CONSUMER

BEHAVIOUR
“The buying behavior of final
consumers – individuals and
households who buy goods
and services for personal
consumption” Philip Kotler.
UNIT-1
The most important
thing is to forecast
where customers
are moving , and be
in front of them.
-Philip kottler
CONSUMER BEHAVIOUR
 Consumer Behavior is defined as the behavior that consumer
display in searching for purchasing, using, evaluating and
disposing of products and services that they expect will satisfy
their needs.
-Schiffman
 The decision process and physical activity individual engage in
when evaluating, acquiring, using or disposing of goods and
services.
-Loudon & Della Bitta
 Consumer behavior is the process whereby individual decides,
when, what, where, how and from where to purchase goods and
services.
-James F Engel
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 Consumer behavior can be defined as the study of psychological,
physical and social actions when individuals buy, use and dispose
of products, services, ideas, and practices. In other words,
consumer behavior is the study of how consumers will make
their buying decision and what those factors which support or
influence these decisions.
 According to marketers, by understanding the compelling reason
for which a consumer buys a particular product or service over the
other, it becomes easier to identify which product is in demand
and which is obsolete so that marketing strategies can be designed
accordingly.
 “The buying behavior of final consumers –
individuals and households who buy goods
and services for personal consumption”
Philip Kotler.
MEANING OF CONSUMER BEHAVIOUR
 Consumer behavior is the behavioral patterns, decision processes, and
actions that a consumer follows while making a purchase decision for a
product or service for self-consumption.
 Understanding consumer buying behavior is a psychological study of the
series of customers’ behavioral patterns that influence their decision-making
before purchasing any products.
 Being aware of consumers’ behavior is one of the most crucial factors in
effective marketing, advertising, or branding campaign. It helps businesses
in running a more personalized campaign to convert the target audience to
buy products or services.
 Consumer behaviour simply means how consumers behave in the market. It
defines the way in which consumers purchase products & services for
satisfying their wants. It basically consists of likes & dislikes of customers
which influence his decision while purchasing products.
 It is a concept which consists of many stages starting from arising of a need
till purchase of a product for end-use. Different consumers respond
differently to the market. It is an important concept for every business to
understand its customers. This helps in better fulfilling of demands of the
customers.
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 Consumer behaviour encompasses several key terms that help
clarify its scope:
 Consumer: According to the International Dictionary of
Management, a consumer is the one who purchases goods and
services for immediate use or consumption.
 Buyer: The buyer is the one who purchases goods either to resell
for use in production or for someone else’s use.
 Customer: Customers are individuals who purchase goods for
their use or the use of others, or they may be regular customers of
a particular product or shop.
 Institutional Buyer: These buyers can be government institutions
or private organizations....
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 The study of Consumer Behavior includes:
 How a consumer feel about alternate brands, products, or services
 The parameters that help consumers to differentiate several brands
 Behaviors during research and shopping and what they want
 How a consumer is inspired by the media and culture of the
organization
 Marketing strategies for improving the influence of brands on the
consumers
EXAMPLE OF CONSUMER BEHAVIOUR
 An example of consumer behavior would be when someone
goes to the grocery store and decides what types of food they
want. The person is making decisions based on their personal
preferences, considering factors such as cost, convenience,
nutritional value, and taste. This behavior then influences how
much time they spend in the store, which items they purchase, and
even if they return later for more items.
 Understanding the psychological factors, as well as social factors
of a marketing consumer, helps marketers better understand the
elements that influence customers buying decisions.
 People think several times before purchasing anything from a
brand or company. Keeping track of customers’ decision-making
processes and decoding them for boosting revenue is a part of the
study of Consumer Behavior. So, it is mainly a study of
behavioral sciences that concerns each customer’s psychology,
behaviors, and motivations individually.
NATURE OF CONSUMER BEHAVIOUR
 Complex In Nature
Consumer behaviour is complex in nature as all persons differ in
their needs and wants. Each individual has their own unique needs
and accordingly, they behave differently in the market. It is a very
difficult task for marketers to recognise the needs and patterns of
each individual. Therefore, it becomes an overall complex job for
the business to identify each consumer’s behaviour and targets
them accordingly.
 Systematic Process
Consumer behaviour is a systematic process consisting of a series
of steps involved in buying decisions of consumers. It is related to
how consumers make their buying decision. The buying decision
of consumers involves different steps which are: Need
identification to buy product, searching for information related
with the product, making list and evaluating different options
available, finally making a purchase decision and at last post-
purchase evaluation done by the marketer.
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 Keeps On Changing
Consumer behaviour is always changing concept and does not
remain constant. It keeps on changing with the time which is due
to the following changing factors: age, income level, education
level of consumer. Same products may be liked by the same
consumer who once hated them. For example, Kids have more
interest in toys during their childhood but as they grow up as
teenagers they lose all their interest.
 Reflects Status
The manner in which the consumer spends and makes buying
decision reflects his status. Not only the behaviour of the
consumer is influenced by its status but his behaviour also reflects
his status in society.
People who spend more and buy luxury items are considered rich
and high-status people by society. These high priced goods adds
pride to their personality.
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 Varies From Region To Region
Consumer behaviour is different for different region, states and
countries. It differs from place to place. Rural population tends to
spend less and are basically conservative in nature. They do not
like to spend on luxury items despite having enough funds due to
their psychological factors. They have a different approach from an
urban population related to buying decision. However, the rural
population tends to spend more and buy luxury items. They even
take loans to fulfil their needs for luxuries if are short of funds.
