Marketing Management module 3 uma k

Marketing Management MODULE 3
UMA K, Assistant professor Page 1
Module 3: Buyer Behavior - Buyer Behavior – buying Influencing Factors – Buyer Behavior
Models– Online Buyer Behavior - Building And Measuring Customer Satisfaction – Customer
Relationships Management – Customer Acquisition, Retaining, Defection.
BUYER BEHAVIOUR:
Introduction
Marketing orientation makes consumer the center stage of all the organizational efforts. An
organizations success to a large extent depends on how well they can connect with their
consumers. It is essential for companies to have a 360-degree view of both the daily lives of the
consumers as well as changes that occur during their lifetime so that the right product can be
marketed to the right consumers.
Consumers are unique in themselves; their needs and wants are diverse from one another;
their consumption pattern and consumption behavior are varied. For an organization to survive
and grow, it is essential for the organization to identify the needs and wants of their consumers
Though similar, consumers are unique in themselves; they have needs and wants which are
varied and diverse from one another; and they have different consumption patterns and
consumption behavior. The marketer helps satisfy these needs and wants through product and
service offerings. For a firm to survive, compete and grow, it is essential that the marketer
identifies these needs and wants, and provides product offerings more effectively and efficiently
than other competitors. A comprehensive yet meticulous knowledge of consumers and their
consumption behavior is essential for a firm to succeed.
Who is a Consumer?
A consumer can be defined as a person or group of persons who purchase or consume a products
or services. They basically identify a need or desire, search for a product to satisfy their need,
buy the product and consume it to satisfy the need. They are the actors in the marketplace. They
buy the products for personal use and not for resale or manufacturing. A consumer could be an
individual, a group of individuals, a business, an organization or an industrial undertaking.
Concept and Definition of Consumer Behavior
Consumers are the fulcrum around which marketing revolves. Marketing starts with
understanding the needs of consumers and ends with the satisfaction of consumers. Thus, it

becomes important for businesses to understand the actions of consumers in the marketplace and
what the underlying causes for such actions are.
Consumer behavior is the study of what consumer’s buy, why they buy, when they buy,
from where they buy, in how much quantity they buy, how often they buy it and how often they
use it. For e.g. if the organization decides to manufacture a new variety of shampoo, the
organization needs to analyze individual consumption behavior as to why consumers use
shampoo (to reduce hair fall, to prevent dandruff), which brand of shampoo they buy (Sun silk or
L’Oreal), why he buys it (because he believes it will reduce hair fall better than competing
brands), when he buys it (weekly/ monthly), where he buys it (super market/ retail outlet), how
much he buys it (100 grams/200 grams). The answer to all these depends on the consumer’s
social and cultural background, age and family life cycle, social class, perception, self concept,
attitude, beliefs, values and many factors internal and external to the consumer.
Consumer behavior can be defined as the study of how consumers (which includes
individuals, groups and organizations) select, buy, use and dispose of goods, services, ideas or
experiences to satisfy their needs and wants. Consumer Behavior is multi disciplinary and has
roots in different disciplines like psychology, sociology, marketing, social anthropology and
economics. The objective of consumer behavior is to understand the decision making process of
consumers, individually as well as in groups and analyze how emotions have an effect on their
decision to buy.
Schiffman and Kunuk have defined consumer behavior as “The behavior that consumers
display in searching for, purchasing, using, evaluating and disposing of products and services
that they expect will satisfy their needs.”
More than a century ago, the father of our nation, Mahatma Gandhi had made a visionary
and deep meaningful statement at Johannesburg, South Africa at 1890 – “A customer is the most
important visitor on our premises. He is not dependent on us. We are dependent on him. He is
not an interruption on our work. He is the purpose of it and not an outsider on our premises. He
is the part of it. We are not doing a favor by serving him. He is doing us a favour by giving us
the opportunity to do so”. Though this statement was not made in the marketing concept, there is
a lot of wisdom and insight into Mahatma’s words. Today all the firms are engaged in the

process of creating a life time value and relationship with their customers. This chapter deals
with studying consumer behavior as a related field of marketing.
Buyer, Customer and Consumer:
Buyer, Customer and Consumer
Consumer Behavior: Behavior is the interaction with the ambient surrounding environment,
inherent in living creatures and mediated by their external and inner activeness. Thus consumer
behavior is actions of consumers in the market place and the underlying motives for those
actions. Marketers expect that by understanding what causes consumers to buy particular goods
and services, they will be able to determine which products are needed in the market place,
which are obsolete and how best to present those goods to the consumer. The study of consumer
behavior is the study of how individuals make decisions to spend their available resources (time,
money, effort ) on consumption related items. In the words of Walters and Paul “consumer
behavior is the process whereby individuals decide what, when, where, how and from whom to
purchase goods and services.”
Need or Importance of Study of Consumer Behavior:
The modern marketing management tries to solve the basic problems of consumers in the area of
consumption. To survive in the market, a firm has to be constantly innovating and understand the
latest consumer needs and tastes. It will be extremely useful in exploiting marketing

opportunities and in meeting the challenges that the Indian market offers. It is important for the
marketers to understand the buyer behavior due to the following reasons.
• The study of consumer behavior for any product is of vital importance to marketers in shaping
the fortunes of their organizations.
• It is significant for regulating consumption of goods and thereby maintaining economic stability.
• It is useful in developing ways for the more efficient utilization of resources of marketing. It also
helps in solving marketing management problems in more effective manner.
• Today consumers give more importance on environment friendly products. They are concerned
about health, hygiene and fitness. They prefer natural products. Hence detailed study on
upcoming groups of consumers is essential for any firm.
• The growth of consumer protection movement has created an urgent need to understand how
consumers make their consumption and buying decision.
• Consumer’s tastes and preferences are ever changing. Study of consumer behavior gives
information regarding color, design, size etc. which consumers want. In short, consumer
behavior helps in formulating of production policy.
• For effective market segmentation and target marketing, it is essential to have an understanding
of consumers and their behavior.
Types of Consumer Behavior:
There are four types of consumer behavior. They are;
Complex Buying Behavior: Consumers goes through complex buying behavior when they are
highly involved in a purchase and aware of significant differences among brands. Consumers are
highly involved when the product is expensive, bought infrequently, risky and self-expensive.
Here consumers go through a rational/logical thinking process to collect as much information as
possible about the available brands. Behavior exhibited while purchasing a car is an example of
complex buying behavior.
Dissonance Reduction Buying Behavior: Sometimes consumers are highly involved in
purchases but see little difference in the brands. After the purchase they feel that the product
does not perform to their expectations. They may thing about alternative brand which has
forgone in the brand selection process. As a result, they feel some discomfort. This mental
condition is known as Cognitive Dissonance.

Variety Seeking Buying Behaviour: Here consumers have a lot more brand options to choose.
At the same time there are significant brand differences. Unit price of product is low. Consumer
involvement is also low. But consumer show brand switching behavior. They go on changing
from one brand to another. They like experiments for the sake of variety satisfaction. They
exhibit variety seeking behavior in case of products like soap, detergents, toothpaste etc.
Habitual Buying Behavior: In this situation consumers buy their products on regular basis.
Brand switching behavior is quite common here. Variations among brands are significant.
Products are usually low priced. Gathering product knowledge is not so important. Consumers
show habitual buying behavior in case of products like salt, matches etc.
Need for understanding Consumer Behavior
Consumer is a priori of business. Marketing begins with needs of the consumers and ends
with the satisfaction of the consumers. An understanding of consumer behavior enables
organizations to produce those goods and services that consumers want. Also modifications can
be made in the products design, components, packaging etc. according to the requirements of the
consumers. Moreover, with time, the needs and preferences of consumers undergo a change. An
understanding of consumer behavior helps organizations adapt to these changes. Knowledge of
consumer behavior on the part of organizations helps them to plan and implement marketing
strategies in a more effective manner. Market segmentation and selection of target market largely
depends on a thorough understanding of consumer behavior. The marketing mix cannot be
developed until the marketers do not have an understanding of the consumers. In short, the
success of an organization largely depends on how well they understand the consumers.
Factors affecting Consumer Behavior
There are a number of factors that affect the buying behavior of consumers. These factors can be
classified under four heads
1. Cultural Factors
2. Social Factors
3. Personal Factors
4. Psychological Factors

