UNIT 1 CONSUMER BEHAVIOUR-NATURE, SCOPE AND APPLICATIONS
Objectives
After studying this unit you should be able to:
define consumer behaviour
describe the nature of consumer behaviour
explain the scope of consumer behaviour
outline the broad areas of application of consumer behaviour especially in the area of marketing.
Structure
1.1 Introduction
1.2 Nature of Consumer Behaviour
1.3 Who is a Consumer?
1.4 What is the Decision Process?
1.5 Scope of Consumer Behaviour
1.6 Decision Process
1.7 Individual Determinants
1.8 External Environment
1.9 Applications of Consumer Behaviour in Marketing
1.10 Summary
1.11 Key Words
1.12 Self-assessment Questions
1.13 Further Readings
1.1 INTRODUCTION
The reason for a business firm to come into being is the existence of a consumer who has unfulfilled needs and wants. To fulfil these consumer needs an organization is set up. In your professional capacity you may also be a part of one such business organization. But as part of the organization, have you ever wondered about who are the consumers of your products and services? Why do these consumers buy your brand and not that of the competitors? How do your consumers perceive your product fulfils their needs? After having bought your product do they feel satisfied or dissatisfied? And how are these feelings reflected in their behaviour as consumers?
It is important to the survival and growth of your organization that you regularly raise such questions and attempt to find answers to them. It is only through such a process of questioning and seeking that you can be sure of keeping your firm on the growth path. A thorough knowledge of your consumers and an understanding of their behaviour (as consumers) are essential if you wish to continue to remain in business.
This and the following units in this book provide you an insight into the subject of consumer behaviour. After having read this unit you would be able to spell out who are consumers, why they behave in the manner that they do, what influences their behaviour and how you as a marketer can manipulate the influencing factors in your favour. This is the most important aspect of consumer behaviour which has practical action implications for each business firm. Once having understood the behaviour of consumers and knowing that their behaviour can be influenced, you can initiate a number of steps to do so. This unit covers the nature, scope and applications of consumer behaviour. • • • •
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1.2 NATURE OF CONSUMER BEHAVIOUR
Consumer behaviour can be defined as:
"The decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services."
This definition raises a few queries in our minds-what or who are consumers? What is the decision process that they engage in? Answers to these questions help define the broad nature of consumer behaviour.
1.3 WHO IS CONSUMER?
A "consumer" is anyone who typically engages in any one or all of the activities described in our definition. Traditionally consumers have been defined very strictly in terms of economic goods and services, i.e. goods and services wherein a monetary transaction is involved. However, over time this concept has been widened to include goods and services where a monetary exchange is not involved. Thus, the services of voluntary organizations have also been included in this definition, and users of the services of these organizations are also viewed as consumers. The logic behind this approach is that consumers of free service also engage in the same kind of decision process and physical activity as consumers of economic goods and services. A "customer" is one who actually purchases a product or service from a particular organization or shop. A customer is always defined in terms of a specific product or company.
However, the term consumer is a far wider term encompassing not only the actual buyer or customer but also all its users, i.e. consumers. There are two situations when this distinction between consumers and customers may occur, i) when the service or product is provided free, and ii) when the customer is not the actual user of the product or is only one of the many users. The second situation needs greater elaboration as it is of critical significance for us.
Very often, the actual customer making a purchase may not be doing so for himself or herself. For instance, in case of a father buying a box of crayons for his four-year old daughter, the customer is the father but the actual user of consumer is his daughter. Another case may be where a father is buying a TV for the family members. The father is the customer but all the family members are the consumers. The two vital elements to remember in all consumer situations are a) the influence on purchase from other people and b) the roles taken on by different people in consumer behaviour situations.
In the instance of the father buying crayons for his daughter, the latter may not have had influence at all on the purchase; the father is the decision maker and buyer and the daughter is the user. In case of the father buying a TV for his family, it is quite likely that the wife and children may have exerted considerable influence on the decision. The father is simply, the buyer, while other family members may be influencers and all. including the father, are users. Table 1, 1 presents one way of classifying the roles that people can take on in the context of consumers behaviour.
Table 1.1
Some Consumer Behaviour Roles
Role Description
Initiator The person who determines that some need or want is not being met.
Influencer The person who intentionally/unintentionally influences the decision to buy the actual purchase and/or use of product or service.
Buyer The person who actually makes the purchase.
User The person who actually uses or consumes the product or service.
