consumer behavior introduction essay

Consumer Behavior – Definition and Examples

Table of Contents

What is Consumer Behavior in Marketing?

In marketing, understanding consumer behavior has become very important for businesses. Consumer behavior refers to the study which analyzes how consumers make decisions about their wants, needs, buying or act with respect to a product, service or organization. It is very critical to understand the behavior of consumers to analyze the behavior of potential consumers towards a new product or service. It is also very useful for companies to identify opportunities which have not yet been met.

An example in the aspect of consumer behavior is the change in eating habits which drastically increased the demand for gluten-free products. Businesses which have identified this market gap have produced gluten-free products and have tapped this market aspect as well.

On the other side, those companies which failed in monitoring consumer behavior could not manage to fill this void in the marketplace and were left behind. Understanding the behavior of consumers allows pro-active companies to increase their market share through anticipating the shift within the consumer choice .

Definition of Consumer Behavior

Consumer behavior can be defined as the study of psychological, physical and social actions when individuals buy, use and dispose of products, services, ideas, and practices. In other words, consumer behavior is the study of how consumers will make their buying decision and what those factors which support or influence these decisions.

According to marketers, by understanding the compelling reason for which a consumer buys a particular product or service over the other, it becomes easier to identify which product is in demand and which is obsolete so that marketing strategies can be designed accordingly.

“The buying behavior of ﬁnal consumers – individuals and households who buy goods and services for personal consumption” Philip Kotler

Factor affecting Consumer Behavior

Understanding how consumer behavior impacts marketing renders it vital to understand those factors which affect consumer behavior and which include:

Cultural Factors

Consumer behavior is influenced by cultural factors like social class, buyer’s culture, and subculture. There are three types of cultural factors include social class, culture, and subculture. Culture can be different by region, different groups and even countries.

Cultural shifts are always important for marketers whether marketing new products or existing products with new features and attributes. For examples nowadays cultural shift towards health and fitness has created a huge demand for exercise equipment, low calories and organic food and other fitness services. This cultural shift greatly influenced the consumer behavior throughout the world i.e. America, England and Europe and many parts of the world. People go to Gym and love organic and healthy food.

Culture is the combination of subcultures . If you are a Muslim, Hindu or Christian, your buying behavior will be influenced by different subcultures. It will affect your choice and preferences like your food, clothing, career goals and recreational activities.

Another cultural factor is the social class that can affect the consumer buying behavior in different parts of the world. For example, in the western world, both the lower class and upper might show the same buying behavior. But in other countries like India upper class have a tendency to buy luxury cars, gadgets, and personal care products. But people from the lower class are unable to spend money on these purchases.

Social Factors

Social factors greatly influence the purchasing behavior of consumers. Social influencers are diverse and include family, school or work communities, social interaction or any group with which an individual interacts. It also includes an individual’s social class which comprises of education level, living conditions, and income.

Social Reference. For example, Last month I was eagerly needed a laptop. I went to a nearby market and purchased a MacBook Pro laptop. What factors affect my buying decision and why I purchased MacBook Pro. It was because my closest friend already having the same brand and he is quite satisfied with this product.

Family. Family plays an important role in the decision-making process. For example, if you are a married person, you will always prefer those products that would benefit both husband and wife.

Social Role and Status. Let us understand social role and status and how it affect consumer behavior. For example, you are a Chief Financial Officer in a leading organization, you are someone’s son, husband and father. your role can also affect the buying tendency of many people.

Personal Factors

Personal factors impact buying decisions and include age, economic situation and occupation. In considering personal factors, buying behavior is also influenced by habits, opinions and interests along with other personal issues.

Human Life Cycle Stages is another example , here marketers target markets based on the human life cycle. They will target teenagers with bright colors, loud music and fast food. A young couple will prefer to buy a retirement plan and secure their future.

Occupation and Economic Circumstances. A person occupation affects the consumer decision while buying goods and services. For example, if you are a blue-color worker you will prefer to buy more work-related clothes. On the other hand, if you are an office worker you will tend to buy smart clothes. Different types of companies specialize in making products based on occupational group. For example, a software house will develop different software for accountants, lawyers, retailers and engineers.

Marketers closely observe buyer personal income, saving and interest rate. Their marketing mix decisions are based on economic indicators. For example, The price of Nikon D-5 professional camera is over $6000, you can only purchase this camera if you enough disposable income, savings or borrowing power.

Lifestyle means how a person lives in a society. For example, you are living in a posh area and people have expensive watches, branded clothes and luxury cars. You have to maintain your status and image.

Psychological Factors

Psychological factors that impact buying decision includes perception, motivation and beliefs and attitudes. Every consumer will respond to marketing message based upon their attitudes and perceptions.

Motivation. People have different needs at a time. Some needs are biological i.e. hunger, thirst and some are psychological i.e. recognition, self-esteem and belonging. When a need reaches a certain level of intensity it becomes a motive. According to Philip Kotler, a motive is a need that has the power to direct the person to seek satisfaction.

Maslow’s Hierarchy of Needs also known as Maslow’s theory of motivation was developed by Abraham Maslow in 1943. This Maslow’s theory is based on human motivation. It is shaped like a pyramid and have a bottom to top approach. According to this hierarchy, there are five levels of human needs.

Freud Theory of Motivation. This theory tells us that the unconscious psychological forces such as emotions and desires shape an individual behavior. These are three factors are Id, superego and ego.

Consumer Behavior Models

Through observation and research, there have been developed several models which further explains the buying behavior of consumers and which includes black box, personal variables as well as complex models.

How to Study Consumer Behavior

Several factors affect the consumer behavior and there are some methods that are used to study consumer behavior. These methods include:

About The Author

Umar Farooq

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Read this essay to learn about Consumer Behaviour. After reading this essay you will learn about:- 1. Definition of Consumer Behaviour 2. Factors Influencing Consumer Behaviour 3. Study of Consumer as an Individual 4. Consumer Behaviour in their Cultural and Social Settings 5. Influence of Consumer Behaviour on Decision Making Process.

Essay Contents:

Essay on the Influence of Consumer Behaviour on Decision Making Process

Essay # 1. Definition of Consumer Behaviour:

Consumer behaviour is defined as the behaviour that consumers display in searching for purchasing, using, evaluating and disposing of products, services and ideas that they expect will satisfy their needs.

The study of consumer behaviour is concerned not only with what consumers buy, but also with why they buy it, when, where and how they buy it and how often they buy it. Consumer behaviour is an integral part of strategic market planning.

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The study of consumer behaviour is the study of how individuals make decisions to spend their available resources (time, effort, money) on consumption-related items. Methodology used to study consumer behaviour is known as consumer research.

Consumer research takes place at every phase of the consumption process; before the purchase, during the purchase, and after the purchase. The field of consumer research developed as an extension of the field of marketing research to enable marketers to predict how consumers would react in the market place and to understand the reasons they made the purchase decisions they did.

Since the market place is composed of different people, with different backgrounds, different interests, different needs and wants, it is necessary to segment the markets. Market segmentation is the process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a specially designed marketing mix.

Following major categories of consumer characteristics provide the most popular basis for market segmentation:

1. Geographic factors

2. Demographic factors

3. Psychological characteristics

4. Sociocultural variables

5. Use-related characteristics

6. Use-situation factors

7. Benefits sought and

8. Hybrid segmentation forms.

Essay # 2. Factors Influencing Consumer Behaviour :

Consumer behaviour is influenced by following factors:

1. Cultural Factors:

Culture, subculture and social class.

2. Social Factors:

Reference groups, family, and roles and statuses.

3. Marketing Inputs:

Information from a variety of sources. Product, price, place and sales promotion information.

4. Situational Factors:

Users, usage occasions, availability of finance, availability of products.

5. Personal Factors:

Age, stage in the life cycle, occupation, economic circumstances, life-style, personality and self-concept.

6. Psychological Factors:

Motivation, perception, learning, beliefs, and attitudes.

Research into all these factors can provide clues as to how to reach and serve consumers more effectively.

Essay # 3. Study of Consumer as an Individual :

Consumer needs :.

Psychologists and consumer behaviourists agree that most people tend to experience the same kinds of needs and motives. Human-needs—consumer needs—are the basis of all modern marketing. Marketers do not create needs, they simply make consumers more keenly aware of unfelt needs.

Successful marketers define their markets in terms of the needs they presume to satisfy, rather than in terms of the products they sell. This is a market- oriented approach to marketing.

The specific courses of action that consumers pursue and their special goals are selected on the basis of their thinking processes (i.e. cognition) and previous learning. Therefore, marketers attempt to influence the consumer’s cognitive processes.

The needs are physiological (food, shelter, clothing etc.) and acquired needs (psychological needs like esteem, fear, love and acceptance). For any given need, there are many different and appropriate goals. The specific goal selected depends on the individual’s experiences, physical capacity, prevailing cultural norms and values, and the goals accessibility in the physical and social environment.

Needs and goals are interdependent and change in response to the individual’s physical condition, environment, interaction with other people, and experiences. As needs become satisfied, new higher-order needs emerge that must be fulfilled. Failure to achieve a goal often results in feelings of frustration.

Personality and Consumer Behaviour :

Personality can be defined as the psychological characteristics that both determine and reflect how a person responds to his or her environment. Trait personality theory states that individual possess innate psychological traits, e.g., innovativeness, novelty seeking, need for cognition, materialism, to a greater or lesser degree and that these traits can be measured by specially designed scales.

Each individual has a perceived self-image as a certain kind of person with certain traits, habits, possessions, relationships and ways of behaving. Consumers frequently attempt to preserve, enhance, alter, or extend their self-images by purchasing products or services and shopping at stores believed to be consistent with the relevant self-image and by avoiding products and stores that are not.

Consumer Perception :

Perception is a process by which an individual selects, organises, and interprets stimuli into a meaningful and coherent picture of the world. Examples of stimuli include products, packages, brand names, advertisements, and commercials. Sensory receptors are the human organs that receive sensory inputs.

The study of perception is largely the study of what we subconsciously add to or subtract from raw sensory inputs to produce our own private picture of the world. People organise these stimuli on the basis of certain psychological principles.

The interpretation of stimuli is also uniquely individual, because it is based on what individuals expect to see in light of their previous experience, on their motives, and interest at the time of perception.

Consumers have a number of enduring perceptions, or images that are particularly relevant to the study of consumer behaviour. Influences that tend to distort objective interpretation include physical appearances, stereotypes, halo effects, irrelevant cues, first impressions, and tendency to jump to conclusions.

Just as individuals have perceived images of themselves, they also have perceived images of products and services, of prices, product quality, retail stores, manufacturers, and of brands. Products and services that are perceived favourably have a much better chance of being purchased than products or services with unfavourable or neutral images.

Consumers often judge the quality of a product or service on the basis of informational cues ; some are influenced by colour, size, flavour etc. while others by price, store image, brand image, service environment etc.

