INTODUCTION TO CONSUMER

BEHAVIOR
Chapter 1

Vincent Dave A. Caraballe

LEARNING OBJECTIVES
1. Define consumer behavior and explain its scope

2. Recognize the interdisciplinary nature of consumer behavior

3. Analyze factors influencing consumer decisions

4. Evaluate the importance of studying consumer behavior

5. Apply consumer behavior concepts to real-world scenarios

 Where to begin?

"Understanding the customer is the

cornerstone of building meaningful
relationships and driving success in any
business."

– Anonymous
WHAT IS CONSUMER BEHAVIOR?
Consumer behavior is defined as the study of how individuals, groups, or organizations
select, purchase, use, or dispose of goods, services, ideas, or experiences to satisfy
their needs and desires. This field examines both the conscious and subconscious
processes involved in these decisions.

For example:
Individual Behavior: A student deciding which smartphone to buy, weighing the
features, price, and brand reputation.
Group Influence: A family choosing a vacation destination together, where each
member’s preferences contribute to the final decision.
Organizational Behavior: A company selecting a supplier based on cost, reliability,
and ethical practices.
FACTORS
INFLUENCING
CONSUMER
BEHAVIOR
1. Psychological Factors
These are internal influences that shape how consumers perceive and respond to
products or services.
Subcategories: Motivation, perception, learning, beliefs, and attitudes.
Example:
A person motivated by the need for safety may choose a car brand with a
reputation for excellent safety features (e.g., Volvo).
If a consumer perceives a brand as luxurious and high-quality, like Apple, they
may prioritize buying its products over competitors.
2. Social Factors
These factors relate to the consumer's interactions with others and their social
environment, including family, friends, and reference groups.
Subcategories: Family, roles and status, reference groups, and social networks.
Example:
A teenager might purchase trendy sneakers like Nike Air Jordans because
their friends or peer group consider them stylish.
Family influence: Parents often shape grocery shopping choices, such as
selecting healthier food options for the household.
3. Cultural Factors
Culture significantly impacts consumer preferences, values, and buying habits. This
includes traditions, subcultures, and social norms.
Subcategories: Culture, subculture, and social class.
Example:
In the Philippines, cultural traditions like fiestas and Christmas celebrations
encourage the purchase of food, decorations, and gifts.
A subculture, such as K-pop fans, may influence the purchase of
merchandise, albums, or concert tickets related to their favorite idols.
4. Personal Factors
These are individual characteristics specific to the consumer, such as age, lifestyle,
occupation, personality, and life stage.
Subcategories: Age, occupation, income, lifestyle, personality, and self-concept.
Example:
A young professional in their 20s might prioritize buying trendy, fast-fashion
clothing brands like Zara, while a retiree may prefer durable, comfortable
apparel.
Occupation influences choices: A corporate employee might invest in formal
attire, while a graphic designer may lean toward casual and creative fashion.
5. Economic Factors
These include the consumer's financial situation and external economic conditions
that affect purchasing power.
Subcategories: Income, price sensitivity, and overall economic conditions.
Example:
A middle-income household might opt for affordable yet reliable appliance
brands like Hanabishi, rather than premium brands.
During an economic downturn, consumers may shift from luxury goods to
essentials, such as buying more generic products or availing promotions.
HOW CONSUMER BEHAVIOR AFFECTS
PURCHASING DECISIONS?
CONSUMER DECISION MAKING PROCESS
 CONSUMER DECISION MAKING PROCESS
1. Need Recognition
This is the first stage, where the consumer identifies a need or problem that requires a solution. The need can
be triggered by internal stimuli (hunger, thirst, etc.) or external stimuli (advertisements, social interactions).
Simple Decision Example: A person realizes they are out of toothpaste and decides to buy more.
Complex Decision Example: A family notices their old car no longer meets their needs, prompting them to
consider purchasing a new one.