 Differs From Product To Product
Consumer behaviour varies from product to product. Same product
may be attractive for one group of consumers but not for another
group. A consumer may have more interest and buys more quantity
of one product and buys less or even no quantity of another
product. Teenagers like to spend heavily on bikes, cars, cell phones
and branded clothes to look attractive, but they would not spend
much on their academics.
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 Vital For Marketers
Consumer behaviour is crucial for marketers to perform their duties
effectively. Marketers should have perfect knowledge of their target
customers buying behaviour. It will help them in understanding their
likes and dislikes and also the factors influencing their buying
decisions.
Marketer can take appropriate actions accordingly to attract customers.
It helps the companies in developing the products as per peoples
demand by providing information collected by them.
 Improves Standards Of Living
Consumer behaviour has an important role in improving the standards of
living of people. When consumers spend more on buying different products
and services, their standard of living is improved.
Higher is the spending of a person, higher is the standard of living of a
person. On the other hand, despite having enough funds if a person spends
less than his standard of living is low. Therefore, the level of spending
directly influences a person’s living standards.
IMPORTANCE OF CONSUMER BEHAVIOUR

 Increase Sales
Consumer behaviour study helps the businesses in understanding their
customers. They have full information about their customer’s likes &
dislikes. This helps in satisfying the wants of their customers properly &
efficiently.
Business will offer the right product to its customers. Customers will
become loyal if getting the right product. This will increase sales &
revenue for business.

 Setting Prices
Setting prices is one of the important & difficult task for any
business. It directly influences the demand for its products in the
market. By understanding consumer behaviour, it becomes easy to
determine whether the customer is price concerned or quality
concerned.
There are some customers in the market who buys products only
because they are cheaper. Understanding their behaviour will help
companies to produce as per their price limit.
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 Designing Sales Promotion Methods
Sales promotion activities are the different methods used for
inducing customers to buy a product. Promotion activities are
effective if they present clearly the features of the product as per
customer needs.
These activities should affect the psychology of customers directly
& inducing them in buying. Understanding their behaviour will
help in easy understanding of factors affecting customers buying
decisions.
 Helps In Competitive Analysis
Facing competition in today’s market is a very tough job for every
business. There is a large number of competitors available in the
market offering the same products. It becomes difficult to attract
customers towards your products.
Understanding their behaviour helps in analysing the reasons for
which they are going for competitors’ products. It helps in
understanding the advantages that competitors are possessing. This
help in facing the competition in a better way.
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 Helps In Forecasting
Forecasting helps in taking competitive advantages from the
businesses. If the business is able to forecast about the future it
can easily take several advantages. Consumer behaviour enables
the businesses in easy forecasting of sales & demand forecasting.
It helps companies in saving their resources, time & cost. They can
easily predict future demands & focus on their operations.
 Helps In Targeting & Segmentation

Segmentation & Targeting helps in serving customers properly. It

segments the customers according to their taste & class.
Segmentation helps in serving the customer better. It helps
businesses to focus on customers as per their needs.
After understanding consumer behaviour, it becomes easy to
segment different customers into different classes.
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 Helps In Designing Product Portfolio
Product portfolio refers to a set of different products offered by
businesses. Every business product portfolio must consist of all
class of products. It should have products for all class of peoples
in the market.
Understanding customer behaviour helps the businesses in easy
understanding demand of market. This will help in proper
designing of product portfolio for the businesses.
SCOPE OF CONSUMER BEHAVIOUR
Consumer behavior is a crucial aspect of marketing that involves understanding the
needs, preferences, and decision-making processes of consumers. The scope of
consumer behavior is broad and encompasses various aspects of marketing, such as
product development, pricing, promotion, and distribution.
 Demand Forecasting
Consumer behaviour helps in the forecasting of the demands for the business. Every
business identifies the needs and wants of the customers by understanding their
behaviour. Forecasting helps them to find out the unfulfilled demands in the
market easily. If the company knows what their consumer wants, they can design
and produce the product accordingly.
The behaviour of the consumer plays an important role in forecasting the demand
for the products. In addition, it helps the company to identify the market
opportunity available to them.
 Marketing Management
Effective business managers know the importance of marketing towards the success
of the business. Understanding consumer behaviour is essential for the long-
running success of any marketing program. A better understanding of consumer
needs and wants to help the business to plan and execute their marketing strategies
accordingly.
Proper understanding of the behaviour of the consumer makes the company know
its customers in a better way. That ultimately helps businesses to strategize and
implement marketing in a better way.
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 Non-profit and Social Marketing
In today's world, every non-profit business-like government sector,
religious sector, university, the charitable institution runs the business's
overall activity by implementing proper marketing plans for the business.
Also, they contribute to solving the problems of society. Thus, a
transparent consumer behaviour process and decision-making
contributed efforts towards the success of the business.
 Select Target Market
Consumer behaviour helps the organisation to select its target group
from the market. Studying and identifying consumer behaviour helps
them to know the consumer segments with distinct features and wants. It
helps in segmenting the overall market into different groups.
 Market Mix
Proper development and designing all-important elements like product,
price, place, and promotion are essential for every business. It helps them
to identify the likes and dislikes of the customers. This allows marketers
to design optimum marketing mix plans and improve the effectiveness of
marketing strategies. The proper implementation of a marketing mix
helps organisations to attract more customers, thereby increasing profit.
CHARACTERISTICS OF CONSUMER BEHAVIOUR
 Following characteristics are found in their behaviour:
1. Bargaining – A trend of bargaining is often found in the behaviour
of buyers. They prefer buying goods by reducing the price as told
by the seller. Indian buyers too do not frame uniform price policy.
The trend of bargaining is still in vogue in the Indian markets.
