CONSUMER BEHAVIOUR ANALYSIS The meaning of consumer behaviour

CONSUMER BEHAVIOUR ANALYSIS The meaning of consumer behaviour and the need to study it: Consumer behaviour is defined as the behaviour that consumers display in searching for, purchasing, evaluating and disposing of products and services that they expect will satisfy their needs. Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption related items.

All of us are consumers. We consume things of daily use, we also consume and buy products according to our needs, preferences and buying power. • • What we buy, how we buy, where and when we buy, in how much quantity we buy depends on : our perception, self concept, social and cultural background age and family cycle, our attitudes, beliefs values, motivation, personality, social class

• It is not just the buying of goods/services that receives attention in consumer behaviour but it is the study of the whole process which starts much before the goods have been acquired or bought. A process of buying starts in the minds of the consumer, which leads to the finding of alternatives between products that can be acquired with their relative advantages and disadvantages. This leads to internal and external research. Then follows a process of decision-making for purchase and using the goods, and then the post purchase behaviour which is also very important, because it gives a clue to the marketer whether his product has been a success or not.

To understand the likes and dislikes of the consumer, extensive consumer research studies are being conducted. These researches try to find out: • What the consumer thinks of the company. ’s products and those of its competitors? • How can the product be improved in their opinion? • How the consumer use the product? • What is the consumer. ’s attitude towards the product and its advertising? • What is the role of the onsumer his /her family?

• Who constitutes the market? Parent, Child, Male, Female • What does the market buy? for eg in the case of a soap. Regular, Medicated, with Glycerine, herbal what Brand, what size ? • Who participates in buying? Parent, Child, Male, Female Organisations • How does the market buy? Cash, Credit, Mail-order etc. • When does the market buy? Monthly, Weekly etc. Prescribed by Doctor, Occasions • Where does the consumer buy from? Supermarket, Retail store etc. • Why does the consumer buy? For Cleansing, Bathing, Fresh feeling etc. Objectives

• Consumer behaviour is a complex, dynamic, multidimensional process, and all marketing decisions are based on assumptions about consumer behaviour. • Marketing strategy is the game plan which the firms must adhere to, in order to outdo the competitor or the plans to achieve the desired objective. In formulating the

It was during the 1950 s, that marketing concept developed and the focus turned on the consumer rather than the production process or the product, and thus the need to study the behaviour of consumers was recognised. Marketing starts with the needs of the customer and ends with his satisfaction. When every thing revolves round the customer, then the study of consumer behaviour becomes a necessity.

Consumers play an important role in the health of the economy-local national and international. The purchase decisions affect the demand of raw materials for transportation, for production, for banking employment, the success and failures of some companies. In order to succeed in any business and especially in today’s dynamic and rapidly evolving marketplace marketers need to know every thing they can about consumers.

Concept of customer value, customer satisfaction and customer retention. There can be many benefits of a product, for example, for owning a motor bike one can be looking for ease of transportation, status, pleasure, comfort and feeling of ownership. The cost is the amount of money paid for the bike, the cost of maintenance, gasoline, parking, risk of injury in case of an accident, pollution and frustration such as traffic jams. The difference between this total benefit and total cost constitutes the customer value. The idea is to provide superior customer value

Customer value is defined as the ratio between the consumer’s perceived benefits (economic, functional and psychological) and resources(monetary, time, effort psychological) used to obtain those benefits. Customer satisfaction is the individual’s perception of the performance of the product or service in relation to his/her expectation. The overall objective of providing value to a consumer continuously and more effectively than the competitors is to have and to retain highly satisfied customers. This strategy is called customer retention.

• APPROACHES TO DECISION MAKING-DECISION MAKING MODELS • DISTRIBUTIVE APPROACH : Distributive approach is used to determine the relationship between the outcome of consumer decision-making and a variety of independent variables such as income, social class, race, and marital status. • ADVANTAGES OF THE DISTRIBUTIVE APPROACH The Distributive approach has been frequently used because it has many advantages. The major advantage is that research utilizing this strategy is relatively simple and typically less expensive than other alternatives. Further more, it has been very useful in those instances where the independent variables under the study are highly correlated with the purchase of the product. The Distributive approach has proven to be somewhat useful in estimating marketing potential and in making media selection decisions.

• LIMITATIONS OF THE DISTRIBUTIVE APPROACH There also a number of limitations inherent in the Distributive approach. The foremost difficulty is that this approach can, at best, provide only a partial or incomplete explanation of consumer behaviour.

