3 – Consumer Markets and Consumer Buying Behaviour

Introduction

Buyers’ buying dynamics differ significantly in most markets, whether they are consumer or organisational buying markets. As a result, the marketing manager’s responsibility is to comprehend these variances in purchasing behaviours and generalise them for better targeting and product offerings. In consumer markets, for example, purchasers differ in age, income, educational level, geographical location, personalities, lifestyles, and expectations of the items and services offered.

So, the non-behavioural correlate, which identifies factors that explain the consumer’s state of being, such as age, gender, income, and occupation, and the behavioural correlate, which explains his past behaviour, current consumption pattern, and intended behaviour, influence the consumer decision-making process. Marketing managers must understand and collect appropriate knowledge on consumers’ non-behavioural and behavioural correlates for improved managerial decision-making. Consumer purchasing is also influenced by a variety of situational factors, such as the location of the store, the crowd in the store, the distance of the store from the consumer’s residence, the type and number of stock-keeping units available in the store, the nature and frequency of advertising, the effects of sales promotion, and public relations. In this lesson, you will learn about several facets of consumer behaviour and the primary factors influencing an individual customer.

3.1 Types of Market

When individual consumers consume a firm’s ultimate output, we might refer to this as a consumer market. End-user demand determines a company’s level of production and marketing effort.

There are various types of consumer markets:

Fast-moving consumer goods (FMCG) market: Products in this market have a low unit value and are repurchased frequently. One of the market’s distinguishing characteristics is its high volume. FMCGs include soaps, juices, groceries, chocolate, and so on.

Consumer durables Market: This is a low-volume but high-unit-value market for consumer durables, including televisions, dishwashers, DVD players, gaming consoles, etc.

Soft goods market: soft goods, such as clothes and shoes, are comparable to consumer durables in that they wear out faster and, hence, have a shorter replacement cycle.

Services Market: a market that deals with intangible products. Teaching, parlours, childcare, and other occupations are examples.

Aside from this, we can divide markets into the following categories:

1. Markets based on area: When area is utilised to categorise markets, we divide them into local markets, regional markets, national markets, and international markets. It is determined by the location of the buyers and sellers in a specific area.
2. Markets based on transaction nature: Based on transaction nature, markets can be divided into two major categories: the spot market and the futures market.
3. Markets based on volume of business: Depending on the volume of business, markets are typically categorised into wholesale and retail markets.
4. Markets based on time: Time is sometimes used to classify markets. It is divided into three categories: extremely short periods, short periods, and long periods. As a result, we have very short-term markets, short-term markets, and long-term markets.
5. Markets based on seller status: Markets are widely grouped into three categories depending on seller status: primary, secondary, and terminal markets.
6. Markets based on the nature of competition: The buyer-seller interaction is the most essential market classification. Three major factors determine the market’s competition:
   1. Factor of substitutability
   2. Factor of interdependence
   3. Factor of ease of entry

3.2 Types of Customers in the Consumer Market

In some way or another, we are all customers/consumers. Each of us has the potential to be a shopper, buyer, user, purchaser, and/or end-user.

First, let us define “client” and “consumer.”

Example: If a person obtains an automotive loan from HDFC Bank, he is a ‘customer’ of HDFC Bank’s products and services. He may now be a potential client or customer for the bank’s other products and competitor products and services.

As a result, a customer can be considered a potential Consumer. Consumer and Customer are synonyms in the thesaurus and some literature. As a result, the terms Customer and Consumer are used interchangeably throughout this article. A consumer regularly engages in any or all of the activities listed in the definition. Consumers have traditionally been defined rigorously regarding commercial goods and services, including monetary exchange. Over time, this concept has grown in scope. Some scholars include commodities and services that do not involve a financial transaction, so customers of non-profit organisations’ services are also considered consumers. Organisations like UNICEF, CRY, and political parties can regard their constituents as “consumers.”

Anyone who purchases regularly from a retailer or firm is called a “customer” of that store or company. As a result, a customer is usually described in terms of a certain business or firm.

We can also define five sorts of customers based on their purchasing patterns. They are as follows:

Loyal Customers: These are customers who repeatedly buy the same brands or from the same stores. Companies and stores must contact these customers regularly through various means such as mass media, telephone, mail, email, and so on. They can impact a brand’s marketing mix decisions. Nothing makes a loyal customer happier than showing them how much you appreciate them. If a devoted consumer is pleased, the likelihood of recommending a brand or store to others is high.

