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OVW OF

MARKETING
MODULE-6 Consumer Markets and Buyer Behaviour

OVERVIEW CONSUMER MARKETS


OF AND BUYER
BEHAVIOUR
MARKETING

1
SYLLABUS CONTENT
Consumer Market – Consumer Buying and Industrial Buying – Types of consumers – Buyer
111
Behavior – Decision making unit (DMU) – Decision Making process (DMP) – Influences on Buying
Behavior – Consumerism – Customer loyalty – Customer delight - Not-for-profit (NFP) Marketing
– Marketing in micro enterprise – Global context of marketing – Virtual Marketplace – Ethics in
Marketing

LEARNING OBJECTIVES
After reading this module, students should:
 Understand the consumer market.
 Understand the difference between consumer and industrial buying behaviour
 Know the decision making process and units involved
 Know the influences of buying behaviour.
 Understand the concept of customer delight and loyalty
 Know the global context of marketing
 Understand the role of ethics in marketing

Introduction:
Buying Behaviour is defined as “all psychological, social and physical behaviour of potential
customers as they become aware of, evaluate, purchase, consume, and tell others about products and
services”. Buyer behaviour:
• Involves both individual and group processes (psychological and social)
• Awareness right through post purchase evaluation indicating satisfaction or non satisfaction
• Includes communication, purchasing and consumption behaviour.
• Basically social in nature so social environment plays an important role
• Includes both consumer and business buyer behaviour.

Buyer behaviour includes the acts of individuals directly involved in obtaining and using economic
goods and services including sequence of decision processes that precede and determine these acts.
Actual purchase is only a part of the decision process as to why, how often, and where and what of
people buy. Buyer behaviour is the most important factors of successful marketing.

Factors influencing Buyer Behaviour:

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A customer responds to the stimuli or response model and may or may not purchase the product. The
inputs,(buying power, marketing mix and other factors) processing, outputs and feedback influence
the buying behaviour of the prospect if he is satisfied. Marketing mix is the marketing effort in
product, price promotion and distribution appeals. Promotion appeals are advertising, salesmen,
reference groups and sales promotion. Other inputs are intra & inter personal influences, and other
environmental factors. Intra-personal influences are reflected in motivation, perception, learning
attitudes and personality of buyers. Inter-personal influences are represented by family, social class,
reference groups and culture. Other environmental influences are general economic conditions,
pending legislation, fashion trends and technological advances.

FEED BACK FEED BACK

1. Buying power
2. Internal or Person making decisions Response
individual factors
Person buying
3. Social and some goods or does
cultural factors Problem-solving process
not buy.
4. Marketing mix
5. Other 1. Perceived want or desire Product use
environmental 2. Information search behaviour
factors 3. Alternative evaluation
4. Purchase no purchase
decision Post Purchase
feeling

1. Stimuli (Inputs) 2. Processing 3. Response (outputs)

Outputs are buyers attitudes, opinions, feelings and preferences as affected by buying process and
actions of the buyer like patronage, brand or store loyalty, positive or negative influences on other
potential buyers. Purchasing responses are choice of a product, brand dealer quantities etc.

Economic Model (Buying Power): Consumer behaviour always involves choice. They see which
product gives them the best satisfaction with the least expenditure and he will allocate his
expenditure over different products at given prices so as to maximize utility. The law of equi-
marginal utility enables him to secure maximum total utility from his limited purchasing power. The
purchasing decision is based on economic calculations and reasons

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The behaviour of the buyer is


1. The lower the price of the product the quantity bought will be large
2. Higher purchasing power will induce more quantity to be purchased
3. When the price of substitute product is low the lower the purchase quantity of the original
product.
4. The higher the promotional expenditure the higher the sales(communication effect)

Economic model of buying behaviour explains how a consumer ought to behave but does not how
he behaves. So this model cannot apply to real world situations as it centers on the product and not
on the consumer. Consumption behaviour is goal oriented. We must distinguish between the goal of
satisfying our needs and the goal object which is the product itself. Consumer behaviour is very
complex and needs a multidisciplinary approach. Economic model concentrates only on one aspect
i.e. income and ignores other aspects (psychological. social and cultural) like perception, motivation,
learning process, attitudes personality, culture and social class.

