HEC GROUP OF INSTITUTION

B.COM ( Hons.)
VI SEM
SUB CONSUMER BEHAVIOUR
UNIT-1
Customer is the one who is purchasing the goods. Consumer is the one who is the end user of
any goods or services. Consumers are unable to resell any product or service. Customers need
to purchase a product or service in order to use it.
Consumer behaviour is the study of consumers and the processes they use to choose, use
(consume), and dispose of products and services, including consumers’ emotional, mental,
and behavioural responses. Understanding consumer behaviour is crucial for businesses to
create effective marketing strategies that can influence consumers’ decision-making
processes.

Consumer behaviour incorporates ideas from several sciences including psychology, biology,
chemistry, and economics.

By understanding consumer behaviour, businesses can tailor their marketing efforts to target
specific groups, improve brand loyalty, and identify emerging trends. This knowledge can
also help businesses stay ahead of their competition and adapt to changes in consumer
behaviour.

In conclusion, understanding consumer behaviour is vital to any successful marketing

strategy. By analyzing the factors that influence consumer behaviour, businesses can develop
effective marketing campaigns that cater to the needs and wants of their target audience.
 7 O’s Framework for Consumer Behaviour
The 7 O’s Framework to understand Consumer Behaviour is discussed as under:

 Occupants – Who is the Consumer?: This questions makes it easier to know about the
consumer’s overall profile in relation to geographic, psychographic, demographic factors.
The geographic factors state the particular area to which the consumer belongs, while
psychographic factors lead to the understanding of the consumer’s lifestyle often reflected in
their interest, activities and opinion.
Similarly, demographic factors enable the understanding of consumer’s age, income, sex,
education, and occupation.

 Object – What does the Consumer Buy?: It determines the product proposition which the
consumer purchases, i.e. the brand, product or product form. Further, it will also identify the
specification, colour, size, type, variant, etc which the customer seeks to buy.
 Objective – Why is Consumer Buying?: It gives reason for the purchase of the product by
the customer, in terms of the needs satisfied or benefits expected from the product.
For example, Complan is expected to increase the height of the child.
 Occasion- When do they Buy?: It ascertains the buying frequency (how often) and the
occasion on which the customer tend to buy the product or services.
 For Example, Item whose ticket size is high, such as television, air conditioner, are bought
during Diwali or New Year.
 Outlet – Where do they Buy?: It identifies the outlet, be it a retail shop, online platform i.e.
app or website, departmental store or any other location from where the customer makes the
buying decision.
For example: Do customers buy a mobile phone from a retail outlet or online via Amazon or
Flipkart?
 Operations – How do they Buy?: It determines the background information which the
consumer collects from various sources, before making the purchase.
For example: Before buying a laptop consumers often look for the reviews of the latest
laptops, as well as ask various questions from the company’s representatives to get assured of
the product quality.
 Organization – Who is Involved?: It determines the management of the sources of
information which influence the buying decision of the consumer.

Types of Consumer Behaviour

A consumer’s buying decision depends on the type of products that they need to buy. The
behaviour of a consumer while buying a coffee is a lot different from while buying a car.
Based on observations, it is clear that purchases that are more complex and expensive involve
higher deliberation and many more participants.
Consumer buying behavior is determined by the level of involvement that a consumer shows
in a purchase decision. The involvement allows customers to ensure that this product is
exactly what they want or do not want.
There are four types of consumer buying behaviour:
1. Complex buying behaviour
2. Dissonance-reducing buying behaviour
3. Habitual buying behaviour
4. Variety seeking behaviour

1. Complex buying behaviour

Complex buying behaviour is encountered particularly when consumers are buying an
expensive product. In this infrequent transaction, consumers are highly involved in the
purchase decision. Consumers will research thoroughly before committing to invest.
Consumer behaves very differently when buying an expensive product or a product that is
unfamiliar to them. When the risk of buying a product is very high, a consumer consults
friends, family, and experts before making the decision.
For example, when a consumer is buying a car for the first time, it’s a big decision as it
involves high economic risk. There is a lot of thought on how it looks, how his friends and
family will react, how his social status will change after buying the car, and so on.
In complex buying behaviour, the buyer will pass through a learning process. He will first
develop beliefs about the product, then attitudes, and then make a thoughtful purchase
choice.
For complex buying behaviour customers, marketers should have a deep understanding of the
products. It is expected that they help the consumer to understand their product. It is
important to create an advertising message in a way that influences the buyer’s beliefs and
attitudes.