Discount Customers help ensure that your inventory turns over, significantly contributing to cash flow. However, because they are more likely to return products, such customers can raise the cost of sales.

Impulse Customers: These people buy products or brands on the spur of the moment, i.e., they make decisions right before the purchase. Nothing beats serving an impulse buyer and having them respond positively to our recommendations for a brand or store. Brands want to aim their displays at this segment of customers because they will supply them with valuable customer information and knowledge.

Need-based Customers: These customers are motivated by a particular need. They will only purchase a brand if it meets their needs. Similarly, when they enter a retail store, they will search to see whether they can find the brand that meets their requirements. If not, they will depart immediately. They purchase for various reasons, such as a special event, an unavoidable necessity, or a specific price point. These clients can be converted into loyal customers if their needs are met quickly and they are pleased. Marketers may not find them enjoyable to service, yet they are the most important source of long-term growth for a company.

A brand or store must realise that need-based clients are readily lost to competition.

For instance, Lux may lose a customer to Fiama Di Wills soap, or a retailer may lose a consumer to Internet shopping or another retailer. Positive communication, usually in the form of innovation and enhanced service, is essential to solving this challenge.

Wandering Consumers: For a retail store, such customers constitute the largest segment in terms of traffic while accounting for the most minor percentage of revenues. There isn’t much you can do about this group because your store’s location primarily determines your number of Wanderers. A retail store, in particular, will draw many such customers if it is located in a mall or shopping centre.

3.3 Buyer/Consumer Behaviour

A consumer should be able to purchase a product or service. As a result, it is critical to research the consumer’s behavioural aspects, i.e., there must be a reasonable answer to the following questions:

1. What does a consumer purchase?
2. From where does he buy it?
3. How often does he buy?
4. How much does he spend? and
5. What motivates him to buy?

Though the first four questions can be answered by conducting statistical data-based market research, such as ‘retail audit,’ ‘prescription audit,’ and so on, the last question is challenging. It can only be answered by conducting ‘motivational research.’ Nonetheless, the answer to the ‘Why’ of consumer behaviour is crucial for every organisation to consider when building a successful product/service and its marketing plan.

A consumer is someone who buys goods and services for his or her use. Consumer behaviour can be defined as the actions of ‘individuals’ who are directly involved in deciding how to spend their available resources (time, money, and energy) in getting and using goods and services.

3.3.1 General Consumer Behavioural Characteristics

The purpose of studying consumer behaviour is because its general characteristics may impact current corporate operations. The following are some of these characteristics:

1. The consumer is supreme.
2. It is possible to learn about consumer behaviour.
3. It is possible to affect consumer behaviour.

Why Research Consumer Behaviour?

1. It will be effective in segmenting the market.
2. It will aid in the creation of an efficient marketing mix.
3. It will aid in evaluating new market opportunities. The concept is unlikely to be abandoned for a long time because there will always be products and people of such a character that some businesses will feel.

What Factors Influence Consumer Purchasing Decisions?

Cultural, social, personal, and psychological aspects impact consumer purchasing behaviour. Cultural variables have the most significant and most profound influence.

3.3.2 Buying and Purchase Decision Process

Buyer choice processes are consumers’ decisions before, during, and after purchasing a product or service in a potential market transaction. To better understand consumers’ purchasing decisions, markets must look beyond the numerous impacts on purchasers. Marketers must specifically identify who makes the purchasing choice, the sorts of purchasing decisions, and the steps in the purchasing process.

Stage of Need Recognition and Problem Awareness

A purchasing process begins when a consumer perceives a significant gap between his current level of pleasure and his expectations in a consumption circumstance. The need is a state of internalised deprivation. A consumer must have a plethora of demands. Still, he becomes aware of only a handful when deprived of particular product or service experiences that would have otherwise fulfilled him. This explanation assumes that consumers are always aware of their demands due to an internal process of deprivation realisation. However, the marketer can make the consumer aware of a specific need through communication, or the social environment might make him aware of a particular need.

