Consumer behavior refers to analyzing and understanding the thought patterns, preferences, and emotions of buyers while purchasing any goods or services. It can also involve attitudes of groups and establishments related to buying, consuming, and disposing of products, ideas, time, and services.
What Is Consumer Behavior?
It is the study of how we behave, decide and respond in terms of our purchasing attitudes, habits, customs, preferences, and patterns towards commercial products. This also includes how prospective buyers react to marketing, packaging, and advertising of products. It is often considered a field of psychology that involves marketing, sociology social anthropology, ethnography, and sociology. Consumer behavior is primarily focused on how decision-making units reach their buying decisions, particularly when they are least likely to possess all available information about all existing brands. It also incorporates how their decisions are influenced by motivation and perception. Such buying behavior is prevalent and similar in different regions, cultures, and societies among all individuals.
The study also involves consumer psychology 1 which utilizes various psychological concepts to understand purchase behavior of consumers. Psychological factors influencing consumer behavior include personality, demographics, lifestyles and behavioral variables such as usage occasion, usage rates, brand advocacy, brand loyalty & willingness to refer. All these factors are studied during market research. It is believed that individuals primarily focus on a wide range of traits of different products, instead of the item or service as a whole.
A 2007 study 2 explains “Consumer behavior encompasses mental and physical activities that consumers engage in when searching for, evaluating, purchasing, and using products and services.” Since what people buy and why they buy it, affects many different aspects of their lives, research into buyer behavior ties together several key psychological issues. These include communication, social status, identity, decision-making, and mental and physical health. The study of consumer behavior may involve an analysis the following factors:
- The personality and characteristics of the buyer (lifestyle, age, cultural background and financial status)
- How buyers think, feel and choose different options (brands, products, services, and sellers)
- The attitude, mindset and behavior of buyers while shopping
- Time and location of purchase or decision making
- How buyer’s behavior is determined by their environment (family, peers, culture, media)
- How marketing campaigns can be modified to more effectively influence the consumer
- Knowledge and intelligence of buyers which affect their purchase decisions
- Reason and motivation for making a purchase decision
- Customer satisfaction and after-sales services provided by the company after the purchase
Read More About Consumerism Here
Types Of Consumer Behavior
A consumer’s buying decision depends on the type of products he/she is looking to buy. Based on such observations, consumer buying behavior can be divided into various categories. It must be noted that consumer buying behavior is determined by the level of involvement that a consumer shows towards a purchase decision. The amount of risk involved in purchases also determines the buying behavior.
There are four types of consumer buying behavior. These are as follows.
- Complex buying behavior
- Dissonance-reducing buying behavior
- Habitual buying behavior
- Variety seeking behavior
1. Complex Buying Behavior
Complex buying behavior arises when consumers are buying an expensive product. In the process of such infrequent transactions, consumers are highly involved in the purchase decision. Buyers will investigate thoroughly before deciding to invest and they behave 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 discusses it with friends, family, and experts before making the decision. In complex buying behavior, the buyer goes through a learning process. The consumer will first develop beliefs about the product, then attitudes, and then will make a thoughtful purchase choice.
2. Dissonance Reducing Buying Behavior
In dissonance-reducing buying behavior, consumer engagement is very high. This is generally due to the high price with low availability of options backed by fewer significant differences among brands. In such a situation, a consumer buys a product that is easily available. Consumers will be forced to buy goods to which they do not have too many choices and therefore consumers will be left with limited decision making. Based on the products available, time limitation, or budget limitation, consumers buy certain products without a lot of research.
3. Habitual Buying Behavior
Habitual buying behavior is described when a consumer has low involvement in a purchase decision. This type of buying behavior is mainly prevalent when it comes to buying day-to-day products 3 . Here, the consumers do not pay much attention to the brand or follow brand loyalty. In fact, the consumer perceives only a few notable differences between brands. When consumers are buying products that they use every day, they do not put a lot of thought into it. They either buy their favorite brand or the one that they use regularly or the one available in the store or the one that costs the least. Habitual buying behavior is mostly influenced by radio, television, and print media.
4. Variety Seeking Buying Behavior
In variety-seeking consumer behavior, consumer engagement is low. There are notable variations between brands. Here consumers often do a lot of brand switching. The cost of switching from one brand to another is low and hence, consumers might want to try out new products just out of curiosity or boredom. Consumers here, generally buy different products mainly with an urge to seek variety. Brand switching occurs often and without intention.
Factors Influencing Consumer Behavior
Consumer behavior or buyer behavior is influenced by several factors or forces. These are as follows:
1. Internal or Psychological Factors
The buying behavior of consumers is influenced by a number of internal or psychological factors. The most important ones are Motivation and Perception.
A need becomes a motive when it reaches a sufficient amount of intensity. A motive is a need that is strong enough to compel a person to act. There can be two types of need- biogenic needs and psychogenic needs.
