1.1 What is Consumer Behavior?

Consumer behavior is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services.

Consumer behavior includes elements from different disciplines such as psychology, sociology, social psychology and economics. It is concerned with the behavior that consumers display in searching for purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. In other words consumer behavior attempts to understand the decision-making processes of buyers, both individually and in groups.

Consumer decision making process

The process of consumer decision making is viewed as three distinct but interlocking stages: 1- the input stage, 2- the process stage, 3-the output stage.

1.	The input stage influences the consumer's recognition of a product need and consists of two major

sources of information:

a.

The company's marketing efforts (the product itself and the price, its promotion, and where it is sold)

b.

The external sociological influences on the consumer (family, friends, neighbors, cultural and sub

cultural memberships)

1.1 What is Consumer Behavior?

2.	The process stage focuses on how consumers make decisions.

3.	The output stage of the consumer decision making consists of two post decision activities:

a.

Purchase behavior

b.

Post purchase behavior

Types of consumers

The term consumer behavior describes two types of consuming entities: the personal consumer and the organizational consumer.

The personal consumer
The personal consumer is the one who buys goods and services for his or her own use, for the use of the household, or as a gift for a friend. In this case the products are bought for final use by individuals who are referred to as end users or ultimate consumers.

The organizational Consumer
The organizational consumer includes profit and not for profit businesses, government agencies (local, provincial, and national) and institutions (e.g. schools, hospitals, and prisons), all of which must buy products, equipment, and services in order to run their organizations.
The organizational consumer comes in different forms: resellers, producers, governments and institutions.

1.1 What is Consumer Behavior?

Relationship between customers and marketers:

Marketers today realize that in order to outperform competitors they must achieve the full profit potential from each and every customer.

The relationship between marketers and customer is controlled by four drivers:

Customer value

High levels of customer satisfaction

A strong sense of customer trust

Building a structure that ensures customer retention.

Customer Value and Customer Value Proposition (CVP):

Customer value is the difference between what a customer gets from a product and what he or she has

to give in order to get it.

In Marketing, a customer value proposition (CVP) consists of the sum total of benefits which a vendor

promises a customer that he will receive in return for the customer's associated payment. ACVP is a

marketing statement that describes why a customer should buy a product or use a service.

1.1 What is Consumer Behavior?

Customer Satisfaction:

Customer satisfaction is a term frequently used in marketing to measure how products and services

supplied by a company meet or surpass customer expectation. It is also defined as the number of

customers, or percentage of total customers, whose reported experience with a firm, its products, or its

services exceeds specified satisfaction goals. Therefore the concept of customer satisfaction is a

function of customer expectations.

Building Customer Trust:

Trust is the foundation for maintaining a long-standing relationship with customers, and it helps the

chances that customers will remain loyal

Securing Customer Retention:

The overall objective of providing value to consumers continuously and more effectively than the

competition is to have and to retain highly satisfied and trusting customers; this is done when from time

to time the companies surprise its customers by providing them with elements of delight. That is why

customer retention is more than giving the customer what they expect. It is about exceeding their

expectations so that they become loyal advocates of the product.

1.1 What is Consumer Behavior?

In almost all businesses situations, it is more expensive to secure new customers than to keep existing

ones. Small reductions in customer defections produce significant increases in profits because:

Loyal customers buy more products

Loyal customers are less price sensitive and pay less attention to competitor's advertising

Servicing existing customers, who are familiar with the company's offering and processing, is

cheaper.

Loyal customers spread positive word of mouth and refer other customers.