Example: Needs associated with basic instincts, such as hunger, sex, and thirst, are needs with the capacity for self-arousal. Conversely, the individual customer’s socialisation process stimulates social wants, such as ownership of products and services associated with social class belongingness and status. Marketers expose consumers to new items and services through marketing communication programmes to satisfy latent, hidden desires.

Either internal or external events can trigger a need. A typical man’s basic wants rise to a certain degree and become a drive, and he learns from previous experience how to satisfy these demands, such as hunger, thirst, sex, and so on. This is an example of an internal stimulation. External stimulation can also trigger a need, such as seeing a new product in a store while shopping for other items. To a marketer, the need arousal stage has two implications:

1. The marketer must find the drive that may really or potentially link with the product class or brand and persuade the customer that the product may meet his wants;
2. He must also know that product need levels fluctuate over time and are triggered by various indicators. The marketer can tailor cues better to match the natural cycles and timing of need arousal.

As a result, the mere existence of a need does not trigger a decision-making process. When this need is accompanied by goal-directed behaviour, it is referred to as a motive. Motives are more dynamic and kinetic than necessities, which are more static. Motives influence the proclivity to seek knowledge and the tendency to expend effort to obtain that information.

Stages of Information Search

Following demand arousal, the consumer’s behaviour leads to the acquisition of available information about various stimuli, in this case, items and services, from numerous sources for further processing and decision-making. A human can be in one of two states, depending on the strength of the need discrepancy and the situation’s urgency. The first state is heightened attention, in which the consumer becomes more attentive to information about the items and services he needs. He becomes aware of facts relevant to his needs and possibilities for fulfilment. When a consumer has to buy a television, he will pay closer attention to television commercials. He recalls comments regarding televisions made by friends and associates. In this situation, he gradually gathers knowledge through a continuous or passive information search.

Suppose the demand is more significant and the situation is more pressing. In that case, the individual enters a stage of active information search in which he attempts to gather additional knowledge about the product, its essential traits, the quality of various brands, and the outlets where they are available. His information quest is direct and visible in his behaviour.

Internal sources are the first source of customer information. The consumer explores his memory box for any relevant product information. If the information is unavailable and there is no supporting information from an internal source to make a purchasing choice, he may gather information from external sources. There are four types of external sources for needed information.

• Individual Sources (family, friends, neighbours and peer groups)
• Commercial or Market Dominated Sources (advertisements, salesmen, dealers, and company-owned sales force) (mass media, consumer rating organizations, trade association publications)
• Experiential Sources (handling, inspecting, and utilising the product) At this stage, the customer actively participates in the purchasing process and pays attention to the product. If he loses interest during this involvement, his attention will be distracted, and the purchasing choice process will fail.

Assume a housewife requires assistance with washing. She may seek additional information about these machines if she becomes aware of them. She might hunt for information on different washing machines, their respective pricing, operational efficiency, and warranty and service options.

Stage of Alternative Evaluation

Once a consumer’s interest in a product(s) is piqued, he or she moves on to the next stage of evaluating alternatives. In the evaluation stage, numerous product alternatives are tested mentally (cognitively) and emotionally (effectively). During this stage, the customer assigns relative value-weights to various products/brands based on accumulated product knowledge and develops conclusions about their respective ability to satisfy his wants. Cognitive evaluation occurs when a customer employs objective choice criteria. When we use emotional reasoning to evaluate alternatives, we refer to this as affective assessment. Consumers evaluate brands by applying either or both requirements in a buying situation.

Evaluation establishes a buying intention, which can be to purchase or reject the product/brand. The forecasting of future course of conduct is referred to as intention. On the other hand, the strength of the positive intention will determine the ultimate purchase: the intention to buy.

In our housewife example, after arousing her interest in washing machines, she will compare the stock of knowledge she has gathered about the various washing machines on the market and then evaluate the value of each one before developing the intention to buy. However, if she believes a washer-man/woman would suffice, she may reject purchasing any washing machine.

Examining consumer behaviour allows the marketer to improve or create the product and segment the market based on product qualities. As a result, during the evaluation stage, the customer assigns relative weights to each aspect of his purchasing choice and rates each brand based on those variables for each alternative.