2. Information Search
After recognizing the need, consumers gather information about potential solutions. This can involve an
internal search (recalling past experiences) or an external search (seeking information from sources like
advertisements, reviews, or recommendations).
Simple Decision Example: For toothpaste, a consumer might rely on memory or look at store promotions.
Complex Decision Example: When buying a car, the family might visit car dealerships, read reviews
online, compare features, and seek advice from friends or experts.
 CONSUMER DECISION MAKING PROCESS

3. Evaluation of Alternatives
In this step, consumers evaluate the options they’ve identified. This involves comparing the features, benefits,
and costs of various alternatives to select the one that best meets their needs.
Simple Decision Example: Comparing different brands of toothpaste based on price, flavor, or packaging.
Complex Decision Example: Evaluating different car models based on fuel efficiency, safety features,
price, and brand reputation.

4. Selection
The consumer narrows down their options and selects the most suitable product or service. This is the
moment they make up their mind about which option to go for.
Simple Decision Example: Choosing a trusted brand of toothpaste from the store shelf.
Complex Decision Example: Deciding on a specific car brand and model after careful deliberation.
 CONSUMER DECISION MAKING PROCESS
5. Purchase Decision
At this stage, the consumer acts on their decision and completes the purchase. However, external factors like
availability, discounts, or peer pressure can still influence this step.
Simple Decision Example: Buying the toothpaste immediately after making a choice.
Complex Decision Example: Finalizing the car purchase at the dealership, possibly after negotiating the
price or payment terms.

6. Post-Purchase Behavior
After the purchase, the consumer evaluates their experience with the product or service. This step
determines satisfaction, which influences repeat purchases, brand loyalty, or sharing of feedback.
Simple Decision Example: Feeling satisfied with the toothpaste and deciding to buy the same brand next
time.
Complex Decision Example: If the new car meets the family’s expectations, they may recommend it to
others or leave a positive review online. If it doesn’t, they may experience regret or dissatisfaction.
 CONSUMER DECISION MAKING PROCESS
7. Disposal Options
This final step focuses on how consumers dispose of the product after its use. It has become increasingly
important in today’s eco-conscious environment.
Simple Decision Example: Recycling the toothpaste tube or disposing of it in the trash.
Complex Decision Example: Selling or trading in the old car for parts, donating it to charity, or recycling it
responsibly.

Simple vs. Complex Decision-Making

Simple Decision-Making: Routine, low-cost, and low-involvement purchases that require minimal effort
and thought (e.g., buying groceries or toiletries).
Complex Decision-Making: High-cost, high-involvement purchases that require extensive research and
evaluation (e.g., buying a house, car, or luxury item).
 IMPORTANCE OF STUDYING CONSUMER
BEHAVIOR
Studying consumer behavior is crucial because it enables businesses, marketers,
and policymakers to understand how individuals make purchasing decisions, what
influences these choices, and how to meet their needs effectively. By analyzing
consumer behavior, businesses can design products that align with customer
preferences, craft targeted marketing campaigns, and build lasting relationships
with their audience. It helps predict market trends, adapt to cultural and
technological changes, and foster customer loyalty by delivering value.
Furthermore, understanding consumer behavior benefits policymakers in
addressing societal needs and empowers consumers to make informed decisions.
Ultimately, it bridges the gap between what consumers want and what businesses
offer, driving success and innovation.
 UNDERSTANDING CONSUMER NEEDS AND
PREFRENCES
Understanding consumer needs and preferences is the foundation of successful marketing and
product development. Consumer needs refer to the essential requirements or problems individuals
seek to fulfill through products or services, while preferences indicate their specific choices or
inclinations based on personal tastes, values, and experiences.

To understand these, businesses must:

1. Conduct Market Research: Surveys, focus groups, and data analytics help identify what
consumers want and expect.
2. Segment the Market: Group consumers based on demographics, behavior, and psychographics
to tailor offerings.
3. Observe Buying Behavior: Analyzing purchasing patterns can reveal trends and shifts in
preferences.
KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR

THE CONSUMER DECISION-MAKING MODEL

MASLOW’S HIERARCHY OF NEEDS

THEORY PLANNED BEHAVIOR

DIFFUSION OF INNOVATION THEORY

 KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR
1. Input Stage
The input stage focuses on external stimuli that influence the consumer’s recognition of a need.
These inputs come from marketing efforts (advertisements, promotions, product packaging) and
sociocultural influences (family, peers, cultural norms, and social trends).
THE CONSUMER Key Components:

DECISION- Marketing Stimuli: Price, promotion, place, product features.

