, loyalty card
programs, promotions like bundled prices, and volume discounts along with flexible
delivery charges.

Trust, a price factor


Consumer trust is a valuable brand asset. Buyers are willing to pay a premium for
trustworthy brands. Products and services that build in trust to their value chain command
a price premium.

Key Terms Useful for Module 2

Consumer
Consumer is the end user of a product or service. The consumer may or may
not be the actual buying customer. A consumer is different from retail/
wholesale buyers in that the consumer tends to buy for personal use rather than
for resale. Consumer activity, in terms of saving and spending, is a bellwether
of confidence in an economy.
Customer
Customer is the actual/ intended purchaser of a product or service. The customer is
always the buyer, although not always necessarily the consumer.
Buyer/Purchaser
In marketing terminology, purchaser is a company buyer. In an organization, the
Purchaser performs the job of buying goods and services for use by that organization.
That is why the terms Purchase Department and Purchase Manager are common.
Buyer, an Enigma
To understand buyer behavior is the ultimate goal of all marketers. Effective marketing
plans and programs must be based upon a sound and thorough understanding of the
buyer, the buyers behavior and the buyers values. However the buyers mind is like a
black box in aviation terminology. The marketer provides stimuli in the shape of
product, brand name, colour, style, packaging, intangible services, shelf display,
advertising, distribution, publicity and so on. In spite of all these stimuli, the marketer is
uncertain of the buyers response and hence the buyer is an enigma. Being competitive
in marketing means sustained efforts to model repeatable buyer behavior, although
complete knowledge of buyer and consumer behavior is unattainable. Hence the critical
importance of decoding the blackbox of buyer and consumer behavior in marketing
management!