Stage of Purchase Decision

Finally, the consumer makes a purchasing decision. Purchase decisions can be made in three ways: do not buy, buy later, or buy now. No buying returns the consumer to the problem recognition stage because his consumption problem remains unsolved, and he may become involved in the process again, as previously indicated. A consumer may postpone a purchase due to a lack of motivation or an evolving personal and economic condition that requires the consumer not to buy today or delay a purchase for a future period. If the consumer develops favourable sentiments toward the chosen option, he or she will purchase.

A purchase is a commitment made by a consumer to buy a product. The final stage of the purchasing decision process concludes the deal. It can take the form of a trial and/or adoption. If a buyer purchases anything for the first time, it may be considered a trial from the behaviour standpoint. This trial allowed him to gain knowledge about the thing he had purchased. If this experience is positive in terms of satisfaction, then repeat purchases may occur; otherwise, they will not.

For instance, when a new brand of bathing soap is released, the buyer may purchase it for the first time as a trial. However, he will only buy it again if he is satisfied with its performance. However, the trial purchase option is not available in all circumstances. A trial is not conceivable in the case of consumer durables such as scooters, refrigerators, and the like because once a product is acquired, it must be adopted and used again. Adoption refers to a consumer’s decision to commit to full or continued use of a product. In our scenario of the housewife, the washing machine is not available for trial purchase; it must be embraced. If the consumer decides to purchase, his post-buy behaviour is investigated in the following stage.

Stage of Post-Purchase Behaviour

The consumer is satisfied if the product meets his expectations. If the product’s performance exceeds expectations, the consumer is thrilled; if the performance falls short of expectations, the consumer is unsatisfied. So, post-purchase behaviour results in one of three outcomes: the consumer is satisfied, the customer is delighted, or the customer is unsatisfied. In the event of dissatisfaction, the consumer returns to the problem recognition stage and repeats the information search process, alternative appraisal, and final purchase. In the succeeding phases, he is unlikely to incorporate the rejected brand from the prior round, instead focusing on the existing brands and new brand information gleaned while still analysing the previous brand.

A consumer’s behaviour after committing to a product is called post-purchase behaviour. It stems from the consumer’s experience with the product and is expressed in satisfaction. This behaviour is demonstrated in recurring purchases or a lack of future purchases. A positive product-use experience results in repeat purchases, recommendations from satisfied consumers to new customers, increased usage, and brand advocacy.

For example, if you eat a burger at McDonald’s and like it, you will be satisfied and likely to dine there again.

The study of post-purchase behaviour also involves how consumers use and dispose of the goods after use. Product disposal outlines the rising environmental challenges associated with package disposal and its influence on the environment.

3.4 Factors Influencing Consumer Behaviour

 3.4.1 Cultural Factors

Culture is a complex conglomeration of symbols (attitudes, ideas, values, language, and so on) and artefacts formed by a society and passed down from generation to generation. People’s biological actions, such as eating, are culturally determined. Thus, a hungry Indian consumer could prefer rice and dal, but a hungry American might prefer a hamburger followed by a Coke. Cultures vary with time; for example, two-income nuclear families and changing gender roles are two of the most recent cultural developments. Because we live in a global village, culture is spreading across borders.

1. Culture has an impact on behaviour.
2. Culture is a social phenomenon.
3. Adoption of culture
4. Culture determines values
5. The tendency of cross-cultural activities is increasing.
6. Culture has a significant impact on marketing strategy.

For example, American culture values achievement, success, efficiency, advancement, material comfort, and so on, but Indian culture values peace, harmony, truth, forgiveness, and service, among other things.

Minor subcultures Within a larger culture are differentiated by their members’ specific identification, socialisation, and distinct behavioural patterns. Within Indian culture, for example, there are unique sub-cultures such as Punjabi, Marwari, Bengali, South Indian, and so on, each with its particular qualities.

3.4.2 Social Factors

Consumer behaviour is heavily influenced by social forces and groups such as reference groups, family, and so on:

1. Reference groups connect formally or informally to influence (directly or indirectly) each other’s attitudes and behaviour. Membership groups are groupings of people who directly affect an individual. Membership groupings are classified into two types: primary and secondary.
2. Primary groups: Interact on a regular and informal basis, such as family, friends, neighbours, and co-workers.
3. Secondary groups: Interact on an irregular and formal basis, such as trade unions, professional organisations, and members of socio-cultural societies.

