A market is designed for buying and selling of products and services.
It is a human activity to satisfy the human needs and wants through the
exchange process. This means the aim of marketing is to satisfy the
potential needs and wants of products and services of the consumer. To
do marketing effectively, first we need to understand the likes,
dislikes, preferences, taste, process of purchase, consumption
patterns, buying power, buying place, quantity etc. of the buyers of
that product. Here comes the importance for us to learn the consumer
behavior. Let us look at the meaning, importance, types and factors
affecting the consumer behavior.
Meaning of consumer behavior.
We all are consumers. In fact, everybody in this world is a consumer. We buy and consume a variety of services and goods in our daily life. But we all have different taste. We adopt different behavior patterns while making purchase decisions. We have different likes and dislikes. You may prefer to use Nokia Mobile phone with Airtel connection while your spouse may prefer Samsung Mobile phone with Vodaphone connection. Your colleague may be using Sony Ericsson Mobile phone with MTNL connection. Your neighbor may be carrying a Motorala Mobile with Reliance connection. You may prefer Close-up toothpaste, Lux toilet soap and Sunslik shampoo while your spouse may prefer Colgate toothpaste, Dove toilet soap and Suave Shampoo.
Similarly, you may have certain preference in selecting your magazines, books, brands, clothing, food, recreational activities, mode of investing, brand of vehicle you use, forms of savings, stores from where you prefer to shop, the people you associate with etc. While you'll find that your spouse, your colleagues and your neighbors are holding different preference in selecting their food, vehicle, books, magazines, cloths, investments, mode of savings etc. While buying vehicles people hold different choices like brand, size and capacity etc.
Economically weaker section buy a car which would help them to commute with less cost. So the preference of such people is entirely different from the preference of rich people. Rich people who can shell out a lot of money look for safety, comfort and look of the vehicle. Price or running cost is least concern for such people.
Again within each category also different people prefer different brands. Thus, each consumer is unique. This uniqueness is reflected in the consumption behavior and pattern as well as process of purchase. The knowledge of consumer behavior provides us reasons as to why consumers differ from one another in buying and using products and services.
What products and services do we buy, how often do we buy, why do we buy, From where do we buy etc. are the issues which are comes under the subject of consumer behavior. It blends the elements from economics, psychology, sociology and social anthropology. It tries to understand both individual and group decision making process of consumers.
Consumer behavior can be defined as those acts of consumers (individuals) directly involved in using, obtaining and disposing of economic goods and services, including decision process that precede and determine the these acts.
Importance of understanding the consumer behavior
The importance of understanding the consumer behavior is that to know and understand the preferences of different consumers which will enable the marketers to form the marketing strategies accordingly. Human being differ in terms of social status, nationality, age, sex, income, occupation, religion, family set-up, education and the culture of the society. We have different needs because of these differences. We buy only those products which we think will satisfy our needs. We can find out or classify the different market segment by analyzing the consumer behavior of same product or variation of same basic product. Better understanding of market segment is necessary for a marketing manager to design strategies for different segments. Knowledge of consumer behavior and taste is important factor which plays a vital role in the creation of marketing strategies.
Consumer taste are also changing as fast as the technology changes. In today's world technology changes are taking place rapidly. The changes in technology changes the taste of consumers. To cater to the need of a rapidly changing consumer trends, a firm has to constantly understand the latest consumer trends and tastes. Consumer behavior provides invaluable clues and guidelines to marketers on new technological frontiers which they should explore. For example, let us consider the 3G enabled mobile phones in India. When the 3G technology introduced and the service providers started 3G services in the end of 2010, the consumers exhibited a desire to purchase 3G enabled mobile phones than the ordinary mobile phones. In the early eighties when the color transmission started, consumers exhibited a desire to purchase color Television for closer-to-life color picture viewing.
To identify and understand the prospective customers and their buying behavior a management which believes in the philosophy of marketing concept will take necessary steps to constantly in touch with the customers to know their likes and dislikes or requirement and expectation of the product. Customer relationship department is a two way communicating agency between the management and the customers. To understand the customer means to understand the goals of customers, which may be long-term or short-term in nature. Once the goals are identified, the firm can decide and design the products accordingly to match the goal of the consumer. The next step is to make the customer aware about the product or services. An advertisement message explaining how the product or services can help the customer to reach his goal will fulfill that part of the work.
There are many difficulties in finding out the goal of the prospective customers. People rarely ever give their goals any conscious thought nor express them in a way that can be understand easily. Many times the consumers fail to express the goals in the order of importance. Sometimes expressed goals are of short term in nature and seeks immediate satisfaction which lacks the long term significance. These difficulties can fail you to understand the true picture of consumer behavior.
To select the appropriate message and medium of advertisement, it is necessary for the firm to understand the specific goals with a fair level of accuracy of the targeted groups.
