Consumer Behavior

Definition:

Consumer behavior is a behavior that consumer displays in searching for using,

purchasing, evaluating and disposing of products and services that they expect will fulfill
their needs.

 What is Consumer Behavior?

The behavior and attitude of consumer toward the specific product or services that how he
perceives the product or service or how should he buy it etc.

The following are the things that help in evaluating the consumer behavior toward the
specific brand, firm, product or services.

1. Time:
That within how much time the product can be purchased and how long will the
product work? So the time plays an important role in measuring the consumer
behavior.
2. Money:
How much will be the cost of specific product or service, what will be the price
of its alternative. Considering price is an important tool while calculating the
consumer behavior.
3. Effort:
Consider that how much effort will be required to purchased the product or
service, and also effort needed to purchases its alternative. So it is also a key point in
evaluating the consumer behavior to the brand, product or services.
 Types of Consumer:

The following are the two types of the consumers.

1. Personal consumer:
These are the types of consumers that purchases the products for
the sake of its own use. These types of consumers are also known as the ultimate
consumers or the final consumers.

2. Business/Organizational Consumer: These are the types of consumers that purchase

the products for the further manufacturing, production purposes.

 Relationship between the consumer behavior and the marketing concept:

 Marketing concepts:
1: Production Concept: (1850-1930)
 The concept that the consumer will favor that
firm whose production is large in volume that the others.
2: Product Concept: (1930-1950)
The concept that the consumer will prefer that firm's brands that
have the most complex product line in the market. Means producing different types of
product.
3: Selling Concept: (1950-1960)
The idea that the consumer will not purchase the product until it
gets a large volume of sale in the market.
4: Marketing Concept: (after 1950)

The marketing concept is the philosophy that firms should

analyze the needs of their customers and then make decisions to satisfy those needs,
better than the competition.

5: Societal Marketing Concept:

The societal marketing is concept that holds that a

company should make marketing decisions by considering consumers' wants, the
company's requirements, and society's long-term interests.

The relationship between the marketing concept and consumer behavior is that marketers
have to understand the markets before marketing strategies can be developed. The consumer
behavior is linked with the societal marketing concept.

 Segmentation, targeting and Positioning:

 Segmentation:

Market segmentation is a marketing strategy which involves dividing a

broad target market into subsets of consumers, businesses, or countries that have, or are
perceived to have, common needs, interests, and priorities, and then designing and
implementing strategies to target them.

 Targeting:
Targeting marketing is a marketing strategy that involves choosing a
specific segment of market on which the marketing efforts will be focused.
OR
The process in which the firm defines that which group of customers should be served
in a broader market.
 Positioning:
 Positioning is the marketing strategy that creates the desirable image of
your product and services in the mind of the targeted consumers. Pricing strategy is created
through the use of promotion, price, place and product.

These all marketing strategies are highly related with the consumer behavior. Without
analyzing the consumer behavior you cannot design these strategies.

 Marketing Mix:

A planned mix of the controllable elements of

a product's marketing plan commonly termed as 4Ps product, price, place, and promotion.

 Price:
Pricing decision should take into account profit margins and probable pricing
response of competitors. Pricing include not only the list price, but also discounts,
financing, and other options such as leasing.
 Product:
The product is a physical product or service offered to the customers. In the
case of the physical products, it also refers to any services or conveniences that are the
part of offerings.
Product decisions include aspects such as function appearance, packaging, service,
warranty etc.
 Place:
Places decisions are those associated with the channels of distribution that serve
as the mean for getting the product to the targeted consumers.
Distribution decisions include the market coverage, logistics, level of services etc.

 Promotion:

Promotion decisions are those related to communicating and selling to

potential consumers. Promotion decisions involve advertising, public relations, media types,
etc.

 Customer Value:
 Customer Value
Fulfill
Cusomer Fulfilling
Customer
Satisfaction Customer
needs and
Desires
wants

Customer value is the difference between what the customer gets from the product and what
he/she is willing to give.

It is the difference between cost and benefit.

 Consumer Research:

It is an investigation into driving forces behind the customer

behavior, consumer psychology and purchasing patterns.

