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CHAPTER 1 Consumer Behaviour

Define Consumer

A consumer is someone who buys goods or services to meet their needs or wants. For example, when you buy food,
clothes, or a phone, you are a consumer. It's anyone who uses products or services, whether for personal use or for
their household.

Concept of Consumer Behaviour

Consumer behaviour refers to the actions and decisions people make when they buy, use, and dispose of products
or services. It involves understanding why consumers choose certain products, how they make those choices, and
what factors influence their buying decisions. These factors can include personal preferences, cultural influences,
social trends, marketing efforts, and even psychological triggers.

In simple terms, it’s about studying what people buy, why they buy it, and how they behave before, during, and
after making a purchase. Understanding consumer behaviour helps businesses create better products, target the
right audience, and improve customer satisfaction.

Importance of Consumer Behaviour

Here's why consumer behaviour is important:

1. Helps Identify Customer Needs: By analysing how consumers behave, businesses can identify what their
target audience wants and needs, allowing them to create products or services that solve problems or fulfil
desires.

2. Improves Marketing Strategies: Understanding consumer preferences and decision-making processes helps
businesses tailor their marketing messages, choosing the right platforms, language, and timing to reach the
intended audience effectively.

3. Enhances Product Development: Companies can develop or improve products based on consumer
feedback, trends, and behaviour, ensuring that what they offer is aligned with market demand.

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4. Increases Customer Satisfaction and Loyalty: By understanding consumer behaviour, businesses can provide
better customer service, personalize experiences, and build stronger relationships, leading to repeat
customers and brand loyalty.

5. Assists in Pricing Strategy: Knowing how consumers perceive value allows businesses to price their products
appropriately, balancing competitiveness with profitability.

6. Predicts Market Trends: Consumer behaviour analysis helps in forecasting trends and future demands,
enabling companies to stay ahead of the competition and adapt to changes in the market.

7. Reduces Business Risk: By having insight into consumer preferences and reactions, companies can make
more informed decisions and reduce the risk of launching products or marketing campaigns that may fail.

Consumer behaviour knowledge

Consumer behaviour knowledge refers to the understanding of how individuals or groups make decisions to buy,
use, and dispose of goods and services. It involves studying their motivations, preferences, attitudes, and purchasing
habits to predict and influence their choices. This knowledge helps businesses tailor products, marketing strategies,
and customer experiences to meet consumer needs effectively.

Consumer Behaviour Model

1. Nicosia Model of Consumer Behaviour

The Nicosia Model was developed by Francesco Nicosia and focuses on the relationship between a business and its
potential consumers, emphasizing the flow of communication between the firm and the consumer. The model is
divided into four stages:

Stages of the Nicosia Model:

1. Field 1 – Consumer Attitude Formation:

o The firm sends messages (advertising, promotions) to potential customers.

o Consumers receive these messages and, based on their past experiences and personal factors,
develop an attitude toward the product or brand.

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2. Field 2 – Search and Evaluation:

o The consumer begins to search for more information about the product and evaluates the available
alternatives.

o Their attitude either leads to interest or disinterest in the product.

3. Field 3 – Decision:

o If the evaluation of the product is positive, the consumer decides to purchase the product. This stage
involves the final purchase decision.

4. Field 4 – Feedback and Post-Purchase Behaviour:

o After making a purchase, the consumer provides feedback (through satisfaction or dissatisfaction)
that influences future decisions and interactions between the consumer and the company.

Nicosia Model

Key Aspects of the Nicosia Model:

• It focuses on the flow of information between the firm and the consumer.

• Consumer decision-making is non-linear and involves interaction between the company’s marketing efforts
and the consumer's perception and attitude formation.

• Feedback loop: post-purchase behaviour impacts future decisions and attitudes.

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2. Howard-Sheth Model of Consumer Behaviour

The Howard-Sheth Model of Consumer Behaviour is a comprehensive framework developed by John Howard and
Jagdish Sheth in 1969. It seeks to explain how consumers make decisions to purchase products or services by
considering various internal and external influences. This model is particularly useful in understanding complex
decision-making processes and is rooted in the idea that consumers' decisions are influenced by multiple variables.

