Chapter 5: Consumers and Consumer Behavior

Introduction

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. As this statement implies, there are two types of markets for the companies. First one is industrial market (business market or organizational market you may call) that 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. The second market is consumer market that consists of individuals who buy either for themselves or for the family and households.

Consumer behavior can be defined as the “Acquisition, consumption and disposition of goods, services, time and ideas by decision making units” (Figure 5.1).

Types of Consumer Buying Behavior

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. According to Abraham Maslow, needs can be grouped into five different levels (Figure 5.2). These are physiological needs, safety needs, belongingness and love needs, esteem needs and self-actualization. The first level of human needs includes physiological things for survival such as food, water, warmth, rest. Then at the second level, one meets his/her needs for safety and security. Third level is belongingness and love needs. Examples include intimate relationships and friends. Fourth level is esteem needs and it includes prestige and feeling of accomplishment. The highest level of the need hierarchy is self-actualization and it refers to achieving one’s full potential, including creative activities. Physiological and safety needs are basic needs; belongingness and love and esteem needs are psychological needs and self-actualization is a selffulfillment need.

Needs become wants when they are directed to specific objects, people, things that might satisfy the need. If a person is thirsty, drinking water, tea or ayran will be alternative ways of satisfying thirst. One will choose among the alternatives. 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 and decision criteria.

Consumer decisions can be classified into one of three broad categories (Figure 5.3):

• Routine response behavior (automatic response behavior, routine response behavior and routinized problem solving)
• Limited decision making
• 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.

Consumers engage in limited decision making when they buy products and services occasionally or when they need to search for information about a product, or when buying a product category that they haven’t tried before.

Extensive decision making occurs when a need is completely new, important to a consumer and much effort is spent to decide how to satisfy the need. This type of buying decisions are related to shopping products or specialty products that consumer feels they worth the time and effort required.

When talking about the types of buying behavior, it will also be beneficial to mention impulse buying behavior. Consumers may buy products or services such as ice creams, holiday souvenirs without any planning or effort. It comes from an urge to buy immediately. Impulse products are bought quickly as unplanned purchases because of a strongly felt need.

Consumer Buying Process

A consumer follows a step by step process called as Consumer Decision Making Process when buying products or services. we go through a series of logical stages to arrive at a decision. These steps are (Figure 5.4):

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

It must be known that while this model is a useful starting point for examining purchase decisions, the process is not always as straightforward as it may appear. For example, the consumer can withdraw at any stage prior to the actual purchase if the need diminishes or no satisfactory alternatives are available. Also, the stages usually are of different lengths, may overlap, and some may even be skipped. Moreover, the consumer is often involved in several different buying decisions simultaneously, and outcome of one can affect the others.

Need recognition : In this step, consumer moves to act via a need he/she felt. As you know from the previous part, need and want can be triggered by a variety of stimuli. Exposure to a food advertising, hunger or best friend’s wedding are stimuli to start a decision making process.

Identification of alternatives (information search): The consumer identifies alternative products, services, brands, companies, also collects information about them. The search may start internally which involves a memory scan to recall past buying experiences or stored knowledge about consumption experiences, products, brands or companies. An advertisement about newly launched product, word of mouth from friends or social media or dissatisfaction with the previous purchase may influence information search. Depending on the factors mentioned previously (importance of the decision, non-availability of a previous experience and/or willingness to gather information) consumer may need more information, and he may gather needed information from external sources .

Evaluation of alternatives: The consumer weights the pros and cons of the alternatives identified. Eating burger or a salad will have different outcomes for the consumer. Therefore, before ordering the meal, consumer weights the alternatives.

Decision (purchasing and consuming): The consumer decides to buy or not to buy. He also makes other decisions related to that purchase. For example, a consumer who is deciding on food, may also pick up a drink. There are certain drinks that go well with certain food, such as hamburger and cola, lahmacun and ayran. This kind of matches create opportunities for companies to do cross-selling.

Evaluation of the decision (post-purchase evaluation): If the consumer does indeed buy a product, he or she expects certain outcomes. “How well the expectations are met?” determines the satisfaction level of the consumer. In sum the evaluation of buying decision is based on the equilibrium between consumer’s expectations and the product’s perceived performance.