People are heavily impacted by their reference groups for product and brand choices, sometimes primarily on brand choice in goods such as furniture and apparel, product choice in items such as beer and cigarettes, or both choices in products such as automobiles and colour televisions. Marketers also try to reach out to opinion leaders in these reference groups. These opinion leaders are people who have a lot of power over a lot of people, like a local sarpanch or the head of a religious institution. Celebrity endorsements of professional brands/products in the media are one method of influencing customer purchasing behaviour.

For instance, people are more inclined to use/prefer brands promoted by their favourite celebrity.

Family: Family members are the most influential reference groups on a consumer’s purchasing behaviour.

There is a shift in the buying decision centre, i.e., the family member with the most influence over the purchasing decision. Previously, the eldest male member of the family decided to purchase a house/flat, car, etc. In contrast, the female members decided on major household products, but this is changing as female members (even children) strongly influence such purchases as real estate, cars, etc., which can be attributed to the impact of education/media advertising.

Roles and Status: An individual’s purchasing behaviour is determined by the type of role that individual is expected to play when purchasing; for example, an individual plays the role of a father when purchasing birthday gifts for his son, or the same individual is a husband when buying an anniversary gift for his wife. Each function has a status; for example, the individual indicated above could be the Managing Director of an MNC or an elementary school teacher.

Again, social class is a stratification of a community based on a hierarchical system ruled by wealth, position, and consequent status. Members of the same social class have comparable ideals, interests, and behaviours.

1. Each community is divided into several social classes, each reflecting a status hierarchy. Although the ancient caste-based venue system is progressively diminishing, it is still a force to be reckoned with in India, particularly in the interior.
2. The formation of social classes is a multifaceted and dynamic process. There are three general classes:
   1. Upper class (15%)
   2. Middle class (65-70%)
   3. Lower class (15-20%)
3. Each class’s members have comparable values, interests, and behaviours.
4. Different social groups have unique tastes for products and brands in sectors such as apparel, home furnishings, automobiles, leisure activities, etc.

3.4.3 Personal Factors

The buyer’s attributes, such as age, life stage, career, lifestyle, and so on, are also predictors of his purchasing behaviour.

Age: A person’s behaviour and habits vary as he gets older; for example, a child’s profound interest in toys and games transforms into acquiring material stuff such as automobiles and houses as he develops to adulthood, and later in life, may shift away from such things owing to shifting priorities.

Stages of Life Cycle: Consumption is shaped by the family lifecycle; for example, a youthful, independent bachelor will typically consume differently than a middle-aged family man with dependents to care for.

The following are the nine stages of the family life cycle (as described by William D Wells and George Gubar):

1. Bachelor stage: young, single, not living at home, minimal financial responsibilities, fashion opinion leaders, fun-oriented Purchase: essential household items, furniture, automobiles, and vacations.
2. Newly married couples: Young, no children, most excellent buying rate and average purchase of durables: automobiles, appliances, furnishings, and vacations.
3. Full nest I: The youngest child under six is the peak time for home buying. Liquid assets are scarce. The child is interested in new products that have been highly advertised. The child purchases washing machines, dryers, televisions, baby food, chest rubs and cough remedies, vitamins, dolls, wagons, sledges, and skates.
4. Full nest II: The youngest child is six or older, the financial situation is better, less swayed by advertising, more extensive packages, multiple units offered, and the purchase of a variety of foods, cleaning supplies, bicycles, music lessons, and pianos.
5. Full nest III: The financial situation is still better for older married couples with dependent children; some children obtain employment, and advertising is challenging to persuade. The average purchase of durables is high: newer, more aesthetically pleasing furnishings, automobile travel, superfluous appliances, yachts, dental services, and periodicals.
6. Empty nest I: Older married couples with no children living with them, the head of the household in the labour force, and peak home ownership. Most are content with their financial situation and savings and are interested in vacation, pleasure, and self-education. Make contributions and gifts. New products do not pique curiosity. Purchase a vacation, indulgences, or house upgrade.
7. Empty Nest II: The couple married at a later age. No children are living at home, and the head of the household has retired. Income has been drastically reduced. Stay at home. Purchase medical equipment and medical-care items.
8. Solitary survivor I: In the labour force, income is still good, but residence is likely to be sold.
9. Solitary survivor II: Retired, same medical and product demands as other retired groups; extreme income reduction, unique need for care, affection, and security.