Structure of the Howard-Sheth Model

The model has four key components:

1. Input Variables

These are the stimuli that influence the consumer's decision-making process. There are three main types:

• Significant Stimuli: These come from the product itself, such as its quality, features, price, or design. These
are attributes directly related to the product that the consumer considers when making a decision.

• Symbolic Stimuli: These refer to marketing and advertising efforts, including brand image, promotional
messages, and other symbolic attributes (like brand reputation) that influence how consumers perceive the
product.

• Social Stimuli: These include interpersonal influences from family, friends, and social groups. Social
pressure, cultural norms, and reference groups play a big role in shaping consumer preferences and choices.

2. Perceptual and Learning Constructs

These variables represent how the consumer processes the input stimuli. The model uses two key processes that
guide consumer behaviour: perception and learning.

• Perceptual Constructs: These involve how consumers perceive and interpret the input stimuli. Perception is
subjective and is influenced by factors like selective attention, selective distortion, and selective retention.

• Learning Constructs: Based on prior experiences, consumers "learn" and adapt their behaviour over time.
This includes learning from feedback after purchases, or from advertisements and recommendations.

These constructs consist of:

• Motives: The internal needs or desires that drive consumers to take action.

• Brand Comprehension: The level to which consumers understand a brand’s offerings.

• Attitude Formation: The attitude a consumer develops toward a product or brand based on their perception
and experience.

• Confidence: The consumer’s certainty in their decision-making ability.

• Intention: The result of learning and perception, where a consumer forms a buying intention.

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3. Output Variables

These are the observable aspects of consumer behaviour, representing the consumer’s decision-making process.
They are divided into stages:

• Attention: The consumer’s focus on the available stimuli (e.g., an ad, product feature).

• Comprehension: Understanding the product and its attributes.

• Attitude: Developing a positive or negative view of the product.

• Intention: The decision to buy or not buy the product.

• Purchase Behaviour: The final action, which is whether the consumer buys the product or not.

4. Exogenous Variables

These are external factors that can influence consumer behaviour but are not part of the decision-making process
directly. These variables include:

• Social Class: The socioeconomic status of the consumer, influencing their buying behaviour.

• Personality: The unique characteristics of the consumer that affect how they perceive and react to stimuli.

• Culture: Cultural values and norms that shape preferences and decisions.

• Time Pressure: The urgency in decision-making, which can affect the complexity of the consumer's
evaluation process.

• Importance of Purchase: The significance or risk involved in the purchase, influencing how deeply the
consumer evaluates alternatives.

Stages of Decision-Making in the Howard-Sheth Model

1. Problem Recognition: The consumer realizes a need or problem that requires a solution.

2. Information Search: The consumer seeks information from both internal (past experiences) and external
sources (advertisements, friends, etc.).

3. Evaluation of Alternatives: The consumer compares different products or brands based on significant and
symbolic stimuli, taking social influences into account.

4. Purchase Decision: Based on the evaluation, the consumer forms an intention to buy and makes the
purchase decision.

5. Post-Purchase Behaviour: After the purchase, the consumer may be satisfied or dissatisfied, influencing
future behaviour through learning.
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Importance of the Howard-Sheth Model

• Explains Complex Buying Behaviour: The model is especially useful for understanding complex buying
decisions, where the consumer is highly involved, such as buying cars, homes, or other significant products.

• Learning Process: The model highlights how past experiences and feedback affect future purchasing
decisions.

• Social and Psychological Influence: It emphasizes that buying decisions are not only influenced by the
product itself but also by social factors, psychological perception, and learning.

Marketing Ethics

Marketing ethics refers to the principles and standards that guide the behaviour of marketers to ensure honesty,
fairness, and responsibility in their practices. It involves promoting products or services in ways that are truthful,
respect consumer rights, and avoid manipulation or deception. Ethical marketing also considers the well-being of
society by avoiding harm, such as misleading advertisements, exploitation of vulnerable groups, and environmentally
damaging practices.

In short, marketing ethics ensures that businesses act with integrity, build trust with customers, and contribute
positively to society while pursuing their marketing goals.

Importance of Marketing Ethics

Importance of Marketing Ethics:

1. Builds Trust and Reputation: Ethical marketing fosters trust with consumers, enhancing brand reputation
and loyalty.

2. Promotes Fair Competition: Ensures businesses compete fairly without deceptive practices, benefiting both
the market and consumers.