A culture is a distinctive way of life of a group of people, their attitudes, beliefs, morals, customs, art
laws etc which get affected by the way they do things. The five elements of culture are

1. Material culture (technology and economics)


2. Social institutions
3. Belief systems
4. Aesthetics
5. Language.

Marketing communications are totally influenced by culture. Market segmentation is based on the
fact that buyers are not alike. Buying behaviour is complex and dynamic The buyers motives, needs,
cultural and social influences cannot be assessed and the why and how of the buyers behaviour
cannot be determined. So we need to observe the needs of the buyer and market the products
accordingly.
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Psychological Model

Motivation: When a person perceives a stimulus he may or may not be moved to respond to the
stimulus. He needs motivation to do an action and to fulfill his need or want. Motivation is affected
by perceptions, attitudes, personality traits, and by outside influences such as culture and marketing
efforts and is a mental phenomenon. Motivation impels the buyer to take certain actions and also
involves an interaction between the person and his social environment. It is his needs (psychological,
social or physiological) and wants that provoke him to action. A want is a recognized need and leads
him into action to satisfy that need whereas a drive is an unsatisfied want. All behaviour must be
stimulated by drives.

Maslow’s Five- level Hierarchy of Needs is well known in the theory of motivation. Maslow felt as
each need is fulfilled there arises a higher level of need which needs to be satisfied. The
physiological needs of the marketers is their close connectivity to the product eg Food for hunger,
medicines for the sick, warm clothing during winter. There is what is known as safety needs like,
insurance Real estate etc Advertisements like baby food, toothpaste toys satisfies the needs of the
family and love towards their family. Cars, refrigerators, luxury items, status symbols satisfy the
needs of self esteem and status. According to Maslow man’s wants are never satisfied completely
His wants are never ending and he wants more and more. Marketers know that there are multiple
buying motives for the same behaviour . The important buying motives are pride, vanity, fashion
possession, fear, safety and security, love and affection, comfort and convenience, economy,
curiosity, social approval and beauty and romance. Any urge with an action or prompting to buy is
called a buying motive. Buying behaviour contributes to product development and advertising
creativity. In developed countries higher level of wants such as psychological and egoistic need to be
satisfied hence marketers should offer marketing mixes to satisfy the higher level wants like love
and belongingness, self esteem etc.
The ladder of Basic Need Hierarchy

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1. Buying Motive: The buying motive is the reason why a person buys a particular product
based on his psychological or physiological wants. High quality, low price, long life,
performance, easy to use are the rational motives involved in buying a product. Desire to appear
different, desire for prestige, desire for mastery, desire to attract are some types of emotional
motives involved in buying. Location convenience, reputation of the outlet, services offered,
friendship, with the store owner price are some of the patronage motives. Marketers are more
interested in patronage motives such as brand patronage and store loyalty.

1. Perception: Whereas a motive creates a disposition to act a perception triggers a behaviour


in a certain way. It gives a direction or path. To perceive is to see, hear, touch, taste, smell, or
sense an event. The senses perceive the colour, shape, sound, smell taste etc; and our
behaviour is governed by these physical perceptions. Perception has been defined by social
psychologists as ‘the complex process’ by which people select, organize and interpret
sensory stimulation into a meaningful and coherent picture of the world. Perception is a
selective process. It is an interpretation of information to select a response to a stimulus. Our
eyes and mind seek out and read information that interests us. We screen out ideas and select
only those that interests us
2. Learning: (The Pavlovian Learning Model) All theories of buyer behaviour is based on
learning model.viz; Stimulation-Response. Learning is defined as all changes in behaviour
that result from previous experience and practice. Learning is a product of reasoning,
thinking information processing and perception. Human behaviour is full of innate needs,
like hunger thirst learning etc. Learning process involves three steps. 1. Drive which impels
action. by virtue of a strong stimulus.
This drive motivates a person to satisfy the need. 2. Cues are weak stimuli. Cues
determine when the buyer will respond as in the case of advertisements. Here the
person will have to choose from a particular response like in hunger indicated in the
advertisement to go to that shop to satiate his need. This learning of links between stimulus, cue
and response results in habits. We learn from these links our attitudes and beliefs. In the
marketing world it would mean brand loyalty brand image and store patronage. We learn through
experiences- trial and error.

3. Attitudes: Attitude is defined by social psychologists as “an emotionalized predisposition to


respond positively or negatively to an object or class of objects”. Predispositions are stored in
the memory of a person based on his previous experience towards his behaviour of a certain
object and is based on his attitudes, beliefs, goals and values. Our attitudes change slowly
like in case of a branded product it is very difficult to change his attitude or change his brand
loyalty.
In general attitude is nothing but a state of mind or feeling. Attitude is to involve oneself
emotionally and induces one to take appropriate action at the same time interacting with our
feeling and reasoning. A new attitude may be created when introducing a new market
product. Advertisements and promotion tools aid in changing and creating an attitude in the
buyers mind. The reason for the marketers to be interested in the buyers attitude Knowledge
of consumers attitudes will help the marketers to know their markets and the consumers
attitude towards their product or products so that they set the redesigning of the product as
per the customer’s choice and improve on them. Promotional devices are essential to change
purchasing attitudes and modify buyer behaviour. However the consumers should be able to
draw their own conclusions.