• Consumer analysts state that the act of buying a particular product is only a fraction of the relevant consumption behaviour: That is, it is important to recognize that the decision to purchase a specific product is preceded by some pattern of conscious and sub-conscious actions that are a part of decision making.

Distributive approach does not provide any insight into why the relationship between an independent variable and purchase decisions exists. Because this approach fails to provide information on the sequence of events culminating in a purchase act, it is of limited value in developing effective marketing strategies or in evaluating existing business in terms of their relationship to consumer behaviour.

DECISION—PROCESS APPROACH: • The Decision-process approach to the study of consumer behaviour focuses on the means by which consumers reach a purchase decision. This decision process is studied within the context of five processes linked in a sequence (i) Problem Recognition, (ii) Alternative Evaluation-internal search, (iii) Alternative Evaluation-external search, (iv) Purchase, and (v) Outcomes. This concept describes the behavioural processes that are operative from the time the consumer recognizes that some decision is required to buy or use a product or service to the point at which there is some post-purchase evaluation of the particular purchase.

• ADVANTAGE OF THE DECISION—PROCESS APPROACH: The Decision—Process approach has some distinct advantages over the distributive approach. This approach views consumer behaviour as a process and is as concerned as to how a decision is reached as it is with the decision itself. Furthermore, the decision approach involves a sequence of processes, including the steps that generally precede the decision, the decision itself, and the course of action that follows the decisions. This approach is a more extended and elaborate means of studying consumer behaviour than is the distributive approach; therefore, it can ordinarily provide the marketing manager with more relevant information.

• A number of different approaches have been adopted in the study of decision making, drawing on differing traditions of psychology. Each of these approaches have alternate models of man, and emphasise the need to examine quite different variables. These approches are: – – – • Economic Man Psychodynamic Behaviourist Cognitive Humanistic

• Economic man approach: In order to behave rationally in the economic sense, as this approach suggests, a consumer would have to be aware of all the available consumption options, be capable of correctly rating each alternative and be available to select the optimum course of action. His buying decisions are mainly governed by the concept of utility.

• Psychodynamic approach: The psychodynamic tradition within psychology is widely attributed to the work of Sigmund Freud (1856 -1939). This view suggests that behaviour is subject to biological influence through ‘instinctive forces’ or ‘drives’ which act outside of conscious thought. Freud identified three facets of the psyche, namely the Id, the Ego and the Superego.

• Behaviourist approach : This approach states that behaviour is explained by external events, and that all things that living beings do, including actions, thoughts and feelings can be regarded as behaviours. The causation of behaviour is attributed to factors external to the individual. The most influential proponents of the behavioural approach were Ivan Pavlov (1849 -1936) who investigated classical conditioning.

• The cognitive approach : This approach attributes observed action (behaviour) to intrapersonal cognition. The individual is viewed as an ‘information processor’. According to this approach internal factors of an individual influence his/her thought patterns and decision making abilities and so the influential role of the environment and social experience is limited, with consumers actively seeking and receiving environmental and social stimuli as informational inputs aiding internal decision making which is a process which goes on internally in the mind.

• There are two major types of Cognitive models. These models identify some influencing factors, and state the relationships between these factors in consumer decision making. Typically they follow the traditional five step classification outlining problem recognition, information search, alternative evaluation, choice and outcome evaluation as the key stages in consumer decision processes. These two models are : • Theory of Buyer Behaviour (Howard and Sheth 1969)) • and The Consumer Decision Model (Blackwell, Miniard et al. 2001).

• INTEGRATIVE–COMPREHENSIVE MODELS OF CONSUMER BEHAVIOUR: • With the emergence of consumer behaviour as a subject for intensive studying in its own right, researchers and practitioners realized the need for an integrative-comprehensive model. The Howard Sheth model is one such model.

• Theory Of Buyer Behaviour -Howard Sheth model: • Howard and Sheth contend that when a buyer is interested in purchasing something, he actively seeks information from his commercial and social environment. • The buyer’s perceptual processes limit the information received and modify it so that it is consistent with his own frame of reference. In addition to the process of searching for information, the buyer draws from his learning constructs, such as attitudes and motives. • The choice criteria the buyer has developed enable him to choose a brand that has the greatest potential for satisfying his motives. This model distinguishes three levels of decision making.

• These three levels of decision making are: • I. --Extensive problem solving : This is the earliest stage of decision making in which the buyer has little information about brands and has not yet developed well defined criteria by which to choose among products. • II. - Limited problem solving : In this more advanced stage the choice criteria are well defined but the buyer is still undecided about which sets of brand will serve him best.

