CONSUMER BEHAVIOUR

Answer to Q1
Introduction
Consumer behaviour looks at the many reasons why people buy things and later
dispose of them. Consumers go through distinct buying phases when they purchase
products: (1) realizing the need or want something, (2) searching for information
about the item, (3) evaluating different products, (4) choosing a product and
purchasing it, (5) using and evaluating the product after the purchase, and (6)
disposing of the product. A consumer’s level of involvement is how interested he or
she is in buying and consuming a product. Low-involvement products are usually
inexpensive and pose a low risk to the buyer if she makes a mistake by purchasing
them. High-involvement products carry a high risk to the buyer if they fail, are
complex, or have high price tags.

Following are consumer decision making models and it has three components –
Influence and resources on Input, Process and Decision result or output.

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Source: https://www.researchgate.net/figure/fig2_321080708

Input
a) Marketing mix of the company : The marketing mix refers to the set of actions,
or tactics, that a company uses to promote its brand or product in the market. The
4Ps make up a typical marketing mix - Price, Product, Promotion and Place.
However, nowadays, the marketing mix increasingly includes several other Ps like
Packaging, Positioning, People and even Politics as vital mix elements.
b) Sociocultural Environment: A sociocultural environment is a population, and it is
described with special attention paid to social and cultural factors. It includes family
and reference groups, non-commercial sources, social class and culture and
subculture. The term is common in business
c)Communications: through which the marketing mix and sociocultural
environmental influence is delivered to the customer.

Process
Psychological factors are related to the process phase – the specific characteristics
of a given consumer: temperament, intelligence, character, motivation, perception,
learning, personality and attitude that impact on decision making. This stage has 3
sub stages

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1). Recognition or awareness of needs
2). Pre-purchase information search and exploration of offers
3). Alternative assessment

• Recognition of needs:
Each purchase decision includes a specific procedure that happens in the minds of
customers. The principal stage in this process is need recognition. In this
progression, a customer perceives a need or a problem. This need can be stimulated
by interior or external jolts. This interior and external jolt really figures out which item
the shopper will purchase, the amount of its amount will be furthermore its
dependability.
• Pre-Purchase information search:
This is the second stage in consumer decision process. Amid this stage the
consumer who has perceived the need; look for data to fulfil the need. A purchaser
can gather the data from numerous sources. For instance, these may be;
➢ Individual sources i.e. companion, family and neighbor.
➢ Business sources incorporate publicizing, bundling and shows.
➢ Open sources incorporate media and diverse association.

In these sources, business sources are imperative in light of the fact that through
advertising, packaging and displays, the organizations can give the feeling that they
have what the customer is searching for.

• Evaluation of Alternatives:

This is the most imperative stage in consumer decision making process. In this
stage, the consumer measures each brand on the specification it possesses from the
information collected before. At this stage, brand convictions assume a critical part in
choosing the item. Marking has turned out to be strong to the point that today
scarcely anything goes unbranded. Brand names help shoppers recognize item
which may advantage them;
Output:
• Purchase Decision, trial and repeat purchase:

This is the stage where consumers really purchase the product. Two factors are
important at this stage, attitude to others and sudden situational elements. Though
the consumer has made his purchase decision in the above stage, these factors
influence is so strong that the purchase decision does not as a matter of course
result in the genuine consumer’s choice. For the first time, consumer will only
purchase the product for trial. If they are satisfied with the product.
Post Purchase evaluation:
In this stage, the consumers really watch that the item fulfils his/her need or not.
There will be three results. On the off chance that the execution of the item is lower
than the normal, it results in client disappointment which can badly affect the

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eventual fate of the organization. Execution of the item is equivalent to the item
execution than the client is fulfilled.
My decision process for buying a Luxury watch (Extensive decision & High
involvement)
✓ Need recognition – to buy luxury watch from a reputed brand since it is very
expensive.
✓ Take feedback from relatives & friends on various luxury watch brands. Study
online reviews from manufacturer`s website & check for ombudsman issues.
✓ Visit brand stores & outlets to physically check the authenticity & performance
of the product
✓ Select & buy the brand that has best features within the targeted budget.
✓ Experience product performance & recommend, give feedback to known
people.
My decision process for buying breakfast cereal (Routine decision making, low
investment & expecting high quality)
✓ Need recognition from external influence on packaging, quality, availability,
promotional offers, retailer’s recommendation
✓ health awareness variables - Doctors recommendation, Health
consciousness, and Consumption of these products is a modern trend .
✓ increased quality consciousness variables - Better Quantity and Long shelf life
of the products.
✓ Taste and Nutrition variables - These products are nutritious, these products
are tastier.
My decision process for buying a protein shake (limited decision making,
Medium involvement)
✓ Need recognition about packaging, quality.
✓ Health awareness variable – Shop area, cleanliness of the shop, raw
materials used to prepare milk shake.
✓ Increased quality consciousness variables – shelf life and freezer capacity.
✓ Taste and nutrition variable – product made by authentic milk supplier, serve
chilled & tastier milk shake.
Conclusion:
Simple Model of Consumer Decision Making Process will increase the awareness
and consumer knowledge on the product itself. This process will not only let
consumer knows better about the product, it will provide benefits to company as well.