2. Dissonance-reducing buying behaviour

In dissonance-reducing buying behaviour, consumer involvement is very high. This might be
due to high prices and infrequent purchases. In addition, there is low availability of
choices with fewer significant differences among brands. In this type, a consumer buys a
product that is easily available.
Consumers will be forced to buy goods that do not have too many choices and therefore
consumers will be left with limited decision making. Based on the products available, time
limitations, or budget limitations, consumers buy certain products without a lot of research.
For example, a consumer who is looking for a new collapsible table that can be taken for
camping quickly decides on the product based on a few brands available. The main criteria
here will be the use and the feature of the collapsible table and the budget available to him.
Marketers should run after-sale service camps that deliver focused messaging. These
campaigns should aim to support consumers and convince them to continue with the choice
of their brand. These marketing campaigns should focus on building repeat purchases and
referrals by offering discounts and incentives.

3. Habitual buying behaviour

Habitual Buying Behaviour is depicted when a consumer has low involvement in a purchase
decision. In this case, the consumer perceives only a few significant differences between
brands.
When consumers are buying products that they use for their daily routine, they do not put a
lot of thought. They either buy their favourite brand or the one that they use regularly – or the
one available in the store or the one that costs the least.
For example, when a consumer buys an energy drink, he tends to buy the flavour/taste that he
likes without actually putting in a lot of research and time. Many products fit into this
category. Products such as chocolates, cakes, juices, etc., all fit into this product category.
Consumers just go for it and buy it – there is no brand loyalty. Consumers do not research or
need information regarding the purchase of such products.
Habitual buying behaviour is influenced by radio, television, and print media. Moreover,
consumers are buying based on brand familiarity. Hence marketers must use repetitive
advertisements to build brand familiarity. Further to initiate product trial, marketers should
use tactics like price drop promotions and sales promotions.
Marketers should attract consumers using visual symbols and imagery in their advertising.
Consumers can easily remember visual advertisements and can associate with a brand.

4. Variety seeking buying behaviour

In variety-seeking consumer behaviour, consumer involvement is low. There are significant
differences between brands. Here consumers often do a lot of brand switching. The cost of
switching products is low, and hence consumers might want to try out new products just out
of curiosity or boredom. Consumers here, generally buy different products not because of
dissatisfaction but mainly with an urge to seek variety.
For example, a consumer likes to buy a cookie and choose a brand without putting much
thought into it. Next time, the same consumer might choose a different brand out of a wish
for a different taste. Brand switching occurs often and without intention.
Brands have to adopt different strategies for such types of consumer behaviour. The market
leader will persuade habitual buying behaviour by influencing the shelf space. The shelf will
display a large number of related but different product versions.
Marketers avoid out-of-stock conditions, sponsor frequent advertising, offer lower prices,
discounts, deals, coupons, and free samples to attract consumers.
Scope of Consumer Behaviour

Words such as consumer behaviour, individual buyer behaviour, and buying behaviour of the
consumer are all the same. Consumer behaviour is defined as the study of individuals,
groups, and organizations performance in selecting, buying, using the goods and services,
ideas, or experiences to fulfil the buyer's needs and wants.
The information given below will help you to understand the behaviour of the customers.
Companies conduct various research programs to collect information about their target
customers.

Scope of consumer behaviour

 Demand Forecasting
 Marketing Management
 Non-profit and Social Marketing
 Selecting Target Market
 Market Mix
 Educating Customers
 Assists in Designing Product Portfolio

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.

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.

