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In this lesson, we will introduce you to the process through which the ultimate buyer makes purchase decisions. After you work out this lesson, you should be able to:
- Identify what stimulates a consumer to consider buying
- Describe the buyer’s decision-making process and the several factors which influence this decision
- Understand the response of the buyer to the marketing and other stimuli
In this lesson, we will discuss the following:
- What is buyer behaviour ?
- Models of consumer/buyer behaviour
- Determinants of consumer behaviour
- The consumer decision process
- Marketing implications of consumer behaviour
Why do people buy one product and not another? Answering this question is the basic task of every marketer. The answer directly affects every aspect of marketing strategy, from product development to pricing and promotion. Discovering that answer requires an understanding of buyer behaviour, the process by which consumers and business-to-business buyers make purchase decisions.
Buyer behaviour is a broad term that covers both individual consumers who buy goods and services for their own use and organizational buyers who purchase business products. A variety of influences affect both individuals buying products for themselves and professional buyers purchasing products for their firms. This lesson focuses predominantly on individual consumer behaviour. What is Buyer Behaviour?
Consumer behaviour is the process through which the ultimate buyer makes purchase decisions. Here is a sample of popular definitions for consumer behaviour:
‘... the study of the buying units and the exchange processes involved in acquiring, consuming, and disposing of goods, services, experiences, and ideas’ (Mowen)
‘... the decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services’ (Loudon and Della Bitta)
‘... reflects the totality of consumers’ decisions with respect to the acquisition, usage and disposition of goods, services, time and ideas by (human) decision making units (over time)’ (Jacob Jacoby)
The definition by Jacoby can be further illustrated. The totality of consumers’ decisions include whether to buy or not, what to buy, why to buy, how to buy, when to buy, where to buy and also how much/ how often/ how long. The idea of consumption not only includes purchasing and using, but also disposing. The marketer’s offering can mean many things - be it product, service, time, ideas, people and so on.
The term decision-making units obviously refer to the people involved. In a typical purchase, many people may be involved and they play different roles such as information gatherer, influencer, decider, purchaser and user. In a consumer buying context, it may mean a family or group influence whereas in the industrial buying context, it means a crossfunctional team with each member of the team performing a particular role in the buying decision. The word ‘time’ could mean different units of time like hours, days, weeks, months and years.
Models of Consumer / Buyer Behaviour
Consumer behaviour is a dynamic, multi-disciplinary process. The study of consumer behaviour builds upon an understanding of human behaviour in general. In an effort to understand why and how consumers make buying decisions, marketers borrow extensively from the sciences of psychology and sociology. The work of psychologist Kurt Lewin provides a useful classification scheme for influences on buying behaviour. Lewin’s proposition is B = f(P, E) which means that behaviour (B) is a function (f) of the interactions of personal influences (P) and pressures exerted by outside environmental forces (E).
This statement is rewritten to apply to consumer behaviour as B = f(I, P) (i.e.) consumer behaviour (B) is a function (f) of the interactions of interpersonal influences (I) such as culture, role models, friends and family - and personal factors (P) such as attitudes, learning and perception. Therefore inputs from others and an individual’s psychological makeup both affect a consumer’s purchasing behaviour. This model is further explained in the following sections of this lesson. There are many other models of consumer behaviour.
The most generic model of consumer behaviour suggests a stimulus-response pattern of understanding the consumer’s behaviour (Figure 1.5.1). The stimulus can be marketing stimuli (which can be manipulated by the marketer) and other external stimuli (like the economy, culture, technology and so on). The response includes the decision to buy, product choice, dealer choice and choices regarding time, quantity, etc.
The consumer is at the center of this model. The stimulus is applied to this consumer who in turn comes up with a response. The consumer has his/her own characteristics and a multi-staged decision-making process. There are also several influencing factors acting upon the consumer. The influencing factors may include personal and interpersonal influences.
Figure 1.5.1 A generic model of consumer behaviour
Determinants of Consumer Behaviour
Consumers don’t make purchase decisions in a vacuum; rather, they respond to a number of external, interpersonal influences and internal, personal factors. Consumer often decide to buy goods and services based on what they believe others expect of them. They may want to project positive images to peers or satisfy the unspoken desires of family members. Marketers recognize three broad categories of interpersonal influences on consumer behaviour:
- cultural influences
- group influences
- family influences
Cultural influences: Culture can be defined as the values, beliefs, preferences and tastes handed down from one generation to the next. Culture is the broadest environmental determinant of consumer behaviour. Therefore, marketers need to understand its role in customer decision making. They must also monitor trends to spot changes in cultural values. Marketing strategies and business practices that work in one country may be offensive or ineffective elsewhere because of cultural variations. Hence cultural differences are particularly important and complex to understand for international marketers. Cultures are not homogeneous entities with universal values. Each culture includes numerous subcultures - groups with their own distinct modes of behaviour.