1. Cultural Factors
Cultural factors are the primary determinant of a person’s needs and wants. Culture encompasses
values, beliefs, ideologies, law, customs, languages and morals of a particular community or
group of individuals. It is shared socially, learned, prescriptive, enduring dynamic and
cumulative.
Culture is one of the most important factors that have an effect on consumer behavior. It
is pervasive in all marketing activities. It forms the basis for market segmentation, design of the
product, the packaging of the product, promotion strategies. Marketers need to be very careful
while analyzing the culture of different groups, regions and countries.
Even within the same country, people belonging to different regions have different
cultures which are reflected in the kind of products they demand. For e.g. women from Assam
and West Bengal prefer to buy saris as compared to women living in Haryana and Punjab.
Similarly, people in North India prefer chapattis over rice as compared to people living in East
and South India
2 Sub-cultures
Each culture consists of small distinct identifiable groups that have unique characteristics. These
sub cultures provide more specific identification for their members. Sub culture includes

religions, nationalities, racial groups and geographic regions. Consumer’s preferences are
influenced by the sub culture they belong to. For instance Hindu brides wear red, maroon or
some bright color Lehenga on their wedding whereas Muslim brides wear green and Christian
brides wear white. Similarly, Hindus consider eating beef a sin whereas Muslims and Christians
relish it.
3 Social Classes
Some form of social stratification takes place in almost all societies. The most frequent form is
social class. Social Classes are hierarchical homogenous divisions in the society which are
representative of a cluster of variables like occupation, income, wealth, education etc. The
members of a particular social class share similar set of values, interests and pattern of behavior.
Social classes differ on the basis of speech patterns, recreation preferences, clothing and so on.
Under the social class system individuals are perceived to occupy superior or inferior positions.
It is possible for an individual during his lifetime to move up or down on the social class ladder.
In India, marketers use Socio Economic classification (SEC) which is a combination of the chief
wage earners education and occupation to classify consumers in urban areas. All the households
in urban areas are divided into 8 categories namely: A1, A2, B1, B2, C, D, and E1and E2,
wherein A1 represents highest purchase potential and E2 is indicative of the lowest. Similarly,
for rural areas a scale has been developed by marketers based on the occupation of the chief
wage earner of the household. The households are classified into 4 broad categories namely R1,
R2, R3, R4 wherein R1 is indicative of high purchase potential and R4 is low purchase potential.
Consumers in different social classes show distinct product and brand preferences in areas like
clothing, automobiles, leisure activities etc. For instance people who belong to A1 or A2
category would buy Mercedes or BMW or Jaguar whereas a person belonging to B1 or B2 might
buy a Honda or Skoda.
Social Factors
Human beings are social animals. They need people to communicate and share their ideas and
views. Just like cultural factors, social factors play a significant role in the consumer’s decision
making process.
1 Reference groups

A group comes into existence when two or more persons interact to realize a common goal. A
person’s reference groups consist of all those groups that have direct or indirect influence on
their attitude and behavior. The groups that have a direct influence on an individual’s behavior
are referred to as Membership Group. The groups with which individual’s interacts
continuously and informally are referred to as Primary Groups and consists of the family,
friends, neighbors and co-workers. The groups with which individuals do not interact
continuously and interact formally are known as Secondary Groups and consist of professional,
religious and trade union groups. Consumers also tend to get influenced by groups to which they
do not belong. A group that an individual aspires to join is known as Aspirational Group and
the groups whose behavior and attitude are rejected by an individual are called Dissociative
Groups. Reference groups impact their members by exposing them to new behaviors and
lifestyles and influencing their self concept and attitude.
The beliefs, attitude and consumption practices of the reference groups have an influence
on the behavior of consumers. Consumers take cues from reference groups when they purchase
anything from automobiles, jewellery to clothing. Reference groups, generally, influence
consumers in 2 ways: Normative influence and Informational influence.
Normative influence: it takes place when consumers perform those actions that conform to the
expectation of another person. This influence is driven by established norms of behavior i.e.
according to what is acceptable to society. The reference group that exerts normative influence
on the consumer has the ability to reward or punish an individual’s behavior.
Normative influences have an effect on the consumers when they are buying products that will
be consumed in public. For instance when a consumer is buying clothing, normative influences
come into play since the consumer wants to avoid being ridiculed and expects to receive
compliments. In contrast if the products are to be consumed privately the normative influences
are less likely to affect consumer’s decision. For e.g. normative influences have little role to play
in consumers decision to buy mattresses.
Informational Influence: This takes place when the consumer is provided information to help
him make a purchase decision. The information provided generally is based on the personal
experiences of the individual providing the information. It helps the consumer save time and

money as it cuts down the search time and the consumer gets access to a reliable product without
having to incur replacement costs.
The informational influences have greater impact on consumer’s decision to buy since
consumer’s associate word of mouth with greater value especially when the source of
information is personally known to them. Informational influences tend to dominate in the
purchase of products that are complex since a high amount of learning is required before
purchasing them such as houses and for products in which some amount of risk is involved such
as pediatric care.
2 Family: Family is defined as a group of two or more persons residing together who are related
by birth, marriage or adoption. In the life of an individual, family can be distinguished into two
types: the family of orientation and the family of procreation. Parents and siblings make the
consumer’s family of orientation and have the maximum amount of influence. They influence
the consumer’s orientation towards politics, religion, and economics has an impact on the
consumer’s self-worth and ambition. Family of procreation consists of the consumer’s spouse
and children. They have a direct influence on everyday buying behavior of consumers.
Depending on the type of product different members of the family dominate the decision
making process. For e.g. the decision regarding which automobile to be bought or which
insurance policy to buy are generally influenced by husbands whereas the decision regarding
kitchen appliances are influenced by wives.
3 Role and Status: An individual is a part of many groups- family, clubs, and organizations.
Role refers to the activities an individual is required to perform as part of the group/groups to
which he belongs. Each role that an individual performs has an effect on the status he enjoys in
the society. Moreover, each individual plays a dual role in the society depending on the group to
which they belong. The vice president of marketing in a reputed firm also plays the role of a
father and husband at home. Consumers buy products according to the status they enjoy in the
society and the role they are playing. Consumers buy Ferrari or Porsche not just for the superior
quality but also because these cars represent social success. It is important for marketers to be
aware of the status symbol potential of products.

3 Personal Factors
The personal characteristics of an individual such as age and life cycle stage, occupation,
personality and life style have a direct impact on the consumer’s decision to purchase a product.
1 Age and Life cycle stage
Over the life span of an individual they generally buy different kinds of products. The products
that they buy at 20 years of age will be very different from the products that they buy when they
are 70. As the age of an individual grows an evolution takes place in his values, lifestyle, hobbies
and habits which have an effect on the type of products he consumes. For instance an individual,
as he grows in age, may change his diet from unhealthy products (like fast food, soft drinks) to
healthy products( like fruits, Organic food, green tea) to avoid health issues. Often the
consumer’s preferences in food, clothing, furniture and recreation modify according to their age.
Moreover, the life cycle stage also has an impact on the consumer’s behavior in the
marketplace. An individual, who is single, married, married with kids, married with no children
living with him, retired etc. offer different opportunities for marketers. For e.g. a young single
individual would prefer to buy smart phones, basic furniture, trendy clothes and exotic vacations
whereas as married couples with young children would prefer to buy toys, healthy food,
comfortable clothes, bicycles and life insurance policies.
2 Occupation and Economic Factors
An individual’s decision to buy or not to buy a particular product largely depends on his
occupation and income. A blue collar worker would buy clothes required for work, comfortable
shoes whereas the president of a company would buy designer clothes, country club membership,
air travel etc. Software companies design different products for lawyers, accountants, engineers,
physicians etc.
Economic circumstances refer to an individual’s level of income, stability of income,
time pattern of income, the assets owned by him, his savings, the proportion of assets that are
liquid, borrowing power, debts and his attitude towards borrowing and spending. These factors
that together represent the economic circumstances greatly impact the product choices made by
consumers as they influence the consumer’s capability to buy.
3 Personalities and Self Concept

Personality refers to a combination of characteristics or qualities that are relatively
consistent and form an individual’s distinctive character. They are inner psychological
characteristics of an individual that are manifested in outer behavior. Personality is relatively
enduring but may change with time and abrupt events. It is often defined in terms of traits such
as self confidence, sociability, dominance, defensiveness and adaptability.
Each individual’s personality has an effect on the type of products they consume. Brands like
consumers also have personality and consumers are likely to choose those brands whose
personality matches their own. Marketers need to understand that to attract more consumers
brands need to develop a personality of traits and values which is in sync with that of consumers
they are targeting.
For e.g. Apple has built an image of innovativeness, creativity and boldness which is able to
attract consumers who identify with these values and will feel valued by buying a product from
Apple. Consumers don’t just buy products based on their needs and features of the products.
They also look for products that are consistent and reinforces with the image they have of
themselves or the image they would like to have.
4. Lifestyle
Lifestyle is the way in which a person lives. A lifestyle is a means of forging a sense of
self and to create cultural symbols that resonate with personal identity. It is an individual’s
pattern of living and is expressed through his activities, interests, opinions and desires.
Individuals belonging to the same culture, social class, occupation even family may lead very
different lifestyles. It is imperative for marketers to search for relationships between their
products and lifestyle groups. The types of products that are consumed by the consumer depend
on the lifestyle they follow. If an individual follows a healthy lifestyle, they are likely to
purchase organic products, buy sports shoes, join gyms etc.
4 Psychological Factors
Consumer responses are influenced by 4 psychological processes-motivation, perception,
learning and attitude.

