Consumer Behaviour

Summarized Notes on Consumer Behaviour for MBA Students

1. Scope, Importance, Significance, and Nature of Consumer

Behaviour
Scope

Consumer behaviour studies how individuals, groups, or organizations select, buy, use, and
dispose of goods, services, ideas, or experiences to satisfy needs and wants. It encompasses
psychological, social, and cultural factors influencing decisions.

Importance

 Marketing Strategy Development: Understanding consumer preferences helps tailor

products, pricing, and promotions (e.g., Coca-Cola’s personalized bottles campaign).
 Customer Retention: Anticipating needs fosters loyalty (e.g., Amazon’s
recommendation system).
 Market Segmentation: Identifies target groups for precise marketing (e.g., Nike’s
campaigns for athletes vs. casual wearers).

Significance

 Drives innovation by revealing unmet needs (e.g., Apple’s iPhone revolutionized

smartphones).
 Enhances competitive advantage through consumer insights.
 Supports ethical marketing by aligning with consumer values (e.g., Patagonia’s
sustainability focus).

Nature

 Dynamic: Evolves with trends, technology, and culture.

 Complex: Involves emotions, cognition, and social influences.
 Multidisciplinary: Draws from psychology, sociology, and economics.
 Contextual: Varies by product, situation, and individual.

Example: Starbucks adapts its menu (e.g., Pumpkin Spice Latte) to seasonal trends, reflecting
dynamic consumer preferences.

2. Factors Influencing Consumer Behaviour

Cultural Factors
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 Culture: Shared values shape preferences (e.g., McDonald’s offers McAloo Tikki in
India).
 Subculture: Regional or ethnic groups influence choices (e.g., Hispanic-targeted ads by
Telemundo).
 Social Class: Impacts purchasing power and brand choice (e.g., luxury brands like Gucci
target high-income groups).

Social Factors

 Reference Groups: Peer influence (e.g., teenagers buying trending sneakers due to social
media influencers).
 Family: Family roles guide decisions (e.g., parents choosing healthy cereals for kids).
 Roles and Status: Social positions affect purchases (e.g., executives buying premium
cars).

Personal Factors

 Age and Life Stage: Needs change over time (e.g., baby products for new parents).
 Occupation: Influences purchasing power (e.g., professionals buying work attire).
 Lifestyle: Affects product choices (e.g., fitness enthusiasts buying wearables like Fitbit).

Psychological Factors

 Motivation: Drives needs (e.g., Maslow’s hierarchy explains luxury vs. basic purchases).
 Perception: Shapes brand views (e.g., Apple’s sleek design perception).
 Learning: Past experiences guide choices (e.g., repeat purchases of trusted brands).
 Beliefs and Attitudes: Influence preferences (e.g., eco-conscious consumers choosing
Tesla).

Example: A young professional may buy a MacBook (personal factor: occupation) due to its
premium brand perception (psychological factor) and peer recommendations (social factor).

3. Consumer Behaviour Models

Traditional Models

1. Economic Model: Assumes rational, cost-benefit decisions (e.g., choosing a budget

smartphone over a premium one).
2. Learning Model: Behaviour changes with experience (e.g., switching brands after a bad
experience).
3. Psychoanalytical Model: Subconscious motives drive purchases (e.g., buying luxury
cars for status).
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4. Sociological Model: Social influences shape behaviour (e.g., adopting fashion trends
from influencers).

Contemporary Models

1. Black Box Model: External stimuli (ads) and internal factors (motives) drive decisions
(e.g., ads prompting impulse buys).
2. Engel-Kollat-Blackwell (EKB) Model: Decision process with stages (problem
recognition to purchase) (e.g., researching laptops before buying).
3. Theory of Planned Behaviour: Intentions predict actions, influenced by attitudes and
norms (e.g., buying eco-friendly products due to social pressure).

Example: A consumer sees an Instagram ad for sustainable clothing (Black Box stimulus),
researches the brand (EKB model), and buys due to eco-conscious attitudes (Theory of Planned
Behaviour).

