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ANNAMALAI UNIVERSITY
DIRECTORATE OF DISTANCE EDUCATION
CONSUMER BEHAVIOUR
LESSONS: 1 – 24
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M.B.A. Marketing Management
SECOND YEAR
CONSUMER BEHAVIOUR
Editorial Board
Members
Dr. E. Selvarajan
Dean, Faculty of Arts
Annamalai University
Annamalainagar
Internals
Dr. S. Sivaraj Murugan Dr. P. Balathandayutham
Asst. Professor Asst. Professor
Department of Business Administration Department of Business Administration
Annamalai University Annamalai University
Annamalainagar Annamalainagar
Externals
Lesson Writers
Units : I – III Units : IV – VI
Dr. S. Arulkumar Dr. J. Arthi
Assistant Professor & Deputy Coordinator Asst. Professor (S.G)
Management Wing, DDE Avinashilingam University
Annamalai University Coimbatore
M.B.A. Marketing Management
SECOND YEAR
CONSUMER BEHAVIOUR
SYLLABUS
Objectives
This course introduces participants to the basics of consumer behaviour,
which is seen as a vital component in advertising and marketing. This course will
teach the students about the internal and external factors that influence the
behaviour of consumers. Influences such as perception, learning, personality,
lifestyle, family and social class are examined, with a view to sensitise students to
the interplay of psychological forces.
Unit–I
Consumer behaviour - Meaning, Scope, Importance and Inter-disciplinary
nature - Problems in Buyers behaviour study.
Unit–II
Buyer behaviour Models - Buying Motives - Buying Habits and Buying process.
Consumer research process-quantitative and qualitative research.
Unit–III
Factors influencing consumer behaviour - Cultural, Social, Personal and
Psychological - Product perception- Learning, Attitude, Personality, New Product
Purchase, Repeat Purchase, Consumer Spatial Behaviour.
Unit–IV
Consumption Analysis-Product Usage Rates-Expenditure Pattern and Howard-
Sheth Model of Buyer Behaviour. Organizational behaviour of Buyer. Diffusion of
innovations-Process of diffusion and adoption.
Unit–V
Individual influence on Consumer Behaviour - Perception - Consumer
Motivation and Involvement-Attitudes and Attitude Change.
Unit–VI
The Buying Process-Problems Recognition and Information Search-
Information Processing - Alternative Evaluation-Purchase Process- Post Purchase.
Rural consumer behaviour. e-consumer behaviour.
ii
Reference Books
1) Rodger D.Black well, James F. Engel and Paul.W Miniard - Consumer
Behaviour: Cengage Learning, 2012
2) Loudon, David - Consumer Behaviour: Concepts and Applications, Tata
McGraw Hill, 2001.
3) Del I Hawkins David L Motherbaugh and Amiit Mookerjee - Consumer
Behaviour: building marketing strategy, Tata McGraw Hill, 2010.
4) Paul Peter and Jerry, Colsen -Consumer Behaviour and Marketing Strategy
Tata McGraw Hill, 2005.
5) Leon Schffman and Leslie lazar Kanuk, - Consumer Behaviour: Pearsn
Education, 2005.
6) D.D Sharma- Marketing Research: Sultan Chand & Sons New Delhi, 2001.
Journals and Magazines
1) Journal of Consumer Research
2) The Journal of Consumer Behaviour
3) Journal of Consumer Behaviour and Psychology
Web Resources
1) www.scribd.com
2) www.researchworld.com
3) www.icmrindia.com
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LESSON – 1
one constant thing is that we all are consumers. CB is a vast and complex subject.
Understanding CB and “knowing consumers’ are not that simple. It is almost
impossible to predict with one hundred per cent accuracy, how consumer(s) will
behave in a given situation. Marketers are interested in watching people shopping,
flirting, parading, playing, entertaining, as they are keenly interested in the wide
variety of behaviours they display. The efforts of all marketers are to influence the
behaviour of consumers in a desired manner. The success or failure in this pursuit
determines the difference between success and failure of marketing efforts or even
the business itself.
Consumer behaviour explains the reasons and logic that underlie purchasing
decisions and consumption patterns; it explains the processes through which
buyers make decisions. Consumer Behaviour may be defined as “the interplay of
forces that takes place during a consumption process, within a consumers’ self and
his environment. This interaction takes place between three elements viz.
knowledge, affect and behaviour; it continues through pre-purchase activity to the
post purchase experience; it includes the stages of evaluating, acquiring, using and
disposing of goods and services”. The “consumer” includes both personal
consumers and business/industrial/organizational consumers.
Definitions
1. “The behaviour that consumers display in searching for, purchasing, using,
evaluating and disposing of products and services that they expect will satisfy their
needs.”- Schiffman and Kanuk
2. “…..the decision process and physical activity engaged in when evaluating,
acquiring, using or disposing of goods and services." - Loudon and Bitta
3. “The study of consumers as they exchange something of value for a product
or service that satisfies their needs”- Wells and Prensky
4. “Those actions directly involved in obtaining, consuming and disposing of
products and services including the decision processes that precede and follow
these actions”. -Engel, Blackwell, Miniard
5. “The dynamic interaction of effect and cognition, behaviour and the
environment by which human beings conduct the exchange aspects of their lives” -
American Marketing Association
By analysing the above definition, it reveals that the study includes within its
purview, the interplay between cognition, affect and behaviour that goes on within a
consumer during the consumption process: selecting, using and disposing off goods
and services.
i. Cognition:
This includes within its ambit the “knowledge, information processing and
thinking” part; It includes the mental processes involved in processing of
information, thinking and interpretation of stimuli (people, objects, things, places
and events). In our case, stimuli would be product or service offering; it could be a
brand or even anything to do with the 4Ps.
3
ii. Affect:
This is the “feelings” part. It includes the favourable or unfavourable feelings
and corresponding emotions towards stimuli (towards a product or service offering
or a brand). These vary in direction, intensity and persistence.
iii. Behaviour:
This is the “visible” part. In our case, this could be the purchase activity: to
buy or not to buy (again specific to a product or service offering, a brand or even
related to any of the 4 Ps).
Why we study of CB: (Importance of CB)
The term CB is defined as the behaviour that consumers’ display in searching
for, purchasing, using, evaluating and disposing of products and services that they
expect will satisfy their needs. CB focuses on how individuals make decisions to
spend their available resources (time, money, effort) on consumption related items.
The term CB describes two different kinds of consuming goods and services for his
or her own use, for the use of the household or as a gift for a friend. In each of
these contexts, individuals, who are referred to as end users or ultimate
consumers, buy the products for fine use. The second category of consumer- the
organizational consumer- includes profit and not-for-profit businesses, government
agencies (local, state, and national), and institutions (e.g. Schools, hospitals, and
prisons), all of which must buy products, equipments and services in order to run
their organization.
The subject of Consumer Behaviour is viewed as the edifice of the marketing
concept, an important orientation in marketing management. The knowledge of
Consumer Behaviour helps the marketer understand and predict the consumption
patterns and consumption behaviours of people. It helps them gain insights as to
why a consumer behaves differently to another consumer; as well as, why a
consumer behaves differently in different times and buying situations. The study
helps them understand the internal (individual determinants) and external
(environmental factors) forces that impel people to act out different consumption
patterns and behaviours. The study helps the marketer in:
a) Analyzing the environment: identifying opportunities and fighting threats.
b) Segmenting, targeting and positioning.
c) Designing the marketing-mix.
d) Designing the marketing strategy.
e) Governmental and Non-profit Organization and Social Marketing.
Need for studying consumer behaviour
Consumer Behaviour is studied to predict buyers’ reaction in markets. If a firm
understands its customers, it becomes successful in the market place. The success
of any business is based on understanding the consumer and providing the kind of
products that the consumer wants. The consumer decides what to buy, when to
buy and also what not to buy. One cannot thrust a product on a consumer. A
marketer sells what the consumer wants. So, emphasis is placed on knowing what
the consumers’ wants are. Studying consumer Behaviour is very much emphasized
for the following reasons.
4
LESSON – 2
that a firm has to deal with. Dynamism relates to how quickly the changes take
place in the environment.
2. Segmentation, targeting and positioning:
The study of consumer behaviour may be applied to segment the market,
select the target market and position the product or service offering. Identifying the
target segment, understanding their needs, providing the right product and service
offering and communicating about the offering – all of these help a marketer succeed
in the long term and ensure his survival and success in a changing environment.
a) Segment the market: The marketer needs to identify distinct customer
groups with needs and wants, classify them on basis of descriptive characteristics
and behavioural dimensions. The descriptive characteristics may take forms of age,
gender, income, occupation, education, family size, family life cycle, gender,
lifestyle, personality, religion, generation, geography, nationality, and social class.
The behavioural dimensions take forms of benefits, uses, use occasion, usage rates,
and loyalty status.
b) Select target market: The marketer then selects one or more markets to
enter. The segment(s) that should be targeted should be viable; there should be a fit
between the market attractiveness and the company’s objectives and resources. The
marketer would be able to assess the viability of a segment on the basis of the
following criteria, viz., measurability, substantial ability, accessibility,
differentiability, and actionability.
c) Position: the product offering in the mind of the customers: The marketers
should be able to communicate the distinct and/or unique product characteristics.