In the absence of direct experience or other information, consumers often rely on price as an indicator of quality. Manufacturers who enjoy a favourable image generally find that their new products are accepted more readily than those of manufacturers with less favourable images.

Consumers generally perceive functional or financial risk in making product selection because of uncertainty as to the consequences of their decisions.

In order to reduce this perceived risk consumers strategy by increased information search, brand loyalty, buying a well-known brand, buying from a reputable retailer, buying the most expensive brand, and seeking reassurance in the form of money-back guarantees, warranties and pre-purchase trial.

This concept has important implications for marketers, who can facilitate the acceptance of new products by incorporating risk reduction strategies in their new product promotional campaigns.

Learning is a process by which individuals acquire purchase and consumption knowledge and experience that they apply to future related behaviour. Cognitive learning theory is concerned with how information is processed by the human mind, how it is stored, retained and retrieved. The processes of memory include rehearsal, encoding, storage, and retrieval.

Consumer Attitudes :

Attitude research is undertaken to determine:

(a) Whether consumers will accept a proposed new-product idea,

(b) To learn how target customers are likely to react to a proposed change in the firm’s packaging.

Awareness of consumer attitudes is such a central concern of both product and service marketers that it is difficult to imagine any consumer research project that does not include the measurement of some aspect of consumer attitudes.

Attitudes are an expression of inner feelings that reflect whether a person is favourably or unfavourably predisposed to some ‘object’ e.g., a brand, a service, a product, product category, product use, price.

The formation of consumer attitudes is strongly influenced by:

(a) Personal experience

(b) Influence of family and friends

(d) Exposure to mass media

(e) Individual’s personality

Similar to attitude formation, attitude change is also influenced by:

(i) Learning,

(ii) Personal experience,

(iii) Other sources of information, and

(iv) Personality.

Attitude change strategies that can be used are:

1. Changing the consumer’s basic motivational function,

2. Associating the product with an admired group or event,

3. Resolving two conflicting attitudes,

4. Altering components of the multi-attribute model, and

5. Changing consumer beliefs about competitors brands.

Communication and Persuasion :

In order to create persuasive communications, the marketer must first establish the objectives of the communication, then select the appropriate audience for the message and the appropriate media through which to reach them, and then design the message in a manner that is appropriate to the medium and to the audience. A prompt feedback is also essential, to enable the marketer to make modifications to the media and message, if required.

Communications are of two types:

(a) Interpersonal Communication:

These occurs on a personal level between two or more people and may be verbal or nonverbal, in person, by telephone or by mail.

(b) Impersonal or Mass Communication:

In these, there is no direct contact between source and receiver through impersonal media such as television, radio, newspapers, or magazines.

Media selection depends upon the product, the audience and the advertising objectives of the campaign.

Essay # 4. Consumer Behaviour in their Cultural and Social Settings:

Group dynamics :.

Almost all individuals regularly interact with other people who directly or indirectly influence their purchase decisions. Hence, the study of groups and their impact on the individual is of great importance to marketers concerned with influencing consumer behaviour.

Following are the basic types of consumer-relevant groups which influence the consumption behaviour in individuals:

2. Friendship groups,

3. Formal social groups,

4. Shopping groups,

5. Consumer action groups and

6. Work groups.

Factors that affect the reference group influence are:

(a) Information and experience

(b) Credibility, attractiveness and power of reference group.

Following major types of reference group appeals in common marketing usage are:

1. Celebrity appeals e.g. movie stars, TV personalities, popular entertainers, sport stars etc.

2. Expert appeals. A person who, because of his occupation, special experience is in a unique position to help the prospective consumer evaluate the product or service.

3. Common man appeals. In this, testimonials of satisfied customers are used to demonstrate to prospective customers that someone just like them uses and is satisfied with product or service.

4. Executive appeals. In this, firms use their top executives as spokespersons in consumer ads. because their appearance seems to imply that someone at the top is watching over the consumer’s interest.

5. Trade or spokes-character appeals.

These present an idealised image and dispense information that can be very important for the product or service.

These reference group appeals are effective promotional strategies because they increase brand awareness and reduce perceived risk among prospective customers.

Family Decision-Making :

Many marketers recognise the family as the basic decision-making unit, they most frequently examine the attitudes and behaviour of only one member who is a major decision-maker. Sometimes, they also examine the attitudes and behaviour of the primary user of the product or service.

The extent and nature of husband-wife influence in family decisions depends on the specific product or service, and the specific product feature under consideration.

Social Class and Consumer Behaviour :

Social class profiles provide a broad picture of the values, attitudes, and behaviour that distinguish the members of various social classes. Social class may be defined by the amount of status that members of a specific class possess in relation to members of other classes.

In recent years, some marketers has turned to geo-demographic clustering. Geo-demographic clustering is a technique that combines geographic and socioeconomic factors to locate concentrations of consumers with particular characteristics.

Consumer researchers have been able to relate social-class standing to consumer attitudes concerning specific products and social class influences on the actual consumption of products.

Influence of Culture :

In the context of consumer behaviour, culture is defined as the sum total of learned beliefs, values and customs that serve to regulate the consumer behaviour of members of a particular society. Beliefs and values are guides for consumer behaviour.

Subculture:

The members of a specific subculture possess beliefs, values and customs that set them apart from other members of the same society. Subculture defines a distinct cultural group that exists as an identifiable segment within a larger and more complex society. India has a large number of subcultures depending upon geographical location, castes, tribes, religion, age, sex, etc.

All consumers are simultaneously members of more than one subcultural segment. Therefore, marketers should strive to understand how multiple subcultural memberships interact to influence target consumers’ relevant consumption behaviour.

Cross-Cultural Consumer Analysis :

Cross-cultural consumer analysis is the effort to determine to what extent the consumers of two or more nations are similar or different. If international marketers are to satisfy the needs of consumers effectively, they must understand the relevant similarities and differences that exist between the peoples of the countries they decide to target.

Consumers have specific attitudes or even preference for products made in particular countries. These “country-of-origin” effects influence how consumers rate quality, and sometimes, which brands they will ultimately select.

Main problems involved in cross-cultural analysis are: differences in language, consumption patterns, needs, product usage, economic and social conditions, marketing conditions etc.

Cross-cultural analysis should be based on psychological, social, and cultural characteristics concerning the consumption habits of foreign consumers. Such analysis would identify increased marketing opportunities that would benefit both international marketers and their targeted consumers.

Essay # 5. Influence of Consumer Behaviour on Decision-Making Process:

Opinion leadership :.

Friends, neighbours, acquaintances, co-workers and others have influence on the individual’s consumption behaviour. Nature and dynamics of this influence called the opinion leadership process, and the personality and motivations of those who influence called the opinion leaders, and those who are influenced called the opinion receivers are need to be examined.

Opinion leadership is the process by which one person (the opinion leader) informally influences the actions or attitudes of others, who may be the opinion seekers or merely opinion recipients.

Marketing strategists concentrate their efforts more on the opinion leaders segment as compared to opinion receivers segment. Therefore, marketers can create opinion leaders for their products by taking socially involved or influential people and deliberately increase their enthusiasm for a product category.

Diffusion of Innovations :

The introduction of new products and services is vital to the:

(а) Consumers, as it represent increased opportunities to satisfy personal, social and environmental needs,

(b) Marketers, as it provide an important mechanism for keeping the firm competitive and profitable,

(c) Entire country or geographic regions or even the world, as it represent potential improvements in the quality of life for people.

The diffusion process and the adoption process are the two closely related concepts concerned with the acceptance of new products by consumers.

(а) Diffusion Process:

Diffusion process is concerned with how innovations spread, that is, how they are assimilated within a market. Diffusion can be defined as the process by which the acceptance of an innovation (a new product or service or idea or practice) is spread by communication (mass media, sales people or informal conversations) to members of a social system (a target market) over a period of time.

From the above, it is clear that diffusion process has following four basic elements:

(1) Innovation,

(2) Channels of communication,

(3) Social system, and

(b) Adoption Process:

Individual consumer passes through different stages of a process while arriving at a decision to try or not to try or to continue using or to discontinue using a new product. This process of diffusion of innovation is known as adoption.

The stages in the adoption process are:

1. Awareness about the product innovation.

2. Interest in the product.

3. Evaluation of the product innovation.

4. Trial of the product on a limited basis.

5. Adoption or rejection based on their trials.

The product characteristics which influence the acceptance of a new product by the consumers are:

(1) Relative advantage

New product marketers are vitally concerned with identifying the consumer innovator so that they may direct their promotional campaigns to the people who are most likely to try new products, adopt them, and influence others.

Variables in Consumer Decision-Making :

The decision model has three sets of variables:

1. Input variables,

2. Process variables and

3. Output variables.

Input variables that affect the decision-making process include commercial marketing efforts, as well as non-commercial influences from the consumer’s sociocultural environment.

Decision process variables are influenced by the consumer’s psychological field, including the evoked set {i.e. the brands in making a purchase choice). The psychological field influences the consumer’s recognition of a need, pre-purchase search for information and evaluation of alternatives.

The output phase of the decision model includes the actual purchase (either trial or repeat purchase) and post purchase evaluation. Both pre-purchase and post purchase evaluation feedback in the form of experience into the consumer’s psychological field, and serve to influence future decision processing.

Consumer behaviour is not just making a purchase decision or the act of purchasing, it also includes the full range of experiences associated with using or consuming products and services. It also includes the sense of pleasure and satisfaction derived from possessing or collecting “things”.

The outputs of consumption are:

(i) Changes in feelings, moods or attitudes;

(ii) Reinforcement of lifestyles, an enhanced sense of self, satisfaction of consumer related need;

(iii) Belonging to groups;

(iv) Expressing and entertaining oneself.

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An Introduction to Consumer Behaviour

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This introduction to consumer behaviour will provide the background information necessary for the study of consumer behaviour, with regard to its nature, definition, development, consumer decision making processes, research methods, market segmentation and relationship marketing. Through this it will explore the characteristics of consumer behaviour and the major concepts in the study of consumer behaviour. In an ever- changing environment, the study of consumer behaviour will adapt and change, however this paper aims to provide an overview that may be considered the timeless history in theories about consumer behaviour. Changing technologies means that new forms of consumer behaviour studies are undertaken, and as Schiffman & Kanuk state ‘…new ways of selling products and services became available to consumers during the past 15 years and are the result of digital technologies…and they exist today because they reflect an understand of consumer needs and consumer behaviour’. (Schiffman & Kanuk, 2008) This paper aims to expand on that point, and display examples of how consumer behaviour studies are undertaken in the 21st century. Defining Consumer Behavior

Consumer Behavior can be described as ‘The behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products, services and ideas’ (Schiffman & Kanuk, 2008) They go on to state that it is best described as ‘what people buy, why they buy, when they buy, where they buy, how often they buy, how often they use it, how they evaluate it after purchase and how they dispose of it.’ (Ibid) It includes the study of the decision making process that people go through when deciding whether to consider a product, service or idea. In addition, it involves the marketer, or the person behind the study of consumer behaviour, who may use these studies to encourage the sales of goods, services or ideas. Moneesha Pachauri, of Nottingham University Business School states in ‘The Marketing Review, 2002’ that ‘simple observation provides limited insight into the complex nature of consumer choice and researchers have increasingly sought the more sophisticated concepts and methods of investigation provided by behavioral sciences in order to understand, predict, and possibly control consumer behaviour more effectively.’

