Consu

mer

Behavi

or

Course Objectives

• Explain What is meant by Consumer Behavior• Describe the Types of Consumers

• Explain Why do Consumers Buy• Explain the Importance of Consumer

Behavior• Explain Role of Consumer Behavior in Loyalty• Explain the Model of Consumer Behavior• Explain Steps of Decision-Making Process• Explain How to Reduce Cognitive Dissonance• Explain Consumer Involvement in Buying Decisions • Explain the Types of Consumer Buying Decisions• Explain the Factors Influencing Consumer Behavior• Explain Role of Consumer Behavior & Satisfaction• Explain Role of Consumer Behavior for Relationship

• Explain Role of Consumer Behavior & Value Drivers

• Explain Role of CRM in Consumer Behavior

Introduction

Globus Inc. is a leading manufacturer of electronic goods and home appliances.

It now intends to venture into the mobile phones market.

Introduction

In order to get to know the mobile phones market, Globus undertakes a detailed research study to find out the latest trends and consumer behavior of this particular market.

Introduction

Globus finds that the latest requirement of consumers all across the market of this particular product is that of ‘smart phones’.

The research also found out that consumers have a great demand for ‘Android’ Operating System in smart phones.

Introduction

Android has numerous applications available for free download in the Android Marketplace.

This makes it possible for consumers to be able to download games, applications, music, eBooks etc. completely free of cost.

Introduction

Globus researched on various consumers of the mobile phone market of different age groups, cultural background, economic background, societal status etc.

It carefully observed the demands and requirements of each group of consumers.

Introduction

So, the management at Globus decided that Globus’ first product offering in the mobile market would be a ‘Sirius G1’.

‘Sirius G1’ would be their first latest Android-based smart phone.

Introduction

‘Sirius G1’ would come loaded with the latest features and completely new customized copyright software for download of updates, ringtones, wallpapers, application software etc.

So, do you think that Globus would be successful in its venture?

Introduction

There is a great chance that Globus would definitely be able to capture a reasonable share of the mobile phone market.

This is due to the fact that Globus has carefully studied the ‘consumer behavior’ of the mobile phone market.

Introduction

‘Consumer Behavior’ would help Globus as well as any company to carefully study its prospective and existing customers. It helps to gain a better understanding of the needs, requirements, desires, opinions of the product, consumer’s view of the product and company image, etc.

Introduction

‘Consumer Behavior’ also helps to improve their existing products to better suit the consumers’ needs, gain feedback about their products and services, develop ideas for future products based on consumer views etc.

Introduction

Hence, you can see that ‘consumer behavior’ is an important concept to be understood to understand the world of business.

Let us learn about ‘Consumer Behavior’ in detail.

What is meant by Consumer Behavior?

‘Consumer Behavior’ involves studying the processes a consumer uses to make purchase decisions, to dispose of purchased goods or services and study the factors that influence purchase decisions and the use of products.

• Consumers can be various types and differentiated based on their ‘age’.

• Consumers can be segregated into ‘sub-groups’ based on their age such as children, teenagers, young adults, mature adults, senior citizens and so on.

• Each individual ‘sub-group’ has its own mind set, characteristics, preferred brands, preferred products etc.

• Age

Age

People Buy for their Needs

People buy for their Needs

• People Buy for their Needs:

o A ‘need’ is anything which is necessary but lacking.

o Hence, a need has to be fulfilled.

• People Buy for their Desires:

o On the other hand, a ‘desire’ is very different from a ‘need’.

o A ‘desire’ is something that we hope to get or buy but is not a necessity.

People Buy for their Desires

People Buy for their Desires

• Hence, when a person ‘desires’ something, he may not actually require that thing or need it, but he has to buy it anyway to satisfy his ‘desire’. • There are many things that a person

may desire such as a new pair of jeans although he may already have many pairs of jeans, new sneakers, new car in spite of having a car etc.

Customer Loyalty BreakersWhen customers end his relationship with suppliers, he breaks the loyalty with him. Following are the reasons which are responsible for loyalty break ups:

6

7

1

2

3

4

5

Customer Attitude: Customer attitude plays a vital role in breaking up the loyalty with existing supplier. This is because some customers have a habit to try new options and change business tactics. Even if they are fully satisfied with the existing supplier, they would attempt a change for the sake of getting new and better option or because of any change in business rules and tactics. These types of customers are experimental in nature and try to be innovative and creative by taking high business risks. These customers are supposed to be least loyal because they less likely to be attached with any sort of bond with a single supplier. It is very difficult to retain these types of customers and suppliers generally try to change their attitude by inheriting some business tactics in their marketing strategies.

Step 5: Post-purchase Behavior

Step 2: Information Search

Step 3: Evaluation of Alternatives

Step 4: Purchase Decision

Step 5: Post-purchase Behavior

Step 1: Need Recognition

Step 5: Post-purchase Behavior

This is the last step of the purchase decision process. A consumer after purchasing the chosen product either reaches a stage of ‘satisfaction’ or ‘dissatisfaction’. This satisfaction or dissatisfaction arises due to the difference and relationship between consumer expectation and perceived performance. So, if a consumer’s expectation from his purchased product is fulfilled, then he is a satisfied customer. Such a satisfied customer is a key to customer loyalty.

Real Life Example

• Mikhail Lipinskii is the Vice President (Sales) at Globus Inc.

• He is a very big fan of electronic gadgets.

• He always buys different new electronic gadgets whenever they are introduced in the market.

• Let us now understand the process that Mikhail uses to reach a purchase decision.

Types of Consumer Buying DecisionsThe given table explains the three types of consumer buying decisions: Routine, Limited and Extensive; as well as the differences between the three of them.

Routine Limited ExtensiveInvolvement low low to moderate highTime short short to moderate longCost low low to moderate highInformation Search

internal mostly internal internal and external

Number of Alternatives

only one few many

• Cultural Factors

Cultural Factors

The word ‘Culture’ means a set of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artefacts, or products, of that behavior as they are transmitted from one generation to the next.It has been found ever since the prehistoric times that culture is: pervasive, functional, learned and dynamic.

• Psychological Factors

Psychological Factors

There are various psychological factors that influence consumer behavior or consumer buying decisions such as follows:

Let us look at each in detail.

Motivation

Perception

Learning

Beliefs and Attitudes

Percent of customers who will buy again after a major

complaint (over $100 in losses)

Unhappy Customers

Who Do Complain

Unhappy Customers Who Don’t Complain

Complaints Resolved Quickly

Complaints NOT

Resolved

Complaints Resolved

9%15%

30%35%

65%

Analysis of Consumer Behavior

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