Biogenic Needs: They result from physiological states of stress such as thirst, hunger, etc.
Psychogenic Needs: They emerge from psychological states of tension such as needs for recognition, esteem, etc.
These needs become a motivation when the individual seeks satisfaction through the purchase of something. A motive is an inner urge or need that influences a person to engage in the purchase action to satisfy his/her wants. core wants and secondary wants. So, motivation is the force that activates goal-oriented behavior, that impels an individual to take action to satisfy his/her needs.
While a motivated person is ready to act, his/her course of action is influenced by his/her perception of the situation. To perceive is to see, it is essential to hear, touch, smell, and sense something in an event or relation and to organize and interpret to find meaning in the experience. Our senses perceive the color, shape, sound, smell, taste, etc, and our behavior is directed by these physical perceptions. Perception has been obtained by social psychologists as the ‘complex process’ by which people select, organize and interpret sensory stimulation into a meaningful and coherent picture of the world. People can emerge with different viewpoints about the same object because of three perceptual processes-
- Selective attention
- Selective distortion
- Selective retention
2. Social Factors
Since humans are social beings, an individual’s behavior patterns, likes, and dislikes are influenced by the people around him/her to a great extent. Research 4 shows that a child’s behavior is determined by their family, “school, community, and broader social influences.” Humans always seek approval from the people around them and hardly do things that are not socially acceptable. The social factors influencing consumer behavior are family, reference groups, and roles and status.
There are two types of families in the buyer’s life- the nuclear family and the joint family. A nuclear family is defined by a small family size where individuals have better liberty to make decisions whereas in joint families, the family size is larger and group decision-making gets more preference than individual. Family members 5 can strongly affect buyer behavior, particularly in the Indian contest. The tastes, likes, dislikes and lifestyles of the members are rooted in the family buying behavior.
B. Reference Group
A group is two or more persons sharing the same set of norms and whose relationship makes their behavior interdependent. It is a group of people with whom an individual associates, where an individual influences others attitudes, values, and behavior directly or indirectly. Reference groups, which influence consumer behavior, are further divided into various categories as mentioned below –
i. Contractual Groups
In such groups, people belong and interact with each other. These groups have a direct influence on their member’s behavior.
ii. Primary or Normative Groups
This group consists of people whom we see on a regular basis, such as friends, family members, neighbors, co-workers, etc. Such groups carry out a fairly regular, informal interaction with cohesiveness and mutual participation.
iii. Secondary Groups
It refers to religious groups or professional groups which include people whom we see occasionally. These groups are less powerful in developing attitudes and controlling behavior but can exert influence on behavior within the purview of the subject of mutual interest.
iv. Aspiration Group
These groups can have a powerful impact on consumer behavior of the members as individuals will often adapt to the behavior of the aspirational group with the hope of getting accepted as a member. Thus, with this hope, most individuals are willing to join such groups.
vi. Formal Groups
These groups have a known list of members. The rules and structure of the group are written down, which cater to the membership and members’ behavior is constrained while they remain part of the group. However, the restrictions usually apply only to fairly limited areas of behavior.
vii. Informal Groups
Such groups are less structured and are typically based on friendship. The rules and regulations of such groups are not formally written, unlike the formal group. Often, informal groups expect a more precise standard of behavior across a wider range of activities than a formal group. The circles of friends are likely to develop rules of behavior and traditions that are more binding than written rules.
viii. Automatic Groups
One can belong to such groups by the virtue of gender, age, education, and culture. These are also called category groups. While initially, it may look like these groups would not exert much influence on the members’ behavior as such groups are not joined voluntarily, it appears that people are motivated by group pressure to comply.
ix. Indirect Groups
In this case, the customers are not in direct contact with the influencers. For example, a celebrity endorsing a particular brand can have a deep influence over his/her blind fans.
x. Comparative Groups
The members of this group are those where one individual compares himself/herself with others. For example, one may compare himself/herself with his/her colleague and try to imitate them by possessing some unique products or brands.
xi. Contractual Group
The group with which we are in regular contact like college friends, office colleagues, etc.
C. Roles and Status
While a person can participate in many groups like family, clubs, and organizations, the person’s position in each group is defined in terms of role and status. A role is defined by the activity that a person is entitled to perform and such roles carry a status. People choose products that express their role and status in society. Marketers must be aware of the status symbol potential of products and brands as it determines consumer behavior as well.
3. Cultural Factors
According to a 2015 study 6 , it was observed that human behavior is largely influenced by the learning process, and as such individuals grow up learning a set of values, perceptions, preferences, and behavior patterns as the result of socialization both within the family and a series of other key institutions. Additionally, the impact of subcultures is consequently affected by social stratification or social class, which acts as a determinant of behavior. Thus, the cultural factors can be further divided into three categories- culture, subculture, and social class.
