Consumer BehaviourCB is routed in Marketing concept, which emerged around 1950s.Earlier,Production concept : assumes that, consumers are mostly interested in product availability at low prices and marketing objectives should be cheap, efficient production and intensive distribution.

Product Concept : Consumers will buy the product that offers them the highest quality, best performance and most features

Product orientation leads to strive for improving product quality and add features which are technically feasible, without knowing whether consumers want it.This too much focus on product is termed as marketing myopia, concept by Levitt.Marketing myopia causes a company to ignore crucial changes in the market place, because it causes the marketers to look in the mirror rather than through the window.Examples : People do not buy PDAs they buy the ways to organize their data.People do not buy drill bits , they buy ways to make holes.

Selling Concept : was a natural evolution of production and product concept. It believes that, consumers are unlikely to buy the firms products unless they are aggressively persuaded to do so.

Marketing Concept : Consumers needs and wants as primary focus

Implementation of marketing concept is based on three pillarsMarket segmentationTargetingPositioning Developing distinct image through USP (value proposition)

Customer value, satisfaction and retentionCustomer value is the ratio of perceived benefits to perceived cost. Benefits include economic, functional or psychological benefits. Costs include money, time, effort, psychological.Perception differs from customer to customer. Customer is satisfied if customer value exceeds customer expectations.Many companies control customer expectations for assured satisfaction through standard product offering

Example : McDonalds offers standard product across world i.e. quality, service, cleanliness and valueWinning new customers requires 10 times more expenditure than retaining existing customers.Loyal customers buy more, are less price sensitive, pay less attention to competitors campaign, servicing them is cheaper and they spread positive word of mouth.Firms maintain selective relationship with customers. ExamplesShare brokersBanking servicesCredit card companiesCompanies selling multiple consumer durables.Customer life-time value (CLV) is taken into consideration as every interaction with consumer is viewed not as a part of transaction but as a part of customer relationship.

Model of Consumer BehaviourIt is a three stages model of input, process and output as follows -Input (external influences)Firms marketing effortsProductPrice Place PromotionSocio Cultural EnvironmentFamilyInformal SourcesNon Commercial SourcesSocial ClassCulture and subculture

Process

Need RecognitionInformation SearchEvaluation of AlternativesPsychological FieldMotivationPerceptionLearningPersonalityAttitudeExperience

Output (Purchase decision and post-purchase behavior)PurchaseTrialRepeat Purchase

Post Purchase EvaluationSatisfaction/DissatisfactionDisposal of product

Cultural factorsCulture at three levelsSupra national Regional (European, asian)National Spanish, IndianGroup Level (subculture) Maharashtrian, Bengali, asian-american

Social Classes : Relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests and behaviours.

Social Class = Social status. It depends on purchasing power or material possession.

Aspiration of higher social class leads to conspicuous consumption.

Psychological FactorsMotivation is the driving force within individuals that impels them to actionUnfulfilled needs leading to tension Drive Behaviour Need FulfillmentCycle continues till needs are fulfilled or tension reduces to zero.Motivation can be positive or negative.

PersonalityThose inner psychological traits that determines how a person responds to his environment.Consumers could be profiled based on personality. Eg. Identifying characteristics of chicken soup lovers.Brand personality is developed to take it closer to targeted customers. Eg. Nike athlete in you, BMW performance driven, Toyota Quality, Emami mens creamBrand personality could be associated to gender. Eg. Emami mens cream, Pulser male, fair and lovely feminine.Personality and colour Coca cola Excitement Red, Yellow novelty, Black sophistication

Types of CBBased on two parameters involvement in purchase (High, low) on X axis, Perceived differences in available brands (High, Low) on Y axis.Leads to a matrix of four zones(Low, Low) Habitual buying behavior eg salt, oil(Low, High) Variety seeking eg apparels, restaurants(High, Low) Dissonance reducing eg Television(High, High) Complex behavior eg house, car

Buying RolesInitiatorInfluencerDeciderBuyerUser

Reference GroupsAny person or group that serves as point of comparison (reference) for an individual in forming general or specific attitude, values or behavior.Reference group forms frame of reference for purchase decisions.Reference groups areFamilyFriendship groupsShopping groupWork groupVirtual groups or communitiesBrand communities (Nike, Apple, Samsung mobile)

Industrial Buying Business Markets Vs. Consumer marketsFewer buyersLarge buyersClose supplier-customer relationshipGeographically concentrated buyersDerived demandInelastic demandFluctuating demandProfessional PurchasingDirect purchasingReciprocity of DemandLeasing