UGANDA MATRYS UNIVERISTY
CONSUMER BEHAVIOR
BY
JOHN TUMWESIGYE
0772406097
johntumwesigye@yahoo.com
Definition of Consumer Behaviour
• Consumer behavior is the study of how individual
customers, groups or organizations select, buy, use,
and dispose ideas, goods, and services to satisfy their
needs and wants.
• It refers to the actions of the consumers in the
marketplace and the underlying motives for those
actions.
• Consumer behavior (CB) is the means and ways
purchase occurs from individuals and organizations in
attaining their needs by making decision amidst social
economic constraints.
Introduction
• CB influences the choice of target market and the
composition of the marketing mix so understanding
customers is a cornerstone of marketing
• The CB enables us to understand the differences
between the consumer buying process and the
organization buying process
Introduction Continued
• Appreciate the factors that influence decision making
eg environment, psychological and socio cultural
• Appreciate the implications of those processes and
influences for marketing strategies
• The consumer behavior (CB) enables us to understand
the decision making process that consumers go
through as they make a purchase
ABRAHAM MASLOW’S HIERARCHY OF NEEDS
THEORY : 1943
Summary: Why Marketers must know consumer behavior
Marketers expect that by understanding what causes the
consumers to buy particular goods and services or having the
knowledge of consumer behavior enables them to take appropriate
marketing decisions in respect of the following factors:
• Product design/model
• Pricing of the product
• Promotion of the product
• Packaging
• Positioning
• Place of distribution
• Planning
• Process upgrade
• Physical evidence improvement
Roles of different Personalities
• A role consists of activities people are expected to
perform according to the persons around them. Kotler
P; Principles of marketing , 6th Edition, pg 142
• Individuals and organizations have different roles and
concerns in the decision making process.
• The functional and non functional roles do interact to
form a buying centre or decision making unit (DMU)
• The roles of different personalities in decision making
must be identified and analyzed by Marketers in
consumer and B2B markets.
Roles of different Personalities in Consumer Behavior
Marketers have identified possible roles in the
buying/purchasing process. Namely;
• Initiator: The person who begins the process of
considering a purchase e.g. children in a home who
express a desire to taste a newly advertised Kellogg
cereals
• Influencer: The person who attempts to persuade others
in the group concerning the outcome of the decision e.g.
in purchasing a holiday for a the family ,key influencers
may the children in a family and probably both husband
and wife will do this role
• Deciders : The individuals with the power or financial
authority to make the ultimate choice regarding which
product to buy. e.g. a husband may decide which brand
of shaving gel he requires even though someone else may
make the purchase
Roles of different Personalities in Consumer
Behavior Continued
• Buyers: These are the people who make the purchase.
They conduct the transaction. They pay the bill. They are
influenced by several factors like socio cultural,
economical, Psychological, personality etc
• Users: The actual consumers or the users of the product.
e.g. children who eat the purchased Kellogg cereals
• The Gate keeper: A secretarial staff or receptionist can
allow or prevent a sales person from reaching a decision
maker in the organization: R & D staff withholding
information
• Reference: Frances B & Steven P, Principles of marketing,
pg 168-173
CHOICE CRITERIA
• Choice criteria are various attributes and
benefits a consumer uses when evaluating
products or services.
• They provide the grounds for the deciding to
purchase one brand or another.
• The choice criteria is not permanent. It differs
between individuals or organizations and it
changes from time to time.
Choice Criteria Continued
There are 4 major types of choice criteria
1.Technical criteria
Reliability
Durability
Performance
Style or looks
Comfort
Delivery
Convenience eg Apple products
Taste
Choice Criteria Continued
2. Economic Criteria
Price
Value for money
Running costs: eg Audi TT TDI higher fuel
economy hence lower running costs
Residual Value eg trade in value of a car
Life-cycle costs
Choice Criteria Continued
3. Social Criteria
Status eg purchase of BMW new model
Social belonging eg red attire for people
power
Convention: social norms, form of custom
stipulated and generally agreed standards
Fashion: It can be current or outdated.
Choice Criteria Continued
4. Personal Criteria: How a product or service relates to
the individual psychologically.
Self Image: Personal view of ourselves: cool, successful
Risk reduction: eg Risk averse can choose safe brands.
Ethics: ethical code of behavior guides the consumer:
The organic products are considered greener and
healthier food options. Responsibility for environmental
issues can be put in consideration as choice criteria.
Emotions: Feelings, pleasure, pride, fun, sadness, etc
NB: Global success is achieved when a product scores
well on a combination of choice criteria.
The Consumer Decision-Making
Process
• Behavioral scientists regard the consumer
decision-making process as a problem solving
or need-satisfaction process. Thus, a vehicle
may be bought in order to solve a problem –
transport challenges – which itself defines the
need – fast moving in locations. In order to
define which vehicle to buy, a consumer may
pass through five series of steps or stages or
choice criteria as illustrated in the model
below;
t
i
Decision Making
n Process Continued
o
f
Need identification/Problem
d
e ) awareness
c
Information gathering
i
s
Evaluation of alternative
i solutions (products)
o
Selection of an appropriate
n solution (product)
Post-purchase evaluation of decision
Stage 1: Need identification/Problem
awareness
• The buying process begins where the consumer
recognizes a problem or a requirement that
needs to be fulfilled. The requirements can be
generated either by internal stimuli or external
stimuli. 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.
