Consumer Behaviour and Market Psychology Report Analysis MBA404

This report provides an in-depth analysis of consumer behavior and market psychology within the context of Fast Moving Consumer Goods (FMCG), specifically focusing on carbonated drinks. It combines information from surveys and videos to demonstrate an understanding of consumer behavior theories, including the stimulus-response model and factors influencing buying decisions (situational, social, and psychological). The report explores the consumer decision-making process, from problem recognition to purchase, and analyzes different buying behaviors. It offers strategic recommendations to attract more customers, supported by peer-reviewed literature, and addresses marketing issues related to consumer attitudes, group influences, culture, and personal buying processes, offering a valuable resource for understanding consumer behavior and its impact on marketing strategies. The report also examines the decline in customer loyalty, providing a comprehensive overview of consumer behavior and market psychology.

Running head: CONSUMER BEHAVIOUR AND MARKET PSYCHOLOGY
Consumer Behaviour and Market Psychology
Name of the Student:
Name of the University:
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1CONSUMER BEHAVIOUR AND MARKET PSYCHOLOGY
Executive Summary
This paper has been elaborated on an in-depth analysis of the several marketing issues
in relation with the customer behaviours. It has demonstrated an in-depth understanding and
application of the different consumer behaviour theories and concepts by analysing the facts
that are gathered from the assessment 1 and assessment 2. It has also provided some strategic
recommendations for the part of the company in order to take some steps for attracting more
customers towards its products. Furthermore, it is also to note that this paper shall gather
information from different peer-reviewed journal articles and literatures for justifying the
proposed recommendations.

2CONSUMER BEHAVIOUR AND MARKET PSYCHOLOGY
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Overview of the selected FMCG Product..............................................................................3
Critical Analysis.....................................................................................................................4
Strategic Recommendations.......................................................................................................8
References:...............................................................................................................................10

3CONSUMER BEHAVIOUR AND MARKET PSYCHOLOGY
Introduction
Consumer behaviour refers to the level of involvement of the consumers with the
product (Rani 2014). Understanding consumer behaviour is very necessary for any company
before launching a product or service in the market. If an organisation fails to analyse how its
customers would respond to a particular product, it would face tremendous losses.
Furthermore, it is also to note that consumer behaviour is a very complex concept as because
of the fact that each and every customer differs in his or her mind-set and attitude towards
purchase making, consumption of the product and its disposal. This paper shall elaborate on
combining the information that were been gathered while doing assessments 1 and 2. It
would showcase an in-depth understanding of the marketing issues that are related to the
customer behaviours, like their attitudes, culture, the social class they belong from, the group
influences and the learning process of theirs along with their process of personal buying
decision making. It shall be demonstrating an in-depth understanding and application of the
different consumer behaviour theories and concepts by analysing the facts that are gathered
from the assessment 2 (the video) and assessment 1 (the survey). Lastly, it shall be providing
some strategic recommendations for the same. Furthermore, it is also to note that this paper
shall gather information from different peer-reviewed literatures for justifying the proposed
recommendations.
Discussion
Overview of the selected FMCG Product
It is to mention that the chosen FMCG (Fast Moving Consumer Goods) consumer
product is that of carbonated drinks, which falls under the category of processed drinks.
Carbonated drinks are the drinks or beverages which contain some dissolved carbon dioxide

4CONSUMER BEHAVIOUR AND MARKET PSYCHOLOGY
gas in them (Shalev 2017). The dissolution of this gas in any liquid gives rise to
effervescence or fizz. It is to note that carbonated beverages are made by mixing the
flavoured syrup along with the carbonated water, which is both chilled. The range of
carbonated levels is up to five volumes of Carbon dioxide per one liquid volume. Colas,
Ginger ale and all the related drinks are carbonates with about 3.5 volumes and the other
drinks such as fruity etc. are less carbonated (Lu et al. 2017). Some of the examples of
carbonated drinks are Mentos eruption and Diet Coke. There are also several different types
of soft drink and they are ice cream float, root bear, sports drink, cola, diet drink, grape soft
drink etc. Carbonated drinks have as their base either soda water or carbonated water that are
regarded as carbonates dinks in their own right. Basically the sweetener and flavour are
added to them. Such beverages are mostly 90%. Water often has an amount of carbon dioxide
in it in anyway but, it is to note that the carbonated water is the water which has been
supersaturated with it in order to create a pleasant sensation. In the year 1840, the carbonated
water began to have flavouring added to it. By 1990s, the carbonated drinks and beverages
had become a great part of an average western countries’ consumers’ choices of drinks.
Originally, the carbonated drinks were regarded as healthy to consume. They were market as
digestive aid as well in the late 1950s. Then, gradually, they came to be considered as junk
food.
Critical Analysis
As per Solomon et al. (2014). Consumer behaviour is the social and psychological
influences of the consumer buying procedure. The relationship in between the seller and the
buyer forms by means of a phenomenon called market exchange. During the process of
exchanging, each of the parties assess the relative trade-offs which must be made for
satisfying their respective wants and desires. On the part of the seller, the trade-offs are
guided by the objectives and the policies of the company. On the other hand, the other part,