4. Types of Consumer Behaviour

1. Complex Buying Behaviour: High involvement, significant differences between brands
(e.g., buying a car after extensive research).
2. Dissonance-Reducing Buying Behaviour: High involvement, few brand differences
(e.g., choosing carpet based on price).
3. Habitual Buying Behaviour: Low involvement, little brand difference (e.g., buying the
same toothpaste repeatedly).
4. Variety-Seeking Buying Behaviour: Low involvement, switching for novelty (e.g.,
trying new snack flavors).

Example: A consumer researching iPhone vs. Samsung (complex) vs. picking a cereal brand out
of habit (habitual).

5. Stages of Consumer Decision Making Process

1. Problem Recognition:
o Identifying a need or problem (e.g., needing a new phone due to an outdated
model).
o Triggered by internal (hunger) or external (ads) stimuli.
2. Information Search:
o Seeking information from personal (friends), commercial (ads), or public
(reviews) sources.
o Example: Reading online reviews for laptops on Amazon.
3. Alternative Evaluation:
 Consumer Behaviour
oComparing options using decision rules:
 Compensatory: Weighing pros and cons (e.g., choosing a phone with
better camera despite higher price).
 Non-Compensatory: Strict criteria (e.g., rejecting phones above budget).
o Example: Comparing iPhone, Samsung, and Google Pixel based on features.
4. Purchase Decision:
o Selecting the product (e.g., buying an iPhone after evaluation).
o Influenced by promotions or salesperson advice.
5. Post-Purchase Evaluation:
o Assessing satisfaction (e.g., happy with phone performance or regretting due to
issues).
o Impacts loyalty and word-of-mouth.

Decision Making Types:

 Nominal: Routine, low involvement (e.g., buying milk).

 Limited: Moderate effort, familiar products (e.g., choosing a new shampoo).
 Extended: High effort, complex decisions (e.g., buying a house).

Example: A student needs a laptop (problem recognition), searches online (information search),
compares Dell vs. HP (alternative evaluation), buys Dell (purchase), and feels satisfied (post-
purchase).

6. Psychological Influences on Consumer Decision Making

1. Motivation:
o Needs drive actions (e.g., buying a gym membership for health goals).
o Maslow’s hierarchy: Physiological (food), safety (insurance), social (gifts),
esteem (luxury), self-actualization (education).
2. Perception:
o How consumers interpret information (e.g., perceiving organic food as healthier).
o Selective attention, distortion, and retention affect choices.
3. Learning:
o Experiences shape behaviour (e.g., avoiding a brand after poor service).
o Classical (associating brands with emotions) or operant (rewards) conditioning.
4. Beliefs and Attitudes:
o Beliefs: Perceptions about products (e.g., “Tesla is innovative”).
o Attitudes: Positive/negative feelings (e.g., preferring eco-friendly brands).
o Example: Choosing reusable straws due to environmental beliefs.
5. Personality and Self-Concept:
o Personality traits (e.g., adventurous people buying travel packages).
o Self-concept: Buying products aligning with self-image (e.g., athletes choosing
Nike).
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Example: A health-conscious consumer (motivation) perceives organic brands as superior
(perception), learns to trust a brand after positive experiences (learning), and buys due to eco-
friendly attitudes (beliefs).

7. Consumer Needs and Motivation, Attention, Consumer

Perception
Consumer Needs and Motivation

 Needs: Gaps between current and desired states, driving consumer actions.
o Maslow’s Hierarchy: Physiological (food), safety (insurance), social (gifts), esteem
(luxury goods), self-actualization (education).
o Motivation: Internal drive to fulfill needs (e.g., buying a Fitbit to meet fitness goals).
 Example: A student buys a laptop (esteem need) to enhance productivity and status among
peers.

Attention

 Definition: The process of focusing on specific stimuli amidst distractions.

 Types:
o Selective Attention: Noticing relevant stimuli (e.g., noticing a sale banner for a desired
brand).
o Divided Attention: Multitasking across stimuli (e.g., browsing social media while
watching TV ads).
 Factors: Bright colors, novelty, or personal relevance attract attention (e.g., vibrant Nike ads
grab athletes’ focus).
 Example: A consumer notices a Starbucks ad for a new drink due to its colorful visuals and
personal coffee interest.

