Why you need to study Consumer Behavior?

Answer 1

Why Study Consumer Behaviour ?

In the highly specialised study of "BUSINESS MANAGEMENT", "BUSINESS ADMINISTRATION" or just "MANAGEMENT" today, "MARKETING MANAGEMENT" function plays a very critical role. This is because this functional area of management (1) "EARNS" the revenue, & (2) "WORKS" in the close proximity with the public or persons outside the organisation. Controlling these two attributes to have the desired benefits are the most difficult part of the management, because none of these two are within the direct control of the marketers. This doesn't mean that the other functional areas are not useful, but they are not "DIRECTLY" involved in the activities mentioned above.

Similarly, within the study of Marketing Management, the "Consumers" or the "Customers" play a very critical role as these are the people who finally BUY the goods & services of the organisation, and the firm is always on the move to make them buy so as to earn revenue. It's crucial from both the points of view as given below :

1. From the customers' point of view : Customers today are in a tough spot. Today, in the highly developed & technologically advanced society, the customers have a great deal of choices & options (and often very close & competing) to decide on.
2. 1. They have the products of an extreme range of attributes (the 1st P - Product),
   2. they have a wide range of cost and payment choices (the 2nd P - Price),
   3. they can order them to be supplied to their door step or anywhere else (the 3rd P - Place),
   4. and finally they are bombarded with more communications from more channels than ever before (the 4th P - Promotion).

How can they possibly decide where to spend their time and money, and where they should give their loyalty ?

1. From the marketers' point of view : "The purpose of marketing is to sell more stuff to more people more often for more money in order to make more profit". This is the basic principle of requirement for the marketers in earlier days where aggressive selling was the aim. Now it can't be achieved by force, aggression or plain alluring. For the customers are today more informed, more knowledgeable, more demanding, more discerning. And above all there is no dearth of marketers to buy from. The marketers have to earn them or win them over.

The global marketplace is a study in diversity, diversity among consumers, producers, marketers, retailers, advertising media, cultures, and customs and of course the individual or psychological behaviour. However, despite prevailing diversity, there also are many similarities. The object of the study of consumer behaviour is to provide conceptual and technical tools to enable the marketer to apply them to marketing practice, both profit & non-profit.

The study of consumer behaviour (CB) is very important to the marketers because it enables them to understand and predict buying behaviour of consumers in the marketplace; it is concerned not only with what consumers buy, but also with why they buy it, when and where and how they buy it, and how often they buy it, and also how they consume it & dispose it. Consumer research is the methodology used to study consumer behaviour; it takes place at every phase of the consumption process: before the purchase, during the purchase, and after the purchase. Research shows that two different buyers buying the same product may have done it for different reasons, paid different prices, used in different ways, have different emotional attachments towards the things and so on.

According to Professor Theodore Levitt of the Harvard Business School, the study of Consumer Behaviour is one of the most important in business education, because the purpose of a business is to create and keep customers. Customers are created and maintained through marketing strategies. And the quality of marketing strategies depends on knowing, serving, and influencing consumers. In other words, the success of a business is to achieve organisational objectives, which can be done by the above two methods. This suggests that the knowledge & information about consumers is critical for developing successful marketing strategies because it challenges the marketers to think about and analyse the relationship between the consumers & marketers, and the consumer behaviour & the marketing strategy.

Consumer behaviour is interdisciplinary; that is, it is based on concepts and theories about people that have been developed by scientists, philosophers & researchers in such diverse disciplines as psychology, sociology, social psychology, cultural anthropology, and economics. The main objective of the study of consumer behaviour is to provide marketers with the knowledge and skills, that are necessary to carry out detailed consumer analyses which could be used for understanding markets and developing marketing strategies. Thus, consumer behaviour researchers with their skills for the naturalistic settings of the market are trying to make a major contribution to our understanding of human thinking in general.

The study of consumer behaviour helps management understand consumers' needs so as to recognise the potential for the trend of development of change in consumer requirements and new technology. And also to articulate the new thing in terms of the consumers' needs so that it will be accepted in the market well.

The following are a few examples of the benefits of the study of consumer behaviour derived by the different categories of people :

1. A marketing manager would like to know how consumer behaviour will help him to design better marketing plans to get those plans accepted within the company.
2. In a non-profit service organisation, such as a hospital, an individual in the marketing department would like to know the patients' needs and how best to serve those needs.
3. Universities & Colleges now recognise that they need to know about consumer behaviour to aid in recruiting students. "Marketing Admissions" has become an accepted term to mean marketing to potential students.

