Consumer Behaviour | Analysis

Executive Summary

This report is about the introduction to consumer behaviour and the role of consumer behaviour in marketing. In this report authors described the definition of the consumer behaviour, the reasons to study consumer behaviour, methods to studying consumer behaviour, the relationsip between consumer behaviour and the marketing mix (7Ps), the underlying principles of consumer behaviour, and at the end of the report authors have developed a brief summary of the whole report for the convenience of all the readers.

Introduction

Every day we buy things. We exchange our money for goods and services, for our own use and for the use of our families. We choose things we think will meet our needs on a day-to-day basis, and we occasionally make buying decisions which will affect our lives for years to come. At the same time, we make decisions about disposing of worn-out or used-up possessions. All these decisions and exchanges have implications for ourselves, our families, our friends, the environment, the businesses we buy from, the employees of those businesses, and so on in the ever-widening ripples.

For marketers, understanding the processes involved in making those decisions is central to establishing policy. The key concept of marketing is customer centrality; we cannot ignore customer decision-making.

1.0 Definition of Consumer Behaviour

Consumer Behaviour is defined as activities people undertake when obtaining, consuming, and disposing of products and services. Simply stated, consumer behaviour has traditionally been thought of as the study of “why people buy” – with the premise that it becomes easier to develop strategies to influence consumers once a marketer knows the reason people buy specific products and brands.

Three primary activities are included in the definition of consumer behaviour – obtaining, consuming, and disposing.

* Obtaining refers to the activities leading up to and including the purchase or receipt of a product. Some of these activities include searching for information regarding product features and choices, evaluating alternative products or brands, and purchasing.

* Consuming means how, where, when, and under what circumstances consumers use products. For example, issues relating to consumption might include decisions about whether the consumers use products at home or at the office. Do they use products according to instructions and as intended or do they find their own unique ways of using products? Is the experience of using the product entertaining or purely functional? Do they use the entire product before disposing of it or is some of it never consumed?

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* Disposing refers to how consumers get rid of products and packaging. Consumer analysts might examine consumer behaviour from an ecological standpoint: How do consumers dispose of product packaging or product remains? Are products biodegradable? Can they be recycled? Consumers might also choose to extend the life of some products by handling them down to younger children, donating them to charity thrift shops, or selling them on eBay.

2.0 Reasons to Study Consumer Behaviour

Consumer Behaviour Determines the Economic Health of a Nation

Every day, in every country around the world, an election is held. The election is not about which political parties will be leading a nation. Rather, consumers are voting on which nation and firms win, and they do it with their dollars, euros, and yen. With their money, consumers elect the retailers and other marketers they want to survive and be profitable enough to provide jobs for a nation’s citizens. With their votes, consumers determine which people will have good jobs or bad jobs, and which will have no jobs at all. Ultimately, consumers determine which companies will have rising share prices and which will go out of business.

Consumer Behaviour Determines the Success of Marketing Programs

People who study consumer behaviour generally desire to influence or change the behaviour of consumers in some way. Some marketer, such as consumer products, manufacturers, want to use marketing to influence brand choice and purchase, whereas others, such as public health advocates, use demarketing to influence people to stop smoking or abstain from illegal drugs.

The Consumer is King

Knowing why and how people consume products helps marketers understand how to improve existing products, what types of products are needed in the marketplace, and how to attract consumer to buy their products. Without customer satisfaction, organizations are unlikely to increase sales and, without increased sales, organizations won’t have resources to invest in important components of customer satisfaction programs.

Only the Customers Can Fire Us All

Consumers ultimately determine which organizations thrive and which ones fail. When consumers make purchase decisions, they are voting for the candidates they want to survive in today’s hypercompetitive marketplace. The power of the consumer is immense, and the desire of major firms to understand consumer is huge. Firms must truly understand customers and the reasons for their behaviour.

Consumer Behaviour Determines the Economic Health of Everyone

Your decisions as a consumer determine your own economy health, which may be the most important reason to study consumer behaviour. Anyone can benefit from money-saving strategies and tips on how to be “better shoppers”, but educational program should be based on research into motivation and behaviour if they are to be relevant in the real world of consumer life.

Consumer Behaviour Helps Formulate Public Policy

Organizations and individuals interested in public policy must understand the needs of consumers when formulating policies relating to economics, social welfare, family planning, or nearly any other subject. They also need to know how to predict the behavioural changes that will follow their policies.

Consumer Behaviour Affects Personal Policy

Personal policy includes how you behave (toward others and in buying situations), your values and beliefs, and how you live your life. A person’s economic quality of life is determined by personal policy. What you have in life is determined more by how much you save (and how little you spend) than how much you earn.

3.0 Methods of Studying Consumer Behaviour

Observation

An observational approach to consumer research consists primarily of observing consumer behaviours in different situations. Sometimes researchers monitor behaviours in their natural settings, such as watching consumers use products and eat foods in their homes, but other times they monitor behaviour in laboratory settings. This process might include observing how consumer react to different advertisements, packaging, or colours in a research facility.

Interviews and Surveys

Consumer analysts also gather information from consumers by conducting surveys and interviews. Surveys are an efficient way of gathering information from a large sample of consumers by asking questions and recording responses. Surveys can be conducted by mail, telephone, Internet, or in person, with each method having some advantages and disadvantages.

