Consumer Behaviour: Meaning, Definition, Natures, Scopes, Importance, Applications

What is Consumer Behaviour?

Consumer behaviour is the study of how individual customers, groups, or organizations select, buy, use, and dispose of 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.

Consumerism is the idea that increasing the consumption of goods and services purchased in the market is always a desirable goal and that a person’s well-being and happiness depend fundamentally on obtaining consumer goods and material possessions.

In an economic sense, it is related to the predominantly Keynesian idea that consumer spending is the key driver of the economy and that encouraging consumers to spend is a major policy goal. From this point of view, consumerism is a positive phenomenon that fuels economic growth.

Marketers expect that by understanding what causes the consumers to buy particular goods and services, they will be able to determine which products are needed in the marketplace, which is obsolete, and how best to present the goods to the consumers.

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Definition of Consumer Behaviour

These are some simple definitions of consumer behaviour by authors:

[su_quote cite=”Louden and Bitta”]Consumer behaviour is the decision process and physical activity, that individuals engage in when evaluating, acquiring, using, or disposing of goods and services[/su_quote]

[su_quote cite=”Ralph Waldo Emerson”]Every man is a consumer, and ought to be a producer. He is by constitution expensive and needs to be rich.[/su_quote]

[su_quote cite=””]Consumer behaviour is broadly the study of individuals, or organizations and the processes consumers use to search, select, use and dispose of products, services, experiences, or ideas to satisfy needs and study its impact on the consumer and society.[/su_quote]

[su_quote cite=”Engel, Blackwell, and Mansard”]Consumer behaviour is the actions and decision processes of people who purchase goods and services for personal consumption.[/su_quote]

[su_quote cite=”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. Consumers are created and maintained through marketing strategies. The quality of marketing strategies depends on knowing, serving, and influencing consumers. This suggests that the knowledge and information about consumers are critical for developing successful marketing strategies because it challenges the marketers to think about and analyze the relationship between the consumers and marketers, and the consumer behaviour and the marketing strategy.[/su_quote]

Consumer behaviour is the study of how people make decisions about what they buy, want, need, or act in regard to a product, service, or company. It is critical to understand consumer behaviour to know how potential customers will respond to a new product or service.

It also helps companies identify opportunities that are not currently met. A recent example of a change in consumer behaviour is the eating habits of consumers that dramatically increased the demand for gluten-free (GF) products. The companies that monitored the change in eating patterns of consumers created GF products to fill a void in the marketplace.

However, many companies did not monitor consumer behaviour and were left behind in releasing GF products. Understanding consumer behaviour allowed the pro-active companies to increase their market share by anticipating the shift in consumer wants.

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Customers vs Consumers

The term customer‘ is specific in terms of brand, company, or shop. It refers to a person who customarily or regularly purchases a particular brand, purchases particular company‘s product, or purchases from a particular shop.

Thus a person who shops at Bata Stores or who uses Raymond’s clothing is a customer of these firms. Whereas the consumer is a person who generally engages in the activities – search, select, use and dispose of products, services, experiences, or ideas.

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Consumer Motives

The consumer has a motive for purchasing a particular product. Motive is a strong feeling, urge, instinct, desire, or emotion that makes the buyer make a decision to buy.

Buying motives thus are defined as those influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods or services. These motives are generally controlled by economic, social, psychological influences, etc.

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Nature of Consumer Behaviour

Following are the nature of consumer behaviour explained below:

1. Influenced by Various Factors
2. Undergoes a Constant change
3. Varies from Consumer to Consumer
4. Varies From Region to Region and Country to County
5. Information on Consumer Behavior is Important to Marketers
6. Leads to Purchase Decision
7. Varies from Product to Product
8. Improves Standard of Living
9. Reflects Status

Influenced by Various Factors

1. Marketing factors such as product design, price, promotion, packaging, positioning, and distribution.
   
2. Personal factors such as age, gender, education, and income level.
   
3. Psychological factors such as buying motives, perception of the product, and attitudes towards the product.
   
4. Situational factors such as physical surroundings at the time of purchase, social surroundings, and time factors.
   
5. Social factors such as social status, reference groups, and family.
   
6. Cultural factors, such as religion, social class-caste, and sub-castes.

Undergoes a Constant change

Consumer behaviour is not static. It undergoes a change over a period of time depending on the nature of the products. For example, kids prefer colourful and fancy footwear, but as they grow up as teenagers and young adults, they prefer trendy footwear, and as middle-aged and senior citizens they prefer more sober footwear.