1 Motivation
The term motivation is derived from the word motive which refers to the needs, drives, urges,
wants or impulses within an individual. They are the starting point in the motivation process.
Motivation is an activated internal need state leading to goal-directed behavior to satisfy that
need. Motives are relatively enduring, strong, and persistent internal stimuli that arouse and
direct behavior toward certain goals.
Recognition of need is the starting point of the consumer buying process. Need can be
defined as the lack of something useful. Some needs are biogenic while some are psychogenic.
Biogenic needs arise from psychological states of tension such as thirst, hunger, discomfort
whereas psychogenic needs arise from psychological state of tension such as the need for
recognition, esteem or belonging. A need becomes a motive when it’s aroused to a sufficient
level of intensity to drive an individual to act.
An individual can be motivated to buy a product for convenience, for style, for prestige,
for self-pride or being at par with others. If the marketers know what creates motivation, they
will be able to develop marketing strategies that will be able to influence consumers’ motivation
to think about, be involved with, and/or process information about their brand or product
2 Perceptions
Perception is the process by which an individual selects, organises and interprets information
input to create a meaningful picture of the world. Perception depends not only the physical
stimuli but also on the relationship of the stimuli with the surrounding field and on conditions
within each individual. For e.g. a salesperson talking fast may be perceived by some people as
aggressive while some may perceive him to be intelligent.

An individual faces thousands of stimuli daily but it is not possible for the brain to
process all the stimuli consciously. The brain focuses only on a few depending on the
individual’s personal experiences, beliefs and characteristics.
Perception mechanism can be organized into three processes
Selective Attention: Attention is the allocation of processing capacity to some stimulus.
Attention could be voluntary or involuntary. Voluntary attention is something purposeful
whereas involuntary attention is grabbed by someone or something. Selective attention refers to
the process where individuals pay attention to information that is of use to them or their
immediate family members. A consumer in a single day is exposed to numerous advertisements,
billboards, hoardings etc. but he is interested in only those which would benefit him in any way.
He would not be interested in information which is not relevant at the moment.
A consumer is likely to be more attentive to a stimulus that relates to a current need.
Suppose a consumer is interested in buying a laptop. He is more likely to notice advertisements
of laptops rather than advertisements of televisions. Also consumers are more likely to notice
stimuli whose deviations are large in relationship to the normal size of the stimuli. For e.g. an
individual will notice an ad offering Rs. 100 off on the selling price rather than Rs. 5 off. Lastly,
a consumer is likely to be attentive a stimuli or information that is relatively new and out of the
ordinary. For instance an innovative advertisement that is different from that of the competitors
is more likely to catch the attention of consumers.
Selective Distortion: the noticed stimuli’s don’t always come across in the way the senders
intended it to. In many situations, two individuals are not likely to interpret information or a
stimulus in the same way. Each individual will have a different perception based on his
experience, state of mind, beliefs and attitudes. Selective distortion leads people to interpret
situations in such a manner that they are consistent with their beliefs and values.
For marketers it means a message that they communicate about the brand in the forms of
advertisements, billboards, press releases etc may not be perceived by the consumers exactly in
the same way. Thus, it becomes imperative for brands to regularly ask consumers in order to
know their actual brand perception.
Popular and strong brands are generally benefitted from selective distortion when consumers
distort neutral or ambiguous brand information to make it more positive. A number of

experiments have shown that if a consumer is given the same product, they are likely to find that
the product is or tastes better when they’ve been told that it’s from a brand they like than when
they’ve been told it’s a generic brand. While the product is exactly the same.
Selective Retention: it is not possible for an individual to retain all the stimuli and
information that they have been exposed to. Selective retention means that the individual will
retain only that information which will fit with their existing beliefs and perceptions. Because of
selective retention consumers are likely to remember the good points of a brand they like and
forget good points about competing brands. Selective retention works for strong brands.
Moreover, it emphasizes the need for brands to use repetition to ensure that their message is not
overlooked.
3 Learning: Learning induces changes in an individual’s behavior and arises from their past
experiences. In every circumstance an individual’s perception is conditioned by their prior
experiences, for it is this which constitutes their preparatory set or expectations and the
framework into which they seek to place and organize new stimuli. In other words, a consumer
learns from their prior experience and tries to maintain a balance by relating and interpreting new
stimuli in terms of past or learned stimuli.
Most human behavior is learned, although much learning is incidental. Learning takes
place due to interplay of drives, stimuli, cues, responses and reinforcements. Marketers can build
demand for their products by associating the product with strong drives, using motivating cues
and providing positive reinforcement.
4 Beliefs and Attitude
Attitude and beliefs are acquired by an individual through experience and learning. A
belief is a descriptive thought that an individual holds about something. Attitude can be defined
as a feeling, an assessment of an object or idea and the predisposition to act in a certain way
toward that object. Attitudes allow the individual to develop a coherent behavior against a class
of similar objects or ideas. Beliefs as well as attitudes are generally part of an individual’s
personality and are difficult to change.
Marketers need to keep track of beliefs that consumers formulate about their products
because belief makes up product image and brand image and have an influence on consumer’s

decision to buy. If consumers have formulated some negative belief about the product which is
preventing purchase the marketer will have to come out with a campaign to correct it.
Consumers have attitude regarding politics, religion, food, music, clothing etc. Just like
belief, the attitude of the consumer also has an effect on the consumer’s decision to purchase a
product. It is important for marketers to gauge the attitude of the consumers towards their
product and brand. If the attitude of consumers is negative they need to come out with strategies
that will change their attitude. However, if the attitude of the consumers towards the companies
brand or products is positive it is essential for marketers to take measures that will ensure in
keeping the attitude positive.
Decision Making: Decision Making is the process of choosing the best alternative from a
number of different alternatives that are available. It is the act of making a choice after
evaluating the pros and cons of each alternative. It is a problem solving and goal oriented process.
Decision making can take two forms
• Programmed Decision Making
• Non Programmed Decision Making
Programmed Decision Making:
It is the process of finding solutions to regular and routine problems. Generally guidelines to deal
with these problems exist and are made without much thought.
Non Programmed Decision Making:
It is the process of finding solutions to problems that are new, unique or arise suddenly. The
individual taking the decision needs to gather lot of information and deliberate before arriving at
a solution.
8. Consumer Decision Making
It refers to the cognitive process undertaken by the consumer in regard to potential market
transaction before, during and after they purchase a product or service. It refers to the decisions
consumers take about what to buy, how much to buy, form where to buy, from whom to buy,
when to buy and how to buy.
It is very significant for marketers to compared the consumer’s decision making process.
Consumers constantly make decisions about the products that are to be bought. These decisions

are important not only to the consumers but also to the marketers. The decision making process
is complicated as consumers often have a number of alternatives from which they have to choose.
In terms of marketing, Programmed decision making takes place day to day purchases,
convenience goods and shopping goods such as grocery, cold drinks, household appliances etc.
The decisions to buy these products require comparatively less involvement on the part of the
consumers and are mostly habitual decisions.
Non programmed decision making takes place for infrequent purchases, specialty goods
and goods bought under emergency such as real estate, laptops, cameras etc. These decisions
require lot of deliberation and involvement on the part of consumers.
Factors that Affect Consumer Decision Making
There a number of factors that affects consumer’s decision to buy a product. They can be broadly
categorized into 4 categories namely
1 Cultural Factor
Cultural factors are the primary determinant of a person’s needs and wants. Culture encompasses
values, beliefs, ideologies, law, customs, languages and morals of a particular community or
group of individuals. Cultural factors consist of
a. Culture: It represents the way consumer views the world. It is mostly a learned behavior that
an individual acquires from the society he/she grows in.
b. Sub-culture: It refers to small identifiable groups within each culture that have unique
characteristics. It includes religions, nationalities, racial groups and geographic regions
c. Social Class: They are hierarchical homogenous divisions in the society which are
representative of a cluster of variables like occupation, income, wealth, education etc. The
members of a particular social class share similar set of values, interests and pattern of behavior.
2 Social Factors
Human beings are social creatures. They have an inherent need to connect with fellow
individuals. Social factors consists of
a. Reference group: Groups to which the consumer may or may not belong but whose attitude,
beliefs, values and opinions have an effect on the behavior of the consumers.

b. Family: Family is defined as a group of two or more persons that reside together and are
related by birth, marriage or adoption. In the life of a consumer his family of orientation (parents,
siblings) and the family of procreation (spouse, children) play a major role in purchase decision.
c. Role and Status: Role refers to the activities an individual is expected to perform as part of
the group to which he belongs. The role he plays has an effect on his status in the society. A
person’s buying decisions is influenced by the role and status he has in the society.
3 Personal Factors
The personal characteristics of the consumer such as age and life cycle stage, occupation,
personality and life style have a direct impact on the consumer’s decision to purchase a product.
a. Age and life cycle stage: Over the life span of a consumer they generally buy different kinds
of products. The products that they buy at 20 years of age will be very different from the
products that they buy when they are 70. Similarly, if the consumer is single, married, married
with kids, retired has an effect on the consumer’s decision to buy a product.
b. Occupation and economic factors: The income the consumer earns and the occupation he is
in has an effect on his decision to buy products.
c. Personality: Refers to inner psychological characteristics of an individual that are manifested
in outer behavior. Each individual’s personality has an effect on the type of products they
consume. Brands like consumers also have personality and consumers are likely to choose those
brands whose personality matches their own.
d. Lifestyle: refers to an individual’s pattern of living and is expressed through his activities,
interests, opinions and desires. Individuals belonging to the same culture, social class, occupation
even family may lead very different lifestyles. The lifestyle that a consumer leads will have an
effect on their decision to buy a product.
4 Psychological Factors
Consumer responses are influenced by 4 psychological processes-motivation, perception,
learning and attitude.
a. Motivation: Motivation is an activated internal need state leading to goal-directed behavior to
satisfy that need. Recognition of need is the starting point of the consumer buying process. A
need becomes a motive when it’s aroused to a sufficient level of intensity to drive an individual
to act.

