An Introduction to Consumer Behaviour

This introduction to consumer behaviour will provide the background information necessary for the study of consumer behaviour, with regard to its nature, definition, development, consumer decision making processes, research methods, market segmentation and relationship marketing. Through this it will explore the characteristics of consumer behaviour and the major concepts in the study of consumer behaviour. In an ever- changing environment, the study of consumer behaviour will adapt and change, however this paper aims to provide an overview that may be considered the timeless history in theories about consumer behaviour. Changing technologies means that new forms of consumer behaviour studies are undertaken, and as Schiffman & Kanuk state ‘…new ways of selling products and services became available to consumers during the past 15 years and are the result of digital technologies…and they exist today because they reflect an understand of consumer needs and consumer behaviour’. (Schiffman & Kanuk, 2008) This paper aims to expand on that point, and display examples of how consumer behaviour studies are undertaken in the 21st century. Defining Consumer Behavior

Consumer Behavior can be described as ‘The behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products, services and ideas’ (Schiffman & Kanuk, 2008) They go on to state that it is best described as ‘what people buy, why they buy, when they buy, where they buy, how often they buy, how often they use it, how they evaluate it after purchase and how they dispose of it.’ (Ibid) It includes the study of the decision making process that people go through when deciding whether to consider a product, service or idea. In addition, it involves the marketer, or the person behind the study of consumer behaviour, who may use these studies to encourage the sales of goods, services or ideas. Moneesha Pachauri, of Nottingham University Business School states in ‘The Marketing Review, 2002’ that ‘simple observation provides limited insight into the complex nature of consumer choice and researchers have increasingly sought the more sophisticated concepts and methods of investigation provided by behavioral sciences in order to understand, predict, and possibly control consumer behaviour more effectively.’

This statement can be married to the idea of the marketing concept, which often goes hand in hand with consumer behaviour. When considering consumer behaviour, one must acknowledge the two types of general consumer that exist. The personal consumer is buying for his/ her own uses. This may be extended into household use or gifts. Contrary to this, the Organisational Consumer consists of companies, charities, government agencies and institutions that but products in order to run their organisations. The style of consumer behaviour for each of these differs, but for the purpose of this paper, we will examine the personal consumer. The consumer goes through processes which allow the act of consumption to be evaluated from the point of problem recognition to the post purchase actions. These may be described through the consumer decision making process. CONSUMER DECISION MAKING PROCESS

The process that a consumer goes through when deciding what or whether to consumer. This lies beneath the act of making a purchase, and may be attributed to the psychological core of the person. The process includes seven steps which consumers go through before making a purchase. Step one may be described as ‘problem recognition’. As the main starting factor of the decision making process, it requires in depth analysis and research. Problem recognition conjures the idea that problems only exist when we recognize them. Hoyer and MacInnis describe the problem recognition stage as ‘the perceived difference between an ideal and an actual state.’ (Hoyer & MacInnis, 2008). The ideal state in this context refers to the way the consumer wishes things were. An example of this may be the wish for a nice house or car. In comparison to this, the actual state refers to how life really is, or how the consumer views it.

Examples would then be ‘this house is too old’ or ‘my car is not fast enough’. It is the recognition of the actual state and ideal state that leads a consumer to the stage of problem recognition. It is within the problem recognition stage that the psychological problem solving variants are considered. These include Extended, Routine and Limited problem solving, and the level of commitment contributing to each may or may not lead to purchase. In addition, psychological and functional needs may be defined within this process. As a psychological need the consumer feels personal gratification associated with a product or service. Conversely, the functional needs refer to the performance of said product or service.

Stage two of the consumer decision making process is referred to as the ‘Internal Search’. This stage require the consumer to delve into their memory, and search for answers in the long term memory. This may lead to a recollection of advertisements or uses in progress that the consumer has acknowledged and stored. The external search follows this in the outside search for information. Communicating with others for advice and their internal knowledge furthers the consumers desire to purchase. The evaluation process then allows you to take these things you have learned and form an attitude or opinion on it. The creation of either a positive or negative opinion will then lead you to intention. The ‘say-do dichotomy’ of the situation is examined during this stage, as the consumer has made a decision in their head about whether or not they will fulfill purchase. It is not the act of purchasing, but the psychological acceptance of the product service or idea. The sixth step of purchase is the act itself. In ireland, this stage is ever changing, as new technologies allow online purchasing and factors such as ergonomics of a shop no longer effect the decision making process.

