Consumer behavior is the study of when, why, how, and where people do or do not buy products. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people’s wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Consumer behavior is influenced by: demographics, psychographics (lifestyle), personality, perceptions, motivation, knowledge, attitudes, beliefs, and feelings. Consumer behavior concern with consumer need consumer actions in the direction of satisfying needs leads to his behavior of every individual depend on thinking process.

Consumers with similar incomes and socio-demographic characteristic, facing similar relative prices, and equipped with similar information, tend to choose similar baskets of goods ( Connor, 1991). There is much research on dairy products that show that socio-economic factors and consumer’s demographic factors have a major impact on their consumption of dairy products (e.g. Bogue and Ritson, 2006; Armstrong et al., 2005; Valli and Traill, 2005; Tendero and Bernabeu, 2005; Vermeir and Verbeke, 2006; Viaene and Gellynck, 1997; Kotler, 1997). In addition, cultural diversity may have an important influence on consumption (Valli and Traill, 2005). There are large differences in the quality of life indicators between urban and rural areas (Sengul and Sengul, 2006). Also there are differences among the urban and rural populations in terms of their socio-economic and demographic characteristics.

Customer behavior study is based on consumer buying behavior, with the customer playing the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer behavior analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalization, customization and one-to-one marketing. Social functions can be categorized into social choice and welfare functions.

The idea that customers prefer one product or one service over another is not new. The ability to identify and measure the elements of such preference decisions with any accuracy and reliability has only recently become available.

Research into this area of consumer behavior has brought understanding to some of the major issues with standard customer satisfaction research. Most importantly, we have come to realize that high customer satisfaction does not assure continued customer preference.

CONSUMER BEHAVIOUR

CULTURAL FACTORS:

Culture

Sub-Culture

Social Class

SOCIAL FACTORS:

Reference Group

Family

Role and Status

PSYCHOLOGICAL FACTORS:

Motivation

Perception

Learning

Attitudes

Beliefs

PERSONAL FACTORS:

Age and Life-Cycle

Occupation

Economic Situation

Lifestyle

Personality

Figure 1.2 Factors affecting Consumer Behavior

Consumer behavior is defined ad the mental and emotional process along with the physical activities of the people who purchase/consume goods and services to satisfy their particular needs and wants. Consumer is the most important person to the marketer because the marketer takes in to consideration on the liking and disliking of the consumer and he produces the goods and services accordingly.

Consumer behavior is important for the three persons.

For consumer:

As a consumer most of the time will spend time in the market and a lot on decision making that what to buy and how to buy and meeting and conferencing with different types of peoples and friends with different types of good and services.

For producer:

Consumer behavior is also important for producer because producer design and manufacture different types of product and services keeping in view the wants and needs of consumer.

For scientist:

The knowledge of consumer behavior is also important for scientists, whether the scientist is working for profitable organization or non profitable organization.

One of the advantages of consumer behavior can be seen when looking at advertisers and how they advertise by keeping the consumers in mind. Advertisers spend a lot of money to keep individuals and groups of individuals (markets) interested in their products. To succeed, they need to understand what makes potential customers behave the way they do.

The advertiser’s goal is to get enough relevant market data to develop accurate profiles of buyers that is basically to find the common ground and symbols for communication. This involves the study of consumer behavior, the mental and emotional process and the physical activities of the people who purchase and use goods and services to satisfy particular needs and wants. Along side the behavior of organizational buyers (the people who purchase the products and services for use in business and government). The primary mission of advertising is to reach prospective customers and influence their awareness, attitudes and buying behavior. This can be done successfully only through knowing the consumer preferences, behavior towards various stimuli i.e. consumer behavior.

1.2 CONSUMER PERCEPTIONS, ATTITUDES AND MOTIVES TOWARDS MILK PRODUCT

1.2.1 Consumer Perceptions

As a consumer, decision making is a very important factor as good decision making will see the Prosper but poor decision making could cost it a lot. In the fact, consumer perceptions influence all the decision of consumer. Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. The perception is important in the study of consumer behavior because people or consumer behavior is based on their perception of what reality is, not on reality itself.

A number of factors operate to shape and sometimes distort perception. These factors can reside in the perceiver, in the object or target being perceived, or in the context of the situation in which the perception is made.

