Analysing Consumer Markets and Buyer Behaviour

Companies that study and understand how and why consumers behave the
way they behave when it comes to making purchases stand to benefit from that
study and understanding. Studying consumers provides clues for developing
new products, product features, prices, channels, messages, and other
marketing mix elements

All individuals and households who buy or acquire goods and services for personal
consumption are termed as consumers. Markets have to be understood before
marketing strategies can be developed.

Consumer Buying Behaviour Vs Buyer Behaviour

There is a contrast between consumer behaviour and buyer behaviour and this
contrast can be seen in the definitions of the two concepts below.

Consumer behaviour is the study of the process involved when individuals or groups
select, purchase, use or dispose of products, services, ideas or experiences to satisfy
needs and desires

On the hand Buyer Behaviour reflects an emphasis on the interaction between

buyers and producers at the time or point of purchase.

The Consumer Proposition Acquisition Process

The consumer acquisition process consists of six distinct stages. The process is useful
because it highlights the importance and distinctiveness of proposition selection and
re-evaluation phases in the process. It is also important to mention that the buying
process is iterative because each stage can lead back to any of the previous stages in
the process or move forward to the next stage in the process.

Motive Development

This is the first stage in the model and arises when we decide we need to acquire a
product. This involves the initial recognition that a problem needs to be solved. To
begin to solve a problem, we must be aware of it. For example, a newly recruited
graduate in a Bank who decides that he/she needs to upgrade his wardrobe.

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Information Gathering

The second stage entails looking for alternative ways of solving our problems. The
searching of information may be active, overt or passive. Furthermore, the search can
involve an internal search where we consider what we already know about the
problem we face and the products we might buy to solve our problems. Or, it could
be external where we do not know enough of our problem and so we seek advice and
supplementary information to help us decide.

Proposition Evaluation

Once we feel that we have all the information that we need to make a decision, we
evaluate the proposition. The criteria that we may use in proposition evaluation can
either be rational (based on cost) or irrational (based on desire).

Proposition Selection

In most cases, the proposition that we eventually select is the one that we evaluate as
fitting our needs best beforehand. However, certain circumstances might cause to
decide to re-evaluate our propositions and acquire a different proposition when what
we want is not available.

Acquisition/Purchase

This takes place once the selection has been done and involves purchase or
acquisition of the proposition. There are different approaches to proposition
acquisition. If a buyer is making a routine purchase (purchase that we make
regularly), we do not particularly get involved in the decision making process.
However, if a purchase is a specialised or infrequent purchase, the buyer becomes
much more involved in the decision making to ensure that the proposition satisfies
the buyer’s needs.

Re-Evaluation or Post purchase Evaluation

This happens after the acquisition stage and entails re-evaluating our actions. The re-
evaluation stage leads to Cognitive Dissonance a theory that suggests that we are
motivated to re-evaluate our beliefs, attitudes, opinions, or values if the position we
hold on them at one point in time is not the same as the position we held at an earlier

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period due to some intervening factors. Cognitive dissonance causes us to be
psychologically uncomfortable and leads to feelings of foolishness or regrets about a
purchase decision that we have made. In order to reduce cognitive dissonance, we
actively avoid situations that might increase our feelings of dissonance. Some of the
actions we might take to reduce dissonance include;

 Selectively forget information.

 Minimise the importance of an issue, decision or act.
 Selectively expose ourselves only to new information that agrees with our
existing view (rather than information which doesn’t)
 Reverse a purchase decision, for instance by taking a product back or selling it
for what it was worth.

It is important to mention that the concept of cognitive dissonance is most prevalent in

purchase situations that entail high involvement such as the purchase of a car, house or
high value investment.