3. Designing the Marketing Strategy:
There exists an interrelation between the Consumer, the Environment
and the Marketing strategy.
a) Consumer: The consumer has his needs and wants as well as product
preferences; Thus, there exists an interplay of Cognition (knowledge about products
and alternatives), Affect (feelings of favorableness and unfavourableness ) and
Behaviour (action: buy or not to buy).
b) Environment: This refers to forces in the environment, which make the
environment complex and dynamic.
c) Marketing strategies: This implies setting up of goals and then achieving
them through the design of an appropriate marketing mix.
The Marketing Strategy should be designed to influence consumers (Cognition,
Affect and Behaviour) and be influenced by them. It should be flexible and ever
evolving with changes in the customer needs and wants; as well as, changes in the
environment in which it operates. The knowledge of consumer behaviour can be
applied to develop a “best fit” between consumer needs and wants, the environment
in which the firm operates; and, the firms’ goals and objectives.
11
c) Place and Distribution: This includes the marketing channel, and comprises
decisions regarding choice of channel (direct or indirect), location, accessibility and
availability of product offering, wholesaling, retailing, logistics etc.
d) Promotion: This includes marketing communication, and the major issues
comprise decisions on communication/promotion mix, the message and media
strategy (the content, appeal and context).
5. Application in Governmental and Non-profit Organizations and Social
Marketing: The knowledge of consumer behaviour finds relevance even in
Governmental and Non-profit Organizations and Social Marketing. Governmental
and Non-profit Organizations have the society as its customers and need to
understand them so as to be able to serve them better. Social marketing involves
propagation of ideas; attempts at such circulation and spread of ideas for moral
and social upliftment can be more successful if there is a proper understanding of
the these consumers (i.e., the public and society)
Social Sciences and Buyer Behaviour:
As an interdisciplinary area of study, the subject borrows heavily from
psychology, sociology; social psychology; anthropology and, economics.
1. Psychology: This includes the study of the individual as well as the
individual determinants in buying behaviour, viz., consumer perception, learning
and memory, attitude, self-concept and personality, motivation and involvement,
attitudes and attitudinal change and, decision making.
2. Sociology: This includes the study of groups as well as the group dynamics
in buying behaviour, viz., family influences, lifestyles and values, and social group
influences.
3. Social psychology: This includes the study of how an individual operates in
group/groups and its effects on buying behaviour viz, reference groups and social
class influences.
4. Anthropology: This is the influence of society on the individual viz., cultural
and cross-cultural issues in buying behaviour, national and regional cultures etc.
12
5. Economics: This is the study of income and purchasing power, and its
impact on consumer behaviour. The underlying premise is that consumers make
rational choices while making purchase decisions. While resources are limited and
needs and want many, consumers collect information, and evaluate the various
alternatives to finally make a rational decision. As discussed before, consumers are
unique in themselves. A comprehensive yet meticulous knowledge of consumers
and their consumption behaviour is essential for a firm to succeed. In order to
understand and predict consumption patterns and behaviours within segment (s),
market.
2.4 REVISION POINTS
1) An understanding of the study of consumer behaviour helps formulate
appropriate marketing strategies for a firm keeping in view the consumer and
his environment.
2) The study of consumer behaviour may be applied to segment the market,
select the target market and position the product or service offering
3) The marketer needs to identify distinct customer groups with needs and
wants, classify them on basis of descriptive characteristics and behavioural
dimensions.
4) There exists an interrelation between the Consumer, the Environment and the
Marketing strategy.
5) The knowledge of consumer behaviour finds relevance even in Governmental
and Non-profit Organizations and Social Marketing.
6) As an interdisciplinary area of study, the subject borrows heavily from
psychology, sociology; social psychology; anthropology and, economics.
2.5 INTEXT QUESTIONS
1) Explain the applications of consumer Behaviour
2) Consumer Behaviour contents borrows heavily from psychology, sociology;
social psychology; anthropology and, economics. – Discuss
2.6 SUMMARY
An understanding of consumer behaviour is necessary for long term success
and survival of a firm. It is viewed as the edifice of the marketing concept, an
important orientation in marketing management.
2.7 TERMINAL EXERCISES
1) The knowledge of consumer behaviour can be applied to help identify ---------
and ----------
2) ----------, ----------- and ---------- help a marketer succeed in the long term and
ensure his survival and success in a changing environment.
3) Setting up of goals and then achieving them through the design of an
appropriate marketing mix is known as ----------
4) The study of consumer behaviour may be applied to design the ----------
5) ---------- is the influence of society on the individual viz., cultural and cross-
cultural issues in buying behaviour, national and regional cultures etc.
13
LESSON – 3
a) Explanations are provided for behaviour: Engel et al. (1990: 475) list
probably the most obvious advantage - that it is possible to visually grasp what
happens as variables and circumstances change;
b) Explanatory variables are specified: According to Engel & Blackwell (1982:
677) every person has a model of consumer behaviour in mind, whether implicit or
explicit. This implies that each person has a concept of factors that shape
motivation and behaviour. Without a held concept, explanation and prediction will
be impossible. The distinction is made with respect to the comprehensiveness of
competing models and the accuracy with which predictions can be made;
c. Systematic thinking is encouraged: Runyon & Stewart (1987: 698) suggest
that forcing theorists to define the relevant elements in behavioural theory, will
result in systematic thinking. Lilien & Kotler (1983:204) support this view by
adding that all major variables that models comprise, are identified and measured;
d} Fundamental relationships between variables and the exact sequence of
cause and effect of variables are specified: This view by Lilien & Kotler (1983: 204)
is supported by Runyon & Stewart (1987: 698), adding that by showing explicit
relationships between variables, a tentative view of behavioural phenomena is
offered;
e) Research findings can be integrated into a meaningful whole: Engel &
Blackwell (1982: 677) point out that most analysts of consumer behaviour are
familiar with behavioural sciences. A well-formulated model assists analysts to
differentiate between relevant and irrelevant literature that is often a highly
frustrating experience to examine;
f) Evaluations are provided for performance of the system: Part of the
requirements for a good model, according to Engel & Blackwell (1982: 678) is that
they describe the functional relationships between variables, resulting in the ability
of the model to make behavioural predictions with some degree of accuracy;
g) Avenues for fruitful research are revealed: Engel & Blackwell (1982: 678)
point out that carefully designed models are often the source of researchable
hypotheses, since gaps in existing knowledge are easily exposed. The nature of the
researchable hypotheses identified is usually determined by the variables
themselves and linkages between them.
Engel et al. (1990: 475) add to the above by stating that the gaps identified
could possibly even establish research priorities;
h) A foundation is provided for management information systems: Essential
insights for marketing strategy, according to Engel et al. (1990: 475), are provided
through the proper use of a model that discloses information required to
understand consumer decision processes; and
i) The final advantage, offered by Runyon & Stewart (1987: 698) and supported
by Lilien & Kotler (1983: 204), is that models sometimes permit sensitivity
analyses and simulations of behaviour so that the impact of changes in variables
can be explored and the implications of the model observed under different sets of
assumptions.
16
PSYCHOANALYTICAL MODEL
Sigmund Freud developed this theory. According to him human personality
has three parts:
1. The Id, is the source of all mental energy that drives us to action
2. The super ego, the internal representation of what is social is approved
conscience
3. The Ego, the conscious director of id impulses for finding him satisfaction in
socially acceptable manner.
The buyer behaviour depends upon the relative strength of the three
elements in the personal ability. Motivational research has been involved in
investigating motives of consumer behaviour so as to develop suitable marketing
implications accordingly. This approach has been used to generate idea for
developing- design, features, advertising and other promotional techniques.
SOCIOLOGICAL MODEL
According to this theory the individual decision and behaviour are quite often
influenced by the family and the society. He gets influenced by it and in turn also
influences it in its path of development. He plays many roles as a part of formal and
informal associations or organizations i.e., as a family member, employee of a firm,
member of professional forum, and as an active member of an informal cultural
organization. Hence he is largely influenced by the group in which he is a member.
For example, the decision may be made by one, actual buying may be done by
another, and the product is used by yet another member of the family. Here, a
mother takes a decision to buy a tiny cycle for her child, the cycle is purchased by
the father and the user is the child.
THE NICOSIA MODEL
According to Runyon & Stewart (1987: 699), the Nicosia model provides a
sophisticated attempt to show the interrelationship between attributes of the
consumer, the consumer decision-making process, the marketing communication
of an organisation and feedback of the response of the consumer to the
organisation.
Schiffman & Kanuk (1987: 653) provide a simplistic explanation of the model
by stating that it is interactive in design, where the organisation attempts to
influence consumers through marketing actions and the consumers in return
influence the organisation through their purchase actions (or lack of action if
products are not purchased)
Runyon & Stewart (1987: 701) continues by stating that if the reaction or
attitude resulting from field one is favourable, the consumer will search for the
product and evaluate it in terms of other alternatives. Schiffman & Kanuk (1987:
654) add that the output of the second field is motivation to purchase the
organisation's brand. The evaluation could, however, also lead to rejection of the
brand although the model illustrates a positive response. The positive evaluation
leads to purchase of the product, the third field of the model
19
.According to Schiffman & Kanuk (1987: 654), the final field of the Nicosia
model, field four, consists of two types of feedback from the purchase experience.