2. Quality vs. Price – Buyers focus on price instead of the variety of
the goods. They therefore, prefer high price goods. A little bit
change has come now because the consumers have now begun
purchase of quality goods on higher price.
3. Brand or Trademark Consciousness – It is the characteristic of the
behaviour of buyer that he appears now aware of the brand of
items and considers these goods authentic and of higher quality.
4. Changing Consumption Patterns – Owing to widespread
education, increase in income and standard of living as also desire
of more comforts, the pattern of consumption is now being
changed. The low income group and high income group are
increasingly buying fridge, tape recorder, cooler, sewing machines
etc.
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5. Role of Women – The role of women is increasing day to day in
the manner of decisions for purchase. The women do purchase of
all kinds particularly in families where the husbands earn the
bread.
6. Credit and Guarantee – New motives for purchase are getting their
way rapidly because of having credit and guarantee facility
available in the market. Such facilities are developing the trade
and commerce.
7. Complaining – Buyers are gradually being aware of their rights.
They have started exhibiting their complaints through media and
the representations before the concerned authorities and the
forums. They can lodge their complaint before consumer forum
and thus, can receive the compensation against the damage/loss so
sustained.
APPLICATION OF CONSUMER BEHAVIOUR

 Analyzing market opportunity

Consumer behavior study help in identifying the unfulfilled needs
and wants of consumers. This requires examining the friends and
conditions operating in the Marketplace, consumer’s lifestyle,
income levels, and energy influences. This may reveal unsatisfied
needs and wants. Mosquito repellents have been marketed in
response to a genuine and unfulfilled consumer need.
 Selecting the target market
Review of market opportunities often helps in identifying district
consumer segments with very distinct and unique wants and needs.
Identifying these groups, behave and how they make purchase
decisions enable the marketer to design and market products or
services particularly suited to their wants and needs. For example,
please sleep revealed that many existing and potential shampoo
users did not want to buy shampoo fax price at rate 60 for more and
would rather prefer a low price package containing enough quantity
for one or two washers. This finding LED companies to introduce
the shampoos sachet, which become a good seller.
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 Marketing-mix decisions
 Once unsatisfied needs and wants are identified, the
marketer has to determine the right mix of product, price,
distribution, and promotion. Where too, consumer behavior
study is very helpful in finding answers to too many
perplexing questions. The factors of marketing mix
decisions are: i) product ii) price iii) promotion iv)
distribution
 Use in social and nonprofits marketing
 Consumer behavior studies are useful to design marketing
strategies by social, governmental, and not for profit
organizations to make their programs more effective such as
family planning, awareness about AIDS.
CONSUMER BUYING BEHAVIOUR
 Consumer buying behavior refers to the decisions and actions people
undertake to buy products or services for personal use. In other words, it’s
the actions you take before buying a product or service, and as you will see,
many factors influence that behavior. You and all other consumers combine
to make up the consumer market.
 The Buyer’s Black Box
One model of consumer buying behavior is what’s known as the buyer’s
black box, which is named as such because little is known about what goes
on in the human mind. It’s also known as the stimulus-response model.
Consumer buying behavior is based on stimuli coming from a
variety of sources—from marketers in terms of the 4Ps (product,
price, promotion, and place), as well as from environmental
stimuli, such as economic factors, legal/political factors, and
technological and cultural factors.
These stimuli go into your “black box,” which consists of two parts:
buyer characteristics such as beliefs and attitudes, motives,
perceptions, and values, and the buyer decision-making process,
which
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TYPES OF CONSUMER BUYING BEHAVIOUR
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 Complex buying behavior occurs when you make a significant or
expensive purchase, like buying a new car. Because you likely don’t
buy a new car frequently, you’re highly involved in the buying
decision, and you probably research different vehicles or talk with
friends or family before reaching your decision. By that time, you’re
likely convinced that there’s a significant difference among cars, and
you’ve developed your own unique set of criteria that helps you
decide on your purchase.
 Dissonance-reducing buying behavior occurs when you’re highly
involved in a purchase but see little difference among brands. Let’s
say you’re replacing the flooring in your kitchen with ceramic tile—
another expensive, infrequent purchase. You might think that all
brands of ceramic tile in a certain price range are “about the same,” so
you might shop around to see what’s available, but you’ll probably
buy rather quickly, perhaps as a result of a good price or availability.
However, after you’ve made your purchase, you may experience post-
purchase dissonance (also known as buyer’s remorse) when you notice
some disadvantages of the tile you purchased or hear good things
about a brand you didn’t purchase.
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 Habitual buying behavior has low involvement in the purchase
decision because it’s often a repeat buy, and you don’t perceive
much brand differentiation. Perhaps you usually buy a certain
brand of organic milk, but you don’t have strong brand loyalty. If
your regular brand isn’t available at the store or another brand is
on sale, you’ll probably buy a different brand.
 Variety-seeking buying behavior has the lowest customer
involvement because brand switching is your norm. You may not
be unhappy with your last purchase of tortilla chips, but you
simply want to try something new. It’s a matter of brand switching
for the sake of variety rather than because of dissatisfaction with
your previous purchase.
INDUSTRIAL BUYING BEHAVIOUR
 Industrial buying behaviour is in essence the arrangement of
how industrial organization purchase goods and services. This
area is essential for the understanding of the consumer needs and
must be taken into consideration for successful suppliers.
INDUSTRIAL BUYING PROCESS
i. Problem recogniton
ii. General need description
iii. Product specification
iv. Supplier search
v. Proposal solicitation
vi. Supplier selection
vii. Order routine specification
viii. Performance review
CONSUMER VS. INDUSTRIAL BUYING
BEHAVIOR
Basis of difference Consumer buying Industrial buying
behavior behavior
Nature of purchase Consumers purchase Industrial buying
goods and services involves purchases
for personal made by businesses
consumption, driven and organizations to
for personal needs, support their
preferences, and operations,
emotions. manufacturing
processes or resale.