Work: The type of one’s occupation can have an impact on purchasing behaviour.

Blue-collar labourers, for example, prefer to buy work clothes and shoes, but white-collar corporate leaders prefer to purchase pricey, tailor-made suits.

Lifestyle: How people live, spend their time, and spend their money are called their lifestyles. It refers to the ‘complete person,’ expressed through activities, interests, and opinions. Marketers’ job is discovering the connections between their products and lifestyle groups. The AIO dimensions, as given in the table below, can be used to define the lifestyle pattern.

Activities	Interests	Opinions
Work	Family	Themselves
Hobbies	Home	Social issues
Social events	Job	Politics
Vacation	Community	Business
Entertainment	Recreation	Economics
Clubs	Fashion	Education
Community	Food	Products
Shopping	Media	Future
Sports	Achievements	Culture

AIO Framework

The marketer can determine the consumer’s psychographics (using psychology and demography to understand an individual) and build an appropriate brand to meet the consumer’s psychographics. Raymond Suiting’s Complete Man positioning and Coca-Cola Cola’s Go Better with Coca-Cola positioning are examples of successful brand positioning based on consumer psychographics.

3.4.4 Psychological Factors

Personality and Self-Concept

Personality qualities influence a person’s purchasing behaviour.

1. Personality: A set of distinct psychological characteristics that result in a relatively constant and long-lasting response pattern.

• Self-esteem
• Dominance
• Sociability
• Autonomy
• Defensiveness
• Adaptability

2. Assumption: Consumers are more likely to prefer brands with similar personalities.

3. Self-Concept: How a person thinks of himself/herself, i.e., one’s perception of oneself. This is founded on the premise that “I am what I have.”

For example, a wealthy illiterate may have a sizable (displayed) collection of classics in literature to create the impression of being well-educated.

Motivation

Motivation is the power that energises behaviour, directs behaviour, and underpins the proclivity to continue.

Motivation Theories

1. Freud’s Theory: Sigmund Freud believed that psychological forces inherent in the unconscious condition of a person’s mind impact human behaviour.
2. Maslow’s Hierarchy of Needs: According to Abraham Maslow, human needs are structured in a hierarchy, and people will prioritise their most critical needs.
3. Hertzberg’s Hypothesis: Frederick Hertzberg created a two-factor theory that differentiates between dissatisfiers and satisfiers. The lack of dissatisfiers is insufficient to inspire a purchase; satisfiers must also be present.

Learning

Learning is a permanent change in behaviour resulting from direct and indirect information or experience. According to Schiffman and Kanuk, consumer learning is “the process by which consumers gain the purchase and consuming knowledge and experience that they apply to future related behaviour.”

There are two main ways to learn: behavioural learning and cognitive learning. Behavioural learning emphasises external environmental cues that trigger the behaviour, whereas internal psychological processes are undervalued. Cognitive learning is founded on the assumption that learning also happens due to mental activity, whereas behavioural learning regards the stimulus-response interaction as leading to learning.

Attitudes

Krech and Crutchfield write, “An attitude is a persistent organisation of motivational, emotional, perceptual, and cognitive processes concerning some aspect of our environment.” Schiffman and Kanuk define attitude in the context of consumer behaviour as “a taught inclination to behave in a consistently positive or negative manner concerning a certain object.”

Consumers have opinions about various topics, including products, brands, companies, celebrities, commercials, etc. Attitudes, which can be positive or negative thoughts and behavioural inclinations, are thought to be highly essential in the object evaluation process, products, or enterprises. According to research, attitudes have a significant impact on customer behaviour.

Perception

Perception is how a person chooses, organises, and interprets stimuli to form a meaningful and cohesive world picture. Stimuli can include products, packages, brand names, ads, commercials, etc. Perception is an individual process influenced by internal beliefs, experiences, wants, moods, and expectations. It is also influenced by stimulus properties such as size, colour, and intensity and the environment in which it is seen or heard.

For instance, if you believe Tata Sky is the most excellent DTH service provider, you are more likely to purchase Tata Sky when you decide to have a DTH connection.