3. Protects Consumer Rights: Ethical practices ensure transparency, honesty, and respect for consumers'
choices and privacy.

4. Reduces Legal Risks: Following ethical standards helps avoid lawsuits, fines, and regulatory issues.

5. Encourages Social Responsibility: Supports positive contributions to society, including environmental

sustainability and community well-being. 6

6. Long-term Profitability: Ethical behaviour leads to customer loyalty and long-term success, promoting
sustainable business growth.
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5. Encourages Social Responsibility: Supports positive contributions to society, including environmental

sustainability and community well-being.

6. Long-term Profitability: Ethical behaviour leads to customer loyalty and long-term success, promoting
sustainable business growth.

CHAPTER 2 Determinants of Consumer Behaviour

• Consumer as an Individual, Need, Motivation

1. Consumer as an Individual

Consumers are not homogenous; each person has unique preferences, perceptions, and decision-making processes
that guide their purchasing behaviour. Factors such as personality, attitudes, beliefs, and past experiences shape
these behaviours. Individual differences can be influenced by:

• Demographics (age, gender, income)

• Psychographics (lifestyle, social class, interests)

• Cultural background and values

Understanding the consumer as an individual allows businesses to better target their marketing efforts and tailor
their products or services to meet specific consumer needs.

2. Need

A need is a basic requirement for survival or a psychological desire that triggers consumer behaviour. Needs can be
classified into different types:

• Physiological Needs: Basic human needs like food, water, shelter, and clothing.

• Safety Needs: Protection from physical and emotional harm.

• Social Needs: The need for love, friendship, and a sense of belonging.

• Esteem Needs: The desire for self-esteem, recognition, and status.

• Self-Actualization Needs: The pursuit of personal growth, creativity, and self-fulfilment.

Maslow’s Hierarchy of Needs is often used to explain the prioritization of consumer needs. Businesses that recognize
which level of needs they are targeting can align their products with the desires of their target audience.
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3. Motivation

Motivation is the internal drive that prompts a consumer to take action in order to satisfy a need or desire. It is
influenced by the intensity of the need and the value the consumer places on satisfying it. There are two types of
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motivation:

• Intrinsic Motivation: Driven by internal rewards like personal satisfaction or a sense of accomplishment.
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Maslow’s Hierarchy of Needs is often used to explain the prioritization of consumer needs. Businesses that recognize
which level of needs they are targeting can align their products with the desires of their target audience.

3. Motivation

Motivation is the internal drive that prompts a consumer to take action in order to satisfy a need or desire. It is
influenced by the intensity of the need and the value the consumer places on satisfying it. There are two types of
motivation:

• Intrinsic Motivation: Driven by internal rewards like personal satisfaction or a sense of accomplishment.

• Extrinsic Motivation: Driven by external factors like rewards, promotions, or social acceptance.

Understanding consumer motivation is essential in shaping marketing strategies, as it allows marketers to appeal to
the emotional and rational factors that influence purchasing decisions.

Personality, Perception, Learning Attitude

1. Personality

Personality refers to an individual's consistent patterns of thoughts, feelings, and behaviours that influence how
they respond to their environment. In the context of consumer behaviour, personality affects the way consumers
interact with brands, products, and marketing messages. Important aspects of personality in consumer behaviour
include:

• Traits: Characteristics such as extraversion, openness, conscientiousness, and emotional stability can
influence buying habits. For example, an extroverted person may prefer social experiences and outgoing
brands, while an introverted person may lean toward private, more reserved options.

• Self-Concept: Consumers often make purchases that reflect their self-image (who they think they are) or the
ideal self (who they aspire to be).

• Brand Personality: Brands that are perceived to have a personality (e.g., fun, sophisticated, rugged) can
attract consumers with matching traits, as people tend to choose products that align with their personality.

Marketers often use personality traits to segment consumers and create targeted advertising.

2. Perception

Perception is the process by which consumers select, organize, and interpret sensory information to form a
meaningful picture of the world. Consumers can perceive the same product or marketing message differently based
on their own interpretations. Key components of perception include:

• Selective Attention: Consumers filter out most information and focus only on what is relevant to them.

• Selective Distortion: Consumers interpret information in a way that fits with their pre-existing beliefs or
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attitudes.

