Module 3

Consumer behavior and Planning in Retailing

Consumer Behavior: Definition It is broadly the study of individuals, or organizations and the
processes consumers use to search, select, use and dispose of products, services, experience, or
ideas to satisfy needs and study of its impact on the consumer and society.
Customers versus Consumers The term ‘customer’ is specific in terms of brand, company, or shop. It
refers to person who customarily or regularly purchases particular brand, purchases particular
company’s product, or purchases from particular shop. Thus a person who shops at Bata Stores or
who uses Raymond’s clothing is a customer of these firms. Whereas the ‘consumer’ is a person who
generally engages in the activities - search, select, use and dispose of products, services, experience,
or ideas.

Need for Study of Consumer Behavior

The study of consumer behavior helps everybody as all are consumers. It is essential for marketers
to understand consumers to survive and succeed in this competitive marketing environment. The
following reasons highlight the importance of studying consumer behavior as a discipline.
1. Need Recognition
When a person has an unsatisfied need, the buying process begins to satisfy the
needs. The need may be activated by internal or external factors. The intensity of the want
will indicate the speed with which a person will move to fulfill the want. On the basis of
need and its urgency, the order of priority is decided. Marketers should provide required
information of selling points.

2. Information Search
Identified needs can be satisfied only when desired product is known and also easily
available. Different products are available in the market, but consumer must know which
product or brand gives him maximum satisfaction. And the person has to search out for
relevant information of the product, brand or location. Consumers can use many sources
e.g., neighbors, friends and family. Marketers also provide relevant information through
advertisements, retailers, dealers, packaging and sales promotion, and window displaying.
Mass media like news papers, radio, and television provide information. Nowadays internet
has become an important and reliable source of information. Marketers are expected to
provide latest, reliable and adequate information.

3. Evaluation of Alternatives
This is a critical stage in the process of buying. Following are important elements in
the process of alternatives evaluation
a. A product is viewed as a bundle of attributes. These attributes or features are
used for evaluating products or brands. For example, in washing machine consumer
considers price, capacity, technology, quality, model and size.
b. Factors like company, brand image, country, and distribution network and after-
sales service also become critical in evaluation.
c. Marketers should understand the importance of these factors with regards to the
consumers while manufacturing and marketing their products.

4. Purchase Decision
Outcome of the evaluation develops likes and dislikes about alternative products or
brands in consumers. This attitude towards the brand influences a decision as to buy or not
to buy. Thus the prospective buyer heads towards final selection. In addition to all the above
factors, situational factors like finance options, dealer terms, falling prices etc., are also
considered.
5. Post- Purchase
Behavior Post-purchase behavior of consumer is more important as far as marketer
is concerned. Consumer gets brand preference only when that brand lives up to his
expectation. This brand preference naturally repeats sales of marketer. A satisfied buyer is a
silent advertisement. But, if the used brand does not yield desired satisfaction, negative
feeling will occur and that will lead to the formation of negative attitude towards brand. This
phenomenon is called cognitive dissonance. Marketers try to use this phenomenon to
attract users of other brands to their brands. Different promotional-mix elements can help
marketers to retain his customers as well as to attract new customers.

Levels Of Consumer Decision Making

The consumer decision making process is complex with varying degree. All purchase decisions do not
require extensive effort. On continuum of effort ranging from very high to very low, it can be
distinguished into three specific levels of consumer decision making.

1 Extensive Problem Solving (EPS)

2. Limited Problem Solving (LPS)
3. Routine Problem Solving (RPS)

1. Extensive Problem Solving (EPS):

When consumers buy a new or unfamiliar product it usually involves the need to obtain
substantial information and a long time to choose. They must form the concept Notes 20 of a new
product category and determine the criteria to be used in choosing the product or brand.

2. Limited Problem Solving (LPS):

Sometimes consumers are familiar with both product category and various brands in that category,
but they have not fully established brand preferences. They search for additional information which
helps them to discriminate among various brands.

3. Routine Problem Solving (RPS):

When consumers have already purchased a product or brand, they require little or no information to
choose the product. Consumers involve in habitual and automatic purchases.

