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What is Consumer Behavior?

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What Is Consumer Behavior?
What is Consumer Behavior in Marketing?

It examines how emotions, attitudes and preferences affect buying behaviour. Characteristics of individual consumers such as demographics , personality lifestyles and behavioural variables such as usage rates, usage occasion, loyalty, brand advocacy, willingness to provide referrals, in an attempt to understand people's wants and consumption are all investigated in formal studies of consumer behaviour.

The study of consumer behaviour also investigates the influences, on the consumer, from groups such as family, friends, sports, reference groups, and society in general. The study of consumer behaviour is concerned with all aspects of purchasing behaviour - from pre-purchase activities through to post-purchase consumption, evaluation and disposal activities.

It is also concerned with all persons involved, either directly or indirectly, in purchasing decisions and consumption activities including brand-influencers and opinion leaders. Research has shown that consumer behaviour is difficult to predict, even for experts in the field.

Customer relationship management CRM databases have become an asset for the analysis of customer behaviour. The voluminous data produced by these databases enables detailed examination of behavioural factors that contribute to customer re-purchase intentions, consumer retention, loyalty and other behavioural intentions such as the willingness to provide positive referrals, become brand advocates or engage in customer citizenship activities.

Databases also assist in market segmentation, especially behavioural segmentation such as developing loyalty segments, which can be used to develop tightly targeted, customized marketing strategies on a one-to-one basis. Also see relationship marketing. History of marketing thought. In the s and 50s, marketing was dominated by the so-called classical schools of thought which were highly descriptive and relied heavily on case study approaches with only occasional use of interview methods.

At the end of the s, two important reports criticised marketing for its lack of methodological rigor, especially the failure to adopt mathematically-oriented behavioural science research methods.

From the s, marketing began to shift is reliance away from economics and towards other disciplines, notably the behavioural sciences, including sociology, anthropology and clinical psychology. This resulted in a new emphasis on the customer as a unit of analysis. As a result, new substantive knowledge was added to the marketing discipline - including such ideas as opinion leadership, reference groups and brand loyalty.

Market segmentation , especially demographic segmentation based on socioeconomic status SES index and household life-cycle, also became fashionable. With the addition of consumer behaviour, the marketing discipline exhibited increasing scientific sophistication with respect to theory development and testing procedures. In its early years, consumer behaviour was heavily influenced by motivation research, which had increased the understanding of customers, and had been used extensively by consultants in the advertising industry and also within the discipline of psychology in the s, '30s and '40s.

By the s, marketing began to adopt techniques used by motivation researchers including depth interviews, projective techniques, thematic apperception tests and a range of qualitative and quantitative research methods. Consumer behaviour entails "all activities associated with the purchase, use and disposal of goods and services, including the consumer's emotional, mental and behavioural responses that precede or follow these activities. Consumer behaviour is concerned with: Consumer responses may be: As a field of study, consumer behaviour is an applied social science.

Consumer behaviour analysis is the "use of behaviour principles, usually gained experimentally, to interpret human economic consumption. Understanding purchasing and consumption behaviour is a key challenge for marketers. Consumer behaviour, in its broadest sense, is concerned with understanding both how purchase decisions are made and how products or services are consumed or experienced.

Consumers are active decision-makers. They decide what to purchase, often based on their disposable income or budget. They may change their preferences related to their budget and a range of other factors. Some purchase decisions involve long, detailed processes that include extensive information search to select between competing alternatives. Some purchase decisions are made by groups such as families, households or businesses while others are made by individuals.

When a purchase decision is made by a small group, such as a household, different members of the group may become involved at different stages of the decision process and may perform different roles. For example, one person may suggest the purchase category, another may search for product-related information while yet another may physically go to the store, buy the product and transport it home.

It is customary to think about the types of decision roles; such as:. For most purchase decisions, each of the decision roles must be performed, but not always by the same individual. The importance of children as influencers in a wide range of purchase contexts should never be underestimated and the phenomenon is known as pester power. To understand the mental processes used in purchasing decisions, some authors employ the concept of the " black box "; a figurative term used to describe the cognitive and affective processes used by a consumer during a purchase decision.