Culture 7 is the most primary determinant of a person’s wants and behavior. Culture affects consumer behavior to a large extent, including the pattern of consumption and the pattern of decision-making. However, culture is not permanent and changes gradually and such modifications are progressively assimilated within society. Culture can change over time, although such changes tend to be slow since culture is deeply built into people’s behavior.
Consumer behavior is further determined by the subculture present within the umbrella of the main culture. Sub-culture is a set of ideas shared by a subgroup of the main culture, which covers nationalities, racial groups, religions, and geographic regions. Many subcultures establish an important market segment which may determine the needs and buying decisions of consumers. Although this subgroup mostly tends to follow the ideas of the main culture, they share among themselves another set of beliefs, which may be at odds with those held by the main group.
C. Social Class
Consumer behavior is also determined by the social class to which they belong. The classification of socioeconomic groups is known as Socio-Economic Classification (SEC). Social class is relatively a permanent and ordered division in a society whose members share similar values, interests, and behavior. Social class is not determined by a single factor, such as income but it is measured as a combination of various factors, such as income, occupation, education, authority, power, property, ownership, lifestyles, consumption, pattern, etc.
There are three different social classes in our society, namely –
Upper class: People who want high-end goods to maintain their status in society.
Middle class: Individuals who purchase carefully and collect information to compare different sellers.
Lower class: People who buy on impulse and based on their limited resources.
4. Economic Factors
Consumer behavior is influenced largely by economic factors. Economic factors that influence buyer’s behavior are:
A. Personal Income
The income of a person greatly influences their buying behavior. The gross personal income of a person can be further divided into disposable income and discretionary income. An increase in disposable income leads to an increase in the expenditure on various items, while an increase in discretionary income leads to an increase in the expenditure on shopping goods, luxuries, etc.
B. Family Income
Family income refers to the total income of all the family members and this influences the family’s consumer behavior as a whole. The surplus family income after fulfilling the basic needs of the family is used for buying durables and luxuries.
C. Income Expectations
Income expectation is another significant determinant of the buying behavior of an individual. If an individual expects an increase in his income, they may be tempted to spend more on shopping goods, durable goods & luxuries.
Savings also determines the buying behavior of an individual. A change in the amount of savings results in a change in the expenditure of an individual.
E. Other Economic Factors
Other economic factors influencing consumer behavior is a list of personal factors including age, occupation and lifestyle.
Importance Of Studying Consumer Behavior
Consumer behavior plays a vital role in marketing management. It provides knowledge to the marketer on the basis of which they can design marketing mix strategies and modify them in the future as per the situation. For the marketer, it is necessary to know how consumers react to the marketing program in order to serve them efficiently. Here are the reasons justifying the importance of buyer behavior.
1. Modern Marketing Philosophy
Modern marketing philosophies include recognizing consumers’ needs and satisfying them more effectively than the competitors.
2. Goal Achievement
The key to the company’s continuance, profitability, and growth in a highly competitive market is its ability to identify and satisfy consumers’ unfulfilled needs. Consumer behavior helps in achieving the same.
3. Marketing Programme
The marketing program consists of product, price, promotion, and distribution decisions. The program can be more appropriate if it is based on the study of buyers’ behavior.
4. Useful for Middlemen
It benefits the middlemen and salesmen to perform their tasks effectively. It helps them to meet consumer’s needs and wants successfully.
5. Predicting Market Trend
Consumer behavior can also help in determining future trends. Due to this, the marketer can develop its strategies well in advance in order to take advantage of the emerging opportunities.
6. Consumer Differentiation
Each segment needs different products and a different marketing program. The right knowledge of consumer differentiation is an important key to formulate different offers which are appealing to different groups of buyers.
7. Creation and Retention of Consumers
Marketers who provide their offering after understanding consumer needs often find a ready market for their products, helping them to sell the same. Understanding the ever-changing expectations of the buyers can help manufacturers and sellers to retain consumers for a longer period.
Studying buyer behavior enables the marketer to gain a competitive advantage. It can help the marketer to offer more competitive products based on consumers’ expectations.
9. Dynamic Nature of Market
It helps the marketer to be active and alert in order to satisfy consumers much better and sooner than the competitors.
10. Fruitful Use of Productive Resources
It helps the marketer to manage the organizational efforts toward consumer-oriented programs. It ensures optimal use of resources for achieving maximum efficiency.
Consumer Behavior Is The Key To Economic Development
Understanding what makes individuals buy the things they do is much more than a simple guessing game. Businesses are now hiring consumer psychologists to accurately evaluate their customer’s decisions and choices. Thus, the next time an individual looks at an advertisement or takes a consumer survey, they need to realize the importance of consumer behavior.
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