Group (Social) influences: Every consumer belongs to a number of social groups. Group membership influences an individual’s purchase decisions and behaviour in both overt and subtle ways. The influences may be informational and/or normative. Every group establishes certain norms of behaviour. Group members are expected to comply with these norms. The difference in group status and roles can also affect buying behaviour. The surprising impact of groups and group norms on individual behaviour has been called the Asch phenomenon because it was first documented by psychologist S.E.Asch.
Discussions of the Asch phenomenon raises the subject of reference groups - groups whose value structures and standards influence a person’s behaviour. Consumers usually try to coordinate their purchase behaviour with their perceptions of the values of their reference groups.
Children are especially vulnerable to the influence of reference groups. They often base their buying decisions on outside forces - what is popular with their friends, what is fashionable and trendy, what is popular, what are their heroes and role models (usually, celebrities) using. In nearly every reference group, a few members act as opinion leaders.
They are the trendsetters who are likely to purchase new products before others in the group and they share their experiences and opinions via word of mouth. Other members’ purchase decisions are affected by the reports of the opinion leaders. Closely related to reference groups is the concept of social class. A social class is an identifiable group of individuals who tend to share similar values and behavior patterns different from those of other classes. These values and behaviour patterns affect purchase decisions.
Family influences: The family group is perhaps the most important determinant of consumer behaviour because of the close, continuing interactions among family members. Like other groups, each family typically has norms of expected behaviour and different roles and status relationships for its members. The traditional family structure consists of a husband and wife.
Although these and other members can play a variety of roles in household decision making, marketers have created four categories to describe the role of each spouse:
- Autonomic, in which the partners independently make equal numbers of decisions (e.g. personal-care items)
- Husband-dominant, in which the husband makes most of the decisions (e.g. insurance)
- Wife-dominant, in which the wife makes most of the decisions (e.g. children’s clothing)
- Syncretic in which both partners jointly make most decisions (e.g. vacation).
Consumer behaviour is affected by many internal, personal factors, as well as interpersonal ones. Each individual brings unique needs, motives, perceptions, attitudes, learning and self-concepts to buying decisions.
Needs and motives: Individual purchase behaviour is driven by the motivation to fill a need. A need is an imbalance between the consumer’s actual and desired states. Someone who recognizes or feels a significant or urgent need then seeks to correct the imbalance. Marketers attempt to arouse this sense of urgency by making a need ‘felt’ and then influence consumers’ motivation to satisfy their needs by purchasing specific products. Motives are inner states that direct a person toward the goal of satisfying a felt need. The individual takes action to reduce the state of tension and return to a condition of equilibrium.
Perceptions: Perception is the meaning that a person attributes to incoming stimuli gathered through the five senses - sight, hearing, touch, taste and smell. Certainly a buyer’s behaviour is influenced by his or her perceptions of a good or service.
Attitudes: Perception of incoming stimuli is greatly affected by attitudes. In fact, the decision to purchase a product is strongly based on currently held attitudes about the product brand, store or salesperson. Attitudes are a person’s enduring favorable or unfavorable evaluations, emotional feelings or action tendencies toward some object. Because favourable attitudes likely affect brand preferences, marketers are interested in determining consumer attitudes toward their products.
Learning: In a marketing context, refers to immediate or expected changes in consumer behaviour as a result of experience (that of self or others’). Consumer learning is the process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behaviour. Marketers are interested in understanding how consumers learn so that they can influence consumers’ learning and subsequently, their buying behaviour.
Self-concept: The consumer’s self-concept - a person’s multifaceted picture of himself or herself - plays an important role in consumer behaviour. The concept of self emerges from an interaction of many of the influences - both personal and interpersonal - that affect buying behaviour.
The Consumer Decision Process
Figure 1.5.2 An integrated model of the consumer decision process
Consumers complete a step-by-step process to make purchasing decisions. The length of time and the amount of effort they devote to a particular purchasing decision depends on the importance of the desired good or service to the consumer.