However, shops such as IKEA show that this purchase decision has physically effected the business, even down to shop layout. The final stage involves cognitive dissonance. It is the post purchase evaluation of your product or service. This allows the consumer to feel satisfaction or remorse in their purchase, and will lead to an increased knowledge for further purchases. By evaluating these seven steps in the consumer decision making process, marketers may conjure ways to manipulate consumers by appealing to their decision making process. Philip Kotler’s ‘Behavioral Models for Analyzing Buyers’ contains a figure that allows us to examine the process of pre to post purchase analysis, using a study of how the inputs of buying influences, and the channels of obtaining information may lead to purchasing responses. This may also be referred to the ‘black box model’ as it explores the buyer’s mind. (Kotler, 1965) When researching an introduction to consumer behaviour, it is important to first consider the consumer. Through the decision making process and the ‘black box’ model, we have examined some of the psychological processes consumers go through when purchasing. In addition to this, there are 7 keys to consumer behaviour. These are a way for marketers to understand the best possible ways they can influence consumers and to understand their preferences and behaviours.

7 KEYS TO CONSUMER BEHAVIOUR
M- MOTIVATION
(Functional) The products performance proves a reason for the customer to decide to buy it. (Self Expressive) The consumer’s behaviour is judged by their need to express their feelings and desires, They want to show something about themselves as an individual. Examples of this may be the Apple vs. PC debate. Apple users feel that owning a Mac says something about them as an individual. (Mix of Motivation) Consumers buy a product for multiple reasons- appearance, performance and the image it gives the owner all come together. An example of this might be the purchasing of a car. The consumer might search for something reliable, spacious, and good looking. A- ACTIVITIES

This includes cognitive actions such as thinking about the product, visualization, observations and studying. These also include physical activities, or doing the action. These would include speaking to a salesperson, trying on a jacket, taking a car for a test drive, and paying for something. The final factor would be how the consumer uses the product. This would include either positive or negative experiences. P- PROCESS

These can be related back to the activities a person goes through. It is the pre-purchase, purchase, and post-purchase stage of the consumer’s relationship with the product. (Pre-purchase) From the consumer’s view this would include, how does the consumer decide that they need the product? Where can the consumer learn about alternative options? The marketer’s view during this process would question how the consumers attitudes or opinions of the product are formed or changed? How do consumers decide whether a product is superior to another or not. An example in this economic climate would be Lidl and Aldi’s use of advertising. They are aware that consumer’s do not want to pay more for similar products, so the use of an advertisement comparing the two products by standard and pricing allows consumer’s to believe they are receiving the same quality at a lower price. (Purchase Activities)

During this stage the consumer is going through the process of either a pleasant or stressful experience with the product. Customer service standards and ergonomics once again come into play when consumer’s consider the emotional attachment. As Tim Manners states in ‘The Empowered Shopper’, ‘They [the consumer] may also find inspiration in the form of product usage ideas, promotional offers, or other products or brands that they had not considered earlier. A positive shopping experience will reinforce the consumer’s commitment to both the brand and the retailer. (Post-Purchase Activities) From the consumer’s perspective, this stage questions whether the product provides pleasure. Does it do the job it was intended to do, and how will the consumer dispose of the product? Each phase links to either the strengthening or weakening of the brand in the consumer’s mind, and therefore marketer’s ensure that a positive reaction is fulfilled. T- TIMING

Timing examines how long the decision making process takes place, and the number of activities involved in making the decision. R- ROLES
When a consumer is purchasing a product or service, they are playing different psychological roles. These may include roles ‘as shopper, as chooser, as communicator, as character explorer, as pleasure seeker, as rebel, as victim, as activist, and as citizen.’ (Thomas, 1997) Solomon et al describe in their book, Consumer Behaviour: A European Perspective, that ‘since people act out many different roles, they may modify their consumption decisions according to the particular ‘play’ they are in at the time. (Solomon et al, 2010) Slide 9 in Appendix 1 contains more information on these roles. I- INFLUENCES

Influences can be described as things that persuade the consumer to consider a product or service in a particular light. Three types of influences that may occur are external influences, internal processes (including consumer decision making) and post- decision processes. (Noel, 2009) Examples of internal influences would include the consumer’s lifestyle, class, music styles, sub-culture, family, or the type of media they consume. External influences would be recognized as values, culture and the people that surround them. Noel goes on to state,