b. Perception: Perception is the process by which an individual selects, organizes and interprets
information input to create a meaningful picture of the world. The way a consumer perceives a
product or brand effects his decision to buy a product.
c. Learning: Learning induces changes in an individual’s behavior and arises from their past
experiences. A consumer learns from their prior experience. This learning helps the consumer
decide which product or brand to buy
d. Beliefs and Attitude: A belief is a descriptive thought that an individual holds about
something. Attitude can be defined as a feeling, an assessment of an object or idea and the
predisposition to act in a certain way toward that object. Beliefs and attitudes that consumers
have towards a product or brand influence their decision making process.
10. Consumer Decision Making Process
There are 5 stages in the consumer decision making process namely:

.For instance when a consumer buys a regular brand of shampoo, they go directly from a
need for shampoo to the purchase decision skipping the information search and evaluation if
alternatives.
CONSUMER BUYING PROCESS (CONSUMER DECISION MAKING PROCESS)
Buying is a mental process. A decision to buy a product is taken after passing through different
stages. According to Robinson, Faris and Wind (in 1967) the buying decision process involve the
following five stages.
Recognition of an Unsatisfied Need:
All buying decisions start with need recognition. When a need is not satisfied it creates tension.
This tension drives people to satisfy that need. Then need becomes motive. Thus motives arise
from needs and wants. The force that converts needs into motives is called motivation.
Identification Of Alternatives:: After recognizing a need or want consumers search for
information about the various alternatives available to satisfy it. If the need is usual, such as
hunger, thirst etc. the consumer may rely on past experience of what satisfies this need. If needs
are unusual or unfamiliar, consumer may seek additional information from friends, family, media,
sales people etc. it is only through this information search that we can identify the means of
satisfying our need.
Evaluation of Alternatives:
By collecting information during the second stage, an individual comes to know about the brands
and their features. Now he compares the alternative products or brands in terms of their attributes
such as price, quality, durability etc. during the evaluation stage he may consider the opinion of
others such as wife, relatives and friends. Then he selects the brand that will give him the
maximum utility (or that he thinks the best).
Purchase Decision:
Finally the consumer arrives at a purchase decision. Purchase decision can be one of the three,
namely no buying, buying later and buying now. If he has decided to buy now, he will decide the
shop (dealer) to buy it from, when to buy it, how much money to spend etc. After deciding these,
he will go to the shop chosen and buy the product of the brand chosen.
Post Purchase Behavior:

It refers to the behavior of a consumer after purchasing a product. After the consumer has
actually purchased the product/brand he will be satisfied or dissatisfied with it. If he is satisfied
with the product he would regularly buy the brand and develop a loyalty. He recommends the
brand to his friends and relatives. The negative feeling which arises after purchase causing inner
tension is known as Cognitive Dissonance (or Post Purchase Dissonance). The post purchase
dissonance is also called Buyer’s Remorse.
Cognitive Dissonance: is the inner tension that a consumer experiences after recognizing an
inconsistency between behavior (purchase decision) and values or opinions (buyer‘s beliefs).
Did I make a good decision?
Did I buy the right product?
Did I get a good value?
Marketing can minimize Cognitive Dissonance through:
• Effective Communication
• Follow-up
• Guarantees & Warranties
FACTORS INFLUENCING CONSUMER BEHAVIOUR/ BUYING DECISIONS
(DETERMINANTS OF CONSUMER BEHAVIOUR)
All factors which determine the buying or consumer behavior are broadly classified into six.
Psychological factors, Social factors, Cultural factors, Personal factors, Economic factors and
Environmental factors.
Psychological Factors
The following are the important psychological factors:
1) Consumer Needs and Motivation: All buying decisions start with need recognition. People
always seek to satisfy their needs. When need is not satisfied it drives people to satisfy that need.
Then the need becomes a motive. Thus motive arises from needs and wants. The force that
converts needs into motives is called motivation.
2) Perception: It is the process of selecting, organizing and interpreting information in order to
give meaning to the world or environment we live in. the way the consumers display selective
attention, distortion or retention motivates marketers to design the product, package, promotional
themes etc. The marketers should understand the consumer perception and convert perception
into a buying response.

3) Learning: Learning is the process of acquiring knowledge. Generally, learning results in four
ways- Listening, Reading, Observing and experiencing. The importance of learning theory for
marketers is that they can create demand for a product by associating it with strong drives, using
motivating cues and providing positive reinforcement.
4) Belief and Attitude: A belief is a descriptive thought that a person holds about something.
Such thoughts are based on learning, opinion or faith. For example, a consumer believes that
Maruti cars are less costly and fuel efficient. Attitude means a person’s feelings towards a
particular object or situation.
Social Factors
The major social factors are as follows
1) Reference Group: consumer behavior is influenced by various groups within society known
as reference groups. We have several reference groups with whom an individual associate such
as friends, relatives, classmates, club memberships etc. In each groups there is an opinion leader
whose style is adopted by others. Marketers often identify such opinion leaders and develop
advertisement featuring them as endorsers.

2) Role and Status: A person takes up many roles in different situations in his /her life. He can
be son, father, husband, employee etc. Each role has a status. A person’s role and status
influence his general as well as buying behavior.
3) Family: Family is one of the important factors influencing buying behavior.
Cultural Factors: Culture determines and regulates our general behavior. The major cultural
factors are as follows:
1) Culture: Culture simply refers to values and beliefs in which one is born and brought up. It is
a set of Ideas, Customs, Values, Art and Belief that are produced or shaped by a society and
passed on from generation to generation. Culture influence what we eat and wear, how we relax
and where we live etc.
2) Sub-Culture: It is based on religion, language, geographic region, nationality, age etc. It is a
segment within a large culture that shares a set of beliefs, values or activities that differ in certain
respects from those of the main or overall culture. The food habits are different in different parts
of India.
3) Social Class: A social class is a group of people with similar values, interest and behavior
within a society. Consumers buying behavior is determined by the social class to which they
belong rather than by their income alone. The social class is based on income, education,
occupation, family history, wealth, lifestyle, area of residence etc.
Personal Factors
Personal factors are unique to a particular person. These factors include demographic factors and
are as follows.
1) Age: Need and wants are determined by age. So buying changes with age, Taste for food,
clothing and recreation etc. changes with age.
2) Stages in the Life Cycle: People buy different goods during different life cycle stages. Life
cycle of an individual refers to the different phases of his or her life.
3) Occupation and Economic Status: Occupation influences product choice, brands beliefs etc.
It determines income, buying power and status.
4) Life Style: It indicates how people live, how they spend their time, how and what they choose
and where they shop. It is the way people eat, drink, spend leisure time, work and so on.
5) Personality: Personality refers to the unique psychological characteristics of an individual.
Personality of consumers influences brand preference and choice of products.

6) Self-Image: Self-image implies what one thinks of himself/herself .It is the way one sees
himself/herself or wishes to see himself/herself or wants to be seen by others. Self-concept is an
important factor to marketers in planning advertising campaign.
Economic Factors
The various economic factors which determine consumer behaviour are as follows:
1) Personal Income: Gross income of a person is composed of disposable and discretionary
income. When disposable income rises, the expenditure on various items will increase and vice
versa.
2) Family Income: It is the aggregate income of all members of a family. The family income
remaining after the expenditure on the basic needs of the family is made available for buying
goods, durables and luxuries
3) Income Expectations: If a person expects any increase in his income he will buy durables on
hire purchase etc., if his future income is likely to decline he will restrict his expenditure to bare
necessities.
4) Savings: When a person decides to save more, he will spend less on comfort and luxuries.
5) Liquidity Position: If an individual has more liquid assets, he goes in for buying comfort and
luxuries.
6) Consumer Credit: If Consumer Credit is available on liberal terms, expenditure on comfort
and luxuries will increase.
Environmental Factors
The various environmental factors which determine consumer behaviour are as follows:
1) Political Situation: In state monopolies, consumers have to be satisfied with a limited range
of products, but in market oriented economy like that of USA, consumers have wider choice.
2) Legal Forces: Consumers make purchases within the legal framework. All purchase dealings
are carried on within legal limits.
3) Technological Advancements: Technological advancements bring wide range of changes in
Products/ services and makes consumers go in for latest products.
4) Ethical Considerations: Buying behavior is influenced by the sense of social morality and
ethical considerations.
Buying Roles played by Consumers in Decision Making Process