You will read more about the different buying roles and their influence on family decision making in Unit 9 of this course. These buying roles may vary in different buying situations. While studying consumer behaviour we have to keep in mind all the various consumer roles that can possibly be taken on. But in practical terms it may be very difficult to study all these roles. Therefore, the emphasis of study is on one role that of the buyer. The reason for this is that this is the only part of the behaviour which is overt and visible. 7 Consumer Behaviour-Nature, Scope and Applications
It is only through the buyer, whom we can easily identify, that we can attempt to study the influences exerted on the purchase by other role players.
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1.4 WHAT IS THE DECISION PROCESS?
We have defined consumer behaviour as the "decision process" and "physical activity" engaged in by individuals. The physical activity which we focus upon in the course of consumer behaviour is that of making the purchase, as explained in the previous section. But there are a number of influences affecting the purchase and a number of individuals maybe involved in exerting these influences. So the purchase action that is visible to us maybe the result of a interplay of a number of complex and hidden variables which may have influenced the ultimate purchase activity. The final purchase is just one activity in the entire series of physical and mental activities that may have occurred in this whole process. Some of these activities may precede the purchase while others may take place later. But because all these activities exert influence on the purchase they are considered a part of consumer behaviour, more specifically a part of the decision process.
Let us go back to the example of a father, we call Mr. Bannerjee. buying a TV for his family. It is possible that the consumer behaviour involving mental processes and activities may have taken place in the following sequence and manner. Mr. Bannerjee's teenage daughter, sees a new colour TV at her friend's house. She then raises the issue of buying a colour TV to replace then existing black and white TV. The family discusses the issue and agrees that it is indeed time they bought a colour TV. The next day Mr. Bannerjee discusses the matter with his friend and colleague, Mr. Chandra. He visits Mr. Chandra's home to see for himself the quality of the EC colour TV that he has. Mrs. Bannerjee also finds out more about the various brands, prices and quality of different brands, from her sister who recently purchased a colour TV. Her sister has a Crown TV and recommends the same. Meanwhile Mr. Bannerjee's daughter checks out the brands of TVs that her various friends have at their respective homes and concludes that BPL is the best. In the next few days the entire Bannerjee family makes it a point to carefully study any advertisements of colour TV that appear in the newspaper, magazine or TV. At all social occasions they raise the question of which is the best colour TV to buy amongst their friends and relatives and mentally, mark the different positive and negative points of different brands. Within two weeks the Bannerjees have collected enough information to take a decision to buy BPL, but they need more specific information. So one evening they visit two dealer outlets in their neighbourhood market to find out more about prices. They find that the BPL TV is rather expensive and beyond their budget. So they settle for Crown which was recommended by quite a few of their friends and the price is affordable too. Moreover, the dealer offered them a special five per cent discount and a free antenna alongwith free installation. The information that this company would soon he offering a VCR at a reasonable price clinched the decision in favour of Crown. 8 Consumer Behaviour-Issues and Concepts
The activity and thought process which resulted in the final purchase of TV started well before the actual purchase took place and was spread over a period of two to three weeks. This entire process forms part of consumer behaviour.
Depending on the nature of product or service in question, the mental decision process accompanying the physical act of purchase may vary from very simple to extremely complex, and from being instantaneous in nature to time consuming and elaborate. But they all constitute consumer behaviour. Thus, not only the overt, observable physical behaviour exhibited in the art of making a purchase, but all the accompanying, preceding and following mental processes and activities also are an integral part of consumer behaviour.
In case of the stock of regular brands of toilet soap being depleted at home, its purchase needs no elaborate decision process or activity of comparison and evaluation. Rather the purchase decision is almost an automatic one.
1.5 SCOPE OF CONSUMER BEHAVIOUR
The scope of a subject refers to everything that is studied as part of that subject. When we set out to explain the scope of consumer behaviour we need to refer to all that which forms part of consumer behaviour.
The scope of consumer behaviour has been briefly touched upon in the previous section wherein it was explained that how consumer behaviour includes not only the actual buyer and his act of buying but also the various roles played by different individuals and the influence they exert on the final purchase decision. In this section we shall define and explain the scope of study of consumer behaviour.
To define the scope of a subject it is important to set parameters or a framework within which it shall be studied. Figure 1.1 presents one such framework for studying consumer behaviour. This framework is made up of three main sections-the decision process as represented by the inner-most circle, the individual determinants on the middle Circle and the external environment which is represented by the outer circle. The study of all these three sections constitutes the scope of consumer behaviour. Here, we shall dwell on these constituents of the framework only briefly as they are explained in detail in the following units.
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