Consumers and Consumer Behavior

In order to compete in the market place, companies need to know:

• Who are our consumers?
• What they buy?
• Why they buy?
• How, when and where they buy?
• Who participates in buying and consuming process?
• What happens after consumption?

Consumer buying behavior refers to the buying behaviors of ultimate consumers, those who purchase products and services for either personal or household needs, not for business purposes such as re-selling.

Industrial market (business market or organizational market you may call)  consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented or supplied to others.

Consumer behavior can be defined as the “Acquisition, consumption and disposition of goods, services, time and ideas by decision making units”.

Abraham Maslow was a 20th century psychologist who developed a humanistic approach to psychology. He is best known for his hierarchy of needs. In 1970, he published a list of famous people he considered to have been self-actualizers – including Einstein (pictured), Mother Teresa, Gandhi, Beethoven, Lincoln and Eleanor Roosevelt.

Needs are the basic human requirements such as food, clothing, love, respect and success for survival. When unmet, they give a certain amount of tension. Needs become wants when they are directed to specific objects, people, things that might satisfy the need. Demands are wants for specific products backed by an ability to pay.

There are some factors that are important when making consumption decisions such as;

• Significance of the decision
• Availability or extent of previous experience
• Willingness to gather information and amount of information gathered
• The number of alternatives available
• Decision criteria

Consumer decisions can be classified into one of three broad categories: Routine response behavior, Limited decision making and Extensive decision-making.

When buying frequently purchased products, such as milk, consumers practice routine response behavior. Routine response behavior is repeatedly selecting a particular way of satisfying a need when it occurs. It is also called as Automatic Response Behavior, Routine Response Behavior and Routinized Problem Solving. This type of buying decision is related to convenience products that are generally low priced and purchased frequently.

A consumer follows a step by step process called as Consumer Decision Making Process when buying products or services. These steps are:

• Need recognition
• Identification of alternatives (information search)
• Evaluation of alternatives
• Decision (purchasing and consuming)
• Evaluation of the decision (post-purchase evaluation)

Stimuli are patterns of energy received by the senses; they evoke behavior and are the basis of perception.

Brand loyalty is defined as a customer’s favorable attitude toward a specific brand. Brand loyalty has advantages for the consumer as well as for the manufacturer and seller. It reduces a buyer’s risk and shortens time spent deciding which product to purchase.

Brand hate results in “the purposeful and deliberate intention to avoid or reject a brand, or even to act out behaviors that demonstrate this rejection” with typical behaviors including negative word-of-mouth, boycotts and sabotage directed at the target of one’s brand.

Payers are consumers who pay for a product and are concerned with its price and financial considerations. As users of a product, consumers are concerned about product features and how successfully the product can be used.

Some influences affect consumers’ decisions. The six categories of influences are:

1. Demographic factors such as age, gender, income of consumers,
2. Psychological forces such as perceptions, attitudes, learning abilities, personalities of consumers,
3. Social forces such as families, friends, and reference groups of consumers,
4. Situational factors such as physical surroundings, social surroundings, time perspective, reason for purchase and the buyer’s monetary conditions,
5. Environmental factors such as economic conditions, political circumstances in the country of a consumer and
6. Marketing factors such as 4 P’s (i.e. products, prices, places and promotions) offered in the market place.

Market is an aggregate of people who, as individuals or organisations, have needs for products in a product class and who have the ability, willingness, and authority to buy such product. Despite the unbearable desire to buy a Ferrari, a young university student cannot be in the definition of Ferrari market since he/she has no economic power to buy it.

A market segment consists of a group of consumers who have similar sets of needs and wants. For car market, small sized, low cost, basic transportation automobiles may create a segment for students who are willing to buy such a car.

Demographics describe populations by identifying such traits as age, income, gender, ethnic background, marital status, race, religion and social class.

Psychological Influences include an individual’s motivations, perceptions, attitudes, ability to learn, and personality. As William James mentioned in his early work (1890), psychology is about discovery of feelings, desires, cognitions, reasoning, decisions and the like.

Perception is the process of selecting, organising and interpreting information inputs to produce meaning. Information input are our sensations received through sight, taste, hearing, smell and touch.

Data are sensory stimuli that we perceive through our senses. Information is data that has been processed into a form that is meaningful to the recipient, hence information are facts provided or learned about something. Knowledge is what has understood and evaluated by the knower.

Power dressing is defined as “a style of dressing in which business people wear formal clothes to make them seem powerful” by The Cambridge Dictionary

Personality is defined as “a person’s characteristic pattern of behaviors in the broad sense (including thoughts, feelings, and motivation)”. This definition implies that a person has also a characteristic pattern of behaviors when consuming.

Traits are distinctive qualities of a person such as being friendly, smart or talkative. One commonly accepted trait taxonomy, called as The Big Five, offers five personality traits where people are scored on these five qualities. It is one of the most widely applied personality instruments in psychology and is considered by many authors to be the best paradigm for personality structure because it is replicable.30 Here are the brief explanations of The Big Five traits:

• Openness-to-experience: The tendency to be open and sensitive to new aesthetic, cultural or intellectual experiences.
• Conscientiousness: The degree to which the individual is responsible, hard-working, and organized.
• Extraversion: The tendency to be outgoing, expressive, energetic and dominant.
• Agreeableness: A number of traits that enable the individual to foster congenial relationships, and to behave cooperatively and unselfishly.
• Neuroticism: The individual’s degree of emotional instability and distress, which can also manifest in outer-directed hostility, anger, frustration and irritation.

As family has been identified as the most important decision making and consumption unit, how a family makes decisions as a consumption unit has attracted the interest of marketers and marketing research over the years. Decision making roles tend to vary significantly upon the type of item purchased. The roles of spouses may take several different forms, here are the examples of the forms and product types:

• Autonomic. An equal number of decisions are made by each spouse but each decision is made by one or the other.
• Husband dominant. Purchase decisions are made mostly by husband.
• Wife dominant. Purchase decisions are made mostly by wife.
• Syncretic. Most decisions are made jointly by husband and wife.

Reference groups are defined as social groups that are important to a consumer and against which he or she compares himself or herself. A member group is a reference group to which an individual belongs. An aspiration group is a reference group to which an individual aspires to belong. Avoidance groups are groups individuals who do not like to be associated with or groups they dislike.