These purchases are
often made in bulk
and are driven by
rational
considerations like
efficiency, cost-
effectiveness and
meeting
organizational
objectives.
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Basis of difference Consumer buying Industrial buying
behavior behavior
Decision-Making Consumer purchase Industrial purchase
Process decisions are influenced decisions are typically
by various factors such more rational and
as personal preferences, logical. They are
brand perception, price, influenced by factors
social influence and such as technical
emotional appeal. The specifications,
decision making performance, reliability,
process may be after- sales service,
complex and involve supplier reputation, and
extensive research or long-term relationships.
may be impulsive Industrial buyers often
depending on the follow a structured
product and decision making
consumer’s personality. process involving
evaluation of multiple
suppliers and
negotiation of terms
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Basis of difference Consumer buying Industrial buying
behavior behavior
Buying unit Consumers are Industrial purchases are
individuals or made by organizations,
households who make which may involve
purchasing decisions various individuals or
for their personal use or departments within the
consumption organization. The
buying process in
industries is often more
formalized and involves
multiple stakeholders
such as engineers,
procurement officers,
and finance teams.
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Basis of difference Consumer buying Industrial buying
behavior behavior

Volume and frequency Consumer purchases Industrial purchases are

are often smaller in typically larger in
volume and more volume and less
frequent, as they are frequent, as they are
intended for individual intended to meet the
or household needs of the business
consumption over an extended
period.
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Basis of difference Consumer buying Industrial buying
behavior behavior
Relationship While relationships Industrial buying
management between consumers and involve building long-
brands or retailers are term relationships
important, they tend to between suppliers and
be more transactional in buyers. Trust, reliability
nature , and loyalty can and service play crucial
be more fickle. roles in maintaining
these relationships as
industrial purchases
often involve ongoing
supply agreements and
partnerships.
UNIT-2
DETERMINANTS OF
CONSUMER
BEHAVIOUR
DETERMINANTS
DETERMINANTS OF CONSUMER BEHAVIOUR

The determinants of consumer behaviour can be grouped into three major

captions namely, economic, psychological and sociological.
 I. Economic Determinants:
Economic scientists were the first among social scientists to study consumers
and their behaviour and provided the details about the solutions to the
consumer and consumption problems. Economists, as we are aware, took man
as a social and rational animal.
1. Personal income:
One’s income is the reward for one’s economic efforts. Income means
purchasing power. When we talk of income in marketing sense, we are more
concerned with ‘disposable income’ and “discretionary income’.
‘Disposable income’ is the amount of money that a consumer has at his
disposal for spending or saving or both. In other words, of the total gross
income, whatever balance remains after meeting pre­emptive demands like
taxes, debt repayment and debt servicing charges and the like.
Any change in disposable income will have change in consumer
buying decisions. Decline in disposable income reduces the consumer
spending; however, when disposable income rises, consumer spending
not only rises but makes them to go in for more of luxuries.
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On the other hand, ‘discretionary income’ is the income which is available
after meeting the basic needs of living.
A rise in discretionary income results in usually an increased spending by
consumers on those items that raise their living standards. Therefore, a
continuous rise in the discretionary income is likely to change the very
life-style of the consumers.
 2. Family income:
Where a consumer is the member of a joint family, the buyer behaviour is
influenced by the family income rather than the individual income. It
does not mean that one can ignore the individual income, for family
income is the aggregate of individual income of all the members of the
family.
In a joint family, it may so happen that a rise in an individual member’s
income may be neutralised by a fall in another member’s income. That is
why; it is the relationship between the family size or the requirements
and the income that finally determines the buying behaviour or the family
members.
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 3. Consumer income expectations:
Many a times, it is the future income expectations of the consumer that
influences such consumer behaviour. It is the optimism or the pessimism about
consumer income that determines the level of current spending.
If there are bleak prospects of future expected income, he spends less now and
saves more and vice versa. It is worth the noting here that the force and vitality
of a tendency to spend or save depends on the nature of consumer needs.
In case of basic needs of living, such tendency will be too weak for no consumer
denies the minimum subsistence level merely because to bleak future income
expectations. However, in case of non-essential goods, such tendency may be
very strong to save than to spend if he is expecting weak future income
generation and vice versa.
 4. Consumer liquid assets:
It is the consumer liquid asset position that influences the consumer
behaviour. Liquid assets of consumers are the assets held in the
money or near-money forms of investments. The best examples of
this kind are hard cash, bank balance, bank deposits, shares and
bonds and saving certificates. These assets are built up to buy some
consumer durables or to meet unexpected future needs or
contingencies.
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 5. Consumer credit:
Availability or paucity of consumer credit has its impact on consumer
buying behaviour. Consumer credit is a facility extended by a market to
postpone the payment of products bought to some future date.
Consumer credit takes number of shapes like deferred payment,
instalment purchasing, hire-purchase arrangements and the like. Easy
availability of consumer credit makes the consumer to go in for those
consumer durables which he would have postponed otherwise. Further, it
makes him to spend more freely the current income.
 6. The level of standard of living:
 The consumer behaviour has the impact of the established standard of
living to which he is accustomed. Even if consumer income goes down,
the consumer spending will not come down proportionately because, it is
very difficult to come down from an established standard of living.
 On the other hand, rise in income tends to improve upon the established
standard of living. In case the income falls, the short-fall is made good by
borrowings to a certain extend over a short period of time.
