A

SEMINAR REPORT
On
Consumer Behaviour and Buying Decision Making.
Submitted in partial fulfillment for the award of degree of MBA.

Submitted by: Submitted to:

Nilofer Anees. Head of Department.

(MBA 2nd SEM)

JIET INSTITUTE, affialted to RTU, KOTA.

JIET UNIVERSE, N.H.65, PALI ROAD, JODHPUR

Preface
Seminar is an important part of any discipline and the
MBA course is no exception to this general rule. A
seminar helps a student in getting acquainted with the
manner in which his knowledge is being practically
used and this is normally different from books.

Studying the consumer buying behavior is a very complex

process, as it involves not only the economic factors
but also the emotional factors. However, there is a
need to study the consumer behavior, as it helps to
position the products better and develop effective
marketing strategies.
Acknowledgement
I am happy to acknowledge that I have completed the seminar report
after the full guidance, support and full encouragement of all those
involved. This project cannot be completed without proper guidance and
proper cooperation of faculty members of college and friends.
I express my deepest indebtness to respected Director Sir, Dean and
HOD, department of Management studies for stimulation to complete the
project work in time.

I wish to express my gratitude and indebtness to Miss Sheetal Soni,

lecturer, for her encouragement, valuable suggestion, helpful comments
and constructive criticism made by her.

I pay my heartfelt regards to my parents who have been source of

inspiration and motivation and their appreciation and creative comments on
the work.

Above all my sincere thanks to God- the almighty that made this task
possible.
 Index

S.NO Contents Pg No.

1. Introduction 1
2. Models of Consumer 3
Behaviour
3. Importance of 4
Consumer
Behaviour
4. Marketing 5
Implications
5. Buying Decisions 8
6. Buying Decision 11
Process
7. Conclusion 15
8. Bibliography 16
INTRODUCTION

The field of consumer behaviour is enormous, and highlights the importance of the
customer centre of the marketer's universe. Each consumer is unique with different
needs and wants and buying choices and habits are influenced by habit, and choice that
are in turn tempered by psychological and social drivers that affect choice and purchase
decision process. It is a complex multi dimensional variable. Applications of consumer
behavior decisions lie on marketing strategies, regulatory policies, social marketing and
informed individual. The general structure and concept of consumer behaviour is
fragmented into four major categories – 1) External influence 2) Internal influence 3)
Self concept and 4) Lifestyle.

External influences include culture, subculture, demographics, social status, reference

group, marketing activities and family.

Internal influences include perception, learning, memory, motives, personality emotions,

and attitude.

Self concept and Lifestyle produce needs and desire, many of which consumption
decision is specified.

Culture plays the most pervasive influence on external factors of consumer behaviour. It
varies in values and nonverbal communications. Sub culture is a segment of larger
culture whose members share distinguishing values and patterns of behaviour.

Demographics consist of structure, size and distribution. Social status refers to ones
position in relatives to others on one or more dimensions valued in society. Household
plays an important decision on most consumption decisions. Family household consists
of a family and any unrelated people residing in the same housing unit. Effect of
household culture and values play an important role in buying decisions.

Consumer behaviour theory prior to the Second World War was based on accepted
economic theory of the "rational man" model of decision making. The central idea of
economics is that people make decisions by weighing costs and benefits in a rational
manner. The consumer's objective is therefore to select a set of product quantities that
maximize satisfaction (or utility), subject to available income. Utility in this context
means the ability of a product to meet functional needs. Product prices and income are
predetermined and, consequently only the quantities of the two products purchased are
varied to maximize utility. Rational therefore means the "explainable" process of
consumer behaviour.

Current approaches suggest that behavioural underpinnings in consumer decision

process is beyond pure rational dimensions and stem from both innate and acquired
needs that involve a complex combination of conscious and unconscious process as
well as rational and emotional factors.

Thus consumer rationality is mediated by dynamics such as personal and perceptual

distortion, risk tolerance and power relations which in turn are subject to cultural and
intellectual prejudices such as gender, age, and ethnicity. This contributes to the notion
of marketing as a normative discipline with elements of art rather than science in its
practice. Arguably as research "explains" the complexity of the dynamics of consumer
behaviour, it will expand the definition of what constitutes a rational consumer. This
behavioural component allows marketers to identify prospective customers' needs and
wants and influence the exchange, perception and satisfaction dynamics of the
purchasing decision process.
Models of consumer behavior.

There are number of models to deal with entire gamut of consumer behavior. Some
popular models are as follows:-

The Learning Model:

It is based on Pavlov a stimulus-response theory, relating to classical

conditioning.pavlov was Russian physiologist. This model is very significant for the
marketing firms. It explains that firms can change or influence consumer behavior by
designing or manipulating the drives, stimuli or responses in order to get favorable
results. The model believes on learning, forgetting, ability and discriminating of
consumers.