This statement can be married to the idea of the marketing concept, which often goes hand in hand with consumer behaviour. When considering consumer behaviour, one must acknowledge the two types of general consumer that exist. The personal consumer is buying for his/ her own uses. This may be extended into household use or gifts. Contrary to this, the Organisational Consumer consists of companies, charities, government agencies and institutions that but products in order to run their organisations. The style of consumer behaviour for each of these differs, but for the purpose of this paper, we will examine the personal consumer. The consumer goes through processes which allow the act of consumption to be evaluated from the point of problem recognition to the post purchase actions. These may be described through the consumer decision making process. CONSUMER DECISION MAKING PROCESS

The process that a consumer goes through when deciding what or whether to consumer. This lies beneath the act of making a purchase, and may be attributed to the psychological core of the person. The process includes seven steps which consumers go through before making a purchase. Step one may be described as ‘problem recognition’. As the main starting factor of the decision making process, it requires in depth analysis and research. Problem recognition conjures the idea that problems only exist when we recognize them. Hoyer and MacInnis describe the problem recognition stage as ‘the perceived difference between an ideal and an actual state.’ (Hoyer & MacInnis, 2008). The ideal state in this context refers to the way the consumer wishes things were. An example of this may be the wish for a nice house or car. In comparison to this, the actual state refers to how life really is, or how the consumer views it.

Examples would then be ‘this house is too old’ or ‘my car is not fast enough’. It is the recognition of the actual state and ideal state that leads a consumer to the stage of problem recognition. It is within the problem recognition stage that the psychological problem solving variants are considered. These include Extended, Routine and Limited problem solving, and the level of commitment contributing to each may or may not lead to purchase. In addition, psychological and functional needs may be defined within this process. As a psychological need the consumer feels personal gratification associated with a product or service. Conversely, the functional needs refer to the performance of said product or service.

Stage two of the consumer decision making process is referred to as the ‘Internal Search’. This stage require the consumer to delve into their memory, and search for answers in the long term memory. This may lead to a recollection of advertisements or uses in progress that the consumer has acknowledged and stored. The external search follows this in the outside search for information. Communicating with others for advice and their internal knowledge furthers the consumers desire to purchase. The evaluation process then allows you to take these things you have learned and form an attitude or opinion on it. The creation of either a positive or negative opinion will then lead you to intention. The ‘say-do dichotomy’ of the situation is examined during this stage, as the consumer has made a decision in their head about whether or not they will fulfill purchase. It is not the act of purchasing, but the psychological acceptance of the product service or idea. The sixth step of purchase is the act itself. In ireland, this stage is ever changing, as new technologies allow online purchasing and factors such as ergonomics of a shop no longer effect the decision making process.

However, shops such as IKEA show that this purchase decision has physically effected the business, even down to shop layout. The final stage involves cognitive dissonance. It is the post purchase evaluation of your product or service. This allows the consumer to feel satisfaction or remorse in their purchase, and will lead to an increased knowledge for further purchases. By evaluating these seven steps in the consumer decision making process, marketers may conjure ways to manipulate consumers by appealing to their decision making process. Philip Kotler’s ‘Behavioral Models for Analyzing Buyers’ contains a figure that allows us to examine the process of pre to post purchase analysis, using a study of how the inputs of buying influences, and the channels of obtaining information may lead to purchasing responses. This may also be referred to the ‘black box model’ as it explores the buyer’s mind. (Kotler, 1965) When researching an introduction to consumer behaviour, it is important to first consider the consumer. Through the decision making process and the ‘black box’ model, we have examined some of the psychological processes consumers go through when purchasing. In addition to this, there are 7 keys to consumer behaviour. These are a way for marketers to understand the best possible ways they can influence consumers and to understand their preferences and behaviours.

7 KEYS TO CONSUMER BEHAVIOUR M- MOTIVATION (Functional) The products performance proves a reason for the customer to decide to buy it. (Self Expressive) The consumer’s behaviour is judged by their need to express their feelings and desires, They want to show something about themselves as an individual. Examples of this may be the Apple vs. PC debate. Apple users feel that owning a Mac says something about them as an individual. (Mix of Motivation) Consumers buy a product for multiple reasons- appearance, performance and the image it gives the owner all come together. An example of this might be the purchasing of a car. The consumer might search for something reliable, spacious, and good looking. A- ACTIVITIES

This includes cognitive actions such as thinking about the product, visualization, observations and studying. These also include physical activities, or doing the action. These would include speaking to a salesperson, trying on a jacket, taking a car for a test drive, and paying for something. The final factor would be how the consumer uses the product. This would include either positive or negative experiences. P- PROCESS

These can be related back to the activities a person goes through. It is the pre-purchase, purchase, and post-purchase stage of the consumer’s relationship with the product. (Pre-purchase) From the consumer’s view this would include, how does the consumer decide that they need the product? Where can the consumer learn about alternative options? The marketer’s view during this process would question how the consumers attitudes or opinions of the product are formed or changed? How do consumers decide whether a product is superior to another or not. An example in this economic climate would be Lidl and Aldi’s use of advertising. They are aware that consumer’s do not want to pay more for similar products, so the use of an advertisement comparing the two products by standard and pricing allows consumer’s to believe they are receiving the same quality at a lower price. (Purchase Activities)

During this stage the consumer is going through the process of either a pleasant or stressful experience with the product. Customer service standards and ergonomics once again come into play when consumer’s consider the emotional attachment. As Tim Manners states in ‘The Empowered Shopper’, ‘They [the consumer] may also find inspiration in the form of product usage ideas, promotional offers, or other products or brands that they had not considered earlier. A positive shopping experience will reinforce the consumer’s commitment to both the brand and the retailer. (Post-Purchase Activities) From the consumer’s perspective, this stage questions whether the product provides pleasure. Does it do the job it was intended to do, and how will the consumer dispose of the product? Each phase links to either the strengthening or weakening of the brand in the consumer’s mind, and therefore marketer’s ensure that a positive reaction is fulfilled. T- TIMING

Timing examines how long the decision making process takes place, and the number of activities involved in making the decision. R- ROLES When a consumer is purchasing a product or service, they are playing different psychological roles. These may include roles ‘as shopper, as chooser, as communicator, as character explorer, as pleasure seeker, as rebel, as victim, as activist, and as citizen.’ (Thomas, 1997) Solomon et al describe in their book, Consumer Behaviour: A European Perspective, that ‘since people act out many different roles, they may modify their consumption decisions according to the particular ‘play’ they are in at the time. (Solomon et al, 2010) Slide 9 in Appendix 1 contains more information on these roles. I- INFLUENCES

Influences can be described as things that persuade the consumer to consider a product or service in a particular light. Three types of influences that may occur are external influences, internal processes (including consumer decision making) and post- decision processes. (Noel, 2009) Examples of internal influences would include the consumer’s lifestyle, class, music styles, sub-culture, family, or the type of media they consume. External influences would be recognized as values, culture and the people that surround them. Noel goes on to state,

‘External influences, such as a consumer’s culture, have a direct impact on their internal, psychological processes and other factors that lead to different consumer decisions being made. For instance, a consumer’s religion could impact on their attitudes towards eating beef or other types of meat; or their age could impact on their ability to perceive fast-moving objects in certain television commercials.’ (Noel, 2009)

P- PEOPLE The world of consumers, similar to the world in general, is made up of many different types of people. Theorists such as Jung and Durkheim discuss the idea of a collective consciousness, and how the media is creating a set of shared beliefs within society. When considering the ‘people’ in consumer behaviour, it would be considered a marketer’s dream for a ‘one size fits all’ package to consumers. However, tools such as market segmentation show us that consumers come in different shapes and sizes, and therefore must be studied and grouped according to their similar interests.

MARKET SEGMENTATION Continuing to examine the consumers themselves, market segmentation is a tool used by marketers to establish who their consumers are, based on similar characteristics in their external and internal influences. An example of this in use would be the advertisements shown on the side of your Facebook page. They are aimed at you specifically based on your gender, age, birthday, location, ‘likes’ and interests, relationship status, language, education, workplace, connections and even friends of connections. (Dunnay, Krueger & Elad, 2010) In the 3rd edition of Solomon et al’s Consumer Behaviour: A European Perspective, they supply a chart describing market segmentation under the headings of ‘category’ and ‘variable’. (Solomon et al, 2006)

Schiffman, Hansen and Kanuk describe marketing segmentation in relation to the marketing concept in their book ‘Consumer Behaviour: A European Outlook’. They state that the marketing concept has been split into several alternative approaches, referred to ‘the production concept, the product concept and the selling concept. The three major strategic tools of marketing are market segmentation, targeting and positioning’. (Schiffman et al, 2008) This shows the importance of the relationship between consumers and marketers, as marketers continue to research consumer behaviour using these strategies. CONSUMER RESEARCH

Similar to marketing research, consumer research exists within two paradigms, the qualitative and the quantitative. Consumer Research contains a six step process. Define the objectives of the research

Collecting and evaluating secondary data Designing a primary research study Collecting primary data Analyzing the data Preparing a report on the findings. (Rifatbabu, 2010) The two most essential approaches to consumer research are positivism and interpretivism. In a positivism approach, the researcher regards the consumer behaviour discipline as an applied marketing science. (Ibid) This form of research is quantitative, and predictions are made about the actions the consumer will take. Contrary to this, the post modern interpretivist view looks more into the consumption of goods, rather than just the buying of goods. Once again the external and internal influences, and the consumer decision making process comes into both of these approaches. The chart below shows the contrast between the positivist and interpretivist approach. (Rifabatu, 2010)

KOTLER’S 5 KEY THEORISTS In the 29th edition of the Journal of Marketing, theorist Philip Kotler presented the idea that the study of consumer behaviour may be described in five ways, according to the 5 key theorists. Each theorist took a different view on consumer behaviour studies, including the economic, learning, psychological, social and the personal organisational consumer. The theorists included in these schools of thought are Alfred Marshall, Ivan Pavlov, Sigmund Freud, Thorstein Veblen and Thomas Hobbs respectively. A line from each, describing their school of thought, may summarize their theory individually. Marshallian Model – According to this theory ‘the consumers are assumed to be rational and conscious about economic calculations. They follow the law of marginal utility. An individual buyer seeks to spend his money on such goods which give maximum satisfaction (utility) according to his interests and at relative cost.’ (MBA-Marketing, 2008)

Pavlovian Model- ‘Learning is an associative process that contains four central concepts: drive, cue, response, and reinforcement’ (Michman et al, 2003) This model is often associated with Pavlov’s experiment in training a dog to eat at the sound of a whistle.