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 II. Psychological Determinants:
Psychologists have also provided certain clues as to why a consumer behaves
this way or that way. The major psychological determinants internal to the
individual are motivation perception learning, attitude and personality.
Here is an attempt to explain and to know their implications in so far as
consumer behaviour is concerned.
 1. Motivation: Motivation is the ‘why’ of behavior. It is an intervening
variable between stimulus and response and a governing force of consumer
behaviour.
 Therefore, motives can be conscious or unconscious, rational or emotional,
positive or negative. These motives range from a mere biological desires like
hunger and thirst to the most advanced scientific pursuits like landing on the
Moon or Mars.
 It was Abraham Maslow who developed five steps human need hierarchy
those of survival-Safety Love & Belongingness and Self-Esteem and Self
Actualisation.
 Brands are constantly in search of new ways to motivate consumers to
engage with, promote, and ultimately buy their products and services.
The decision-making science behind consumer motivation is an essential
element to building brand equity and a loyal customer base..
HOW CUSTOMER BEHAVIOR INFLUENCED BY
MOTIVATION
 1. Need Recognition: Motivation frequently begins with the recognition of a need
or a problem. Customers experience motivational tension when they believe there
is a difference between their current state (what they have or where they are) and
their desired state (what they want or aspire to have). This awareness of a need acts
as a potent catalyst for customers to begin looking for answers, which may result in
decisions to make purchases.
 2. Goals and Aspirations: Both in the short and long term, consumers have a
variety of goals and aspirations. These objectives may be connected to one's
comfort, status, or self-improvement, among other things. To ensure that their
purchases are in line with their goals and aspirations, consumers must be
motivated. For instance, someone who is motivated to get fitter could be more
likely to purchase workout gear or nutritional supplements.
 3. Awards & Incentive Programs: Business-sponsored incentives, awards,
discounts, and promotions are examples of outside factors that might affect
motivation. When they see a concrete benefit or value in making a purchase,
consumers are frequently driven to do so. A discount, a free present, or
participation in loyalty programs are examples of this.
 4. Emotions: Emotions play a significant role in motivating or influencing
consumer behaviour. Consumers often make purchase decisions based on their
emotional responses to products or brands. For example, a consumer might be
motivated to buy a luxury item because it makes them feel prestigious or a comfort
food item because it provides emotional comfort.
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. ,
2 Perception: Customer perception is the opinions, feelings and beliefs
customers have about your brand. It plays an important role in
building customer loyalty and retention as well as brand reputation
and awareness.
 Marketing management is concerned with the understanding of the
process of perception because, perception leads to thought and
thought leads to action. Perception is the process whereby stimuli are
received and interpreted by the individual and translated into a
response.
 In other words, perception is the process by which the mind receives,
organises and interprets physical stimuli. To perceive is to see, hear,
touch, taste, smell and sense internally something or some event or
some relation. The personal factor of perception is his self concept,
need, span of apprehension, mental set and the past experiences.
Factors that influences customer perception
 Customer perception is influenced by both direct and indirect interactions
with your business. Factors such as social media, online reviews, pricing,
quality influencers, Brand image & Reputation, Personal Experience.
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 The entire process of customer perception starts when a consumer sees
or gets information about a particular product. The customer collects
information about a product and interprets the information to make a
meaningful image of a particular product.
 When customers see advertisements, promotions, customer reviews
social media feedback, etc., relating to a product, they develop an
impression of the product. This process continues until the consumer
builds an opinion about the product.
 For example, Avon uses a pink color with white and black accents.
This color predominantly attracts women, while men feel alienated by
pink color. The customer perception is built based on the colors used in
the logo.
For example, when a retail clothing store displays clothes on crowded
racks using low-quality plastic hangers, customers get a perception that
it is a low-quality brand.
 But when the same clothes are presented well with back-lit
mannequins, neatly arranged, good quality attractive hangers, etc., the
customers build a different perception of the brand.
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FACTORS INFLUENCING CUSTOMER
PERCEPTION
1. Personal Experience
 Customer perception is highly influenced by the personal experience that
a customer has while buying and using a particular product. If the quality,
customer service, price, logo, color, discounts, etc., could make an
excellent impression on the customers' minds, they would build a good
perception of the brand. But if they do not enjoy the experience with the
brand, it will leave an everlasting impression.
2. Advertising
 Customers get to see the products first through advertisements and
therefore become one of the biggest factors that influence customer
perception. The advertisements and campaigns that a company runs will
help to build a positive customer perception.
3. Influencers
 People generally buy things when another person has tried and tested
them. Such people who have bought it first and tried the product become
influencers. When people hear about a great product that the influencer
has tried out, it will influence them, person, to buy it and test it out, as the
recommendation has come from a known person whom they trust.
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4. Customer Reviews
 Many people look into customer reviews before buying a product. This shows that
customer reviews are an important factor in defining customer perception. If the
consumers see that a product has fewer stars, it means that the product does not have
good customer reviews. The impression that it creates in the consumer’s mind is
negative.
5. Social Media
 Social media has become the strongest medium to manage customer perception. When
a social media audience gets consistent communication regarding a product, the users
build an image of the product. Social media can be used to post content, images,
videos, etc., which helps to build the kind of perception intended by the company.
 Price perception:
Price is another element of marketing mix where perception has its implications.
Studies have proved beyond doubt that consumers judge product or service quality by
price. ‘Higher the price better the quality’ that goes.
This goes on establishing that there is going to the direct or positive relationship
between price and demand where marketer is cared to gain. Another aspect of this
price perception is psychological pricing.