The first type of feedback relates to the organisation where sales data will be
obtained and the second to the consumer in the form of experience, leaving the
consumer either satisfied or dissatisfied. The experience obtained by the consumer
relating to the product will affect the predisposition and attitudes with regard to
future messages from the organisation.
Limitations of the Nicosia model according to Runyon & Stewart (1987: 701),
are the questionable assumptions that the consumer has no prior knowledge or
experience of the product, as well as inadequate understanding of subfield two, the
influences and interrelationships among the consumer attributes. A final limiting
factor is that, for repetitive decisions (considered a significant part of consumer
purchases), the operation of the model is ambiguous.
Engel, Blackwell & Kollat (1978: 548) criticise the Nicosia model by claiming
that the model never received the necessary elaboration and empirical support nor
has it been revised to reflect changes. In conclusion to the Nicosia model, Runyon &
Stewart (1987: 701) express the opinion that despite the limitations of the model, it
attempts to explicitly incorporate the marketing actions of the organisation within a
model of consumer behaviour.
THE HOWARD-SHETH MODEL
The Howard-Sheth model of buying behaviour, according to Foxall (1990: 10),
presents a sophisticated integration of the psychological and various social and
marketing influences on consumer choice, into a coherent sequence of information
20
processing. Runyon & Stewart (1987: 704) and Foxall (1990: 10) add respectively
that the model attempts to explain rational brand choice behaviour within the
constraints of incomplete information and limited individual capacities, and also
that it provides an empirically testable description of behaviour in terms of
cognitive functioning together with its outcomes.
Schiffman & Kanuk (1987: 654) explain the Howard-Sheth model (depicted in
Figure 2.4) a model that explicitly distinguishes between three different stages or
levels of decision-making, also referred to as levels of learning, namely extensive,
limited and routinised problem-solving.
Extensive problem-solving implies that the consumer has very little or no
knowledge and beliefs about brands. The consumer actively seeks information on a
number of alternatives at this point due to the lack of a brand preference. Foxall
(1990: 12) adds that in order to reduce brand ambiguity, the consumer is involved
in a decision process and undertakes prolonged deliberation contemplating which
brand to purchase or whether to buy at all.
Limited problem-solving occurs when the consumer cannot fully assess the
brand differences to arrive at a preference, since knowledge and beliefs about the
brands are only partially established. According to Foxall (1990: 12). Other factors
to be considered in limited problem-solving are that consumers have formed choice
criteria, know a few brands well and favour them equally because they have already
tried several brands at this stage.
Routinised problem solving
A type of purchasing scenario whereby the purchaser of a product or a service
has past experience with purchasing it and automatically makes the decision to
purchase again. Brand recognition plays a large part in routine response
Behaviour. It can also be referred to as habitual response Behaviour.
The value of the Howard-Sheth model, according to Runyon & Stewart (1987:
706), is that the model attempts to identify and organise major variables that may
influence consumer behaviour. The model is also perceived to be dynamic in
nature, since it reflects the complexity of consumer behaviour in an attempt to
understand it. The consumer is portrayed to form generalisations as a guide to
decision-making through an active information search from the environment by
employing past experiences.
Criticism towards the model, highlighted by Runyon & Stewart (1987: 706), is
that the hypothetical constructs portrayed in the model are not operationally
defined in unambiguous terms and the specific interrelationships are therefore
somewhat speculative.
ENGLE-BLACKWELL-MINIARD MODEL:
This model was originally developed in 1968 by Engle, Kollat and Blackwell
followed by number of researches on this model. Recently Miniard has contributed
this model in conjunction with Engle and Blackwell. It stands as one of the most
popular representation of buyer behaviour. The model is summarized in four
sections (1) Decision-process stages, (2) Information output, (3) Information
processing and (4) variables influencing the decision process.
21
Variables are grouped into four general categories: stimulus input, information
processing, decision process and variables influencing the decision process. The
model depicts buyer behaviour or decision process as the central focus of this
model defined under five basic decision process stages. These stages are motivation
and need recognition, search for information, alternative evaluation, purchase and
outcomes.
Similar to Howard-Sheth model the authors recognize two significantly
different modes of operation by buyers. One is described as extended problem
solving behaviour (EPS) which is categorized by high levels of involvement and high
level of perceived risk. In limited problem solving behaviour (LPS) the buyer is
operating under low level of involvements and low level of perceived risk. The
authors argue that the same basic model can be used to characterize both EPS and
LPS, depending on the degree of various stages used by the buyer.
These models are helpful in gaining new insight into complex and dynamic
buyer Behaviour. These models have their own pros and cons. Several other models
were also proposed but the typical, complicated and unpredicted nature of buyer
Behaviour could not be fully explained by anyone. Neither they establish a straight
input-output equation on buyer behaviour nor they provide a precise answer to the
why‟s or how‟s of buyer of buyer behaviour. It is essential to understand various
dimensions of buyer Behaviour for developing a sound marketing strategy for a
product or a service. The working on buyer mind is still a mystery for marketers.
SHETH FAMILY DECISION M AKING MODEL
Three comprehensive models presented were far all focusing on individual
decision making model. An alternative perspective considered the family as an
appropriate decision making unit. This model shows separate psychological
systems representing the distinct predispositions of the father, mother and other
family members. The separate predisposition leads into family buying decisions
which may be either individually or jointly determined. The model lists seven
factors that influences purchase decision are autonomous or joint: social class,
lifestyle, role orientation, family life cycle stage, perceived risk, service importance
and time pressure. The model suggests that joint decision making tends to prevail
in middle class families, newly married and close relation. It is suggested that joint
decision making is more prevalent in situations of high perceived risk and
uncertainty. The joint purchase decision is also considered important when there is
ample time to make a decision.
SHETH NEWMAN GROSS MODEL OF CONSUMPTION VALUES:
This model explains the reasons of selecting a product by the consumer. The
model concentrates on assessing consumption-relevant values that explain why
consumers buy a product or not. This model describes three central propositions:
(1) Consumer choices is a function of small number of consumption values, (2)
Specific consumption value make differential contribution in any given choice
situation and (3) Different consumption values are independent. The model
describes five consumption values that are core of this model. Functional value of a
22
LESSON – 4
search extensively for information about the brands, evaluate their characteristics,
and make a weighty decision on which brand to buy.
Instead, they are passive recipients of information as they watch television or
see print ads. Ad repetition creates brand familiarity rather than brand conviction.
Consumers do not form a strong attitude towards a brand but select it because it is
familiar. After purchase, they may not even evaluate the choice because they are
not highly involved with the product. So the buying process is brand beliefs formed
by passive learning, followed by purchase behaviour, which may be followed by
evaluation.
Marketers of low-involvement products with few brand differences find it
effective to use price and sales promotions to stimulate product trial, since buyers
are not highly committed to any brand. In advertising a low-involvement product, a
number of things should be observed. The ad copy should stress only a few key
points Visual symbols and Imagery are important because they can easily be
remembered and associated with the brand.
The ad campaigns should go for high repetition with short- duration messages.
Television is more effective than print media because it is a low-involvement
medium that is suitable for passive learning. Advertising planning should be based
on classical conditioning theory where the buyer learns to identify a certain product
by a symbol that is repeatedly attached to it.
Marketers can try to convert the low-involvement product into one of higher
involvement. The ways are:
i. This can be accomplished by linking the product to some involving issue, as
when Crest toothpaste is linked to avoiding cavities.
ii. The product can be linked to some involving personal situation, for
instance, by advertising a coffee brand early in the morning when the consumer
wants to shake oft sleepiness.
iii. The advertising might seek to trigger strong emotions related to personal
values or ego defense.
iv. An important product feature might be added to a low-involvement product,
such as by fortifying a plain drink with vitamins,
These strategies at best raise consumer involvement from a low to a moderate
level, they do not propel the consumer into highly involved buying behaviour.
VARIETY-SEEKING BUYING BEHAVIOUR:
Some buying situations are characterised by low consumer involvement but
significant brand differences. Here consumers are often observed to do a lot of
brand’ switching. An example occurs in purchasing cookies. The consumer has
some beliefs, chooses a brand of cookies without much evaluation, and evaluates it
during consumption. But next time, the consumer may reach for another brand out
of boredom or a wish for a different taste. Brand switching occurs for the sake of
variety rather than dissatisfaction.
28
The marketing strategy is different for the market leader and the minor brands
in this product category. The market leader will try to encourage habitual buying
Behaviour by dominating the shelf space, avoiding out-of-stock conditions, and
sponsoring frequent reminder advertising. Challenger firms will encourage variety
seeking by offering lower prices, deals, coupons, free samples and advertising that
presents reasons for trying something new.
BUYING ROLES
For making strategic decisions the marketers have to identify the buyers who
make the final buying decisions. It is truly a big task before the marketers to
identify the target buyers of the particular service.