Factor in the perceiver:

Attitudes

Motives

Interests

Experience

Expectations

Factor in the situation:

Time

Work setting

Social setting

Factors in the target:

Novelty

Motion

Sounds

Size

Background

Proximity

Similarity

PERCEPTIONS

Figure 1.3 Factors that influence perceptions. Perceptions and Individual Decision Making, Organization Behavior (Fifth Edition)

When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is heavily influenced by the personal characteristic of the individual perceiver. Personal characteristic that affect perception include a person’s attitudes, personality, motives, interests past experiences and expectations. Characteristic of the target being observed can affect what is perceived. Loud people are more likely to be noticed in a group than the quiet ones. For example of the milk product is the milk product with more benefit and promotion are more likely to be noticed in consumer mind than the low promotions. So, too, are extremely attractive or unattractive individuals. Because targets are not looked at in isolation, the relationship of a target to its background also influences perceptions.

Based on study by Grunert et al. (2000) mentioned that consumer perception of dairy product quality was characterized by four major dimensions, hedonic, health-related, convenience related and process related. The information of the product itself rather than the physiological properties of the product influenced consumer acceptance of dairy product. Watanabe et al. (1997) classified consumer characteristics of milk consumption and indicated that men, middle-aged people, and people with no calcium concerns preferred soda and alcoholic beverages. People with relatively stronger health concerns consumed more milk products. Hsu and Kao (2001) evaluated product attributes and demographic factors that influenced purchases of fluid milk products in Taiwan using consumer survey data. Their result revealed that larger households purchases more fluid milk products. Households with higher income and household shoppers with higher educational levels tended to reduce purchases of flavoured milk products.

1.2.2 Consumer Attitudes

As a consumer, each of us has a vast number of attitudes towards products, services, advertisements, direct mail, the internet, and retail stores. Within the context of consumer behavior, an appreciation of prevailing attitudes has considerable strategic merit. To get at the heart of what is driving consumers’ behavior; attitude research has been used to study a wide range of strategic marketing questions. For example, attitude research is frequently undertaken to determine whether consumers will accept a proposed new-product idea, to gauge why a firm’s target audience has not reacted more favorably to its new promotional theme, or to learn how target customers are likely to react to a proposed change in the firm’s packaging design.

1.2.1.1 The Attitude-Toward-Object Model

The attitude towards object model is especially suitable for measuring attitudes towards a product or service category or specific brands. According to this model, the consumer’s attitude toward a product or specific brands of a product is a function of the presence and evaluation of certain product-specific beliefs and attributes. In other words, consumers generally have favorable attitudes towards those brands that they believe have an adequate level of attributes that they evaluate as positive, and they have unfavorable attitudes towards those brands they feel do not have an adequate level of desired attributes or have too many negative or undesired attributes.

Conducting consumer attitude research with children, especially gauging their attitudes towards products and brands is an ongoing challenge. What are needed are new and effective measurement approaches that allow children to express their attitudes toward brands.

1.2.1.2 The Attitudes-Toward-Behavior Model

The attitude toward behavior model is the individual’s attitude toward behaving or acting with respect to an object rather than the attitude toward the object itself. The appeal of the attitude toward behavior model is that it seems to correspond somewhat more closely to actual behavior than does the attitude toward object model.

1.2.1.3 Theory of Reasoned Action Model

The theory of reasoned action represents a comprehensive integration of the attitude components which is the consumer in this case, that ultimately are the building blocks of preference on multinational milk brand. The model is designed to provide a better understanding of how consumer preference is formed and, correspondingly, to provide the means to accurately predict consumer preference behavior. Figure 1.3 provides an overview of customer preference formation from the theory of reasoned action point of view.

In order to understand preference it is need to determine the functional or performance demands involved in the purchase, the desired emotive outcomes, and the subjective norms consumers use to determine their desire for one milk product or brand over another. The primary assumption of the model is that individuals make considered purchases. In some cases the consideration may be minimal and the purchase behavior almost habitual. In another the period of consideration (incubation) may be extensive and each element of the consideration process carefully examined.

Belief that the behavior leads to certain outcomes

Attitude toward

The behavior

Evaluation of the Outcomes

Preference Behavior

Intention to buy milk

Beliefs that specific referents think I should or should not perform the behavior

Subjective comparison norm

Motivation to comply with the specific referents

Figure 1.3 Basic Structural Model of Customer Preference Formation

Source: Adapted from Icek Ajzen and Martin Fishbein, Understanding Attitudes and Predicting Social Behavior (Upper Saddle River, NJ: Prentice Hall, 1980), 84.