Some of the areas that provide useful insight into consumer behavior
are psychology, Sociology, social psychology, economics and cultural
anthropology. Special markets which are consists of government
agencies and other non profit organizations needs to be studied
carefully to understand the unique consumer behavior. To capitalize
the potentials of the market we need to analyze the market in depth.
Types of consumers:
Types of consumers can be classified in to two. They are:
1. Personal Consumers and
2. Organizational consumers.
Personal Consumers: When you buy a Watch for your own use, you are buying in your capacity as a personal consumer. Whenever you buy goods and services for your own or for your family use, you are treated as a personal consumer. All individuals therefore, fall in the category of personal consumers. Buying decisions of a personal consumer mostly depend on his taste, availability and afford-ability of the goods and services.
Organizational Consumer: When you buy a printer for your use in office, you are making the the purchase in your capacity as an organizational consumer. All business firms, government agencies and bodies, non-business organizations such as temples, truest, hospitals etc. are organizational consumers who purchase goods and services for running the organizations. Even in the organization, buying decisions are taken by individuals only. Therefore, the behavior pattern of organizational consumer is marginally different from personal consumers.
Factors influencing consumer behavior
Consumer behavior is affected by a host of different factors ranging
from personality characteristics, needs, attitudes, values, economic
and cultural background like age, sex, professional status to social
influences of various kinds like forces from family, friends,
colleagues and society as a whole. The combined effect of these
various factors influence the purchasing decision and behavior of the
Consumer behavior results from environmental and individual influences. To achieve ideal self-image and to project the self-image they want others to accept, consumers often adjust their purchases of goods and services. Influence of others and the psychological makeup of individuals control the consumer behavior.
All the factors that influence the consumer behavior can be classified
in to four broad groups:
1. Psychological Factors
2. Personal Factors
3. Social Factors
4. Cultural Factors
Psychological Factors: A felt need of something useful is the starting point of a purchase decision process. We all have needs. We hope fulfilling those needs will improve and satisfy our life. Sufficiently pressing needs will direct the person to seek its satisfaction. We call this urgency of the need motive. Therefore, motives are inner states that direct people towards the goal of satisfying a felt need. People take steps or action to reduce the tension created by the want or need.
Mr. Abraham Maslow (1908 - 1970) has developed a useful theory of the hierarchy of needs based on tow important assumptions.
1. People are wanting animals whose needs depend on what they already possess. Only these needs that have not been fulfilled can influence human behaviour. A satisfied need is not a motivator.
2. In the order of importance all needs can be ranked from the low biological needs to the higher level psychological needs. Unfulfilled level of need is the motivator behind the individuals behaviour. As soon as one level of need is fulfilled, he moves on to the next higher level of needs.
Maslow has classified the needs into five categories. They are:
- Physiological needs
- Safety Needs
- Social Needs
- Esteem Needs
- Self Actualization Nees
Since no need is ever totally satisfied, there is always overlap
amongst the different levels of needs. Also there is always scope for
Physiological Needs: The basic needs or primary needs are food, shelter and clothing. It is the common and the basic need of a human being. He sees to fulfill this need before he goes for higher needs. Once hungry, a person ignores all other needs until he gets food to satisfy his hunger. Once his Physiological needs are met, he looks for other higher levels of needs and try to fulfill such needs. He tries to fulfill his basic needs of Food, water, air, shelter and sex at this stage.
Safety Needs: The second important need is the safety, security and protection from physical unexpected harm which may come in the way as the life progress. To protect oneself from such unexpected harm, he take the necessary steps to face such situations. Saving account, medical insurance, life insurance, health club membership are some of the tools he use to protect himself. Security of: body, employment, resources, morality, health, family health are some of the desires he tries to fulfill at this stage.
Social needs: The desire to be accepted by family, individuals and the society (group) comes after fulfilling the physiological and safety needs. To be accepted in the society, he starts to behave in such a way that acceptable to the society in which he live. He change his dress code. Use gadgets to match the status of the group he belongs. He would be interested in obtaining status among the group in which he belong. Friendship, belongingness, family, sexual intimacy are the some of the needs that one desire at this stage.
Esteem needs: A sense of accomplishment, achievement and to receive respect from others is the next higher level of need a person desire to fulfill. Status, Prestige, Success, Self Respect, confidence, respect by others and respect of others are some of the desires one look for at this stage. Esteem needs are present in all human beings. But very few work towards to achieve the same in a big way. In this level he not only desire to get acceptance but also have a desire for respect and recognition. He wanted to be an outstanding individual in the crowed.
Self-actualization Needs: Maslow defines self-actualization as "The healthy man is primarily motivated by his needs to develop and actualize his fullest potentialities and capacities. What man can be, he must be." He tries to achieve his fullest potential of his capabilities and talents at this stage. Morality, creativity, spontaneity, problem solving, lack of prejudice, acceptance of facts are some of the needs of this stage one seeks for.
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