• Selective Retention: People remember information that supports their attitudes or beliefs and forget
information that contradicts them.
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Perception affects how consumers view a brand, the value they place on a product, and even their willingness to pay
for it. Marketers strive to create positive perceptions through effective branding, packaging, advertising, and product
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• Selective Distortion: Consumers interpret information in a way that fits with their pre-existing beliefs or
attitudes.

• Selective Retention: People remember information that supports their attitudes or beliefs and forget
information that contradicts them.

Perception affects how consumers view a brand, the value they place on a product, and even their willingness to pay
for it. Marketers strive to create positive perceptions through effective branding, packaging, advertising, and product
positioning.

3. Learning

Learning refers to the process by which individuals acquire knowledge and experience that influences future
behaviour. In consumer behaviour, learning plays a key role in shaping how consumers make decisions over time.
Learning can happen in several ways:

• Classical Conditioning: Associating a product with a positive experience or emotion. For example, pairing a
luxury product with images of happiness or success can make consumers associate the product with those
feelings.

• Operant Conditioning: Learning from consequences. Positive reinforcement, such as discounts or rewards
for loyalty, can encourage repeat purchases.

• Cognitive Learning: Based on reasoning and problem-solving. Consumers gather information, evaluate
alternatives, and make a decision based on this analysis.

Marketers use learning principles to encourage repeat purchasing and brand loyalty through rewards programs,
advertising, and customer education.

4. Attitude

Attitude is a learned predisposition to respond in a consistently favourable or unfavourable manner toward a

product, brand, or service. Attitudes are shaped by consumers' beliefs, feelings, and behavioural intentions. They are
important because:

• Beliefs: These are the thoughts a consumer has about a product. For instance, a consumer might believe that
a particular smartphone brand has the best camera.

• Feelings: These are emotional responses to the product. A person might feel excitement or comfort when
thinking about a brand.

• Behavioural Intentions: These are a consumer’s intentions to buy or avoid a product. If a consumer has a
positive attitude toward a product, they are more likely to purchase it.

Attitudes are relatively stable, but they can be changed through persuasive marketing efforts, product experiences,
or changes in consumer beliefs.

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Communication persuasion

1. Communication

Communication in the context of consumer behaviour refers to the process of conveying messages about products
or services to consumers. Effective communication can create awareness, generate interest, and persuade
consumers to take action. The communication process typically involves:

• Sender: The brand or company delivering the message.

• Message: The content or idea that the sender wants to convey (e.g., information about a product, service, or
promotion).

• Medium: The channel through which the message is communicated (e.g., television, social media, print,
online ads).

• Receiver: The consumer who is the target of the message.

• Feedback: The response from the consumer, which can be measured through behaviour (e.g., purchase,
inquiry) or through social engagement (e.g., likes, shares, comments).

Key considerations in communication:

• Clarity: The message should be clear and easily understood.

• Relevance: The message should resonate with the needs and interests of the target audience.

• Consistency: Consistent messaging across different platforms builds brand recognition and trust.

• Timing: The message should be delivered at the right moment when consumers are most receptive (e.g.,
seasonal campaigns, special occasions).

2. Persuasion

Persuasion refers to the process of influencing consumers’ attitudes, beliefs, and behaviours through
communication. Persuasion is essential in marketing as it guides consumers toward making purchasing decisions.
Several psychological principles are used in persuasion:

• Ethos (Credibility): Persuasion through credibility involves using trustworthy, authoritative, and expert
figures to influence consumer behaviour. For instance, endorsements from experts or celebrities can
increase a brand's appeal.

• Pathos (Emotional Appeal): Emotional persuasion appeals to a consumer’s feelings, such as fear, happiness,
or nostalgia. Ads that trigger emotions are often memorable and effective in creating a connection between
the consumer and the brand.

• Logos (Logical Appeal): This strategy involves using logical arguments, facts, and data to persuade
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consumers. Examples include highlighting product benefits, comparing prices, or presenting testimonials and
reviews.

The Elaboration Likelihood Model (ELM) is often used to explain how persuasion works:
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• Central Route to Persuasion: When consumers are highly involved and motivated, they are more likely to
carefully consider the message's content. Persuasion in this case relies on strong, logical arguments and
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• Logos (Logical Appeal): This strategy involves using logical arguments, facts, and data to persuade
consumers. Examples include highlighting product benefits, comparing prices, or presenting testimonials and
reviews.