1) Influencer: Several people may be involved in a particular purchase decision,
but all of them are not consumers. A person who has influence, whose views
or advice is given wheightage while taking the final decisions
2) Gatekeepers: Family members who control the flow of information about a
product or service into the family.
3) Initiator: The person who is the first to suggest or think of the idea of
purchasing a product or service.
4) Decider: The person who finally takes the decisions of whether to buy, what to
buy, how to buy and from where to buy.
5) Buyer: The person who actually buy the product/service after making
payments.
6) User: The person who actually uses or consumes the product or service.
decision.
4.4 REVISION POINTS
1) Consumers go through complex buying behaviour when they are highly
involved in a purchase and aware of significant differences among brands.
Consumers are highly involved when the product is expensive, bought
infrequently, risky and highly self-expressive.
2) Sometimes the consumer is highly, involved in a purchase but sees little
difference in the brands.
3) Many products are bought under conditions of low consumer involvement and
the absence of significant brand differences.
4) Some buying situations are characterised by low consumer involvement but
significant brand differences.
4.5 INTEXT QUESTIONS
1) What are the types of buying decision Behaviour?
2) What is Dissonance-Reducing Buying Behaviour?
3) What is Habitual Buying Behaviour?
4) What is Variety-Seeking Buying Behaviour?
4.6 SUMMARY
High involvement always has a strong affective component, and this does not
necessarily mean a high cost commitment. People also fall in love with cheap
products. So involvement does not always equate to price. A high-involvement good
29
mattress pad can be set to shake the consumer awake. VibeAwake’s parent
company, Linens Only is planning to roll this new product out in the summer
months, as parents and students are purchasing supplies to take to the university.
When the product is initially introduced, they plan that the first big target customer
group will be university students, especially first year students. The executives at
Linens Only plan that as Vide Awake moves through its life cycle, they will target
other major customer segments such as the deaf community. Once you have settled
on a tagline, you must provide a rationale /explanation for the tagline that you
have created.
1) Tagline:
2) Rationale/Explanation of Choice
4.12 KEYWORDS
Complex Buying Behaviour, Dissonance-Reducing Buying Behaviour, Habitual
Buying Behaviour, Variety-Seeking Buying Behaviour, purchasing cookies, Visual
symbols, Imagery
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LESSON – 5
BUYING MOTIVES
5.1 INTRODUCTION
Buying motive is the urge or motive to satisfy a desire or need that makes
people buy goods or services. Behind every purchase there is a buying motive. It
refers to the thoughts, feelings, emotions and instincts, which arouse in the buyers
a desire to buy an article. A buyer does not buy because s/he has been persuaded
by the salesman, but s/he buys for the aroused desire in him or her. Motives
should be distinguished from instincts.
5.2 OBJECTIVES
After studying this lesson, you will be able to understand:
• Promotional product buying motives
• Rational product buying motives:
• Emotional patronage buying motives and
• Rational patronage buying motives.
5.3 CONTENTS
Promotional product buying motives
Rational product buying motives:
Emotional patronage buying motives and
Rational patronage buying motives.
A motive is simply a reason for carrying out a particular behaviour and not an
automatic response to a stimulus, whereas instincts are pre-programmed
responses, which are inborn in the individual and involuntary. Thus hunger is an
instinct whereas desire to purchase pizza is a buying motive. According to Prof. D.
J. Duncan, “Buying Motives are those influences or considerations which provide
the impulse to buy, induce action and determine choice in the purchase of goods
and services.” Buying motives are can be divided by the following way:
psychological attraction of the product (i.e. the enhancement of the social prestige
or status of the purchaser through its possession), desire to remove or reduce the
danger or damage to life or body of the possessor, etc. In short, they refer to all
those characteristics of a product, which induce a buyer to buy it in preference to
other products. Product buying motives may be sub-divided into two groups, viz.,
(1) emotional product buying motives and (2) rational product buying motives.
EMOTIONAL PRODUCT BUYING MOTIVES:
When a buyer decides to purchase a product without thinking over the matter
logically and carefully (i.e., without much reasoning), she is said to have been
influenced by emotional product buying motives. Emotional product buying motives
include the following:
1. Pride or Prestige:
Pride is the most common and strongest emotional buying motive. Many
buyers are proud of possessing some product (i.e., they feel that the possession of
the product increases their social prestige or status). In fact, many products are
sold by the sellers by appealing to the pride prestige of the buyers. For instance,
diamond merchants sell their products by suggesting to the buyers that the
possession of diamonds increases their prestige or social status.
2. Emulation or Imitation:
Emulation, i.e., the desire to imitate others, is one of the important emotional
buying motives. For instance, a housewife may like to have a silk saree for the
simple reason that all the neighbouring housewives have silk sarees.
3. Affection:
Affection or love for others is one of the stronger emotional buying motives
influencing the purchasing decisions of the buyers. Many goods are purchased by
the buyers because of their affection or love for others. For instance, a husband
may buy a costly silk saree for his wife or a father buy a costly watch for his son or
daughter out of his affection and love.
4. Comfort or desire for comfort:
Desire for comfort (i.e., comfortable living) is one of the important emotional
buying motives. In fact, many products are bought comfort. For instance, fans,
refrigerators, washing machines, cushion beds, etc. are bought by people because
of their desire for comfort.
5. Sex appeal or sexual attractions:
Sex appeal is one of the important emotional buying motives of the
buyers. Buyers buy and use certain things, as they want to be attractive to the
members of the opposite sex. Men and women buy cosmetics, costly dresses, etc.,
because of this emotional motive, i.e., sex appeal.
6. Ambition:
Ambition is one of the emotional buying motives. Ambition refers to the desire
to achieve a definite goal. It is because of this buying motive that, sometimes,
customers buy certain things. For instance, it is the ambition that makes many
33
people, who do not have the facilities to pursue their college education through
regular colleges, pursue their education through correspondence courses.
7. Desire for distinctiveness or individuality:
Desire for distinctiveness, i.e., desire to be distinct from others, is one of the
important emotional buying motives. Sometimes, customers buy certain things,
because they want to be in possession of things, which are not possessed by others.
Purchasing and wearing a particular type of dress by some people is because of
their desire for distinctiveness or individuality.
8. Desire for recreation or pleasure:
Desire for recreation or pleasure is also one of the emotional buying motives.
For instance, radios, musical instruments, etc. are bought by people because of
their desire for recreation or pleasure.
9. Hunger and thirst:
Hunger and thirst are also one of the important emotional buying motives.
Foodstuffs, drinks, etc. are bought by the people because of this motive.
10. Habit:
Habit is one of the emotional considerations influencing the purchasing
decision of the customers. Many customers buy a particular thing because of habit,
(i.e. because they are used to the consumption of the product). For instance, many
people purchase cigarettes, liquors, etc. because of sheer habit.
RATIONAL PRODUCT BUYING MOTIVES:
When a buyer decides to buy a certain thing after careful consideration (i.e.
after thinking over the matter consciously and logically), s/he is said to have been
influenced by rational product buying motives. Rational product buying motives
include the following:
Safety or Security:
Desire for safety or security is an important rational buying motive influencing
many purchases. For instance, iron safes or safety lockers are bought by the people
because they want to safeguard their cash, jewelries etc., against theft. Similarly,
vitamin tablets, tonics, medicines, etc., are bought by the people because of this
motive, i.e. they want to safeguard their health and protect themselves against
diseases.
2. Economy:
Economy, i.e. saving in operating costs, is one of the important rational buying
motives. For instance, Hero Honda bikes are preferred by the people because of the
economy or saving in the operating cost, i.e. petrol costs.
3. Relatively low price:
Relatively low price is one of the rational buying motives. Most of the buyers
compare the prices of competing products and buy things, which are relatively
cheaper.
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4. Suitability:
Suitability of the products for the needs is one of the rational buying motives.
Intelligent buyers consider the suitability of the products before buying them. For
instance, a buyer, who has a small dining room, naturally, goes in for a small
dining table that is suitable, i.e. that fits in well in the small dining room.
5. Utility or versatility:
Versatility or the utility of a product refers to that quality of the product, which
makes it suitable for a variety of uses. Utility of the product is one of the important
rational buying motives. People, often, purchase things that have utility, i.e. that
can be put to varied uses.
6. Durability of the product:
Durability of the product is one of the most important rational buying motives.
Many products are bought by the people only on the basis of their durability. For
instance, buyers of wooden furniture go in for teak or rosewood table, though they
are costlier, as they are more durable than ordinary wooden furniture.
7. Convenience of the product:
The convenience of the product (i.e. the convenience the product offers to the
buyers) is one of the important rational product buying motives. Many products are
bought by the people because they are more convenient to them. For instance,
automatic watches, gas stoves, etc., are bought by the people because of the
convenience provided by them.
PATRONAGE BUYING MOTIVES
Patronage buying motives refer to those considerations or reasons, which
prompt a buyer to buy the product wanted by him from a particular shop in
preference to other shops. In other words, they are those considerations or reasons,
which make a buyer, patronise a particular shop in preference to other shops while
buying a product.
Patronage buying motives also may be sub-divided into two groups viz. a)
Emotional patronage buying motives and b) Rational patronage buying motives.