Consumer decision making is a complex process. To understand how consumers actually take
the decision to buy a product, it is important for marketers to identify who makes and has input
in the decision making process. There are 5 roles that an individual might play
1. Initiator: It refers to the person who first identifies that a problem or need exists that can be
resolved by making a purchase.
2. Influencers: It refers to the person who persuades the buyer to buy a product and help him in
arriving at a decision.
3. Decider: It refers to the person who has a final say in the decision making process. He decides
what is to be bought, how it is to be bought, when it is to bought and from where it is to bought
4. Buyer: It refers to the person who is involved in the physical activity of making a purchase
and conducts the final transaction or exchange.
5. User: It refers to the person who consumes the product.
It is important for marketers to identify each role that an individual might play and devise
strategies to target them.
Summary
The success of an organization depends on how well it understands its customer’s.
Marketing begins and ends with the consumer’s
Consumer behavior is the study of what consumer’s buy, why they buy, when they buy, from
where they buy, in how much quantity they buy, how often they buy it and how often they use it.
It is important for organizations to understand consumer behavior so that they can satisfy the
consumers better, segment the market effectively, come out with products that the consumers
want, modify their marketing strategies and marketing mix to suit the requirements of the
consumers.
Consumer behavior is influenced by 4 main factors: Cultural Factors (Culture, Sub-culture,
and Social class), Social Factors (Reference groups, Family, Roles and status), Personal Factors
(Age and Life cycle stage, Occupation and Economic conditions, Personality and self concept,
Lifestyle) and Psychological Factors (Motivation, Perception, Learning, Beliefs and Attitudes)
Consumers are the actors of the marketplace.
Decision making is the process of selecting the best alternative from a number of alternatives.

Consumer decision making refers to the decisions consumers take about what to buy, how
much to buy, form where to buy, from whom to buy, when to buy and how to buy.
The consumer decision making process is influenced by 4 main factors: Cultural Factors
(Culture, Sub-culture, Social class), Social Factors (Reference groups, Family, Roles and status),
Personal Factors (Age and Life cycle stage, Occupation and Economic conditions, Personality
and self-concept, Lifestyle) and Psychological Factors (Motivation, Perception, Learning, Beliefs
and Attitudes)
there are 5 steps in the consumer decision making process
BUYER BEHAVIOUR MODELS:
Models of consumer behavior
Traditional models:
Economic Model
Learning Model
Psychoanalytic Model
Sociological Model
1. Economic model
Law of principal of maximum utility
Law of equimarginal utility enables a consumer to secure the maximum utility from limited
purchasing power
Price effect
Substitution effect
Income effect
Learning model
The response of satisfaction reinforces the relationship
Learns to associate connection between stimulus and response which becomes habit
Understanding the response of consumer at the market place
Psychoanalytical model
Personality of consumers and their responses
Consumer behavior is directed by a complete set of deep seated motives

Sociological model
As his role, status, interaction, influence, group relation, lifestyle, income, occupation, place
of residence, social classetc.
Contemporary models
Harwardseth model
Nicosia
Webster and wind
Engel, balckwell and minard model
Howard sheth model
Customer lacks well defined evaluative criteria to judge the product
Searches for information
After passing his own personality, his intake is modified
Evaluates the brands available
Seeks greatest potential of satisfying his motives

Example: Online Shopping.
Nicosia model
Proposed by Francesco Nicosia in 1970s
Incomplete in a number of aspects, very reductionist
Variables in the model have not been clearly defined
A number of assumptions have been made that question the validity of this model, for
instance:
What type of consumer are we talking about?
The company and the consumer have an existing relationship? What type?
Is this for a new product? Is this the first exchange the consumer has had with the producer?
Example four wheelers
Engel, Blackwell and minard model

Information input
Information processing
Decision process stage
Variables influencing decision making process
Example
Garment sector
Social class
Family
Lifestyle
Personality
Beliefs
Attitudes
Webster and wind

partitiones the buying process into several processes
Processes of decision-making are determined by environmental and organizational factors.
Final buying process rendered as the mixture of individual and group decision
Example
Automobile manufacturing
• B2B business
• Purchasing tires

Conclusion
Understanding consumer contributes the best to any organization and for this, models would
work great
ONLINE BUYER BEHAVIOUR:
Types of Online Shoppers
Time-starved consumers: Usually found in a house with two sources of income. They are
willing to pay higher prices or costs more to save time shopping, no matter whether they like it
or not on-line buying experience.
Shopping avoiders: Do not like shopping and may use the Internet just to avoid the crowd,
queue or traffic congestion.
New technologist: Usually young people and comfortable with technology, online shopping
because "it's cool".
Time-sensitive materialist atau click-and mortar consumers: Only use the Internet to view
the products they prefer to make purchases from traditional stores for taking security or other
reasons.
Traditional: Just like a traditional store. Probably not going to do shopping online.
Hunter-gatherers: 20 percent of the total number of on-line customers. Like to compare
prices and find the best prices.
Brand loyalists: Purchase online for a particular brand as it gets more benefits.
Single shoppers:16 percent of the total number of on-line customers. Liked the Internet not
only for shopping but also for banking, communication, playing games, news and other activities.
Online Purchase Decision Aids
Shopping Portals:
comprehensive portals
linked to many different vendors
comparison shopping sites
there is a comparison tool
niche oriented
have specialized in a product (cattoys.com)
there is a referral fee quotation

there is a portal that has a formal relationship with partners
Shopbots (Shopping robot) dan Agent (Shoppingagent):
A review tools (Scout) Web to customers who specify the search criteria. Different Shop bots
using different search methods.
Zdnet.com/computer shopper – computer
Office.com – office furniture
Business Rating Sites:
Enhance the rating of the various types of e-tailer and online products based on many criteria.
Gomez.com
Bizrate.com
Trust Verification Sites:
Works to assess and confirm whether a given e-tailer is reliable or not. For example,
TRUSTe, BBB On-line, Secure ASSURE and Ernst & Young. TRUST e- Stamp available on e-
tailer Web site reflects the credit. E-tailer has to pay to TRUST to use such stamps.
Other Shopping Tools:
Escrow services- 3rd party to assure quality
Communities of consumers
Learning about Consumer Behavior Online
A Model of Consumer Behavior Online
The purpose of a consumer behavior model is to help vendors understand how a consumer
Makes a purchasing decision
Independent (or uncontrollable) variables – personal characteristics and environmental
characteristics
Intervening or moderating variables – market stimuli and EC systems (vendor-controlled)
Dependent variables – buyers’ decisions
Personal Characteristics
Higher education and/or income levels are associated with more online shopping.
More experience people have with Internet shopping, the more likely they are to spend more
money online.
Most-cited reasons people do not purchase:

Shipping charges (51%)
Difficulty in judging the quality of product (44%)
Cannot return items easily (32%)
Credit card safety (24%)
Environmental Characteristics
Social – people are influenced by family members, friends, coworkers, and trends.
Of importance are Internet communities, discussion groups.
Cultural/community – where people live influence what they buy. Rural shoppers differ from
urban shoppers, Europe shoppers differ from Asian shoppers.
The Consumer Decision-Making Process
Roles people play in the decision-making process:
Initiator – the person who suggests a product/service
Influencer – a person whose advice influence purchasing decision
Decider – the person who makes the buying decision
Buyer – the person who makes an actual purchase
User – the person who consumes or uses a product/service
Online Consumer decision making models:
Generic Purchasing-Decision Model
Customer Decision Model in Web Purchasing
Online Buyer Decision Support Model
Generic Purchasing-Decision Model
Consists of five phases:
Need identification – consumer convinced the need of a product/service
Information search – on various alternatives to satisfy the need
Evaluation of alternatives – a set of criteria is developed to help evaluation and comparison
Purchase and delivery – payment, purchase warranties
After purchase evaluation – customer service and evaluation of usefulness
Web Purchasing Model

Each of the phases of the purchasing model can be supported by Consumer Decision Support
System facilities and Internet and Web facilities.
CDSS facilities support the specific decisions in the process.
EC technologies provide necessary mechanisms and enhance communication and
collaboration.
Online Buyer Decision Support Model
Online Buyer Decision Support Model – Part 1
Buyer behavior
Identify and manage buying criteria
Search for products and merchants
Compare alternatives
DSS Design Choices (Current Transaction)
Product representation
Options to support searching
Options to compare alternatives

Online Buyer Decision Support Model –
Part 2 & 3
Comparing alternatives
Price negotiation
Shipping options
Finance center
Cross-transaction Concerns
Personalization
User preferences
Customer help
Online versus traditional consumer
Technology adoption
Online consumer is best predicted by Internet self-efficacy, followed by perceived financial
benefits.
Convenience and Decision Support
Online consumer only desire is convenience and timesaving.
Depth and breadth of information available on the Internet meets the consumer’s need of
information to make purchase decision.
Market dynamics
More alternatives can be considered online because of lower search costs and greater
availability of information.
Online consumers becoming less price conscious over time.
Loyalty and trust
The ability to customize products/services and transactional environment online is far beyond
the capability of traditional store.
Consumer loyalty to access competitor’s site is only a click away.
Trust for online consumer is an expectation based on past performance, a strategy to reduce
uncertainty, a willingness to rely on an exchanging partner, and a perception of reliability.
Products versus services
Products are tangible and services are intangible in traditional commerce but both products
and services are intangible online.