Consumer Perception

 Definition: How consumers interpret and make sense of stimuli.

 Process:
o Exposure: Contact with stimuli (e.g., seeing a billboard).
o Perception Formation: Organizing and interpreting stimuli (e.g., perceiving Apple as
premium due to sleek ads).
o Selective Perception: Filtering based on needs (e.g., ignoring car ads if not in the
market).
 Influences: Branding, packaging, and context (e.g., organic labels perceived as healthier).
 Example: A consumer perceives Tesla as innovative due to its sleek design and eco-friendly
messaging.
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8. Learning and Memory; Personality and Self-Image
Concept
Learning and Memory

 Learning: Acquiring knowledge or behaviors through experience.

o Classical Conditioning: Associating stimuli with responses (e.g., Coca-Cola’s logo with
happiness).
o Operant Conditioning: Behavior shaped by rewards/punishments (e.g., loyalty points
encouraging repeat purchases).
o Observational Learning: Learning from others (e.g., buying a brand after seeing an
influencer use it).
 Memory: Storing and retrieving information.
o Short-Term: Temporary recall (e.g., remembering a sale price).
o Long-Term: Lasting brand associations (e.g., trusting Dove for skincare).
 Example: A consumer learns to trust Amazon after positive delivery experiences (operant
conditioning) and recalls its reliability (long-term memory).

Personality and Self-Image Concept

 Personality: Unique traits influencing behavior (e.g., extroverts preferring vibrant clothing).
o Theories:
 Trait Theory: Big Five traits (e.g., openness drives adventurous purchases like
travel gear).
 Psychoanalytic Theory: Subconscious desires (e.g., buying luxury for status).
 Self-Image Concept: How consumers view themselves and aspire to be.
o Actual Self: Current self-perception (e.g., practical shopper).
o Ideal Self: Desired self (e.g., aspiring to be stylish, buying designer clothes).
o Social Self: Perceived by others (e.g., buying eco-friendly products to appear
responsible).
 Example: An adventurous consumer (personality) buys a GoPro to align with their ideal self as a
thrill-seeker.

9. Consumer Attitude Formation and Change; Consumer

Values and Lifestyles
Consumer Attitude Formation and Change

 Attitude: Learned predisposition to respond positively or negatively to a product/brand.

o Components:
 Cognitive: Beliefs (e.g., “Organic food is healthier”).
 Affective: Emotions (e.g., liking Nike’s empowering ads).
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 Behavioral: Actions (e.g., buying Nike shoes).
o Formation: Through experience, ads, or social influence (e.g., positive reviews shape
attitudes toward a brand).
 Attitude Change Strategies:
o Cognitive Dissonance: Reducing post-purchase regret (e.g., Apple’s return policy eases
doubts).
o Persuasion: Ads or influencers (e.g., celebrity endorsements for cosmetics).
o Changing Beliefs: Highlighting new features (e.g., Tesla promoting longer battery life).
 Example: A consumer develops a positive attitude toward Patagonia after learning about its
sustainability (cognitive) and feels inspired by its ads (affective), leading to a purchase
(behavioral).

Consumer Values and Lifestyles

 Values: Core beliefs guiding behavior (e.g., environmentalism drives purchases of reusable
straws).
o Lifestyle: Patterns of living reflected in activities, interests, and opinions (AIO).
 VALS Framework: Segments consumers by values/lifestyle (e.g., “Innovators”
buy cutting-edge tech like smartwatches).
 Impact: Shapes product preferences (e.g., health-conscious consumers buy organic groceries).
 Example: A vegan consumer (value) with an active lifestyle buys plant-based protein bars from a
brand like Clif Energy.

10. Sociological Influences on Consumer Decision-Making

Social Class

 Definition: Hierarchical groups based on income, education, and occupation.

 Impact: Influences brand preferences (e.g., upper-class consumers buy luxury brands like Rolex,
while middle-class opt for value-driven brands like Uniqlo).
 Example: A professional buys a Mercedes to reflect their high social status.

