Consumer behaviour

shopping arcade in Brussels, Belgium. Consumer behaviour, in its broadest sense, is concerned with how consumers select, decide and use goods and services. Consumer behaviour is the study of individuals, groups, or organisations and all activities associated with the purchase, use and disposal of goods and services. It encompasses how the consumer's emotions, attitudes, and preferences affect buying behaviour, and how external cues—such as visual prompts, auditory signals, or tactile (haptic) feedback—can shape those responses. Consumer behaviour emerged in the 1940–1950s as a distinct sub-discipline of marketing, but has become an interdisciplinary social science that blends elements from psychology, sociology, social anthropology, anthropology, ethnography, ethnology, marketing, and economics (especially behavioural economics). The study of consumer behaviour formally investigates individual qualities such as demographics, personality lifestyles, and behavioural variables (like usage rates, usage occasion, loyalty, brand advocacy, and willingness to provide referrals), in an attempt to understand people's wants and consumption patterns. Consumer behaviour also investigates on the influences on the consumer, from social groups such as family, friends, sports, and reference groups, to society in general (brand-influencers, opinion leaders).…

shopping arcade in Brussels, Belgium. Consumer behaviour, in its broadest sense, is concerned with how consumers select, decide and use goods and services.]] Consumer behaviour is the study of individuals, groups, or organisations and all activities associated with the purchase, use and disposal of goods and services. It encompasses how the consumer's emotions, attitudes, and preferences affect buying behaviour, and how external cues—such as visual prompts, auditory signals, or tactile (haptic) feedback—can shape those responses. Consumer behaviour emerged in the 1940–1950s as a distinct sub-discipline of marketing, but has become an interdisciplinary social science that blends elements from psychology, sociology, social anthropology, anthropology, ethnography, ethnology, marketing, and economics (especially behavioural economics). The study of consumer behaviour formally investigates individual qualities such as demographics, personality lifestyles, and behavioural variables (like usage rates, usage occasion, loyalty, brand advocacy, and willingness to provide referrals), in an attempt to understand people's wants and consumption patterns. Consumer behaviour also investigates on the influences on the consumer, from social groups such as family, friends, sports, and reference groups, to society in general (brand-influencers, opinion leaders). Due to the unpredictability of consumer behavior, marketers and researchers use ethnography, consumer neuroscience, and machine learning, along with customer relationship management (CRM) databases, to analyze customer patterns. The extensive data from these databases allows for a detailed examination of factors influencing customer loyalty, re-purchase intentions, and other behaviors like providing referrals and becoming brand advocates. Additionally, these databases aid in market segmentation, particularly behavioral segmentation, enabling the creation of highly targeted and personalized marketing strategies. ===Purchase decision=== Once the alternatives have been evaluated, the consumer firms up their resolve to proceed through to the actual purchase. For example, the consumer might say to themself, "Yes, I will buy Brand X one day." This self instruction to make a purchase is known as purchase intent. 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. For instance, a consumer may wish to buy a new product, but may be unaware of the retail outlets that stock it, so that purchase cannot proceed. The extent to which purchase intentions result in actual sales is known as the sales conversion rate. Organisations 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. A call-to-action is any device designed to encourage immediate sale. Typically, a call-to-action includes specific wording in an advertisement or selling pitch that employs imperative verbs such as "Buy now!" or "Don't wait!". 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.g. 'Offer must expire soon'; 'Limited stocks available') or a special deal usually accompanied by a time constraint (e.g. 'Order before midnight to receive a free gift with your order'; 'Two for the price of one for the first 50 callers only'). Additionally, service convenience is a saving of effort, in the way that it minimises the activities that customers may bear to buy goods and services. 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. For this reason, personal sales representatives must be well versed in giving sales pitches and in tactics used to close the sale. Methods used might include 'social evidence', where the salesperson refers to previous success and satisfaction from other customers buying the product. 