Lecture Note Part-1

Basics of Consumer Behavior

1. Consumer behavior is defined as the behavior that consumers display in searching

for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. a) Consumer behavior focuses on how individuals make decisions to spend their available resources on consumption-related items. b) As consumers, we play a vital role in the health of the economylocal, national, and international. c) Marketers need to know everything they can about consumers. d) Marketers need to understand the personal and group influences that affect consumer decisions and how these decisions are made. e) Marketers need to not only identify their target audiences, but they need to know where and how to reach them. 2. The term consumer behavior is often used to describe two different kinds of consuming entities: the personal consumer and the organizational consumer. a) The personal consumer buys goods and services for his or her own use, for the use of the household, or as a gift for a friend. i) Products are bought for final use by individuals (referred to as end users or ultimate consumers). b) The organizational consumerincludes profit and not-for-profit businesses, government agencies, and institutions, all of which must buy products, equipment, and services in order to run their organizations6. Despite the importance of both categories of consumers, individuals and organizations, this book will focus on the individual consumer, who purchases for his or her own personal use or for household use. ii) End-use consumption is perhaps the most pervasive of all types of consumer behavior. The strategic and applied field of consumer behavior is rooted in three philosophically different business orientations that lead up to an extremely important business orientation known as the marketing concept.
1. The production orientation focused on gearing up manufacturing skills in order to

expand production. a) An additional focus was on perfecting the production capabilities of the company. b) The production orientation extended from the 1850s to the late-1920s. c) During this time period, demand exceeded supply.
2. The sales orientation focus was to sell more of what the manufacturing department

was able to produce. a) The orientation shifted from producing to selling.

b) c)

At some point, supply increasingly reached a point where it was greater than demand. The sales orientation began in the 1930s and extended to the 1950s.

3. In the mid-1950s there was a shift from the sales orientation to the marketing

orientation. a) Businesses realized the importance of focusing on consumers and their preferences. b) Companies determined, that in order to be successful, they must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition. It is often important for companies to continuously conduct marketing research studies to monitor consumers needs and preferences with respect to the products and services that they currently market and what they might develop in the future.
1. They discovered that consumers were highly complex individuals, subject to a variety

of psychological and social needs quite apart from their basic functional needs. a) The needs and priorities of different consumer segments differed dramatically. b) The objectives of a company should be to target different products and services to different market segments in order to better satisfy different needs. c) In order to design new products and marketing strategies that would fulfill consumer needs, they had to study consumers and their consumption behavior in depth. 2. The term consumer research represents the process and tools used to study consumer behavior. CONSUMER BEHAVIOR IN A WORLD OF ECONOMIC INSTABILITY
1. This edition of Consumer Behavior was written in a time of recession and widespread

economic downturn in consumer confidence.

2. Economic events will impact what and how much consumers are able to purchase. 3. Some consumers really suffer in times of recession and widespread economic

downturn. 4. Much of the process of consumer decision making and the dynamics of consumer research and shopping will still go on, but it will be different. CONSUMER BEHAVIOR INTERDISCIPLINARY AND DECISION MAKING ARE

1. Consumer behavior was a relatively new field of study in the mid-to-late 1960s. 2. Marketing theorists borrowed heavily from concepts developed in other scientific

disciplines: a) Psychologythe study of the individual. b) Sociologythe study of groups. c) Social psychologythe study of how an individual operates in groups.

Anthropologythe influence of society on the individual. Economicsto form the basis of this new marketing discipline. 3. Many early theories concerning consumer behavior were based on economic theory, the idea that individuals act rationally to maximize their benefits (satisfactions) in the purchase of goods and services. 4. Later research discovered that consumers are just as likely to purchase impulsively, and to be influenced not only by family, friends, advertisers and role models, but by mood, situation, and emotion.
d) e)

Model of Consumer Decision Making

1. The process of consumer decision making can be viewed as three distinct but

interlocking stages: the input stage, the process stage, and the output stage.
2. The input stage influences the consumers recognition of a product need and consists

of two major sources of information: a) The firms marketing efforts (the product itself, its price, promotion, and where it is sold). b) The external sociological influences on the consumer (family, friends, neighbors, other informal and noncommercial sources, social class, cultural and subcultural memberships). 3. The process stage focuses on how consumers make decisions. a) The psychological factors inherent in each individual (motivation, perception, learning, personality, attitude) affect how the external inputs influence the consumers recognition of a need, pre-purchase search for information, and evaluation of alternatives. b) The experience gained through evaluation of alternatives, in turn, affects the consumers existing psychological attributes. 4. The output stage of the consumer decision-making model consists of two closelyrelated post decision activities: a) Purchase behavior, which can be a trial purchase or a repeat purchase. b) The post-purchase evaluation of the product feeds directly into the consumers experience in the process stage of the model. Role of social and behavioral sciences in developing the consumer decision-making model. Consumer behavior was a relatively new field of study in the mid- to late-1960s. Because it had no history or body of research of its own, marketing theorists borrowed heavily from concepts developed in other scientific disciplines. These disciplines were psychology (the study of the individual), sociology (the study of groups), social psychology (the study of how an individual operates in groups), anthropology (the influence of society on the individual), and economics. Many early theories concerning consumer behavior were based on economic theory on the notion that individuals act rationally to maximize their benefits (satisfactions) in the

purchase of goods and services. Later research discovered that consumers are just as likely to purchase impulsively and to be influenced not only by family, friends, advertisers, and role models, but also by mood, situation, and emotion. All of these factors combine to form a comprehensive model of consumer behavior that reflects both the cognitive and emotional aspects of consumer decision-making.

Reference : 1. Schiffman, L.G., Kanuk, L.L. & Kumar, S.R. (2011). Consumer Behavior, 10th Edition, New Delhi, Pearson Education Inc.