Key Topics and Definitions

 Consumer Market: Consists of all the individuals and households

who buy or acquire goods and services for personal consumption.
 Consumer Behavior: Consumer buyer behavior refers to the
buying behavior of final consumers – individuals and households
who buy goods and services for personal consumption.
 Factors Influencing Consumer Behavior:
o Cultural Factors:
 Culture: Refers to a set of values, ideas, and attitudes
that are accepted by a homogeneous group of people
and are shared and transmitted to the next generation.
 Subcultures: Subgroups within a larger, or national
culture with unique values, ideas, and attitudes that are
significantly different from those of the larger culture
they are part of.
 Social Class: A relatively permanent, homogeneous
division in a society into which people sharing similar
values, interests, and behavior can be grouped.
o Social Factors:
 Family: Family members can strongly influence buyer
behavior.
 Roles and Status: A person belongs to many groups—
family, clubs, organizations, online communities. The
person’s position in each group can be defined in terms
of both role and status. A role consists of the activities
people are expected to perform according to the people
around them. And each role carries a status reflecting
the general esteem given to it by.
 Reference Groups: Groups that serve as frames of
comparison or reference for individuals in their forming
attitudes or consumption patterns. Membership groups
are those that have a direct influence and to which a
person belongs; can be primary or secondary groups.
Aspirational groups are one to which the individual
wishes to belong.
o Personal Factors: Age, Life-Cycle Stage, Occupation,
Economic Circumstances, Life Style, Personality
o Psychological Factors: Motivation, Perception, Learning,
Beliefs and attitudes
  Motivation: The needs (factors) which energize, direct,
and sustain one's behavior towards a goal. The reason
underlying behavior (Maslow’s Hierarchy).
 Perception: The process by which an individual selects,
organizes, and interprets inputs to create a meaningful
picture of the world.
 Learning: Changes in an individual’s behavior arising
from experience and occurs through an interplay of:
Drives: Internal stimulus that calls for action; Stimuli:
Objects that move drive to motive; Cues: Minor stimuli
that affect response; Reinforcement: Additional
feedback on action.
 Beliefs: Conviction that an individual holds about
something.
 Attitudes: Enduring favorable or unfavorable: cognitive
evaluations, emotional feelings, action tendencies;
describes a person’s evaluations, feelings, and
tendencies toward an object or idea.