The Economic Model:

This model assumes human being as a rational man. It believes that emotions play a
little role in buying decision of consumers. It explains that consumers buying decisions
are guided by utility n rationale considerations. her include
economy,efficiency.quality,durability,safety,performance,resale value,etc,etc.the sole
criterion for the allocation remains the intention of getting maximum benefits n utility frm
the product.the allocation to purchase different products remains very judicious.

The Sociological Model:

It believes that consumer is a part of society.person has no existene in isolation of the

society. The model explains that buying decisions of an individual is greatly influenced
by the society. The society includes family, friends, relatives, social class, etc. all these
make their own great impact on buying decisions of consumers. This model differs from
the economic model.this model believes that consumers buying decisions r not totally
governed by rationality n utility. In order to remain with the society n to remain the part
of it consumer’s hv a desire to follow the consumption pattern prevailing in their social
group. It may b possible that specific consumer may not hv need of a particular product,
but may b forced to purchase due to social compulsions.

Importance of Consumer Behavior.

To successfully market to different market segments and for a successful marketing

campaign management the marketing manager needs appropriate marketing strategies
which he can design only when he understand the factors which account for those
differences in consumer behaviors and tastes.
In today’s world of rapidly changing technology, consumer tastes are also characterized
by fast changes. To survive in the market, a firm has to be constantly innovating and
understand the latest consumer trends and tastes. Consumer behavior provides
invaluable clues and guidelines to marketers on new technological frontiers which they
should explore. For example, Mobile Phones, Lap Tops, LCD Monitors, etc.
Consumer behavior is a process, and purchase forms one part of this process. There
are various endogenous psychological and exogenous environmental factors which
influence this process. All these factors and the type of influence which they exert on an
individual’s consumption behavior can be understood and analyzed.
MARKETING IMPLICATIONS

Consumers do not make their decisions in a vacuum. Their purchases are highly
influenced by cultural, social, personal, and psychological factors. For the most part,
they are “non controllable” by the marketer but must be taken into account. We want to
examine the influence of each factor on a buyer’s behaviour. The basic belief of market-
oriented company is that the customer is the hub around which the business revolves.
Therefore, understanding what makes people in general buy and what makes your
customer in particular buy is a vital part of business success. Market itself means
customer around whom all marketing strategies are formulated and implemented. In
order to meet competition at the market place, the marketing managers are using
various methods to add value to the final product which will reach the hands of the
consumers. It means in ever changing marketing environment, there is a growing
concern or awareness among marketers to go for a careful study of the consumer
behaviour around which all marketing activities are made.

Following are the key marketing implications of consumer behavior:-

Family Structure

The purchase and consumption of many products are driven by the household life cycle.
The reason for this is that each stage in the family poses unique problems or
opportunities to the family members and the solution of these problems often requires
the consumption of products. The implication for the marketer is to decide which
segment the product has to be focused i.e. on which household life cycle stage the
product has to be marketed. Opportunity for the marketer lies in innovating fashionable
products and focus on opinion leaders. Building brands is important as most of the
respondents are brand loyal and have different perceptions on various brands.

Cultural Factors

In a diversified country like India cultural factors have the broadest and deepest
influence on consumer behaviour; we will look at the role played by the buyer’s culture,
subculture, and social class. Today, physical fitness, good health and smart appearance
are on premium. Slimming centers and beauty parlors are mushrooming in all major
cities of the country. Cosmetics for both women and men are being sold in increasing
numbers. Even exclusive shops are retailing designer clothes Cross-cultural marketing
is defined as “the effort to determine to what extent the consumers of two or more
nations is similar or different. This will facilitate marketers to understand the
psychological, social and cultural aspects of foreign consumers they wish to target, so
as to design effective marketing strategies for each of the specific national markets
involved.

Some important characteristics of Indian cultural traits:

a) Homogenous harmony to be valid and preserved

b) Group is important and not individual

c) Ambiguous

d) Public oriented
Time

Time is a resource which is distributed equally amongst everybody. Every person has
the same amount of time at his disposal. The role of time plays an important parameter
for marketers as people in India mostly purchase attires during occasions, festivals like
Diwali, Holi, etc.

Friendship

Friendship plays an important role in business transactions. Good personnel

relationship and feelings matter most in a long term agreement. Social contacts
developed by parties gain priority over technical specifications. In India, personnel ties,
personal trust leads to cooperation and a lot of transaction can take place between
parties. Friends play the role of opinion leaders and should be targeted by the
marketers.

