Lifestyle refers to a person`s way of living and spending pattern. Lifestyle of a person is determined on the basis of his past experiences, innate characteristics and current situations.

Lifestyle segmentation is based on the activities, opinions and interests of groups. Marketers try to establish a relationship between the products offered and different lifestyle groups to effectively segment and target the market. This is done by finding out the activities, interests and opinions of the people.

Lifestyle Segmentation of consumers is influenced by various factors like:

• Cognition – The thought processes which run in the minds of Consumers
• Emotion – The desire to buy a product or service
• Conation – The real behaviour of the consumers with respect to defining their needs and purchase decisions

Cognition, Emotion and Conation are supported by the feelings that are aroused due to the environmental and societal factors. All the above decide the consumer`s behavior, which as a result decides market and business performance.

Key characteristics of Lifestyle Segmentation

• Lifestyle is an individualistic terminology that is applicable to a single consumer. However when the lifestyle of individuals makes an impact on the others in the society a group is formed. When the market is segmented, the preferences of this group influences the decision making process in a holistic manner.
• Lifestyle of a person exhibits consistency in approach and behaviour. For instance, if a consumer is brand conscious, he or she may choose to go in for the brand again and again. It is for sure that he will not shift to any other brand or go in for unbranded choices. This is applicable to all aspects of preferences including accessories and food. Grouping people with such approach creates a segment of consumers who are highly quality conscious.
• Lifestyle applies to the individual areas of interest of a person. During the segmentation process, this individual area of interest is taken in to consideration as one of the major aspect. For instance, a group of people who consider education and knowledge enhancement as their life goals will consider all products and services related to the same. People who love leisure activities would prefer to align with areas that offer the same. Grouping people based on such interests that add value to their core belief system creates a set of consumers who opt for services and products related to these aspects.
• Wealth creation opportunities and aspirations pertaining to wealth accumulation act as one of the major factors when deciding one’s lifestyle. When such people who are rich are grouped together, the segment displays similar characteristics, though the scenario and interests might have been in total contrast before becoming rich.

Value and Lifestyle Segmentation (VALS)

Many internal and external factors that act as the basis of consumers’ value system become influential factors when it comes to segmenting consumers into various groups. These factors are basically divided in to two kinds,

Factors externally oriented

• Financially downtrodden (survival is the drive)
• Illiterates (sustenance is the drive)
• Popularity of products that change from time to time (impulsive purchase decisions)
• Conservatism leading to conventional purchase decisions (unexperimental in nature)
• Showing off status (to impress others)
• Brand consciousness (quality conscious)
• Hedonism making people go in for good life (Brand conscious)

Factors internally oriented

• Motivation to purchase (Lack of knowledge)
• Brand name attraction (Impulsive purchase decision)
• Yearnings and longing (Pushed by desires)
• Expects value for the money paid (Very cautious about label contents)
• Highly matured (makes purchases decisions in a knowledgeable manner considering all facts including necessity)

Value and lifestyle segmentation (VALS) was developed by Arnold Mitchell in 1978, who classified American adults into nine segments on the basis of their lifestyle. The VALS Model divides consumers into four major groups and further breaks up that group into 9 segments. The four major groups are:

• Need driven – Poor and uneducated people
• Outer directed – Middle or upper class people whose lifestyle is directed by external factors
• Inner driven – People who are motivated by inner needs and their lifestyle is directed by inner factors
• Integrated – They are matured consumers whose lifestyle is directed by a combination of internal and external factors

These were further classified into:

Survivors – People whose purchase decisions are influenced by the cost of the products that are in their needs list. They are poor, uneducated and depressed and usually by economical products.

Sustainers – Aspirants who want to rid themselves from the clutches of Poverty. This drives them to go in for brands just to satisfy their aspiration.

Belongers – As the name suggests this type of consumers stick or belong to particular types of brands exhibiting loyalty of high levels. They tend to be highly conservative and refuse to experiment with buying new brands that are not in their usual list.

Emulators – These are set of consumers who are very conscious about their status levels. Their purchase decisions are mostly not based on their requirements and desires. They buy products as a status symbol to impress others.

Achievers – This set of people are leaders who live a high quality life. Their purchases target reflecting quality and their desire to enjoy life to its fullest.

Self oriented – Young people who are highly self-oriented in approach fall in this group. They are not influenced by external factors but tend to go in with what their desires are which usually change very frequently

Experimentalist – These are people who focus more on their inner needs than outwardly purchases. Their purchase decisions are focussed more to satisfy their elevated inner aspirations

Society oriented – This is the group of people who think of improving the society as a whole. Pushed by this inner feeling, they tend to go in for products that are genuine and unharmful to the society. They are the ones who read the instructions and ingredients printed on Product labels before making the real purchase

Integrated – This set of people have a balance approach towards their purchases which are generally made taking into consideration their inner and outer aspects. Such people are considered as highly matured consumers.

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Attitude in consumer behaviour refers to a way of thinking or behaviour of a person towards a product or service which is developed through his/her past purchase experiences, use, knowledge, beliefs etc.

