Consumer Behaviour: Meaning, Factor, Advantages and Disadvantages

Meaning :

It is an old saying that customer is the ‘king’ because he is the person on whose decision demand of any
product or service is dependent. The attitude of consumer or buyer decides how demand will emerge
for a new product and service and how existing goods and services will be sold. The attitude in turn
depends upon many economic, social, cultural and climatic factors.

The decisions are also influenced by education, stage of economic development, life style, information,
size of family and host of other factors. The study of consumer behaviour implies how and why a
particular consumer or group reacts to decisions of producers. “We define consumer behaviour as those
actions directly involved in obtaining, consuming, and disposing of products and services, including the
decisions process that proceeds and follow the action.”

According to another author the consumer behaviour is “the behaviour that consumer display in
scanning for purchasing, using, evaluating and disposing of products and services that they expect will
satisfy their needs. The study of consumer behaviour is the study of how individuals make decisions to
spend their available resources (time, money, effort) on consumption related items. It includes the study
of what they buy, why they buy it, when they buy it, where they buy it, how often they buy it, and how
often they use it”.

Normally in consumer behaviour one studies the behaviour of consumers for consumption goods but in
the study the behaviour of buyer is also included. He may be user i.e. ultimate consumer or he may be
buying for some-one else. In certain products like medicines one buys on the prescription of a physician
which is also part of consumer behaviour.

In case of capital goods that is plant, equipment, machinery, buildings etc the decisions are often based
on technical advice of others. In case of industrial raw materials the decision is influenced by supplier of
equipment. Then there are purely consumer goods with short life and once they are used they
extinguish. They are called Fast Moving Consumer Goods (FMCG). There are other consumer goods
which are durable like cars, refrigerators, electrical iron, juicer-mixer etc. but they are basically
consumer items with long life.

There are also goods like clothes which are not consumed in one go but are used for long. The behaviour
of consumers for all these products are taken on different considerations than short term consumer
goods like fruits, juices, ice-cream or milk. The study implies study of all these behaviour and the
technique of study is different for different items.

Most authors confine consumer behaviour to consumption goods and take capital goods only casually or
do not study them at all. Their emphasis is largely on day-to-day consumption goods which is only partial
study of behaviour of consumers because ultimately one has to take decision for purchase of capital
goods also. In short the consumer behaviour implies study of behaviour of purchaser of all goods and
services whether purely consumer goods, intermediate goods or capital goods. In other worlds it implies
study of attitude of all consumers in disposing of their resources.

Further it is not confined to final users but also includes study of attitudes, of all those who take
investment decisions whether they consume themselves or buy for others. It also includes study of
behaviour of those who are consultant, advisers and give their opinion to buy and not to buy particular
thing and the study of factors which influence their advice/opinion.

Why Study Consumer Behaviour?

The consumer or buyer is the person or group of persons, who decide what to buy, when to buy and
what not to buy. In competitive environment one cannot thrust a product on consumer. He has to
produce what is demanded or what can be demanded. The marketing personnel study consumer
behaviour to find out what can be sold and what goods or services are likely to be rejected.

Through the study he is motivated to buy or not to buy particular product. After study of consumer
behaviour through market research or otherwise manufacturer tries to find out how sales can be
pushed of existing products, what changes are required in existing products, what changes are required
to get larger market share.

Before launching a new product survey of consumer behaviour is necessary to find-out whether a
particular product will sell or not so that accordingly investment decision is taken. The more important
function and purpose is to influence the behaviour of consumers through advertisements, incentives
and other methods so that consumer behaviour is studied by marketing personnel to influence the
behaviour of consumers after studying what factors decides the behaviour for a particular product,
persons, groups or regions.

Factors Influencing Consumer Behaviour:

The behaviour of consumer is dependent on a number of factors which may be economic or non-
economic factors and are dependent upon economic factors such as income, price, psychology,
sociology, anthropology, culture and climate. Therefore, the study is dependent upon all these sciences
and consumer behaviour scientists study it through research and they believe that behaviour can be
influenced which has been proved by actual sales promotion of a large number of products.

However, there is dispute whether customer should be influenced or not and what methods should be
applied to influence him. In certain cases objectionable or wrong statements are made to influence the
consumer. For instance, producers of certain face creams advertise that with the usage of their creams
complexion will become fair but actually it does not happen.

There are ads for removing baldness by certain oils or creams. In certain countries there are heavy
damages under the contract act or other laws to safeguard the interest of consumers. In India there is
Consumer Protection Act to safeguard consumer’s interest.

The basic fact is that marketing personnel believe that it is legitimate socially to influence the consumer
behaviour but only objection is with regard to methods used. For instance, the use of sex is objected in
many countries including India but still it is widely used in advertisements.