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which is the buyer, also has several objectives and policies which guide their decisions in
exchange. It is to note that one of the earliest theory of customer decision making is
dependent on the principles of economics called the economic man. As per the model of
economic man, the customers are narrowly self-interested and are rational. This theory
assumes that individuals act selfishly as customers by always trying to increase the
advantages that they drive from the process of exchange. This model suggests that consumers
actively make use of information regarding all the prevailing options before making any
decision of purchasing.
Furthermore, another model of consumer behaviour is that of the Stimulus-Response
Model or the “black box” model. It focuses on the customers as thinkers and problem solvers
who respond to a wide range of internal and external factors while deciding whether or not to
make the purchase.
Figure 1: The Stimulus-Response Consumer Behavioural model
Marketing-
Internal and
external
stimuli
Price
Product
Promotion
Place
Social
Political
Consumer
Black Box
The decision making
procedure of the
buyer towards the
purchase of the
product
Buyer
Response
Product Choice
Seller ad Brand
Choice
Quantity

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The above figure demonstrates the external stimuli which customers respond to
comprise of the marketing mix and the other environmental factors present in the market. It is
to note that the marketing mix represents a set of stimuli which are created and are planned
by the organisation (Kellaris and Machleit 2016). Together, all these factors represent the
external circumstances which help to shape the choices of the customers. Furthermore, the
internal factors that affect the customers decisions are describes as “black box”. This “box”
comprise of a wide range of factors which exist inside the mind of the person. This comprise
of the characteristics of the customers like their values, beliefs, lifestyle, motivation etc.
It is also to note that the process of decision making is also one of the parts of the
black box. This is because the customers come to recognise that they have an issue that they
need to solve and then they consider how a purchasing decision might solve their issue (Chu
and Liang 2018). As the customers respond to the external stimuli, their process of “black
box” choices are based on the internal determinants in order to determines the response of the
customers- whether to buy or not. According to Guidotti et al. (2018), just like the economic
man model, this Stimuli-response model also assumes that notwithstanding of what happens
inside the “black box”, the response of the consumers is a result of their rational and
conscious decision making process. Many of the markers are doubtful of this assumption and
they think which customers are more often tempted for making emotional and irrational
purchasing decisions. In fact, it is to note that the markets understand the irrationality of the
customers and their emotion are often what make them receptive of marketing stimuli. Due to
this reason, the purchasing behaviour of the customers is regarded by most to be a “black
box” or the “mystery”. When people themselves do not completely understand the things that
drives their choices and decisions, the process of exchange could be unpredictable and
difficult for the markets for understanding.

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According to Koschate-Fischer et al. (2018), the major factors that affect the
consumer behaviour towards the purchase making of the FMCG product of their choice are
divided into three groups- the situational influences, the social influences and the
psychological influences. The situational influences include time, physical surroundings,
condition and mood of the customers, social surroundings and the reason of purchase. On the
other hand, the social influences include the family of the customers, their roles, the opinion
leaders, the reference groups, the social classes they belong to as well as their cultures and the
subculture groups. Furthermore, the psychological influences include motives of purchasing,
the perception of the customers, their attitudes, learning, self-concept, personality and
lifestyle.
Furthermore, it is also to note that the buying decision behaviour of the customers
differ from one place to another and one person to another. The buying decision become
more complicated in the result of more buying deliberation and participants. There are several
factors that impacts the buying decision behaviour and they are classified in the below
mentioned categories:
 Habitual Buying Behaviour
 Variety Seeking Buying Behaviour
 Complex Buying Behaviour
 Dissonance Reducing Buying Behaviour
Habitual Buying Behaviour is a part where the involvement is low and there is no
significance among the brand names (Balabanis and Siamagka 2017). One of the good
example of this is a match box and lighter. They just go for it and directly buy it. There is no
existence of brand loyalty. Also, in this case, the customers do not seek for any information
about the brand purchase or the product characteristics. The Variety Seeking Buying