'Scarcity attraction' is another technique, where the salesperson mentions that the offer is limited, as it forces the consumer to make a quicker decision and therefore spend less time evaluating alternatives. ==Influences on purchase decision== Purchasing is influenced by a wide range of internal and external factors. ====Motivations and emotions==== The consumer's underlying motivation drives consumer action, including the information search and purchase decision. The consumer's attitude to a brand (or brand preference) is described as a link between the brand and a purchase motivation. These motivations may be negative (to avoid pain or unpleasantness) or positive (to achieve some type of reward such as sensory gratification). One approach to understanding motivations was developed by Abraham Maslow. Maslow's hierarchy of needs is based on five levels of needs, organised accordingly to the level of importance. Maslow's five needs are: Physiological: basic levels of needs such as food, water, and sleep Safety: the need for physical safety, shelter, and security Belonging: the need for love, friendship, and also a desire for group acceptance Esteem: The need for status, recognition, and self-respect Self-actualisation: The desire for self-fulfillment (e.g. personal growth, artistic expression) 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-actualisation 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. Maslow's approach is a generalised model for understanding human motivations in a wide variety of contexts, but is not specific to purchasing decisions. Another approach proposes eight purchase motivations, five negative motives and three positive motives, which energise purchase decisions as illustrated in the table below. These motivations are believed to provide positive reinforcement or negative reinforcement. In the marketing literature, the consumer's motivation to search for information and engage in the purchase decision process is sometimes known as involvement. Consumer involvement has been defined as "the personal relevance or importance of a message [or a decision]". Purchase decisions are classified as low involvement when consumers experience only a small psycho-social loss in the event that they make a poor decision. On the other hand, a purchase decision is classified as high involvement when psycho-social risks are perceived to be relatively high. The consumer's level of involvement is dependent on a number of factors including perceived risk of negative consequences in the event of a poor decision, the social visibility of the product, and the consumer's prior experience with the product category. ====Perception==== Part of a marketing strategy is to ascertain how consumers gain knowledge and use information from external sources. The perception process is the process by which individuals receive, organise, and interpret information in order to attribute meaning to it. Perception involves three distinct processes: sensing information, selecting information, and interpreting information. Sensation is also part of the perception process and is directly linked to responses from the senses, creating reactions towards the brand name, advertising, and packaging. The process of perception is uniquely individual and may depend on a combination of internal and external factors, such as experiences, expectations, needs, and the momentary set. When exposed to a stimulus, consumers may respond in entirely different ways due to individual perceptual processes. A number of processes potentially support or interfere with perception. Selective exposure occurs when consumers decide whether to be exposed to information inputs. Selective attention occurs when consumers focus on some messages to the exclusion of others. Selective comprehension is where the consumer interprets information in a manner that is consistent with their own beliefs. Selective retention occurs when consumers remember some information while rapidly forgetting other information. Collectively the processes of selective exposure, attention, comprehension, and retention lead individual consumers to favor certain messages over others. The way that consumers combine information inputs to arrive at a purchase decision is known as integration. Marketers are interested in consumer perceptions of brands, packaging, product formulations, labeling, and pricing. Of special interest is the threshold of perception (also known as the just noticeable difference) in a stimulus. For example, how much should a marketer lower a price before consumers recognise it as a bargain? In addition, marketers planning to enter global markets need to be aware of cultural differences in perception. For example, westerners associate the colour white with purity, cleanliness, and hygiene, but in eastern countries white is often associated with mourning and death. Accordingly, white packaging would be an inappropriate colour choice for food labels on products to be marketed in Asia. ===External influences on purchase decision=== Purchasing behaviour can also be affected by external influences, such as culture, sub-culture, social class, reference groups, family, and situational determinants. ====Culture==== Culture is the broadest and most abstract of the external factors. Culture refers to the complexity of learning meanings, values, norms, and customs shared by members of a society. Cultural norms are relatively stable over time, so culture has a major effect on consumer behaviour. Research studies have consistently shown that culture influences almost every aspect of purchasing: it affects basic psychological domains such as self-identity and motivation, the way that information is processed, and the way that advertising messages are interpreted. Additionally, perceived value and happiness are critical in shaping consumers' attitudes and behavioral intentions. The cultural choice of consumption behaviour is influenced by two decisive factors: the external factor—the overall social and cultural atmosphere—and the internal factor—the consumer's artistic quality, aesthetic pursuit, and cultural value orientation. The cultural choice of consumption must be restricted by these two decisive factors, both inside and outside. The so-called social and cultural atmosphere is reflected in the influence of consumption atmosphere, customs, and trends on consumers. For example, all kinds of money-worship consumption criticised by public opinion are the influence of vulgar culture. The so-called internal factors mainly refer to what kind of spiritual realm and value orientation consumers adopt towards consumption, and what they show through consumption is a certain cultural mentality. Marketers interested in global expansion