• III. - Routinised response behaviour – In this stage buyers have well defined choice criteria and also have strong predisposition towards one brand. • In this theory four major components are involved. They are : A) Input variables B) output variables C) hypothetical constructs and D) Exogenous variables

• A) THE INPUT VARIABLES are the stimuli from the environment. There are three types of stimuli: • Significative stimuli: These are actual elements of the product portrayed to the consumers. • Symbolic stimuli: These are symbolic forms of the product such as advertisements, logos etc. • Social stimuli : These are the various influences from family, social circle etc.

• B) The OUTPUT VARIABLES: These are : • Attention : the buyer’s ability to intake brand information • Comprehension : the buyer’s ability to understand the brand • Attitude towards the brand • Intention of purchase • Purchase behaviour

• C) HYPOTHETICAL CONSTRUCTS : These are intervening variables. They are categorised into two groups • 1. Perceptual constructs : - Sensitivity to information- This is the degree to which the buyer regulates the stimulus information flow - Perceptual bias –Distorting or altering information - Search for information-active seeking of information about brands and their charecteristics

• • • 2. learning constructs: the learning constructs are a. Motive b. Brand potential in the buyer’s mind c. Decision mediators i. e. the buyer’s mental rules for matching and ranking purchase alternatives according to his/her motives d. Predisposition –a preexisting preference towards brands e. Inhibitors or the environmental forces such as price and time pressure which restrain purchase of a preferred brand f. Satisfaction or the degree to which buyers’ expectations are met.

• D. Exogenous variables: • Exogenous variables are those variables which help explain individual differences to such factors as financial status, time, pressure, and social class. • The great strength of the Howard Sheth model lies in the fact that a multiplicity of variables are linked in a precise way.

• ENGEL, BLACKWELL, AND KOLLAT’S CONSUMER DECISION PROCESS MODEL : • The Consumer Decision Process model has been developed by Engel, Blackwell, and Kollat. This model has gone through numerous revisions and the most recent model has been contributed to Miniard in collaboration with Engel and Blackwell The model has the following criteria. (i)The model conforms well to the rules of logic. (ii)The model is internally consistent. (iii)The model encompasses relevant theories. (iv)The model can be empirically used (v)The model serves as a basis to derive new models. (vi)The model is consistent with existing model. (vii)The model suggests new directions for research

ENGEL, BLACKWELL, AND KOLLAT’S CONSUMER DECISION PROCESS MODEL : • The Stages in the Consumer Decision Process • The consumer decision process model is organized around five interrelated decision-process stages: (i)Problem Recognition, (ii) Search, (iii) Alternative Evaluation, (iv) Choice, (v) Outcomes. These phases are affected by internalised environmental influences, general motivating influences, product/brand evaluation and information processing. • PROBLEM RECOGNITION • Problem recognition occurs when an individual perceives a difference between an ideal state of affairs and the actual state of any given moment. The simplified depiction of problem recognition indicates that there are two basic sources of problem recognition: (i) Motive activation, (ii) External stimuli.

• Problem recognition can be activated solely by motive activation without any type of external stimulation. Motives are enduring predisposition to strive to attain specific goals, and they contain both an arousing and a directing dimension. Motive activation causes the individual to become alert, responsive , and vigilant because of the feelings of discomfort produced. The result is the formation of a consciously felt drive that energizes motive satisfying behaviour.

• Problem recognition can also be activated by external stimuli. Technically, external stimuli affects new information and experience that trigger motive and, in turn, motive activates problem recognition.

• The Search Process • After problem recognition the consumer must then assess the alternatives for action. Initially the consumer will search internally to determine whether or not sufficient information is available to make a purchase decision. If the internal search and the alternative evaluation process reveals that alternatives have been well defined and a satisfactory one can be identified, the remaining stages of the decision process will be circumvented, and a purchase decision will be made. This type of response to problem recognition is referred to as routinized behaviour.

If the internal search does not prove to be sufficient, external search is activated. Several variables such as attitudes, beliefs, and personality also have impact on consumer internal search for buying products. Internal search for information occurs instanteously and largely unconsciously. In many instances, this search is insufficient to permit the consumer to make a decision.

• In this model there are two different modes of operation by consumers. They are : a) extended problem solving behaviour (EPS) and b) limited problem solving behaviour (LPS) • In extended problem solving behaviour there is high levels of involvement as well as high levels of perceived risk. In EPS the product evaluation process will be rigorous and if necessary the consumer will shop in many outlets.