The decision model situates the black box in a broader environment which shows the interaction of external and internal stimuli e. The decision model assumes that purchase decisions do not occur in a vacuum. Rather, they occur in real time and are affected by other stimuli, including external environmental stimuli and the consumer's momentary situation.

The elements of the model include: In addition, the buyer's black box includes buyer characteristics and the decision process, which influence the buyer's responses.

The black box model considers the buyer's response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized a problem, and seeks to solve it through a commercial purchase.

In practice some purchase decisions, such as those made routinely or habitually, are not driven by a strong sense of problem-solving. High involvement products are those that carry higher levels of risk and are often expensive, infrequent purchases. The consumer buying process is usually depicted as consisting of 5 distinct stages: The purchase decision begins with the problem recognition stage which occurs when the consumer identifies a need, typically defined as the difference between the consumer's current state and their desired state.

The strength of the need drives the entire decision process. Information search describes the phase where consumers scan both their internal memory and external sources for information about products or brands that will potentially satisfy their need. The aim of the information search is to identify a list of options that represent realistic purchase options. Throughout the entire process, the consumer engages in a series of mental evaluations of alternatives , searching for the best value.

Towards the end of the evaluation stage, consumers form a purchase intention, which may or may not translate into an actual product purchase. The stages of the decision process normally occur in a fixed sequence. The first stage of the purchase decision process begins with problem recognition also known as category need or need arousal. This is when the consumer identifies a need, typically defined as the difference between the consumer's current state and their desired or ideal state.

A simpler way of thinking about problem recognition is that it is where the consumer decides that he or she is 'in the market' for a product or service to satisfy some need or want.

The strength of the underlying need drives the entire decision process. Theorists identify three broad classes of problem-solving situation relevant for the purchase decision: Consumers become aware of a problem in a variety of ways including: During the information search and evaluation stages, the consumer works through processes designed to arrive at a number of brands or products that represent viable purchase alternatives.

Typically consumers first carry out an internal search ; that is a scan of memory for suitable brands. The evoked set is a term used to describe the set of brands that a consumer can elicit from memory and is typically a very small set of some 3- 5 alternatives.

The fact that a consumer is aware of a brand does not necessarily mean that it is being considered as a potential purchase. For instance, the consumer may be aware of certain brands, but not favourably disposed towards them known as the inept set. Such brands will typically be excluded from further evaluation as purchase options.

For other brands, the consumer may have indifferent feelings the inert set. Traditionally, one of the main roles of advertising and promotion was to increase the likelihood that a brand name was included in the consumer's evoked set. In practice, the consideration set has assumed greater importance in the purchase decision process because consumers are no longer totally reliant on memory.

The implication for marketers is that relevant brand information should be disseminated as widely as possible and included on any forum where consumers are likely to search for product or brand information, whether traditional media or digital media channels. Thus, marketers require a rich understanding of the typical consumer's touchpoints. Consumer evaluation can be viewed as a distinct stage. Alternatively, evaluation may occur continuously throughout the entire decision process.

Consumers evaluate alternatives in terms of the functional also called utilitarian and psycho-social also called the value-expressive or the symbolic benefits offered. Brand image or brand personality is an important psycho-social attribute.

Consumers can have both positive and negative beliefs about a given brand. Consumers who are less knowledgeble about a category tend to evaluate a brand based on its functional characteristics. However, when consumers become more knowledgeable, functional attributes diminish and consumers process more abstract information about the brand, notably the self-related aspects.

The marketing organization needs a deep understanding of the benefits most valued by consumers and therefore which attributes are most important in terms of the consumer's purchase decision.

During the evaluation of alternatives, the consumer ranks or assesses the relative merits of different options available. No universal evaluation process is used by consumers across all-buying situations. Thus the relevant evaluation attributes vary according to across different types of consumers and purchase contexts.