are especially interested in understanding cross-cultural differences in purchasing and consumption. For instance, Ferrari, one of the world's top brands found that Chinese consumers are very different from their Western counterparts. Whereas consumers in the US, UK and Australia expect to wait 12 months for a custom-made Ferrari, prospective Chinese buyers are more likely to want to drive the vehicle off the showroom floor. China is an 'instant-gratification market'. Meaning buyers see their friends riding around in a luxury car and want to have the same as quickly as possible. To meet the growing demand for luxury goods, Ferrari and other luxury car makers have modified their production processes for Asian markets. ====Subcultures==== Subcultures may be based on age, geographic, religious, racial, and ethnic differences. More often, however, a subculture occurs when people with shared interests form a loose-knit group with a distinctive identity (sometimes called consumer tribes). Members of subcultures are self-selected, and signal their membership status by adopting symbols, rituals, or behaviours that are widely understood by other members of the tribe (e.g. a dress code, hairstyle or even a unique way of speaking). For example, within youth culture it is possible to identify a number of sub-groups with common interests such as punks or goths. Generally known as communities, as they create a sense of belonging to something important. A different type of subculture is a consumption subculture which is based on a shared commitment to a common brand or product. In other words, consumption subcultures cut across demographic, geographic, and social boundaries. The most well-known example of a consumption subculture is that of Harley-Davidson motorcycle owners. Ethnographic researchers who have studied Harley riders believe that there are only two types of motor cyclists: Harley owners and the rest. Harley-Davidson has leveraged the values of this subculture by establishing the Harley Owners Group (HOG). Subcultures are important to marketers for several reasons. Firstly, given that subcultures can represent sizeable market segments which are profitable and influential, there are obvious advantages in developing and selling products and services that meet the needs of subculture members. Secondly, and perhaps less obviously, many new fads and fashions emerge spontaneously from within these tribal groups. Trend-spotters are accordingly interested in studying the lifestyles and activities of tribes in an effort to spot new trends before they go mainstream. ====Social class==== Social class refers to relatively homogenous divisions in a society, typically based on socio-economic variables such as educational attainment, income, and occupation. Social class can be very difficult to define and measure, however marketers around the world tend to use a conventional classification which divides any given population into five socio-economic quintiles (e.g. In Australia the groups AB, C, D, E and FG, where AB is the top socio-economic quintile, but in much of Asia the quintiles are labelled I, II, III, IV and V where I is the top quintile). In Australia, for example, the AB socio-economic group account for just 24% of the population, but control 50% of discretionary spending. The top quintiles (i.e. AB socio-economic segments) are of particular interest to marketers of luxury goods and services such as travel, dining-out, entertainment, luxury cars, investment or wealth management services, up-market consumer electronics, and designer labels (e.g. Louis Vuitton). However, middle-class consumers tend to consume more carefully in comparison and collect information to compare different producers in the same line. Those who are lower-class consumers tend to buy more on impulse in comparison to the wealthy class who purchases goods to maintain social status. ====Reference groups==== A reference group is defined as "a group whose presumed perspectives or values are being used by an individual as the basis for his or her judgment, opinions, and actions". Reference groups are important because they are used to guide an individual's attitudes, beliefs and values. Insights into how consumers acquire a given value system can be obtained from an understanding of group influence and group socialisation processes. The literature identifies five broad types of reference group: primary, secondary, aspirational, dissociative and formal: Primary groups: groups, such as family, that exert a strong influence on attitudes and behaviours Secondary groups: groups such as clubs, societies, sports teams, political parties, religions that align with a person's ideas or values, but exert a less fundamental influence on the formation of attitudes and behaviours Aspirational groups groups to which an individual does not currently belong, but possibly aspires to become a member because the group possesses characteristics which are admired. Disassociative reference groups - a group which has a negative image; individuals may disapprove of the disassociative group's values, attitudes or behaviours and may seek to distance themselves from such groups. Opinion Leaders can act like reference groups in that they exert considerable social influence because of their product knowledge, expertise and credibility. In the marketing literature, opinion leaders are also known as influencers, mavens, and even hubs. Opinion leaders are specific to a product category, so that an opinion leader for computers is not likely to be an opinion leader for fashion. Typically, opinion leaders have high levels of involvement with the product category, are heavy users of the category, and tend to be early adopters of new technologies within the category. Journalists, celebrities, and bloggers are good examples of an opinion leader due to their broad social networks and increased