Stage 2: Information gathering
• 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),
Internet( social media, web search engines,
Directories) and experiential sources (handling,
examining, using the product). The relative influence of
these information sources varies with the product and
the buyer.
Stage 3: Evaluation of alternative solutions
(products)
• 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, economics, or sales persons.
Stage 4: Selection of an appropriate solution
(product)
• 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 usual income, usual price,
and usual product benefits.
Stage 5: Post-purchase evaluation of decision
• 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.
Factors that influence consumer behavior
• The study of Consumer Behavior helps in
understanding how individuals make decisions to
spend their available resources like time, money, and
effort while purchasing goods and services.
Consumer buying behavior is influenced by certain
factors or determinants
• Personal factors e.g. gender ,age, race, income etc
• Psychological factors e.g. perception, motives, attitude
,personality etc
• PESCTLEGE factors
Illustration showing factors or influences of Consumer
buying behavior
• Marketing factors such as product design,
price, promotion, packaging, positioning and
distribution do influence consumer buying
behavior
• Consumer behavior is a complex and
multidimensional process that reflects the
totality of consumer decisions with respect to
acquisition, consumption, and disposal of
goods and services.
• Understanding buyer behavior has important
implications for salespeople and sales
management. Recognition that buyers
purchase products in order to overcome
problems and satisfy needs implies that an
effective sales approach will involve the
discovery of these needs on the part of the
salesperson. Only then can they sell from the
range of products marketed by the company
the offering that best meets these needs
Cont.
• When the decision-making unit is complex, as
in many organizational buying situations, the
salesperson must attempt to identify and
reach key members of the DMU in order to
persuade them of the product’s benefits. They
must also realize that different members may
use different criteria to evaluate the product
and thus may need to modify their sales
presentation accordingly.
Organization Buying Behavior
• Organizations must ensure customer satisfaction by
offering their needs and wants beyond customer
expectation.
• Organizations must provide the right product and
services, at the right time, in the right place and at the
right price
• Organizations have structures and the buying process
is different from consumer buying process thus the
development of marketing strategy must be different.
(B2B marketing)
Uncertainty, Risk and Relationships in
OBB
• Risk type Explanation
• Technical Will the parts, equipment or product/service
perform as expected?
• Financial Does this represent value for money, could we
have bought cheaper?
• Delivery Will delivery be on time, complete and in good
order? Will our production schedule be disrupted?
• Service Will the equipment be supported properly and within
agreed time parameters?
• Personal Am I comfortable dealing with this organization,
are my own social and ego needs threatened?
• Relationship To what extent is the long-term relationship with
this organization likely to be jeopardized by this decision?
• Professional How will this decision affect my professional
standing in the eyes of others and how might my career and
personal development be impacted?
Comparing Organizational and
Consumer Buyer Behavior
• Organizational and consumer buying is ‘the decision
making process by which formal organizations
establish the need for purchased products and services
and identify, evaluate and choose among alternative
brands and suppliers
• One of the important aspects of this definition is that
organizational and consumer buying behavior is a
process rather than a static, one-off event. There are a
number of stages, or phases, associated with product
and service procurement, each one often requiring a
key decision to be made
Cont.
• There is a natural inclination, when exploring
organizational buyer behavior, to refer to
consumer buyer behavior and to highlight the
differences. However, this only serves to
differentiate and fails to reveal areas of
overlap and similarity. The intention here is to
consider the main characteristics and evaluate
both the differences and the similarities that
exist between the two
A comparison of buying characteristics in
organizational and consumer markets
Particular areas Consumer buying Organizational buying
Number of buyers Many Few
Purchase initiation Self Others
Evaluative criteria Social, ego and level of Price, value and level of
utility utility
Information search Normally short Normally long
Range of suppliers used Small number of suppliers Can be extensive
considered
Importance of supplier Normally limited Can be critical
choice
Cont.
Particular areas Consumer buying Organizational buying
Size of orders Small Large
Frequency of orders High Low
Value of orders placed Low High
Complexity of decision Low to medium Medium
making
Range of information Limited Moderate to extensive
inputs
Strategic Significance/ Importance of
buyer behavior
• Whatever definition of marketing is selected,
consumer orientation is central. Implicit in a
marketing oriented company is the
assumption that the wish is to satisfy
customers. We now look at aspects of the
strategic marketing process and discuss
applications of buyer behavior at each stage,
starting with the business mission.
1.Business Mission
• Production and sales-oriented companies
usually have ‘company’ based missions rather
than ‘customer’-based missions. A customer-
based mission necessarily aligns the company
with the marketing concept and affirms the
importance of consumer behaviour to the
firm.