Purchases with high levels of potential social or economic consequences are said to be high-involvement purchase decisions. Routine purchases that pose little risk to the consumer are low-involvement decisions. Consumer generally invests more time and effort to purchase decisions for high-involvement products than to those for low- involvement products. For example, a car buyer will probably compare prices, spend time visiting dealer showrooms, read auto reviews and ask for advice from friends before making the final decision. Few buyers invest that much effort in choosing between two brands of candies.
They will still go through the steps of the consumer decision process but on a more compressed scale. Purchase decisions can be thought-based (cognitive) or feeling-based (emotive). While it is true that both cognition and emotion will be present in every purchase decision, either one of them will dominate the decision. As a result, we can construct a grid as follows to analyze different consumer purchase decisions.
Figure 1.5.3 Classification of consumer purchase decisions
Figure 1.5.2 shows the five steps in the consumer decision process. First, the consumer recognizes a problem or an unmet need. Then he/she searches for goods or services that will fill that need and evaluates the alternatives before making a purchase decision (and the actual purchase). After completing the purchase, the consumer evaluates whether he/she has made the right choice. Much of marketing involves steering the consumers through the decision process in the direction of a specific item.
Consumers apply the decision process in solving problems and taking advantage of opportunities. Such decisions permit them to correct differences between their actual and desired states. Feedback from each decision serves as additional learning experience to help guide subsequent decisions.
During the first stage in the consumer decision making process, the consumer becomes aware of the discrepancy between the actual state (‘where we are now’ and the ideal state (‘where we want to be’). Problem recognition motivates the individual to achieve the desired state of affairs. A marketer can stimulate problem recognition either by creating a new ideal state or by creating dissatisfaction with the actual state. In the second stage, the consumer gathers information related to his/her attainment of a desired state of affairs.
This search identifies alternative means of problem solution. High- involvement purchases may elicit extensive information searches, while low-involvement purchases require little search activity. The search may cover internal or external sources of information. During the internal search, stored information, feelings and experiences relevant to the problem-solving situation are recalled from the consumer’s memory. An external search gathers information from outside sources, which may include family members, associates, store displays, sales representatives, advertisements and product reviews.
The external search may be a general on-going search or a specific pre-purchase search. The search identifies alternative brands for consideration and possible purchase. The number of brands that a consumer actually considers in making a purchase decision is known as the evoked set. Marketers try to influence consumer decisions during the search process by providing persuasive information about their goods or services in a format useful to consumers.
The third step in the consumer decision making process is to evaluate the evoked set of options identified during the search step. The outcome of the evaluation stage is the choice of a brand or product in the evoked set or possibly a decision to renew the search for additional alternatives, should all those identified during the initial search prove unsatisfactory.
To complete this analysis, the consumers develop a set of evaluative criteria to guide the selection. These criteria can either be objective facts or subjective impressions. Marketers can attempt to influence the outcome from this stage in many ways. First, they can try to educate consumers about attributes that they view as important in evaluating a particular class of goods. They can also identify which evaluative criteria are important to an individual and attempt to show why a specific brand fulfills those criteria. They can try to induce a customer to expand his/her evoked set to include the product they are marketing.
The search and alternative evaluation stages of the decision process result in the eventual purchase decision and the act of making the purchase. At this stage, the consumer has evaluated each alternative in the evoked set based on his/her personal set of evaluative criteria and narrowed the alternatives down to one. Marketers can smooth the purchase decision and action by helping consumers through financing, delivery, installation and so on.
The purchase act produces one of two results. The buyer feels either satisfaction at the removal of the discrepancy between the actual and the ideal states or dissatisfaction with the purchase. Consumers are generally satisfied if purchases meet their expectations.
Sometimes, however, consumers experience some post-purchase anxieties, called cognitive dissonance. It is a perception that one has not made the right decision. The consumer attempts to reduce this dissonance by searching for additional information that confirms his/her choice. The marketer can help by providing reassuring information to the buyer and also by positive marketing communications.
Marketing Implications of Consumer Behaviour
Marketers study consumer behaviour because it has serious marketing implications - be it in marketing strategy (as defined by market segmentation, targeting and positioning) formulation or in designing the marketing mix (defined by the 4 Ps of marketing, viz., product, price, place and promotion). The following is a list of questions related to marketing strategy and marketing mix. The answers obviously arise from insights and findings from the study of consumer behaviour. Consider this.