Freudian Model- This model is based on Freud’s theories of the Id, Ego and Superego. The model suggests that the Id would drive consumers to desire products, emphasizing the subconscious motivations for consuming.

Veblenian Model- Suggests that consumers are effected by their social influences. Michman states ‘…the impact of present group memberships and aspired group memberships is stressed…conspicuous consumption operates in the purchase…’ (Michman et al, 2003)

Hobbesian Model- Hobbs suggests that the organisational consumer is also a personal consumer. ‘The buyer has private aims, and yet he tries to do a satisfactory job for his corporation.’ (Karp, 1974)

Relationship Marketing “Mass advertising can help build brands, but authenticity is what makes them last. If people believe they share values with a company, they will stay loyal to the brand.” (Schultz, 2012)

The quote above, from Howard Schultz’s book ‘Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time’, can teach marketers that there is more to the study of consumer behaviour than simply selling. As a consumer, they want a connection with their purchase, and companies may chose to acknowledge and supply this connection through relationship marketing. Palmatier tells us that the definition of marketing itself had been updated by the American Marketing Association in 2004. Marketing is now defined as ‘an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders’. (Palmatier, 2008) As you may see, an emphasis has been added to the management of customer relationships, and this is no surprise as innovation in the past 20 years has changed the role of marketing drastically.

Relationship marketing allows for the maintenance of a strong relationship between business and consumer. It also works as traditional marketing does, by attracting new consumers into their market. This may be achieved in many ways, such as gift cards, loyalty cards or charity competitions. An example of the success could be the Supervalu chain in Ireland. The loyalty card allows consumers to gain points, and provides discount holidays upon a certain number of points. This assures Supervalu customers that they are receiving more than just good service and affordable shopping, and allows them to feel like a part of the Supervalu community.

Another use for the customer loyalty card is the use of database marketing. These databases allow marketers to examine which products are selling, and shows the customers personal preference of product. In return for the customers participation, they receive direct marketing that is significant to them. For example, Tesco Club card users receive monthly coupons on items they have frequently bought. As discussed earlier, Facebook advertising and Youtube advertising appeal directly to the consumer, as they examine their interests and taste and advertise products they might be interested in.

In a technological age, the use of social networking has changed the world of marketing. The use of Facebook and Twitter are common among large and small companies, as they may share the page among friends, or hold competitions to involve the consumer. The diagram below shows the relevant number of social features that sites use. It is a strong representation of the changing times in marketing, and allows us to examine how some Irish companies are using social features on their e-commerce site.

Diagram: (O’Toole, 2011)

The study of consumer behaviour extends into many more detailed fields, however, this paper has aimed to explore the introductory points necessary for the knowledge of consumer behaviour. The relationship between consumer and marketer continues to be examined, and new methods of research will continue to be formed. In an innovative age, the world of consumer behaviour is progressively leaning towards the addition of the internet, including social networking and e-commerce. Marketers will continue to use ethical forms of advertising to create popular culture, leading to successful business.

Dunay, P. Krueger, R. Elad, J. (2011) Facebook Advertising for Dummies. Wiley Publishing, Inc. New Jersey. Icmrindia (no author/ year) Consumers Behavior. Accessed from: http://www.icmrindia.org/courseware/Consumer%20Behavior/CBC06.htmRetrieved: February, 2013 Karp, R. (1974) Issues in Marketing. p.64. Ardent Media

Kaur, R. (2012) Unit 1- Consumer Behaviour and Marketing Action. Accessed From: http://www.slideshare.net/tamana2223/7008203-consumerbehaviourRetrieved: February, 2013 Kotler, P. (1965) Behavioral Models for Analyzing Buyers. Journal of marketing, Vol. 29 pgs. 37-45 Michman, R. Mazze, E. Greco, A. (2003) Lifestyle Marketing: Reaching the New American Consumer. Greenwood Publishing Group. MBA-Marketing (2008) Consumer Behaviour: Lesson 5, Consumer Behaviour Models.Accessed From: http://www.scribd.com/doc/7008203/57/ECONOMIC-OR-MARSHALLIAN-MODEL Retrieved: February, 2013 Noel, H. (2009) Basics Marketing 01: Consumer Behaviour. AVA Publishing O’Toole, A. (2011) How sociable is Irish E-Commerce?

Rifatbabu (2010) Consumer Research. Accessed From: http://www.slideshare.net/rifatbabu/consumer-resarchRetrieved: February, 2013 Schiffman, L. Hansen, H. Kanuk, L. (2008) Consumer Behaviour: A European Outlook. 9th Ed. Pearson Education. Solomon, M. Bamossy, G. Hogg. M.K. (2006) Consumer Behaviour: A European Perspective. 3rd Ed. Prentice Hall. England. Solomon, M. Bamossy, G. Askegaard, S. (2010) Consumer Behaviour: A European Perspective. 4th Ed. Pearson Education. Thomas, M. J. (1997) Consumer Market Research: Does it have validity? MCB University Press.

Essay on Consumer Behaviour: Top 8 Essays | Microeconomics

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Essay # 1. introduction to consumer behaviour:.

Microeconomic theory tends to assume that individuals are the economic agents exercising the act of consumption, the decision to purchase goods and services. The consumer is assumed to choose among the available alternatives in such a manner that the satisfaction derived from consuming commodities (in the broadest sense) is as large as possible.

This implies that he is aware of the alternatives facing him and is capable of evaluating them. All the information pertaining to the satisfaction that the consumer derives from various quantities of commodities is contained in his ‘utility function’.

We assume that each consumer or family unit has complete information on all matters pertaining to its consumption decision. A consumer knows precisely what his money income will be during the planning period. ‘Utility’ refers to subjective satisfaction derived from consumption of commodities.

The 19th century economists, namely W. Stanley Jevons, Leon Walras and Alfred Marshall came up with the cardinal theory of consumer behaviour. They considered utility is measurable just as the weight of objects. The consumer is assumed to possess a cardinal measure of utility when he is able to assign every commodity, a number representing the amount or degree of utility associated with it.

Under this theory, it is possible to measure marginal utility (MU) of a commodity, whereby by MU we mean a change in utility due to a change in per unit of consumption of a commodity. Another property is the existence of Law of Diminishing Marginal Utility (LDMU).

This means as a consumer keeps on consuming successive units of the same commodity, consumption of other commodities held fixed, marginal utility diminishes. Total utility increases at a decreasing rate for successive units of consumption of a particular commodity.

Essay # 2. Assumptions of Consumer Behaviour under Cardinal Theory :

(i) Utility is numerically measurable.

(ii) Marginal utility is the unit of measurement of utility.

(iii) Marginal utility of money (or total budget) is constant.

(iv) The Law of DMU holds,

(v) Independence axiom holds.

Total utility can be expressed as sum of utilities pertaining to each commodity separately. For example, let utility be a function of two goods x 1 and x 2 , i.e.,

In Fig. 1 we divided consumption space into four zones — I, II, III, IV. Due to the axiom of non-satiation it is observed that consumption bundle, XPY (X has more of x 2 than Y for the same x 1 ). Similarly, ZPY Hence all the points in zone I are superior to Y and all the points in zone III are inferior to Y.

The remaining two zones, viz., II and IV are important to draw indifference map as follows:

A ray through origin, OH, passes through Zone II. All Space points on OP are inferior to Y but XPO i.e., somewhere between P and X where there is switch of preferences say point M. Successive drawings of such a ray through origin can make us safely assert that there is a point say M which is indifferent to X. Similar exercise can be carried out with Zone IV and joining these points like W, M, Y, T, we get a curve called Indifference Curve.

An indifference curve is a locus of points in a commodity space—or commodity bundles—among which the consumer is indifferent. Each point on an indifference curve yields the same utility as any other point on that indifference curve. The IC approach has been applied in areas of international trade and public finance, community (social) indifference curves (ICs and SICs) are used to show gains from trade.

Similarly, ICs are used to compare to the welfare effects of a lumpsum tax and a price distorting tax. IC approach including the Slutsky theorem is also used to show the effect of income tax on a worker’s labour-leisure choice. At times SICs are used to compare cost of living indices and then show the effects of price inflation.

We may now summarise the basic properties of indifference curves as follows:

1. IC is Downward Sloping:

In Fig. 2, along the IC, utility is constant. Therefore, when consumption of one commodity increases, given the level of other commodity, utility increases. But since total utility is constant, additional utility has to be sacrificed by reducing the consumption of other commodity. Hence IC is downward sloping.

2. ICs are Non-Intersecting:

In Fig. 3, CPB (since C has more of x 1 than B for same x 2 ). But CIA as both C and A lie in same IC, IC 0 . Again, BIA, as both B and A lie on same IC 1 .

. . . Therefore, by the axiom of transitivity, CIB (or BIC) which is not possible or gives contradictory results. Therefore ICs cannot intersect.

3. Higher ICs give Higher Utility:

It can be seen that BPA, as more of x 2 is consumed in B than A for the same amount of x 1 . Hence all the points on IC 1 are preferred to all the points on IC 0 , as it gives higher utility. Again, CPB as for same x 2 , more of x 1 is consumed. Therefore, all points on IC 2 are preferred to all points on IC 0 and IC 1 as it gives more utility. Higher IC gives higher utility (Fig. 4).

4. ICs are Convex to the Origin:

Axiom 4 leads to convexity of IC which implies diminishing MRS where by MRS we mean absolute necessary reduction in consumption of x 1 due to additional consumption of x 2 by one unit such that total utility is fixed (assuming two commodities x 1 and x 2 only)

Now we shall discuss about budget constraint and budget lines. The budget line is set off more commodity bundles than can be purchased, if the entire money income is spent.

Hence, budget constraint is given by following equation:

where m = total money income (assumed constant).

P i = price of i th commodity

X i = i th commodity, i = 1, 2,…, n

In a two-commodity framework, therefore, the budget constraint will be

m=p 1 x 1 + p 2 x 2

or, x 2 = (m/p 2 – p 1 /p 2 ) x 1 [This is indeed the equation of a downward sloping straight line.]

The solution of problem of maximisation of utility subject to the budget constraint is the main motive behind the theory of consumer behaviour.

Properties of Demand Functions :

Demand functions are homogeneous of degree zero in prices and income which means that equi-proportional and unidirectional changes in prices and money income do not alter optimality condition. This homogeneity postulate suggests that the consumer is free from money illusion.

Consumers’ initial equilibrium is point E. Every time his income increases the budget line shifts F and G are the corresponding equilibrium points. The locus of all the equilibrium points is called income consumption curve. In the Fig. 6 both x 1 and x 2 are normal goods.