Consumer behaviour has become an integral part of strategic market planning. It is also the basis of the approach to the concept of Holistic Marketing. (See the article on "HOLISTIC MARKETING " written by the author). The belief that ethics and social responsibility should also be integral components of every marketing decision is embodied in a revised marketing concept - the societal marketing concept - which calls on marketers to fulfil the needs of their target markets in ways that improve society as a whole.

Introduction to Consumer Behaviour

The study of Consumer Behaviour is quite complex, because of many variables involved and their tendency to interact with & influence each other. These variables are divided into three major sections that have been identified as the most important general influences on Consumer Behaviour. Imagine three concentric circles, one at the outer most, one in the middle & one at the inner most, and they represent the following :

1. External Environmental Variables Influencing Behaviour : These are the factors controlled by external environments like the following form the basis of external influences over the mind of a customer (outer circle) :
2. 1. Culture, and Sub-culture,
   2. Social Class, and Social Group,
   3. Family, and Inter-Personal Influences,
   4. Other Influences (which are not categorised by any of the above six, like geographical, political, economical, religious environment, etc.).

1. Individual Determinants of Behaviour : Major individual determinants of Consumer Behaviour are portrayed in the middle ring. These are the human mind and its attributes. These variables are personal in nature and they are influenced by the above set of external factors and in turn influence the way consumers proceed thro' a decision making process regarding products & services. They are :
2. 1. Personality & Self-concept,
   2. Motivation & Involvement,
   3. Perception & Information Processing,
   4. Learning & Memory,
   5. Attitudes.
   1. Problem Recognition,
   2. Information Search,
   3. Evaluation of Application,
   4. Purchase Decision,
   5. Post-Purchase Behaviour.
3. The Consumer Decision Making Process : The buying decision comes as a product of the complex interaction of the external factors and the personal attributes. The inner most circle denotes the consumer decision making process regarding products & services, whose major steps are :

Marketers are frequently uncertain about the variables that are at play influencing & affecting consumers. Sometimes this occurs because they don't clearly understand the extent of variables that might be having an influence. The details of all external, internal, environmental, economical etc. are discussed above. Sometimes some variables are not directly observable. Other times variables are known to the marketers but their exact nature & relative strength of influence is not apparent. In these circumstances, it is useful to understand the above mentioned concepts and how the consumers behave, so that their decision making process can be predicted to a reasonable extent. The human mind being as complex as it is, the understanding of the buying behaviour of the consumers becomes a continuous activity of application of various theories & concepts by the marketers.

The Consumer Behaviour Theory

An understanding of how the theory of consumer behaviour and its application tools evolved over the years will enable us to appreciate the validity of the theory and give us a guidance in its practical application. Consumer behaviour, like all human behaviour is very complex. But the consumer behaviour theory, like all theories is a simplified & abstract representation of reality. The more simplified picture of consumers provided by the theory helps us enormously to understand the consumers. It not only helps us to think about consumers, but also provides us with a language to talk about them. This language is very useful, because to be effective in an organisation - for profit or non-profit - one has to persuade others to accept his ideas. And in fact, lack of this language has been one of the greatest drawback of the modern marketers.

Market Research or Marketing Research (MR) has been developing since "MARKETING" which brings together all customer elements, grew out of the concept of "SALES" in the early fifties. The theory of consumer behaviour draws heavily upon the famous psychologist Sigmund Freud, particularly with respect to the emotional, psychological, mental, subjective or non-utilitarian aspects of buying decision or behaviour of a consumer. The theory represents the hidden order in this very complex activity, which we call consumer behaviour. On the surface, this highly complex & varied display of behaviour by consumers seems essentially unexplained. But slowly as the theory develops, the hidden pattern emerges, describing the order we suddenly see, and explaining why the behaviour pattern takes place.