Family
Family is a social group with earnings, consuming, and decision-making unit. This is actually
a sub-set of more general classification of household. The family is the basic purchasing and
consuming unit. Therefore, it is of great importance for retailers. The family consists of two or more
related or unrelated persons living together in a dwelling unit. There are three types of families:
married couples, nuclear families and extended families. The basic functions of the family are to
provide emotional support, economic well-being, suitable lifestyle and family member socialization.
The family is the most important consumer buying organization in society, and family
members constitute the most influential primary reference group. We can distinguish between two
families in the buyer’s life. The family of orientation consists of parents and siblings. From parents a
person acquires an orientation toward religion, politics, and economics, and a sense of personal
ambition, self-worth, and love. Even if the buyer no longer interacts very much with his or her
parents, their influence on behavior can be significant. In countries where parents live with grown
children, their influence can be substantial. A more direct influence on everyday buying behaviour is
the family of procreation – namely, one’s spouse and children.
Reference Groups

Reference groups influence people’s thoughts and behavior: aspirational groups – a person
does not belong but wishes to join; membership groups – a person does belong; and dissociative
groups – a person does not want to belong. Face-to-face groups, such as families, have the most
impact. Within reference groups, there are opinion leaders whose views are well respected and
sought. Groups having a direct or indirect influence on the person’s behavior like family, close
friends, co-workers. Since they interact frequently with the person and most interactions are
informal; the person absorbs their like and dislikes.

Culture Influence on the Shopper

Culture has a strong influence on shoppers’ behavior, as this refers to a complex set of values,
ideas, beliefs, attitudes, and other meaningful symbols, created by human beings to shape human
behavior and artifacts of that behavior as they are transmitted from one generation to another.
Within a given culture, sub-cultures therefore, arise due to geographic, religious, nationality, and
ethnic differences. Culture is the accumulation of shared meanings, rituals, norms, and traditions
among the members of an organization or society.
A culture is a distinctive heritage shared by a group of people that passes on a series of beliefs,
norms, and customs. The Indian culture stresses individuality, success, education, and material
comfort; there are also various subcultures like Christianity, Islamic, Jainism, Buddism.
The term culture normally refers to the person’s values, preferences, wants and desires, which
dictate or determine, to a great extent, the person’s behaviour. These influences emerge from the
environment, education and experiences encountered by the person through childhood and
adulthood. Middle class people desire to play safe, like security, and do not like to take risks. The
lower middle class does not have much of an income, and office clerks tend to be a little suspicious.
Culture refers to the learned meanings, values, and behavior patterns that are shared by a society
and it includes the knowledge, beliefs, art, law, morals, customs and habits acquired by a person as a
member of society.

Social Influence on the Shopper

Social class is defined as the relatively permanent and homogeneous division or structure in
society, which differ in their status, wealth, education, possessions, values, beliefs and attitudes,
friendships, and manner of speaking. Social classes are of different categories. Shoppers’ behaviour
is strongly influenced by the social class. Social class is the hierarchy by which people in a society
rank one another in different social positions.
They are associated closely because they share beliefs, values and ways of behaving. The
social interactions of different groups influences the consumption of o ne another. Such as the
choice of a place to live in affects the living status of the residents and their consumption decisions
as well.

Social group is a collection of people who are related because of some interaction with one
another. Group members can have influence on individual behavior. Social groups also provide
information to consumers that can influence subsequent behavior. Social class involves an informal
ranking of people based on income, occupation, education, and other factors. People often have
similar values in each social class.

Roles and Status

The person’s person in each group can be defined in terms of role and status. Role consists of the
activities a person is expected to perform. Each role carries a status.
A senior vice president of marketing has more status than a sales manager, and a sales manager has
more status than an office clerk. People choose products that reflect and communicate their role
and actual or desired status in society. Marketers are interested in the roles and relative influence of
family members in the purchase of a large variety of products and services. With expensive products
and services like cars, vacations, or housing, the vast majority of husbands and wives engage in more
joint decision making.

These psychological factors help in identifying and understanding consumer lifestyles:

➢ A personality is the sum total of an individual’s traits, which make that individual unique. They
include a person’s level of self-confidence, innovativeness, autonomy, sociability, emotional stability,
and assertiveness.
➢ Class consciousness is the extent to which a person desires and pursues social status. It helps
determine the use of reference groups and the importance of prestige purchases. A class-conscious
person values the status of goods, services, and retailers.
➢ Attitudes (opinions) are the positive, neutral, or negative feelings a person has about different
topics. They are also feelings consumers have about a given retailer and its activities. Does the
consumer feel a retailer is desirable, unique, and fairly priced?
➢ Perceived risk is the level of risk a consumer believes exists regarding the purchase of a specific
good or service from a given retailer, whether or not the belief is correct. Perceived risk is high if a
retailer or its brands are new, a person is on a budget, a person has little experience, there are many
choices, and a purchase is socially visible or complex.

Lifestyle
Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way an
individual stays in the society. It is really important for some people to wear branded clothes
whereas some individuals are really not brand conscious. An individual staying in a posh locality
needs to maintain his status and image. An individual’s lifestyle is something to do with his style,
attitude, perception, his social relations and immediate surroundings.

Personality
Personality is one of the many factors that exert on influence on consumers behaviour. Personality is
the composition of an individual’s psychological traits, characteristics, motives, habits, attitudes,
beliefs, and outlooks.