Consumer Markets and Buyer Behavior

Consumer Buying Behavior: The buying behavior of final consumers - individuals and households "who buy goods
and services for personal consumption.

Consumer Market: All the individuals and households who buy or acquire goods and services for personal
consumption.

MODEL OF CONSUMER BEHAVIOR:

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. Marketing stimuli consist of the four Ps: product, price,
place and promotion. Other stimuli include significant forces and events in the buyer's environment; economic,
technological, political and cultural. All these inputs stimuli enter the buyer's black box, where they are turned into a
set of buyer responses- the buyer’s attitudes and preference, brand engagements and relationships, 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 behavior. We look first at buyer characteristics as they affect buying behavior, and then
discuss the buyer decision process.

Characteristics Affecting Consumer Behavior Model:

Consumer purchases are influenced strongly by cultural (culture, subculture, and social class), social (family, groups,
and social roles), personal (age and life-cycle stage, occupation, economic situation, lifestyle, personality, and self-
concept) and psychological (motivation, perception, learning, and beliefs and attitudes) characteristics.
Cultural Factors
Cultural factors have the most significant influence on consumer behavior. Marketers need to understand the role
played by the buyer’s culture, subculture, and social class in shaping consumer behavior. The influence of cultural
factors can be stated as under:

Culture: Culture is the set of basic values, perceptions, wants, and behaviors learned by a member of society from
family and other important institutions.

Subculture: Each culture is composed of smaller subcultures. Subculture refers to a group of people with shared
value systems based on common life experiences and situations. Subcultures consist of nationalities, religions, racial
groups, and geographic regions.

Social Class: Every society has a social class structure. Social classes are society’s relatively permanent and ordered
divisions whose members share similar values, interests, and behaviors.

Social Factors
Various social factors influence consumer behavior. These factors are consumers, small groups, family, and social
roles and status and can be explained as under:

Group: Group refers to two or more people who interact to accomplish individual or mutual goals.

Family: The family is the most important consumer buying organization in society as members of a family can
strongly influence buyer behavior.

Social Roles and Status: An individual belongs to more than one group. The position a person holds in each group
can be defined in terms of both role and status.

Personal Factors
Personal characteristics have a significant influence on a buyer’s decisions. These characteristics are the buyer’s age
and life-cycle stage, occupation, economic situation, lifestyle, and personality and self-concept. The brief discussion
can be presented as under:

Age and Life-Cycle Stage: People buy different types of goods and services during different periods of their lives.
Demand for various goods and services are often age-related. The buying pattern is also influenced by the stage of
the family life cycle.

Occupation: A buyer’s occupation significantly influences decisions regarding what to buy. Marketers try to identify
the occupational groups that have an above-average interest in their products and services.

Economic situation: A buyer’s economic situation affects product choice. Marketers monitor trends in personal
income, savings, and interest rates.

Lifestyle: People coming from the same subculture, social class, and occupation may have quite different lifestyles.
Lifestyle is a person’s pattern of living, as expressed in his or her psychographics. The lifestyle concept can be used
by marketers to understand changing consumer values and influencing buying behavior.

Personality and Self-Concept: Every individual has a unique personality that influences his or her buying behavior.
Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses
to one’s environment.
Psychological Factors
Four major psychological factors have their influence on a person’s buying behavior. These factors are; motivation,
perception, learning, and beliefs and attitudes. These can be expressed as under:

Motivation: A person has many needs. Some of these needs are biological such as hunger and thirst, while others
are psychological, such as recognition, esteem, or belonging.

Perception: The processes by which people select, organize, and interpret information to form a meaningful picture
of the world.

Learning: Learning describes changes in an individual’s behavior arising from experience.

Beliefs and Attitudes: People acquire beliefs and attitudes through action and learning. Beliefs and attitudes
influence buying behavior. A belief is a descriptive thought which a person maintains about something. Beliefs may
be based on real knowledge, opinion, or faith and may or may not be associated with emotion. Attitude is a person’s
consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea.

Why is consumer behavior important?

Consumer behavior is important for businesses because it helps them to understand their target audience, identify
consumer needs and wants, and develop effective marketing strategies that can influence consumers’ decision-
making processes.

Types of Buying Decision Behavior

Complex Buying Behavior: Complex buying behavior occurs when a person buys an expensive and costly product.
They are highly involved in the purchase process and consumers’ research before committing to a high-value
investment. Imagine buying a house or a car; these are an example of a complex buying behavior.

Dissonance-Reducing Buying Behavior: Dissonance-reducing buying behavior happens when the consumer shows a
high level of involvement because the product is very pricy and expensive. For example, a consumer is in the market
for a collapsible table that can be easily transported for camping. In this situation, the consumer will likely make a
quick decision based on the available brands. The main factors that will influence the decision are the collapsible
table's features, intended use, and the consumer's budget.

