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consumer behavior addis ababa university
Typology: Essays (university)
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This module introduces students to the notion of consumer behavior as an interdisciplinary science that investigates the consumption-related activities of individuals. Consumer behavior is an integral factor in the ebb and flow of all business in a consumer-oriented society. The field of consumer behavior is young, dynamic and in flux. It is constantly being cross-fertilized by perspectives from many different disciplines.
The structure of this module goes from micro to macro levels. The module begins with issues related to the individual consumer and expands its focus until it eventually considers the behaviors of large groups of people in their social settings. The topics to be covered correspond to the conceptual framework presented in the following figure.
Figure1.1 Framework of consumer behavior
The psychological core Motivation Personality Perception Learning & involvement Personal Values , Lifestyles , Psychographics and Relationships Attitude formation and change
The consumer decision making process Need recognition, Information search, Judgment and decision making Post-decision process
Consumer behavior outcomes The diffusion process, The adoption process and profile of the consumer as innovator
The decisions that we make concerning our consumption behavior affect the demand for basic raw materials, for transportation, for production, for banking; they affect the employment of workers and the deployment of resources.
The term consumer behavior describes two different kinds of consuming entities: the personal consumer and the organizational consumer. The personal consumer buys goods and services for his own use, for the use of the household, or as a gift for a friend. In each of these contexts, the products are bought for final use by individuals who are referred to as end users or ultimate consumers. The organizational consumer includes the profit and not-for-profit businesses, government agencies, local and national institutions such as schools, hospitals and prisons, all of which must buy products , equipment, and services in order to run their organizations.
According to Hoyer and MacInnis (2010), consumer behavior is the study of when, why, how, and where people do or do not buy products. It blends elements from psychology, sociology, social anthropology and economics. Consumer behavior therefore: attempts to understand the buyer decision making process, both individually and in groups. studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.
Belch and Belch define consumer behavior as 'the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires. Consumer behavior is influenced by:
demographics, psychographics (lifestyle), personality, motivation, knowledge, attitudes, beliefs, and feelings. culture, sub-culture, locality, royalty, ethnicity, family, social class, reference groups, lifestyle, and market mix factors.
According to Hoyer and MacInnis (2010), consumer behavior reflects the totality of consumers’ decisions with respect to the acquisition, consumption, and disposition of goods, services, activities, experiences, people, and ideas by decision-making units over time. This definition has some very important elements, which are described in detail and summarized in figure 1.2.
Figure 1.2 shows that consumer behavior reflects more than simply how a product is acquired by a single person at any one point in time.
Consumer Behavior Reflects: The totality about the of an by decision- over of decisions consumption offering making units time
Figure 1.2 Elements of Consumer Behavior
Whether What Why How When Where How much/ How often/ How long
Acquisition Usage Disposition
Products Services Time Ideas
Information Gatherer Influencer Decider Purchaser User
Hours Days Weeks Months Years
Marketing Strategies and Tactics
consumers' disposition behavior can have extremely important implications for marketers.
iii) Consumer Behavior Is a Dynamic Process Consumer behavior involves understanding that acquisition, consumption, and disposition can occur over time in a dynamic sequence. In other words, usage of an offering is often a logical outcome of acquisition; disposition, in turn, follows from a certain level of usage; and finally, disposition sets the stage for future acquisitions. As figure 1.2 indicates, the time period that describes this sequence could occur over a matter of hours, days, weeks, months, or even years. To illustrate the sequence, A family can use (drive) a new car after they have acquired it. Usage of the car provides information (it drives well, is reliable, impresses others, and is good for the environment) that affects when, whether, how, and why they will dispose of the car (sells, trade, or junk it). Because a family always has needs for transportation, disposition of the car will likely affect when, whether, how, and why they acquire another car in the future. Entire markets are designed around linking one consumer's disposition decision to other consumers' acquisition decisions. For example, when consumers buy used cars, they are buying cars that others have disposed of. Organizations like goodwill Industries, antique stores, and used clothing stores are all examples of businesses that link one consumer's disposition behavior with other' acquisition behavior.
iv) Consumer Behavior Can Involve Many People Consumer behavior does not necessarily reflect the action of a single individual; instead, many people could be involved in consumer behavior. In the purchase of an automobile, for example, one or more family members might take the role of information gatherer by collecting information about potential models. Others might take the role of influencer and try to affect the outcome of a decision. One or more members may take the role of purchaser, while others may take the role or user. Finally, several family members may be involved in disposal of the product.
v) Consumer Behavior Involves Many Decisions Consumer behavior involves not just understanding what consumers acquire, use, or disposes of. It also includes understanding whether, why, when, where, how, how much, how often, and how long consumers will buy, use, or dispose of an offering.