For example, attributes important for evaluating a restaurant would include food quality, price, location, atmosphere, quality of service and menu selection. Consumers, depending on their geographic, demographic, psychographic and behavioural characteristics, will decide which attributes are important to them. Potential patrons seeking a hedonic dining experience may be willing to travel further distances to patronise a fine-dining venue compared to those wanting a quick meal at a more utilitarian eatery.

After evaluating the different product attributes, the consumer ranks each attribute or benefit from highly important to least important. Once the alternatives have been evaluated, the consumer firms up their resolve to proceed through to the actual purchase. Purchase intentions are a strong, yet imperfect predictor of sales.

Sometimes purchase intentions simply do not translate into an actual purchase and this can signal a marketing problem. The extent to which purchase intentions result in actual sales is known as the sales conversion rate. Organizations use a variety of techniques to improve conversion rates. The provision of easy credit or payment terms may encourage purchase.

Sales promotions such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now rather than defer purchases for a later date. Advertising messages with a strong call-to-action are yet another device used to convert customers. Other types of calls-to-action might provide consumers with strong reasons for purchasing immediately such an offer that is only available for a limited time e.

The key to a powerful call-to-action is to provide consumers with compelling reasons to purchase promptly rather than defer purchase decisions. As consumers approach the actual purchase decision, they are more likely to rely on personal sources of information.

Methods used might include: Following purchase and after experiencing the product or service, the consumer enters the final stage, namely post-purchase evaluation. The consumer's purchase and post-purchase activities have the potential to provide important feedback to marketers. The post purchase stage is where the consumer examines and compares product features, such as price, functionality, and quality with their expectations.

This is also known as "post-purchase intention". Consumer actions, in this instance, could involve requesting a refund, making a complaint, deciding not to purchase the same brand or from the same company in the future or even spreading negative product reviews to friends or acquaintances, possibly via social media.

After acquisition, consumption or disposition, consumers may feel some uncertainty in regards to the decision made, generating in some cases regret. Post-decision dissonance also known as cognitive dissonance is the term used to describe feelings of anxiety that occur in the post purchase stage; and refers to the consumer's uneasy feelings or concerns as to whether or not the correct decision was made at purchase. This type of anxiety can affect consumers' subsequent behaviour and may have implications for repeat patronage and customer loyalty.

Consumers use a number of strategies to reduce post purchase dissonance. A typical strategy is to look to peers or significant others for validation of the purchase choice. Marketing communications can also be used to remind consumers that they made a wise choice by purchasing Brand X.

When consumers make unfavorable comparisons between the chosen option and the options forgone, they may feel post-decision regret or buyer's remorse. Consumers can also feel short-term regret when they avoid making a purchase decision, however this regret can dissipate over time. This refers to the formation of hypotheses about the products or a service through prior experience or word of mouth communications. There are four stages that consumers go through in the hypothesis testing: Hypothesis generation, exposure of evidence, encoding of evidence and integration of evidence.

Internal influences refer to both personal and interpersonal factors. Social theory suggests that individuals have both a personal identity and a social identity. Personal identity consists of unique personal characteristics such as skills and capabilities, interests and hobbies. Social identity consists of the individual's perception of the central groups to which an individual belongs and may refer to an age group, a lifestyle group, religious group, educational group or some other reference group.

Social psychologists have established that the need to belong is one of the fundamental human needs. Demographic factors include income level, psychographics lifestyles , age, occupation and socio-economic status.

Personality factors include knowledge, attitudes, personal values, beliefs , emotions and feelings. Psychological factors include an individual's motivation , attitudes , personal values and beliefs. Other factors that may affect the purchase decision include the environment and the consumer's prior experience with the category or brand.

Social identity factors include culture, sub-culture and reference groups. The consumer's underlying motivation drives consumer action, including information search and the purchase decision. The consumer's attitude to a brand or brand preference is described as a link between the brand and a purchase motivation.