Post-purchase evaluation stage is the beginning of either brand loyalty or brand hate. Brand loyalty is defined as; a customer’s favourable attitude toward a specific brand. On the other hand, 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.

Factors Influencing The Consumer Decision Making Process

Different individuals may be involved in the process of buying and consuming. To understand consumer behavior, it is helpful to begin with a review of the different roles consumers play. 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. A person can both buy, pay and use a product or service. But there are some consumption cases that the buyer and user can be different people. The firms that are shaping their marketing efforts must consider all of the different roles and individuals involved in the consumption process.

1. There are six categories of influences that affect consumers’ decisions. These are (Figure 5.5): Demographic factors such as age, gender, income of consumers (Demographic Influences on Consumers)
2. Psychological forces such as perceptions, attitudes, learning abilities, personalities of consumers (Psychological Influences on Consumers)
3. Social forces such as families, friends, and reference groups of consumers (Social Influences on Consumers)
4. Situational factors such as physical surroundings, social surroundings, time perspective, reason for purchase and the buyer’s monetary conditions (Situational Influences on Consumers)
5. Environmental factors such as economic conditions, political circumstances in the country of a consumer
6. Marketing factors such as 4 P’s (i.e. products, prices, places and promotions) offered in the market place.

Demographic Influences on Consumers: Demographics describe populations by identifying such traits as age, income, gender, ethnic background, marital status, race, religion or social class. For example, consumers of different age groups have different needs and wants, although people who belong to the same age group differ in many other ways, they do tend to share a set of values and common cultural experiences that they carry throughout life.

Additionally, companies may gather supplementary data on certain population groups i.e. their target market segments. The changes and trends revealed in demographic studies are of great interest to marketers, because the data can be used to locate and predict the size of markets for many products, ranging from mortgages to baby food.

Market is an aggregate of people who, as individuals or organizations, 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.

Psychological Influences on Consumers: Psychological Influences include an individual’s motivations, perceptions, attitudes, ability to learn, and personality.

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. Sensations such as colours, touches, smells and sounds are being accepted as bricks of which perceptions are made. We may collect the same information but interpret the same information in a different way because we perceive the world in an entirely different way.

Since the brain’s capacity to process information is limited, we tend to be very selective about what we pay attention to. We apply the following selective process:

• Selective exposure
• Selective perception
• Selective retention

Selective exposure: Our eyes and minds seek out and notice only information that interests us.

Selective perception: We screen out or modify ideas, messages and information that conflict with previously learned attitudes and beliefs.

Selective retention: We remember only what we want to remember.

Learning means the changes in behavior resulting from observation and experience. Almost all consumer decisions engage multiple cognitive functions that govern attention-driven encoding of information (about prices, brands, and attributes of products so on so forth), retrieval of task-relevant information from memory and updating the information stored on memory. Hence, the decision making process is all about information, memory, updating the memory and retrieval of the information stored. Memory involves a process of acquiring information and storing it over time so that it will be available when needed (Figure 5.6) . 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.

A motive is an internal energizing force that directs a person’s activities towards satisfying needs or achieving goals. As you may guess, a person may buy a product thinking that it will give him or her a prestigious image. For instance, there is a dressing code called as power dressing. The motivation “vengeance” will find its place in consumer behavior when the consumer’s needs are not satisfied by the product he/she bought. In such case he will do something to get the frustration out of his body, and the marketing literature calls this sort of consumer behaviors as “retaliation”.

Personality is defined as “a person’s characteristic pattern of behaviors in the broad sense (including thoughts, feelings, and motivation)”. 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:

• Openness-to-experience
• Conscientiousness
• Extraversion
• Agreeableness
• Neuroticism

Openness-to-experience is the tendency to be open and sensitive to new aesthetic, cultural or intellectual experiences.

Conscientiousness is the degree to which the individual is responsible, hard-working, and organized.

Extraversion is the tendency to be outgoing, expressive, energetic and dominant.

Agreeableness is a number of traits that enable the individual to foster congenial relationships, and to behave cooperatively and unselfishly.

Neuroticism is the individual’s degree of emotional instability and distress, which can also manifest in outerdirected hostility, anger, frustration and irritation.