a) Whether to Acquire/Use/Dispose of an Offering? First, consumers must decide whether to acquire, use or dispose of an offering. Consumers need to decide whether to buy or save their money when they get a raise. In some cases, decisions about whether to acquire, use or dispose of an offering are related to safety concerns. For example, some consumers are concerned about whether they should buy and use cellular phones because the phones have been found to adversely affect pacemakers. Concerns about economic risk, social risk, and psychological risk may also motivate decisions about whether or not to acquire, use, or dispose of products.
b) What to Acquire/Use /Dispose of? Consumer behavior also involves decisions about what to acquire, use, or dispose of. Consumers may make choices about spending a 2000 Birr on some new celphone apparatus or on some new clothes. In other cases, choice involves decisions about brands. Marketers often conduct research to determine just what consumers want to acquire, use, or dispose of.
c) Why to Acquire/Use/Dispose of? What consumers acquire, use, or dispose of is often closely tied to why they do so, and their acquisition, usage, and disposition can occur for a number of reasons. An offering's compatibility with consumers' needs, values, and goals often affects why consumers make particular acquisition, usage, and disposition decisions. For example, some consumers have various tattoos on their body parts because they feel it is a form of self-expression. Others do it to fit into a group. Still others believe it is a form of aesthetic beauty. Marketers' knowledge of why consumers do and do not acquire, use, and dispose of an offering can provide considerable insight into marketing strategies for both improving existing products or services or introducing new ones.
g) How Much, How Often, & How Long to Acquire/Use/Dispenses of? Consumers also make decisions about how much of a good or service to acquire, use, and dispose of, how often to acquire, use or dispose of it, and how long they will spend in acquisition, usage, and disposition. We may decide to listen to music or read a good book for several hours on the weekend. Usage decisions can vary widely from person to person and even culture to culture. For example, the average Chinese consumer drinks far less coffee than Ethiopian or U.S. consumers but drinks approximately 1,500 cups of tea per year. Thus, consumers in these countries differ greatly in how much of these products they use and how often they use them.
Define the marketing concept and discuss the relationship between the study of consumer behavior and the marketing concept in adopting and implementing marketing strategies.
The philosophy that marketing strategies rely on a better knowledge of the consumer is known as the marketing concept. The marketing concept states that marketers must first define the benefits consumers seek in the marketplace and gear marketing strategies accordingly. Acceptance of this concept has provided the impetus for studying consumer behavior in the marketing context. Understanding of consumer behavior influences marketing strategies. A product must be positioned to deliver a set of benefits to a defined segment of consumers. Advertising goals are to communicate symbols and images that show how the brand delivers these benefits, to create a favourable attitude toward the brand, and to induce trial. Advertising is also intended to reinforce the consumers’ choice to influence them to repurchase.
Activity 1.
Commentary
The model of consumer behavior exhibited in figure 1.3 addresses two key questions: how do consumers make decisions about acquisition, usage, and disposition of an offering and what factors influence these decisions? As shown in figure 1.3, consumer behavior encompasses four domains: i) the psychological core ii) the process of making decisions iii) the consumer's culture and iv) consumer behavior outcomes.
i) The Psychological Core: Internal Consumer Processes The psychological core represents important stages of information processing which serve as inputs to the decision-making process. In other words, before consumers can make decisions, they must have some source of knowledge of information up on which their decisions can be based. The psychological core involves four major elements.
Exposure, Attention, and Perception: In everyday life, consumers are constantly exposed to many different types of information, including advertising and word-of- mouth communication. Categorizing and Comprehending Information: Consumers use the information that they perceive and attend to in order to make categorization judgments and to comprehend the information to which they are exposed. Forming and Changing attitudes: Based on the information they perceive, attend to, categorize, and comprehend, consumers may form attitudes (or enduring evaluations) about various options. One of the reasons why our attitudes may not completely predict our behavior is that we may not remember the information we have been exposed to when we later makes a decision.
Problem Recognition and Search for Information: Consumers begin the process by engaging in some form of problem recognition and information search. For example, Maya needed a vacation and searched for information to have an insight into where she might go, how much it might cost, and when the best travel times might be. She also examined her financial situation. Elements of the psychological core are invoked in problem recognition and search because once Maya realized that she needs a vacation and begins her information search, she exposes herself to information, attends to and perceives it, categorizes and comprehends it, and forms attitude and memories. Making Judgments and Decisions: Based on the information they gather consumers decide what to buy, where to buy, how to buy, and when to buy. Consumers' decision can be characterized as a high-effort judgment and decision-making process where consumer are willing to exert a lot of mental and emotional energy and time in making decision (i.e., motivation, ability, and opportunity to process information are high). Where consumers lack the will to exert high mental and emotional energy the decision making process is characterized by low effort judgment. Making Post-Decision Evaluations: Where consumers’ decisions help to solve their problem, they will feel satisfied. Where consumers get disappointed with their last purchasing decisions they develop a psychological state known as cognitive dissonance.