Educating Customers
Consumer behaviour helps the marketer to know how consumers spend their buying
decisions. By understanding the customer's behaviour, a marketer can easily get an idea of
how they can improve their buying decision. The market can guide and suggest a way to save
their money and give them better options. Customers become aware of the opportunities
available to them as per their behaviour.

Assists in Designing Product Portfolio

Designing a product portfolio is a challenging part of every business. Every business should
design a portfolio that consists of all classes of the product. Consumer behaviour helps in
identifying the class and needs of the customers. It helps companies to design the product
which fulfils the requirements of their customers. In this way, a business can design the
optimum portfolio and serve its customers better.
The Segmentation, Targeting, Positioning (STP)

The Segmentation, Targeting and Positioning (STP) Model helps you position a product or
service to target different groups of customers more efficiently. STP stands for: Segment your
market. Target your best consumers.

What Is the STP Marketing Model?

The STP Marketing Model can help you to analyze your product offering and the way
you communicate its benefits and value to specific groups.

STP stands for:

 Segment your market.

 Target your best customers.
 Position your offering.
The model is useful because it helps you to identify your most valuable types of
customer, and then develop products and marketing messages tailored to them. This
allows you to engage with each target group more effectively, persona lize your
messaging, and – ultimately – increase your sales.

Applying the STP Model

Follow the steps below to apply the STP Model in your organization. For each step,
we've also provided a worked example using the fictitious travel firm, the Adventure
Travel Company.

Step 1: Segment Your Market

Your organization, product or brand can't be all things to all people. So, use market
segmentation to divide your customers into groups of people with common
characteristics and needs. This allows you to tailor your approach to meet each group's
needs effectively, and gives you a huge advantage over competitors who use a "one
size fits all" approach.

There are many different ways to segment your target markets:

Example:

The Adventure Travel Company is an online travel agency that organizes worldwide
adventure vacations. It has split its customers into three segments, because it's too
costly to create different packages for more groups than this:

 Segment A is made up of young married couples, who are primarily interested

in affordable, eco-friendly vacations in exotic locations.
 Segment B consists of middle-class families, who want safe, family-friendly
vacation packages that make it easy and fun to travel with children.
 Segment C comprises upscale retirees, who are looking for stylish and
luxurious vacations in popular locations, such as Paris and Rome.

Step 2: Target Your Best Customers

Next, you need to decide which segments to target by identifying the group that will
offer the largest return and will be the most profitable. There are several factors to
consider here:

1. The profitability of each segment. Which customer groups contribute most to

your bottom line?
2. The size and potential growth of each customer group. Is it large enough to be
worth addressing? Is steady growth possible? How does it compare with other
segments? (Make sure that you won't be reducing revenue by shifting your focus
to a niche market that's too small.)
3. How well your organization can service this market. For example, are there
any legal, technological or social barriers that could have an impact?

Example:

 The Adventure Travel Company analyzes the profits, revenue and market size of

each of its segment. Segment A has profits of $8,220,000.

 Segment B has profits of $4,360,000.

 Segment C has profits of $3,430,000.
So, it decides to focus on Segment A, after confirming that the segment size is big
enough (it's estimated to be worth $220,000,000/year.)

Step 3: Position Your Offering

Finally, you need to identify how you should position your product to target the most

valuable customer segments. Then, select the marketing mix that will be most
effective for each of them.

Consider why customers should purchase your product rather than those of your

competitors. Do this by identifying your unique selling proposition, and draw

a positioning map to understand how each segment perceives your product, brand or
service. This will help you determine how best to position your offering.

Example:

The Adventure Travel Company markets itself as the "best eco-vacation service for

young married couples" (Segment A).

It hosts a competition on Instagram® and Pinterest® to reach its desired market,

because these are the channels that these target consumers tend to favor. It asks its
followers on these channels to send in interesting pictures of past eco -vacations, and
the best one wins an all-inclusive trip.

The campaign goes viral and thousands of people send in their photos, which helps
build the Adventure Travel Company mailing list. The company then creates a
monthly e-newsletter full of eco-vacation destination profiles.