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4. Personality: Attitudes and beliefs leads to a consistent response by the individual to his
environment. This consistent behaviour is personality. Its primary features are self concept
roles and levels of conciousness. Self concept is analyzing oneself-the idealized self, looking
at yourself in the eyes of others, and that you are what you are. Each individual in life plays
many roles such as father, co-worker, wife, friend executive etc for which the buying
behaviour is influenced by the particular role (dominance, adventurous, social, friendliness,
responsibility aggressiveness dependence) he plays at that point of time.

The Freudian Psychanalytic model: Frued pointed out that the human personality has three
roles to play 1. the id,- the source of all mental energy which drives us to action. 2. The
superego- the internal representation i.e. conscience 3. the ego- the id impulses which
represents our basic impulses, instincts for immediate and total satisfaction which could be
antisocial. The superego or conscience reflects our idealized behavioural pattern. A conflict
between id and superego is resolved by the ego –the mediator. Promotion messages should
protect and enhance the self image of consumers.

Psychographics (Life Styles)


A new technique evolved to analyse and predict consumer behaviour. A life style measures
people’s actions combining the psychological factors with the demographic. Activities,
interests, opinions (AIO) combined with demographic such as age, sex, education,
occupation income offer marketers life style dimension. This factor determines how people
spend money, their interests, work patterns and leisure, political and social issues. So that
marketers come to know their life styles.

Social and Cultural Influences on Buyer Behaviour.

External or interpersonal influences are


1. Family 2. Reference Group 3. Social Class 4. Culture

1. Family: Family exerts considerable influence in the buying behaviour of the individual.
Personal values, attitudes and buying habits are shaped by family influences. The house
wife acts as the mediator of the product that satisfies the want her children. The who of
buying which penetrates into four areas of family purchases interest the marketer. One
member or different people in the family may act in the family purchases. For most house
products and groceries it is the house wife who influences decision making. In case of
teenagers or children being decision makers marketing programmes will provide special
attractions like offering premium on the products. Family purchases will be generally
determined by family members by advertising appeals.

2. Reference Group: Reference groups are the social, economic or professional groups and
a buyer will evaluate his opinion about the product in consultation, and guidance from
them. Consumers take the advice from the peer groups about the quality, style, and
performance of the product. Group norms direct the attention of the buyer to the new
product where group influence is seen in brand preferences and brand choices. Eg of
reference groups are clubs, friends, college, athletic teams, family where the members
have face to face interactions where a critical factor determines the brand or product to be
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bought. A satisfied customer becomes a salesman of the product. A person may prefer a
particular brand eg cigarettes, tea beverages etc because his reference group prefers that
particular brand or product. Opinion leaders act as effective communication agents of
marketing management.

3. Social Class: Marketing managers are familiar with the consumption patterns of the
social class. Social class comprises of upper, middle and lower class, whose buying
behaviour is determined according to the class they represent. . Middle class consumers
are more rationale in their approach than the lower class who are non rational and make
fewer choices while purchasing. The three social classes have differences in the stores
they patronize, the magazines that they read and the clothing and furniture they select.
The upper classes prefer brands and products which shows symbols of their social status.
Middle classes study and buy brands which suit their purse whereas lower class buy
products on impulse and are influenced by point of purchase materials. The
psychographic life styles combines both person centred and situation centred reasoning
while purchasing goods.

4. Culture: Culture represents a set of learned beliefs, values, attitudes, morals, customs,
habits and behavioural forms that are shared by society and also transmitted to their
future generations. Culture is a living entity which keeps changing to external and
internal pressures causing intercultural conflicts. Our cultural institutions form guidelines
to marketers. Technological, educational advances have considerable influence on
culture. Marketing strategies can be developed for one culture separately though
subcultures (caste, religion, region etc) within one culture exist. North Indian and South
Indian behaviours could differ as in the case of Brahmins, Christians, Jains and Muslims.

Buying Process:

Buying process goes through five steps:

1. Perceived want i.e. recognition of an unsatisfied need


2. Search for relevant information
3. Evaluation of alternatives
4. Purchase decision
5. Post- purchase experience and behaviour i.e. product use and evaluation.

If the buyer has desired satisfaction the seller can have repeated orders.