Developing a Customer-Oriented Strategy
- Market segmentation
- How Is Market Segmented?
- How Profitable Is Each Segment?
- What Are the Characteristics of Consumers in Each Segment?
- Are Customers Satisfied with Existing Offerings?
- Selecting the target market
- How Are Competitive Offerings Positioned?
- How Should Our Offerings Be Positioned?
- Should Our Offerings Be Repositioned?
Developing Products or Services
- What Ideas Do Consumers Have for New Products?
- What Attributes Can Be Added to or Changed in an Existing Offering? What Should Our Offering Be Called?
- What Should Our Package and Logo Look Like?
- What About Guarantees?
Making Promotion (Marketing Communications) Decisions
- What Are Our Advertising Objectives?
- What Should Our Advertising Look Like?
- Where Should Advertising Be Placed?
- When Should We Advertise?
- Has Our Advertising Been Effective
- What About Sales Promotion Objectives and Tactics?
- When Should Sales Promotions Happen?
- Have Our Sales Promotions Been Effective?
- How Many Salespeople Are Needed to Serve Customers?
- How Can Salespeople Best Serve Customers?
Making Pricing Decisions
- What Price Should Be Charged?
- How Sensitive Are Consumers to Price and Prices Changes?
- When Should Certain
- Price Tactics Be Used?
Making Distribution Decisions
- Where Are Target Consumers Likely to Shop?
- How Should Stores Be Designed?
Here are some specific real-life examples to emphasize the marketing implications that arise from the study of consumer behaviour. Product positioning and competition: Remember the classic ad campaign for CoffeeBite. It talks about the positioning identities - What am I and Who am I. The Axe Deo campaigns strongly bring out the positioning identity of ‘For whom am I?’.
Also the positioning of different supermarkets like FoodWorld, Nilgris, ApnaBazar and Subiksha answer the question ‘For whom am I?’. While designing the competitive marketing strategy, one question that bothers marketers is ‘Who am I competing with?’.
For instance, is Xerox competing with other photocopier makers or computer printer makers or printers? With a positioning as ‘the Document company’ it protects itself from marketing myopia and positions itself to take on competition even from the substitute products. If Style-Spa, the high-end home furniture retailer considers itself as a home expressions company, it invites competition from antique furniture shops. Similarly, Archies, a social expressions company selling cards and gifts, in reality competes with florists! These insights emerge from an understanding of the consumer needs and motives which is central to consumer behaviour.
Marketers are concerned about how consumers perceive their products. For example, brands like Strepsil (with all its colours and flavours), Crocin (with interesting mass media campaigns) can possible confuse the consumers - are they pharmaceutical products? self-help relievers? Are they specialty or common-place products.
Consumer perception determines the evoked set for the problem. No brand wants to be categorized with wrong competition in the evoked set! Itch guard represents a classic case of the creation of a new product category. The consumer need was always there until this brand arrived and addressed this need exquisitely and exclusively. In many markets, orange juice enjoys different perceptions - as a breakfast drink, as a refresher drink, as a health drink, and as a health recovery drink.
Same product but different consumer perceptions! This understanding is vital for a brand like Tropicana which sells orange juice in different markets. Also, the use of celebrity endorsements (as reference groups, opinion leaders) is attributed to its role in consumer behaviour. The use of cricketers like Sachin Tendulkar and Bollywood stars like Aishwarya Rai in advertisements attempts to shape and influence consumer behaviour in favor of the brands they endorse. Another classic example is the ‘Got milk?’ campaign featuring several celebrities in support of milk as a healthy drink and endorsing its consumption. In Eastern cultures, group values are stressed over the individual’s. So the appeal to normative beliefs takes on greater significance while designing marketing communications in the Eastern cultures.
A study of consumer learning reveals how consumers generalize related marketing stimuli. Based on this, there are several marketing applications - product-line extension (Pepsi Lemon), product-form extension (Pepsi can), product-category extension (Aquafina), Family branding (Nestle’s Maggi, HP Pavillion), Licensing (Tommy, CK, Disney - in several product categories to several merchandisers), usage situation generalization (an all-hair shampoo).
The study of consumer behaviour is a very exciting field of marketing. Marketing begins and ends with consumers. As a result, the study of consumer behaviour permeates all of marketing.
Case Study 1.5.1 Marketing Beyond the Veil
Many marketers think that marketing to Saudi Arabian women is a very difficult task. Women in Saudi remain behind the purdah and it is difficult to talk to them.