‘External influences, such as a consumer’s culture, have a direct impact on their internal, psychological processes and other factors that lead to different consumer decisions being made. For instance, a consumer’s religion could impact on their attitudes towards eating beef or other types of meat; or their age could impact on their ability to perceive fast-moving objects in certain television commercials.’ (Noel, 2009)

P- PEOPLE
The world of consumers, similar to the world in general, is made up of many different types of people. Theorists such as Jung and Durkheim discuss the idea of a collective consciousness, and how the media is creating a set of shared beliefs within society. When considering the ‘people’ in consumer behaviour, it would be considered a marketer’s dream for a ‘one size fits all’ package to consumers. However, tools such as market segmentation show us that consumers come in different shapes and sizes, and therefore must be studied and grouped according to their similar interests.

MARKET SEGMENTATION
Continuing to examine the consumers themselves, market segmentation is a tool used by marketers to establish who their consumers are, based on similar characteristics in their external and internal influences. An example of this in use would be the advertisements shown on the side of your Facebook page. They are aimed at you specifically based on your gender, age, birthday, location, ‘likes’ and interests, relationship status, language, education, workplace, connections and even friends of connections. (Dunnay, Krueger & Elad, 2010) In the 3rd edition of Solomon et al’s Consumer Behaviour: A European Perspective, they supply a chart describing market segmentation under the headings of ‘category’ and ‘variable’. (Solomon et al, 2006)

Schiffman, Hansen and Kanuk describe marketing segmentation in relation to the marketing concept in their book ‘Consumer Behaviour: A European Outlook’. They state that the marketing concept has been split into several alternative approaches, referred to ‘the production concept, the product concept and the selling concept. The three major strategic tools of marketing are market segmentation, targeting and positioning’. (Schiffman et al, 2008) This shows the importance of the relationship between consumers and marketers, as marketers continue to research consumer behaviour using these strategies. CONSUMER RESEARCH

Similar to marketing research, consumer research exists within two paradigms, the qualitative and the quantitative. Consumer Research contains a six step process. Define the objectives of the research

Collecting and evaluating secondary data
Designing a primary research study
Collecting primary data
Analyzing the data
Preparing a report on the findings.
(Rifatbabu, 2010)
The two most essential approaches to consumer research are positivism and interpretivism. In a positivism approach, the researcher regards the consumer behaviour discipline as an applied marketing science. (Ibid) This form of research is quantitative, and predictions are made about the actions the consumer will take. Contrary to this, the post modern interpretivist view looks more into the consumption of goods, rather than just the buying of goods. Once again the external and internal influences, and the consumer decision making process comes into both of these approaches. The chart below shows the contrast between the positivist and interpretivist approach. (Rifabatu, 2010)

KOTLER’S 5 KEY THEORISTS
In the 29th edition of the Journal of Marketing, theorist Philip Kotler presented the idea that the study of consumer behaviour may be described in five ways, according to the 5 key theorists. Each theorist took a different view on consumer behaviour studies, including the economic, learning, psychological, social and the personal organisational consumer. The theorists included in these schools of thought are Alfred Marshall, Ivan Pavlov, Sigmund Freud, Thorstein Veblen and Thomas Hobbs respectively. A line from each, describing their school of thought, may summarize their theory individually. Marshallian Model – According to this theory ‘the consumers are assumed to be rational and conscious about economic calculations. They follow the law of marginal utility. An individual buyer seeks to spend his money on such goods which give maximum satisfaction (utility) according to his interests and at relative cost.’ (MBA-Marketing, 2008)

Pavlovian Model- ‘Learning is an associative process that contains four central concepts: drive, cue, response, and reinforcement’ (Michman et al, 2003) This model is often associated with Pavlov’s experiment in training a dog to eat at the sound of a whistle.

Freudian Model- This model is based on Freud’s theories of the Id, Ego and Superego. The model suggests that the Id would drive consumers to desire products, emphasizing the subconscious motivations for consuming.