The study of consumer behaviour has proved that following are the main factors which influence the
behaviour:

1. Economic Factors:

Price
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Income

Distribution of Income

Competition with substitutes

Utility

Consumer preferences

2. Social Factors:

Culture

Attitude of society

Social values

Life Style

Personality

Size of family

Education

Health standards

Social class like upper class, middle class-urban, rural. It also includes tribes, professions and alike.

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Group:

In certain societies and tribes group decision is taken or influences the decision.

3. Psychology:

It decides the personality, taste, attitudes of individuals or groups, life style, preferences especially on
occasions like marriage. The demonstration influence is also dependent upon psychology of an
individual.

4. Anthropology & Geography:

Climate, region, history all effect, consumer behaviour. In hot countries like India certain products which
keep us cool like squashes, sarbatas, are demanded but they have no demand in cold regions. The dress
is also influenced by climate along with other factors. Culture is also influenced by climate.

5. Technology:

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In case of equipment’s whether for consumer use or industrial use is affected by technological
innovations and features. But it is not confined to durable goods only. Even in case of perishable goods
the shelf life etc are determined by technological developments. Innovations and introduction of new
product also depends upon technological development.

Innovations and introduction of new products also depend upon technological change.

6. Others:

Knowledge-technical or otherwise and information. Government decisions, laws, distribution policies,

production policies have also big affect on consumer behaviour. All these factors are studied by
consumer behaviour scientists and then they decide what production and marketing strategy should be
adopted to develop a particular product, change the existing product and what pricing and marketing
mix should be used to attract more customers towards the product/service in question to optimize sales
and profits.

The consumer behaviour study in India has been ignored except by MNC’s and a few big companies. It is
because till recently say up to the beginning of 90’s there was sellers market and anything could be sold.
Therefore, hardly any attention was paid to consumer. For instance Hindustan Motors continued to
produce same car for decades till Maruti appeared on the arena. But with the competition emerging
many cars, refrigerators, TV’s to mention a few items appeared on the scene.

This resulted into study of consumer behaviour and in future when competition is expected to be fierce
for many products and when not only American and European producers will be on the scene but Japan
and Korea are emerging big players there will be much greater emphasis on study of consumer
behaviour. The establishment of over 700 management institutes is also helping greater use of the tool
of consumer behaviour for marketing.

Advantages of Study of Consumer Behaviour:

The consumer science is largely used by marketer to find-out whether a particular product will be
purchased by consumers or not. The failure of a large number of products after II World War compelled
the producers and marketer to undertake consumer studies to market test the products.

Some of the advantages of study of consumer behaviour are as under:

Saves from Disaster:

The failure rate of new products is surprisingly high not only in highly competitive economies of USA,
Europe and Japan etc. but even in India. For instance, Roohafza of Hamdard succeeded well but when
other companies tried like Dabur to produce similar products they could not succeed. Dabur had to stop
production of Sharbat, because consumers did not like its taste. Meghee became very popular with
consumers but when other companies tried they failed, some of them have become sick. There are
many more such examples. If one tests the market before launching a new product this type of disaster
can be avoided or minimized.

Helps in Formulating Right Marketing Strategy:

If one studies well what factors will influence demand of a product accordingly production and
marketing strategies can be framed. Nirma in initial stages succeeded in its washing powder only on
account of its price. It gave tough competition to Hindustan Lever, Surf the market leader and today
Nirma has become a big producer.

In food items it is taste which decides whether consumer will buy it or not. Besides big names even small
producers have succeeded because of proper product. For instance, a small producer of Sikanji (cold
drink prepared by mixing syrup and lemon) at Modinagar has become a name in the region and now he
provides franchise to others. From a small pan shop he has become a well known name in the area of
Delhi-Modinagar and made huge profits. Helps in Sales Promotion

If through the study of consumer behaviour one is able to know correctly the factors which influence
buying decisions of the consumer one can promote sales of existing or new product. The scheme of
buying back old items has helped a lot LML in pushing sales.

This strategy was followed, by Akai T.V. and number of other companies like Bajaj Auto Akai. T.V.
Manufacturers of diesel generator sets, refrigerators, electric iron, pressure cookers etc. also adopted
the strategy and benefited.

Similarly, introduction of small packs of shampoos, washing powder and pan masala etc has helped the
companies to expand their market. “When producers found that even a poor person does not mind
trying a new costly product if it is available in affordable price pack many companies introduced such
packaging and when the product was liked they became regular customers.

Segmentation of Market is Helped:

The study of consumer behaviour suggested that everyone does not buy on price consideration or utility
consideration only. For high income group’s high priced cloth, cars, etc have been produced. In certain
cases the price of such cloth is three to eight times of normal suiting price but some section still buy it
for prestige or show.