A person can have a positive or a negative attitude towards a product or service. For e.g. Elders usually have a negative attitude towards fast food as they consider it unhealthy, but youngsters have a positive attitude towards fast food as it is easy to eat, while middle-aged people may be indifferent towards fast food. Hence,

• Attitude is the mental aspect of humans which decide the likes and dislikes of human beings.
• It makes a consumer go in for a brand or banish the same from their purchase preferences.
• It impacts purchase decision as well as the post purchase experience of consumers.
• Attitude of consumers towards brands make them select between one of the same when given a choice.

Models of Attitude

Attitude plays a prominent role in influencing consumer behaviour and can be understood by two models – 

• The Tricomponent Attitude Model
• The Multi attributes Models

(1) The Tricomponent Attitude Model is based on three elements that help a consumer to evaluate a product. They are:

• Affective Element – Feelings and emotions about a product or service
• Cognitive Element – Knowledge and belief about the product or service
• Conative or Behavioral Element – Actions and behaviour towards the product or service

This Model is based on different types of hierarchy that fall under four categories as follows –

• Experiential Hierarchy
• Low Involvement Hierarchy
• Standard Learning Hierarchy
• High Involvement Hierarchy

The holistic manner in which the Tricomponent Model approaches the attitudinal aspect to that of consumer behaviour makes it a highly dependable one.

(2) The Multi Attributes Model substantiates the interest of the consumers on a specific object and likes and dislikes of consumers towards a product or a brand. This model is divided in to two types namely –

• Attitude towards the Behaviour Model
• Attitude towards the Object Model

Attitude towards Object Model – ATO Model

While Attitude towards Behaviour Model focuses on the changing Behaviour of consumers, Attitude towards Object Model focuses on the object related aspects of purchase.

• The ATO Model measures the likes and dislikes of consumers with the help of Fishbein Model.
• According to this model, consumers choose products and brands based on comparative analysis of various product or brand attributes. Consumers go in for products based on many attributes like options of accessories available along with the product, product performance, durability of the product and reliability aspects of the same.
• The ATO Model clearly states that the expectations of customers vary based on the products and services consumers go in for. The process of ATO model remains constant even when the attributes undergo changes
• This model substantiates that in order to choose the best product among the various choices available, Consumers shortlist all the attributes they expect from the product. They rate the feature or weight the required features of the product on a comparative scale. Finally they go in for the product that gets the maximum rating.

Key benefits of ATO Model

• ATO Model is highly rational and useful model
• The model gives well defined steps to select a product, evaluate different products and their attributes and make a good purchase decision
• It gives consumers the choice to experiment with new brands and product they have not used till now
• It allows consumers to rate or weight all possible options available in front of them and conduct a comparative analysis of various products or brands
• Consumers get the best value for their money when the ATO Model is practiced
• ATO Model helps consumers to make well informed and thoughtful purchase decisions 

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Inner psychological characteristics are specific qualities, attitudes, mannerism that differentiates one person from another. The behavior of Consumers gets influenced by many factors internal and external. Personality is the inner factor that influences an individual`s product choice and brand choice.

People generally choose the products that match their personality. Hence, marketers must associate a product or broad with different personality traits to develop an effective marketing strategy for a type of personality. Personality of a person may change gradually from time to time due to learning, personal experiences or major life events.

Characteristics of Personality

• Personality is more of an internal factor
• It gets reflected in the pattern of response in humans
• It is a collection of mannerisms, attributes and factors which are unique to every human being
• It is associated with the psychological factors related to the human
• Conglomeration of many traits makes a personality
• Personality is a highly integrated structure which gets formed due to the rounded effort of all factors concerned
• Personality serves its needs all by itself without much dependence on external factors
• The individualistic characteristics of personality is what differentiates one human being from the other
• Personality expresses itself in the form of behaviour by being overt
• Personality once established remains the same exhibiting high levels of consistency

Approaches to Personality

Many approaches have been adapted by researchers to study the personality of an individual. They are:

(1) Psycho-graphic Approach

Psychographic Approach takes a different pathway for inferring traits of each personality than other approaches. While the other approaches use Personality traits to understand the reasons behind behaviours, Psychographic approach studies the tendencies of individual behaviours to arrive at Personality traits.

(2) Typology Approach

Typology approach tends to group people who are of similar personality types. Studies based on this approach take up to understanding each personality type in an in depth manner by focussing on each of them individually.

(3) Psychoanalytic Approach

Psychoanalytic Approach relies upon Psychoanalysis which is an in depth study into the situations, events and processes that has determined the personality factors. Known also as Freudian Psychology, Psychographic Approach tends to make people understand the factors that have shaped their personality type. This helps individuals cope up with their life events in a more efficient manner.

(4)Trait & Factor Approach

The Trait and Factor Approach tends to analyze each and every factor associated with personalities. All such factors that make up a rounded personality are then arrived at by categorizing the same in an individual manner.

Personality Theories

Based on the above approaches, many personality theories have been formulated like:

• Freudian Theory or Psychoanalytic Theory
• Trait Theory
• Non-Freudian or Socio-psychological Theory

(1) Freudian Theory or Psychoanalytic Theory

Most studies related to Personality takes Freudian Theory as their basis. They work on three factors which act as the basis for all behaviors triggered by psychology.