One approach to understanding motivations, was developed by Abraham Maslow. Maslow's hierarchy of needs is based on five levels of needs, organized accordingly to the level of importance. Maslow's five needs are: Physiological needs and safety needs are the so-called lower order needs. Consumers typically use most of their resources time, energy and finances attempting to satisfy these lower order needs before the higher order needs of belonging, esteem and self-actualization become meaningful.

Part of any marketing program requires an understanding of which motives drive given product choices. Marketing communications can illustrate how a product or brand fulfills these needs. We typically feel more warmly toward things we encounter again and again.

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When you think about Italian-made products, what comes to mind? Is it the romantic image of a cobbler or artisan from Italy giving the "Made in Italy" brand such panache? Marketing takes this information to create ad campaigns about existing and new products with the intent to create a demand for products and services. By understanding consumer behavior, the marketing department of a company can effectively create an entire campaign to support the awareness and demand for a product or service.

Consumer behavior is the study of how people make decisions about what they buy, want, need or act in regards to a product, service or company. Consumers have more options than ever, with more companies competing for their attention and money.

Understanding consumer behavior is critical to being competitive. Companies that tailor their marketing efforts to match consumer behavior are more likely to understand their customers and provide products or services that appeal to them.

To understand consumer behavior, marketers must understand the factors that affect it, including psychological, personal and social factors. Additionally, there are several ways to study consumer behavior, like the black-box, personal-variable and complex models.

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The way that marketing benefits from understanding consumer behavior is examined. Try it risk-free for 30 days. An error occurred trying to load this video. Try refreshing the page, or contact customer support. You must create an account to continue watching.

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Consumer Involvement in the Decision-Making Process. Consumer Behavior Theory and Marketing Strategy. Consumer Behavior in the Hospitality Industry: Setting the Advertising Budget: What Is Consumer Buying Behavior? Rational Choice Theory in Marketing.

Influences on Business Buying Decisions. Understanding the Consumer Decision-Making Process: The Functions of Marketing Management. What Is the Buying Process in Marketing? Reference Groups in Marketing: Intro to Public Relations. The lesson addresses consumer behavior in marketing. What is Consumer Behavior in Marketing?

The Three Factors To fully understand how consumer behavior affects marketing, it's vital to understand the three factors that affect consumer behavior: Psychological Factors In daily life, consumers are being affected by many issues that are unique to their thought process.

Personal Factors Personal factors are characteristics that are specific to a person and may not relate to other people within the same group. Social Factors The third factor that has a significant impact on consumer behavior is social characteristics. Consumer Behavior Models Through research and observation, several models have been developed that help further explain why consumers make decisions, including the black box, personal variables and complex models.

How It's Studied There are many ways to study consumer behavior but the three most common ways include: Try it risk-free No obligation, cancel anytime. Want to learn more? Select a subject to preview related courses: Importance in Marketing Once companies have a better understanding of consumer buying habits and consumer behavior, they have valuable information about what consumers want, how they learn about products, and how they spend their money.

Lesson Summary Let's review! Consumer Behavior Facts Consumer behavior is the study of how people make decisions about what they buy, want, need, or act in regards to a product, service, or company. The three factors that affect consumer behavior are psychological, personal, and social. Consumer behavior is studied through focus groups, surveys, and tracking sales history.

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Today, consumer behaviour (or CB as it is affectionately known) is regarded as an important sub-discipline within marketing and is included as a unit of study in .

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Consumer behavior involves services and ideas as well as tangible products. The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for .

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Customer Behavior online seminar broadcasts from the best minds in marketing Be sure to check out our Upcoming Online Seminars. Tune in LIVE or watch the recordings at any time. Consumer behavior is a hotbed of psychological research as it ties together issues of communication (advertising and marketing), identity (you are what you buy), social status, decision-making, and mental and physical health. Corporations use findings about consumer behavior to .

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To define consumer behavior: it is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services. A more in depth definition will also include how that process impacts the world. Understanding consumer behavior is a vital aspect of marketing. Consumer behavior is the study of how people make decisions about what they buy, want, need, or act in regards to a product, service.