If x 1 is inferior the ICC will be backward bending and if x 2 is inferior it will be forward falling. See (Fig 7). If consumption of a good falls as income rises, then such a commodity is called inferior goods. So one important prediction is that if the consumer spends all his income on two goods, both cannot be inferior at the same time.

The relation between money income and quantity consumed is explained by a function is known as the Engel’s curve. Now we allow the price of one of the two goods to fall. Suppose that of x 1 falls. In this case the budget line becomes flatter and the consumer is able to reach higher indifference curves and enjoy more utility or satisfaction, thus improving his level of welfare.

So every time P 1 falls, the consumer moves to higher IC and reaches a new equilibrium point. The locus of successive equilibrium points is the price consumption curve (PCC) which shows the consumer’s reaction to a single price change which changes the price ratio, i.e., p 1 /p 2 .

There are two uses of PCC. First, we can derive the consumer’s demand curve for a commodity from the PCC. According to the ordinal approach, the demand curve for a normal good is downward sloping due to price effect which has been decomposed by Hicks and Slutsky into two parts, namely, substitution effect and income effect. The slope of the demand curve depends on the relative strength of the two effects which, in turn, depends on the nature of the commodity under consideration.

From the PCC we can predict price elasticity of demand (e) by using the total outlay method.

Three points will be noted in the context:

(i) If PCC is downward sloping, demand for x 1 is price elastic.

(ii) If PCC is horizontal, demand for x 1 is unitary price elastic.

(iii) If PCC is upward sloping, demand for x 1 is price inelastic.

Essay # 5. Price Effect as a Sum-Total of Substitution Effect and Income Effect:

From the Marshallian demand curve (constant money income demand curve) it is not possible to explain the price effect because Marshallian approach is based on LDMU, i.e., cardinal theory. It was John Hicks and E. Slutsky who decomposed the price effect into two parts. Thus, two new concepts of demand curve have emerged, namely,

(i) Real income constant demand curve (the Slutsky demand curve)

(ii) Total utility constant demand curve (the Hicks demand curve)

We shall now construct Marshallian demand curve and compensated demand curve for a normal good in a two-commodity framework.

From the price effect such derivation of the demand curve for x 1 is as follows:

Let initial budget line be AS in Fig. 10(a) for price p 1 , corresponding equilibrium x 1 at E 0 is x 1 . Hence for price p 1 , x 1 is plotted in Fig. 10(b). If p 1 falls slope of budget line falls and hence AB becomes flatter. The budget line becomes AB’. The consumer reaches higher utility level on IC 2 and new equilibrium x 1 is x 1 M . Plotting this in Fig. 10(b) and joining E 0 and E M in Fig. 10(b), we get the negatively sloped demand curve for x 1 which is the Marshallian demand curve, D M .

We will construct D H and D S for same initial conditions as the one we considered while drawing the Marshallian demand curve. Let price of x 1 , p 1 fall from p 1 o to p 1 ’. For Hicksian demand curve we consider budget line, CD tangent to initial IC 0 implying constant utility level even as new price ratio P’ 1 /P 2 and hence parallel to AB’. Because of movement from E 0 to E H , x 1 rises from x 1 to x 1 H . This is purely substitution effect, and joining E 0 and E M we get Hicksian demand curve D H .

If we follow the Slutsky approach, we can make the following two Predictions:

(i) Perfect Substitutes:

If two commodities are perfect substitutes like blue and black ink for a colour blind person the IC will be a straight line with PE = SE and IE = 0.

(ii) Perfect Compliments:

If two commodities are perfect complements like left and right shoe SE = 0 Thus, PE = IE. For Slutsky demand curve we consider budget line C’ D’ , which passes through initial equilibrium point E 0 implying that consumer is just enough to purchase initial equilibrium commodities even at new price ratio P’ 1 /P 2 , hence parallel to AB.

This hypothetical budget line is thus to the right of CD and hence consumer reaches higher IC, IC 1 . Consumption of x 1 rises, hence when plotted in 10(b), we see that D S is flatter than D M . The movement from E S to E M is the income effect.

The substitution effect is always negative because the entire IC approach is based on the of substitution which suggests that the consumption of one commodity is always at the expense of the other but IE is negative in case of normal good, if we consider change in real income. Thus in case of a normal good the negative income effect reinforces the negative, SE so as to make the price effect very strong in this case and the demand curve is relatively flat.

In case of an inferior good, IE is positive but less-strong than the substitution effect. So the price effect is still negative but less strong than that in the case of a normal good. In case of a Giffen good, which is essentially a price phenomenon, the positive income effect is stronger than the negative substitution effect so as to cause price effect to be positive. This is one of the exceptions to the empirical law of demand. These points are summarized in Table 1.

An important aspect of ordinal theory is the derivation of Slutsky Equation. This is done in the mathematical appendix.

Essay # 6. The Hicksian Interpretation of Consumer Behaviour:

Hicks define own-price substitution effect in terms of constant utility.

According to SARP, if (x 1 , x 2 ) is revealed preferred to (y 1 , y 2 ) (either directly or indirectly) and (y 1 , y 2 ) is different from (x 1 , x 2 ) then (y 1 , y 2 ) cannot be directly or indirectly revealed preferred to (x 1 x 2 ). Likewise, in the ordinal theory under revealed preference approach it can be proved that substitution effect is always negative. Let prices be given by P° when a consumer purchases a commodity bundle X° when X’ was affordable. This means X° is purchased at P° when X’ was affordable. This is possible only when,

Essay # 8. Modern Approach to Consumer Behaviour:

An alternative approach to the theory of consumer demand was pioneered by K. Lancaster. He argued that goods are demanded as their characteristics. It is these characteristics that yield utility. Thus, we may consider three different goods say sugar, honey and saccharixe. But they may have only two characteristic, viz., sweetness and calories. If a new sweetener is produced we analyse it not as a new good but as one better that has the same characteristics.

Thus, compared with traditional analysis, the new approach has two advantages:

(i) We can study the introduction of new goods,

(ii) We can study the effects of changes in quality.

Comparison with traditional approach:

In the traditional theory, the consumer’s indifference curves are given in terms of the original set of goods. Now if a new good is introduced in the market we have to introduce a whole new set of indifference curves or surfaces. All the information in the preference about old set of goods is discarded.

In terms of the new approach we can make an insightful analysis of consumer choice. In the real commercial world many of the so-called new goods are actually the same as the old goods with the characterisation of different proportions.

Thus, if we consider the preferences in terms of characterisation we can analyse introduction of new goods very easily. We do not have to discard any old set of preferences as worse. If new goods appear in the market with new characteristics, we have to introduce a new set of preferences.

A major advantage of the characteristic approach is that it permits the analysis of many goods. At times the number of goods is considerably higher than the number of characteristics. Furthermore, once we think in terms of characteristics we have to consider substitution effect which is different from the substitution effect of the traditional theory.

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The Importance of Consumer Behaviour

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Part of: Consumer Behaviour

Introduction

This essay discusses the value to marketers of understanding the importance of, and applying consumer behaviour concepts and theories.

Consumer Behaviour

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Importance of Consumer Behaviour to business managers

Importance of Consumer Behaviour to Marketers

1. To understand Buying Behaviour of consumers

2. to create and retain customers though online stores, 3. to understand the factors influencing consumer’s buying behaviour, 4. to increase the knowledge of sales person influence consumer to buy product, 5. to understand the consumer’s decision to dispose a product or services.

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6. To help marketers to optimize sale of product and create focused marketing strategies

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Consumer Behavior – Essay Example

Consumer behavior focuses on the thoughts and behavior of buyers when they make a purchasing decision. There are two categories of customers: those, who buy for themselves or their family consumption, and industrial customers that purchase for businesses. In both cases, the marketing specialist has to deal with the practical needs of a buyer or organization and his/her emotional and personal needs.

The importance of motivation in consumer behavior is known around the world. Over the past 30 years, there was a large and rapid progress in consumer behavior research. Consumer behavior is an activity, which is aimed primarily at the use and disposal of products and services, including the decision-making processes that precede these actions and follow them. Nowadays, the range of goods and services for consumption is exceedingly large, and the consumer’s choice depends primarily on the needs, tastes, habits, traditions, and preferences.

Consumer preferences – is recognition that some goods are better than the others. Consumer preferences are, of course, subjective. The assessment of the usefulness and benefits of each selected product is also subjective. However, the choice of the consumer is not determined only by his or her preferences, it is also limited by the price of alternative products and the income of the consumer. Unlimited customer’s needs and limited resources make the consumer choice necessary.

When we consume different amounts of the same benefits, we notice that the more benefits we consume, the less satisfaction we get from consuming an additional unit of these goods. In theory, this pattern is called the law of diminishing marginal utility. It is the amount of added value of one additional unit of the good. This law involves the relation between the increase in the amount of goods consumed and additional useful unit of that good.

Thus, it is possible to state some principles of consumer behavior in the market, as there is a certain model of their behavior. Consumer behavior is rational, as it proposes certain objectives and is guided by self-interest. When the customer is selecting the goods, he or she is also limited by the budget constraint.

Model of consumer behavior is unrelated to general principles of consumer behavior in the market, including, above all, maximization of the total utility, the law of diminishing marginal utility and budget constraint. The above model of consumer behavior is the simplest model. However, it is also useful as it explains the buyer’s behavior on the market and the factors that influence the demand for goods.

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Factors Affecting Consumer Behavior Essay

Introduction, internal factors, external factors, situational factors.

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Understanding consumer behavior is a critical aspect of success for marketers in all sectors of the economy. Studying consumer behavior furnishes companies with information about consumers’ demands, perceptions, and their spending habits.

Understanding consumer behavior enables companies compete effectively, stay in business, improve sales, and develop better and effective marketing strategies. Many factors affect consumer behavior. They are classified into three groups namely internal, external, and situational factors. Internal and external factors are intertwined.

However, they affect consumer behavior in different ways. Many factors that affect consumer behavior are beyond the control and manipulation. Factors that influence consumer behavior include motivation, perception, learning, feelings, personal preferences, thinking, social norms, cultural values, trends, group influence, family influence, cultural influence, sub-cultural influence, environment, economy, culture, marketing, age, prevailing circumstances, and personal life.

Internal factors that influence consumer behavior include motivation, perception, learning, feelings, personal preferences, and thinking. These factors are also referred to as personal factors. A consumer’s motivation to purchase a certain product or service mainly depends on an urge to fulfill a certain desire or attain a certain goal. Consumers’ perceptions largely affect their behaviors. They determine how they value certain products or services based on their perceived outcomes or benefits.

Perception can be influenced by factors such as education, marketing, and advertising. Many consumer behaviors are adapted from learning. People learn to like or dislike certain products depending on the information they get form materials such as books, magazines, and online sources. Personal preferences affect consumer behaviors because they determine consumer attitudes and perceptions.