Types Of Consumer Research:

1) Quantitative Research:

Quantitative research is the systematic empirical investigation

of observable phenomena via statistical, mathematical or computational techniques.

2) Qualitative Research:
 Qualitative Research is primarily exploratory research. It is
used to gain an understanding of underlying reasons, opinions, and motivations. It provides
insights into the problem or helps to develop ideas or hypotheses for potential
quantitative research.

 Quantitative Consumer Research Methods:

a) Survey Method:

Survey methodology studies the sampling of individual units

from a population and the associated survey data collection techniques, such as questionnaire
construction and methods.

Brief interviews and discussions with individuals about a specific topic are called survey.

b) Observational Method:

The observation method involves human or mechanical

observation of what people actually do or what events take place during a buying or
consumption situation.

c) Experimental Method:

Is a systematic and scientific approach to research in

which the researcher manipulates one or more variables, and controls and measures any
change in other variables.

 Types of Questionnaires.
a) Disguised Questionnaire:

Disguised questionnaire s are those questionnairs in which the

purpose is not explained. It have quantitative data basis.

b) Undisguised Questionnaire:
 These are those questionnaires in which the purposes are
explained on the basis of quantitative data.

c) Open ended Questionnaires:

These are the types of questionnaires in which you provide

some space to the respondent.

d) Close minded Questionnaires:

These are the types of questionnaires in which you do

not provide any space to the respondents.

 Language of the Questionnaire:

 We should not ask leading question. While the leading question is a question
suggested in a question.
 You should not ask that are specific to the specific category.
 We should ask only those questions that the respondents are able to answer.
 We should ask those question that the respondent are will to answer.
 We should avoid to ask for two points in one question.

Research Design:

The research design refers to the overall strategy that you choose to
.integrate the different components of the study in a coherent and logical way

1) Instrument:
This terms refer that what instrument u will use while designing and
execution of the research. What instrument will be used for the performance of the
research?
2) Sampling Plan:
A sampling plan is a detailed outline of which measurements
will be taken at what times, on which material, in what manner, and by whom.
Sampling plan should be designed in such a way that the resulting data from the
sample should represent the overall population.

3) Data collection Method:

There are different data collection methods for different
types of data. If the data is quantitative so then the data collection method should
include the experiment, observing and recording, survey methods etc. while if the data
 is qualitative so then the methods for data collection might include face to face
interviews, telephone interviews, document review etc.
 Different types of data collection scales:
1) Attitudinal scale:
An attitudinal scale is a device consisting of symbols that have a
value assigned to them by the researcher. Attitudinal scales are very popular
measureing instruments with researchers. The best known type of a scale is Likert
scale
2) Satisfaction Scale:
Satisfaction measures is the type in which we normally identify
the scale from very satisfied (1) to very satisfied (5).
3) Importance scale:

In importance scale, respondents are asked to show their

perceptions on the scale extremely important (1) to not at all important (5)

4) Semantic differential Scale:

Use to assess respondents’ attitudes toward a

particular brand, advertisement, object or individual. . For example, reliability - no
reliability; good - bad; important – unimportant; useful – unuseful etc.

5) Behavioral intentional scale:

This scale measures that what is the intention of

an individual towards the product and what the consumer thinks about the product.

 Customer Satisfaction:

Customer satisfaction is a measure of how products and

services supplied by a company meet or surpass customer expectation. It has two
main factors:

(a). Customer expectation.

(b). Delivered value

 If customer expectation is less than delivered value, customer is highly satisfied. If
customer expectation meets delivered value, then customer is satisfied. And if
customer expectation exceeds delivered value, then customer is dissatisfied. The task
of marketer is to meet customer expectation so that customer can be satisfied.

 How to measure customer expectation?

Customer expectation can be measured through following methods:

a.) Survey method (interviews, field studies etc.).

b.) Complaint center (put a small box and ask customer to put their comments in
the box, comment cards etc.).

 How to measure Delivered value?

Delivered value can be measured through following methods:

a.) Survey method (interviews, field studies etc.).

b.) Ghost shopping (one of the company member visit service center as a
customer and observe the level of service).