A. EMOTIONAL PATRONAGE BUYING MOTIVES:
When a buyer patronises a shop (i.e. purchases the things required by him
from a particular shop) without applying his mind or without reasoning, he is said
to have been influenced by emotional patronage buying motives. Emotional
patronage buying motives include the following:
1. Appearance of the shop:
Appearance of the shop is one of the important emotional patronage buying
motives. Some people make their purchases from a particular shop because of good
or attractive appearance of the shop,
2. Display of goods in the shop:
Attractive display of goods in the shop also makes the buyers patronise a
particular shop.
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3. Recommendation of others:
Recommendation of others also constitutes one of the important emotional
patronage buying motives. Some people purchase their requirements from a
particular shop because that shop has been recommended to them by others, i.e.,
by their friends and relatives.
4. Imitation:
Imitation also is one of the emotional patronage buying motives influencing the
purchases of buyers. Some people make their purchases from a particular shop
just because other people make their purchases from that shop.
5. Prestige:
Prestige is one of the emotional patronage buying motives of the buyers. For
instance, some people consider it a prestige to take coffee from a five-star hotel.
6. HABIT:
Habit is also one of the important emotional patronage buying motives. Some
people make their purchases from a particular shop for the simple reason that they
have been habitually making their purchases from that shop.
B. RATIONAL PATRONAGE BUYING MOTIVES
When a buyer patronises a shop after careful consideration (i.e. after much
logical reasoning and careful thinking) he is said to have been influenced by
rational patronage buying motives. Rational patronage buying motives include the
following:
1. Convenience:
Convenient location proximity of a shop is one of the considerations
influencing the purchases of many buyers from a particular shop. Many buyers,
usually, buy their requirements from a near-by shop, as it is convenient to them to
make their purchases.
Similarly, convenient working hours of the shop also influence the purchases
of good many buyers. For instance, if a shop works for a longer period of time every
day and even on Sundays, it will be very convenient to the buyers. As such, many
buyers may make their purchases from such a shop.
2. Low price charged by the shop:
Price charged by the shop also influences the buyers to patronise a particular
shop. If the price charged by a shop for a particular product is relatively cheaper,
naturally, many people will make their purchases from that shop.
3. Credit facilities offered:
The credit facilities offered by a store also influence the buying of some people
from a particular shop. People who do not have enough money to make cash
purchases every time prefer to make their purchases from a shop which offers
credit facilities.
4. Services offered:
The various sales and after-sale services, such as acceptance of orders
through phone, home delivery of goods, repair service, etc., offered by a shop also
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induce the buyers to buy their requirements from that shop. Rational buyers are,
often, influenced by the various services or facilities offered by the shop.
5. Efficiency of salesmen:
The efficiency of the salesmen employed by a shop also influences the people
in patronising a particular shop. If the employees are efficient and are capable of
helping the buyers in making their purchases, people naturally would flock to such
a shop.
6. Wide choice:
Wide choice of goods offered by a shop is one of the rational considerations
making the buyers patronise a particular shop. People generally prefer to make
their purchases from a shop, which offers wide choice (i.e. wide varieties of goods).
7. Treatment:
The treatment meted out by a shop to the customers is one of the rational
considerations influencing the buyers to patronise a particular shop. Usually,
people would like to purchase their requirements from a shop where they get
courteous treatment.
8. Reputation of the shop:
Reputation of the shop for honest dealings is also one of the rational patronage
buying motives. Usually, people would like to make their purchases from a store
having reputation for fair dealings.
5.4 REVISION POINTS
1) A motive is simply a reason for carrying out a particular behaviour and not an
automatic response to a stimulus, whereas instincts are pre-programmed
responses, which are inborn in the individual and involuntary.
2) Product buying motives refer to those influences and reasons, which prompt
(i.e. induce) a buyer to choose a particular product in preference to other
products.
3) When a buyer decides to purchase a product without thinking over the matter
logically and carefully (i.e., without much reasoning), she is said to have been
influenced by emotional product buying motives.
4) When a buyer decides to buy a certain thing after careful consideration (i.e.
after thinking over the matter consciously and logically), s/he is said to have
been influenced by rational product buying motives.
5) Patronage buying motives refer to those considerations or reasons, which
prompt a buyer to buy the product wanted by him from a particular shop in
preference to other shops. In other words, they are those considerations or
reasons, which make a buyer, patronise a particular shop in preference to
other shops while buying a product.
6) When a buyer patronises a shop (i.e. purchases the things required by him
from a particular shop) without applying his mind or without reasoning, he is
said to have been influenced by emotional patronage buying motives.
7) When a buyer patronises a shop after careful consideration (i.e. after much
logical reasoning and careful thinking) he is said to have been influenced by
rational patronage buying motives.
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LESSON – 6
required to make the decision and how this information can be obtained. For
example, a decision problem may be whether to launch a new product. The
corresponding research problem might be to assess whether the market would
accept the new product.
The objective of the research should be defined clearly. To ensure that the true
decision problem is addressed, it is useful for the researcher to outline possible
scenarios of the research results and then for the decision maker to formulate
plans of action under each scenario. The use of such scenarios can ensure that the
purpose of the research is agreed upon before it commences.
Setting up the Research Objectives
1) A statement of research objectives. For example: "This research investigates
the relationship between demographic background and musical preference.
More specifically, this study studies how age, sex, income level and educational
level determine consumer preference on film and classical music."
2) Declare the precise information needed.
3) It should be specific and unambiguous as possible.
4) The entire research efforts should be directed to accomplish the
research objectives.
5) Sometimes, theories and models are set up.
6) Sometimes, hypotheses are set up.
Step Two: Creating the Research Design
A plan that researchers follow to answer the research objectives and/or test
the hypotheses.
Whether the design will be Descriptive and/or Causal (diagnostic and predictive)?
Descriptive design: Answer the questions who, what, when, and how.
In quantitative research, we may calculate the mean, median, mode or S.D. of
the data collected. For example: 35% of the respondents said they like classical
music.
Causal design: Examine whether one variable causes or determine the value
of another variable (two variables at least).
Independent variable (The cause, example demographic variables) and
dependent variable (the outcome, musical preference).
In quantitative research, you may use regression analysis to analyze the
association between two (or more) variables. For example, the older the respondent,
the more he likes classical music. Now let us now look more in details at each of
the three categories of marketing research, viz.,
• Exploratory research
• Descriptive research
• Causal research
These classifications are made according to the objective of the research.
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Observation also might take longer since observers may have to wait for appropriate
events to occur, though observation using scanner data might be quicker and more
cost effective. Observation typically is more accurate than communication.
Personal interviews have an interviewer bias that mail-in questionnaires do not
have. For example, in a personal interview the respondent's perception of the
interviewer may affect the responses.
Step four: Selecting the Sampling Procedure
1) Sample is a subset of the whole population.
2) Why sampling? May be.. .Population is too big, population unknown,
insufficient resources to conduct a census.
3) Sample should be "representative" — should help the researchers to make
inference about the population.
Sampling Plan
The sampling frame is the pool from which the interviewees are chosen. The
telephone book often is used as a sampling frame, but have some shortcomings.
Telephone books exclude those households that do not have telephones and those
households with unlisted numbers. Since a certain percentage of the numbers
listed in a phone book are out of service, there are many people who have just
moved who are not sampled. Such sampling biases can be overcome by using
random digit dialing. Mall intercepts represent another sampling frame, though
there are many people who do not shop at malls and those who shop more often
will be over-represented unless their answers are weighted in inverse proportion to
their frequency of mall shopping.
In designing the research study, one should consider the potential errors. Two
sources of errors are random sampling error and non-sampling error. Sampling
errors are those due to the fact that there is a non-zero confidence interval of the
results because of the sample size being less than the population being studied.
Non-sampling errors are those caused by faulty coding, untruthful responses,
respondent fatigue, etc.
There is a tradeoff between sample size and cost. The larger the samples size
the smaller the sampling error, but the higher the cost. After a certain point the
smaller sampling error cannot be justified by the additional cost.
While a larger sample size may reduce sampling error, it actually may increase
the total error. There are two reasons for this effect. First, a larger sample size may
reduce the ability to follow up on non-responses. Second, even if there are a
sufficient number of interviewers for follow-ups, a larger number of interviewers
may result in a less uniform interview process.
Two ways of thinking about sampling:
A. Sampling for policy makers, or "describers". A policymaker is interested in
questions such as "How many people are unemployed?" Policy makers typically use
cumulative statistics and confidence intervals.
45
Sampling Frame: Actual list of units from which the sample is drawn which
might not be totally inclusive of the survey population.
Sampling Unit: Elements or set of elements considered for sampling. E.g.,
persons, geographical clusters, churches.
Unit of Analysis: Unit from which the information is collected. E.g., persons,
households, network.
Types of Sampling and Area Probability Sampling
A. Probability Samples
1. Simple Random Samples
We rarely use them except for some listed samples, e.g., the lists of seniors
and freshman provided by the schools for a survey. We were provided the lists,
assigned the students random numbers, and then selected the sample based on the
random numbers. This method can be used where sampling frames are clearly
defined, e.g., a list of all students in a college. It is very difficult for household
populations studies. In SRS, every sample has a greater than 0 probability of
selection which implies every item in the sample can be selected.