The reasoning behind such pricing strategies is that consumers are likely to perceive
used in cut-price sales promotions to increase the feeling that a price has been
drastically reduced.
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3. Learning:
 In consumer behavior terms, learning is the process by which consumers
acquire the information that they apply to future purchase behavior.
Simply put, learning is the foundation of consumer behavior.
 Understanding the elements of learning is critical to understanding how
and why your consumers make the purchase decisions that drive your
industry. There are four critical elements of consumer learning:
1. Motivation
Unfulfilled needs are the underlying drivers that lead to motivation.
2. Cues
Cues are the stimuli that suggest a specific way to satisfy your
motivations. There are often many cues competing for a customer’s
attention, some of which can be created by marketers and others that are
simply part of the external environment.
3. Response
A response is the consumer’s reaction to a cue. While there can be many
responses to each cue, the response the consumer chooses often depends
heavily on their previous experiences. A marketer’s understanding of
consumer learning could enable them to elicit the desired response.
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4. Reinforcement
The reward -- the pleasure, enjoyment and benefits -- that the consumer receives
after buying and using a product or service is called reinforcement.
Reinforcement is critical to the learning process and can significantly impact
future responses, even though this element typically happens after purchase.
 As most consumer behaviour is learnt behaviour, it has deep impact on
consumer buying process. Prior experience and learning acts as buying guide.
In-spite of such habitual behaviour, one can think of reasonable amount of brand
switching, trying new products, does take place.
 The strong tendency of most consumers to develop brand loyalties definitely
benefits the makers of established brands. This makes the manufacturer of a new
brand to face difficulty in breaking such loyalties and encouraging brand
switching.
 He succeeds in his efforts when he shows that his product is potentially much
more satisfying than his competitors. Free sampling, in store trial and
demonstrations and deal activities may be used to break the existing brand
barrier to establish new patterns of purchase behaviour.
4. Attitude: An attitude describes a person’s relatively consistent evaluations,
feelings, and tendencies toward an object or an idea. Attitudes put people into a
frame of mind for liking or disliking things and moving toward or away from
them.
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 Attitudes develop gradually as a result of experience; they emerge from
interaction of a person with family, friends, and reference groups.
 Attitude refers to how someone feels about something. For example, a student
having a negative outlook toward math class. A behavior is how someone acts
in response to their feelings. For example, the student's action of skipping math
class.
 There are three distinct components of attitude namely, cognitive, affective and
co-native. ‘Cognitive’ component is what an individual believes about an
object, thing or an event whether it is good or bad, necessary or unnecessary,
useful or useless.
 It is based on the reason and is linked with knowledge and about the object,
thing or an event whether it is pleasant or unpleasant, tasty how an individual
responds to the object, thing or an event. It is based on the other two
components and is related with his behaviour.
 Each of the three attitude components vary according to both the situation and
the person. The marketer may be interested in confirming the existing attitudes,
or change in the existing attitudes or create new attitudes depending on how his
product is performing in the market.
 .
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 Consumers learn attitudes from a variety of sources, ranging from direct
experience to word of mouth to marketing.
 Though attitudes are often consistent with behaviors, they can be situational.
For example, while we may not have a positive attitude toward our local
hospital system, in times of dire need, we may choose to seek treatment at that
hospital if the situation warrants it.
Tricomponent Attitude Model
 Tri-component Model − According to tri-component model, attitude
consists of the following three components.
 Cognitive Component − The first component is cognitive component. It
consists of an individual’s knowledge or perception towards few products or
services through personal experience or related information from various
sources. This knowledge, usually results in beliefs, which a consumer has,
and specific behavior. In short, It encompasses our beliefs and thoughts
about the object . It includes our knowledge about a particular thing or topic.
 Affective Component − The second part is the affective component. This
consists of a person’s feelings, sentiments, and emotions for a particular
brand or product. They treat them as the primary criteria for the purpose of
evaluation. The state of mind also plays a major role, like the sadness,
happiness, anger, or stress, which also affects the attitude of a consumer.
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In short it encompasses our emotional response to the object of our
attitude.

Behavioral Component − The last component is behavioral component,
which consists of a person’s intention or likelihood towards a particular
product. It usually means the actual behavior of the person or his
intention. In short it encompasses the way we act toward the object of our
attitude.
 Attitude formation – Our families play a significant role in shaping our
attitudes through exposure.
 Belonging to a particular culture also shapes our attitudes.
 What is culture?
 Culture is made up of the shared ideas, traditions, attitudes and behaviors
of group of people.
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 Attitude changing is more difficult task than mere confirming it. It is a
change from disposition to act in the direction of the original attitude to a
disposition to act in the opposite direction.
 A product disliked is to be liked by the consumers. It is really a difficult
process. Attitude creation is to make the consumers to forget the old
products or brands and to make them to go in for new product or brand
entirely altogether, in fact, it is comparatively easier to create new
attitudes than to change the existing one. The most powerful instrument
of attitude change and creation is advertising.
5. Personality:
 Very often, the word ‘personality’ is used to refer to the capacity of a
person for popularity, friendliness or charisma. However, in strict sense,
it refers to the essential differences between one individual and another.
 Therefore, personality consists of the mannerisms, habits and actions that
make a person an individual and thereby serve to make him distinct from
everyone else. It is the function of innate drives, learned motives and
experience.
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 Personality signifies the inner psychological characteristics that reflect
how a person reacts to his environment. Personality shows the individual
choices for various products and brands. It helps the marketers in
deciding when and how to promote the product. Personality can be
categorized on the basis of individual traits, likes, dislikes etc.
 Trait Theory
Traits are the features of an individual or tendency of an individual in a
particular manner.