First is the ID which relates to the desires of human beings triggered by the unconscious aspect of human mind. This includes the intuitions that people get in frequent intervals. ID asks for immediate satisfaction and works based on the principle closely related to Hedonism (pursuit of pleasure; sensual self-indulgence). Satisfaction of pleasures matters the most to ID. Relating ID to consumer behaviour in a typical purchase context, the unsatisfied desires of consumers which are more of fantasies creates frustration in their minds. It tends to make consumers handle issues in a subjective manner rather than with objectivity

Second is the Ego which is nothing but the fully conscious self image. This is a highly practical aspect that works with ID as its basics. Behaviors that appear more impulsive tend to get controlled by Ego. Ego is that aspect of mind which seeks to experience pleasure that is desired by the ID aspect of the same. Ego being a realistic one, in a typical consumer context, it tends to control the impulsive behaviours of consumers. It does not get frustrated by dreams and fantasies and enjoys the same from a pleasure experiencing angle. 

Third is the Superego which is that portion of mind that controls the behavior of human beings. This is the aspect of mind that helps people seek perfection in all that they do. It sets moral and discipline codes which in turn control the aggressive behaviour in human beings. A typical consumer who works from a Super Ego angle tends to be highly matured in all their purchase related decisions.

Freud advocates that a proper balance in all the three above given aspects makes a person become rounded personality. A consumer who has a balanced ID, Ego and Super Ego exhibits a balanced approach in all their decision pertaining to purchase of products.

(2) Trait Theory

According to Trait Theory, traits are considered as the basic factors which decide the response of people. This response is nothing but the behaviour of people to given situations. A trait is a predisposition to behave in a particular way to a particular situation.

Traits have been divided into 16 major categories by Cattell they are:

1. Tensed (versus) Relaxed
2. Outgoing (versus) Reserved
3. Controlled (versus) Undisciplined
4. Bright (versus) Dull
5. Self Sufficient (versus) Group Dependent
6. Aggressive (versus) Docile
7. Experimenting (versus) Conservative
8. Happy Go Lucky (versus) Serious
9. Self Respective (versus) Self Assured
10. Stable (versus) Unstable
11. Polished (versus) Unpretentious
12. Conservative (versus) Expedient
13. Imaginative (versus) Practical
14. Uninhibited (versus) Shy
15. Suspicious (versus) Trusting
16. Tender Minded (versus) Tough Minded

According to Traits Theory, traits can be acquired at an early age through learning or may be inherited in a person. Traits that define the personality of humans are highly stable in nature. Many traits are found in general amidst the common people. However, the exact depth of a trait in individuals will vary based on many factors and can be measured using rating scales, questionnaires, etc.

(3) Non-Freudian or Socio-psychological Theory

Socio-Psychological Theory is also called as Non-Freudian Theory. It is based purely on relationships which are considered as the reason for the development of different types of Personalities. Based on this consideration the behaviour of consumers has been divided in to three types. The three types of consumer behaviors have been grouped into one and termed as CAD. Under this model, individuals have been classified as:

• Compliant
• Aggressive
• Detached

(1) Compliant Individuals are the ones who are compassionate about being loved by others. They relish care and attention given by others. They are highly compliant in all their activities and can be termed as Conformists.

(2) Aggressive Individuals are those who act against the intention of others. They are highly manipulative. They enjoy power and being at authoritative positions. Consumers who fall under this individual type go in only for branded products owing to their desire to be noticed. 

(3) Detached Individuals least care for brands. Freedom is important for them. They love to feel independent and are mostly self reliant in their thinking and activities.

The above put together is termed as CAD Model. CAD Model has high reference points with respect to classifying consumer behaviour in a holistic manner.

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Ten Consumer Behaviour Models

The ten Consumer Behaviour models explained below are:

• Pavlovian Model
• Economic Model
• Input, Process, Output Model
• Psychological Model
• Howarth Sheth Model
• Sociological Model
• Family Decision making model
• Engel-Blackwell-Kollat Model
• Industrial Buying Model
• Nicosia Model

Consumer Behaviour Models – Pavlovian Model

Ivan Pavlov, a famous Psychologist, devised this consumer behaviour model and the model is named after him. Ivan Pavlov conducted experiments to determine the change in behaviour with the help of Dogs. He conditioned the dog`s mind to receive a piece of meat every time a bell is rung and measured the extent of change in behaviour on the basis of levels of saliva secretion in dogs.

Learning was defined as the changes in behavior which are developed through practice and personal experience. The learning process consisted of Drive, Drives and Reinforcement. While a drive refers to a strong internal stimuli which demands an action, drives are inborn psychological needs arising out of thirst, physical pleasures, hunger and pain that create a stimuli that gives out a triggering and non-triggering cues. The triggering (activate the decision process) and non-triggering cues (Only influence the decision process) help to create a response (purchase or do not purchase) which gets reinforced over time in a conditional pattern. Pavlovian Model is purely based on psychology and has been widely accepted around the world.