The Elaboration Likelihood Model (ELM) is often used to explain how persuasion works:

• Central Route to Persuasion: When consumers are highly involved and motivated, they are more likely to
carefully consider the message's content. Persuasion in this case relies on strong, logical arguments and
relevant information.

• Peripheral Route to Persuasion: When consumers have lower involvement or motivation, they are more
influenced by superficial cues like attractive visuals, celebrities, or catchy slogans, rather than the content
itself.

Persuasion Techniques:

• Reciprocity: Offering something of value, such as free samples or discounts, can persuade consumers to
return the favour by making a purchase.

• Scarcity: Limited-time offers or exclusive deals create a sense of urgency, encouraging consumers to act
quickly.

• Authority: Endorsements from experts or influential figures help establish trust in the product or brand.

• Social Proof: Reviews, testimonials, and user-generated content can persuade potential customers by
showing that others approve of or use the product.

• Consistency: Consumers prefer to act in ways that are consistent with their past behaviour. Marketers can
use this by building campaigns around consumers’ previous purchases or preferences.

• Liking: People are more likely to be persuaded by individuals or brands they like or relate to.

The Role of Technology in Communication and Persuasion

In the digital age, communication and persuasion have become more interactive and data-driven. Businesses can use
social media, personalized advertising, email marketing, and influencer partnerships to reach and persuade
consumers more effectively. Modern tools like AI and data analytics help brands target their messages more
precisely, making communication more relevant and engaging.

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Consumers in their Social & Cultural Setting, the family, Social Class, Cross-
Cultural Consumer Behaviour

1. Consumers in their Social & Cultural Setting

Consumer behaviour is significantly influenced by the social and cultural environment in which an individual
operates. This environment includes interactions with family, friends, colleagues, and larger societal groups.
Understanding this broader context is key to grasping why consumers make specific choices.

• Social Influence: People often look to others for cues on what to buy. The influence of peer groups, opinion
leaders, and social norms plays a critical role.

• Cultural Influence: Culture encompasses shared values, beliefs, customs, and traditions passed down from
generation to generation. It shapes perceptions of products, brands, and consumption patterns.

o Subculture: Within larger cultures, there are subgroups with distinct values and behaviours, such as
ethnic groups, religious communities, or regional groups.

o Cultural Norms: These are unwritten rules that govern what is considered acceptable behaviour
within a culture, affecting everything from clothing choices to dining habits.

2. The Family

The family is one of the most influential social groups affecting consumer behaviour. Family members influence
purchasing decisions through shared consumption habits, financial contributions, and decision-making roles. The
family life cycle also affects purchasing patterns, as the needs of families evolve over time.

Key aspects include:

• Family Decision-Making: Family members may play different roles in the decision-making process, such as
the initiator, influencer, buyer, and user.

• Parental Influence: Parents often pass down consumption habits, values, and brand preferences to their
children.

• Changing Family Structures: Modern trends such as dual-income households, single-parent families, and
delayed marriages influence buying patterns, as they create new needs and spending habits.

3. Social Class

Social class refers to the division of society based on socioeconomic status, which is typically determined by income,
education, and occupation. Social class significantly impacts consumer behaviour by influencing:

• Buying Power: Higher social classes generally have more disposable income and tend to buy premium
products, while lower social classes may focus on basic necessities.

• Tastes and Preferences: People in different social classes often have different tastes, preferences, and
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aspirations. For instance, luxury brands appeal more to affluent consumers.

• Status Symbol Consumption: In many societies, consumption patterns reflect an individual’s desire to
project a certain social image. High-status products, like luxury cars or designer clothes, are often purchased
to signal wealth and status. CONSUMER BEHAVIOUR
4. Cross-Cultural Consumer Behaviour
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• Tastes and Preferences: People in different social classes often have different tastes, preferences, and
aspirations. For instance, luxury brands appeal more to affluent consumers.

• Status Symbol Consumption: In many societies, consumption patterns reflect an individual’s desire to
project a certain social image. High-status products, like luxury cars or designer clothes, are often purchased
to signal wealth and status.

4. Cross-Cultural Consumer Behaviour

As globalization expands, understanding cross-cultural consumer behaviour becomes essential for businesses
operating in multiple countries. Cross-cultural behaviour refers to how consumers from different cultural
backgrounds interpret and respond to marketing messages, products, and brands.