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TWO IMPORTANT INTERRELATED VARIABLES

Individual’s Socio-Cultural
Predispositions Considerations

1. Family
1. Cognition
2. Reference Group
2. Attitudes, values, beliefs
3. Social Class
3. Perception
4. Culture
4. Learning
5. Life Style Personality
5. Motivation

(P) The Person - Centred Factors (S) The Situation -Centred Factors

1 2 3 4 5

Awareness Search for Evaluation Post


of Purchase
informatio of Purchase
want/need decision
n Alternatives behaviour
Feedback
Feedback Feedback

Basic Model of Consumer-Buyer behaviour


P = Person-centred factors S = Situation-centred factors

The transactional nature of buyer behaviour is revealed in the interaction of person and situation
related factors. The stimulus is seen in the seller and response from the buyer. Consumer buyer
behaviour is a process wherein a series of stage related activities takes place.
First is the discovery and want, second is the drive third is the search for information and finally
evaluation and purchase decision. Then comes the post purchase decision wherein the buyer assesses
whether he is satisfied or dissatisfied with the purchase. There are five steps in the purchase decision
process.
1. Perceived Want or Desire: Buying process begins when a person feels the need or want to
be satisfied. Needs may be ignited by a stimulus called a sign or a cue. The intensity of want
hastens the need to fulfill the unsatisfied want. Marketing management should promote sales
by offering appropriate and attractive cues.
2. Information Search : Aroused desires can be satisfied when the products are easily
available. But the availability factor of the best brand or product where and when available
can be had from information from friends, neighbours, family, and acquaintances. Marketers
provide the relevant information through their salesmen, advertisements, publicity, dealers,
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and window display. Consumer organizations also offer necessary information and guidance.
Marketers are expected to provide all updated and adequate information about their products
and services from time to time. Average consumers are always in need of reliable guidance
and information.
3. Evaluation of Alternatives: Available information can be employed to evaluate the
alternatives (products and brands). This is the critical stage in the process of buying costly
consumer durables. There are certain important elements in the process of evaluation.1. A
product is viewed by the features it attributes. Eg Tea has attributes like taste, flavour, colour,
aroma, strength number of cups per packet and price. Consumers will have different
preferences for these attributes. 2. Information cues or hints about the brand like quality,
price, distinctiveness, availability are provided by the marketers. 3. Brand images and
concepts can help in the evaluation of alternative. 4. In order to reduce the alternatives they
start eliminating or reducing the alternatives by their critical attributes. For eg in saree
purchases the women first specify the price range thereby reducing their choices then they
impose themselves to colour restrictions and then move on to the next level of choosing
alternatives like quality, texture length etc.. 5. Occasionally consumers may choose trade offs
in their evaluation process. Marketers should grasp and then design and promote the product
that would be readily acceptable in the market.
4. Purchase Decision: While evaluating the alternatives consumers may go in for an
alternative brand. This attitude for another brand shows his intention to buy which may be
influenced by 1.social factors i.e. opinions of reference groups for final selection. 2.
Situational factors like availability, dealer terms, falling prices, loss of job etc 3. Perceived
risk like higher range of products- Sophisticated products may involve a higher performance
risk. Consumers may prefer national brands to international brands because of problems of
service after sale.
5. Post -Purchase Experience and Behaviour: The post evaluation after purchase normally
decides the preference of brand attributes. It will create brand preference influencing future
purchases. If the brand does not yield satisfaction then cognitive dissonance occurs which
creates negative feelings and doubts. He would be wondering whether he has made the right
purchase decision or he should have gone for an alternative. Marketers may try to create
dissonance by attracting users of other brands to his brand by changing his beliefs.
Advertising and sales promotion can help marketer in this job of brand switching.

Consumer purchases are influenced strongly by or there are four factors.

1. Cultural Factor

2. Social Factor

3. Personal Factor

4. Psychological Factor.

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1. Cultural Factor:-

• Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class
o Culture:-
 The set of basic values perceptions, wants, and behaviours learned by a
member of society from family and other important institutions. Culture is the
most basic cause of a person’s wants and behaviour. Every group or society
has a culture, and cultural influences on buying behaviour may vary greatly
from country to country.
o Sub Culture :-
 A group of people with shared value systems based on common life
experiences and situations.
 Each culture contains smaller sub cultures a group of people with shared value
system based on common life experiences and situations. Sub culture includes
nationalities, religions, racial group and geographic regions. Many sub culture
make up important market segments and marketers often design products.
o Social Class:-
 Almost every society has some form of social structure, social classes are
society’s relatively permanent and ordered divisions whose members share
similar values, interests and behaviour.