Veblenian Model- Suggests that consumers are effected by their social influences. Michman states ‘…the impact of present group memberships and aspired group memberships is stressed…conspicuous consumption operates in the purchase…’ (Michman et al, 2003)

Hobbesian Model- Hobbs suggests that the organisational consumer is also a personal consumer. ‘The buyer has private aims, and yet he tries to do a satisfactory job for his corporation.’ (Karp, 1974)

Relationship Marketing
“Mass advertising can help build brands, but authenticity is what makes them last. If people believe they share values with a company, they will stay loyal to the brand.” (Schultz, 2012)

The quote above, from Howard Schultz’s book ‘Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time’, can teach marketers that there is more to the study of consumer behaviour than simply selling. As a consumer, they want a connection with their purchase, and companies may chose to acknowledge and supply this connection through relationship marketing. Palmatier tells us that the definition of marketing itself had been updated by the American Marketing Association in 2004. Marketing is now defined as ‘an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders’. (Palmatier, 2008) As you may see, an emphasis has been added to the management of customer relationships, and this is no surprise as innovation in the past 20 years has changed the role of marketing drastically.

Relationship marketing allows for the maintenance of a strong relationship between business and consumer. It also works as traditional marketing does, by attracting new consumers into their market. This may be achieved in many ways, such as gift cards, loyalty cards or charity competitions. An example of the success could be the Supervalu chain in Ireland. The loyalty card allows consumers to gain points, and provides discount holidays upon a certain number of points. This assures Supervalu customers that they are receiving more than just good service and affordable shopping, and allows them to feel like a part of the Supervalu community.

Another use for the customer loyalty card is the use of database marketing. These databases allow marketers to examine which products are selling, and shows the customers personal preference of product. In return for the customers participation, they receive direct marketing that is significant to them. For example, Tesco Club card users receive monthly coupons on items they have frequently bought. As discussed earlier, Facebook advertising and Youtube advertising appeal directly to the consumer, as they examine their interests and taste and advertise products they might be interested in.

In a technological age, the use of social networking has changed the world of marketing. The use of Facebook and Twitter are common among large and small companies, as they may share the page among friends, or hold competitions to involve the consumer. The diagram below shows the relevant number of social features that sites use. It is a strong representation of the changing times in marketing, and allows us to examine how some Irish companies are using social features on their e-commerce site.

Diagram: (O’Toole, 2011)

The study of consumer behaviour extends into many more detailed fields, however, this paper has aimed to explore the introductory points necessary for the knowledge of consumer behaviour. The relationship between consumer and marketer continues to be examined, and new methods of research will continue to be formed. In an innovative age, the world of consumer behaviour is progressively leaning towards the addition of the internet, including social networking and e-commerce. Marketers will continue to use ethical forms of advertising to create popular culture, leading to successful business.

REFERENCES

Dunay, P. Krueger, R. Elad, J. (2011) Facebook Advertising for Dummies. Wiley Publishing, Inc. New Jersey. Icmrindia (no author/ year) Consumers Behavior. Accessed from:
http://www.icmrindia.org/courseware/Consumer%20Behavior/CBC06.htmRetrieved: February, 2013 Karp, R. (1974) Issues in Marketing. p.64. Ardent Media

Kaur, R. (2012) Unit 1- Consumer Behaviour and Marketing Action. Accessed From: http://www.slideshare.net/tamana2223/7008203-consumerbehaviourRetrieved: February, 2013 Kotler, P. (1965) Behavioral Models for Analyzing Buyers. Journal of marketing, Vol. 29 pgs. 37-45 Michman, R. Mazze, E. Greco, A. (2003) Lifestyle Marketing: Reaching the New American Consumer. Greenwood Publishing Group. MBA-Marketing (2008) Consumer Behaviour: Lesson 5, Consumer Behaviour Models.Accessed From: http://www.scribd.com/doc/7008203/57/ECONOMIC-OR-MARSHALLIAN-MODEL Retrieved: February, 2013 Noel, H. (2009) Basics Marketing 01: Consumer Behaviour. AVA Publishing O’Toole, A. (2011) How sociable is Irish E-Commerce?

Rifatbabu (2010) Consumer Research. Accessed From: http://www.slideshare.net/rifatbabu/consumer-resarchRetrieved: February, 2013 Schiffman, L. Hansen, H. Kanuk, L. (2008) Consumer Behaviour: A European Outlook. 9th Ed. Pearson Education. Solomon, M. Bamossy, G. Hogg. M.K. (2006) Consumer Behaviour: A European Perspective. 3rd Ed. Prentice Hall. England. Solomon, M. Bamossy, G. Askegaard, S. (2010) Consumer Behaviour: A European Perspective. 4th Ed. Pearson Education. Thomas, M. J. (1997) Consumer Market Research: Does it have validity? MCB University Press.