Conversely, several consumer behavior scholars and researchers who debate whether these five dimensions are enough to describe human behavior or not have also offered some trait adjectives. They offered their own taxonomies such as:

• Achievers
• Optimists
• Innovators
• Uniqueness pursuers
• Excitement seekers

Achievers: The degree to which consumers are motivated for success.

Optimists: The degree to which consumers feel good about their personal future.

Innovators: The extent to which consumers embrace change, novelty, and new ideas and products.

Uniqueness pursuers: The extent to which consumers like to think of themselves as being distinct from the mainstream.

Excitement seekers: The extent to which consumers seek fun and non-routine activities.

Self refers to a person’s perception of himself. Selfconcept is a multidimensional, multilevel and complex psychological system, which refers to individual’s perception and subjective evaluation of their own psychological, physical and social function.

Social Influences on Consumers: Social influences include all types of factors and effects on buyer behavior that result from interactions between a consumer and his/her external environment. Social influences include factors such as family, reference groups, culture and subculture.

The family is the most important social institution for many consumers. It strongly influences values, attitudes and self-concept. We all learn how to consume many products and services from our families. Moreover, the family is responsible for a person’s socialization process that transfers cultural values and norms of a society to the person. The roles of spouses may take several different forms, here are the examples of the forms and product types:

• Autonomic
• Husband dominant
• Wife dominant
• Syncretic

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. People may use the behavior of members of a group as the cue for their purchase decisions to align themselves with the group’s values or to enhance his credibility. Three types of reference-group influence have been identified in consumer research (Table 5.1):

• Informational Influence
• Utilitarian Influence
• Value expressive Influence

Informational Influence: The individual seeks information about various brands from an association of professionals or independent group of experts.

Utilitarian Influence : The individual’s decision to purchase a particular brand is influenced by the preferences of people with whom he or she has social interaction.

Value Expressive Influence : The individual feels that the purchase or use of a particular brand will enhance the image others have of him or her.

A member group is a reference group to which an individual belongs. It is a reference group to which an individual belongs, an aspiration group is a reference group to which an individual aspires to belong. An aspiration group is a reference group to which an individual aspires to belong. Besides membership groups and aspirational groups, there are also negative reference groups, dissociative reference groups. Dissociative reference groups (also called avoidance groups ) are groups individuals who do not like to be associated with or groups they dislike. Most often people have stereotypical associations regarding such a group – they do not know anything specific about the group or about the members of the group. However, in consumer behavior, this attitude usually manifests itself in an avoidance of consuming products and brands that are used by the dissociative reference group.

Culture is the accumulation of values, knowledge, beliefs, customs, object and concepts what a society uses to cope with its environment and passes on to future generations. Culture is a learned, transmitted, and shared phenomenon. Acculturation refers to the process in which individuals learn and adopt the norms and values of a culture different than the one in which they grew up. Consumer acculturation occurs along two, and often conflicting, dimensions. First dimension is the direct adoption (i.e. without modification) of foreign or global behavior. For example, “I said yes” posts on Instagram, or marriage proposals on bedded knee are freshly accepted behaviors among Turkish citizens. In other situations, mixing of alternative behavior with local elements (e.g., the practice of drink tea with milk, eating sushi with grape leaves) or hyper-identification with the culture of origin (e.g., Mexican immigrants in the U.S. consuming greater quantities of foodstuffs associated with Mexico, than do Mexicans in their home country) applies. A subculture is a group of individuals whose characteristics, values and behavioral patterns are similar within the group and different from those of people in the surrounding culture. Some of the examples of subcultures are business men, Çerkezs (Circassians), or university alumni.

Situational Influences on Consumers: They result from the circumstances, time and location that affect consumers. Situational factors can be classified into five categories: physical surroundings, social surroundings, time perspective, reason for purchase and the buyer’s monetary conditions. Imagine buying an automobile tire after noticing, while washing your car, that the current tire is badly worn. This is a different experience from buying a tire right after a blown out on the highway spoils your vacation, because in the prior scenario one can take time to search for the best tire alternative. Situational factors can be classified into five categories: physical surroundings, social surroundings, time perspective, reason for purchase and the buyer’s monetary conditions.