Choice Criteria

Choice criteria refers to the various features and benefits a customer uses when
evaluating products and services. Different people will use different criteria and the
same criterion may be used differently. It should also be noted that choice criteria
change over time due to changes in incomes and commitments in the family life cycle.
There are four different types of criteria used for deciding which brand to purchase
and these are discussed below;

a) Technical Criteria

This choice criterion relates to the performance of the product and consumers
consider aspects such as reliability, durability, comfort and convenience.

b) Economic Criteria

This choice criterion concerns the cost aspects of the purchase and includes the
price and running costs off the product. For example, people may decide to buy
certain products because of a reduction on price

c) Social Criteria

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This choice criterion concerns the impact that the purchase makes on the
person’s perceived relationships with other people and the influence of social
norms on the person. Key considerations under this criterion include aspects like
the social status, social belonging, whether the product is fashionable or not
fashionable in the eyes of society.

d) Personal Criteria

This criterion concerns how the product relates to the individual psychologically.
People may choose to buy brands that are in line with their self-image. For
example some people will view themselves as being young, trendy or successful
executives and buy products that reflect this conception. Other personal criterion
considerations include risk reduction and emotional considerations. Risk
reduction affects choice because some people are risk averse and choose to buy
‘safe brands’. People will use emotions because many purchase decisions are
experiential and may evoke feelings of fun, pride, pleasure boredom or sadness.
For example, some people find it boring to be using the same variant of a shower
gel or bathing soap and will therefore change the variant from time to time.

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MODEL OF CONSUMER BEHAVIOUR

Consumers make many buying decisions every day. Most large companies research
consumer buying decisions in great detail to answer questions about what
consumers buy, where they buy, how and how much they buy, when they buy, and
why they buy. Marketers can study actual consumer purchases to find out what they
buy, where, and how much. But learning about the whys of consumer buying
behaviour is not so easy—the answers are often locked deep within the consumer's
head.

The central question for marketers is: How do consumers respond to various
marketing efforts the company might use? The company that really understands how
consumers will respond to different product features, prices, and advertising appeals
has a great advantage over its competitors. The starting point is the stimulus-
response model of buyer behaviour shown in Figure below. This figure shows that
marketing and other stimuli enter the consumer's "black box" and produce certain
responses. Marketers must figure out what is in the buyer's black box.

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Marketing stimuli consist of the four Ps: product, price, place, and promotion. Other
stimuli include major forces and events in the buyer's environment: economic,
technological, political, and cultural. All these inputs enter the buyer's black box,
where they are turned into a set of observable buyer responses: product choice,
brand choice, dealer choice, purchase timing, and purchase amount.

The marketer wants to understand how the stimuli are changed into responses
inside the consumer's black box, which has two parts. First, the buyer's
characteristics influence how he or she perceives and reacts to the stimuli. Second,
the buyer's decision process itself affects the buyer's behaviour. Consumer purchases
are also influenced strongly by cultural, social, personal, and psychological
characteristics as we will see in the next unit. For the most part, marketers cannot
control such factors, but they must take them into account when devising marketing
strategies.

FACTORS INFLUENCING CONSUMER BEHAVIOUR

There are four major factors that can influence the Buying decision of the buyer. These
are summarised in the figure below:

Figure 10.1: Factors influencing consumer behaviour

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a. Cultural Factors

Cultural factors exert the broadest and deepest influence on consumer behaviour. The
marketer needs to understand the role played by the buyer's culture, subculture, and
social class.

I. Culture

Culture is defined as the set of basic values, perceptions, wants and behaviours learned
by a member of society from family and other important institutions. It is the most basic
cause of a person's wants and behaviour. Human behaviour is largely learned. Growing
up in a society, a child learns basic values, perceptions, wants, and behaviours from the
family and other important institutions. A person normally learns or is exposed to the
following values: achievement and success, activity and involvement, efficiency and
practicality, progress, material comfort, individualism, freedom, humanitarianism,
youthfulness, and fitness and health.

Every group or society has a culture, and cultural influences on buying behaviour
may vary greatly from country to country. Failure to adjust to these differences can
result in ineffective marketing or embarrassing mistakes.