The change in buying behaviour may take place due to several other factors such as an increase in income level, education level, and marketing factors.

Varies from Consumer to Consumer

All consumers do not behave in the same manner. Different consumers behave differently. The differences in consumer behaviour are due to individual factors such as the nature of the consumers, lifestyle, and culture.

For example, some consumers are technologies. They go on shopping and spend beyond their means. They borrow money from friends, relatives, and banks, and at times even adopt unethical means to spend on shopping of advance technologies. But there are other consumers who, despite having surplus money, do not go even for regular purchases and avoid the use and purchase of advanced technologies.

Varies From Region to Region and Country to County

Consumer behaviour varies across states, regions, and countries. For example, the behaviour of urban consumers is different from that of rural consumers. A good number of rural consumers are conservative in their buying behaviours.

The rich rural consumers may think twice to spend on luxuries despite having sufficient funds, whereas the urban consumers may even take bank loans to buy luxury items such as cars and household appliances. Consumer behaviour may also vary across states, regions, and countries. It may differ depending on the upbringing, lifestyle, and level of development.

Information on Consumer Behavior is Important to Marketers

Marketers need to have a good knowledge of consumer behaviour. They need to study the various factors that influence the consumer behaviour of their target customers.

The knowledge of consumer behaviour enables them to take appropriate marketing decisions in respect of the following factors:

1. Product Design/Model
2. Pricing of Product
3. Promotion of Product
4. Packaging
5. Positioning
6. Place of Distribution

Leads to Purchase Decision

Positive consumer behaviour leads to a purchase decision. A consumer may take the decision of buying a product on the basis of different buying motives. The purchase decision leads to higher demand, and the sales of the marketers increase. Therefore, marketers need to influence consumer behaviour to increase their purchases.

Varies from Product to Product

Consumer behaviour is different for different products. There are some consumers who may buy more quantity of certain items and very low or no quantity of other items.

For example, teenagers may spend heavily on products such as cell phones and branded wear for snob appeal, but may not spend on general and academic reading. A middle-aged person may spend less on clothing but may invest money in savings, insurance schemes, pension schemes, and so on.

Improves Standard of Living

The buying behaviour of consumers may lead to a higher standard of living. The more a person buys goods and services, the higher the standard of living. But if a person spends less on goods and services, despite having a good income, they deprive themselves of a higher standard of living.

Reflects Status

Consumer behaviour is not only influenced by the status of a consumer, but it also reflects it. The consumers who own luxury cars, watches, and other items are considered to belong to a higher status. The luxury items also give a sense of pride to the owners.

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Importance of Consumer Behaviour

The importance of consumer behaviour is explained below:

1. Modern Philosophy
2. Achievement of Goals
3. Useful for Dealers and Salesmen
4. More Relevant Marketing Programme
5. Adjusting Marketing Programme over Time
6. Predicting Market Trend
7. Consumer Differentiation
8. Creation and Retention of Consumers
9. Competition
10. Developing New Products
11. Dynamic Nature of Market
12. Effective Use of Productive Resources
13. Consumer Behaviour Assumes

Modern Philosophy

It concerns modern marketing philosophy identifying consumers’ needs and satisfying them more effectively than competitors. It makes marketing consumer-oriented. It is the key to success.

Achievement of Goals

The key to a company’s survival, profitability, and growth in a highly competitive marketing environment is its ability to identify and satisfy unfulfilled consumer needs better and sooner than the competitors. Thus, consumer behaviour helps in achieving marketing goals.

Useful for Dealers and Salesmen

The study of consumer behaviour is not useful for the company alone. Knowledge of consumer behaviour is equally useful for middlemen and salesmen to perform their tasks effectively in meeting consumers’ needs and wants successfully. Consumer behaviour, thus, improves the performance of the entire distribution system.

More Relevant Marketing Programme

A marketing programme, consisting of product, price, promotion, and distribution decisions, can be prepared more objectively. The programme can be more relevant if it is based on the study of consumer behaviour. A meaningful marketing programme is instrumental in realizing marketing goals.

Adjusting Marketing Programme over Time

Consumer behaviour studies the consumer response pattern on a continuous basis. So, a marketer can easily come to know the changes taking place in the market. Based on the current market trend, the marketer can make necessary changes in the marketing programme to adjust to the market.