Media

Identified needs can be satisfied only when desired product is known and also easily
available. Different products are available in the market, but consumer must know which
product or brand gives him maximum satisfaction. The person has to search out for
relevant information of the product, brand or location. Consumers can use many
sources e.g., neighbours, friends and family. Marketers also provide relevant
information through advertisements, retailers, dealers, packaging and sales promotion,
and window displaying. Mass media like news papers, radio, and television provide
information. Now a day’s internet has become an important and reliable source of
information. As marketers are able to understand the exposure behaviour to the various
source of media by a person as the customers are becoming highly computer savvy and
internet savvy so the product should be made available to the internet also. It is
important to understand the preference of channels most people like to
watch.egs:STAR PLUS,CNBC 18,ZEE TV,etc.
BUYING DECISIONS

Every person takes a number of decisions (to solve his / her problems) every day
without stopping to think about the process involved in arriving at such decision.

Decision-making is a process of selecting an appropriate option from two or more

alternatives. A customer enjoys the freedom of choosing a particular brand or product
when there is more than one brand or product to choose from.

Buying Roles

There can be a single user for a product or there may be multiple buyers for it. Buying
roles are the roles, a person or a group of persons, play in purchasing and using the
product. The number of members involved in each role may vary from product to
product. In case of families, it may vary from one family to another. Buying roles are
dynamic in nature. Hence, in order to target the right audience, marketers should have a
clear idea about the different buying roles that people assume.

Different roles assumed by people:-

Initiator: A person who initiates the idea of purchasing the product. Recognizes that the
problem can be solved or avoided by acquiring the product.

Influencer: A person whose views and advices influence the buying decision. The range
of influencers becomes broad when major purchase decisions have to be made.

Decider: A person who decides where, when, why and how to buy the products. He
makes the final decision about the purchase. In case of major organizational purchases,
it is often found that many senior managers act together to make the decision.

Buyers: A person who actually purchases the products.

User: A person who actually uses the product.

Maintainer: A person who repairs or services the products.

Disposer: A person who disposes the product.

A particular type of product is bought by a particular category of people who might or
might not be the end user of that product. For e.g. parents buy chocolates and toys for
their young ones. In the above example, we can see that there are different and distinct
roles adopted by the parent and the children. The parent might assume the role of a
decider, buyer, preparer and maintainer and the child assumes the roles of an initiator,
influencer, user and disposer.

Buying Behavior
The buying behavior of people is not predictable. When a consumer buys an expensive
product, it involves careful thinking and a large number of participants. Buying day-to-
day products like vegetables and groceries is different from buying an apartment or an
automobile. Consumer buying behavior is based on the degree of buyer’s involvement
and the degree of differences he perceives among brands.

Extensive problem solving buying behavior

Consumers exhibit this type of behavior when they indulge in buying expensive,
infrequently purchased and unfamiliar products. Consumers gather a lot of data
regarding the various brands available in the product category. Extensive problem
solving consumer behavior is a three-stage process.

I.Buyer develops a belief about the product.

Ii.Attitudes is shaped around that belief.

Iii.The buyer makes a well-planned decision.

This type of decision making process calls for marketers to develop strategies that
assist the customers to learn more about the product. Instead they choose the brand,
which they are familiar with or have been choosing for a long time. Purchase decision in
such cases is quick. Therefore customer involvement in such purchase decisions is low.
Customers usually do not evaluate the post purchase performance of such products.
Variety seeking behavior
Consumers show a great amount of brand differentiation when buying a low
involvement product. They are not very brand conscious and often switch brands. They
evaluate the product during consumption. For example, in the case of toilet soap, only
very few people stick to a particular brand while buying soaps. This is not due to
dissatisfaction, but due to the need for variety.

Impulse buying is the situation where the customers do not make purchase decision
before buying the product. It is an on the spot decision based on the instinct to buy.
When a buyer perceives that there is little difference between different brands, the
buyer will purchase instantly and impulsively. Purchase may be based on criteria.

BUYING DECISION PROCESS

Consumers pass through different stages before actually buying products. Data
regarding these stages in the buying decision process can be obtained from the
consumers who have already purchased the product or from prospective customer.
Generally, the buying decision process can be divided into five stages – 1} Problem
recognition 2} Information search 3} Evaluation of alternatives 4} Purchase decision and
5} Post purchase behavior (see Figure 5.1). All consumers may not go through all of the
five stages.
{Figure 5.1} Stages in Consumer Buying

Problem Recognition

The process of buying starts when a person realizes that he has a problem or an
unsatisfied need. A need can be aroused internally within the person, for
example, hunger or by an external stimulus. An external stimulus such as an
advertisement or the attractiveness of a product package may also trigger a
need in the person. Marketers try to arouse these needs and help people
identify these through products, pricing strategies, packaging and
advertisements.