Saudi Arabia is one of the largest markets in West Asia and is a homogenous society. There exists a wrong notion among some marketers that Saudi women are passive consumers. Many Saudi women are often highly educated. About 3,80,000 women work in Saudi Arabia and the number of female students in the colleges is set to rise about 1,75,000 in the next two years. Most women work in the traditional fields of health and education. Some are even employed in retailing, designing, publishing and manufacturing.
They are exploring ways to sell products to Saudi women since Saudi Arabia is considered a young market. Shopping malls are an utter flop as women find these out-of-town malls inconvenient. MNCs have realized that Saudi women are brand conscious and make the buying decision for household items. MNCs have been searching intensively for women who can act as intermediaries between the company and the clients and those who have links with colleges, women groups, etc.
Marketers should now stop underestimating the sophistication of Saudi women as consumers. It is time they recognized that they are the emerging economic force. Women emerging out of a car fully covered by the purdah may hold a degree in finance or law or medicine and so on, and she may be a potential consumer given her educational background and culture.
Questions: List out the differences between Consumer Behaviour of Women in a closed culture (as described by this case) in Saudi Arabia and in open culture (say, in Western Europe). Highlight the cultural implications for a Woman consumer and also for a marketer in the given context. Think of creative applications of ‘reference groups’ to market to the Saudi Arabian Women, say for a personal care product.
Case study 1.5.2 That CSR (Corporate Social Responsibility) thing!
[Source: Business Today, May 8, 2005]
It shouldn’t surprise anyone that Indian companies have just discovered the marketing pay-off of their corporate social responsibility (CSR) initiatives. They could get by with focusing on real or perceived product attributes, and with profit-mindedness being considered a coarse sentiment, any CSR program they launched was far removed from their core businesses, brands, even consumers.
There has been a spate of corporate CSR initiatives over the past few years. Companies have been quick to respond to crises (such as the Gujarat earthquake or the Tsunami that hit the southern part of the country) or shown inherent goodness in plugging gaps in the government’s efforts to provide healthcare and education to all - in a country as vast as India, there will always be gaps - but there has been little effort to link such work to things such as marketing, even corporate strategies. Most CSR activities are, at best, charity, not very different from discrete acts of philanthropy and, at worst, a mere humane facade of a for-profit-only capitalist system.
This is why recent advertising campaigns by the country’s two largest fast-moving consumer goods (FMCG) companies, Hindustan Lever Limited (HLL) and ITC are significant. The first, a campaign for Surf Excel Quick Wash with the tagline Do bucket paani ab rozana hai bachnai (I will save two buckets of water a day), has struck a chord in a country where the shortage of water is an endemic phenomenon.
“We decided it would be of immense benefit to a household if technology could be developed that would reduce the water consumed in the washing of clothes and the amount of effort required while rinsing while delivering superlative cleanliness”, says an HLL spokesperson. Surf’s sales, say sources in the market, have gone up by as much as 15% since the advertisement, starring actress-turned-social-activist and former Member of Parliament, Shabana Azmi, went national (the company had tested the strategy in water- starved Tamil Nadu last year with another actress-turned-social-activist Revathy Menon).
Then, there is ITC’s Working for you, working for India campaign, one strand of which focuses on the company’s e-choupal initiative, an effort that seeks to enhance rural incomes, then, sell a variety of products and services to rural customers (apart from sourcing agricultural produce from them). The tagline itself smacks of the old-style image-led CSR activity, but given what the e-choupal does, it is actually an attempt to build and position the company’s brand around the idea of doing something for the country.
In some ways, ITC’s e-choupal is a far stronger example of a CSR-brand linkage than the Surf Excel campaign. It is a programme that is obviously advantageous to the company, yet it is accomplished by enough socially relevant goodies to make it look the way a government program targeted at rural development ideally should. HLL, coincidentally, has an initiative that fits the bill, its Project Shakthi that uses Women’s self-help groups in rural areas to further its reach. “The problem with old-style CSR was that the benefactors were not in control of what they would get”, says Vivek Vaidya, a brand consultant. With brand or corporate strategy-driven CSR, they are.
Questions: Explain the success of Do bucket paani ab rozana hai bachnai (I will save two buckets of water a day) campaign for Surf Excel. What consumer behaviour insights can you draw from this case. Identify the personal and interpersonal factors that affect consumer behaviour for the product/service described in the case.