Consumer Behaviour Models – Economic Model

According to Economic model of consumer behaviour, consumers try to maximize the utility from products on the basis of law of diminishing marginal utility. The desire of consumers to obtain maximum gains by spending a minimum amount acts as the core for the derivation of this model.

The economic model assumes that there is close similarity between the behaviour of buyers and that a homogenous buying pattern is exhibited in the market. The model is based on Income effect, Substitution effect and Price effect.

• Income Effect substantiates that when a person earns more income, he will have more money to spend and so he will purchase more.
• Substitution Effect substantiates the fact that if a substitute product is available at a cheaper cost, then the product in question will be less preferred or less utilized by people.
• Price Effect suggests that when the price of a product is less, consumers tend to purchase more quantity of that product.

Consumer Behaviour Models – Input, Process, Output Model

The input, process, output Model focuses on the product that is being marketed, the environmental forces and family background of the consumer. Factors that act as inputs and outputs in this model are:

Inputs are the marketing efforts in terms of product, price, place, promotion taken by an organization and the environmental forces such as family, reference groups, culture, social class etc. that influence the decision making process of a consumer. These factors which act as inputs trigger the consumer to identify his needs and ensure that the consumer gets the intention to purchase products after careful evaluation of the factors.

Process is concerned with the purchase process. A consumer goes through various steps like need recognition, awareness, evaluation and purchase in order to make a buying decision. While a satisfied customer acts as the brand ambassador exerting influence on future purchases, a dis-satisfied customer acts as a negative reference point spoiling the marketing efforts of the company to promote the product.

Outputs refer to the consumer’s response to the marketing efforts of the organization. Some responses that consumers display are regarding:

• Buying decision
• Choice of Product
• Choice of Brand
• Choice of Dealer or Store
• Purchase timing and amount
• Post Purchase behaviour

Picture Credits: Consumer Behaviour – Matin khan

Consumer Behaviour Models – Psychological Model

The Psychological Model is based on the famous psychologist A.H. Maslow’s theory of Hierarchy of Needs. The psychological model divides the needs into Psychological Needs, Safety and Security Needs, Social Needs, Ego Needs and Self Actualization Needs. This division of needs is termed as Hierarchy of Needs.

According to this model, the behaviour of consumers gets motivated by their needs and consumer needs never ceases to exist but arise one after another with passing time. A consumer acts according to the strongest need at a particular time, he strives to satisfy the basic needs first and then moves on to a higher level of needs and tries to satisfy them. This process continues till he reaches the highest level in the hierarchy of needs.

Consumer Behaviour Models – Howarth Sheth Model

Howarth Sheth Model substantiates the complexity involved in consumer behavior and takes into consideration various factors like attitudes of consumer, their perception levels and learning capacity that influence consumer behaviour. This model is based on four variables that are:

• Inputs Parameters
• Constructs that are related to perception and learning
• Output Parameters
• Variables that are external or exogenous in nature.

Input Parameters

As per Howarth Sheth Model, inputs are provided by three types of Stimuli namely, Significative Stimuli, Symbolic Stimuli and Social Stimuli that are essential to make a purchase decision.

While a Significative Stimuli refers to the tangible product characteristics like uniqueness, quality, stock availability, price and service effectiveness, a Symbolic Stimuli refers to perception of an individual about a particular product characteristic. Social Stimuli takes into consideration all factors that belong to the societal group to which a consumer belongs. Some factors related to Social Stimuli are reference groups, family and background and consumer`s financial status in the society.

Perceptual and Learning Constructs

Constructs or Psychological variables like Motivation, Attitude, Learning and Perception influence the decision making process of a consumer. When a consumer receives a stimuli and interprets it, the interpretation is influenced by two factors that are stimulus ambiguity and perceptual bias. A stimulus ambiguity occurs when a consumer cannot fully interpret a stimuli while a perceptual bias occurs when an individual manipulates the stimuli according to his needs and experience. These two factors influence a consumer to evaluate a product or brand as good or bad and develop the confidence to purchase it.

Output Parameters

Output in Howarth Sheth Model refers to the final purchase decision and satisfaction or dissatisfaction levels of a consumer after making a purchase. High satisfaction results in elevated brand performance while dissatisfaction leads to lower brand performance. 

External or Exogenous variables

External or Exogenous variables refer to the indirect influence exerted on the decision making process of consumers by factors such as financial status, social class, necessity to purchase and personality traits of individuals.

Picture Credits: Consumer Behaviour – Matin khan

All four factors are dependent on each other and influence the decision making process of a consumer.

Consumer Behaviour Models – Sociological Model

The Sociological Model of Consumer Behavior is closely related to the society and the versatile groups involved in the same. These groups can be classified into Primary and secondary ones. Primary groups consist of close acquaintances, friends, relatives and family members. Secondary group consists of any member in the society, his personality type and requirements based on the same. Sociological Model focuses mainly on the lifestyle and related product requirements of consumers in the society in a holistic manner.

Consumer Behaviour Models – Family Decision making model

The role every member of a family plays in the purchase decision is unique. There are six types of members in a family structure who exert influence over the purchasing decision of the others in the family. They are:

1. The User
2. The Influencer
3. The Preparer
4. The Gatekeeper
5. The Buyer
6. The Decider

The User is the person in the family who plans to use the product being purchased. The user may be a single person in the family or the whole family. For instance, if the purchase decision pertains to a car or television, it may be used by all family members. When a purchase decision pertains to buying a mobile phone or a laptop, it may be for a single person in the family.

