What is consumer behavior? Important factors affecting make customer loyalty

Topics to be covered in Consumer Behavior article:

• Understand the buying habits of consumers
• Models of consumer behavior
• Recognize types of buying behavior
• Understand the buyer-decision process
• Buyer decision for new products
• Factors affecting consumer behavior

Consumer behavior

Consumer behavior refers to the actions and the decision process of the people who purchase goods and services for personal consumption
The consumer market is made up of all the final consumers who buy products or services for personal consumption.

Types of Consumers

• Consumer – is a purchaser of goods and services for immediate use or consumption.
• Customer –who purchases goods for his own use or for the use of others.
• Buyer – who purchase goods either for resale or for use in production.
• Institutional buyer – are either govt. institutions or private organizations purchase goods or service for institutional use.

Five Premises of Consumer Behavior

• Consumer behavior is purposeful and goal oriented
• The consumer has free choice
• Consumer behavior is a process
• Consumer behavior can be influenced
• There is a need for consumer education

A Model of Consumer Behavior

Quesions:

• Why companies are so interested to study consumer behavior?
• Write any three reasons?

Importance of study consumer behavior

• To make better strategies for increasing profits.
• To know the buying decisions and how consumer make consumption.
• Consistent change in consumer`s tastes or preferences
• Consumer behavior study is necessary to make pricing policies
• To avoid future market failures

Types of Buying Decision Behavior

The Buyer Decision Process

Need recognition

Occurs when the buyer recognizes a problem or need triggered by:

• Internal stimuli
• External stimuli

Information search – Sources of Information (Which source of information is more reliable to customers?)

• Personal sources—family and friends
• Commercial sources—advertising, Internet
• Public sources—mass media, consumer organizations
• Experiential sources—handling, examining, using the product

Evaluation of alternatives

How the consumer processes information to arrive at brand choices

Purchase Decision

• The act by the consumer to buy the most preferred brand
• The purchase decision can be affected by:
  • Attitudes of others
  • Unexpected situational factors

Post-Purchase Decision

The satisfaction or dissatisfaction that the consumer feels about the purchase Relationship between:

• Consumer’s expectations
• Product’s perceived performance

The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction

Cognitive dissonance is the discomfort caused by a post-purchase conflict

The Buyer Decision Process for New Products

Adoption process is the mental process an individual goes through from first learning about an innovation to final regular use

• Awareness: The consumer becomes aware of the new product but lacks information about it.
• Interest: The consumer seeks information about the new product.
• Evaluation: The consumer considers whether trying the new product makes sense.
• Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value.
• Adoption: The consumer decides to make full and regular use of the new product.

Characteristics Affecting Consumer Behavior

Culture and Sub-Culture

• Culture is the learned values, perceptions, wants, and behavior from family and other important institutions
• Subculture are groups of people within a culture with shared value systems based on common life experiences and situations

• Central Asians
• Asian
• Muslims and Jewish
• India her sub-continents
• Mature consumers

Cultural Factors

Social Class

Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors
Measured by a combination of occupation, income, education, wealth, and other variables

Group and Social Networks

Personal Factors

Age and life-cycle stage RBC Royal Band stages

• Youth: younger than 18
• Getting started: 18–35
• Builders: 35–50
• Accumulators: 50–60
• Preservers: over 60

Questions?

• How one child policy in China affect demand of certain product?
• If there is more old-aged people in a country, what type of product or service will be more profitable for companies?

• Occupation affects the goods and services bought by consumers.
• Economic situation includes trends in:
• Lifestyle is a person’s pattern of living as expressed in his or her psychographics

Personality and Self-Concept. Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environment

Psychological Factors

Psychological Factors Motivation:

• A motive is a need that is sufficiently pressing to direct the person to seek satisfaction
• Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations

Psychological Factors:

• Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes
  • Selective attention
  • Selective distortion
  • Selective retention
• Selective attention is the tendency for people to screen out most of the information to which they are exposed
• Selective distortion is the tendency for people to interpret information in a way that will support what they already believe
• Selective retention is the tendency to remember good points made about a brand they favor and forget good points about competing brands

Beliefs and Attitudes

• Belief is a descriptive thought that a person has about something based on:
  • Knowledge
  • Opinion
  • Faith
• Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea

Referrences:

https://clootrack.com/knowledge_base/what-is-consumer-behavior/