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II. Subculture

Subculture is a group of people with shared value systems based on common life
experiences and situations. Each culture contains smaller subcultures or groups of
people with shared value systems based on common life experiences and situations.
Subcultures include nationalities, religions, racial groups, and geographic regions.
Many subcultures make up important market segments, and marketers often design
products and marketing programs tailored to their needs.

III. Social Class

Social Classes are society's relatively permanent and ordered divisions whose
members share similar values, interests, and behaviours. Social class is not
determined by a single factor, such as income, but is measured as a combination of
occupation, income, education, wealth, and other variables. Almost every society has
some form of social class structure. In some social systems, members of different
classes are reared for certain roles and cannot change their social positions.
Marketers are interested in social class because people within a given social class
tend to exhibit similar buying behaviour. Social classes show distinct product and
brand preferences in areas such as clothing, home furnishings, leisure activity, and
automobiles.

b. Social Factors

A consumer's behaviour also is influenced by social factors, such as the consumer's

small groups, family, and social roles and status.

I. Groups

Many small groups influence a person’s behaviour. Groups that have a direct
influence and to which a person belongs are called membership groups. In contrast,
reference groups serve as direct (face- to- face) or indirect points of comparison or
reference in forming a person's attitudes or behaviour. Reference groups to which
they do not belong often influence people. Marketers try to identify the reference
groups of their target markets. Reference groups expose a person to new behaviours

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and lifestyles, influence the person's attitudes and self-concept, and create pressures
to conform that may affect the person's product and brand choices.

The importance of group influence varies across products and brands. It tends to be
strongest when the product is visible to others whom the buyer respects.
Manufacturers of products and brands subjected to strong group influence must
figure out how to reach opinion leaders—people within a reference group who,
because of special skills, knowledge, personality, or other characteristics, exert
influence on others.

Many marketers try to identify opinion leaders for their products and direct
marketing efforts toward them. In other cases, advertisements can simulate opinion
leadership, thereby reducing the need for consumers to seek advice from others.

The importance of group influence varies across products and brands. It tends to be
strongest when the product is visible to others whom the buyer respects. Purchases
of products that are bought and used privately are not much affected by group
influences because neither the product nor the brand will be noticed by others.

II. Family

Family members can strongly influence buyer behaviour. The family is the most
important consumer buying organization in 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

Husband-wife involvement varies widely by product category and by stage in the

buying process. Buying roles change with evolving consumer lifestyles.

Children may also have a strong influence on family buying decisions. For example,
parents are now considering places where their children can be entertained while
having dinner. It is not surprising then to find some eating places with jumping
castles for kids. Also we buy food that children like or enjoy to eat. In the case of
expensive products and services, husbands and wives often make joint decisions.

III. 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. A role consists

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of the activities people are expected to perform. Each role carries a status. People
therefore choose products that communicate their role and status in society.

c. Personal Factors

A buyer's decisions also are influenced by personal characteristics such as the

buyer's age and lifecycle stage, occupation, economic situation, lifestyle, and
personality and self-concept.

I. Age and Life-Cycle Stage

People change 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—the stages through which families might pass as they
mature over time. Marketers often define their target markets in terms of life-cycle
stage and develop appropriate products and marketing plans for each stage.
Traditional family life-cycle stages include young singles and married couples with
children.

II. 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. Marketers try to identify the occupational groups that have an above-
average interest in their products and services.

A company 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.

III. Economic Situation

A person's economic situation will affect product choice. Marketers of income-

sensitive goods watch trends in personal income, savings, and interest rates. If
economic indicators point to a recession, marketers can take steps to redesign,
reposition, and re-price their products closely.