The Influencer is the person who keeps the family members updated about products and services new to the market. He convinces them to go in for the same. His influence plays a crucial role in the ultimate decision taken by the family members

The Preparer is the person who gives a product its final shape in which it is actually going to be used by the users in the family. Raw vegetables used for cooking food is an example for the Preparer role where one who cooks is involved in the process.

The Gatekeeper is a person in the family who influences the family members to go in for products which they feel will be useful to them. They safeguard the gates disallowing any product or service information that they dislike from reaching their family members. They help the family in decision making by filtering information or product attributes to make a purchase decision.

The Buyer is the person who actually buys the product. Irrespective of the different kinds of influences exerted by other member of the family, the person playing the role of the Buyer makes the final purchase of the product or service

The Decider is the person in the family who has the money power to buy a product or service chosen for purchase. Family members playing this role have an upper hand in the purchase decision.

Family Decision making Model thus takes into account the many roles played by members of a family and their influence in decision making pertaining to purchase of products and services.

Also Read: Family Influence on Consumer Behaviour

Consumer Behaviour Models – Engel-Blackwell-Kollat Model

Engel-Blackwell-Kollat Model is based upon four key components namely Information processing (IP), Central Control Unit (CCU), Decision Making process and influences exerted by the environment.

Information Processing (IP) is dependent on many factors which act as stimuli both from a marketing and non-marketing perspective, it consists of four components that are exposure, attention, comprehension and retention. Information Processing focuses on the message to which the consumer is constantly exposed (exposure). When the message instantly grabs the attention of the consumer (attention), the next logical step for him is to comprehend about the same in the rational manner (comprehension). When all of the activities happen in the perfect manner the message is retained in the memory of the consumer (retention).

Central Control Unit (CCU) is based on four factors that are psychological in nature.

• Previous experience of the consumers and their acquaintances about the product
• Criteria based on which a consumer evaluates a product
• Changing mindsets of consumers and
• Personality of the consumer based on which he or she takes the purchase decision.

A consumer processes and interprets all the information on the basis of the above four factors.

The Decision process consists of recognizing the problem, internal and external information search, evaluating the alternatives available and finally purchasing the product. This component deals with the post purchase satisfaction levels as well as dissatisfaction levels which play a crucial role in the future decision making process of the consumers.

The Environmental influences consists of all those factors that may favour or disfavour the purchase decision like:

• Income level of consumers
• Financial status and social class in the society
• Family Influences and other societal factors etc.

Picture Credits: Consumer Behaviour – Matin khan

Consumer Behaviour Models – Industrial Buying Model

Industrial Buying Model deals with the cumbersome process involved in making purchase decisions in a typical industrial set up. The decision making process related to purchase in an Industrial setup involves many Departments that are concerned with the same in a direct or indirect manner. This model highlights three crucial characteristics involved in purchase decisions by Industries.

• Individuals who hail from different backgrounds, possessing varying psychological outlook are involved in the decision making process
• Joint decision making is inevitable in an Industrial setup
• Decisions pertaining to a purchase may lead to opinion clashes between concerned departments or individuals before an amicable solution is found

Individuals in decision making capacities may be from various departments in an organization. Some Departments concerned are Research and Development Department, Quality Control Department, Finance Department, Manufacturing Department and Technical Support Department amongst the many others. The committee that is formed for making purchase related decision may comprise individuals who

• Have different perceptions
• Hail from varying backgrounds
• Have differing satisfaction levels related to past experience
• Obtain information from different sources
• Search experience that is totally dependent on their skills

The purchase decision in an Industrial setup is dependent on many factors. These factors may be specifically related to products or to the organization that manufactures the concerned products. The product specific factors are the kind of purchase done by consumers, probable risks involved in choosing a particular alternative and the pressure pertaining to the timely delivery of product. The Organization Specific factors focus on solving problems that arise due to the purchase decision from time to time, the persuasion and bargaining issues connected with the same and other factors pertaining to situations that may arise every now and then.

Also Read: Industrial Buying Process, Organizational Buying Behaviour

Consumer Behaviour Models – Nicosia Model

Nicosia Model deals with the level of exposure a consumer gets with respect to the purchase decision. This model is based on four fields such that the output of one field acts as the input of second field and so on.

Picture Credits: Consumer Behaviour – Matin khan

The First field divided into two sub fields namely:

Sub-field one consists of:

• Product Attributes
• Firm`s Attributes

While subfield two consists of:

• Pre-disposition or existing attitude of a consumer towards the product
• The attributes exhibited by the organization whose products are to be purchased.

The Second Field consists of consumer research and evaluation.

The Third Field is concerned with the buying decision of the consumer.

The Fourth Field is concerned with the post purchase behavior, use of product, its storage and consumption. The consumer who is satisfied with a product or service tends to stock the product for regular or future usage and develops a positive attitude. On the contrary, a dis-satisfied customer tends to develop a negative attitude towards the product or the business house.