 Why People Buy: Role playing, Diversion, Self-gratification,

Learning new trends, Physical activity, Sensory stimulation
 Buying Decision Behavior: The process consumers use to buy
products and services is different for every individual and every
category of product. When consumers are considering purchasing
products, they do not necessarily go through all the buying stages.
 Buying Decision Process:
o Need Recognition: The first stage of the buying decision
process. It appears when the consumer recognizes a
perceptible and big enough difference between the actual
level of satisfaction of a certain need and the amount of
satisfaction that he longs for. The existence and the
manifestation of the need can be triggered by: internal stimuli
when one of the person’s normal needs—for example, hunger
or thirst—rises to a level high enough to become a drive. A
need can also be triggered by external stimuli. For example,
an advertisement or a discussion with a friend that need a
new car.
o Information Search/Identification of Alternatives: Once
the consumer has recognized the existence of an unsatisfied
need, the next phase of the buying decision process is
information search and the identification of alternatives. An
interested consumer may or may not undertake an
 information search related to the need. Consumers can obtain
information from: Internal source (the mental process of
researching the information stocked in the memory, actively
or passively). External sources such as personal sources
(family, friends), commercial sources (advertising,
salespeople, and packaging), public sources (mass media),
experiential sources (handling, examining, and using the
product).
o Evaluation of Alternatives: After the identification of
possible alternatives, the consumer then goes to the next
phase of the decision buying process, the mental evaluation of
the existent alternatives. It involves processing information to
arrive at brand choice. The identification of the attributes is
the first aspect of the evaluation process. The second aspect
in the evaluation of alternatives is the consumer’s beliefs and
attitudes. Through the expectancy-value model – consumer
arrives at attitudes toward various brands through an
attribute evaluation procedure.
o The Purchase Decision: In the evaluation stage, the
consumer ranks brands and purchase intentions are formed.
Generally, the consumer’s purchase decision will be to buy the
most preferred brand. But at least two factors intercede
between purchase intentions and the actual decision – The
attitudes of others and unexpected situational factors. Then
consumer decides upon his decisional behavior: buy, not buy,
postpone or replacing the product he wants with another
product.
 Types of Buying Decision Behavior:
o Complex Buying Behavior: Buying scenarios that are
characterized by high levels of consumer "involvement" in a
purchase decision; with significant amounts of perceived
differences between brands in the product category.
Involvement refers to actions the consumer must take to
understand the product or service they are motivated to buy.
Thus the consumer does whatever they can to learn about
product category, develop beliefs about the product, then
attitudes, and then make a thoughtful purchase choice.
o Dissonance-Reducing Buying Behavior: This occurs when
the consumer is highly involved but perceives little difference
between brands. The key word here is perceiving. There may
be many real differences between the different brands,
however, the buyer's beliefs about the other brands are that
there are very similar or essentially the same. Due to the fact
 that perceived brand differences are not large, buyers may
shop around to see what is available, but buy very quickly.
Post-purchase dissonance (after-sale discomfort) may occur if
they observe certain drawbacks of the purchased item or if
they receive information favorable for the brands not
purchased. However, consumers are likely to experience post-
purchase dissonance at least to some extent at every
purchase they make.
o Habitual Buying Behavior: Refers to situations where a
consumer has low involvement in a purchase, and is
perceiving very few significant differences between brands in
a given product category. Common Habitual Buying Behavior
involves cheap, frequently purchased products such as sugar,
toilet paper, salt, and black pepper. Consumer behavior does
not run through the belief attitude-behavior sequence,
consumer neither research about the brands, nor rate brand
properties nor make significant decisions about which brand
to buy; they select the brand because it is familiar. Since they
are not highly involved with the product, consumers may not
evaluate the choice even after the purchase.
o Variety-Seeking Buying Behavior: Refers to situations
where there is low consumer involvement, but the consumer
perceives significant differences between the brand options in
front of them. In variety-seeking situations, there is no real
brand loyalty as consumers tend to do a lot of brand
switching, simply for the sake of variety rather than because
of dissatisfaction. Evaluation tends to happen during
consumption of the product. Beliefs and attitudes will come
during the experience of eating them, or using them at
parties. The next time the consumer is ready to buy, they will
sometimes buy the same brand if the experience was
favorable.
 Buyer Decision Process for New Products:
o New Products: Good, service, or idea that is perceived by
customers as new to them.
o Adoption Process: The mental process an individual goes
through from first learning about an innovation to final regular
use. A decision-making process involving a period of time
during which an individual goes through a number of mental
stages before making a final decision to adopt or reject an
innovation.
o Stages in the Adoption Process:
 Awareness: At this stage, the individual becomes
aware of a new product. Details are lacking and it is a
very passive stage.
 Interest: Consumers are ready to learn more about the
new product and/or service. The individual wants more
information. They begin to wonder if the innovation can
help them. They may actively seek out new information.
 Evaluation: The individual mentally examines the
innovation using the information gathered, trying to
determine whether it will really impact their work and
how it will make their effort easier or better.
 Trial: Nothing helps a consumer make a decision about
a new product more than actually trying the product
out! The individual actually tests the innovation to see if
reality matches expectations, usually with small-scale,
experimental effort.
 Adoption/Rejection: When the consumer enters the
product adoption phase, he/she is ready to purchase
your company's product. The individual likes the
innovation and adopts it wholeheartedly. It is applied to
all areas of relevant use and the individual often
becomes a strong advocate for the innovation. All
individuals in a social system do not adopt a new idea at
the same time and thus they can be grouped differently.
o Adopter Categories:
 Innovators: Are venturesome, eager to try new ideas
and have a more cosmopolitan outlook; although they
make up a very small part of the total market. Has the
greatest degree of opinion leadership in a social system;
play a very important role. They are interested in
anything new, and are quick to adopt new and
innovative products. Innovators are willing to pay a high
price to be among the first to have this new product.
 Early Adopters: Early adopters are opinion leaders
(influencers). They pay attention to what the innovators
have discovered and find a practical use for the
innovation. They play a very important role by
influencing the attitude and changing the behavior of
the other adopters. They then communicate to their
followers the usefulness of the new product.
 Early Majority: Value shoppers; the early majority
carefully observe the early adopters, but wait to adopt
innovative products until they are sure they will get
 value from them. The early majority will only adopt a
new product if they are sure the new product will
provide usefulness to their lives - and not be a waste of
their time and money.
 Late Majority: Skeptics; the late majority wait until an
innovation has been accepted by a majority of
consumers and the price has dropped to adopt the new
product. Typically adopt innovative products because
they feel as if everyone else is doing it.
 Laggards: Traditionalists; laggards are the very last
group to adopt a new product. Laggards are content
with what they have, and they adopt new products
unenthusiastically and only because they feel as if they
have to.
o Factors Influencing Adoption or Rejection: The most
important factors influencing the rate of adoption are: The
innovation itself (perceived attributes of innovations).
 Relative Advantage: The degree to which an
innovation is perceived as being better than the idea it
supersedes in terms of (1) economic profitability, (2)
lower perceived risk, (3) savings in time and effort, (4) a
decrease in discomfort, and (5) immediacy of the
reward.
 Compatibility: As the degree to which an innovation is
perceived as consistent with the existing values, past
experience, and needs of potential adopters in terms of
socio-cultural values and beliefs, previously introduced
ideas, client needs for the new practice.
 Complexity: The degree to which an innovation is
perceived as relatively difficult to understand and use.
The meanings of some innovations are clear to potential
adopters while others are not. The more complex the
new practice, the greater will be the resistance to
innovate.
 Trialability/Divisibility: The degree to which an
innovation may be experimented with on a limited basis.
New practices that can be tried reduce the perceived
risk of the new ideas and lessen resistance.

 Post-Purchase Behavior: In this phase, the consumer analyzes

the extent to which his purchase decision was good or not. The
answer lies in the relationship between the consumer’s expectations
and the product’s perceived performance. If it meets expectations,
the consumer is satisfied; If it exceeds expectations, the consumer
is delighted. Delighted consumers engage in positive word-of-
mouth. If the product “falls short of expectations, the consumer is
disappointed and may opt for: Non-behavior response-do nothing
about it; Obtain redress directly by contacting the seller-ask for
appropriate corrective action; Exit option-stop any further purchase;
Voice option-badmouth, write to press, take to social media; Legal
option. Unhappy customers tell on average 11 other people.