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IV. Lifestyle

Life style is a person's pattern of living as expressed in his or her psychographics. It

involves measuring consumers' major AIO dimensions—activities (work, hobbies,
shopping, sports, social events), interests (food, fashion, family, recreation), and
opinions (about themselves, social issues, business, products). People coming from
the same subculture, social class, and occupation may have quite different lifestyles.
Lifestyle captures something more than the person's social class or personality. It
profiles a person's whole pattern of acting and interacting in the world.

V. Personality and Self-Concept

Personality refers to the unique psychological characteristics that lead to consistent

and lasting responses to the consumer’s environment. Each person's distinct
personality influences his or her buying behaviour. Personality is usually described
in terms of traits such as self-confidence, dominance, sociability, autonomy,
defensiveness, adaptability, and aggressiveness. Personality can be useful in
analyzing consumer behaviour for certain product or brand choices. For example,
coffee marketers have discovered that heavy coffee drinkers tend to be high on
sociability. Thus, to attract customers, Starbucks and other coffeehouses create
environments in which people can relax and socialize over a cup of steaming coffee.

Self-concept or self-image is based on the premise that people's possessions

contribute to and reflect their identities; that is, "we are what we have." Thus, in
order to understand consumer behaviour, the marketer must first understand the
relationship between consumer self-concept and possessions. For example, the
founder and chief executive of Barnes and Noble, the nation's leading bookseller,
notes that people buy books to support their self-images.

d. Psychological Factors

A person's buying choices are further influenced by four major psychological factors:
motivation, perception, learning, and beliefs and attitudes.

I. Motivation

A person has many needs at any given time. Some are biological, arising from states
of tension such as hunger, thirst, or discomfort. Others are psychological, arising from
the need for recognition, esteem, or belonging. Most of these needs will not be strong

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enough to motivate the person to act at a given point in time. A need becomes a
motive when it is aroused to a sufficient level of intensity. A motive (or drive) is a
need that is sufficiently pressing to direct the person to seek satisfaction.

III. Perception

Perception is the process by which people select, organize, and interpret information
to form a meaningful picture of the world. A motivated person is ready to act. How
the person acts is influenced by his or her own perception of the situation. All of us
learn by the flow of information through our five senses: sight, hearing, smell, touch,
and taste. However, each of us receives, organizes, and interprets this sensory
information in an individual way.

IV. Learning

Learning describes changes in an individual's behaviour arising from experience.

This means that when people act, they learn. Learning theorists say that most human
behaviour is learned. Learning occurs through the interplay of drives, stimuli, cues,
responses, and reinforcement. If experience with a product or service is rewarding,
consumers will probably demand more of it and vice-versa. Marketers can build
demand for a product by associating it with strong drives, using motivating cues and
providing positive reinforcement.

V. Beliefs and Attitudes

A belief is a descriptive thought that a person has about something. An attitude is a

person’s relatively consistent evaluations, feelings, and tendencies toward an object
or idea. Through doing and learning, people acquire beliefs and attitudes. These, in
turn, influence their buying behaviour. Attitudes are difficult to change. A company
should then try to fit its products into existing attitudes rather than attempt to
change attitudes.

Buying behaviour differs greatly for a tube of toothpaste, a tennis racket, an

expensive camera, and a new car. More complex decisions usually involve more
buying participants and more buyer deliberation. Figure12.1 shows types of
consumer buying behaviour based on the degree of buyer involvement and the
degree of differences among brands.

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Figure:Types of Consumer Buying Behaviour

1. Complex Buying Behaviour

Consumers undertake complex buying behaviour when they are highly involved in a
purchase and perceive significant differences among brands. Consumers may be
highly involved when the product is expensive, risky, purchased infrequently, and
highly self-expressive. Typically, the consumer has much to learn about the product
category. For example, a personal computer buyer   may not know what attributes to
consider. Many product features carry no real meaning: a "Pentium Pro chip," "super
VGA resolution," or "megs of RAM." This buyer will pass through a learning process,
first developing beliefs about the product, then attitudes, and then making a
thoughtful purchase choice. Marketers of high-involvement products must
understand the information-gathering and evaluation behaviour of high-involvement
consumers. They need to help buyers learn about product-class attributes and their
relative importance, and about what the company's brand offers on the important
attributes. Marketers need to differentiate their brand's features, perhaps by
describing the brand's benefits using print media with long copy. They must motivate
store salespeople and the buyer's acquaintances to influence the final brand choice.