The feedback from Fourth Field acts as input for field one. Feedback from field four compels a firm to change the product attributes which in turn act as in put for field two. A change in product attributes bring a change in consumers perception about the product and hence may affect his buying decision and subsequently his post purchase behavior.

Reference and Picture Credits: Consumer Behaviour – Matin khan

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Few changes in the Indian consumer market are:

• The consumers have become more aware, demanding and quality conscious.
• Liberalization and globalization has increased competition giving rise to consumer oriented products and marketing techniques.
• The overall costs are rising, prices are falling and profit margins are decreasing.

Changing Consumer Behaviour in India

Consumer Behavior has gone through many changes in the attitude, motivation, perception, spending habits, and post purchase behaviour during the past few decades in India. Some of the key factors that have contributed towards changing consumer behaviour in India are:

• Rapid Urbanization leading to changes in the mindset of consumers
• Increasing income levels
• Shift in approach towards family systems

Rapid Urbanization

In 1980`s, a typical consumer in India had very limited choices. Consumer choice was restricted by low income, supply shortages, non-availability of products, traditional buying methods, low competition, limited choice, import restrictions. Rapid urbanization in the country is brought a huge change in the mindset of Indian population. Liberalization and globalization in the 1990`s opened new avenues for marketing, advertising, travel and communication which in turn helped in increasing the GDP of the country. Innovative marketing techniques, increasing competition and product branding made the consumers more aware, demanding and quality conscious. Now consumers have wide product choices at competitive prices.   

Increasing income levels

Increasing households Income have increased the spending capabilities of people, making India one of the top countries in the Consumer market segment. Now consumers do not settle for sub-standard products but demand high quality products at competitive prices. Consumers have access to abundant information through newspapers, T.V. and internet which bought about a change in marketing techniques of businesses. Marketers strive to differentiate their products and services through pricing, packaging, promotions, customer service and branding. With radical revolution in information technology consumer satisfaction was given more importance as consumer expectations had increased and all consumers had multiple options to satisfy their respective needs.

Shift in approach towards family systems

India has been witnessing a shift with respect to family systems and family influence on consumer behaviour. Joint families are decreasing in number giving way to nuclear families. The spend ratio has increased by leaps and bounds owing to the increasing number of nuclear family systems. Lifestyle amenities get more priority amidst the younger generation who opt for nuclear family structures. Less number of Gatekeepers and matured influencers in such nuclear families gave rise to what was considered as ‘unnecessary spending’ by earlier generations. The food, apparel and entertainment industries have gained maximum owing to the tendency of the younger generation to keep up with the latest trends at all points of time.

However, marketers must keep the following points in mind to effective adjust to the changing consumer behaviour in India –

• It is essential to communicate with customers.
• All marketing efforts must be directed towards the customer.
• Products and services must be developed keeping in mind the needs and desires of consumers.
• Efforts must be made to understand the mindset of the consumer for which a feedback mechanism must be developed.
• All strategies must aim at providing customer satisfaction and delight.

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There are many Motivation Theories formulated to chalk out the relationship between consumer behaviour and Motivation. Some such theories are enlisted below for clear understanding.

Maslow’s Theory of Motivation – Divides motivation based on five type of needs which are:

• Physiological – Necessities like food, shelter, physical pleasure and clothing
• Social – Acquaintances, friendships, desire to be loved
• Safety – Self security, safety of one’s belongings, safety pertaining to money and job etc.
• Esteem – Status in terms of financial class, prestige, ego satisfaction etc.
• Self actualization – Feeling of fulfillment on all aspects of life being lived

McGuire’s Psychological Motives – Divides motivation based on different types of needs which are

• Need to attribute causation – Attributing the reason for a decision on self or others
• Need for consistency – Displaying constant patterns in all aspects of life
• Need for cues – Providing cues that suit consumer mindset who desires for a particular lifestyle
• Need to categorize – Categorizing products value-wise or model-wise for ease of decision making
• Need for Novelty – Introducing new features and characteristics in products and experiences
• Need for Independence – Consumers enjoy products that expresses or makes them feel free
• Need for Ego Defence – Going in for famous brands to show off one’s status symbol
• Need for Self Expression – Purchasing products that reveal our self identity and thoughts
• Need for Reinforcement – Buying products based on appreciations from other consumers
• Need for Assertion – Going in for products ascertaining their high performance levels
• Need for Modeling – Promoting a product using amour personalities
• Need for Affiliation – Using products recommended by friends to get the feeling of affiliation
• Needs utilitarian in nature – Buying products purely based on the utility value
• Needs Hedonistic in nature – Buying products that offer more of physical pleasures

When organization manufacturing products approach consumers based on one of the motivations mentioned in the above lists, their involvement levels are high. Let us have a detailed look at Consumer Involvement.

Definition of Consumer Involvement

Consumer Involvement here refers to the depth of interest in a product or service displayed by consumers through their behaviour and approach. The aspect called Consumer Involvement has many striking characteristics. Key characteristics of Consumer Involvement are:

• Exerts high levels of influence over the personal choice of consumers
• Directly related to the self concept aspect of consumers
• Arouses interest in consumers in one form or the other
• Involvement levels vary from one customer and another depending on the various factors surrounding them

Levels of Consumer Involvement

Consumer Involvement can basically be classified into three types based on the level of intensity.