2. Social Factors :-

• A consumer’s behaviour also is influenced by social factors, such as the (i) Groups (ii)
Family (iii) Roles and status
o Groups :-
 Two or more people who interact to accomplish individual or mutual goals.
 A person’s behavious is influenced by many small groups. Groups that have a
direct influence and to which a person belongs are called membership groups.
 Some are primary groups includes family, friends, neighbours and coworkers.
Some are secondary groups, which are more formal and have less regular
interaction. These includes organizations like religious groups, professional
association and trade unions.
o Family:-
 Family members can strongly influence buyer behaviour. The family is the
most important consumer buying organization society and it has been
researched extensively. Marketers are interested in the roles, and influence of
the husband, wife and children on the purchase of different products and
services.
o Roles and Status :-
 A person belongs to many groups, family, clubs, organizations.
 The person’s position in each group can be defined in terms of both role and
status.
 For example. M & “X” plays the role of father, in his family he plays the role
of husband, in his company, he plays the role of manager, etc. A Role consists
of the activities people are expected to perform according to the persons
around them.
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3. Personal Factors :-

• It includes
• i) Age and life cycle stage (ii) Occupation (iii) Economic situation (iv) Life Style (v)
Personality and self concept.
o Age and Life cycle Stage:-
 People changes the goods and services they buy over their lifetimes. Tastes in
food, clothes, furniture, and recreation are often age related. Buying is also
shaped by the stage of the family life cycle.
o Occupation :-
 A person’s occupation affects the goods and services bought. Blue collar
workers tend to buy more rugged work clothes, whereas white-collar workers
buy more business suits. A Co. can even specialize in making products needed
by a given occupational group. Thus, computer software companies will
design different products for brand managers, accountants, engineers, lawyers,
and doctors.
o Economic situation :-
 A person’s economic situation will affect product choice
o Life Style :-
 Life Style is a person’s Pattern of living, understanding these forces involves
measuring consumer’s major AIO dimensions.
 i.e. activities (Work, hobbies, shopping, support etc) interest (Food, fashion,
family recreation) and opinions (about themselves, Business, Products)
o Personality and Self concept :-
 Each person’s distinct personality influence his or her buying behaviour.
Personality refers to the unique psychological characteristics that lead to
relatively consistent and lasting responses to one’s own environment.

4. Psychological Factors:-

• It includes these Factors.


• i) Motivation (ii) Perception (iii) Learning (iv) Beliefs and attitudes

• Motivation :-
o Motive (drive) a need that is sufficiently pressing to direct the person to seek
satisfaction of the need
• Perception :-
o The process by which people select, Organize, and interpret information to
form a meaningful picture of the world.
• Learning:-
o Changes in an individuals behaviour arising from experience.
• Beliefs and attitudes :-
o Belief is a descriptive thought that a person holds about something
o Attitude, a Person’s consistently favourable or unfavourable evaluations,
feelings, and tendencies towards an object or idea

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CONSUMER PURCHASE DECISION PROCESS

• Behind the visible act of making a purchase lies a decision process that must be
investigated.
• The purchase decision process is the stages a buyer passes through in making choices
about which products and services to buy. :

1. problem recognition,
2. information search,
Five Stages
3. alternative evaluation,
of
4. purchase decision, and
Consumer Behavior
5. post-purchase behavior.
A. Problem Recognition: Perceiving a Need
a. Perceiving a difference between a person's ideal and actual situations big enough to
trigger a decision.
b. Can be as simple as noticing an empty milk carton or it can be activated by marketing
efforts.

B. Information Search: Seeking Value

The information search stage clarifies the options open to the consumer and may involve two steps
of information search.

Internal search

o Scanning one’s memory to recall previous experiences with products or brands.


o Often sufficient for frequently purchased products.

External search

o When past experience or knowledge is insufficient


o The risk of making a wrong purchase decision is high
o The cost of gathering information is low.

The primary sources of external information are:

1. Personal sources, such as friends and family.


2. Public sources, including various product-rating organizations such as Consumer
Reports.
3. Marketer-dominated sources, such as advertising, company websites, and salespeople

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C. Alternative Evaluation: Assessing Value

The information search clarifies the problem for the consumer by


1) Suggesting criteria to use for the purchase.
2) Yielding brand names that might meet the criteria.
3) Developing consumer value perception.

a. A consumer's evaluative criteria represent both


i. the objective attributes of a brand (such as locate speed on a portable CD
player)
ii. the subjective factors (such as prestige).
b. These criteria establish a consumer's evoked set
i. the group of brands that a consumer would consider acceptable from among
all the brands in the product class of which he or she is aware
Purchase Decision: Buying Value

Three possibilities:-

1. From whom to buy: which depends on such considerations


 Terms of sale
 Past experience buying from the seller
 Return policy.
2. When to buy: which can be influenced by
 store atmosphere
 time pressure
 a sale
 pleasantness of the shopping experience.
3. Do not buy

E. Postpurchase Behavior: Value in Consumption or Use

After buying a product, the consumer compares it with expectations and is either satisfied or
dissatisfied.