Online shopping consumers concern about risk for products than services, more concern about
perceived ease of use for services rather than products.
Site design
The impact of the shop window is correlated to the impact of a site’s home page but the
impact of store layout versus site layout has some differences.
Thus, more study is needed to examine what design elements affect online consumer behavior.
Empowerment, persuasion and entertainment
The ability to shop worldwide at any time from virtually any location with the availability of
real-time product and competitor information increase consumer’s sense of freedom and power.
Personalized welcome pages and tailored recommendations list provide customers with a
powerful feeling of discovery.
Online consumers can react to persuasive media more often than a human at selling.
Online shopping is also a form of entertainment and/or social interaction.
BUILDING AND MEASURING CUSTOMER SATISFACTION:
Introduction:
In today’s competitive environment, the business houses are facing the toughest
competition. The economic growth system, success, survival and growth of firms need accurate
knowledge about the consumers, their needs, behaviors regarding the products and services. This
competitive world has made the companies to essentially understand the consumers‟ needs and
requirements. But the company’s success majorly depends upon the level of consumer
satisfaction achieved by the company which totally depends upon the customer relationships. As
stated by the CEO of Cisco System, John Chambers that the company can easily achieve the
customer satisfaction by making customers the center of the culture of the company. Consumer
satisfaction helps the company to earn profits and also helps in social and economic justification
which is necessary for the growth and survival of the company. The profitable satisfaction of the
consumer needs the mixture and the proper organization of all the business activities which can
be achieved by the consumer oriented plans and strategies. The future success of the company
can also be assured by providing the right product with right promotion at right time, right place
and right price to the consumer. The needs of the various consumers varies from one consumer
to another and also this variation is due to different cultures, religions, languages, customs,
lifestyles, etc. If the every business unit satisfies their customers then their business benefits are

enormous. Customer service is not an ordeal that a company has to endure but an opportunity
that can produce huge benefits for the organization. To be market-led companies must be
customer driven. The modern philosophy of marketing emphasizes the relationship marketing
approach as an effective means for achieving marketing goals in a highly competitive
environment. The focus on creation, growth and retaining of customers has become so strong
that customer relationship management has almost become synonymous with the marketing
management. Customer Relationship Management focuses totally on the customers and the
organization’s entire gamut of functions related to the value creation and value delivery. It is
concerned with the development of the brand loyalty and customer loyalty to the highest possible
level and to maintain the long term customer relationship.
Meaning of consumer
A consumer is any person who receives a product which can either be a good or service
from an organization and consumes it. A consumer is the most important person for the company.
The company is totally dependent on the consumer. The consumer is a part of the company
without whom the company cannot work. The company is doing favour to consumer by serving
him and moreover the consumer is providing an opportunity to the company by doing so. The
consumers can be of two types:
Internal Consumers: Internal consumers like colleagues, supervisors, managers, or staff
working in other departments of the organization.
External Consumers: External consumer is the most important person for the company. The
company is totally dependent on the external consumers. It is the job of the company to ensure
that the consumer is provided with the product needed by him.
Consumer satisfaction
Consumer satisfaction refers to the extent to which consumer are happy with the products
and services provided by any business organization. In general way „satisfaction‟ means a
person’s feelings of pleasure or displeasure resulting from comparing a product’s outcome and
perceived performance in relation to his or her expectation and if performance and outcome of
any product becomes short of his/her expectations then consumer is dissatisfied. In other words,
customer satisfaction is the extent to which the product’s perceived performance matches the
expectations, the customer is satisfied. If it exceeds the expectations, the customer is highly

satisfied or delighted. Successful marketing companies go out of the way to keep their customers
satisfied or delighted. They strive to match the customer expectations with the company’s
performance. Some companies aim to delight customers by promising only what they can deliver,
then delivering more than they promise. Marketers use the Customer Satisfaction Index (CSI) to
track satisfaction levels.
Definition of consumer satisfaction:
Consumer satisfaction is the perception of the consumer which the vendor achieves by
meeting the consumer’s expectations fully, efficiently and promptly. It is the summary of the
opinion of the consumers about the vendors. For different analysis, consumer has to choose a
vendor who provides the consumer value for the money and by providing the products with
which the consumer is comfortable and is satisfied. Today’s era is consumer oriented and every
firm not only tries to attract its customers and also to satisfy the consumer which is the ultimate
goal of the company. As every company is established with the motive of earning profits and the
profits can be earned with achieving consumer satisfaction. If the company increases the
consumer satisfaction by decreasing its product price or increase its services, the result would be
lower profits. Example: Consumer Satisfaction towards Cadbury’s chocolate. The Cadbury has
taken the opportunity to offer us a broader view of chocolate category. The Cadbury India’s No.
1 is able to share with their market insight based upon unparalleled breath of chocolate
experience. In this way Cadbury provide high level satisfaction with more value of their
consumer’s money.
Main ingredient of consumer satisfaction: The main ingredient of the consumer satisfaction is
consistency. The consistency can be consumer consistency or, emotional consistency, or
communication consistency. .
Principles of consumer satisfaction
The general principles which would sharpen the ability of the person to satisfy the consumer and
to retain him are explained below. Consumer satisfaction is the minimum goal which a company
tries to achieve; the ultimate goal is the consumer retention.

1. Listen carefully to consumer:The first principle of consumer satisfaction is creating
relationship with their consumer by listening to them carefully. Listening means not only to
listen to words of consumer but also the ideas which they are trying to get across to you.
2 Respond quickly to consumer: Then, secondly the consumers should be given accurate
response after listening to their views. Proper time frame should be given to consumers for
discussing complete response.
3 Be patient when respond to consumer: Thirdly, the company should try to have patience
whenever the company respond to consumer because consumers are the persons for whom the
company is manufacturing the products. So every time explain everything in detail to consumer
what you are doing.
4 A perfect product to consumer: Every consumer want defect free product and better quality
product and services. So every firm need to design their product and services according to their
consumers‟ demand.
5 Be a team player:Every firm must try to work like a team player with their consumer to
improve their product services and demand.
Importance of consumer satisfaction:
Consumers are very important because satisfied consumer every time spend more money
and refer more consumers and support businesses longer than unsatisfied consumer. These things
help to increase more revenue for businesses. Consumer satisfaction is so powerful primarily
because it enables companies to communicate directly with consumer about their needs –

assuring that the quality standards which the company establishes that reflects the voice the
consumer. There are following importance:
1 It helps to know their consumer intention for repurchase and loyalty: Consumer
satisfaction helps to every firm to know about their willingness to repurchase their product and
loyalty towards company product rather than others.
2 It’s a point of differentiation: In competitive business environment every firm compete for
consumers, their satisfaction which is seen as a key differentiator. In this cut throat environment
which business succeeds is the one that make consumer satisfaction a key element of their
business strategy.
3 Reduce bad word of mouth: It helps to eliminate bad word of mouth because when company
provides a better quality product rather than other then it eliminates every bad thing.
4 It’s not a costlier concept: Consumer satisfaction is not a costlier concept because help to
retain their existing consumers. When company creates new consumer then cost is six or seven
time more than retaining existing consumer.
Building Customer Satisfaction
In marketing perspective, satisfaction is elucidated as person’s feeling of pleasures or
disappointment resulting from comparing a product’s perceived performance in relation to his/
her expectation. Consumer satisfaction is core conception in contemporary marketing practices.
It emphasizes the process of satisfying to consumers and get huge profits. It is suggested that in
order to maximize satisfaction, do not overstate the product or service capabilities while running
advertising campaign or other communication. Customer satisfaction for the product can lead to
profitability. Companies can boost the chance of repeated sales to customers, while reducing the
cost of sales and marketing. Customer satisfaction assists to increase customer faithfulness,
reducing the need to assign marketing budget to get new customers. Satisfied customers may
also recommend company products or services to other prospective consumers, increasing the
chances for extra income and profit. It’s difficult to over-stress the importance of customer
satisfaction. According to Henry Ford , Sustained profitability is only possible through building
customer value and satisfaction. Profit comes as a consequence of building customer value.