Sociocultural Influences: Word-of-mouth, social norms, and reference groups.
MAKING MODEL Example:
A company advertises a smartphone with advanced camera features. A consumer sees the ad
on social media and recognizes the need for a phone upgrade after noticing that their current
phone doesn’t meet their photography expectations.
 KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR
2. Process Stage
The process stage focuses on the consumer's internal decision-making process. It includes need
recognition, information search, evaluation of alternatives, and purchase decision. This stage is
heavily influenced by psychological factors, such as perception, motivation, attitudes, and beliefs.
Key Steps in the Process Stage:
THE CONSUMER a. Need Recognition: The consumer identifies a problem or desire (e.g., needing a new phone).
b. Information Search: The consumer researches solutions, such as reading online reviews,
DECISION- asking friends, or visiting stores.
c. Evaluation of Alternatives: The consumer compares options based on features, price, brand
MAKING MODEL reputation, and personal preferences.
d. Purchase Decision: The consumer selects the best option that meets their needs and aligns
with their budget.
Example:
After seeing the smartphone ad, the consumer searches online for reviews, compares it with
similar models, and evaluates factors like price, brand reliability, and camera quality. They decide
to buy the advertised phone because it meets their expectations and fits their budget.
 KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR
3. Output Stage
The output stage involves post-purchase behavior and disposal decisions. It examines the
consumer's satisfaction or dissatisfaction with the product, which influences whether they will
repurchase, recommend the product, or share their experience.

THE CONSUMER Key Components:

Post-Purchase Behavior: Consumer evaluates if the product met expectations (satisfaction

DECISION- vs. cognitive dissonance).

Disposal Decision: How the consumer disposes of the product after use (reuse, recycle, sell,
MAKING MODEL or discard).
Example:
The consumer uses the new phone and finds that the camera quality exceeds their expectations,
leading to satisfaction. They recommend the product to friends and leave a positive review
online. Once the phone becomes outdated, they may trade it in for a newer model or recycle it.
 KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR

MASLOW’S
HIERARCHY OF
NEEDS
 KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR

THEORY
PLANNED
BEHAVIOR
 KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR
Developed by Everett Rogers, the Diffusion of Innovations
Theory explains how new products, services, or ideas spread
within a population or market over time. This theory
DIFFUSION OF
categorizes individuals into distinct adopter groups based on
INNOVATIONS how quickly they adopt innovations and identifies factors that
THEORY influence the rate of adoption. Understanding this theory
helps businesses, policymakers, and organizations strategize
to promote and accelerate innovation adoption.
 KEY THEORIES AND MODELS IN CONSUMER
BEHAVIOR
Key Components of the Theory
1. Adopter Categories
Innovators (2.5%): Risk-takers and the first to try new ideas or technologies. They often have the financial means and
willingness to experiment.
Example: Tech enthusiasts who preorder new gadgets like the latest iPhone before official reviews are out.
Early Adopters (13.5%): Influential individuals who adopt innovations after seeing their potential. They play a key role
in spreading awareness to the broader population.
Example: Professionals who buy electric cars like Tesla soon after launch and recommend them to peers.
Early Majority (34%): Pragmatic individuals who adopt innovations once they are proven and have positive reviews.
Example: A family purchasing a smart home device like Google Nest after seeing its benefits from friends.
Late Majority (34%): Skeptical individuals who adopt only when the innovation becomes mainstream or necessary.
Example: People switching to smartphones after older mobile phones became obsolete.
Laggards (16%): Conservative individuals resistant to change who adopt only when there are no other options.
Example: People adopting online banking long after it has become standard.
END