 Segmentation:

The division of product into the subset of customers who have homogenous
needs and wants is called segmentation.

Types of Segmentation:

1) Geographic Sengmentation:

People with similar demographic characteristics normally

live nearby. For example; in urban areas, towns, states, regions and countries etc.
People living within the same geographical boundaries often have similar buying
patterns

2) Demographic Segmentation:
 Demographic segmentation is based on various
demographic factors such as age, gender, marital status, family size, income,
occupation, education, nationality and social class etc.

3) Psychographic Segmentation:

Psychographic segmentation is dividing the

markets on the bases of interests, activities, opinions, behavioral patterns, habits,
lifestyle, and hobbies etc.

4) Socio-Cultural Segmentation:

Sociocultural segmentation combines social (related to

groups) and cultural variables (related to the shared values, beliefs, attitudes of people) that
provide further basis for segmentation.

5) User Framework Segmentation:

There are three types of users; Heavy users,

Medium users and Light users. Research indicates that normally 20% of the
population of the segment buys 80% products of a company. Heavy users will buy
more products than the light users.

6) Benefit Segmentation:

Benefit segmentation is dividing your market based upon

the perceived value, benefit, or advantage consumers perceive that they receive from a
.product or service

7) Hybrid Segmentation:
Hybrid segmentation is the kind of segmentation where instead
of sticking to one particular segmentation style, marketers combine one or two
segmentation variables and arrive at segmentation. This style is referred to as Hybrid
segmentation.
  Two frameworks:
a) Claves Framework:

b) Valves Framwork:

VALVES framework discussed six types of persons who have

different characteristics.

1) Innovator:
The top ones are innovators or self-actualizers who have all the
resources. So there basic motivation can come from above three points. Therefore
these customers are variety seeking and always prefer new products.
2) Survivors:
On the lowest side, survivors, these people have fewer resources. They are
normally motivated by security and fulfilling of basic needs. They normally try to buy
on discounts and try to find cheap packages
3) Believers:
Another important type of groups is believers. These types of people avoid
changes, they do not indulge in buying new things and these are normally brand loyal.
4) Achievers:
Achievers are more goals oriented. They centered themselves around the
family behavior. They want products which are premium in nature. They have
abundant of resources.

5) Strivers:
 Strivers are the ones who enjoy themselves, they are trendy, but due to less
resources they buy low price products but they are trying to buy the products similar to
the achievers.

6) Experiencers:
These types of people appreciate the eventual things. They experience
new things. They spend lot of money on entertainments and enjoyments.
7) Makers:
These types of people are value oriented and practical in their life. They
also want to express themselves but on practicality. They prefer value than luxury.
 Criteria for selecting target market: 
:Identified

We should be very clear to identify the particular characteristics of the segment

.which will be used for the purpose of marketing, positioning and strategy

:Sufficient

The target that you will choose should be sufficient in terms of number of
people. You should be able to identify a large number of customers and enough demand so
.that it is profitable for the company

Reachable:

Segment should be reachable. For example, there is a demand in Gilgit but if

you can not approach them then it means your segment is not profitable.

Stable:

Segment should be stable and should stay for a number of periods longer duration.
This type of segment will be more rationale to target.

 Implementation of the Segmentation Strategy:

There are three types of strategies:

1. Concentrated strategy:
This suggests that we select design only one product to for
market. We target only for this product. Company which has less resources normally
focus on this type of strategy.
2. Differentiation Strategy:
 In this type of strategy, company normally target more
than one segment at the same time. We must understand that company should
consider two things; External environment and internal environment. If company has
enough resources then they can easily go for differentiation strategy. For example,
Procter & Gamble has number of products in its portfolio.
3. Counter Segmentation Strategy:
Combine the segments. There is a possibility
that over a period of time, different things normally vanish from the segments and
segments become similar. Hence, we combine the segment because each segment is
so small that is difficult to target each individual. For example universities. In the
initial stages, the separate the courses but in senior classes they combine the classes.
 Resource Based View:
Researchers have suggested that most of the strategies can be
developed into two frameworks:
(A). One frame is to look at external market and then develop your own strategy.
(B). Second frame is to see your internal strengths and then devise strategies.
 Motivation:

Internal and external factors that stimulate desire and energy in people
to be continually interested and committed to a job, role or subject, or to make an effort to
attain a goal.