Key factors to consider:

• Cultural Sensitivity: Products or marketing strategies successful in one country may not resonate in another
due to differences in language, beliefs, customs, or values.

• Global vs. Local Preferences: Some brands adopt a standardized global marketing approach, while others
customize products and advertising to fit local tastes and traditions. Understanding these preferences is
crucial for success in international markets.

• Consumer Ethnocentrism: In some cultures, consumers prefer local brands over foreign ones as a show of
national pride, while in others, international brands may carry higher prestige.

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CHAPTER 3 Consumer Decision-Making Process

• Personal and Societal Influence & Opinion

1. Consumer Decision-Making Process

The consumer decision-making process refers to the steps consumers follow before, during, and after purchasing a
product or service. This process is typically divided into five stages:

1. Problem Recognition: The consumer identifies a need or a problem that requires a solution, which initiates
the search for a product or service.

2. Information Search: The consumer gathers information about possible solutions, products, or services to
meet their need. This search can involve internal sources (memory, past experiences) and external sources
(advertising, online reviews, word-of-mouth).

3. Evaluation of Alternatives: After gathering information, the consumer evaluates the different options based
on various factors such as price, quality, features, and brand reputation.

4. Purchase Decision: The consumer makes the final decision and chooses a product to purchase. However,
factors like availability or peer influence can affect this stage.

5. Post-Purchase Behaviour: After purchasing, the consumer assesses the product's performance and
satisfaction level, which influences future purchase decisions.

2. Personal Influence

Personal influences are unique to each consumer and vary based on individual characteristics, preferences, and life
experiences. Some key aspects include:

• Personality: Consumers' personality traits (e.g., risk-taking, introversion, extroversion) affect their
preferences and buying behaviour. For instance, an adventurous person may prefer bold, innovative
products, while a cautious person might stick to trusted brands.

• Lifestyle: A consumer's lifestyle, defined by their activities, interests, and opinions, shapes their product
choices. For example, a fitness-focused individual will prioritize health-related products, while a tech
enthusiast might gravitate towards the latest gadgets.

• Perception: How consumers perceive a product, its price, and it’s branding greatly influences their choices.
Perception involves how consumers interpret marketing messages, product appearance, and packaging.

• Attitudes and Beliefs: A consumer's attitudes toward a brand or product category can either encourage or
discourage purchase. Positive past experiences with a brand often lead to loyalty, while negative
experiences may result in avoidance. 14

• Experience and Knowledge: Past experiences and the amount of product knowledge a consumer has can
directly influence decision-making. More informed consumers may compare options in greater detail, while
less informed consumers mightCONSUMER BEHAVIOUR
rely on brand reputation or word-of-mouth.

3. Societal Influence
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• Attitudes and Beliefs: A consumer's attitudes toward a brand or product category can either encourage or
discourage purchase. Positive past experiences with a brand often lead to loyalty, while negative
experiences may result in avoidance.

• Experience and Knowledge: Past experiences and the amount of product knowledge a consumer has can
directly influence decision-making. More informed consumers may compare options in greater detail, while
less informed consumers might rely on brand reputation or word-of-mouth.

3. Societal Influence

Societal influence refers to the external social forces that shape consumer behaviour, including family, peer groups,
social networks, and broader cultural and societal trends. Consumers often look to others for guidance or validation
when making decisions.

• Family and Household: The family remains a primary influence in consumer decision-making. Family
members may share product preferences, influence purchases, or make joint decisions, especially for larger
items like homes, cars, and vacations.

• Reference Groups: These are groups that individuals look to for approval or as a source of information.
Reference groups can include friends, co-workers, or even online communities. Consumers often emulate
the consumption habits of their reference groups.

• Social Norms and Trends: Society sets certain norms for what is acceptable or desirable, and these norms
can shape purchasing behaviour. For example, sustainable and ethical consumption has become a significant
trend in many cultures, leading to increased demand for eco-friendly products.

• Role of social media: Social media platforms provide powerful societal influences. Consumers frequently
look to influencers, celebrities, or their social network for opinions and recommendations, which heavily
affect purchasing behaviour.