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Behaviour is the category in which the customer involvement is very low and there is a
notable differences among the brands. In this situation, the customers perceive brand
switching. For example, chips. Customers buy these things and the reason is just consumption
and the next time when they purchase other brand, it is just to change the taste. In the
Complex Buying Behaviour, the level of consumer involvement is high and observe a
considerable differences among the brands. It is the most notable when the price of the
products are high, of low quality after the sale and are risky. One of the best example is that
of a mobile or a laptop. Lastly, the dissonance reducing buying behaviour is the category in
which the customer involvement is very high because of high process and less purchase along
with very less significance differences among the brands. Also, in this case, the buyer
purchases the services and products that are very easily available.
Vohs et al. (2018), in this context have stated that the Consumer Decision Making
Process is a process that is used by the markets for identifying and tracking the decision
making process of a buyer journey, right from the beginning to the end. The very first
element in the process of consumer decision making process is that of Problem recognition. It
is the stage where the customers determine what they actually needs if they feel like there is
something that is missing and they need that to get that for feeling better. The next step is of
information search. In this step, the information are gathered regarding the stud from people
or internet via recommendations or through their earlier experiences. At this step, the
customers also begin to think about the risk management (Betsch 2014). The next step is of
evaluation of the alternatives. Here the questions are asked whether the product is right for
the customers or not. Once the customers are determined that the product will satisfy their
needs, they begin to seek for the best deal. Furthermore, the fourth step is of purchasing.
Here, the customers decide on the basis of the information and knowledge gathered about
what to purchase and where to purchase from. The very last step is of Post purchase

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behaviour. Here, the customers find that whether or not the product or services has matched
or have exceeded the made promises and their expectations. After this stage, they become the
brand ambassador who influence the other potential customers.
Strategic Recommendations
a) There should be a more proactive and aggressive approach by Pepsi and its
distributors in the relatively affluent and easy to reach market. A lot of FMCG
companies invest lot of efforts and time into understanding the competitors of the
product in the market place. However, they sometimes neglect the deep understanding
of what makes the products different to others. Hence, the company must assess how
its products would make the customers feel, what is the message that they providing
to the customers, does it perform a different role to the other and is it get consumer at
different occasions?
b) The pricing should be relative. The price in which Pepsi is selling the carbonated
drinks needs to match the expectations of the customers.
c) If the company thinks that the product could drive the incremental volume if goes on
promotion, then the company needs to consider its promotion strategy. Pepsi should
ensure that the promotion strategy of the company should be aligned with the brand
strategy and the customer use case.

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References:
Balabanis, G. and Siamagka, N.T., 2017. Inconsistencies in the behavioural effects of
consumer ethnocentrism: The role of brand, product category and country of
origin. International Marketing Review, 34(2), pp.166-182.
Betsch, R.D.M.T., 2014. Preference theory: An affect-based approach to recurrent decision
making. In The routines of decision making (pp. 69-96). Psychology Press.
Chu, L.C. and Liang, C.P., 2018. BEHAVIOR INTENTION OF APP SERVICE USING BY
TECHNOLOGY ACCEPTANCE MODEL AND THEORY ON STIMULUS-ORGANISM-
RESPONSE THEORY. Journal of International Management Studies, 19(2).
Guidotti, R., Monreale, A., Ruggieri, S., Turini, F., Giannotti, F. and Pedreschi, D., 2018. A
survey of methods for explaining black box models. ACM Computing Surveys (CSUR), 51(5),
p.93.
Kellaris, J.J. and Machleit, K.A., 2016. Signage as Marketing Communication: A Conceptual
Model and Research Propositions. Interdisciplinary Journal of Signage and Wayfinding, 1(1).
Koschate-Fischer, N., Hoyer, W.D., Stokburger-Sauer, N.E. and Engling, J., 2018. Do life
events always lead to change in purchase? The mediating role of change in consumer

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innovativeness, the variety seeking tendency, and price consciousness. Journal of the
Academy of Marketing Science, 46(3), pp.516-536.
Lu, W., Ma, C., Li, Z., Zhang, J., Huang, Y., Huang, Q. and Chen, T., 2017. A water-soluble
near-infrared (NIR) fluorescence activation probe for efficient detection of dissolved carbon
dioxide. Sensors and Actuators B: Chemical, 246, pp.631-637.
Rani, P., 2014. Factors influencing consumer behaviour. International journal of current
research and academic review, 2(9), pp.52-61.
Shalev, P., SO SPARK Ltd, 2017. System, method and capsules for producing sparkling
drinks. U.S. Patent Application 15/658,436.
Solomon, M.R., Dahl, D.W., White, K., Zaichkowsky, J.L. and Polegato, R.,
2014. Consumer behavior: Buying, having, and being (Vol. 10). London: Pearson.
Vohs, K.D., Baumeister, R.F., Schmeichel, B.J., Twenge, J.M., Nelson, N.M. and Tice, D.M.,
2018. Making choices impairs subsequent self-control: A limited-resource account of
decision making, self-regulation, and active initiative. In Self-Regulation and Self-
Control (pp. 45-77).