Consumer behavior consists of activities/processfollowed 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 thingneeds to be highlighted here is that consumer behavior does not end withpurchase of goods or service, but also post purchase activities are included inconsumer behavior.
Companiesmake investment in understanding consumer behavior and implementing strategies,which will help them retain customers.
Consumerscan be categorized as an individual consumer and organizational/industrialconsumers. Understanding their behavior and buying pattern is important inultimate survival of companies in the market place.
Furthermore,there is a difference between consumer behavior and buying behavior. Consumerbehavior as highlighted before talks about process and actions taken by thefinal or end users whereas buyer behavior looks at intermediate users (who addvalue 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.
Understandingof 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 informationis obtained from different sources next step, is the evaluation and intent where in consumer evaluates variousparameters 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 toconsumer behavior namely economic determinants, psychological determinant andsociological 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.).
Asthere are determinants for consumer behavior, similar industrial buying behaviorhas its own set of determinants, which are overall objectives of theorganization, technological capabilities of the organization which consist ofinformation systems and network capabilities and finally organizationstructure, which includes its capital and number of employees.
Incompare the industrial buying process is much more formal process doneaccording to pre-defined policy and norms. The key features of organizationbuying are it’s a formal and standardized process, it is done in largequantities and may be done at periodic intervals of time and decision-makingprocess usually involves more than one individual.
Fromabove it can be comprehended that consumerbehavior is important factor in determining marketing policies.
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