• High Involvement
• Low Involvement
• Routine or least Involvement

High Involvement is witnessed in consumers when the products bought are of huge value. Products that consumers buy probably once or maximum twice in a life time fall under this category. Consumers take a lot of precautionary measures while going in for buying such products in order to avoid taking any sort of risk post purchase. Huge money is at stake and so the care being taken by consumers is also high.

Low Involvement is witnessed in customers who go in for products that are not purchased frequently but is changeable after a few years. Television sets, refrigerators, wooden almirahs etc. fall in this category.

Routine or Least Involvement – Products which are purchased month on month as a need fall under this category. Consumers generally stick to a brand as far as purchase of products like tooth paste, body soaps and talcum powder are concerned.

By Hcberkowitz (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

Factors affecting Consumer Involvement

Consumer Involvement is dependent on many variables some of which are listed below:

• Preferences of Consumers
• Response from other sources
• Stimuli exerted by internal and external factors
• Consistent interest of the Consumer
• Situations surrounding the Consumers
• Focus area of the consumer which differs according to their social status
• Depth of Intensity exerted by Consumers over a period of time

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Marketers constantly try to influence customers to adopt new products and services, therefore it is necessary for them to identify and understand the behaviour of various groups of customers on the basis of how slow or fast do they adopt a product or service or how much time do they take to adopt a new product or service.

Consumer Adoption – Classification of Adopters

To study Consumer Adoption consumers may be divided into five groups on the basis on time taken by them to adopt a new product or service during its life cycle. They are:

• Innovators (2.5%) – Innovators amount for only 2.5% of the consumers. Innovators are early buyers and risk takers, they are the first to purchase the product at the beginning of its life cycle. They are adventurous people, who like to try new products and stay updated with the latest products and trends, they do not hesitate to pay a premium price for the benefit and are always eager to learn more about latest products from magazines, T.V., internet.
• Early Adopters (13.5%) – The next 13.5% purchasers are early adopters who take calculated risks before buying a new product. They are generally opinion leaders of a group and the success of the product greatly lies upon their adoption of the product. Early adopts weighs the pros and cons of the product before buying it and upon satisfaction help the product to become socially acceptable by providing information to their social groups.
• Early Majority (34%) – The early majority are cautious people who only buy a product when it has been accepted by the early adopters and innovators. They are well-educated buyers who do not have the time or resources to research a product and rely on personal sources for information regarding products and services. They do not buy the product until it is socially acceptable and successful.
• Late Majority (34%) – It consists of 34% of the late consumers who adopt a new product only due to social pressures or non-availability. These consumers are less educated and therefore are very skeptical in nature. They rely on informal sources for information and make a purchase only after the majority has already purchased it.
• Laggards (16%) – The last 16% of the buyers are traditional or elderly people with little or no social interaction, who show great resistance towards adopting a new product. Some laggards never purchase a product while others purchase it at the end of its life cycle. They are uneducated people with low status and earnings and they purchase a product only when the existing product is out of use (broken and cannot be repaired).

Conclusion:

Marketers aim to identify and focus on innovators and early adopters and offer price promotions or free trials or samples backed by extensive advertisement for these groups. Early adopts work as change agents for the product and help to overcome resistance from the public and influence other consumers to adopt or buy the product. Therefore marketers first focus on early adopters capable of becoming opinion leaders whom others groups will follow. Special care must be taken in identifying these groups as an innovator for cars may be a laggard for bikes regarding consumer adoption.  

After the early majority has been satisfied, special strategies are formed for later consumer adoption stages (late majority and laggards) offering huge discounts, guarantees and other marketing tactics.

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A buying centre consists of all those individuals and groups that participate in the organizational decision making process while making a purchase for the organization. It is essential for a marketer to identify various individual and groups that are involved in the buying centre and understand various buying roles and influences that exist in an organization.

Organizational Customers 

• Institutions – Schools, hospitals, research institutes, agricultural institutes etc.
• Government agencies – Municipal corporations, Public works department, police department etc.
• Public Sector organizations – g. (INDIA) Air India, BHEL, ONGC, BSNL
• Private Sector organizations –g. (INDIA) Tata Industries, Reliance industries, General Electric Company
• Wholesalers, Distributers, Retailers – g. (INDIA) Wal-Mart, Big Bazaar, Spencer, Shoppers stop

Buying Roles of Buying Centre members

• Initiators – The people who initiate the buying process. It may be the workers, top management or any technical, managerial or administrative department
• Users – The actual user or users of the product. For e.g. workers using computers, printer, machines, production department, technical personnel
• Influencers – Officials like purchase officer, production manager, engineer who influence the purchase decision
• Specifiers – Consultants, technicians or designers who state product specifications.
• Deciders – The committee, department or individual who makes the final selection of product
• Approvers – The person or group that approves the proposed action or decision. It may be the top management, Managing director or any departmental head
• Buyers – The person who has the formal authority to make a purchase on the behalf of the organization. He may also be the decider.
• Gate Keepers – People who control the flow of information within an organization. They disseminate or restrict information according to their own opinion in the organization. They may be at any level in an organization from a mail man to a member of the board of directors.