For example, some consumers prefer high heel shoes to flat shoes. This influences how they make decisions on the type of shoes to purchase. Consumer behaviors are also influenced by feelings and thinking. Emotions play a critical role in determining whether consumers purchase certain products or not. Through thinking, consumers analyze products, compare them with others, and decide which products and services best suit their needs.

External factors that influence consumer behavior include social norms, cultural values, trends, group influence, family influence, cultural and sub-cultural influence, and environment. Social norms are strong determinants of consumer purchasing behaviors. In many societies, certain social norms restrict individuals of certain genders to certain ways of dressing or doing social things.

For example, women only purchase certain types of clothing that does not contradict their norms. This greatly affects their purchasing behaviors. Group influences includes informational influence, comparative influences, and comparative influences. Informational influences take place in situations where consumers seek information from families or friends.

Comparative influences take place when a consumer bases his/her decision on the identity of the group to which they belong. For example, a young person will buy the type of shoes that his/her peers buy. Finally, normative influences involves establishment of rules regarding the behavior of group members. These aspects determine what consumers purchase. Trends have significant influence on consumers especially young people.

They dress in the latest fashion in order to look relevant and knowledgeable. Older people are less attracted to trends and fashion. They mostly dress for comfort. Families also affect the process of decision making by consumers. For example, purchasing trends change when a single individual starts a family. Single people purchase products that suit their lives as single individuals.

In contrast, married people purchase products that fulfill the needs of all their family members. As such, they purchase more products. I addition, families influence decision making. Unlike in the case of single individuals that make personal decisions, married individuals make joint decisions that take into account the preferences of other family members. Cultural and sub-cultural factors include social norms and beliefs.

In certain cultures, modes of dressing, feeding, and communication are determined by norms, traditions, and beliefs. Therefore, consumers are very selective on what they purchase. Collectivist cultures differ from individualistic cultures. In collectivist cultures, decisions are made collectively. As such, consumer behaviors are determined by the collective decision made. In contrast, the consumer habits observed in individualistic societies depend on personal tastes and preferences.

One of the most important aspects of business is the consumer market. An important skill is needed for businesses to understand the needs of customers. In addition, they should understand the factors that affect their behaviors. Examples of situational factors that affect consumer behavior include economy, culture, marketing, age, prevailing circumstances, and personal life.

These factors that affect consumer spending have different effects in varying degrees. Some have stronger effects than others do depending on the status of the consumer. Economy is the main and most important factor. This is because it determines the financial status of consumers, the amount of money they are willing to spend, and the amount available to spend. If the state of the economy is worse, then consumers will have little to spend and will therefore shun spending.

However, if the economy is thriving, consumers possess a lot of money and they therefore spend it on buying goods and services. In addition, the economy also affects the job markets. High rates of employment mean that consumers have more money to send while low rates of employment means that the economy is unstable and therefore little money to spend. Culture is also an important factor. Culture determines the beliefs, attitudes, and prejudices that people harbor. This in turn affects their purchasing tendencies.

People’s attitude and beliefs are largely influenced by their families and friends. It is important to study the effect of culture on consumers’’ spending tendencies. Marketing is a very effective tool that is used to control and influence consumers’ spending tendencies. It influences consumes by telling them what to buy and why to buy. Age is also a determinant of consumer behaviors. People of different ages have different needs and preferences.

Therefore, consumer behaviors depend on age and the suitability of certain goods and services to certain ages. For example, movies attract more young people compared to old people. Finally, personal life and prevailing circumstances influences consumer behaviors significantly. For example, the spending habits of married people are different from sending habits of single people. The wants and needs of married people are more. Therefore, they spend more.

Many factors affect the purchasing decisions that consumers make. These decisions are influenced by a wide range of factors that are grouped in three classes. They include internal, external, and situational factors. Factors in each group influence consumer behavior differently in varying degrees. Examples of internal factors include motivation, feelings, perception, and attitude.

External factors include group influence, family, environment, culture, and sub-culture influences. Situational factors include economy, personal life, age, and prevailing circumstances. Study of consumer behavior is important because it furnishes companies with information about consumers’ demands, preferences, perceptions, and spending habits. In addition, it helps businesses improve sales and develop better and effective marketing strategies.

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Reflection On Consumer Behavior

Higher education rhetorical analysis.

Marketing is “an organisational function and a set pf processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders” (Reid and Bojanic, 2009, p. 9). In the pursuit of maintaining and increasing their enrolment numbers, many higher education universities and business schools realise and underline the necessity of marketing for student enrolment (Ivy, 2008, pp. 288-289). Perceiving students as consumers, marketers investigate and determine factors affecting student’s choice for an educational institution and develop marketing models and theories applicable to higher education to promote particular universities and business schools (Cubillo, Sanchez and Cervino, 2006, pp.

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Reflection On Strategic Marketing

First, from the beginning of the classes I was able to design and implement marketing/business strategies in particular areas only. After that, I am able to create long-term and mutually beneficial exchange relationships between an entity and the publics with it interact. Moreover, the strategic marketing analysis & planning process such as internal & external situation assessment, strategy formulation, positioning and marketing mix were taught during lessons in detail that integrated my marketing knowledge. And as a result I also became aware with a range of new issue of marketing management and the marketing tactics in particular that were resulted from the product and branding strategy. I found strategic marketing analysis and planning of this project more challenging than

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Consumer Behavior: Price Attention & Memory

Introduction

Consumer behavior is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of the consumers in the marketplace and the underlying motives for those actions. (Consumer Behaviour 2014) The study of consumer Behaviour helps everybody as all are consumers. It is essential for marketers to understand consumers to survive and succeed in this competitive marketing environment.

Consumers make price based decisions every day. They consistently observe and compare prices and make buying decisions based on spot prices. They take decisions based on the knowledge they obtain by observing the prices in different stores and advertisements. Some buy products regardless of the quality and the price it is sold. One study showed that only 47% to 55% of consumers were able to recall its correct price (Dickson and Sawyer 1990; Le Boutillier, Le Boutillier, and Neslin 1994; Wakefield and Inman 1993). This could have resulted due to lack of motivation and attention by the consumer or by the distractions present in the store itself. Moreover, it could also be due to the cognitive challenges faced by the brain which enables the consumer to recall the actual price of the product. As explained by the psychologist Daniel Schacter in his book ‘The Seven Sins of Memory: How the Mind Forgets and Remembers’

Purpose of the research

The overall purpose of the research is to understand the concept between price attention and memory when purchasing items also through this research we would be able to determine whether the marketing factors effect a consumers buying power or whether people consider the price when buying goods from shops. Hence this research is done to either approve the listed hypothesis or to reject one.

A hypothesis, in a scientific context, is a testable statement about the relationship between two or more variables or a proposed explanation for some observed phenomenon. The researcher’s prediction is usually referred to as the alternative hypothesis, and any other outcome as the null hypothesis — basically, the opposite outcome to what is predicted. Nevertheless, both is proposed and one hypothesis is rejected after the research has been completed. (WhatIs.com)

Hypothesis 1

Null hypothesis (H1) Men are better at recalling price than woman

Alternative hypothesis (H2) Women are better at recalling price than men

As it is believed that men are more superior than woman, many agree that men have better memory than woman. Men tend to recall things that they have seen just once.

Hypothesis 2

Null hypothesis (H5) When buying variety of items people tend to forget the prices more often

Alternative hypothesis (H6) People do not forget the prices even if they are purchasing variety of items

It is evident that no man can remember a list of items which they have seen just once. Same goes to the prices, even though they have seen the price of the item before buying it they are also exposed to the prices of other irrelevant products which confuses them and that memory is blocked by other memory which the person just saw.

Hypothesis 3

Null hypothesis (H9) Recollection of price of grocery is much less than cosmetics

Alternative hypothesis (H10) Recollection of price of grocery in not less than cosmetics

The price of grocery varies widely and it changes due to various reasons. It can be either overpriced due to bad weather or it can be cheap due to over stock of good or other valid reason. However, when we look into cosmetics they usually have a fixed price which makes it easier to remember the price of products being bought. Additionally, people look for products which are of good quality and cheaper items.

Methodology

“Methodology is the philosophical framework within which the research is conducted or the foundation upon which the research is based” (Brown, 2006)

To get the results for the research the whole procedure took more than a week to complete. Firstly, a small interview was conducted in order to prove the hypothesis. It only included some basic information regarding the consumer. For example; how much the person earn a month? Gender, and what the person do for a living? Is he married or not. After doing such, accompany the person to shopping, observe his/her behavior while he/she is selecting the required products. Note how much time is spent on selecting the products needed and how absent minded or how much attention is paid to the price while shopping. Also note any unusual behavior when the person checks the price of the products before actually buying it. After the person has done shopping ask for the receipt. Now explain to the person that you are going check how good his memory is. Also explain that any value close to the actual value would be fine. For example, the person bought a tooth brush which cost MVR25 but he guessed it as 24 hence his recollection of price is correct also any decimal values will not be considered as some products have values such as MVR2.345 the answer would have been correct if he says it cost MVR2 only. After you are done with the recollection of prices ask whether the person really needed to buy the products or was he/she doing it for someone else. The chances of while buying goods for others the person sometimes gives exact amount of money to buy them that is for everyday household items.

Results/Analysis and finding

In Fig 1 shows a table in which a 23-year-old male went shopping for his mom. Whose occupancy range about MVR4500-8000. It took him half an hour to figure out which items to buy. He bought a mob, mop bucket, broomstick and a soft bun which was for himself. There were three different types of mop and broomstick. From his behavior he was trying to buy an item which would satisfy his mom. An item both cheap and has good quality. After he was done shopping when he was asked to recall the price as shown in Fig 1 he was able to correctly remember the price of only two items. His overall recall percentage is 96%. As the number of items purchased were less he was easily able to remember values close to the actual price. His average difference percentage is 4% which showed that he had distractions all around him but due to less variety he scored pretty well.

According to Fig 2 a 27-year-old male went shopping for his family. He did have a list of items with him while shopping. His occupancy ranges between MVR8000-12000. From his behavior and talks I was able to grasp he had kids as well. He was very focused as he had to buy mostly cosmetic products. In Fig 2 shows that he had recall percentage of 92% with an average difference of 5.8. After he done shopping he was able to recall only 3 items actual price. Other items he was able to recall very close values as he was very focused on buying cheap but quality products which matches his families need.

Fig 3 shows middle aged women who earns more than MVR10000 a month with 2 kids and came for monthly shopping. She mostly bought grocery items and a few cosmetic items. She had bought about 24 varieties of items from the same store. But she was done shopping in an hour. When buying the grocery, she did ask for the prices of the items but didn’t careless and bought them anyways. When asked about the price of the items she could not recall the exact amount, when questioned she answered saying the prices vary nevertheless the prices here are affordable on top of that variety of items are available unlike other shops where only one item is available and have to go to different shops to buy the missing item. Out of 24 items she correctly recalled only 6 items price. She also had mentioned while shopping she normally does not remember the price of the items she purchases as she only goes for shopping once or twice a month. The average difference of the recollection is 7%.