Satisfaction or dissatisfaction affects:

ii. consumer value perceptions


iii. consumer communications
iv. repeat-purchase behavior.

Many firms work to produce positive postpurchase communications among consumers and
contribute to relationship building between sellers and buyers.

Cognitive Dissonance: The feelings of postpurchase psychological tension or anxiety a


consumer often experiences
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Firms often use ads or follow-up calls from salespeople in this postpurchase stage to try to
convince buyers that they made the right decision.

MODEL OF SELECTED CONSUMER BEHAVIOUR ROLES:

INITIATOR
Is the individual who determines that some need or what is not being fulfilled or authorises a
purchase to rectify the situation.

GATEKEEPER
 Influences the family’s processing of information.
 Has the greatest expertise in acquiring and evaluating the information

INFLUENCER
Is a person who influences the buying decision, actual purchase

DECIDER
The person or persons who actually determine which product or service will be chosen

BUYER
Buyer is an individual who actually makes the purchase transaction

CONSUMERISM:

Before the mid-twentieth century, consumers were without rights with regard to their interaction
with products and commercial producers. Consumers had little ground on which to defend
themselves against faulty or defective products, or against misleading or deceptive advertising
methods.

By the 1950s, a movement called consumerism began to gather a following, pushing for increased
rights and legal protection against malicious business practices. By the end of the decade, legal
product liability had been established in which an aggrieved party need only prove injury by use of a
product, rather than bearing the burden of proof of corporate negligence.

In 1962, President John F. Kennedy presented a speech to the United States Congress in which he
extolled four basic consumer rights, later called The Consumer Bill of Rights.

The Six Basic Rights:

The Right to Be Safe

The assertion of this right is aimed at the defense of consumers against injuries caused by products
other than automobile vehicles, and implies that products should cause no harm to their users if such
use is unexecuted as prescribed. Established in 1972 by the US federal government, the Consumer
Product Safety Commission (CPSC) has jurisdiction over thousands of commercial products, and

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MODULE-6 Consumer Markets and Buyer Behaviour

powers that allow it to establish performance standards, require product testing and warning labels,
demand immediate notification of defective products, and, when necessary, to force product recall.

The Right to Choose Freely

The right to free choice among product offerings states that consumers should have a variety of
options provided by different companies from which to choose. The federal government has taken
many steps to ensure the availability of a healthy environment open to competition through
legislation including limits on concept ownership through Patent Law, prevention of monopolistic
business practices through Anti-Trust Legislation, and the outlaw of price cutting and gouging.

The Right to Be Heard

This right asserts the ability of consumers to voice complaints and concerns about a product in order
to have the issue handled efficiently and responsively. While no federal agency is tasked with the
specific duty of providing a forum for this interaction between consumer and producer, certain
outlets exist to aid consumers if difficulty occurs in communication with an aggrieving party. State
and federal Attorney Generals are equipped to aid their constituents in dealing with parties who have
provided a product or service in a manner unsatisfactory to the consumer in violation of an
applicable law. Also, the Better Business Bureau is a national non-governmental organization whose
sole agenda is to provide political lobbies and action on behalf of aggrieved consumers.

The Right to Be Informed

This right states that businesses should always provide consumers with enough appropriate
information to make intelligent and informed product choices. Product information provided by a
business should always be complete and truthful. Aiming to achieve protection against misleading
information in the areas of financing, advertising, labeling, and packaging, the right to be informed
is protected by several pieces of legislation passed between 1960 and 1980.

The Right to Education

To have access to programs and information that help consumers make better marketplace decisions.

The Right to Service

To convenience, to be treated with courtesy and respect, to responsiveness to needs and problems
and to refuse any services offered.

CONSUMER PROTECTION ACT 1986 (INDIA)

Consumers play a vital role in the economic system of a nation because in the absence of effective
demand that emanates from them, the economy virtually collapses. Mahatma Gandhi said, "A
consumer is the most important visitor on our premises. He is not dependent on us, we are on him.
He is not an interruption to our work, he is the purpose of it. We are not doing a favour to a

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consumer by giving him an opportunity. He is doing us a favour by giving us opportunity to serve


him. But, of late, unfortunately cheating by way of overcharging, black marketing, misleading
advertisements, etc has become the common practice of greedy sellers and manufacturers to make
unreasonable profits. In this context, it is the duty of the government to confer some rights on
consumers to safeguard their interests.

The Act enshrines all the consumers' rights which are internationally accepted. As per the Act, the
consumer protection councils have been established at Central, State and District levels to promote
and protect the consumer rights. They are:

1. Right to Safety: The right to be protected against goods which are hazardous to life and
property.

2. Right to Information: The right to be informed about the quality, quantity, purity, price and
standards of goods.

3. Right to Choose: The right to be assured access to a variety of products at competitive


prices, without any pressure to impose a sale, i.e., freedom of choice.