Reference Groups

 Definition: Groups influencing attitudes/behaviors (e.g., friends, colleagues).

 Types:
o Primary: Close contacts (e.g., family recommending a restaurant).
o Secondary: Professional or social groups (e.g., fitness clubs endorsing gym gear).
o Aspirational: Desired groups (e.g., emulating celebrities’ fashion).
 Example: A teenager buys Air Jordans after seeing friends wear them (primary reference group).

Family

 Definition: Household unit influencing decisions.

 Consumer Behaviour
 Roles:
o Initiator: Suggests purchase (e.g., child requesting a toy).
o Decider: Finalizes choice (e.g., parent approving purchase).
o User: Consumes product (e.g., child using toy).
 Example: A family decides on a vacation package, with parents (deciders) influenced by
children’s preferences (initiators).

Culture and Subculture

 Culture: Shared values, norms, and traditions (e.g., festive purchases during Diwali in India).
 Subculture: Smaller groups within culture (e.g., regional preferences like spicy food in South
India).
 Impact: Shapes product choices (e.g., McDonald’s offering vegetarian options in India due to
cultural dietary norms).
 Example: A Hispanic consumer buys Goya products to align with their subcultural food
preferences.

Social Roles and Status

 Roles: Expected behaviors in social positions (e.g., a manager dressing formally).

 Status: Social rank associated with roles (e.g., executives buying premium brands to reflect
status).
 Example: A doctor purchases a high-end stethoscope to align with their professional role and
status.

11. Influence of Culture and Subculture; Social Class;

Reference Groups and Family Influences; Opinion Leaders
Culture and Subculture

 Culture: Shared values, beliefs, and norms shaping consumer preferences (e.g., festive
purchases during Christmas or Diwali).
 Subculture: Smaller groups within a culture with distinct values (e.g., regional preferences like
spicy cuisine in South India or veganism in urban areas).
 Impact: Influences product design and marketing (e.g., McDonald’s offering McAloo Tikki in
India to align with vegetarian culture).
 Example: A Hispanic consumer buys Goya beans to connect with their subcultural culinary
traditions.

Social Class

 Definition: Hierarchical groups based on income, education, and occupation (e.g., upper,
middle, working class).
 Impact: Determines purchasing power and brand preferences (e.g., luxury brands like Louis
Vuitton target upper class, while Walmart appeals to middle/working class).
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 Example: A high-income professional buys a Rolex to reflect their social status.

Reference Groups

 Definition: Groups influencing attitudes and behaviors.

 Types:
o Primary: Close contacts like friends/family (e.g., friends recommending a restaurant).
o Secondary: Professional/social groups (e.g., colleagues endorsing work tools).
o Aspirational: Desired groups (e.g., emulating celebrity fashion).
 Example: A teenager buys Nike sneakers after seeing peers wear them (primary reference
group).

Family Influences

 Definition: Household unit shaping purchase decisions.

 Roles:
o Initiator: Suggests need (e.g., child requesting a toy).
o Decider: Makes final choice (e.g., parent approving purchase).
o User: Consumes product (e.g., child using toy).
 Impact: Family dynamics guide choices (e.g., parents choosing healthy snacks for kids).
 Example: A family selects a minivan, with parents (deciders) influenced by children’s need for
space (initiators).

Opinion Leaders

 Definition: Influential individuals shaping others’ attitudes due to expertise or social reach (e.g.,
influencers, industry experts).
 Role: Guide purchase decisions via recommendations (e.g., a tech blogger endorsing a new
smartphone).
 Example: A beauty influencer promotes a skincare brand on Instagram, prompting followers to
buy it.

12. Diffusion of Innovation; Adoption Process; Online

Consumer Behavior
Diffusion of Innovation

 Definition: Process by which new products spread among consumers or industries.