2. Dissonance-Reducing Buying Behaviour

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Dissonance reducing buying behaviour occurs when consumers are highly involved
with an expensive, infrequent, or risky purchase, but see little difference among
brands. For example, consumers buying house furniture may face a high-involvement
decision because furniture is expensive and self-expressive. Yet buyers may consider
most furniture brands in a given price range to be the same. In this case, because
perceived brand differences are not large, buyers may shop around to learn what is
available, but buy relatively quickly. They may respond primarily to a good price or
to purchase convenience.

After the purchase, consumers might experience post purchase dissonance (after-sale
discomfort) when they notice certain disadvantages of the purchased carpet brand or
hear favorable things about brands not purchased. To counter such dissonance, the
marketer's after-sale communications should provide evidence and support to help
consumers feel good about their brand choices.

3. Habitual Buying Behaviour

Habitual buying behaviour occurs under conditions of low consumer involvement

and little significant brand difference. For example, take salt, tooth paste etc.
Consumers have little involvement in this product category—they simply go to the
store and reach for a brand. If they keep reaching for the same brand, it is out of habit
rather than strong brand loyalty. Consumers appear to have low involvement with
most low-cost, frequently purchased products.

In such cases, consumer behaviour does not pass through the usual belief-attitude-
behaviour sequence. Consumers do not search extensively for information about the
brands, evaluate brand characteristics, and make weighty decisions about which
brands to buy. Instead, they passively receive information as they watch television or
read magazines. Ad repetition creates brand familiarity rather than brand conviction.
Consumers do not form strong attitudes toward a brand; they select the brand
because it is familiar. Because they are not highly involved with the product,
consumers may not evaluate the choice even after purchase. Thus, the buying process
involves   brand beliefs formed by passive learning, followed by purchase behaviour,
which may or may not be followed by evaluation. Because buyers are not highly
committed to any brands, marketers of low-involvement products with few brand
differences often use price and sales promotions to stimulate product trial. In

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advertising for a low-involvement product, ad copy should stress only a few key
points. Visual symbols and imagery are important because they can be remembered
easily and associated with the brand. Ad campaigns should include high repetition of
short-duration messages. Television is usually more effective than print media
because it is a low-involvement medium suitable for passive learning. Advertising
planning should be based on classical conditioning theory, in which buyers learn to
identify a certain product by a symbol repeatedly attached to it.

Marketers can try to convert low-involvement products into higher-involvement

ones by linking them to some involving issue. Procter and Gamble does this when it
links Crest toothpaste to avoiding cavities. At best, these strategies can raise
consumer involvement from a low to a moderate level. However, they are not likely
to propel the consumer into highly involved buying behaviour.

4. Variety-Seeking Buying Behaviour

Consumers undertake variety seeking buying behaviour in situations characterized

by low consumer involvement but significant perceived brand differences. In such
cases, consumers often do a lot of brand switching. For example, when buying
cookies, a consumer may hold some beliefs, choose a cookie brand without much
evaluation, then evaluate that brand during consumption. But the next time, the
consumer might pick another brand out of boredom or simply to try something
different. We also do brand switching on fruit juices. Brand switching occurs for the
sake of variety rather than because of dissatisfaction.

In such product categories, the marketing strategy may differ for the market leader
and minor brands. The market leader will try to encourage habitual buying
behaviour by dominating shelf space, keeping shelves fully stocked, and running
frequent reminder advertising. Challenger firms will encourage variety seeking by
offering lower prices, special deals, coupons, free samples, and advertising that
presents reasons for trying something new.

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