The important contribution of the reasoned action model is the realization that consumers utilize the model in all purchase experiences of milk to a lesser or greater extent. Of equal importance is the realization that the components used to make a preference decision are also the ones employed by a consumer to evaluate the performance success of the milk product or service purchased and the company responsible for them. Therefore, as the components of preference on milk brand change, the elements influencing satisfaction change accordingly. The relationship is dynamic and fluid therefore static or predetermined satisfaction analytic packages often miss the most important elements of preference and can create a false sense of security on the part of companies who think that since their customer satisfaction scores are high they must in turn have relatively loyal customers.

The theory of reasoned action assumes a consequence for the action taken. People prefer some product, someone, or some service because they determined the object was best aligned with company’s performance and emotive requirements as judged through our comparative norms. People evaluate the performance in light of how well the product, person or service meets their preference expectations.

(www.icrsurvey.com/…/Customer%20Preference%20Formation_1205.doc)

1.2.3 Consumer Motivation

Motivation is one of the important factors that can influence the consumer behavior. Motivation is the processes that account for an individual’s intensity, direction and persistence of effort towards attaining a goal. The famous theory in the development of motivation concepts is the Abraham Maslow’s hierarchy of needs.

HIRARCHY OF NEEDS THEORY

It is probably safe to say that the most well-known theory of motivation is Abraham Maslow’s hierarchy of needs. The hypothesized that within every human being there exists a hierarchy of five needs. These needs are:

Physiological: includes hunger, thirst, shelter, sex and other bodily needs.

Safety: includes security and protection from physical and emotional harm.

Social: includes affection, belongingness, acceptance and friendship.

Esteem: includes internal esteem factors such as self-respect, autonomy and achievement and external esteem factors such as status, recognition and attention.

Self- actualization: the drive to become what one is capable of becoming: includes growth, achieving one’s potential and self-fulfillment.

Need 3: Social Need

Need 1: Physiological Need

Need 2: Safety Need

Need 4: Esteem Need

Need 5: Self Actualization

Figure 1.2.3 Maslow Hierarchy of Needs Model

As each of these needs becomes substantially satisfied, the next need becomes dominant. In terms of the figure 1.2.3, the individual moves up the steps of the hierarchy. From the standpoint of motivation, the theory would say that although no need is ever fully gratified, a substantially satisfied need no longer motivates. So, if the consumer wants to motivate someone, according to Maslow, the consumer need to understand what level of the hierarchy that consumer is currently on and focus on satisfying the needs at or above that level.

While customers have different motivations for consuming the things they do, all consumers have motivations that guide them to want, and purchase certain goods or services. Some motivations for consumption could include the need for status, social acceptance, security or individuality while other motivations are unconscious and can be utilized by marketers to hook consumers into buying a product they never knew they always wanted.

Beyond more emotional appeals there is the very real and tangible model of needs proposed by Abraham Maslow in his Hierarchy of Needs pyramid. Maslow’s theory indicates that most consumer motivations can be attributed to where they fall on the pyramid of needs he developed. The lower level on Maslow’s pyramid begins with basic “physiological needs” (dinking fluids, eating, sleeping, etc.), and climbs all the way to the highest level on the pyramid to the “need for beauty” (as cited in Lindquist & Sirgy, 2003, p. 250-251). Maslow believed that a person moved through each level of need sequentially. In other words, once the needs in one category were met completely, a person would move up to the next most immediate category, and his or her purchasing motivations would change as a result of the new category to which he or she would become a part of (as cited in Lindquist & Sirgy, 2003, p. 250-251).

Maslow separated the five needs into higher and lower orders. Physiological and safety needs were described as lower order needs and social, esteem and self-actualization as higher-order needs. The differentiation between the two orders was made on the premise that higher-order needs are satisfied internally (within the person), whereas lower-order needs are predominantly satisfied externally (by things such as pay, union contracts and tenure).

