Consumer Theory or Behaviour | CUET PG Economics – Notes

Consumer Behaviour

• Consumer Behaviour is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of the consumers in the marketplace and the underlying motives for those actions.
• The study of consumer Behaviour assumes that the consumers are actors in the marketplace. The perspective of role theory assumes that consumers play various roles in the marketplace. Starting from the information provider, from the user to the payer and to the disposer, consumers play these roles in the decision process.
• Consumer Behaviour is a complex , dynamic, Multidimensional process and all marketing decisions are based on the assumptions about consumer Behaviour which includes communicating , Purchasing , and consuming , interacting.

Meaning and Definition

• Consumer Behaviour is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of the consumers in the marketplace and the underlying motives for those actions.
• In the words of Engel, Blackwell, and Mansard, “consumer Behaviour is the actions and decision processes of people who purchase goods and services for personal consumption”.
• According to Schiffman “Consumer Behaviour is defined as Behaviour that consumers display in searching for purchasing, using evaluating and disposing of products and services that expect will satisfy their needs”.
• According to Louden and Bitta, “Consumer Behaviour is the decision process and physical activity, which individuals engage in when evaluating, acquiring, using or disposing of goods and services”.

Nature of Consumer Behaviour

• Influenced by Various Factors:

1. 1. Marketing factors such as product design, price, promotion, packaging, positioning and distribution.
   2. Personal factors such as age, gender, education and income level.
   3. Psychological factors such as buying motives, perception of the product and attitudes towards the product.
   4. Situational factors such as physical surroundings at the time of purchase, social surroundings and time factor.
   5. Social factors such as social status, reference groups and family.
   6. Cultural factors, such as religion, social class—caste and sub-castes.

• Undergoes a constant change: Consumer Behaviour is not static. It undergoes a change over a period of time depending on the nature of products.
• Varies from consumer to consumer: All consumers do not behave in the same manner. Different consumers behave differently. The differences in consumer Behaviour are due to individual factors such as the nature of the consumers, lifestyle and culture.
• Varies from region to region and country to county: The consumer Behaviour varies across states, regions and countries. It may differ depending on the upbringing, lifestyles and level of development.
• Information on consumer Behaviour is important to the marketers: Marketers need to have a good knowledge of the consumer Behaviour. They need to study the various factors that influence the consumer Behaviour of their target customers. i.e. Product design/model, pricing, packaging, positioning, promotion of product etc…
• Leads to purchase decision: A positive consumer Behaviour leads to a purchase decision. A consumer may take the decision of buying a product on the basis of different buying motives. The purchase decision leads to higher demand, and the sales of the marketers increase.
• Varies from product to product: Consumer Behaviour is different for different products. There are some consumers who may buy more quantity of certain items and very low or no quantity of other items.
• Improves standard of living: The buying Behaviour of the consumers may lead to higher standard of living. The more a person buys the goods and services, the higher is the standard of living. But if a person spends less on goods and services, despite having a good income, they deprives themselves of higher standard of living.
• Reflects status: The consumer Behaviour is not only influenced by the status of a consumer, but it also reflects it. The consumers who own luxury products like luxury car, watches and other items are considered belonging to a higher status. The luxury items also give a sense of pride to the owners.

Consumer

A Consumer is an individual who buys products or services for personal use and not for manufacture or resale . A Consumer may be a person or group of people such as a household and similar needs, not directly related to entrepreneurial or business activities who are the final users of products or services. Consumers are the basic economic entities of an economy. All the consumers consume goods and services directly and indirectly to maximise satisfaction and utility.

Types of Consumer:

1. Personal Consumer/ Individual consumer: Buy the Product and services for his family and own or family.
2. Organizational Consumers/Commercial consumers: Buy the product or services for manufacturing or reselling.