• In LPS there is low level of involvement. The model is applicable to both EPS and LPS behaviours, but the degree to which the various stages in the model would be used would be different.

• INFORMATION PROCESSING: • Information processing refers to the process by which sensory inputs are transformed, reduced, elaborated, stored, recovered, and used by the consumer. Research has established unequivocally that consumers are highly selective in the way they process information. In fact, the information loss and distortion can be so substantial that there is very little similarity between the actual content of the message and the content as perceived and retained by information loss and distortion occur as new information is passed through active memory.

• The information that the consumer processes can exert an influence on four key variables within the central processing unit: (i) Evaluating criteria, (ii) Beliefs, (iii) Attitudes, and (iv) Intentions • Evaluative criteria are the internalised specifications and standards used by consumers to assess and compare alternative products. They are the desired outcomes from choice and use expressed in the form of specifications used to evaluate alternatives.

• Evaluative criteria are concrete, product specific manifestations of underlying personal goals, typically applied across several products within a product type. Several factors must be kept in mind when considering these evaluative criteria, which are shaped by an individuals personality, stored information, social influence, and marketing efforts of firms. These criteria change over time and consequently the evaluative criteria related to any product must be careful.

• Beliefs represent information that links a product or brand to evaluative criteria. Where as evaluative criteria are highly individualized and, therefore, rather resistant to marketer influence, beliefs can normally be influenced by the marketer with little difficulty. • Attitude can be defined as a learned predisposition to respond consistently in a favourable or unfavourable manner with respect to a given alternative. The alternative choice with the highest rating summed across the evaluative criteria has the greatest probability of being purchased and consumed when a corresponding need exist.

• Intention refers to subjective probability that a specified action will be undertaken in a particular instance. Thus, it has been concluded that a change in attitude is necessary, but not sufficient, condition for change in intention. The change in intention than leads to a change in behaviour, unless it is inhibited by an environmental factor. Two environmental influences that have a particularly pronounced effect on intentions are normative compliance and anticipated circumstances.

• Normative compliance refers to the existence of perceived social influence on choice plus the motivation to comply with that influence. The sensitivity to comply with social influence is determined by the individual’s personality makeup. Personality is normally considered to be the consistent pattern of responses to environmental stimuli. The term lifestyle refers to the pattern of enduring traits , activities, interests, and opinions which determines general behaviour and thereby makes one individual distinctive in comparison with another.

• Choice and outcomes • Choice generally follows the formation of a purchase intention but perceived unanticipated circumstances can serve as a barrier to such intention. Examples of unanticipated circumstances are: changes in income, changes in family circumstances, and non-availability of alternatives. In the event that an intended behaviour is thwarted, the intention either remains in existence until a later time or the decision-making process begins anew. The choice process includes the selection of the particular retail outlet at which product is purchased as well as those activities associated with determining the conditions of sales.

• The decision to purchase a product or service can result in two types of outcomes: satisfaction and dissonance. If the customer’s post-purchase evaluation indicates that the chosen alternative is consistent with prior beliefs and attitudes, the resultant outcome is satisfaction. • A purchase decision can also produce post decision dissonance. • Post-decision dissonance is a state of doubt motivated by awareness that although one alternative was chosen, the alternatives not chosen also have desirable attributes.

• Dissonance is especially likely to occur if the purchase is financially burdensome and several attractive alternatives were rejected. The purchaser now might be sensitive to the information that confirms the choice and thereby relives doubt. Therefore, post decision search for information is not unusual in such circumstances.

• Nicosia model • Francesco Nicosia was one of the first consumer behaviour theorist to shift focus from the act of purchase itself to the more complex decision process that consumers engage in about products and services. • The model contains four major components. They are • a) The firm’s attributes, communication and outputs and the consumer’s psychological attributes. • b) the consumer’s search for and evaluation of the firm’s output and other available alternatives. • c) the consumer’s motivated act of purchase and • d) the consumer’s use or the storage of the product.

• In field one the firm’s advertising message is exposed to the consumer. The consumer determines the inflence it has on him. This attitude is the input to field two. • The consumer will probably become motivated to gain information at this point and search activity is likely to occur. Both internal and external search will occur.

• Infield two after search process and alternative evaluation the consumer might or might not be motivated to buy the product. • If the resultant output of field two is +ve motivation to buy the product then it becomes the input for field three in which motivation might transform into actual purchase.

• Field four is storage or usage of the purchased product. The output of the fourth field is feedback on product sales to the business firms and on the performance of the purchased product