Model of Motivation:
The important variables of the above model are as follows;

Cognitive Processes:

It is recognition of something. E.g. if we need toothpaste, then

cognition will tell us the available number of brands.

Learning:

It is something we want to know about that. These two things lead us to the
behavior. Behavior is choice that we make in terms of buying or using the kind of product.

Needs and Wants:

Most marketers want to use needs and wants simultaneously. We should

recognize that needs exists in ourselves, however, needs can be converted into wants and
marketers create this.

 Goals and Its types:

Goal:

The object of a person's ambition or effort; an aim or desired result is called goal.
Goals are the end of your need or want satisfying behavior.

Types of Goals:

a) Generic Goals:

When you want to satisfy like hunger and no more hunger. For
example you have done MBA that is generic goals

b) Product specific goals:

For example, you want to join Virtual University after

getting your MBA degree. Hence, your goal is product specific.

c) Promotional Goals:

For example, we want promotion

d) Prevention Goals:

For example, we avoid using motorcycle because this is not a

secure conveyance considered a safe vehicle for travelling.

 Maslow’s theory of Needs:

Psychological Needs:
 It is the basic requirement to live.

Safety Needs:

When first need is satisfied, then people start looking for safety and
protection.

Social Needs:

People tend to come together to satisfy….what??? At this stage, languages

started and people started communication and building relationships.

Self Esteem:

Here, people started feeling that they are better than others so they started
dividing into tribes. People tend to become chiefs of the tribes.

Self-actualization:

People want to do something because they have strong internal drive to

achieve something. It is the highest level of need which motivates people to act for their own
personal and internal motives.

 Other than this, there are so many needs which have been researched.

For example:

- Need for power.

- Need for affiliation.

- Need for achievement.

All these needs can still be directly related to Maslow’s Hierarchy. For example;

Need for power suggests a desire of an individual to control his environment. It relates to the
Maslow’s need of ego or self-esteem.

Need of affiliation where you want to directly associate with people. When we compare it to
the Maslow’s Hierarchy, it relates directly to the social need.

Need for achievement people who possess this need are normally more into their self and
this need directly relate to the self-actualization as well as self-esteem.
Example:

Some people want a specific amount of loan for different purposes:

1st person: For the education of his children. ( need of Affiliation).

2nd person: For purchasing the cloths. (Need of affiliation).

3rd person: For wedding. (Need of power).

4th person: To open Trust. (Need of Achievement).

Let us replace two learning and cognitive processes in motivation model which are very
broad in scope with three concepts which are specific:

1. Ability.

2. Opportunity.

3. Risk

A) Ability:

Company should have an ability to provide the products according to the needs of
the customers.

B) Opportunity:

If people don’t have an opportunity to buy a problem then it will be a

problem for the customer. E.g. if you want to buy a luxury car and that is not
permitted by the Government then you or the marketer will miss this opportunity.

C) Risk factors which impact motivation. There are six risk factors:

a. Functional risk.

b. Physical risk.

c. Financial risk.

d. Social risk.

e. Psychological risk.
f. Time risk.

a. Functional risk:

This risk is related to the characteristics of the product.

b. Financial Risk:

Suppose I pay price for the product. There is a risk that if after six
months new model of the product is launched, then the value of the product that I have will
be lowered.

c. Physical risk:

The risk associated with me or the people around me. For example,
people say that extensive use of cell phone cause brain tumor. If it is true, then it will be a
physical risk. Similarly, cigarette.

d. Social risk:

More conscious about the social behaviors. For example, will people
appreciated me using this product or will laugh at that.

e. Psychological risk:

It is the internal fear that I have about the failure of product and
service. Even though there is a guarantee but still I am worried.

f. Time Risk:

It relates to the time I have invested in searching a product. Risk is there in

terms of time consumption.