In Fig 4 a 22-year-old female went shopping with her sister. Of course in order to do the research I also went along with them. They had bought cosmetics which they choose very precisely. To them the price mattered however they had an average recall percentage of 97% with an average of 3% as a difference in in the prices. They did not buy a variety of items however they had bought 7 items in which they recalled successfully the price of 5 items.

The seven sins of memory

“The Seven Sins of Memory: How the Mind Forgets and Remembers” is a book by the chairperson of Harvard University’s psychology department Daniel Schacter, PhD, a longtime memory researcher. As he has noted that same brain mechanisms are involved both memory’s strengths and sins. He explains that, these sins shouldn’t be taken as flaws in the architecture of memory, instead these should merely be considered as the costs paid for the benefits of memory. The Seven Sins of Memory can also be related with Seven Deadly Sins, which is the idea behind the book. (Shretha) In this research some of the sins were observed.

Lack of data collecting methods and sample size

Primary data was mainly used however the primary data collected was not enough to make an assumption about the whole market. It is very certain that with the results of only five people, we cannot generalize it for the whole population. Even if we do, the results are uncertain and it can either be too biased as the sample size we have chosen are random and the people selected are related to us and they almost have the same attitude and cultural preferences towards products and people. For the research only five samples were selected which is too small to make an assumption about the whole population based on the five peoples results which varies accordingly.

Recommendation: more data could have been collected with a wide range of sampling size. This would greatly give more efficient and realistic results. Also more data could have been obtained if the target market was big.

Limited time

Overall the research process went very smoothly however one of the major limitation when doing the analysis was the limited time. It was very difficult as there was too much stress and a lot to be covered with in the short period of time. When evaluating the consumers about the price recall of the goods they bought most of them were in a hurry to go home. They all seemed a little too distracted while recalling the prices. One of them literally just guessed the prices and stormed off. It was difficult to convince people it would take only a minute or five for the whole process to be over.

Recommendation: more time should have been spent with the participants so that their rational and irrational behavior can also be evaluated more. the selected participant could have been a person who had cleared his/her schedule just for shopping and a person not in a hurry which would have given accurate results as expected.

Lack of promotional activities/awareness

The store selected is known to do a lot of promotional activities however the amount of promotional activities they have done is not enough to grab the attention of customers who are not focused on the price but the quality of the product. People who earn more than MVR10000 a month mostly does not consider price as a factor when purchasing goods however they do consider the quality and reliability of the products brand they want. Moreover, the store does not have labeled prices of some of the products stacked in the shelves. It also influences consumers price attention and memory.

Recommendation: More promotional activities could have been done to influence a person’s memory on price of the products they purchase. Prices of the goods should have been labeled accordingly so that it does not affect the results of the research.

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Reference list

McNeal, J., & Yeh, C.2003. Consumer Behavior of Chinese Children: 1995-2002. Journal of Consumer behavior. Vol: 20 Issue: 6. http://www.emeraldinsight.com/journals.htm?issn=0736- 3761&volume=20&issue=6&articleid=856475&show=html Pons, F., Laroche, M., & Mourali, M. 2005. Individualistic Orientation and Consumer Susceptibility to Interpersonal Influence. Journal of Services Marketing. Vol: 19 Issue: 3. http://www.emeraldinsight.com/journals.htm?issn=0887- 6045&volume=19&issue=3&articleid=1502354&show=html Richarme, M. 2005. Consumer Decision-Making Models, Strategies, and Theories. Decision Analyst. http://www.decisionanalyst.com/Downloads/ConsumerDecisionMaking.pdf Rihan Academic. 2002. Consumer Behavior. Retrieved on 3.8.2012 from http://www- rohan.sdsu.edu/~renglish/370/notes/chapt05/ Shah, A. 2010. Factors Affecting Consumer Behavior. Product Management Library Knowledge. http://www.aipmm.com/html/newsletter/archives/000434.php

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Consumer Behavior, Issues, Challenges and Analysis

Introduction.

This paper presents a dynamic model on the consumer behaviour on the real world marketing issue. It will further discuss the marketing and industrial experiences encountered daily in everyday business life, in addition is the Consumer behavioural issues and consumer analysis or recommendations.

Research studies has argued that industries or companies experience lots of issues in awe to the logistics of their daily routine, giving them the knowledge that can be used to anticipate incoming situations with the way of tackling problems. However, with the familiarity and repeated external occurrences in the marketing scope of an industry there are many implementations carried out in solving such problems without complexity.

In any industry if the external occurrences are novel, the industrialist structural understanding will lack concrete account of the situation, thereby using old attitude in solving current occurrences. In so doing, there is the tendency of disaster or failure since the result does not get closer to the consumers expectation, hence they device new approach of solving recent occurrence by using the trial and error process in addition to experimentation. The process of surrogating will therefore be tested in the market for the consumer’s appraisal, and once it works then it will be settled on. Although industries do not actively become accustomed to the consumer behaviour or external environment, but by the use of their imagination, they create an environment to which they will become accustomed by means of learning, experimentation and trial an error. Given that consumers have different tastes and expectation in the rapidly changing world, the industries visualization and protrusions are again subject to the consumer or market tests.

What is consumer behaviour?

Consumer behaviour is the procedure or practice whereby a group of people or an individual make a selection of good or product, or the procurement and the utilization or disposition of goods or products, services, opinion or belief and experiences for the satisfaction of one’s wants and cravings (Sandhusen 217).

Consumer behaviour can also be said to be the study of when an individual or group of people buy a product , their reasons or enthusiasm toward buying of the products, the manner or the way or the extent at which they bought the product , and the location or place where they buy or do not buy their products. In other words there is variety of influence that affects an individual or people in decision or choice making; hence this policy making can be either internal or external.

There is variation in policy making for consumers in that they may buy a product, either use it or dispose it on the long run, because of this they may be thought of as major dramatis personae who require different products aid in their basic needs.

Marketing problems and consumer behaviour issues:

The key aspect of consumer behaviour is the marketing segmentation. Consumers can be grouped into different sections or part, including product usage, demographics and psychological and lifestyle segments. In any industry the market research is vital because it ensures that the manufacturer produces the customer’s actual want or demand and not their imagination or conjecture on the consumers want or need. Whenever, an industry understands the customer’s needs, it helps in improving their marketing strategies. Some of the issues of the consumer are:

Consumer behaviour is vital if studied from different perspective and the problem of marketing is the basic point of discussion. The marketing problem is important because it help the company in the understanding and prediction of the consumers need or demand for certain products in addition to the familiarity and preference in the selection of brands. It is also important to give adequate and genuine information to the consumers to avoid the issue of deception and lastly the consumer must expand in their behaviour in making decision when shopping for products (Chien and Moutinho 35).

Promising developmental change of any company or industry for instance the modern emphasis on the relationship of marketing and the practice of database marketing helps the Marketers with the familiarization of the wants and needs of different consumers. The importance of this is that people are authorized in building their consumer space by assessment of different information about a product before buying. The consumer will also be able to contact companies with the help of database through the internet instead of inactive marketing communications.

With the introduction of modern communication technology like the web there has been transformation in the way consumers interact with companies.

The recent technology like the E-commerce allows the consumer in the location of products that are not seen distinctly from different part of the world, thereby helping consumers to share about a product and the recommendation of such products. Although, there is the possibility of problems which accompanies such benefits like: there is little or no privacy in such interactions and the deterioration of customary communal interaction.

Marketing has impacted the consumers massively in that the consumer behaviour is relevant to the perceptive of the public policy issues and the dynamics of popular culture.

In addition to this there’s a saying in public relations that “any publicity is good publicity. If we are to view this critically from the business or marketing perspective one will admit that it is better than something that receives bad publicity than no publicity at all because when the value of manufactured goods is known before consumption or distribution there is a high tendency in the shaping of the demand and the prevalence of the publicized product may be taken as presumptive proof that they affect consumers demand, but the fundamental inquiry about the nature of information being transmitted remains.

In line with this once a product is well publicized and the consumers have good and adequate information on such product there is the tendency of market growth or development of the product, the consumers or people will have adequate information of such product irrespective of how, where, when the product is publicised. A good example of a company that benefited from not just good publicity but also genuine and reliable information to customers is the Toyota motors Plc, which made an extra 100 million dollars from stalling, but with the aid of good publicity they achieved a massive profit from the novel market.

The marketing performance put forth a colossal impact on group people or an individual in that consumer behaviour is relevant to our mutual understanding of public policy issues and the dynamics of well-liked culture. However, the broadened area of consumer behaviour is interdisciplinary; it is made up of an organised study from many broads, sharing an interest on how people work together with the open market. These disciplines can be classified by the level to which their centre of attention is the individual consumer (micro consumer) and the group of people or generously proportioned society (macro consumers).

There are many points of view on the consumer behaviour, but researchers approximately divided it into two approaches that are the positivist and interpretive approach. The positivist point of view, which at present dominates the field of consumer behaviour, lays emphasis on the objectivity of science and the consumer as a reasonable and sensible decision maker. While, the interpretive point of view is in contrast to that of the positivist, in that it emphasises on the importance of the subjective meaning of the consumers individual experience, hence, it suggest that whichever behaviour a consumer performs is subject to diverse interpretations to a certain extent than just a single explanation to it.

In conclusion, to this I think that marketers do not have the ability of controlling the consumers need through the process of efficient marketing methods. However, the marketers can successfully market products by taking the process of demographics and psychographics into consideration, while this will profitably market their products to the intended consumers hence increase in the demand or need.

Works cited

Chien, Charles, S. and Moutinho, Luiz. Problems in marketing: applying key concepts and techniques. California: SAGE, 2007. Print.

Perners, Lars. Consumer Behaviour: The Psychology of Marketing. Department of Marketing Marshall School of Business University of Southern California (Lars Perner), 1999-2008. Print.

Sandhusen, Richard, L. Marketing, Barron’s business review series Business Review Series . New York: Barron’s Educational Series, 2000.

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StudyCorgi. (2021, December 8). Consumer Behavior, Issues, Challenges and Analysis. Retrieved from https://studycorgi.com/consumer-behavior-issues-challenges-and-analysis/

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Diffusion Models and Consumer Behavior: Adopting & Disseminating Technology & Innovations - Essay Sample

Introduction.

The adoption and dissemination of technology and innovations is a relevant topic in the literature on consumer behavior. Within research on this topic, two types of models are distinguished. A first type is the models that try to increase the understanding of the diffusion process as a whole. These models are analytical representations of a dissemination process at the aggregate level. They are often referred to as diffusion models.

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The second class of model aims to provide clarity regarding the factors that determine the decision of adoption (or non-adoption) of the individual. These models take a disaggregated perspective and are generally known as adoption models (Venkatesh & Davis, 2000). Consequently, it can be said that the adoption of technology is the process by which a consumer begins to buy and use new technology.