 Categories of Adopters (Rogers’ Model):
o Innovators (2.5%): Risk-takers, first to try (e.g., early Tesla buyers).
o Early Adopters (13.5%): Opinion leaders, adopt early (e.g., tech enthusiasts buying new
iPhones).
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o Early Majority (34%): Pragmatic, adopt after validation (e.g., buying smartwatches once
proven useful).
o Late Majority (34%): Skeptical, adopt later (e.g., older consumers using smartphones).
o Laggards (16%): Resistant, last to adopt (e.g., still using feature phones).
 Industrial Context: Businesses adopt innovations like cloud computing (e.g., companies
transitioning to AWS).
 Example: Electric vehicles spread from innovators (early Tesla adopters) to early majority
(mainstream buyers) as charging infrastructure grows.

Adoption Process

 Stages:
1. Awareness: Learning about the innovation (e.g., seeing ads for a smart speaker).
2. Interest: Seeking information (e.g., reading reviews about Amazon Echo).
3. Evaluation: Assessing benefits (e.g., comparing Echo vs. Google Home).
4. Trial: Testing the product (e.g., trying a demo in-store).
5. Adoption: Full commitment (e.g., purchasing and using the smart speaker).
 Example: A consumer hears about Air Pods (awareness), researches features (interest),
compares with competitors (evaluation), tries them at a store (trial), and buys them (adoption).

Online Consumer Behavior

 Process:
o Problem Recognition: Identifying needs (e.g., needing a new laptop).
o Information Search: Browsing websites/reviews (e.g., checking Amazon ratings).
o Evaluation: Comparing options (e.g., Dell vs. HP on price and specs).
o Purchase: Completing transaction (e.g., buying via e-commerce).
o Post-Purchase: Reviewing or returning (e.g., rating the product online).
 Factors:
o Convenience: Easy access (e.g., Amazon’s one-click purchase).
o Trust: Secure platforms (e.g., PayPal’s buyer protection).
o Social Influence: Reviews and influencer endorsements.
 Trends:
o Mobile shopping (e.g., using apps like Flipkart).
o Personalization (e.g., Netflix’s tailored recommendations).
o Social commerce (e.g., buying via Instagram ads).
 Characteristics: Fast decision-making, impulse buys, and reliance on digital cues.
 Example: A consumer buys a phone on Amazon after reading reviews (search), comparing
brands (evaluation), and being swayed by a discount (purchase).

13. Consumer Behaviour Analysis; Psychological and

Sociological Influences
 Consumer Behaviour
Consumer Behaviour Analysis

 Definition: Studying how consumers make decisions to optimize marketing strategies.

 Methods:
o Surveys/Interviews: Gathering consumer preferences (e.g., Starbucks surveying coffee
tastes).
o Observation: Tracking behavior (e.g., analyzing in-store movements).
o Data Analytics: Using purchase data (e.g., Amazon’s recommendation algorithms).
 Purpose: Understand needs, segment markets, and predict trends.
 Example: Netflix analyzes viewing habits to recommend shows, boosting engagement.

Psychological Influences on Consumer Decision Making

 Motivation: Drives needs (e.g., buying organic food for health goals, per Maslow’s hierarchy).
 Perception: Shapes brand views (e.g., perceiving Apple as innovative due to sleek ads).
 Learning: Experiences guide choices (e.g., avoiding a brand after poor service).
 Attitudes/Beliefs: Influence preferences (e.g., choosing eco-friendly brands like Patagonia).
 Personality: Traits affect purchases (e.g., adventurous consumers buying travel gear).
 Example: A fitness enthusiast (motivation) perceives a brand like Under Armour as high-quality
(perception) and buys it repeatedly (learning) due to positive attitudes.

Sociological Influences on Consumer Decision Making

 Culture/Subculture: Shapes preferences (e.g., vegetarian options in India due to cultural

norms).
 Social Class: Impacts brand choice (e.g., luxury cars for upper class).
 Reference Groups: Influence decisions (e.g., friends recommending a restaurant).
 Family: Guides choices (e.g., parents choosing kid-friendly products).
 Social Roles/Status: Align purchases with roles (e.g., professionals buying formal attire).
 Example: A middle-class consumer (social class) buys a vegetarian meal kit (culture)
recommended by friends (reference group) to suit their role as a health-conscious parent
(family/role).

Notes By Abhishek Singh (MBA Business Analytics)