Answer to Q2
The minimal difference that can be detected between two similar stimuli is called the
differential threshold or just noticeable difference (JND). A nineteenth-century
German scientist named Ernst weber discovered that the JND between two stimuli
was not at absolute amount, but an amount relative to the intensity of the fifth
stimulus. Weber`s law, states that the stronger the initial stimulus, the greater the
additional intensity needed for the second stimulus to be perceived as different. Eg:
during economic downturn, consumers become very price sensitive and are likely to
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note even small changes in the price. However, during such times, companies feel a
squeeze on their profit margins because people are the weight of different SKU,
taking into consideration the price rise. This is to ensure that the reduction in the
respective weight of the SKU is not readily noticeable to consumers.

Source: khan academy/2345697/differential threshold or just noticeable difference.

Weber`s law has important applications in marketing. Manufacturers and marketers
endeavour to determine the relevant JNDs for their products for two reasons. First,
they want to prevent changes (eg.reductions in product size or quality, or increase in
product price) from becoming readily discernible to the public (i.e remain below

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JND). Second , they want to ensure that product improvements examples, improved
or updated packaging, larger size, or lower price are very apparent to consumers,
but without being wastefully extravagant. When it comes to product improvements,
marketers very much want to meet or exceed the consumer`s differential threshold;
that is, they want consumers to readily perceive any improvements made in the
original product. Marketers use the JD and to determine the amount of improvement
they should make in their products.
The discipline of marketing has extensively used JND theory in developing insights
into further understanding various aspects of human perception of packaging,
branding and pricing of goods and services. Weber’s law is integral to marketing
(Henderson Britt 1975). Studies in marketing have tried to understand the consumer
perception of size of the product, changes in colours, labelling price and promotions
as well. Product improvements or changes in size are made below or above the JND
threshold to manage consumer perception (Britt and Nelson 1976, Nan arrow, Wright
et al. 1998). Negative changes such as product size, price increase or quality
changes are set based on thresholds where consumer will least notice the change
and, on the contrary, more positive changes such as larger sizes or promotions are
set just above the noticeable threshold. From a consumer-centric viewpoint, the
theory has been used to measure the effectiveness of scale and magnitude of
change in the emerging field of sensory marketing. For many years now, firms have
used the five human senses to reach consumers and create perceptions of a brand
or brand personalities. In the last couple years, the field of sensory 29 marketing has
received renewed attention and focus.
There has also been contradictory evidence about the applicability of JND to price,
particularly in certain industries. Some researcher has used the “fair price theory”
instead to explain that as prices rise, a constant price difference between brands is
more important in establishing product market share, based on the industry context
and competitive landscape.
Most research in the area has focused on the consumer goods industry. Studies
have used scanner data available from the grocery stores. Industry will benefit from
studies relating to price as a variable than are focused on other than grocery store
data (Malhotra, Peterson et al. 1999). There are no studies that examine JND theory
in context of the service industry. Second, differential online pricing thresholds have
not been studied at a channel level. 30 Examination at this level may yield additional
insights for pricing strategy practitioner and increase the conceptual understanding
of online price bands based on customer heterogeneity. Since its discovery in the
early 1800’s, JND theory was key to the discipline of psychophysics and has been
extensively used to understand the human response to physical stimuli. In schools of
psychology, it is taught as one of the foundational theories. In the last two centuries,
most of Weber’s and Fechner’s experiments related to understanding human
perception of the sense of sound, sight, smell, touch and speech have been the
basis of much deeper research and application areas for JND theory

Brand A has decided to increase it price value by INR 2, the JND for this product
category holds INR 1. By looking at Brand A, Brand B has made certain changes to
its product formula to make last long for 4 more days, the JND of this product
category has found to be 3 days. In this case below the JND will not be perceived

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with some new products for which Brand B claimed to be last long 4 more days and
will hurt the credibility of Brand A promoting the product as “new and improved” by
increasing the price about Rs.2. When Brand B changed its formula and make it last
for 4 days with the same cost without increasing its price tag of Rs.1, where the JND
of both Brand B and Brand has been considered as Rs 1. The threshold difference of
the life of the product is found to be 1 day since the Brand A product lasts for 3 days.

However, when Brand B came up with some new formula for which it claimed longer
life, many consumers were disappointed because, apparently the improvements
were below JND and therefore unperceived. However, when Brand A introduced
product life of 1 more day, they hailed the breakthrough technology because of
improvements were far above the JND and easily noticeable.

