Consumer behavior consists of activities/process followed in making any buying decision of goods as well as a service. In recent time service (holiday, travel, etc.), decisions are forming large part of consumer behavior.
One thing needs to be highlighted here is that consumer behavior does not end with purchase of goods or service, but also post purchase activities are included in consumer behavior.
Companies make investment in understanding consumer behavior and implementing strategies, which will help them retain customers.
Consumers can be categorized as an individual consumer and organizational/industrial consumers. Understanding their behavior and buying pattern is important in ultimate survival of companies in the market place.
Furthermore, there is a difference between consumer behavior and buying behavior. Consumer behavior as highlighted before talks about process and actions taken by the final or end users whereas buyer behavior looks at intermediate users (who add value to goods and service) and final users.
Consumer behavior and consumption behavior are two different concepts developed and cannot be used as a substitute. Consumer behavior deals with the process of an individual or organization in coming to the purchase decision, whereas consumption behavior is a study focus on consuming unit or service.
Understanding of the consumer behavior begins with study of the consumer buying process. Consumer buying process is five step activities. The starting with need recognition, which leads to information search, once information is obtained from different sources next step, is the evaluation and intent where in consumer evaluates various parameters of the product or service.
The next step in five-step activity is the purchase decision where in intent is converted into an actual purchase of the good or the service. The final step is post-purchase reaction where in customer if she is satisfied with goods or services recommends to other prospective customers or repeat the purchase. If the customer is not happy with purchase, a bad word of mouth follows, and she looks for alternative product or service.
Three factors are identified as determinants to consumer behavior namely economic determinants, psychological determinant and sociological determinant.
Economic Determinants are personal income (individual’s purchasing power), family income (total purchasing power of the family), the future income expectations (expected increase or decrease in availability of disposable income), availability of liquid asset (asset, which can be converted to cash), consumer market credit (if market conditions are good credit easily available) and social class (effluent class, upper-middle class, middle class, etc.).
As there are determinants for consumer behavior, similar industrial buying behavior has its own set of determinants, which are overall objectives of the organization, technological capabilities of the organization which consist of information systems and network capabilities and finally organization structure, which includes its capital and number of employees.
In compare the industrial buying process is much more formal process done according to pre-defined policy and norms. The key features of organization buying are it’s a formal and standardized process, it is done in large quantities and may be done at periodic intervals of time and decision-making process usually involves more than one individual.
From above it can be comprehended that consumer behavior is important factor in determining marketing policies.
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