4. Opinion Leaders and Word-of-Mouth

Opinion leaders are individuals who have expertise or influence in a specific domain and whose recommendations
are trusted by others. They play a significant role in shaping consumer decisions, especially in areas such as
technology, fashion, or lifestyle products.

• Who are Opinion Leaders? Opinion leaders can be experts, celebrities, bloggers, or influential social media
personalities. They can significantly impact product choices by reviewing or recommending products to their
followers.

• Influence on Consumer Decisions: Consumers often rely on opinion leaders when they are unsure about a
product or when they need reassurance about a purchase. Positive reviews or endorsements from an
opinion leader can sway consumers to make a purchase, while negative opinions can deter them.

• Word-of-Mouth (WOM): Word-of-mouth is another powerful form of influence. Consumers trust

recommendations from friends, family, or peers more than they trust advertising. Positive word-of-mouth
can drive sales and build brand loyalty, while negative word-of-mouth can damage a brand’s reputation.

5. Social Influence on Consumer Decisions 15

Social influence, particularly from peers and online communities, plays a significant role in the decision-making
process. Consumers are often swayed by others' opinions, especially when it comes to products or services that
involve a higher degree of risk or uncertainty.
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• Peer Influence: People tend to follow the recommendations of those they trust or admire, especially when
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5. Social Influence on Consumer Decisions

Social influence, particularly from peers and online communities, plays a significant role in the decision-making
process. Consumers are often swayed by others' opinions, especially when it comes to products or services that
involve a higher degree of risk or uncertainty.

• Peer Influence: People tend to follow the recommendations of those they trust or admire, especially when
making complex or unfamiliar purchasing decisions. Peer influence is especially strong in younger consumers
who are highly influenced by social media trends.

• Social Proof: The concept of social proof suggests that individuals are more likely to adopt behaviours or
make choices that others are making. Online reviews, testimonials, and social media trends are forms of
social proof that guide consumer behaviour.

• Conformity to Group Behaviour: Sometimes consumers make purchasing decisions to fit in with a group or
societal expectations. For example, buying the latest smartphone or fashion item to be perceived as trendy
or up-to-date is often driven by social influence.

Consumer decision making process (Product: Goods & Services)

The consumer decision-making process outlines the steps consumers go through when selecting, purchasing, and
using goods and services. Understanding this process is crucial for businesses as it helps them identify opportunities
to influence customers at each stage. Here's a breakdown of the five key stages involved in the consumer decision-
making process:

1. Problem/Need Recognition

The consumer decision-making process begins when a consumer recognizes a need or problem. This realization
could be triggered by internal or external stimuli:

• Internal Stimuli: Needs such as hunger, thirst, or personal comfort that arise from within the individual.

• External Stimuli: Marketing messages, advertisements, or word-of-mouth recommendations can alert

consumers to a need they were not previously aware of.

For goods (e.g., a phone) or services (e.g., a haircut), the recognition of a problem (e.g., a broken phone or
overgrown hair) prompts the consumer to seek a solution.

2. Information Search

Once the need is recognized, the consumer seeks out information to address the need. This stage can vary in
intensity depending on the complexity and importance of the purchase:

• Internal Search: Consumers may rely on their own memory, knowledge, and past experiences with similar
products or services.
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• External Search: When the consumer lacks enough information, they turn to external sources such as online
reviews, recommendations from friends, advertising, product brochures, and expert opinions.

For goods, this could involve searching for product specifications,

CONSUMER prices, or brands. For services, it may involve
BEHAVIOUR
looking for reviews or recommendations about service quality, such as a restaurant review or hotel rating.
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• Internal Search: Consumers may rely on their own memory, knowledge, and past experiences with similar
products or services.

• External Search: When the consumer lacks enough information, they turn to external sources such as online
reviews, recommendations from friends, advertising, product brochures, and expert opinions.

For goods, this could involve searching for product specifications, prices, or brands. For services, it may involve
looking for reviews or recommendations about service quality, such as a restaurant review or hotel rating.

3. Evaluation of Alternatives

In this stage, the consumer compares the various options identified during the information search. The evaluation
process may vary based on:

• Attributes: Consumers assess different product or service attributes like price, quality, brand reputation,
features, or customer service.

• Criteria: They might have specific criteria for selection, such as price sensitivity, brand loyalty, or specific
product/service features.