Predicting Market Trend

Consumer behaviour can also aid in projecting future market trends. Marketer finds enough time to prepare for exploiting emerging opportunities, and/or facing challenges and threats.

Consumer Differentiation

The market exhibits considerable differentiations. Each segment needs and wants different products. For every segment, a separate marketing programme is needed. Knowledge of consumer differentiation is a key to fitting marking offers with different groups of buyers. Consumer behaviour study supplies the details about consumer differentiations.

Creation and Retention of Consumers

Marketers who base their offerings on recognition of consumer needs find a ready market for their products. The company finds it easy to sell its products. In the same way, the company, due to continuous study of consumer behaviour and attempts to meet changing expectations of the buyers, can retain its consumers for a long period.

Competition

Consumer behaviour study assists in facing competition, too. Based on consumers’ expectations, more competitive advantages can be offered. It is useful in improving the competitive strengths of the company.

Developing New Products

The new product is developed in respect of the needs and wants of the target market. In order to develop the best-fit product, a marketer must know adequately about the market. Thus, the study of consumer behaviour is the base for developing a new product successfully.

Dynamic Nature of Market

Consumer behaviour focuses on the dynamic nature of the market. It helps the manager to be dynamic, alert, and active in satisfying consumers better and sooner than competitors. Consumer behaviour is indispensable to watching the movements of the markets.

Effective Use of Productive Resources

The study of consumer behaviour assists the manager to make the organisational efforts consumer-oriented. It ensures an exact use of resources for achieving maximum efficiency. Each unit of resources can contribute maximum to objectives.

It is to be mentioned that the study of consumer behaviour is not only important for the current sales but also helps in capturing the future market.

Consumer Behaviour Assumes

Take care of consumer needs, and the consumers, in return, will take care of your needs. Most problems can be reasonably solved by the study of consumer behaviour. Modern marketing practice is almost impossible without the study of consumer behaviour.

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Scope of Consumer Behaviour

These are the scope of consumer behaviour given below:

1. Consumer Behaviour and Marketing Management
2. Non-Profit and Social Marketing
3. Consumer Behaviour and Government Decision Making
4. Consumer behaviour and DE Marketing
5. Consumer Behaviour and Consumer Education

Consumer Behaviour and Marketing Management

Effective business managers realise the role of marketing in the success of their firm. A sound understanding of consumer behaviour is essential to the long-run success of any marketing program. In fact, it is seen as a cornerstone of the Marketing concept, an important orientation of philosophy of many marketing managers.

The essence of the Marketing concept is captured in three interrelated orientations – consumers’ needs and wants company’s integrated strategy.

Non-Profit and Social Marketing

In today’s world, even non-profit organisations like government agencies, religious sects, universities and charitable institutions have to market their services for ideas to the “target group of consumers or institution.”

At other times these groups are required to appeal to the general public for support of certain causes or ideas. Also, they make their contribution towards the eradication of the problems of society. Thus a clear understanding of consumer behaviour and the decision-making process will assist these efforts.

Consumer Behaviour and Government Decision Making

In recent years the relevance of consumer behaviour principles to government decision-making. Two major areas of activities have been affected:

1. Government Services: It is increasingly and that government provision of public services can benefit significantly from an understanding of the consumers, or users, of these services.
   
2. Consumer Protection: Many Agencies at all levels of government are involved in regulating business practices for the purpose of protecting consumer’s welfare.

Consumer behaviour and DE Marketing

It has become increasingly clear that consumers are entering an era of scarcity in terms of natural gas and water. These scarcities have led to promotions stressing conservation rather than consumption. In other circumstances, consumers have been encouraged to decrease or stop their use of particular goods believed to have harmful effects.

Programs designed to reduce drug abuse, gambling, and similar types of conception examples. These actions have been undertaken by government agencies non-profit organizations, and other private groups. The term “DE marketing” refers to all such efforts to encourage consumers to reduce their consumption of a particular product or service.

Consumer Behaviour and Consumer Education

Consumer also stands to benefit directly from orderly investigations of their own behaviour. This can occur on an individual basis or as part of more formal educational programs.

For example, when consumers learn that a large proportion of the billions spend annually on grocery products is used for impulse purchases and not spent according to a pre-planned shopping list, consumers may be more willing to plan an effort to save money.

In general, as marketers that can influence consumers’ purchases, consumers have the opportunity to understand better how they affect their own behaviour.