Unfulfilled Needs, Wants, and Desires

Tension

Learning

Drive

Behavior

Goal or Need Fulfillment

Cognitive

Processes

Tension Reduction

Figure 1.4 Model of Motivation Process

Source: From Jeffrey F. Dugree et al. “Observations: Translating Values into Product Wants, “Journal of Advertising Research, 36, 6, (November 1996)

The figure above is presents a model of the motivational process. It portrays motivation as a state of need-induced tension that “drives” the individual to engage in behavior that he or she believes will satisfy the need and thus reduce the tension. Whether gratification is actually achieved depends on the course of action pursued. The specific goals that consumers wish to achieve and the source of action they take to attain these goals are selected on the basis of their thinking processes (cognition) and previous learning. Therefore, marketers must view motivation as the force that induces consumption and through consumption experiences, the process of consumer learning.

1.3 RESEARCH PROPOSAL

1.3.1 The Factors Affecting Consumer Behavior towards Milk Product

Consumer purchases are strongly influenced by cultural, social, personal and psychological characteristics. It is difficult for marketers to control such as factors but they should take these into account because it does provide marketers with a guideline.

1.3.1.1 Cultural Factors

Cultural factors have a significant impact on customer behavior:

1. Culture

Culture is the most basic cause of a person’s wants and behavior. Growing up, children learn basic values, perception and wants from the family and other important groups.

Marketing are always trying to spot “cultural shifts” which might point to new products that might be wanted by customers or to increased demand. For example, among this particular family was believed that fresh milk has the highest nutritious value among all types of milk and fitness has created opportunities (and now industries) servicing customers who wish to buy:

Low calorie foods

Health club membership

Exercise equipment

Activity or health-related holiday etc

2. Subculture

Each culture contains “sub-cultures” – groups of people with share values. Sub-cultures can include nationalities, religions, racial groups, or groups of people sharing the same geographical location. Sometimes a sub-culture will create a substantial and distinctive market segment of its own. For example, people from one country only accept one flavor of milk, it is plain milk. So the people will only buy plain milk and do not want to choose other milk flavor.

3. Social class

These are relatively permanent and ordered divisions in a society whose members share similar values, interests and behaviors. For example, high class people who really very concern about their health especially their body shape will only buy low fat milk instead of other types of milk.

Cultural factors exert a broad and deep influence on consumer behavior. The marketer needs to understand the role played by the buyer’s culture, subculture and social class.

http://tutor2u.net/business/marketing/buying_cultural_factors.asp

1.3.1.2 Social Factors

A consumer’s behavior is also influenced by social factors, such as the consumer’s small groups, family, and social roles and status. Because these social factors can strongly affect consumer responses, companies must take them into account when designing their marketing strategies.

1. Reference Groups

Groups are a person’s behavior is influenced by many small groups. Groups which have a direct influence and to which a person belongs are called membership groups. References groups are groups that serve as direct or indirect points of comparison or reference in the forming of a person’s attitudes or behavior. Marketers try to identify the reference groups of their target markets. The importance of group influence varies across products and brands, but it tends to be strongest for conspicuous purchases. For example, an individual may choose a selected milk brand based on their group reference. References by the group can also known as mouth to mouth advertising. The reference group may validate the experience faced by the customer.

2. Family

Family – family members can strongly influence buyer behavior. We can distinguish between two families in the buyer’s life. The buyer’s parents make up the family of orientation. From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, self-worth, and love. The family of procreation-the buyer’s spouse and children-exerts a more direct influence on everyday buying behavior. The family is the most important consumer buying organization in society, and it has been researched extensively. Marketers are interested in the roles and relative influence of the husband, wife, and children on the purchase of a large variety of products and services. Consumers are also affected and influenced by the presence of a family member. For example, the parents normally decide what milk product they want to purchase but the children can decide what the flavor is.

3. Role and status

Roles and Status – a person belongs to many groups-families, clubs, organizations. The person’s position in each group can be defined in terms of both role and status. Role consists of the activities people are expected to perform according to the people around them. Status reflects the general respects given to role by the society. People often choose products that show their status in the society. Apart from that, consumers are also affected by their role they play and the status they hold in the society. For example, a general manager’s role and status will definitely differ from the role and status of a clerk. Bearing this in mind, the needs of customers also change.

1.3.1.3 Personal Factors

A buyer’s decisions are also influenced by personal characteristics such as the buyer’s age and life-cycle stage, occupation, economic situation, life style, and personality and self-concept.