4. Right to be Heard: The right to be heard and assured that consumer interests will receive
due consideration at appropriate forums.

5. Right to Seek Redressal: The right to get relief against unfair trade practice or exploitation.

6. Right to Education: The right to be educated about rights of a consumer.

NOT FOR PROFIT MARKETING:

In non-profit marketing communications there is lightly to be less money available, messages are
likely to be subjected to greater scrutiny and the objectives of the communications will be quite
different from those applying in consumer marketing. The major categories of non-profit
communicators are political parties, social causes, the government, religious bodies and professional
bodies.
The wide category of voluntary and non-for profit (NFP) organizations might be defined as
organizations which do not have increasing the wealth of the owners as a primary objective. Many
voluntary NFP bodies undertake clearly commercial ventures, such as shops and concerts, in order to
generate revenue. However, their first objective is to be ‘non-loss’ operations in order to cover their
costs. Profits are only made as a means to an end such as providing the service (e.g. the scouting
association, local government etc.)

Consumers play a vital role in the economic system of a nation because in the absence of effective
demand that emanates from them, the economy virtually collapses. Mahatma Gandhi said, "A
consumer is the most important visitor on our premises. He is not dependent on us, we are on him.
He is not an interruption to our work; he is the purpose of it. We are not doing a favour to a
consumer by giving him an opportunity. He is doing us a favour by giving us opportunity to serve
him. But, of late, unfortunately cheating by way of overcharging, black marketing, misleading
advertisements, etc has become the common practice of greedy sellers and manufacturers to make

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MODULE-6 Consumer Markets and Buyer Behaviour

unreasonable profits. In this context, it is the duty of the government to confer some rights on
consumers to safeguard their interests.

VIRTUAL MARKET PLACE

Both B2B marketing and B2C marketing on the internet has progressed beyond the stage where a
web site is just a shop window or a place of delivery. It is now fairly common to use internet for
transactions or e-commerce. Virtual market recognises the following:-
• B2B (Business to Business)

• B2C(Business to Consumer)

• B2E(Business to Employee)

• G2C(Government to Citizen)

• C2C(Consumer to Consumer)

ETHICS IN MARKETING:

Marketing ethics is the area of applied ethics which deals with the moral principles behind the
operation and regulation of marketing. Eg. Ethics in promotional activities, strategies etc.

Ethics are a collection of principles of right conduct that shape the decisions people or organizations
make. Practicing ethics in marketing means deliberately applying standards of fairness, or moral
rights and wrongs, to marketing decision making, behavior, and practice in the organization.

In a market economy, a business may be expected to act in what it believes to be its own best
interest. The purpose of marketing is to create a competitive advantage. An organization achieves an
advantage when it does a better job than its competitors at satisfying the product and service
requirements of its target markets. Those organizations that develop a competitive advantage are
able to satisfy the needs of both customers and the organization.

As our economic system has become more successful at providing for needs and wants, there has
been greater focus on organizations' adhering to ethical values rather than simply providing products.
This focus has come about for two reasons. First, when an organization behaves ethically, customers
develop more positive attitudes about the firm, its products, and its services. When marketing
practices depart from standards that society considers acceptable, the market process becomes less
efficient—sometimes it is even interrupted. Not employing ethical marketing practices may lead to
dissatisfied customers, bad publicity, a lack of trust, lost business, or, sometimes, legal action. Thus,
most organizations are very sensitive to the needs and opinions of their

Customers and look for ways to protect their long-term interests.

Second, ethical abuses frequently lead to pressure (social or government) for institutions to assume
greater responsibility for their actions. Since abuses do occur, some people believe that questionable
business practices abound. As a result, consumer interest groups, professional associations, and self-
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regulatory groups exert considerable influence on marketing. Calls for social responsibility have also
subjected marketing practices to a wide range of federal and state regulations designed to either
protect consumer rights or to stimulate trade.

The Federal Trade Commission (FTC) and other federal and state government agencies are charged
both with enforcing the laws and creating policies to limit unfair marketing practices. Because
regulation cannot be developed to cover every possible abuse, organizations and industry groups
often develop codes of ethical conduct or rules for behavior to serve as a guide in decision making.
The American Marketing Association, for example, has developed a code of ethics (which can be
viewed on its Web site at www.ama.org). Self-regulation not only helps a firm avoid extensive
government intervention; it also permits it to better respond to changes in market conditions. An
organization's long-term success and profitability depends on this ability to respond.