For goods like a smartphone, consumers may compare features (e.g., camera quality, battery life, price) across
different brands. For services like a hotel booking, they may compare reviews, pricing, location, and amenities.

4. Purchase Decision

After evaluating the alternatives, the consumer makes a decision to purchase a particular good or service. The
decision can be influenced by several factors:

• Brand Preference: If a consumer has a positive past experience with a brand or perceives a brand as
superior, they are more likely to choose it.

• Sales Promotions/Discounts: Special offers or discounts can sway a consumer toward making a purchase.

• Availability: Sometimes, the availability of the product or service at a convenient location or through a
preferred online retailer impacts the decision.

At this stage, for goods, the consumer might purchase the product (online or in-store), while for services, they may
book or order the service (e.g., booking a massage, reserving a table at a restaurant).

5. Post-Purchase Behaviour

After the purchase, consumers experience the post-purchase phase where they reflect on their decision. This stage
is critical for building brand loyalty or causing buyer's remorse:

• Satisfaction or Dissatisfaction: Consumers evaluate whether the product or service met or exceeded their
expectations. If satisfied, they are more likely to repurchase and recommend the brand. If dissatisfied, they
may seek returns or repairs and leave negative reviews.

• Cognitive Dissonance: Also known as buyer’s remorse, this is the discomfort a consumer may feel after
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purchasing a product or service, especially for high-involvement purchases. Consumers may seek
reassurance by reading reviews, comparing the product with competitors, or discussing the purchase with
others.

CONSUMER
For goods, satisfaction might be based on BEHAVIOUR
the product's functionality and quality over time. For services, it often
depends on the experience and outcome, such as the quality of service received at a salon or restaurant.
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• Cognitive Dissonance: Also known as buyer’s remorse, this is the discomfort a consumer may feel after
purchasing a product or service, especially for high-involvement purchases. Consumers may seek
reassurance by reading reviews, comparing the product with competitors, or discussing the purchase with
others.

For goods, satisfaction might be based on the product's functionality and quality over time. For services, it often
depends on the experience and outcome, such as the quality of service received at a salon or restaurant.

Application to Goods and Services

• Goods: Tangible products like smartphones, clothing, appliances, etc. Consumers assess physical features,
price, brand, and reviews before making a purchase.

• Services: Intangible offerings like hospitality, education, healthcare, and financial services. Consumers
evaluate service quality, reputation, customer reviews, and past experiences.

For example, in purchasing a good like a new laptop, the process may involve comparing models, reading
specifications, looking for deals, and finally buying from a trusted retailer. In purchasing a service like a car repair,
the decision might involve evaluating service providers based on reviews, pricing, and past experiences, before
making an appointment.

Difference Between Goods and Services

1. Nature
Basis Goods Services
1. Nature Tangible
• Goods: Tangible items that can be items that
seen, touched, can be seen,
and stored. Intangible
Examples include activities
cars, food, or benefits
and clothing.
touched, and stored. Examples provided. Examples include
• Services: Intangible activities or benefits provided. Examples include
include cars, food, and clothing. haircuts, legal advice,
haircuts, legal and teaching.
advice, and
2. Ownership teaching.
2. Ownership Ownership is transferred from the No ownership is transferred; the
• Goods: Ownership is transferred seller to the
from the buyer
seller upon
to the buyerpurchase. buyer pays for the experience or
upon purchase.
outcome.
• Services: No ownership is transferred; the buyer pays for the experience or outcome.
3. Production and Consumption Can be produced, stored, and Produced and consumed
3. Production and Consumption consumed at different times. simultaneously (e.g., a live
concert).
• Goods: Can be produced, stored,Non-perishable
4. Perishability and consumed at(at different
least intimes.
the short Perishable; cannot be stored
term); can be stored for future use. once the service is provided.
• Services: Produced and consumed simultaneously (e.g., a live concert).
5. Standardization Can be standardized (mass Often customized to meet
4. Perishability production). individual needs.
6. Measurement of Quality Quality can be objectively measured Quality is subjective and
• Goods: Non-perishable (at least in the short
(e.g., term);
material, can be stored for future depends
durability). use. on customer
• Services: Perishable; cannot be stored once the service is provided. experience.

5. Standardization 18
• Goods: Can be standardized (mass production).

• Services: Often customized to meet individual needs.

CONSUMER BEHAVIOUR
6. Measurement of Quality