ability to influence people's decisions. Indeed, recent evidence suggests that bloggers may be emerging as a more important group of opinion leaders than celebrities. In order to leverage the value of opinion leaders in marketing strategies, it is important to be able to identify the unique opinion leaders for each category or situation and this can be very challenging. Some techniques that can be used are through key informants, socio-metric techniques and self-questionnaires. More often, however, marketers use gut instinct to identify opinion leaders. For example, marketers of athletic shoes have been known to provide gym and aerobic instructors with free shoes in the hope that class members will adopt the same brand as the instructor. Marketers of cosmetics and skincare preparations regularly provide fashion editors with free samples in the hope that their products will be mentioned in fashion magazines. ====Information search==== Studies have found that people in a positive mood are more efficient at information search activities. That, is they are more efficient at processing information, are able to integrate information by identifying useful relationships and arrive at creative solutions to problems. Due to their efficiency processing information, those who are in a positive mood are generally quicker to make decisions and easier to please. Research consistently shows that people in a positive mood are more likely to evaluate information positively. As online environments become more important as a consumer search tool, it may be prudent for web designers to consider site-design issues such as ease of navigation, lest poor design contribute to customer frustration thereby engendering a bad mood and ultimately leading to unfavourable product/brand evaluations. ====Choice==== Affect may play an important role in impulse-buying decisions. Research suggests that consumers place higher weightings on immediate affective rewards and punishments, while delayed rewards receive less weighting. For instance, the immediate pleasure of eating a sweet treat often outweighs the longer term benefits of eating a healthy alternative such as fruit. This occurs because the immediate emotional gain is a strong driver, and one that consumers can readily visualise whereas the more distant goal lacks sufficient strength to drive choice. ====Customer experience==== Customers who are in a bad mood are more difficult to please. They are slower to process information and consequently take longer to make decisions. They tend to be more argumentative and are more likely to complain. ====Customer satisfaction==== The relationship between affect and customer satisfaction is an area that has received considerable academic attention, especially in the services marketing literature. The proposition that there is a positive relationship between affect and satisfaction is well supported in the literature. In a meta-analysis of the empirical evidence, carried out in 2001, Szymanski et al., suggest that affect may be both an antecedent to and an outcome of satisfaction. Emotions elicited during consumption are proposed to leave affective traces in memory that are available for consumers to access and integrate into their satisfaction assessments. A 2011 meta-analysis illustrates how both repurchase intent and loyalty enjoy a strong positive relationship (0.54) with customer satisfaction. Another meta-analysis finds that "The results indicate that both cognitive-related variables (including brand awareness, brand personality, and brand identity) and hedonic-related variables (including hedonic attitude, entertainment, and aesthetic appeal) have significant impacts on quality and value perceptions towards the brand (including perceived quality, reputation, brand image, perceived value, commitment, and trust). In addition, these variables are all significant predictors of brand loyalty." A third meta-analysis, from 2013 elaborates on the concept of brand personality (bp): "First, the key drivers of BP are communication with hedonic benefit claims, branding activities, a brand's country-of-origin, and consumer personalities. Second, the study finds that the effects of BP are stronger for mature brands than for brands in the early life cycle stages. Third, sincerity and competence have the strongest influence on brand success variables (e.g., brand attitude, image, commitment, purchase intention), while excitement and ruggedness have the weakest influence on brand attitude and brand commitment." ====Advertising==== Emotion can play an important role in advertising. In advertising, two different approaches to persuasion are common: (a) thinking ads that require cognitive processing (also known as the central route to persuasion) and, (b) feeling ads that are processed at an emotional level (also known as the peripheral route). Advertisers can bypass cognitive, rational processing which can lead to counter-arguing by simply appealing to the emotions. Neuro-imaging studies suggest that when evaluating brands, consumers primarily use emotions (personal feelings and experiences) rather than information (brand attributes, features, and facts). It is relatively widely accepted that emotional responses require fewer processing resources (i.e. are easier) and also result in more enduring associations with the brand being advertised. Feelings elicited by the advertising message can shape attitudes towards the brand and to the advertisement. ==References== Deaton, Angus; Muellbauer, John, Economics and Consumer Behavior, Cambridge; New York : Cambridge University Press, 1980. Deutsch, D., & Deutsch, J. A. (1975). Short-term Memory. New York: Academic Press. Ferber, R. (1976). A Synthesis of Selected Aspects of Consumer Behaviour. Chicago, Ill. Guilford, J. P. (1967). The Nature of Human Intelligence. 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