On the other hand, the diffusion of technology describes how the use of it extends through a specific population. All innovation adoption models have three underlying phases: cognitive, affective (evaluative) and behavioral (conative) (Venkatesh, 2000). In the cognitive phase, the consumer considers mentally or is exposed to the product, service or idea. Thus, the consumer develops a set of opinions or beliefs about the characteristics of the product.

These ideas are used to form feelings towards the product (affective phase). Based on the feelings, the consumer undertakes the actions in the behavior phase. In the study of adoption processes related to technology, two types of models have been applied: normative models and expected value models. Each of these models is based on one of the traditions of the literature of cognitive psychology and social psychology, respectively.

Performance Expectancy

Performance expectancy can be described as the degree to which a person believes that by using a certain technology, he/she will achieve performance gains in his/her attributions and enhance job performance (Venkatesh et al., 2003). It was founded in the constructs of different models: Utility perceived coming from the models of TAM (Technology Acceptance Model) and TAM-TPB, extrinsic motivation originating from the MM model, setting the work from the MPCU model, relative advantage from the RTD model and expectancy results from the SCT model.

The adoption of new technologies cannot be understood without the conviction of the person who incorporates them that they benefit from their use, and this can occur at work or in personal life. If a person does not believe that the incorporation of these elements will be useful, it will be more difficult to acquire them (Sung, Jeong, Jeong, & Shin, 2015). This issue is important because it is no longer a matter of positive or negative predisposition, but whether people have a mobile or tablet as a short-term investment. Therefore, if predisposition is a fundamentally passive issue, the intention is proactive and implies the desire to have this technology in daily life.

One such example is the use of LinkedIn among professionals. Individuals are aware that by using LinkedIn, they can gain professional benefits such as: acquiring more contacts, looking for new career opportunities or obtaining information related to the corporate environment and its areas of activity (Benbasat & Barki, 2007). This is because LinkedIn has a variety of services with professional focus in which they make it possible to display professional information with the interaction between stakeholders.

Since LinkedIn Professional Social Networking enables one to quickly share professional information, improve the chances of benefits with one's contacts, increase the chances of getting opportunities and other possibilities, it is assumed that the perception of these benefits can influence the intention to use the social network (Alraja, 2015). Some individuals with the intention of turnover possibly seek tools, media, new technologies such as the LinkedIn professional social network, seeking to disseminate their professional information, locate professional opportunities, obtain information about the job market, get more contacts, among other reasons.

One of the most influential approaches to model the adoption of technological products is the so-called normative model, where the consumer selects the alternative that provides the greatest objective utility (performance expectancy), is usually determined by a compensatory procedure between the expectations of profit and the costs that may be incurred. The central elements of the normative models are rationality and optimization.

A physical stimulus, such as the attributes of a product, supposes a first influence on the perceptions that, later, determine an affection or preference for the products, leading to the choice. The Expected Values model is also known as Multi-Attribute, Linear Compensatory or Fishbein Attitude models. The expected value models have a long tradition in marketing research (Aarts & Gorman, 2007). The underlying hypothesis is that an attitude towards an object (or action) is a function of one's beliefs about the attributes of the object (or consequences of the action) and its evaluation of the affective reactions towards the individual attributes (or consequences).

The adoption of information technology or communication systems, in many organizations, is imposed by management and, therefore, is not a volitional act in which an election occurs. The voluntary variable would change the relative importance of the perceived characteristics of innovation. Intrinsic motivation leads to behaviors for pure personal pleasure and not for an external reward.

No external reinforcement is necessary to the individual and the behavior is performed simply by its inherent diversion. Many behaviors are made for this reason and the authors of the TAM argue that the use of a computer system in the workplace is one of them. They argue that users value the use of computer science for personal reasons rather than for organizational efficiency and the rewards they imply for the worker (Gatewood, Shaver, Powers, & Gartner, 2002). The perception of how easy a system is to use and its quality also have a positive effect on entertainment, since they represent two different information resources relevant to feelings of self-efficacy, competence, and self-determination, which are elements of intrinsic motivation.

Effort Expectancy

The expectations of effort are defined as the user's perception of the ease in the use of technology. It was founded in the constructs of different models: Perceived Ease of TAM, TAM2, Complexity Model MPCU and ease of use of the RTD. There are similarities in the definitions of the constructs and in their measurement scales (Venkatesh et al, 2003, p. 450). They are directly related to factors such as experience or familiarity and may be due to the inclusion of other variables such as hedonic motivations or habit.

These are factors that have a positive influence on the use of technology and people find it easy to use. The level of development of technology in a country is inversely related to the significance of the variable expectations of effort on technology (Ghalandari, 2012). It is found that, in the countries where its development is initial, this variable is not significant and that the opposite occurs in developed countries, the influence of the effort expectations in technology being high.

The expectations of effort and the facilitating conditions will tend to have high levels of influence on the intention of using technology when its diffusion in a country is at levels of massification or high diffusion in society. Effort expectancy is directly related to perceived ease of use. Ease of use refers to the work that is going to be done because of the adoption of new technologies and, in this case, it must be said that some factors such as expertise will also be fundamental (Oh, Lehto, & Park, 2009). There are people who have had a hard time joining the digital path and taking on small operations such as internet browsing, for example. In many cases, then, the difficulty that a person perceives for the use of new technology can be decisive in deciding, or not, its final adoption. Many technologies that were objectively useful took time to incorporate because their potential users did not perceive them that way.

It is essential, to adopt the new technologies, to know what the population's predisposition towards them is. A person predisposed to use a mobile data connection or WhatsApp messaging will learn to use it faster than a person who is not (Trybou, 2017). The attitude, of course, is a passive question because a worker sees how new technology is incorporated into his job, but it is not he who decides to include it.

The example of LinkedIn can also be used in this case as well. The Expectation of Effort appears as another positive influence on the intended use of the LinkedIn social network. Some individuals perceive aspects related to the ease of use of this system, such as clear and easy to understand interaction, that learning to use it is easy, that it is easy to become an expert in use, among other aspects. Thus, the LinkedIn interface is likely to have features that make handling simple and practical, which may be related to the design changes the platform has undergone and apparently made its interface simpler to use.

It consists in the expectation that by investing "X" effort, "X" results will be obtained. The expectation has a lot to do with the concept of self-efficacy. This concept refers to a person's perceived ability to cope with obstacles and achieve what is proposed. Within the theory of the expectation of Vroom, and referring to the second essential element that leads to motivation, there is instrumentality (Venkatesh, Thong, & Xu, 2012). This has to do with the fact that each worker will have his function and will be an indispensable part so that all the gear works, the organization itself as a whole. The objective will be that the employee has a good performance, which allows obtaining the desired results; that is to say, it has to be a "functional" piece, which brings value.

Another component of the Vroom expectation theory formula is valence, and it has to do with what each employee values; there will be some who value technology more and are more inclined to see it. The role of the employer, in this case, will be to discover what their workers value regarding technology, in addition to knowing what value they give to their own results. In conclusion, the adoption of these technologies depends on the automation of other factors such as the cost of developing and implementing automation solutions for specific uses in the workplace, the dynamics of the markets, the benefits of automation beyond substitution, regulatory issues and social acceptance.

Social Influence

Regarding the external variables (sociodemographic) that affect the individual use of the technology, Venkatesh et al. (2003) established that the education and economic income of each subject explained the use of said technology. The educational level of a subject also impacts users' perception of the usefulness of technology and its use. As the educational level of an individual increase, he/she will probably perform more elaborate tasks, which could encourage him/her to make greater use of technology and demonstrate its usefulness in his/her work. On the other hand, a person with better education will possess skills and knowledge, such as reading, writing, and mathematical skills, which will facilitate the use of technology.

The higher the educational level of a person, the greater their perceived ease of use of technology. The higher the educational le...

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Home — Essay Samples — Business — Consumer Behavior — Effect Of Music On Consumer Behaviour

Effect of Music on Consumer Behaviour

Literature review, introduction, research background, problem statement, research objectives, effect of music on consumer behavior, type of music that can give effect to the consumer, music effect purchasing behavior.

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100 Hot Consumer Behavior Essay Topics

In this article you will find a brief overview of consumer behavior research and consumer psychology examples as well as a practical guideline on how to write an essay on consumer behavior. Most importantly, this article will provide you with 100 hot consumer behavior essay topics that will make choosing a topic so much easier for you. This list is a real gem if you are looking for:

Consumer Behavior Research

Consumer behavior is social science that involves marketing, psychology, sociology, ethnography, behavioral economics, and anthropology. The concept of consumer behavior involves intentions, decisions, and actions connected with purchasing goods and services, using them, and disposal activities. In essence, any behavior associated with purchasing anything can be considered as consumer behavior.

When we investigate consumer behavior, the topics of research include, but are not limited to:

Consumer Psychology Examples

In the market environment, customers seek to purchase goods and services to meet their needs, while sellers strive to develop marketing strategies that would be the most impactful in motivating consumers to buy. That being said, marketing strategies are often designed to make the product more appealing to customers by influencing emotions and feelings.

Consumer psychology examples include the ways in which marketing campaigns influence consumer behavior. Appealing to customers by making a marketing campaign touching, emotional, or funny, are all examples of consumer psychology.

Let us consider several examples of consumer psychology, both good and bad, to get a better understanding of how marketing manipulates feelings of customers.

Successful consumer psychology example

Procter & Gamble’s “Thank you, Mom” Campaign is emotional and strong, focusing on how mothers support their children no matter what. This campaign was tied to the 2018 Winter Olympics and promoted inclusion, diversity, and family values.

Consumer psychology failure example

One of the most notable marketing failures of the 2010s is, without a doubt, Pepsi commercial in 2017 . The ad exploited unity, freedom, and diversity as a way to communicate to every customer, depicting a carbonated soda as an element equally important as protest, democracy, and equality. An attempt to manipulate customer feelings was so obvious that the ad was taken down after a severe backlash.

How to Write an Essay on Consumer Behavior: Outline

Generally, just about any essay includes 3 major parts, namely introduction, body paragraph, and conclusion . Whichever of the hot consumer behavior essay topics you choose and whatever length your essay is, you can use the following outline to construct a logically structured essay that will engage your readers and will reflect your topic to the full.

1. Introduction

2. Body paragraph – the number of body paragraphs can vary depending on essay length, while their general structure and elements are uniform

3. Conclusion – summary of your essay. Don’t simply rewrite your main findings, but reveal them in logical sequence, demonstrating connection among facts, cause and effect relationships, and concepts. Restate your thesis statement with regard to the findings you write about in your body paragraphs.

How to Research Consumer Behavior

Here is a list of 7 unconventional sources of information about consumer behavior that will help you find out more about your chosen topic:

Consumer Behavior Essay Do’s and Don’ts

The topics below are designed to be versatile, interesting, topical, and truly compelling for essays, presentations, assignments, and projects.

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consumer behavior introduction essay

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