Habitual Buying Behavior: Habitual buying behavior occurs under conditions of low consumer involvement and little
significant brand difference. Imagine grocery shopping: you go to the store and buy your preferred type of brand.
Your behavior is showing a consistent habit rather than a strong loyalty towards a specific brand.

Variety-Seeking Buying Behavior: Consumer buying behavior in situations characterized by low consumer
involvement, but significant perceived brand differences. For example, a consumer likes to buy a cookie and choose
a brand without putting much thought into it. Next time, the same consumer might choose a different brand out of a
wish for a different taste. Brand switching occurs often and without intention.
.

The Buyer Decision Process

Need Recognition: The first stage of the buyer decision process in which the consumer recognizes a problem or
need. The customer’s need results from two main influences: internal and external stimuli. Internal stimuli include
hunger and thirst, for instance and external stimuli include advertisement, campaign. In this stage, the marketer
should study and understand the consumers to find out what kinds of needs arise, what brought them about, and
how they led the consumer towards a particular product.

Information Search: In this stage, the consumer seeks more information. The consumer may have keen attention or
may go into active information search. The consumer can obtain information from any of the several sources. This
include personal sources (family, friends, neighbors, and acquaintances), industrial sources (advertising, sales
people, dealers, packaging), public sources (mass media, consumer-rating and organization), and experiential
sources (handling, examining, using the product). The relative influence of these information sources varies with the
product and the buyer.

Evaluation of Alternatives: In this stage, the consumer uses information to evaluate alternative brands from
different alternatives. How consumers go about evaluating purchase alternatives depends on the individual
consumer and the specific buying situation. In some cases, consumers use logical thinking, whereas in other cases,
consumers do little or no evaluating; instead they buy on aspiration and rely on intuition. Sometimes consumers
make buying decisions on their own; sometimes they depend on friends, relatives, consumer guides, or sales
persons.

Purchase Decision: In this stage, the consumer actually buys the product. Generally, a consumer will buy the most
favorite brand, but there can be two factors, i.e., purchase intentions and purchase decision. The first factor is the
attitude of others and the second is unforeseen situational factors. The consumer may form a purchase intention
based on factors such as expected income, expected price, and expected product benefits.

Post-Purchase Behavior: In this stage, the consumers take further steps after purchase based on their satisfaction
and dissatisfaction. The satisfaction and dissatisfaction depend on the relationship between consumer’s
expectations and the product’s performance. If a product is short of expectations, the consumer is disappointed. On
the other hand, if it meets their expectations, the consumer is satisfied. And if it exceeds their expectations, the
consumer is delighted. Consumer satisfaction is important because the company’s sales come from two basic
groups, i.e., new customers and retained customers. It usually costs more to attract new customers than to retain
existing customers and the best way to retain them is to get them satisfied with the product.
The Buyer Decision Process for New Products
New product: A good, service or idea that is perceived by some potential customers as new.

Adoption process: The mental process through -which an individual passes from first hearing about an innovation to
final adoption.

Adoption: The decision by an individual to become a regular user tit the product.

Buyers go through five stages in this process of adapting for a new product:

 Awareness: The customer becomes aware of the new products, but lacks in sufficient information about it.

 Interest: The consumer seeks information about a new product.

 Evaluation: The customers consider whether trying the new product makes sense.

 Trial: The customer tries a new product on a small amount to improve his or her estimate of its value.

 Adaption: The customer decides to make regular or full use of the new product.

This model suggests that the new-product marketers must think about how to help consumers move through these
stages

The Influence of Product Characteristics on Adoption Rate:

The characteristics of a new product affect its adoption rate. While some new products catch on almost immediately
or overnight, others take a long time to gain acceptance. The five product characteristics are significant in influencing
an innovation’s adoption rates are:

 Relative Advantages: Is the degree to which an innovation appears superior to the existing products or
services. The greater the perceived relative advantage in picture, quality and ease of operation the sooner
the adoption.
 Compatibility: Is the degree to which an innovation fits the values and experiences of potential consumers.
 Complexity: Is the degree to which an innovation is difficult to understand or use.
 Divisibility: Is the degree to which an innovation may be tried on a limited basis. Deer innovations have a slow
adoption rate.
 Communication: Is the degree to which the results of using an innovation may be observed or experienced to
others. An innovation that leads itself to demonstration and description will be adopted faster by the
consumers.

Other characteristics are like initial and on-going cases, risks and uncertainty and social approval. A new
product marketer must research on all the factors when developing the new product, idea or service and its
marketing program.

The diffusion process – the spreading of an innovation’s acceptance and use through a population. Diffusion is the
process by which the acceptance of an innovation (a new product, a new service, new idea or new practice) is spread
by communication (mass media, salespeople, or informal conversations) to members of a social system (a target
market) over a period of time.

Diffusion is a macro process concerned with the spread of a new product an innovation from its source to the
consuming public.

Adoption is a micro process that focuses on the stages through which an individual consumer passes when deciding
to accept or reject a new product.