Several areas of concern in marketing ethics are explored in the remainder of the article.

UNFAIR OR DECEPTIVE MARKETING PRACTICES

Marketing practices are deceptive if customers believe they will get more value from a product or
service than they actually receive. Deception, which can take the form of a misrepresentation,
omission, or misleading practice, can occur when working with any element of the marketing mix.
Because consumers are exposed to great quantities of information about products and firms, they
often become skeptical of marketing claims and selling messages and act to protect themselves from
being deceived. Thus, when a product or service does not provide expected value, customers will
often seek a different source.

Deceptive pricing practices cause customers to believe that the price they pay for some unit of value
in a product or service is lower than it really is. The deception might take the form of making false
price comparisons, providing misleading suggested selling prices, omitting important conditions of
the sale, or making very low price offers available only when other items are purchased as well.
Promotion practices are deceptive when the seller intentionally misstates how a product is
constructed or performs, fails to disclose information regarding pyramid sales (a sales technique in
which a person is recruited into a plan and then expects to make money by recruiting other people),
or employs bait-and-switch selling techniques (a technique in which a business offers to sell a
product or service, often at a lower price, in order to attract customers who are then encouraged to
purchase a more expensive item). False or greatly exaggerated product or service claims are also
deceptive. When packages are intentionally mislabeled as to contents, size, weight, or use
information, that constitutes deceptive packaging. Selling hazardous or defective products without
disclosing the dangers, failing to perform promised services, and not honoring warranty obligations
are also considered deception.

OFFENSIVE MATERIALS AND OBJECTIONABLE MARKETING PRACTICES

Marketers control what they say to customers as well as and how and where they say it. When
events, television or radio programming, or publications sponsored by a marketer, in addition to
products or promotional materials, are perceived as offensive, they often create strong negative
reactions. For example, some people find advertising for all products promoting sexual potency to be
offensive. Others may be offended when a promotion employs stereotypical images or uses sex as an

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appeal. This is particularly true when a product is being marketed in other countries, where words
and images may carry different meanings than they do in the host country.

When people feel that products or appeals are offensive, they may pressure vendors to stop carrying
the product. Thus, all promotional messages must be carefully screened and tested, and
communication media, programming, and editorial content selected to match the tastes and interests
of targeted customers. Beyond the target audience, however, marketers should understand that there
are others who are not customers who might receive their appeals and see their images and be
offended.

Direct marketing is also undergoing closer examination. Objectionable practices range from minor
irritants, such as the timing and frequency of sales letters or commercials, to those that are offensive
or even illegal. Among examples of practices that may raise ethical questions are persistent and
high-pressure selling, annoying telemarketing calls, and television commercials that are too long or
run too frequently. Marketing appeals created to take advantage of young or inexperienced
consumers or senior citizens— including advertisements, sales appeals disguised as contests, junk
mail (including electronic mail), and the use and exchange of mailing lists—may also pose ethical
questions. In addition to being subject to consumer-protection laws and regulations, the Direct
Marketing Association provides a list of voluntary ethical guidelines for companies engaged in
direct marketing.

ETHICAL PRODUCT AND DISTRIBUTION PRACTICES

Several product-related issues raise questions about ethics in marketing, most often concerning the
quality of products and services provided. Among the most frequently voiced complaints are ones
about products that are unsafe, that are of poor quality in construction or content, that do not contain
what is promoted, or that go out of style or become obsolete before they actually need replacing. An
organization that markets poor-quality or unsafe products is taking the chance that it will develop a
reputation for poor products or service. In addition, it may be putting itself in jeopardy for product
claims or legal action. Sometimes, however, frequent changes in product features or performance,
such as those that often occur in the computer industry, make previous models of products obsolete.
Such changes can be misinterpreted as planned obsolescence.

Ethical questions may also arise in the distribution process. Because sales performance is the most
common way in which marketing representatives and sales personnel are evaluated, performance
pressures exist that may lead to ethical dilemmas. For example, pressuring vendors to buy more than
they need and pushing items that will result in higher commissions are temptations. Exerting
influence to cause vendors to reduce display space for competitors' products, promising shipment
when knowing delivery is not possible by the promised date, or paying vendors to carry a firm's
product rather than one of its competitors are also unethical.

Research is another area in which ethical issues may arise. Information gathered from research can
be important to the successful marketing of products or services. Consumers, however, may view
organizations' efforts to gather data from them as invading their privacy. They are resistant to give
out personal information that might cause them to become a marketing target or to receive product or
sales information. When data about products or consumers are exaggerated to make a selling point,
or research questions are written to obtain a specific result, consumers are misled. Without self-

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imposed ethical standards in the research process, management will likely make decisions based on
inaccurate information.

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