The producers of such items make heavy profits which would not have been possible without study of
consumer behaviour because it is against basic economic theory. Even some producers to cater different
segments produce varieties of products such as soaps, creams, toothpastes etc.

Helps in Development of New Products:

Before launching a new product proper study of consumer tastes i.e. behaviour avoids later failure and
loss. This is particularly true for food items and daily consumption products. It is equally true for fashion
goods like garments, cosmetics, cigarettes and new flavours of existing products. In certain cases if a
product is reintroduced after a long gap this type of study helps.

For instance, Coca-Cola was banned in India in 1977 and consumers by and large forget its taste and
liking. Thumps up and other drinks took its place. When Coca-Cola was reintroduced in 90’s it could as
yet not reach the same supremacy. Life Bouy re-oriented its product and produced different items like
Life Bouy Gold, Life Bouy Plus to meet demand of different consumers.

Helps in Product Orientation:

The study of consumer behaviour helps to find-out why consumers are drifting away from a product or
why they are not liking it. For instance, some of Indian toothpastes are being produced for long like
Neem but it could not capture the market. There are many other instances when a new product has
been developed or reoriented to again capture its old glorious position.

Those who do it scientifically succeed and others who do not study consumer behaviour properly or do
not orient loose the market, merely by pretty faces or fancy claims he wants to be assured that what is
claimed is really true.

Therefore, based on consumer research new techniques are used Hindustan Lever and Procter &
Gamble for Surf Ultra and Ariel has brought in producers of cloth Bombay Dyeing and Reliance to testify
claims of producers of these washing powders. This is not an isolated case but this type of study had
paid good results to others also.

Helps in Reorientation of Packaging:

A great deal of importance is being given to packaging for quite some time by marketing department
and market research. But whether a particular packaging is liked by consumers or not is a recent
phenomenon. Consumer if likes a packing helps in pushing sales.

Producers of Vanaspati (hydrogenated oil), milk, drinks items, etc. have developed utility packaging so
that once container becomes empty they can be used for refilling. In certain cases this fact is advertised
also. But in many cases this has been done without study of consumer behaviour and his attraction or
disliking of a particular packaging. The fact however remains that proper study can help in pushing sales.

Helps Consumers to Study their Behaviour:

The consumers often are guided by their income, emotions, opinion of others and they do not
undertake study of their behaviour whether it is scientific or not. The science, however, can help them
to study cost benefit of their buying decisions. The study can reveal them whether buying an expansive
item is rational, or not.

Whether they should buy Rs. 2 ball pen or fancy pen costing Rs. 100 or more. Whether they should
decide in favour of expensive cloth, car, consumer durables and other fashion goods or should they buy
on utility consideration. If there are competitive goods it can help them to make consumer preference
chart and then decide what to buy immediately and what to postpone and what should be rejected.

Disadvantages of Study of Consumer Behaviour:

The marketers study the behaviour of consumer to mold it in favour of their product and sometimes
make fancy claims and use objectionable techniques. They also take the help to produce and market
such products which have no utility. In many cases consumers are exploited by sexy or otherwise
attractive advertisements through the media.

They take full advantage of weaknesses of consumers to mold it in their favour whether it is scheme of
exchange, gifts, lotteries or otherwise. All over the world consumers have been exploited by sales
promotion schemes and campaigns. For instance producers certain producers claim that use of their
tooth paste will guard against germs and cavity.

Producers of medicines claim cure of certain diseases. Producers of hair oils claim that it will stop falling
of hairs and/or new hairs will start growing. Slim centres claim to reduce weight in magic speedy
manner. Someone claims that baldness can be cured by replanting of new hairs in short period.
Someone claims regeneration of vitality even in old person.

Any number of examples can be given but such claims sometimes even by big companies are only
partially true. High priced products are introduced to take advantage of consumers weakness just by
changing shape, packing etc. Customers are attracted by gifts, lotteries, exchange schemes, etc.

In such cases often claims are exaggerated and benefits in the form of sales promotion scheme is only to
seller and not to buyer. The government in most of the countries has found that though consumer is the
king he is exploited. Hence most of countries have framed and enacted many acts and regulations to
safe guard the interest of consumers.

In India also there are a large number of laws in this direction like Monopoly and Restrictive Trade
Practices Act (MRTP)., Essential Commodities Act., Consumer Protection Act, compulsory printing of
maximum retail price on each packing, weights and Measures Act and Code of Advertising.

Conclusion:

The study of consumer behaviour basically is to mold consumer behaviour and his decisions by market
man and to avoid failure of their product, promote new products and for sales promotion. The science
at times is misused and to protect consumers there are a number of enactments both in India and other
countries. Actually consumer movement in India is much weaker than other developed countries
because till a decade back India was sellers market and competition is of recent origin.