These factors are divided into:

1. Age and life cycle

Age and Life-Cycle State – people change the goods and services they buy over their lifetimes. The types of milk people buy change during their lifetimes. As people grow older and mature, their desires change. The make up of family cycle also change their behavior. For example, when one person was a kid, he always drinks chocolate milk. But as he grows older, his preference in chocolate milk change becomes low fat plain milk or yogurt. Marketers often define their target markets in terms of life-cycle stage and develop appropriate products and marketing plans.

2. Occupation

Occupation – a person’s occupation affects the goods and services bought. Marketers try to identify the occupational groups that have an above-average interest in their products and services. A company can even specialize in making products needed by a given occupational group. For instance, blue collar workers would buy cheaper milk brand whereas executives will prefer to buy more expensive brand.

3. Economic Situation

Economic Situation – a person’s economic situation will greatly affect product choice. A person with higher purchasing power will be more willing to spend on famous cheese whereby, someone with middle income will choose local cheese, which offer better values. Marketers of income-sensitive goods closely watch trends in personal income, savings, and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and re-price their products.

4. Lifestyle

Life Style – people coming from the same subculture, social class, and even occupation may have quite different life styles. Life style is a person’s pattern of living as expressed in his or her activities, interests, and opinions. Life style captures something more than the person’s social class or personality. The life-style concept, when used carefully, can help the marketer gain an understanding of changing consumer values and how they affect buying behavior. People who always consume and wear branded stuff might always want to consume only famous milk brand comparing to people who consume milk despite their famous brand.

5. Personality and self concepts (self-image)

Personality and Self-Concept – each person’s distinct personality will influence his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. Many marketers use a concept related to personality-a person’s self-concept.

1.3.1.4 Psychological Factors

A person’s buying choices are also influenced by four major psychological factors – motivation, perception, learning, and beliefs and attitudes.

Motivation

Motivation – a person has many needs at any given time. A need becomes a motive when it aroused to a sufficient lever of intensity. A motive is a need that is sufficiently pressing to direct the person to seek satisfaction. Motivation is based on Maslow’s hierarchy of Needs. According to Maslow, a person tries to satisfy the most important need first, which is known as the survival needs or the psychological needs. When the important need is satisfied, it ceases to act as a motivator and the person will subsequently try to satisfy the next important need, known as safety needs. Base on Maslow theory, it is stated that a person should meet their basic and physiological needs like food, shelter, and clothes. It can be applied to milk as well whereby a person with low income will think how to eat food which can fulfill their body need such as rice before they consume milk which is nutritious but can not satisfy their hunger.

Perception

Perception – a motivated person is ready to act. How the person acts is influenced by his or her perception of the situation. Two people with the same motivation and in the same situation may act quite differently because they perceive the situation differently. Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world. Learning – when people act, they learn.

Learning

Learning is the reinforcement process, which an individual gained through the experiences. The practical significance of learning theory of marketers is that they can build demand for a product by associating it with strong drives, using motivating cues, and to the same drives as competitors and providing similar cues because buyers are more likely to transfer loyalty to similar brands then to dissimilar ones. Or it may design its brand to appeal to a different set of drives and offer strong cue inducements to switch (discrimination).

Belief and Attitudes

Beliefs and Attitudes – through acting and learning, people acquire their beliefs and attitudes. These in turn influence their buying behavior. A belief is a descriptive thought that a person has about something. Marketers are interested in the beliefs that people formulate about specific products and services. If some of the beliefs are wrong and prevent purchase, the marketer will want to launch a campaign to correct them. People have attitudes regarding religion, politics, clothes, music, food, and almost everything else. An attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. Attitudes put people into a frame of mind of liking or disliking things, moving toward or away from them.

Based on study (Morrison, 2002) attitude describes a person’s relatively consistent evaluations consistent evaluations, feelings and tendencies toward and object or an idea.

(Morrison, Alastair M, Ph.D., Hospitality and Travel Marketing, 3rd Edition, Thompson Learning, United States)

SUMMARY

Markets must be understood before marketing strategies can be developed. The consumer market buys goods and services for personal consumption. Consumers vary tremendously in age, income, education, tastes and other factors. Marketers must understand how consumers transform marketing and other inputs into buying responses. Consumer behavior is influenced by the buyer’s characteristics and by the buyer’s decision process. Buyer characteristics include four major factors: cultural, social, personal, and psychological. A person’s buying behavior is the result of the complex interplay of all these cultural, social, personal, and psychological factors. Many of these factors cannot be controlled by marketers, but they are useful in identifying and understanding the consumers that marketers are trying to influence.