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Applications of Consumer Behaviour

The following are the applications of consumer behaviour discussed below:

1. Analyzing Market Opportunity
2. Selecting Target Market
3. Marketing-Mix Decisions
4. Use in Non-profits and Social Marketing

Analyzing Market Opportunity

Studies related to consumer behaviour help marketers in identifying the gaps existing in society. These gaps are unfulfilled needs and wants of the consumer. This requires a close examination of the style and surroundings existing in the lifestyles, consumer‘s income levels, marketplace and other emerging influences on clients.

This helps in revealing discontented wishes and requirements of consumers in a marketplace. With the increase in the number of dual-income households, greater importance is given to convenience goods for household items such as mixer grinders, vacuum cleaners, washing machines, childcare centres and many more.

Mosquitoes’ repellents are also a good example of a marketing reaction to valid and unsatisfied consumer requirements.

Selecting Target Market

Reviews of markets over and over again help in recognising different customer sections with extremely distinctive and limited requirements and needs. Identification of these types of groups, their behaviour and getting knowledge about how they formulate purchase decisions allow the marketers to plan, invent and market products or services which suit their wants and desires.

For example, studies on the behaviour of consumers exposed that customers generally prefer a shampoo sachet rather than purchasing a shampoo bottle priced more than 60 rupees or more. Well identifying such a kind of information helps marketers and producers to have a competitive edge over their competitors.

Marketing-Mix Decisions

Once the unfulfilled desires and requirements are recognised, the next step for a marketer is to find out the exact combination of product/service, price, promotion and distribution. Again at this point, consumer behaviour studies facilitate marketers in finding answers to many confusing questions.

1. Product
2. Price
3. Place
4. Promotion

Product

The marketer usually decides to create that type of product or service which can convince or satisfy the unfulfilled wants or needs of consumers. Other decisions are about the size, shape and features of the product. The marketers have to make a choice with reference to their service, packaging of products, accessories and warranties to be provided with that product to the customer.

For Example: Firstly, Nestle introduced Maggi noodles in the market with masala flavour but over the course of time, in view of consumer preferences in several regions, the company bring in some more variants of magi noodles in sambar, garlic and many other flavours.

Price

Price is another essential constituent of the marketing mix. It is the duty of a marketer to decide at what price a product or service is to be sold. The company‘s revenue is influenced by such decisions. It is the marketer, who has to decide whether to charge at higher or lower rates than their competitors.

He also finds answers to various other questions, such as; will the lower price stimulate the consumer‘s purchase, effects of any price discounts on the consumer? Do consumers recognise lower prices as being an indication of poor quality of a product?

Before answering these questions, the seller should be aware of how the company‘s goods are perceived by consumers, the significance of cost to them to stimulate a purchase and how diverse price levels are going to influence sales. It is only possible through studies on consumer behaviour so that the marketer can expect to discover answers to some of these important questions.

Place

The next decision is that of the distribution channel which tells about where and in what way services or products are to be offered for sale. Whether to sell product via all the outlets of retailing or by selected ones only? Should the marketer use only the outlets, which are selling the products of competitive brands, or should new outlets selling only the marketer‘s brands should be preferred?

How important is the location of retail outlets from consumers‘ point of view? Should the company use direct marketing or other means of marketing are more preferred? The answers to all these above questions are well-found by research on the behaviour of consumers.

Promotion

The promotion reflects communication with the consumers regarding the product. The essential methods of promotion include sales promotion, advertising, publicity, personal selling and direct marketing. It is the duty of a marketer to find out the method that might be appropriate to efficiently reach the target consumers.

Should advertising alone be used or in a combination with sales promotion or a mixture of all tools? The company must know about their target clients, preferences, their location, media they have access to etc. in some cases, like industrial products, the advertising content is very little or it doesn‘t exist.

The only way by which these products are promoted is through sending a brochure which contains important technical specifications for the clients and the salespersons to make follow-up visits.

Use in Non-profits and Social Marketing

Studies on consumer behaviour are also useful in planning the marketing strategies by governmental, social and non-profit organisations to build their important programmes on environmental concerns, AIDS awareness, driving safety, family planning, crime prevention against women and many other more effective ways for social benefit.

Some world organisations like UNICEF, Red Cross etc. generally employ consumer behaviour understanding for selling their services and product organisations.

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FAQ Related to Consumer Behaviour