Customer satisfaction is strongly associated with the expectation of purchaser. When
customers buy product, they compare the actual performance of the product with their
anticipation. They get satisfaction when product performance meets expectations and feelings of
dissatisfaction if it does not fulfill their demands. If actual performance exceeds expectations, the
customer is extremely elated. Clientele form their expectations from various sources such as
friends, past experiences, competitors as well as the marketer's messages and promises. It can be
established from this explanation that customers compare their views of product performance
with specific standards. Confirmation results when the perceived performance matches standards,
whereas disconfirmation results from a disparity.
Customer satisfaction formula:

P= Performance E= Expectation
In modern business climate, it is necessary to measure the level of satisfaction. Business
organizations can use these measurements to enhance their business results. Measurement of
customer satisfaction requires quantitative and qualitative methods. In theoretical studies, it is
demonstrated that satisfaction is a result of purchase and use resulting from the buyer's
comparison of the rewards and costs of the purchase in relation to the anticipated outcomes.
Operationally, satisfaction is comparable to attitude in that it can be evaluated as the amount of
the satisfactions with the various attributes of the product or service (Churchill and Suprenant,
1982). Organizations can recognize the customer satisfaction through number of problem calls,
number of complaints by E mail or phone, or number of returned goods (Werth, 2002).
Sometimes, managers must have to gauge customer dissatisfaction in order to develop healthy
relationship. It is the major responsibility of company to collect and analyse relevant data which
may give precise information about customer satisfaction.
Customer satisfaction measurement: Customer satisfaction measurement
Antecedents of satisfaction: In management researches, antecedents of satisfaction are
asses in different ways. Mostly, the consideration is focused on two basic constructs such as
customers’ expectations prior to purchase or use of a product and his comparative perception of
the performance of that product after the using it.
Expectation and Perceived Product Performance: Expectations of a customer on a product
tell us his anticipated performance for that product. As it is suggested in the literature, consumers
may have various "types" of expectations when forming opinions about a product's anticipated

performance. For example, four types of expectations are identified by Miller (1977): ideal,
expected, minimum tolerable, and desirable. While, Day (1977) indicated among expectations,
the ones that are about the costs, the product nature, the efforts in obtaining benefits and lastly
expectations of social values. Perceived product performance is considered as an important
construct due to its ability to allow making comparisons with the expectations. It is considered
that customers judge products on a limited set of norms and attributes. Many theorists like
Olshavsky and Miller (1972) and Olson and Dover (1976) explained the differences between
expectations and perceived performance.
Common Perception Gaps
Perception gaps are the difference between how the company and its customers view its products
or services. The common gaps are the following:
• The gap between what the companies thinks the customer wants and what the customers actually
want.
• The gap between what the companies thinks the customer has bought and what the customers
perceive they have received.
• The gap between the service qualities the company believes is being provided and what the
customer perceives as being provided.
• The gap between the customer’s expectations of service quality and the service quality the
company actually delivers.
• The gap between the marketing promises and the company’s actual delivery.
Knowing the gap in the business will help the marketers focus attention on the areas that matter
most to the customers.
Customer Perceived Value
In present days, the consumers are more educated and aware and even they have more
tools to verify the companies‟ claims and seek out the superior alternatives.
Example: Hewlett Packard has started to out space Dell in terms of customer-perceived value.
Dell has gained success by providing low-priced computers, logistically efficient and proper
after sale services. The company has mainly focused on providing the low-priced products to the
consumers rather than on managing service and quality. In contrast, the Hewlett Packard is
pursuing solutions based approach for the strengthening of the channel partner relationships.

Consumer perceived value is the difference between the prospective customer‟s evaluation of all
the benefits and all costs of an offering and the perceived alternatives.
Total Customer Benefit:the total customer benefit is the perceived monetary value of the
bundle of economic, functional and psychological benefits which the customers expect from the
market offering.
Total Customer Cost: the total customer cost is the perceived bundle of costs customers expect
to incur in evaluating, obtaining, using and disposing of the given market offering, including
monetary, time, energy and psychological costs.
Factors affecting consumer satisfaction
Consumer’s satisfaction is the outcome which is the result of product and performance of
producer in comparison with the customer’s level of expectations. The factors influencing the
consumer satisfaction can be human factors and product factors. Consumer satisfaction is overall
impression of consumer about the supplier and the products and services delivered by the
supplier. Some of the factors which affect the consumer satisfaction are as follows:
• Technological and engineering aspects of product and services.
• Suppliers response about type and quality of product and services
• Complaint management
• Department of firms
• Supplier ability to manage whole consumer life cycle.
• Department wise capability of the supplier.
• Technological and engineering or re-engineering aspects of products and services.
• Type and quality of response provided by the supplier.
• Supplier’s capability to commit on deadlines and how efficiently they are met.
• Customer service provided by the supplier.
• Complaint management.
• Cost, quality, performance and efficiency of the product.
• Supplier’s personal facets like etiquettes and friendliness.
• Supplier’s ability to manage whole customer life cycle.
• Compatible and hassle free functions and operations.

The above factors could be widely classified under two categories i.e. suppliers behavior and
performance of product and services. The supplier’s behavior mostly depends on the behavior of
its senior subordinates, managers and internal employees. All the functional activities like
customer response, direct product and maintenance services, complaint management etc. are the
factors that rely on how skillful and trained the internal and human resources of the supplier are.
The second category is regarding all the products and services. This depends on the capability of
supplier to how to nurture the products and service efficiently and how skilled the employees are.
It’s all about how the skills are implemented to demonstrate engineering, re-engineering and
technological aspects of the products and services. The quality and efficaciousness of the
products is also an important factor that enables compatible and hassle free functions and
operations. This bears to lower maintenance and higher life of the product which is highly
admired by the customers.
Methods to measure consumer satisfaction:
There are varieties of methods which can be used by the experts for measuring consumer
satisfaction. These can be classified into two groups, viz., direct methods and indirect methods.
This can be measured by preparing questionnaire and getting the reviews of the customers. After
the questionnaire filling by the customers, the company can get the true and accurate information
regarding the satisfaction level of the consumers.
Direct method: Consumer feedback and Informal chat/ interview to market consumer sector are
the direct methods of measuring the consumer satisfaction.
Indirect method: Measurement of changes in complaints by using transient changes and by
measuring the changes in loyalty are the indirect methods of measuring customer satisfaction.
Consumer delight
Consumer delight is the superior experience of the consumers. When the company
provides such a product which is much more than the expectations of the consumers, then this
creates a positive emotional reaction by the consumer which is also known as WOW effect. The
consumer delight helps in creating a competitive advantage as the consumer delight is directly
affected by the sale and profitability of a company by distinguishing its brand, product and
loyalty. The delighted customer can do a lot for the company. Consumer delight is a key to
success. Customers will be delighted when what is provided is more than what is promised or

expected. If what the company provides exceeds what is promised or expected then that will be
sufficient to create delight. It may be only a small delight, a short delight or a fleeting delight,
but it will be delight.
Definition:
Consumer delighted can be defined as: “The result of delivering a product or services that exceed
consumer expectations”.
According to Tom Peters, “Customer satisfaction is no longer good enough to survive in
today‟s competitive market. What is needed is customer delight.”
Need of Customer Delight
The main factor which needs to be considered is the perspective why the customer delight
is needed. The delighted customers remain loyal to the company. They repeatedly buy the
products of the company. Moreover a good word of mouth is provided by them. Delighted
customers can increase the profits of the company to manifold. A new acquired customer cost
about five times more than that of a delighted customer of the company.
Delighted Consumers are an asset: The delighted consumers have a positive impact and they
also inform many other people to buy the company’s products. Thus, they are a sound
investment and many companies have understood their impacts.
Consumer services leads to consumer delight: Life without creativity is just like coca cola
without the fizz. The tremendous advancements in the field of communication, transportation
have made world a global village.
Consumer satisfaction research demonstrates the need for the continuous improvement:
Consumer satisfaction is the critical strategic weapon for any type of organization. But if every
business unit can move consumer from being simply satisfied to delighted, the business benefits
are enormous. The consumer is anyone who receive a product either a good or a service from an
organization.
EXAMPLE: Consumer Satisfaction towards Cadbury’s chocolate. The Cadbury has taken the
opportunity to offer us a broader view of chocolate category. The Cadbury India’s no. 1 is able to
share with their market insight based upon unparalleled breath of chocolate experience. In this
way Cadbury provide high level satisfaction with more value of their consumer’s money. Their
satisfaction is the outcome that result from product and vender performance in comparison with

his her level of expectations. The factors influencing the consumer satisfaction can be divided
into two groups as “human “and” “product”.
Summary
Consumer delights creates a competitive advantages as it directly affect the sale and
profitability of a company by distinguish its brand, product and loyalty. They are moving
towards services and quality. They can do a lot in the favour of a company. It is not enough we
satisfy the consumer, basically consumer delight have importance to manage the quality of
product and assumption state. Their delight and satisfaction were not the same because delight to
take pleasure in which satisfaction means how we agree the person that will purchase the product
or not so, both give the different meaning. Including the meaning of consumers the product is
having the common center in the consumer mind. Product is center target of the product function.
Life without creativity is like coca cola without the fizz. The tremendous advances made in the
field of communication, transportation have sunk the world we live in, into a small place. It is in
fact referred to by many as a global village. Consumers are very important because satisfied
consumer every time spend more money and refer more consumers and support businesses
longer than unsatisfied consumer. These things help to increase more revenue for businesses.
Consumer satisfaction is so powerful primarily because it enables companies to communicate
directly with consumer about their needs – assuring that the quality standards which the company
establishes that reflects the voice the consumer. A company would be wise to measure consumer
satisfaction regularly because one key to consumer retention is consumer satisfaction. Because
highly satisfied consumer generally stays loyal longer, buy more as the company introduces new
products and upgrade existing products, talks favourably about the company and its products.
Consumer satisfaction measurements involve the collection of the data that provides information
about how satisfied or dissatisfied consumers are with a “scores.” The data can be used by
organization to understand the reasons for the level of satisfaction that has been collected by
company’s market manager. This information analyzed in different ways to find out the exact
level of satisfaction. Consumer satisfaction measurement is questionnaire –based research
approach. Consumer’s satisfaction is the outcome that result from product and vender
performance in comparison with his her level of expectations. The factors influencing the
consumer satisfaction can be divided into two groups as “human “and” “product”. Consumer