2. Systematic Samples
Begins with a random start within a list. Then, based on the sampling fraction,
a certain proportion is chosen. E.g., University has approximately 6000 students in
total. We wanted to sample 500. The sampling fraction is 500/6000 or one of
twelve. We could have used a random number between one and twelve to indicate
the first student chosen and then choose every twelfth student. E.g., if the random
number were 5, we would have chosen the 5th, 17th, 29th, etc through the list.
These samples are generally used with fairly large and well-organized lists. In
many studies, there are some drawbacks to their practical application, e.g. if there
are problems with the lists..
3. Stratified Samples
The target population is divided into strata (groups) based on characteristics
that the researcher thinks are important. Many surveys of college students stratify
by race, ethnicity, gender, on-off campus, etc. Stratification generally reduces
sampling error because they can ensure that all relevant portions of the population
are included in the sample. Strata can also be used to compensate for nonresponse
of various forms.
Proportional Stratified Sampling
The number in each strata are chosen to ensure that each strata is
represented proportionally. E.g., we would stratify the classes in some schools to
ensure that a proportional numbers of students living off-campus are included.
Non-proportional
The number in each strata are chosen to ensure there are enough in each
strata to make reasonable estimates. Eg, in our University student's survey, we
increased the sampling rate of day scholars so that we could be sure there would be
enough to analyze them as a group.
47
so significant effort should be put into the questionnaire design. The questionnaire
should be tested thoroughly prior to conducting the survey.
2 Steps to Developing a Questionnaire
The following are steps to developing a questionnaire - the exact order may
vary somewhat. In addition I would also like to mention that we are doing all this
things in much greater detail in the next lesson.
• Determine which information is being sought.
• Choose a question type (structure and amount of disguise) and method of
administration (for example, written form, email or web form, telephone
interview, verbal interview).
• Determine the general question content needed to obtain the desired
information.
• Determine the form of response.
• Choose the exact question wording.
• Arrange the questions into an effective sequence Specify the physical
characteristics of the questionnaire (paper type, number of questions per page,
etc.)
• Test the questionnaire and revise it as needed.
3 Question Type and Administration Method
Some question types include fixed alternative, open ended, and projective:
• Fixed-alternative questions provide multiple-choice answers. These types of
questions are good when the possible replies are few and clear-cut, such as age, car
ownership, etc.
• Open-ended questions allow the respondent to better express his/her
answer, but are more difficult to administer and analyze. Often, open-ended
questions are administered in a depth interview. This technique is most appropriate
for exploratory research.
• Projective methods use a vague question or stimulus and attempt to project a
person's attitudes from the response. The questionnaire could use techniques such
as word associations and fill-in-the-blank sentences. Projective methods are
difficult to analyze and are better suited for exploratory research than for
descriptive or causal research.
There are three commonly used rating scales: graphic, itemized, and
comparative.
• Graphic - simply a line on which one marks an X anywhere between the
extremes with an infinite number of places where the X can be placed.
• Itemized - similar to graphic except there are a limited number of categories
that can be marked.
• Comparative - the respondent compares one attribute to others. Examples
include the Q-sort technique and the constant sum method, which requires one to
divide a fixed number of points among the alternatives.
50
is valid, then it also is reliable and if it is not reliable, then it cannot be valid. One
way to show reliability is to show stability by repeating the test with the same
results.
7 Attitude Measurements
Many of the questions in a marketing research survey are designed to measure
attitudes. Attitudes are a person's general evaluation of something. Customer
attitude is an important factor for the following reasons:
• Attitude helps to explain how ready one is to do something.
• Attitudes do not change much over time.
• Attitudes produce consistency in Behaviour.
• Attitudes can be related to preferences.
Attitudes can be measured using the following procedures:
• Self-reporting - subjects are asked directly about their attitudes. Self-
reporting is the most common technique used to measure attitude.
• Observation of Behaviour - assuming that one's Behaviour is a result of one's
attitudes, attitudes can be inferred by observing Behaviour. For example, one's
attitude about an issue can be inferred by whether he/she signs a petition related
to it.
• Indirect techniques - use unstructured stimuli such as word association
tests.
• Performance of objective tasks - assumes that one's performance depends on
attitude. For example, the subject can be asked to memorize the arguments of both
sides of an issue. He/she is more likely to do a better job on the arguments that
favor his/her stance.
• Physiological reactions - subject's response to stimuli is measured using
electronic or mechanical means. While the intensity can be measured, it is difficult
to know if the attitude is positive or negative.
• Multiple measures - a mixture of techniques can be used to validate the
findings; especially worthwhile when self-reporting is used. There are several types
of attitude rating scales:
• Equal-appearing interval scaling - a set of statements are assembled. These
statements are selected according to their position on an interval scale of
favorableness. Statements are chosen that has a small degree of dispersion.
Respondents then are asked to indicate with which statements they agree.
• Likert method of summated ratings - a statement is made and the
respondents indicate their degree of agreement or disagreement on a five-point
scale (Strongly Disagree, Disagree, Neither Agree Nor Disagree, Agree, Strongly
Agree).
Semantic differential scale - a scale is constructed using phrases describing
attributes of the product to anchor each end. For example, the left end may state,
52
"Hours are inconvenient" and the right end may state, "Hours are convenient". The
respondent then marks one of the seven blanks between the statements to indicate
his/her opinion about the attribute.
Stapel Scale - similar to the semantic differential scale except that 1) points on
the scale are identified by numbers, 2) only one statement is used and if the
respondent disagrees a negative number should marked, and 3) there are 10
positions instead of seven. This scale does not require that bipolar adjectives be
developed and it can be administered by telephone.
Dimension Qualitative Quantitative Remarks
Types of Probing Limited probing Respondents have more
questions freedom to structure
the answers.
Information per Large and in-depth Depends
respondent
Administration Demand skilled Less skillful is Quantitative researches
administrators acceptable usually have clearer
guidelines.
Ability to Low High
replicate
Sample size Usually small (<30) Can be large
Analysis Subjective, inter Statistical Qualitative analysis will
subjective, be more time-
interpretive. consuming
Type of research More suitable for More suitable for
exploratory descriptive or causal
research research
Special Tape and/or video Questionnaires,
hardware recorder, probing computer with
questions, pictures statistical software
Training of the More on Social More on information
researchers science processing
• Q-sort technique - the respondent if forced to construct a normal
distribution by placing a specified number of cards in one of 11 stacks according to
how desirable he/she finds the characteristics written on the cards.
QUALITATIVE RESEARCH VS. QUANTITATIVE RESEARCH
Qualitative Research is about investigating the features of a market through
in-depth research that explores the background and context for decision-making. In
qualitative research there are 3 main methods of collecting primary data:
i. Depth interviews
ii. Focus/discussion groups
iii. Projective techniques
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Depth Interviewing
Depth interviews are the main form of qualitative research in most business
markets. Here an interviewer spends time in a one-on-one interview finding out
about the customer's particular circumstances and their individual opinions.
The majority of business depth interviews take place in person, which has the
added benefit that the researcher visits the respondent's place of work and gains a
sense of the culture of the business. However, for multi-national studies, telephone
depth interviews, or even on-line depth interviews may be more appropriate.
Feedback is through a presentation that draws together findings across a
number of depth interviews. In some circumstances, such as segmentation studies,
identifying differences between respondents may be as important as the views that
customers share.
The main alternative to depth interviews - focus group discussions - is typically
too difficult or expensive to arrange with busy executives. However, on-line
techniques increasing get over this problem.
Group Discussions
Focus groups are the mainstay of consumer research. Here several customers
are brought together to take part in a discussion led by a researcher (or
"moderator"). These groups are a good way of exploring a topic in some depth or to
encourage creative ideas from participants.
Group discussions are rare in business markets, unless the customers are
small businesses. In technology markets where the end user may be a consumer, or
part of a team evaluating technology, group discussions can be an effective way of
understanding what customers are looking for, particularly at more creative stages
of research.
Projective Techniques
Used in Consumer research to understand consumer's knowledge in
association with a particular product or brand. Used by clinical psychologists to
understand a consumer's hidden 'attitudes', 'motivation' and 'feelings'. These
techniques could be:
i. Word association: Respondents are presented with a series of words or
phrases and asked to say the first word, which comes to your mind. This method is
helpful to check whether the proposed product names have undesirable
associations.
ii. Sentence completion: The beginning of a sentence is read out to the
respondent and he/she is asked to complete it with the first word that comes to the
mind. E.g., "people who don't prefer to eat from fast food joints are.....”
iii. Third party techniques: Respondents are asked to describe a third person
about whom they have little information. It is useful in determining 'attitudes' of the
respondents.
54
vi. Role-playing: respondents are asked to visualize that they are a product or a
person and asked to enact or perform their role describing their feelings, thoughts
and actions.
Step Six: Data Analysis
Before analysis can be performed, raw data must be transformed into the right
format. First, it must be edited so that errors can be corrected or omitted. The data
must then be coded; this procedure converts the edited raw data into numbers or
symbols. A codebook is created to document how the data was coded. Finally, the
data is tabulated to count the number of samples falling into various categories.