 Following are the few of the most common traits −
 Outgoing
 Sad
 Stable
 Serious
 Practical
Psycho-Analytic theory(Sigmund Freud)
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Id − According to Freud’s psychoanalytic theory of personality, the id operates

based on the pleasure principle, which stresses on immediate fulfillment of
needs. The id is the personality component made up of unconscious psychic
energy which satisfies basic urges, needs, and desires.
Ego − Ego is that state of awareness which thinks of you as separate from the
other. It always thinks of the glories of the past and hopes of the future and
focuses on guiltiness. It always thinks of what was and what could be.
Super Ego − The superego provides guidelines for making judgments. It is the
aspect of personality that holds all our moral standards and ideals that we
acquire from both parents and society.
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 Socio psychoanalytic Theory of Personality(Karen Horney)
 This theory of personality has been put forward by Karen Horney, one of the
disciples of Sigmund Freud, as a modification of his theory.
 The nature of interaction will dictate one’s personality. In her study, she
identified three personality types found in different individuals. The first type
is ‘compliant.’ One whose personality is of compliant type, he want to love
others and expects that others will accept, need, and appreciate him.To be
accepted by others, such a person can even go up to the last extent of sacrifice.
He always conforms to others to avoid conflict and receive friendly treatment
from them.
 Another type of personality identified by Karen Horney is the ‘detached type’.
Individuals of this type of personality normally avoid responsibility. They also
do not like to be dependent on others. They cannot trust anyone surrounding
them. They think that they are rational, intelligent, and possess talents. They
expect others to recognize their talents no matter whether they display their
talents or not.
 The third type is ‘aggressive’. Individuals of this personality type are highly
achievement motivated. They are keen on gaining prestige, achieving things,
and getting recognition from others.They consider everyone their competitors
and believe everyone acts based on self-interest. They also act based on reality
and rationality, not based on emotion or sentiment.
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 The personality types may be introvert or extrovert or another
classification as tradition direction outer direction and inner direction.
Each of these traits and types has been explored as the possible clues to
the behaviour of consumers.
 Evaluation of personality’s role in marketing is seen in drawing consumer
profiles and psychographic market segmentation.
III. Sociological Determinants:
 In the area of psychological determinants, the consumer behaviour was
seen from the stand point view of an individual. However, the
sociologists and social psychologists have attempted to explain the
behaviour of a group of individuals and the way in which it affects and
conditions and individual’s behaviour in marketing or purchase decisions.
 These groups of individuals as determinants are:
 (1) Family
 (2) Reference groups
 (3) Opinion leaders
 (4) Social class and.
 (5) Caste and culture.
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 Reference Groups
 Immediate Family Members
 Relatives
 Role in the Society
 Status in the society .
1. Reference Groups
Every individual has some people around who influence him/her in
any way. Reference groups comprise of people that individuals
compare themselves with. Every individual knows some people in the
society who become their idols in due course of time.
Co workers, family members, relatives, neighbours, friends, seniors at
workplace often form reference groups.
 Reference groups are generally of two types:
 Primary Group - consists of individuals one interacts with on a regular
basis.
 Primary groups include:
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 Friends
 Family Members
 Relatives
 Co Workers
All the above influence the buying decisions of consumers due to
following reasons:
They have used the product or brand earlier.
They know what the product is all about. They have complete knowledge
about the features and specifications of the product .
Rehan wanted to purchase a laptop for himself. He went to the nearby
store and purchased a Dell Laptop. The reason why he purchased a
Dell Laptop was because all his friends were using the same model and
were quite satisfied with the product.
A married individual would show strong inclination towards buying
products which would benefit not only him but also his family
members as compared to a bachelor. Family plays an important role
in influencing the buying decisions of individuals.
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 A consumer who has a wife and child at home would buy for them rather
than spending on himself. An individual entering into marriage would be
more interested in buying a house, car, household items, furniture and so
on. When an individual gets married and starts a family, most of his
buying decisions are taken by the entire family.
 Every individual goes through the following stages and shows a different
buying need in each stage:
 Bachelorhood: Purchases Alcohol, Beer, Bike, Mobile Handsets (Spends
Lavishly)
 Newly Married: Tend to purchase a new house, car, household
furnishings. (Spends sensibly)
 Family with Children: Purchases products to secure his as well as his
family’s future.
 Empty nest (Children getting married)/Retirement/Old Age:
Medicines, Health Products, and Necessary Items.
 A Ford Car in the neighbourhood would prompt three more families to
buy the same model.
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 Secondary Groups - Secondary groups share indirect relationship with
the consumer. These groups are more formal and individuals do not
interact with them on a regular basis, Example - Religious Associations,
Political Parties, Clubs etc.
Roles and Status: An individual’s position and role in the society also
influences his buying behavior. Such as, a person holding a supreme
position in the organization is expected to purchase those items that
advocate his status. The marketers should try to understand the
individual’s position and the role very much before the endorsement of
the products.
SELF CONCEPT
 Self concept is defined as the way, in which we think, our preferences,
our beliefs, our attitudes, our opinions arranged in a systematic manner
and also how we should behave and react in various roles of life. Self
concept is a complex subject as we know the understanding of someone’s
psychology, traits, abilities sometimes are really difficult. Consumers buy
and use products and services and patronize retailers whose personalities
or images relate in some way or other to their own self-images
 Traditionally, individuals are considered to be having a single self-image
which they normally exhibit. Such type of consumers are interested in
those products and services which match or satisfy these single selves.
However, as the world became more and more complex, it has become
more appropriate to think of consumers as having multiple selves.