2.SWOT analysis
• Strengths and weaknesses that are internal to the
organization are assessed to ascertain its capability and
resources. Opportunities and threats are external to the
organization and are evaluated to determine the broad
environmental and competitive trends that have an
impact on it. Companies that can diagnose threats and
turn them into opportunities have an added advantage
in the marketplace. This includes trends in consumer
behavior e.g. a change in lifestyle may have implications
for the company; over recent years more people have
been concerned with healthy eating, so food producers
who monitored this trend and anticipated such changes
were in a better position than competitors
Cont.
• Such companies changed their product
offerings, e.g. Panamera removed additives
into their bread, or communicated existing
healthy attributes about their products to
consumers. Consumer behavior can also be
used in the strengths and weaknesses analysis
to discover attitudes and awareness about
their brands as well as those of competitors
3.Market opportunity analysis
• From an analysis of consumer behavior it can be seen
how existing products are perceived in comparison to
those of competitors. Market opportunity analysis also
shows whether or not there are any gaps in the market
that your company can meet profitably with new
products e.g. the shampoo brand ‘Empathy’ was
launched to cater for the specific needs of older female
consumers a segment that was previously ignored.
Suffice to say here that markets can be segmented into
homogeneous groupings of consumers in a number of
ways
Cont
• Therefore, consumer behavior itself is used as
a segmentation variable. When groupings of
consumers are identified, companies decide
which ones to target. Positioning strategies
then aim to take the product offering and
‘position’ it in the mind of consumers to
reflect consumer behavior of targeted
customers.
4.Design of marketing strategies
• Marketing strategies that companies decide to
implement should be consistent with the consumer
behavior associated with the product or service.
• First, the variables affecting purchase behavior must
be analyzed and understood. This allows for the
prediction of behavior using the most important
variables. Strategies based on controllable variables
i.e. marketing mix variables of product, price, place
and promotion, are designed and implemented which
should influence the desired outcome of making a
purchase
Cont.
a)Product
The study of consumer behavior should indicate the
types of product or service that will be successful.
This can be extended into detailed product attributes and
packaging decisions, including after-sales service. For
example, a car manufacturer, to be successful, should
look at consumer behavior to see:
i) the preferred types of cars for certain groups of
customers;
ii) what product attribute/features are required, e.g.
large boot, four doors, speed or fuel consumption;
iii) warranties required after the sale.
iv) control of the quality of the product or service being
supplied,
Cont.
b) Price
Research into the relationship between price and
consumer behavior is important to the marketer.
Consumers may not be aware of the prices of
certain goods they purchase. This is especially
true in fast-moving consumer goods (FMCG)
markets. Consumers may be sensitive to price
differentials between competing brands; in this
case the marketer will have to monitor
competitors’ pricing strategies and either
compete on price or try to add value to the
product in another way.
Cont.
• In marketing to organizational buyers it is
important not to make the mistake of believing
and acting on the notion that organizational
buyers buy only on price and will always select
the lowest priced supplier. In both consumer and
organizational markets it is overall value that is
most important.
• Organizational buyers recognize that the lowest
priced supplier does not necessarily equate with
the lowest cost solution, particularly where this
means lower quality
Cont.
c) Place
• These decisions concern channels of distribution from
the producer to the consumer. Different consumer
groups have preferences for different retail outlets for
certain products e.g. in ladies fashion some customers
prefer to shop in department stores or in independent
retail outlets, market stalls, mail order or chain stores.
Consumer behavior research can indicate how many
outlets there should be, and where they should be
located.
• The widespread adoption of JIT purchasing has meant
that in organizational markets, reliable delivery and
the design of distribution and logistics systems are
crucial.
Cont.
d) Promotion
Different consumer groups respond positively or
negatively to marketing communications.
Research into consumer behavior will indicate to
which promotional tools the target market will
respond favorably. This can be used for general
media planning e.g. when marketing a skin cream
to teenage girls, research may help in deciding to
conduct press advertising; e.g. a monthly teenage
magazine
Cont.
Promotion can also be used to try to change a poor
consumer image. Many companies have attempted to
change their images by positive promotional
campaigns.
• Many companies have a belief that the ‘rationality’
and ‘hardheadedness’ of organizational buyers has
meant that the promotional element of the mix is less
effective and important in forming attitudes of buyers.
However, organizational buyers are individuals and in
this context might be swayed by effective advertising
and imagery provided as part of the marketing mix.
Evidence suggests that advertising in organizational
markets can help to substantially reduce costs of
selling.
5. Control of marketing effort
• By observing and analyzing consumer
behavior we can evaluate the success of
marketing programs. Marketing strategies can
then be refined to fit customer needs more
closely
Conclusion
• The concept of fulfilling consumer needs is
central to successful marketing strategy. The
study of buyer behavior has become a specialist
area of marketing owing to its complexity and it
covers questions concerning who is in the
market, what they buy, when they buy, how they
buy and where. Marketing mix variables – price,
product, place and promotion and the extra 3Ps
of the mix for services – affect buyer behavior, so
the strategic marketer should be aware of the
impact of these controllable variables