Simple tabulations count the occurrences of each variable independently of the
other variables. Cross tabulations, also known as contingency tables or cross tabs,
treats two or more variables simultaneously. However, since the variables are in a
two-dimensional table, cross tabbing more than two variables is difficult to visualize
since more than two dimensions would be required. Cross tabulation can be
performed for nominal and ordinal variables.
Cross tabulation is the most commonly utilized data analysis method in
marketing research. Many studies take the analysis no further than cross
tabulation. This technique divides the sample into sub-groups to show how the
55
dependent variable varies from one subgroup to another. A third variable can be
introduced to uncover a relationship that initially was not evident.
Step Seven: Preparing and Writing the Report
1. Researcher should communicate their findings to the managers; if possible,
oral presentation and written report should both be made.
2. Practical recommendations should be suggested to the managers. For
example: If our shop will target on younger consumers, we should sell more pop
music, and the interior design should be more fashionable to fit their lifestyles.
3. How you present the results may affect how the managers use your
information.
The format of the marketing research report varies with the needs of the
organization. You should make sure that the report contains the following sections:
• Authorization letter for the research
• Table of Contents
• List of illustrations
• Executive summary
• Research objectives
• Methodology
• Results
• Limitations
• Conclusions and recommendations Appendices containing copies of the
questionnaires, etc.
6.5 REVISION POINTS
1) The research process begins with the recognition of a business problem or
opportunity.
2) In quantitative research, you may use regression analysis to analyze the
association between two (or more) variables.
3) Descriptive research is more rigid than exploratory research and seeks to
describe users of a product, determine the proportion of the population that
uses a product, or predict future demand for a product.
4) Causal research seeks to find cause and affect relationships between variables.
6.5 INTEXT QUESTIONS
1) What are the steps in the consumer research process?
2) What are the types of research design?
3) What are the popular data collection methods?
4) What is the format of research report?
6.6 SUMMARY
Before moving into the consumer research process, let us first understand a
very key issue in consumer research, i.e., the difference between market research
and marketing research. You will find that these terms often are used
interchangeably, but technically there is a difference. Market research deals
56
specifically with the gathering of information about a market's size and trends.
Marketing research covers a wider range of activities. While it may involve market
research, marketing research is a more general systematic process that can be
applied to a variety of marketing problems. The stages in consumers research
process discussed in this lesson.
6.7 TERMINAL EXERCISES
1) ---------- deals specifically with the gathering of information about a market's
size and trends.
2) The general systematic process that can be applied to a variety of marketing
problems is known as ----------.
3) ---------- begins with the recognition of a business problem or opportunity.
4) Theoretical and hypothetical aggregation of all elements to which a survey
should apply is known as ----------
5) -------- sampling begins with a random start within a list.
6) The questionnaire should be tested thoroughly prior to conducting ---------
7) ---------- is about investigating the features of a market through in-depth
research that explores the background and context for decision-making.
6.8 SUPPLEMENTARY MATERIALS
1) Du Plessis, P.J., and Rousseau, G.G. 2003. Buyer Behaviour. Third Edition.
Cape Town: Oxford University Press.
2) Jacoby, J., Chestnut, R. W., and Fisher, W. A. "A Behavioural process
approach to information acquisition in nondurable purchasing," Journal of
marketing research) 1978, pp 532-544.
3) Howcroft, B., Hewer, P., and Hamilton, R. "Consumer decision-making styles
and the purchase of financial services," Service Industries Journal (23:3) 2003,
pp 63-81
4) Katona, G., and Mueller, E. "A study of purchase decisions," Consumer
Behaviour: The dynamics of consumer reaction (1) 1955, pp 30-87
6.9 ASSIGNMENTS
1) List the information you would require for preparing the presentation of
research process. Discuss various methods/sources for obtaining the required
information. Suggest the best method for data gathering.
6.10 SUGGESTED READINGS/ REFERENCE BOOKS
1) Philip Kotlar, Kevin Kellar, Abraham Koshy, Mithileswar Shah, Marketing
Management-South Asian Perspective, 14th edition, Pearson Education, New
Delhi
2) Leon G. Schiffman & Leslie Lazar Kanuk: Consumer Behaviour, Pearson PHI.
3) Batra & Kazmi, Consumer Behaviour, Excel Books.
4) Hawkins, Best & Concy, Consumer Behaviour, Tata McGraw Hill.
5) Peter. D. Bennett Harold H. Kassarjian: Consumer Behaviour (PHI).
6) Srivastava, Khandoi, Consumer Behaviour, Galgotia publications.
7) M.S.Raju & Dominique. Xardel, Consumer Behaviour, Vikas Publications.
8) Loudon & Della Bitta, Consumer Behaviour, Tata McGraw Hill,
57
LESSON – 7
esteemed as a lifestyle and as a personal value and was culturally apt as well as
was a respected aspect of individuals. They have probably imbibed the importance
given to the age old values of thrifts and savings, which have imbued these
generations with cost consciousness. On the other hand, is the movement that
eschews the values of avoiding ostentatious or luxurious or even comfort driven
lifestyles or of subsuming their individuality to the socially "correct" and tradition
bound ways of life. Indian consumers are value conscious and value for money
buyers and are extremely cost conscious (across all income groups), yet these
marketing people base their communication on the prestigious, the luxurious and
so on and not so much on the price. The usage of credit for purchase itself is an
area or great change.
Sex: Male and female dominating decisions are discussed in the context of
different types of services as well as for marketing segmentation. According to many
authors some decision are male dominated, some are female dominated and other
are joint in nature. Gender is another important variable to distinguish between
male and female consumers. But from past few decades sex roles are neglected by
marketers as it is not an accurate basis for differentiate consumers. Much of the
sex roles have been discussed because of the upsurge in the number of working
women.
Marital Status: The family has focus of marketing efforts for many products
and services as the household continues to be the relevant consuming unit. There
are more autonomy and less influence among unmarried as compared to among
married couples. However these patterns vary from service to service and from
decision stage to decision stage. Marketers are interested in the number and kinds
of households that own and/or buy certain services. They are also interested in
determining the demographic and media profiles of the household decision maker
in order to develop appropriate marketing strategies.
Income: Income is an important variable for distinguishing market segments. A
major problem with segmenting market on the basis of income alone is that income
simply indicates the ability (or inability) to pay for a service. For this reason,
marketers often combine income with other demographic variable(s) to define target
markets accurately. Personal income is the income from wages, salaries, dividends,
rent, interests, business/professions, social security and farming. Disposable
personal income is the amount available after deductions (taxes) for personal
consumption expenditure and saving. Income has long been an important variable
for determining buyer Behaviour. The discretionary income is the income available
for spending after deducting expenditures for necessities or fixed items such as
food, clothing, transportation, shelter and utilities. A household's income level
combined with its accumulated wealth determines its purchasing power. While
many purchases are made on credit, one's ability to buy on credit is ultimately
determined by one's current and past income (wealth). As developing economy,
Indian has seen income rising amongst a growing number of household across both
urban and rural markets. However, the typical middle and lower middle class
dominance in household income and expenditure can be seen from the fact that
number of registered vehicle is increasing from past few decades.
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The NCAER established a five level classification in their 2002 report and
stated that over two 2 percent of the population consisted of very rich households
in terms of consumption levels. Their 2005 study, classifying consumers in four
categories of deprived, aspiring, middle class and the rich, has been quoted as
stating that by the end of the century, over 1.25 lakh households would have an
annual income of more than ten million rupees.
Education: The levels of education achieved by buyer such as Graduate, Post
Graduate also influence buyer Behaviour. India is increasingly seen as a country
with a future in knowledge based economy; this base will contribute significantly to
the GDP, the per capita income and the general disposable income that flows back
to the economy through higher consumption standards. Education levels usually
determine occupational chances and thereby income. Education may also affect
skills and expertise and thereby income, even in agricultural and entrepreneurial
ventures such as with mechanized scientific farming or technocrat ventures.
Experts also argue that with the largely agrarian economy at present and prevailing
low levels of high school, college and vocational educational levels in the
population. It may be difficult to transform our economy into a largely knowledge
based one at present. However, the gross number of knowledge workers is quite
large. Further their contribution to the economy is also seen to be growing at a
much higher rate than that of the workers in any other sector. With decreasing
population growth rates and better life chances, population is getting greater
education. Families in the lower income categories are also sending their children
to school, which to some extent increases the growth in literacy, as well as the
gross numbers of children in school. This number of children making it to the high
school stage has increased significantly in the last decade. The number of
professional college has also grown. Literacy affects consumer markets in many
ways. At one end, it signifies occupational status and consumption baskets to
some extent. It is also indirectly indicates the general awareness of the consumer
and likely sophistication of information search and evaluation. It also determines
the modes of information search and the media and content that may be
communicated by the marketer. The exposure of consumers to various media is
also seen as influenced by education levels, as reported by various readership
surveys.