Buying Influences and Buying Centre

Selection of a Supplier

Factors that are considered by a buying centre while selecting a supplier are:

• Cost of product
• Reliability of delivery
• Quality of the product and after sale services
• Supplier`s reputation in the market
• Sample provided by the supplier
• Ability of the supplier to provide the product regularly
• Flexibility in dealing
• Credit policies
• Rejection Rate/No. of defects
• Relationship with the supplier

All the suppliers are evaluated against criteria based on the above factors and the most qualified supplier is selected. 

Organizational Buying Situation

An organization demands a wide variety of products and services for its business operations such as:

• Raw Material – Agricultural products, Mineral Products, Livestock, Forest Products, Marine Products 
• Machinery and equipment
• Small Components, Tools and Spare parts 
• Power – fuel, water, electricity 
• Services – Technical, Financial, Legal and Administrative Services

According to Robinson, Fari`s and Wind, there are three types of buying situations that organizations face. They are:

(1) Straight Rebuy Situation – It includes routine orders placed daily, weekly, monthly, quarterly or yearly with known suppliers for products and services such as raw materials, office supplies, financial services etc.

• It involves buying for a recurring need
• It requires little or no new information
• Buyers & sellers operate in a routine manner
• Need recognition and purchase are the only steps in the buying process

(2) Modified Rebuy Situation – As all business activities are affected by seasonal and cyclic fluctuations and changing demand and preference for its products which in turn affects its buying patterns. Industrial buyers modify their orders or completely change the order according to such internal and external environment changes.

• It involves re-evaluation of order, price or sellers in order to derive benefits or cope up with environmental changes
• It emphasizes on search and evaluation of suppliers
• Buyers go through a limited problem solving process
• Buyers have detailed information about product alternatives and develop a well-defined criteria for product selection

(3) New Buy or New task – When an item is bought for the first time, it is a new buying situation. The organizational buyers go again through the decision making process as the product has never been bought in the past.

• The problem or need is completely different from previous needs in case of a new task
• Buyers require a significant amount of information
• It emphasis on problem definition and development of product specifications
• Buyers go through an extensive problem solving process

Fisher identified two factors that affect buying situations i.e. product complexity, and commercial uncertainty and gave various characteristics of each factor – 

On the basis of the above model he suggested four buying situations and gave the basis of purchase decision by industrial buyers under each situation:

Buying Preference and Buying Situations

Buying Situation, Buying Centre and Marketing Strategy

More: Introduction to Organizational Buying Behaviour, Organizational Decision making Process

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Steps in Organizational Buying Process

A Buying Centre consisting of members of the organization participate in the purchase process and take relevant decisions according to different buying situations.

Buyers go through the following 8 stages in the organizational buying process –   

(1) Problem/Need recognition – It starts with realization of need or problem within the organization. It may be need for a new computers, printers etc. or problem like inventory shortage and under-production which can be solved by procuring more stock and buying new machines in the latter case.

(2) Definition of characteristic and quantity needed – This stage involves clearly defining then the problem in hand and laying down the general characteristics of a product or service that may solve the problem. For e.g. deciding the cost, type, quantity and quality computer, stock or machine to be bought. This may be done by a purchase committee, production manager, technical manager or the top management.

(3) Development of product specification – Once the general specifications have been laid down, the buyers look for information about various product alternatives and lays down well defined product specifications that is to be bought. This is generally done by the department or group or individual who will use or distribute the product. For e.g. an engineer may develop technical specifications of PC`s to be bought or the production manager may take decisions on different items that are to be stocked on the basis of brand, quality, demand of products.

(4) Search and qualification of potential sources – After product specifications have been laid down, the buyers enter the marketplace and make trails and collect samples. Buyers also conduct a value analysis and determine various cost reduction and standardization techniques that will effective solve the problem. The buyers them determine various sellers that have the ability to provide the required quantity and good quality of product needed.

(5) Acquisition and analysis of proposal – This step involves getting quotations from different sellers and floating tenders. The offers received by various parties are then scrutinized against the previously developed criteria and few sellers are shortlisted who can satisfy all requirements.

(6) Evaluation and selection of suppliers – The shortlisted suppliers are then evaluated on the basis of:

• Past reputation
• Quality of product
• Delivery and Payment terms
• Guarantees, Warranties, Discounts, Assurance offered by the seller
• Price of the product
• After sale services etc.

Suppliers are reviewed again and again and then one or more than one supplier may be selected.

(7) Selection of an order routine – At this stage the buyers place the final order with the chosen supplier or suppliers specifying all the technical specifications, quantity needed, expected delivery time, payment and return terms, installation or after sale services etc. required.

(8) Performance feedback and evaluation – The last stage involves deciding whether to re-order, modify the order or drop the seller. The buyers evaluate their satisfaction with the product and the seller(s) and communicate the response to the seller(s). An order schedule is prepared for a month, quarter or year and the organization enters into a contract with the seller.

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