iii) The Consumer's Culture: External Processes Culture is broadly defined as the myriad groups and social systems to which an individual belongs that bear on the values and beliefs they hold and the symbols they use to communicate group membership. Culture refers to the lens through which all phenomena are seen. Consumers have certain feelings, perceptions, and attitudes because of the unique combination of groups one belongs to. External processes involve the following elements. Regional, ethnic, and religious influences Social class influences
Age, gender, and household differences Reference groups and social influence Psychographics: Values, personality and lifestyle
iv) Outcomes of Consumer Behavior As figure 1.3 indicates, factors associated with the psychological core and the culture can also influence consumer behavior out comes, such as: a) Symbolic consumer behavior: Consumer behavior can symbolize who we are. The groups to which we belong and our own sense of self can affect the symbols we use to express our identity. For example, jewelry such as engagement rings has obvious symbolic meaning. b) The diffusion of consumer behaviors through a market: Consumers often engage themselves in word-of-mouth communication disseminating information about their positive and negative experiences related to their acquisition, consumption, or use of a product. The dissemination of information can have both positive and negative effects for marketers.
The study of consumer behavior is important to at least four key constituents: i) Marketing managers, ii) Ethicists, iii) Public policy makers and regulators, and iv) Consumers.
i) Importance to Marketing Managers The study of consumer behavior provides critical information to marketing managers in developing marketing strategies and tactics. To effectively market a product or service, marketing managers must clearly understand consumers' needs and wants. The study of consumer behavior thus provides strategic information about what consumers need and want and how marketing programs should be designed to precipitate an exchange. Understanding consumer behavior helps marketing managers to make critical decisions in the following areas:
Third, understanding consumer behavior also helps marketers know when products must be modified or tailored to meet the needs of new groups. Fourth, knowledge of consumer behavior aids in the development of new product or services. By recognizing needs or wants that are not currently being fulfilled, new product ideas can be identified. Finally, an understanding of consumer behavior aids in decisions about other aspects of the product such as the brand name, package, logo, and aspects of the extended product like warranties and guarantees. e) Pricing decisions: The price of a product or service is one of the most important variables influencing consumer decision making. It is very important for marketers to understand how consumers react to pricing decisions. Consumers' reactions to prices often vary and are complex in nature. In some cases, consumers are very price sensitive, whereas in other cases they are not. Moreover, although simple economic theory would suggest that a decrease in price will lead to a higher likelihood of purchase, research on consumer behavior has shown that the relationship is not always so simple. If the price of an item becomes too low, consumers can become suspicious of the product's quality (higher price means higher quality). For fashion or prestige good in particular, a high price symbolizes status. Thus, an understanding of consumer behavior is needed to predict how pricing strategies will affect purchase and sales. f) Distribution decisions: Another important marketing decision involves the manner in which products or services are distributed. Consumer research has clearly shown that different distribution alternatives have different images and that these images will affect consumers' perceptions of the offering. Consumer behavior also helps us understand patterns of shopping behavior (who goes to what store and why). Knowledge of consumer behavior can also help marketers design retail or other distribution environments with the most appropriate type of colors, aisle space music etc. g) Promotion decisions: Marketing decision making also involves the use of a variety of promotional tools, such as advertising, sales promotions (premiums, contests, sweepstakes, free samples, commons, and rebates), personal selling, and
public relations. Consumer behavior helps marketers to design promotional tools to influence consumers' acquisition, consumption, or disposition decisions and behaviors. Promotions can affect consumer decisions by revealing that the offering fulfills a consumer need. Promotion can also affect decision making by affecting aspects of the psychological core identified in figure 1.3. Promotions can also be designed to influence consumers' attitudes. Promotions can be used to influence consumers' memories for brand names, product attributes, and companies. Repeating advertising message frequently and using catchy brand names are additional ways of enhancing consumer memory.
Putting brand names in prominent places can also reinforce brand name memory. Marketers can also use promotions to set consumers' expectations and in this way influence consumers' post-decision satisfaction judgments. Marketers can actually create dissatisfaction if they set expectations that the offering does not meet. Finally, knowledge of the consumer as a member of a culture helps marketers design promotions. Color, language, body language, and the like have different meaning in different cultures. Their use in advertising, sales promotions, and personal selling efforts can therefore evoke different reactions and interpretations form different consumers.
ii) Importance to Ethicists and Advocacy Groups The behavior of marketers with respect to consumers sometimes raises important ethical issues. Doctors, for example, are very important opinion leaders who influence patients' use of medications. Drug companies therefore try very hard to get doctors to prescribe certain drugs for appropriate patients. In their marketing activities, drug companies often give doctors gifts. Some ethicists are concerned that some of these practices lean toward bribes. Consumers who are concerned about the ethical practices of marketers sometimes form advocacy groups; these groups are designed to create public awareness of potentially unethical or socially inappropriate marketing practices. They may also engage in consumer resistance strategies like boycotts.