Answer to Q3
a) In consumer studies, personality is defined as consistent responses to
environmental stimuli or we can also say patterns of behaviour that are consistent
and enduring. An individual’s personality helps marketers to describe consumer
segments as it provides for orderly and coherently related experiences and
behaviour. Personality characteristics may be a basis for product positioning. For
example, one segment of the market may die because they want to stick to the
group norms and therefore uses diet product. In contest another segment is on diet
because of internal need. Therefore, company’s positioning strategies will be
different for both. For the first segment, they will portray group approval as a result of
product use, whereas positioning for the second segment would portray individual
achievement.

• Self-concept:

The self-concept is how an individual think about or perceives themselves. One way
an individual can maintain their self-concept is through the consumption of products.
Possessions (products) help to define the self and create a sense of identity
(Richins, 1994). “Through the purchase and use of products, consumers define,
maintain and enhance their self-concept” (Zinkham and Hong, 1991). Belk (1988)
recognized the importance of self-concept in consumer behaviour and stated that in
order to fully understand consumer behaviour, we must first examine the relationship
between possessions (products) and the self. The term conspicuous consumption
has been used to define the act of purchasing visually conspicuous brands in order
to reflect social status and wealth, convey self-image and boost self-esteem (Veblen,
1899; Souiden, M’Saad & Pons, 2011). Veblen (1899) first defined conspicuous
consumption as “lavish” spending on goods and services to promote and display
income and wealth. Since then researchers have identified 8 conspicuous
consumption as a way for consumers to not only display wealth but also enhance
self-concept and inform others about one’s self-image (O’Shaughnessy and
O’Shaughnessy, 2002; Souiden, M’Saad & Pons, 2011).

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 • 4 Types of Self Image:

Since consumers’ decisions about brand choice are guided by self-image, it is

suggested that consumers will choose products whose images are congruent with
their own. This self-image/brand-image link has been termed “self-image congruity”.
Sirgy (1982) specified four self-image/product image congruity states:

➢ Positive self-congruity: Comparison between a positive product-image

perception and a positive self-image belief.

➢ Positive self-incongruity: Comparison between a positive product-image

perception and a negative self-image belief.

➢ Negative self-congruity: Comparison between a negative product-image

perception and a negative self-image belief.

➢ Negative self-incongruity: Comparison between a negative product-image

perception and a positive self-image belief.

According to Sirgy (1982), the strongest predictor of purchase behaviour is a positive

self-image/product-image congruity, followed by positive self-incongruity, negative
self-congruity and negative self-incongruity. Consumers will be motivated to
purchase positively valued products in order to maintain a positive self-image but will
also seek out products that have an image similar to their own (whether positive or
negative) in order to maintain self-consistency. According to this theory, self-esteem
and 9 self-consistency compromise the self-image, and therefore, are motivators of
consumer behaviour.

b) 4 elements of Consumer learning

Understanding the elements of learning is critical to understanding how and why

your consumers make the purchase decisions that drive your industry.

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There are four critical elements of consumer learning:

1. Motivation

Unfulfilled needs are the underlying drivers that lead to motivation.

For example, if you’ve just visited the doctor and he has informed you that you need
to live a more active lifestyle to reduce your elevated cholesterol levels, your
unfulfilled need is to live a more active, healthy lifestyle. Therefore, you may be
motivated to learn as much as you can about local gyms in the hopes of joining one,
leading a more active lifestyle and improving your health.

2. Cues

Cues are the stimuli that suggest a specific way to satisfy your motivations. There
are often many cues competing for a customer’s attention, some of which can be
created by marketers and others that are simply part of the external environment.

In the case of our example, in order to learn about local gyms, cues could take the
form of advertisements for gyms you see online or hear about on the radio,
conversations you have with salespeople at those gyms or even a conversation
about a local yoga studio you overhear between two friends at a coffee shop.

Some cues, like the conversation with a salesperson, are deliberately sought, while
others, like overhearing the conversation at a coffee shop, are not. Regardless, you
can learn from both the cues that are deliberately sought and those that are
incidental.

3. Response

A response is the consumer’s reaction to a cue. While there can be many responses
to each cue, the response the consumer chooses often depends heavily on their
previous experiences. A marketer’s understanding of consumer learning could
enable them to elicit the desired response.

4. Reinforcement

The reward -- the pleasure, enjoyment and benefits -- that the consumer receives
after buying and using a product or service is called reinforcement. Reinforcement is
critical to the learning process and can significantly impact future responses, even
though this element typically happens after purchase.

Returning to our gym example, if you choose to join the local gym, reinforcement
may take the form of a positive experience, where the machines you want to use are
readily available along with the occasional 10% off coupon for the juice bar. This
reinforcement may lead you to remain satisfied with the gym and perhaps even
recommend it to a friend, contributing cues to their learning process.