Importance of Studying Consumer Behaviour

• Modern Philosophy: It concerns with modern marketing philosophy – identify consumers’ needs and satisfy them more effectively than competitors. It makes marketing consumer-oriented. It is the key to succeed.
• Achievement of Goals: The key to a company’s survival, profitability, and growth in a highly competitive marketing environment is its ability to identify and satisfy unfulfilled consumer needs better and sooner than the competitors. Thus, consumer Behaviour helps in achieving marketing goals.
• Useful for Dealers and Salesmen: The study of consumer Behaviour is not useful for the company alone. Knowledge of consumer Behaviour is equally useful for middlemen and salesmen to perform their tasks effectively in meeting consumers needs and wants successfully. Consumer Behaviour, thus, improves performance of the entire distribution system.
• More Relevant Marketing Programme: Marketing programme, consisting of product, price, promotion, and distribution decisions, can be prepared more objectively. The programme can be more relevant if it is based on the study of consumer Behaviour. Meaningful marketing programme is instrumental in realizing marketing goals.
• Adjusting Marketing Programme over Time: Consumer Behaviour studies the consumer response pattern on a continuous basis. So, a marketer can easily come to know the changes taking place in the market. Based on the current market trend, the marketer can make necessary changes in marketing programme to adjust with the market.
• Predicting Market Trend: Consumer Behaviour can also aid in projecting the future market trends. Marketer finds enough time to prepare for exploiting the emerging opportunities, and/or facing challenges and threats.
• Consumer Differentiation: Market exhibits considerable differentiations. Each segment needs and wants different products. For every segment, a separate marketing programme is needed. Knowledge of consumer differentiation is a key to fit marking offers with different groups of buyers. Consumer Behaviour study supplies the details about consumer differentiations. 
• Creation and Retention of Consumers: Marketers who base their offerings on a recognition of consumer needs find a ready market for their products. Company finds it easy to sell its products. In the same way, the company, due to continuous study of consumer Behaviour and attempts to meet changing expectations of the buyers, can retain its consumers for a long period. 
• Competition: Consumer Behaviour study assists in facing competition, too. Based on consumers’ expectations, more competitive advantages can be offered. It is useful in improving competitive strengths of the company.
• Developing New Products: New product is developed in respect of needs and wants of the target market. In order to develop the best-fit product, a marketer must know adequately about the market. Thus, the study of consumer Behaviour is the base for developing a new product successfully.
• Dynamic Nature of Market: Consumer Behaviour focuses on dynamic nature of the market. It helps the manager to be dynamic, alert, and active in satisfying consumers better and sooner than competitors. Consumer Behaviour is indispensable to watch movements of the markets.
• Effective Use of Productive Resources: The study of consumer Behaviour assists the manager to make the organisational efforts consumer-oriented. It ensures an exact use of resources for achieving maximum efficiency. Each unit of resources can contribute maximum to objectives.

Factors Influencing Consumer Behaviour

The behaviour of consumer is dependent on a number of factors which may be economic or non-economic factors and are dependent upon economic factors such as income, price, psychology, sociology, anthropology, culture and climate. The study of consumer behaviour has proved that following are the main factors which influence the behaviour:

• Economic Factors: Price, Income, Distribution of Income, Competition with substitute , utility and Consumer preferences are the factors categorised as Economic factors .
• Social Factors: Culture, Attitude of society, social values, Life-style, personality, Size of family, Education, health standards are the factors catagorised as Social factors.
• Psychology : It decides the personality, taste, attitudes of individuals or groups, life style, preferences especially on occasions like marriage. The demonstration influence is also dependent upon psychology of an individual.
• Anthropology & Geography: Climate, region, history all effect, consumer behaviour. In hot countries like India certain products which keep us cool like squashes, sarbatas, are demanded but they have no demand in cold regions. Culture is also influenced by climate.
• Technology: In case of equipment’s whether for consumer use or industrial use is affected by technological innovations and features. Even in case of perishable goods the shelf life etc are determined by technological developments. Innovations and introduction of new product also depends upon technological development.
• Others: Knowledge-technical or otherwise and information. Government decisions, laws, distribution policies, production policies have also big affect on consumer behaviour.