Now, what is the magic stuff called consumer behaviour theory that does all these wonderful things. It's not just a theory, as explained earlier, but more than that. It helps us to make better marketing decisions for profit & non-profit organisations. Thus we can examine the characteristics of a theory that enables us to do so. Researchers G Zaltman and M Wallendorf have came out with the most important attributes of a good & sound theory, after very close and careful thought. These are the following :

1. A theory which does both : explains how consumers buy & predicts what consumers will buy.
2. It unifies previously unrelated areas of knowledge, for example, it relates to information that consumers get from advertising so as to decide what brands they buy.
3. The theory is simple. If not, it can be so complex that we can't understand well enough to apply it to our practical problems.
4. It is testable so that we can verify whether the theory is valid and therefore dependable.
5. Implied in the previous characteristic, it is supported by the facts. This means, to lay the theory up against data describing how consumers buy in the market and thereby determine if the facts confirm the theory. If they don't, then either the theory should be modified till the facts do verify it or abandon the theory.
6. The theory is general, which means that it can be applied to a wide range of products & services. If it is not, then it won't be very useful.
7. It has heuristic value, meaning that it poses new questions for us that had not been previously asked. While trying to answer these questions, new knowledge is created and that becomes the part of the theory.
8. It is internally consistent. This means that the theory is internally free from logical incongruencies or else the prediction will be doubtful & flawed. Lack of this quality will make the theory a dangerous tool.
9. It is original. If not, it adds little to the existing knowledge.
10. It is plausible. If not, it can't be seen by others as making any sense, and hence, they will not likely to accept the theory and so it won't be useful.
11. And if all the above ten points are in order, then it can be applied to designing marketing strategy and marketing plans.

Definitions :

Consumer Behaviour (or Buyer Behaviour) is broadly defined by various scholars & researchers as :

1. It's the behaviour displayed by the consumers during the acquisition, consumption and disposition of products, services, time and ideas by decision making units.
2. It is the body of knowledge which studies various aspects of purchase and consumption of products and services by individuals with various social and psychological variables at play.
3. The behaviour that the consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.
4. The process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires.
5. The activities directly involved in obtaining, consuming, and disposing of products and services, including the decision processes that precede and follow these actions.
6. The American Marketing Association (AMA) defines consumer behaviour as "The dynamic interaction of cognition, behaviour & environmental events by which human beings conduct the exchange aspect of their lives.

The study of consumer behaviour involves search, evaluation, purchase, consumption and post purchase behaviour of the consumers and includes the disposal of purchased products keeping environment and personal characteristics in mind.

Key Words :Users Customers Internal FactorsConsumer ResearchBuyers Consumers External Factors Problem RecognitionCulture Social Class Holistic MarketingSocial ResponsibilityMemory Involvement Purchase Decision Marketing AdmissionAttitude Sub-Culture Societal MarketingConsumer Behaviour LearningSocial GroupInformation Search Environmental InfluenceMotivation Self-ConceptMarketing Strategy Evaluation of ApplicationPerception Marketing PlanPersonal Attributes Post-purchase Behaviour References :

1. Consumer Behaviour & Marketing Action, Thomson India Edition, 6th Edition, 2006.
2. Consumer Behaviour & Marketing Research, Suja R Nair, Himalay Publishing House, 1st. Edition, 2004.
3. Consumer Behaviour & Marketing Strategy, J Paul Peter, Jerry C Olson, 2nd. Edition, IRWIN, 1990.
4. Consumer Behaviour : Basic Findings and Management Implications, G Zaltman and M Wallendorf, John Wiley & Sons, 1983.
5. Consumer Behaviour in Marketing Strategy, John A Howard, Prentice Hall, 1989.
6. Consumer Behaviour, David L Loudon & Albert J Della Bitta, TMGH, 4th. Edition, 2006.
7. Consumer Behaviour, ICFAI University, May - 2005.
8. Consumer Behaviour, James F Engel, Roger D Blackwell, Paul W Miniard, 8th. Edition, The Dryden Press, 1995.
9. Consumer Behaviour, Leon G. Schiffman & Leslie Lazar Kanuk, PHI - EEE, 9th. Edition, 2006.
10. Consumer Behaviour, Roger D Blackwell, Paul W Miniard, & James F Engel, Thomson India Edition, 10th Edition, 2007.
11. Marketing Management - Planning, Implementation & Control, Global Perspective, Indian Context, V S Ramaswamy & S Namakumari, MacMillan India Ltd., 3rd. Edition, 2003.
12. Marketing Management, 12th. Edition, by Philip Kotler & Kevin Lane Keller.
13. Marketing Management, Philip Kotler, PHI - EEE, 11th. Edition, 2003.
14. Marketing Research, G C Beri, TMGH, 3rd. Edition, 2000.