BUS101: Introduction to Business

Consumer behavior is the study of when, why, how, and where people do or do not buy a product.

Learning Objective

• Outline the steps in the consumer purchasing process

Key Points

• Consumer behavior studies when, why, how, and where people chose to buy, or not buy, a product. It blends elements of psychology, sociology, social anthropology, and economics. It attempts to understand the individual and group buyer decision-making process. It studies the characteristics of individual consumers, such as demographics and behavioral variables to understand what people want. It also tries to assess the influence groups have on consumers, such as family, friends, reference groups, and society in general.

• Customer behavior study is based on buying behavior, where the customer plays three distinct roles: user, payer, and buyer.

• Consumers compare the brands and products in their evoked set. How can a marketing organization increase the likelihood that their brand is part of the consumer's evoked set? Consumers evaluate alternatives in terms of the functional and psychological benefits they offer. The marketing organization needs to understand the benefits consumers are seeking and the most important attributes that will help them make a decision. It also needs to check other brands the customer is considering to help prepare the best plan for its own brand.

• Purchase intention does not always result in an actual purchase. The marketing organization can use a variety of techniques to help the consumer act on their purchase intention. Providing credit or payment terms may prompt a purchase, or a sales promotion, such as a premium or opportunity to enter a competition, which may incentivize them to buy now.

• The consumer buying process includes five stages:

1. The problem recognition stage involves identifying something is a need;
2. The search for information stage involves researching information about the product via internal and external knowledge bases;
3. The reviewing alternative options stage involves researching better or cheaper products;
4. The choice to purchase stage; and
5. Purchasing the product stage.

Terms

• Extensive decision-making buying behavior: Items are rarely purchased and require planning. Decisions can include input from websites, stores, friends, company personnel, etc.
• Routine response purchasing behavior: Items are bought frequently and do not require high-level decision-making.
• Selective retention consumers: These consumers remember messages that are meaningful or important to them.
• Selective comprehension consumers: These consumers interpret messages in line with their beliefs, attitudes, motives, and experiences
• Selective attention consumers: These consumers choose which promotional messages they will pay attention to.
• Limited decision making purchasing behavior: This purchasing behavior relates to items bought occasionally. Consumers put more thought into these decisions than with a routine purchase, but they do not involve a high level of thought and time.
• Selective exposure consumers: These consumers choose the promotional messages they will expose themselves to.
• Integration: Refers to the relevant internal psychological process associated with a purchase decision.

Examples

• Social functions: decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity, and weak and strong Pareto optimality.
• Routine response purchasing behavior: soft drinks and candy bars.
• Limited decision making purchasing behavior: clothing and games.
• Extensive decision making purchasing behavior: cars, apartments, and electronic equipment.

Consumer behavior is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology, and economics. It attempts to understand the buyer decision-making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behavior study is based on consumer buying behavior, with the customer playing three distinct roles of user, payer and buyer. Research has shown that consumer behavior is difficult to predict, even for experts in the field. Relationship marketing is an influential asset for customer behavior analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalization, customization and one-to-one marketing. Social functions can be categorized into social choice and welfare functions. Each method for vote counting is assumed as social function but if Arrow's possibility theorem is used for a social function, social welfare function is achieved. Some specifications of the social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity and weak and strong Pareto optimality. No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer.

• Selective exposure consumers choose the promotional messages they will expose themselves to.
• Selective attention consumers choose the messages they will pay attention to.
• Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences.
• Selective retention consumers remember messages that are more meaningful or important to them.

The implications of this process helps develop an effective promotional strategy, and choose the most effective sources of information for the brand. Information evaluation: At this time the consumer compares the brands and products that are in their evoked set. How can the marketing organization increase the likelihood that their brand is part of the consumer's evoked set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer. The marketing organization needs to understand the benefits consumers are seeking and which attributes are most important in terms of making a decision. It also needs to check other brands the customer is considering to prepare the right plan for its own brand. Once the alternatives have been evaluated, the consumer is ready to make a purchase decision. Sometimes purchase intention does not result in an actual purchase. The marketing organization must facilitate the consumer to act on their purchase intention. The organization can use a variety of techniques to achieve this. The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. The relevant internal psychological process that is associated with purchase decision is integration. Once the integration is achieved, the organization can influence the purchase decisions much more easily. There are 5 stages of a consumer buying process they are:

1. The problem recognition stage, meaning the identification of something a consumer needs. 
2. The search for information, which means you search your knowledge bases or external knowledge sources for information on the product. 
3. The possibility of alternative options, meaning whether there is another better or cheaper product available. 
4. The choice to purchase the product.
5. And then finally, the actual purchase of the product. 

This shows the complete process that a consumer will most likely, whether recognisably or not, go through when they go to buy a product.

Source: Boundless
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