Experimentation

Experimentation, as a research methodology, attempts to understand cause and effect relationships by carefully manipulating independent variables (such as number of advertisements, package design, methods of communication) to determine how these changes affect dependent variables.

Consumption Research

Consumption research focuses on how people use products rather than how they buy them, and can involve any of the research methods described. This approach often requires researchers to get inside people’s homes or other places to understand how lifestyles, values, and societal trends affect usage in daily living.

4.0 Consumer Behaviour and the Marketing Mix (7Ps)

1. Product

The bundle of benefits which consumers acquire is the basis of their decision-making. Deciding which benefits are essential, which are desirable, which do not matter and which are actually not benefits at all but drawbacks is the starting point for all rational decisions.

2. Price

The cost of product goes beyond the price tag in most cases. If the product is complex, there will be a learning cost attached to figuring out how to use it: if the product is dangerous, there may be a cost attached to consequent injury. If the product is visible to others, there may be an embarrassment cost.

3. Place

Convenient locations for making purchases are essential; in fact it would not be too much to say that the easier the marketers make it for consumers to find the product conveniently, the more products will be sold. For example: a corner shops (convenience stores): although they are invariably more expensive than supermarkets, being easy reach of home offers a clear advantage which is worth paying for.

4. Promotion

Promotion is not something which is done to consumers; it is something which they consume. People buy magazines, watch TV shows, go to cinema and ride on public transport. Although they do not usually do these things in order to be exposed to advertisements, they usually pay at least some attention to them and frequently they enjoy the experience.

5. People

Business is not about money, it is about people. The people who run businesses and deal with the public need to understand how other people react in purchasing situations. In some cases, the product is the person: people become loyal to the same hairdresser, the same doctor, the same restaurant chef.

6. Process

The way services are delivered affects the circumstances in which people buy as well as their propensity to buy. A meal out might be a ten-minute lunch stop at a fast-food outlet, or it might be a romantic dinner for two in a five star restaurant. The process is completely different in each case, and so is the price. In the first case, the consumer may only go through a limited problem-solving process. In the second case the process may well be longer because the need to get it right is greater.

7. Physical Evidence

Physical aspects of the service experience often relate to the pleasure one feels from receiving the service rather than the practical aspects. The surroundings in a restaurant, the food itself, the décor, the table linen and cutlery all form part of the service and provide part of the pleasure of dining out.

5.0 The Underlying Principles of Consumer Behaviour

The Consumer is Sovereign

Consumer behaviour, as a rule, is purposeful and goal oriented. Products and services are accepted or rejected to the extent that they are perceived as relevant to needs and lifestyles. The individual is fully capable of ignoring everything the marketer has to say. It all comes down to a simple point: It is easier for a firm to change its marketing programs to fit the preferences of consumers than to expect consumers to change their preferences to fit the needs of a marketer. Firms that survive and thrive learn that the consumer reigns.

The Consumer is Global

“The world is our marketplace” might be the new creed for consumers and organizations that must understand consumers who watch global television networks and search the World Wide Web to satisfy basic consumer needs and decision processes that are nearly universal. Every country throughout the world is using the same methods and theories to conduct research and analyse consumer behaviour. Even though there are differences between cultures and consumer decisions, as consumers become more global, the similarities are much greater.

Consumers Are Different: Consumers Are Alike

Marketers must dive deeper in their understanding of consumer behavior to identify groups of people – called market segments – spanning demographic characteristics and geographical boundaries. Consumer analysts focus on similarities within groups of consumers, while recognizing the differences between groups. When these segments exist across national boundaries, it’s described as intermarket segmentation.

6.0 Summary

The study of consumer behaviour enables marketers to understand and predict consumer behaviour in the market place; it is concerned not only with what consumers buy but also with why, when, where, how, and how often they buy it. Consumer behaviour is defined as the behaviour that consumers display when searching for, purchasing, using, evaluating, and disposing of products, services and ideas that they expect will satisfy they needs.

Our society is a study in diversity – diversity among consumers, marketers, retailers, advertising media, cultures and customs, but there are also many similarities among customers. Segmenting target audiences on the basis of similarities makes it possible for marketers to design marketing strategies with which their target consumers identify.

The study of consumer behaviour enables marketers to understand and predict consumer behaviour in the market place. It is concerned not only with what consumer buy, but also with why they buy, when they buy, where they will buy, how they buy, and how often they buy. To answer such questions, marketers utilize consumer research from a positivistic or interpretive viewpoint, and various methodologies (e.g. scanner data, surveys or interviews) to study consumer behaviour.

Consumer behaviour has become an integral part of strategic market planning. The belief that ethics and social responsibility should also be integral components of every marketing decision is embodied in a revised marketing concept – the social marketing concept – which calls on marketers to fulfill the needs of their target markets in ways that improve society as a whole.

References

Blackwell, Roger D., Miniard, Paul W., Engel, James F. (2006). Consumer Behaviour (10th Edition). Thomson South Western : USA.

Blythe, Jim. (2008). Consumer Behaviour. Thomson Learning : London

Dann, Stephen. (2007). Consumer Behaviour: Buying, Having, Being. Pearson Education : Australia.