Information Search
A consumer who realizes the need for a product will try to gather information
regarding the product. Information search helps the customer understand the
features of a product and competing brands better. Past purchase experiences
can also help the customer reduce the time for information search and
 evaluation. The information can be gathered from several sources like personal,
commercial, public and experimental sources.

1) Evaluation of Alternatives

In this stage, a customer analyzes the information available with him to select the
right brand or product. The criteria to evaluate a product may differ depending
either on the buying situation or on the level of involvement required. For high
value and infrequently purchased items, a customer can be involved in detailed
analysis of information. However, for low involvement or low priced products,
customers can use simple criterion, such as price. Customers can also give a
certain level of attention to the different features and characteristics like the
quality of the product or guarantee provided with the product.

Sales personnel can help customers evaluate the product or brand features vis a
vis other products of the customers. When the customer’s evaluating process
results in identifying brands, he is ready to buy, he moves on to the next stage –
the actual purchase.

2) Purchase Decision

Selection or purchase of a particular brand depends upon the evaluation criteria

and ratings. The purchase decision also depends on the availability of the brand.
This stage also accounts for a large number of sub decisions about purchasing a
product like seller and location of the store, time of purchase, size of the product,
color and attractiveness of the package, price and payment methods, delivery
and warranty, etc.

3) Post Purchase Behavior

A customer evaluates the performance of a product after buying it. He will also
compare the performance of the product with that of the competitor’s product.
The consumer will be either satisfied or dissatisfied after the evaluation. Buyer’s
post purchase feelings are of significant importance to marketers. The post
purchase evaluation might either lead to repeat purchase and the buyer talking
favorably about the product to others or the buyer may talk negative about the
firm’s product.

Post purchase satisfaction: If the product meets the expected performance, the
customer is satisfied. If the performance exceeds the expectation, the customer
is delighted and if it doesn’t the customer is dissatisfied. Marketers should try to
improve the performance of the products and add new and unique features to
delight the customers. Post purchase satisfaction with the product leads the
customer to make repeat purchase and recommend it to others in his reference
group.

Post purchase dissonance: In case of high involvement and less frequently

purchased products a customer tries to gather information about the product. The
post purchase use of the product might make him feel dissatisfied about his
purchase decision. This dissatisfaction or dissonance might arise, when the
customer hears goods things about other brands, or when he does not get all the
features he was looking for in the product. When products of competitors brands
have the desirable features that the customer was seeking, the customer
experiences cognitive dissonance. The buyer may even try to return the product.
In order to avoid these, marketers should try to reassure the customers about
their purchase decision.

Post purchase use and disposal:

Marketers should observe how consumers use the purchased product and how
they dispose off their products. Some consumers may discover new uses for the
products other than what the product was meant for. For example, people in
Punjab used the single tub washing machines for making the summer drink
“lassi”. Marketers should also make an effort to educate the customers on how to
dispose the products like hazardous material and other items like plastic bags,
beverage containers, aerosol cans, etc. They come up with new ideas like
 refilling the packs. Reusing the product’s package helps the company reduce
cost of packaging, reduces the waste disposal cost and improves ergonomics.

Many socially responsible companies are engaged in recycling their products.

Kodak recycles acetate films and other manufacturing solvents, uses recycled
paper, and jute for packing its products. Marketers may also come up with
innovative products for successful disposal of their product.

SUMMARY

Studying the consumer buying behavior is very complex process, as it involves not only
the economic factors but also the emotional factors. However, marketers need to study
the consumer behavior, as it helps them position their products better and develop
effective marketing strategies. Consumer buying behaviour is influenced by the culture
and subculture. Likes and dislikes of the people belonging to a particular culture or
subculture can affect the marketing efforts of a firm to a great extent. The social class to
which the individual belongs tells about the type of products the individual prefers. Other
factors that influence the buying behavior are social factors like reference group, family,
personal factors like the age, life cycle and occupation, and psychological factors like
motivation, perception and attitudes of the customers. Buying roles and buying decision
constitute consumer’s decision-making behavior. A customer can adapt various buying
roles like initiator, influencer, decider, buyer prepare, maintainer and disposer in
purchasing and using the products. Buying behavior helps marketers learn the intensity
and degree of involvement of customers in purchasing the products. Customer buying
behavior is broadly classified into three types. Extensive problem solving buying
behavior is exhibited when a customer buys high involvement, expensive and less
frequently purchased products. Consumers are involved in routine problem solving
decision making process, when they purchase routinely purchased, low cost products.
Variety seeking behavior is seen when customers purchase low involvement products.
Bibliography
www.google.com

www.managementparadise.com

Philip Kotler