COURSE NOTES FOR BMM 320: CONSUMER BEHAVIOR | TOPIC 1: INTRODUCTION TO CONSUMER BEHAVIOR

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BUSINESS STUDIES

COURSE NOTES FOR BMM 320: CONSUMER BEHAVIOR

TOPIC 1: INTRODUCTION TO CONSUMER BEHAVIOR

Definition

Consumer behavior studies individuals, groups, or organizations and all the activities associated with purchasing, using, and disposing of goods and services.

It refers to the actions of the consumers in the marketplace and the underlying motives for those actions.

According to Engel, Blackwell, and Mansard, ‘Consumer behavior is the actions and decision processes of people who purchase goods and services for personal consumption’.

According to Louden and Bitta, ‘Consumer behavior is the decision process and physical activity, which individuals engage in when evaluating, acquiring, using or disposing of goods and services’

IMPORTANCE OF STUDYING CONSUMER BEHAVIOR

1.     Helps to achieve financial goals through increase of revenue:  Through enabling the company to identify and satisfy the unfulfilled consumer needs better and sooner than the competitors.

2.     Creation and retention of consumers: The company that studies consumer behavior continuously and attempts to meet buyers changing expectations, can retain its consumer for a long period.

3.     Helps to improve the competitive strengths of the company: By studying consumer behaviour, the company can identify consumers’ expectations early before other companies.

4.     Developing new products: Which is based on the needs and wants of the target market. A marketer must know the target market well in order to produce the best-fit product to the market needs.

5.     It’s useful for Dealers and Salesmen to identify the products needed by customers, and where to locate them.

6.     Effective use of productive resources: It assists managers in making organizational efforts consumer-oriented; ensuring the exact use of resources for achieving maximum efficiency.

7.     Adjusting marketing program over time: By studying consumer response patterns continuously, a marketer can easily know the changes taking place in the market and make necessary changes in the marketing program to adjust to the market.

8.     Predicting Market Trends: Consumer behavior can also aid in projecting future market trends. Marketer finds enough time to prepare for exploiting emerging opportunities, and/or facing challenges and threats.

9.     Consumer Differentiation: The market exhibits considerable differentiations. Each segment needs and wants different products. For every segment, a separate marketing program is needed. Knowledge of consumer differentiation is key to fitting marketing offers with different groups of buyers. Consumer behaviour study supplies the details about consumer differentiations.

 

Key terms

Consumer – individual purchasing goods and services.

Behavior – the way an individual(customer) acts in response to purchases, use, and disposal of goods and services.

There are three kinds of people in the marketplace: purchasers, users, and disposal systems. They can be the same (e.g., buying your Foodstuffs, using and disposing of the leftovers) or different people like a mother buying school uniforms for her kids who will give out to others when they outgrow them)

 

SCOPE OF CONSUMER BEHAVIOR

1. Consumer behavior and marketing management: Effective business managers realize the importance of marketing to the success of their firm.

2. Consumer behavior - Non-profit and social marketing: In today's world even non-profit organizations like government agencies, religious sects, universities, and charitable institutions have to market their services for ideas to the "target group of consumers or institutions."

3. Consumer behavior and government decision making: In recent years the relevance of consumer behavior principles to government decision making. Two major areas of activity have been affected:

4. Government services: It is increasingly and that government provision of public services can benefit significantly from an understanding of the consumers, or users, of these services.

5. Consumer protection: Many Agencies at all levels of government are involved with regulating business practices to protect consumer welfare.

6. Consumer behavior and energy marketing: It has become increasingly clear that consumers are entering an era of scarcity in terms of natural gas and water. These scarcities have led to promotions stressing conservation rather than consumption

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