satisfaction is overall impression of consumer about the supplier and the products and services
delivered by the supplier. Consumer satisfaction measurement allows an organization to
understand the issues or key drivers that cause satisfaction or dissatisfaction with a service
experience. Their satisfaction measurement can help an organization understand what it can and
cannot control. Customers will be delighted when what is provided is more than what is
promised or expected. If what the company provides exceeds what is promised or expected. If
what the company provides exceeds what it promised to provide, or what the customer expected
the company to provide, that will be sufficient to create delight. It may be only a small delight, a
short delight or a fleeting delight, but it will be delight
CUSTOMERRELATIONSHIPS MANAGEMENT: (CRM)
Customer Relationship Management (CRM) is a comprehensive strategy and process of
acquiring, retaining and partnering with selective customers to create superior value for the
company and the customer.
“CRM is a philosophy & a business strategy, supported by a system & a technology,
designed to improve human interactions in a business environment. It is also a continuing
business initiative that demands a dynamic, on-going strategy of customer engagement.” - Paul
Greenberg
Advantages of CRM are:
CRM systems provide a number of important advantages for both small and large companies.
• Decreased cost of customer acquisition. Data enables companies to correctly identify their target
audience and to focus all of the marketing efforts on that particular group of people.
• Increase sales. Analyzes current customer service practices and can be used to pinpoint
shortcomings and areas that need improvement. Better customer service will ultimately result in
a higher sales volume through up selling, cross selling and increased share of wallet.
• Increase efficiencies and avoid serious mistakes. Employees can access important information
quickly and process and can be automated.
• Better and more accurate data. Analytics and reporting allows the sales, marketing and customer
service teams to work together and introduce improvements.
• Data security. Not only does a CRM manage your data but security allows you to control who
has access to certain data and features.

• Faster Lead Generation: A good CRM can help immensely with lead generation. For instance,
many CRMs can integrate with website and social media campaigns, sending leads from these
sources directly to the appropriate salesperson. That means the sale steam is spending less time
cold calling and more time working warm leads, which tend to be far more fruitful. And by
tracking each salesperson's activities, it can keep lead lists up to date – so that you don't have five
different salespeople calling the same lead.
• Increase in revenue per month per sales representative –This is an important benefit of CRM,
careful management is required to ensure that time saved as a result of automation is used
productively to deliver more sales. To determine this benefit, consider measuring the increase in
base revenue generated per month per sales representative.
• Improved image of your company – Automation can play a leading role in building your
company’s image in the eyes of your customers.
• Increasing customer loyalty and making win backs possible
• Serving to help reactivate customer purchases
Disadvantages of CRM are:
• It seems to be mainly focused on retention of existing customers rather than on theacquisition of
new ones.
• Not all customers may want a relationship with the company.
• Developing relationships may not be possible for certain product categories.
• Legal aspects (e.g.: privacy) and ethical issues should be considered during its implementation
• It may lead organizations to discriminate group of customers. More profitable customers may
enjoy better treatments and conditions than occasional customers. This may damage the image of
the company.
• Poor communication can prevent buy-in. In order to make CRM work, all therelevant people in
your business must know what information you need and how to use it.
• Cost of the software & customization is generally considered high.
• Scalability is either limited or too costly there by making companies to provide CRM for a fewer
users.
• If the CRM software is too complex & difficult to understand, all its functionalitiesmay not be
utilized.

Role of CRM
• A CRM system consists of a historical view & analysis of all the acquired or to be acquired
customers.
• It is easy to track a customer accordingly & can be used to determine which customer can be
profitable &not.
• Customers are grouped according to different types of business they do or according to physical
location & are allocated to different customer managers.
• It helps the company to manage unpredictable growth and demand and implement a good
forecasting model to integrate sales history with sales projections which results in opportunity
management.
• It involves using technology to organize, automate, and synchronize sales, marketing, customer
service, and technical support.
• It can automatically suggest suitable appointment times to customers via e-mail or the web.
• A CRM system becoming more “customer-centric” means being able to manage critical
relationships more effectively and being positioned to offer new and expanded services.
• CRM systems are equipped with mobile capabilities, making information accessible to remote
sales staff.
• Sales forces also play an important role in CRM, as maximizing sales effectiveness and
increasing sales productivity is a driving force behind the adoption of CRM.
CUSTOMER ACQUISITION, RETAINING, DEFECTION:
Customer Acquisition - Meaning and its Process
Customer acquisition is the process of acquiring new customers for business or
converting existing prospect into new customers. The importance of customer acquisition varies
according to the specific business situation of an organization. This process is specifically
concerned with issues like acquiring customers at less cost, acquiring as many customers as
possible, acquiring customers who are indigenous and business oriented, acquiring customers
who utilize newer business channels etc. The whole process should concentrate on following
considerations:
Primarily it is important to determine and focus on psychology of customers, like how the
customers feel and think and then selecting the product segment to be presented to

them.Concentrating on how the customers are influenced by the surrounding environment like
the business culture, technology, media etc. Analysis of customer behavior and tendency while
buying specific range of product. Studying the customer’s limitation of knowledge processing
power which influence the decision making power. Finally it’s very important to engage best
strategies for effectively convincing new customers and improving marketing campaigns.
Customer acquisition techniques change with technological changes. There is always a
need to optimize and upgrade the traditional ways of marketing channels available. Exploring
new methods to entertain customers is important to remain in competition and have high
acquisition rate.
Acquiring a customer depends on how effectively the organization is able to build a
comprehensive relationship with that customer. When suppliers have healthy relationship with
customers, the revenue of the organization always increases as customers tend to buy more and
more. There is possibility that a satisfied customer seek to buy special category of related
products apart from the regular ones from that particular supplier. For instance if a satisfied and
loyal customer has a home insurance policy from an insurance company then there are positive
chances that he could also insure his property and car if he is fully satisfied with the services of
that insurance company. This will definitely result in growth of business.
While acquiring, the nature of response provided to acquisition is the key aspect to create
an impressive opinion in customer’s mindset. Hence, the suppliers should always have prompt,
responsive and experienced executives to serve customers. For example, if a customer calls and
asks about some critical features of any product and the executive fails to explain it or being non-
responsive to most of his questions then the customer could probably divert his way to some
other organization for better response which could definitely result in end of the deal and
relationship with that customer.
Improving customer acquisition is the primary challenge which an organization faces.
Hence it is important to identify critical approaches to enhance customer acquisition power. This
includes acquiring more number of customers or more number of attractive customers at low cost.
One of the best strategies to acquire new customers is performing promotional campaigns. These
campaigns should be efficient and well targeted to customers. Encouragement of customer

referrals can also attract new customers. It is always a cost-free advocacy by customers to
provide referrals to supplier when they feel satisfied and encouraged and when they have a
healthy relationship with customers. These referrals or customer’s reference of other customers
act like a piece of cake for suppliers as there is no cost and struggle involved in this. For
enhancing the revenue, the organization should always balance the number of customers
acquired with number of customers who divert to different organizations. Failing to which will
definitely effect the economic growth of the organization.
Customer Retention Strategies
The easiest way to grow your customers is not to lose them. The average business loses around
20 percent of its customers annually simply by failing to attend to customer relationships. In
some industries this leakage is as high as 80 percent. The cost, in either case, is staggering, but
few businesses truly understand the implications.
Imagine two businesses, one that retains 90 percent of its customers, the other retaining
80 percent. If both add new customers at the rate of 20 percent per year, the first will have a 10
percent net growth in customers per year, while the other will have none. Over seven years, the
first firm will virtually double, while the second will have no real growth. Everything else being
equal, that 10-percent advantage in customer retention will result in a doubling of customers
every seven years without doing anything else.
The consequences of customer retention also compound over time, and in sometimes
unexpected ways. Even a tiny change in customer retention can cascade through a business
system and multiply over time. The resulting effect on long-term profit and growth shouldn’t be
underestimated.
Marketing Wisdom can introduce you to a number of simple customer retention strategies
that will cost you little or nothing to implement. Behind each technique listed here there is an in-
depth step-by-step process that will increase your customer retention significantly once
implemented, and will have a massive impact on your business.
1. Reducing Attrition

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