EXTERNAL DETERMINANTS
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Culture:
 An individual’s values, attitudes, beliefs and opinions are shaped with
his culture. This in turn also form people attitude towards purchasing
specific products or services.
 Culture of an individual also gratifies his several emotional needs and
due to this they try to protect their cultural values and beliefs (Singh,
2006). This culture protection is reflected in individuals’ behaviour as
consumers.
 This could also be understood with an example of McDonald that
served Indian consumers in a way it used to serve American
consumers. This act of the company made a negative effect on
Indian consumer due to their specific vegetarian culture values
(Kotler, 2002).
 Culture is the most basic cause of a person's wants and behavior. Human
behavior is largely learned. Growing up in a society, a child learns basic
values, perceptions, wants, and behaviors from the family and other
important institutions. Marketers are always trying to spot cultural shifts
in order to imagine new products that might be wanted.
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 Culture does vary from individual to individual, region to region, and
country to country, so the marketer needs to pay a lot of attention in
analyzing the culture of various regions and groups. Throughout the
process, the consumer is under influence of his culture as his friends,
family, society, and his prestige influence him.
 For a marketer, it is very crucial to take all these things into consideration
while analyzing or observing a consumer’s behavior as they play a vital
role in his behavior, perception and expectations.
 For example, if we observe the taste and preferences, people in southern
India prefers rice to roti whereas north Indian people prefer roti than rice.
2. Subculture:
 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
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3. Social Classes
 The social groups or membership groups to which an individual belongs are the
social classes that influence him. In the social classes, we usually find people
with similar values, lifestyle and behavior. Now a marketer or a researcher needs
to pay attention here because generally the buying behavior of people in a
particular social class to some extent is similar, though the level of influence
may be low or high, he can tailor his marketing activities according to different
social classes. Social perception is a very important attribute that influences the
buying behavior of an individual.
 Example − A person from a low-income group may focus on price while making
the purchase while a person from a higher income group may consider the
quality and uniqueness of the product.
 Sometimes an individual also is influenced by a social group to which he does
not belong, but wishes to get connected with others. For example, in a college a
student is in no need to buy a smart phone but purchases it to be part of that
group and be accepted by them.
 Marketers need to understand these situations well and plan their strategies
accordingly for such social benefits. Individuals play various roles in the
consumer buying process −
 Initiator − Initiator is usually the person who comes up with an idea and
suggests the purchase.
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 Influencer − He is the individual who actually pushes for the purchase. He
highlights the benefits of the product. This individual can be from the family or
friend or outside the group too.
 Decision Maker − He is generally the person who takes the final decision or
the final call after analyzing all the pros and cons of the product. He may not
necessarily be the final buyer as may also take the decision on behalf of the
consumer.
 For example, a father might decide on buying a laptop for his son or a brother
might decide on the best career option for his sister.
 Buyer − Buyer is generally the end user or the final consumer who uses the
product.
4. Reference Group
 A reference group is a group whose perspective we consider. Now our
reference could be very large or very small including a few of our family
members or few close friends. Reference groups influence people a lot in their
buying decisions. They set the levels of lifestyle, purchasing patterns, etc.
Reference groups are of two types −
 Primary Groups

 Secondary Groups
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 Primary Groups
 Primary reference groups are basically the set of people whom you meet
every day. They can be from your family, your close friends, your
roommates, etc.
 These people from primary groups may have a direct and strong impact
on your lives and your buying decisions since they are very significant to
you. Primary groups make you comfortable and give you a feeling that
they are with you when you are confused about a purchase. These people
give you very honest and clear advice as they are so close to you, due to
which you could be more confident about the purchase.
 Secondary Groups
 Secondary reference groups are usually formal and they speak less
frequently. They might be professionals, your collogues, your seniors
at work or your acquaintance at the club, etc.
 In secondary reference groups, the power to influence people is quite
less as compared to primary reference groups as people in these
groups are not that comfortable in sharing their thoughts or views on
the purchase.
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 Aspirational Group
 The aspirational group is the one to which a person may want to become
part of. They currently are not part of that group but wish to become and
get with that group. For doing the same, they try to dress, talk, act, and
even think of the way the members of that group do.
 For example, people who like Madhuri Dixit wish to become like her and
meet her and so start purchasing and using all those products that she
endorses.
 Dissociative Group
 The people in these groups are totally opposite to the people in the
aspirational group. Here people deny becoming or getting connected
to a particular group. They just hate being related to that group.
 For example, if people don’t like a particular community, they would
never like being connected to them. So they would try all the possible
ways to avoid the way in which they dress, think, or act.
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5. Situational factors
 Situational factors also play an important role in the process of consumer
decision making process. These factors can be availability of desired product, the
timing of the purchase, location and weather.
Social Situation
 The social situation you're in can significantly affect your purchase behavior.
For example- when you go for outing with your friend circle and entered at
high end restaurant. So you have to order some food because you don’t want
to look cheap.
Time
 The time of day, time of year, and how much time consumers feel like they
have to shop affect what they buy. For example-The company's point-of-sale
systems at its checkout counters monitor what is selling well and when, and
stores are restocked with those items immediately - sometimes via motorcycle
deliveries that zip in and out of traffic along Japan's crowded streets. The goal
is to get the products on the shelves when and where consumers want them.
Seven-Eleven Japan also knows that, like Americans, its customers are "time
starved". Shoppers can pay their utility bills, local taxes, and insurance or
pension premiums at Seven-Eleven Japan stores, and even make photocopies.
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Reason for the Purchase
 The reason you are shopping also affects the amount of time you will
spend shopping. Are you making an emergency purchase? What if you
need something for an important dinner or a project and only have an
hour to get everything?