Occupation: Occupation of the buyer also influences consumption pattern. The
workforce diversity is providing variety of occupations such as service occupation,
blue collared and white collared. The education, occupation and income tend to be
closely related. Occupation is probably the most widely applied single cue people
use to initially evaluate and define individuals. Occupation is strongly associated
with education (which to some extent determines occupation) and income (which to
some extent is determined by occupation).
One's occupation provided status and income. In addition, the type of work
one does and the types of individual’s one works with over time also directly
influence one's values, lifestyle and all aspects of the consumption process.
Differences in consumption between occupation classes have been found for
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products and services. Media preferences, hobbies and shopping pattern are also
influenced by occupational class.
Given the occupation is so closely linked with qualifications and education on
one side and opportunities in life and lifestyles on the other. It has been observed
that in India, the role of caste, region and developmental status of the residential
area has also played a role in occupations of people. The society had earlier been
defined in castes which were hereditary and occupation ran in the family. In many
cases, especially in artisan, farming and other occupations, family jobs are taken
up by succeeding generations. Further, since it badly affected income and hence
education and awareness, the changes in the occupational profile have been slow to
catch on. However, the last decade has changed the opportunity profile and
the economy in terms of skills and employment opportunities as well as
remuneration pattern. Further, with better health and life chances and smaller
families, education has also spread to a significant extent. This has led to a change
in the occupational profile of the population significantly. The service is now the
largest part of the economy and engages a large part of working population. Change
in rural occupation pattern has been slow, as the household industry is not that
widespread and rural economy is still primarily agri-produce oriented and not agri-
processing oriented or mechanized in nature.
Economic Circumstances: Service choice is influenced by one's economic
circumstances. People economic circumstances consists of spending behaviour,
level of spendable income, stability of income, savings, assets, debts, borrowing
power, attitude toward spending.
Geographical: In geographic segmentation, the market is divided by location.
The theory behind this strategy is that people who live in the same area have
similar needs and wants and that these needs and wants differ from those of people
living in other areas. Some regional differences can be accounted for by climate.
Marketers observed divergent consumer purchasing patterns among urban, rural
and suburban areas.
Geo demographic: People share similar financial means, life styles and
consumption habits. Geo demographics is not a new concept it is age old and
useful when the personalities, goals and interest of an advertiser can be isolated in
terms of where they live.
Location: The place where a buyer resides and stays for a longer time.
Transportation, mode of conveyance, development in the residential area,
educational and industrial advancements are some of the factors influencing buyer
behaviour and buying decisions.
City or Metro: The place where a buyer resides is part of urban, sub-urban,
metropolitan or rural areas, facilities, advancements, mall culture, fashion, trends,
status and living parent of geographical area also influence buying decisions.
Climate: Weather, temperature and other climatic conditions are components
of geographical factors that may influence decision making of individuals for their
purchases.
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The household life cycle (HLC): The HLC is based on the age, marital
status of adult members in the households along with presence and age of their
children. The buyer use to change their preferences for services over a period of
time. Marketers often define their target markets in terms of life-cycle stage and
develop appropriate services and marketing plans for each stage such as; Single I:
Unmarried single, Young couples (No Children), Full nest I (Married couples), Single
parent I, Middle aged single, Empty nest I (Middle aged married with no children),
Delayed full nest I (Old married with young children), Full nest II (Middle -aged
married with children at home), Single parent II (Middle -aged single with children
at home), Empty nest II (Older married couples) and Older single.
Consumer socialization: The family provides a basic network in which
consumer socialization occurs, Consumer socialization is the process by which
young people acquire skills, knowledge an attitude relevant to their functioning as
consumers in a marketplace. Consumer's behaviour is determined by social factors,
such as small group, family and status.
Group Influences on Consumer Behaviour
A group is defined as two or more individuals who share a set of norms,
values, beliefs. The group member should have certain implicitly or explicitly
defined relationships to one another so that their behaviours are interdependent. A
group is association of two or more people who interact to accomplish individual or
mutual goals. Groups may be classified according to a number of variables.
Marketers have found three classification criteria for groups: (1) membership, (2)
type of contact and (3) attraction. The membership criteria are dichotomous. Either
one is the member of a particular group or one is not a member of that group. Type
of contact refers to how much interpersonal contact the group members have with
each other. Attraction refers to the desirability that membership in a given groups
has for the individual. This can range from negative to positive. Groups with
negative desirability -dissociative reference group can influence behaviour just as
do those with positive desirability. Membership groups also have a direct influence
on consumer decision process. Reference groups serve as direct or indirect points of
comparison. A person's reference group consists of all the groups have a direct
(face-to-face) or indirect
The aspirational reference group refers to those others against whom one
would like to compare oneself. Humans are inherently social animals and
individuals greatly influence each other. Associative reference groups include
people who more realistically represent the individuals' coworkers and neighbors.
Finally, the dissociative reference group includes people that the individual would
not like.
Social Class is a group of individuals with similar social rank, based on such
factors as occupation, education and wealth. Social classes are relatively permanent
and ordered divisions whose members share similar values, interests and
behaviours. Social class is not determined by a single factor but is measured as a
combination of occupation, income, education, wealth and various other factors.
Markets are interested in social class because people within a given social class
tend to exhibit similar buying behaviour. Social classes show distinct services and
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brand preferences in areas, such as: clothing, home furnishing, leisure activity and
motor vehicles.
Roles and Status: A role consists of the activities people are expected to
perform according to persons around them. Each role carries a status reflecting the
general esteem given by society.
Consumption Subculture: A consumption based group often termed as
consumption subculture is a distinctive subgroup of society. On the basis of shared
commitment to a particular service class, brand or consumption activity. These
groups have (1) an identifiable, hierarchical social structure, (2) a set of shared
beliefs or values and (3) unique jargon, rituals and mode of symbolic expressions.
Thus, they are reference groups for their members as well as those who aspire to
join or avoid them. A number of such subcultures have been studied in some
details, including those focused on style/attitude, organisation, service, television
programme and activities.
Brand Communities: Consumption subculture focus on the interactions of
individuals around an activity, service category or occasionally a brand. A brand
community is a non-geographically bound community, based on a structured set of
social relationships among owners of a brand and the psychological relationship
with a specific brand.
Opinion Leader: Opinion leader is a person within a reference group who exerts
influence on his followers because of special skills, knowledge, personality etc. The
exchange of advice and information between group members and leader can occur
when they seeks information from each other. In choosing products and services
consumer are often influenced by advice received from experts.
Factors Influencing Indian Consumer in a Turbulent Marketing Environment
India being a large country consists of several states, different religions and
different languages. It is difficult to generalize the tastes and preferences of the
Indian masses as there can be various segments of consumers based on economic
and social characteristics such as income levels, regions, caste and culture that
they belongs to. There are various social classes emerging due to turbulent
marketing environment. Even though the per capita income in India is low, it still
remains an enticing market. India is a unique market in the sense there are so
many factors affecting the buying decisions like tradition, family values, value for
money, orientation towards love and affection. There are many issues influencing
Indian consumers such as socio-cultural, cultural, economical and psychological.
India can be divided into various emerging social classes such as:
High Net worth People: These are the people who are at the top of the income
chart. They frequently visit trendy malls, chic restaurants, upscale multiplexes and
very expensive clubs. They go for ultra expensive brands and do not think twice
about spending millions on them.
The Great Indian Middle Class: This is a cliche but the companies can ignore
this group at the cost of their own performance. These people reflect the taste and
preferences of the majority. They seek a lot of information before purchasing any
high value item. They want full value for their money and are quite careful while
69
making purchases. Savings are top priority and they are always willing to struggle
financially today, for a better and more satisfying future.
The Alpha Female: This is a new category which has recently joined the Indian
buying brigade. Earlier, there were not many working women but today their
presence is inescapable. These working women have added punch to the
purchasing power to the household they belong to be in their paternal house as
spinsters or their in-laws house after marriage. So, the overall effect has been good
for the companies selling their wares. These women have become more independent
and are in the position to take independent decisions regarding purchases.
Rural India: There is a huge market out there in the hinterland. Companies
have started targeting them but a major part still untapped. The rural people are
not only aware but also are willing to spend money for procuring them. This is
especially true of the rich farmers of Punjab, Western UP and to some extent,
Haryana. The buying pattern varies across different classes as also across regions
and the level of exposure that people have. With the advent in information
technology, e-choupals and choupal-sagar rural people can assess information
related to financial services at their native place.
Indian Urban Market: This niche is strongly supported by the lifestyle and
aspirations of west. The following values can be associated with niche:
Material success: Young professional between 25 to 30 years, extremely
conscious of their material success, have changed in the last decade. Higher
education, intelligence and aspirations of these consumers have resulted in their
acquiring substantial wealth at a relatively young age in the life-cycle stages. This
wealth is spent on essential services which have contributed to the service
economy-health, amusement, time-compression and convenience.
Impulse Gratification: While a number of consumer mat be using credit cards
only for convenience, the neo-urban young adults exhibit a compulsive need to buy
products and services through credit cards. This niche may process multiple credit
cards. The insurers are joining hands with credit card companies to sell their
offerings.
Success through Professional Achievements: These aspects contributes to the
intrinsic and extrinsic motivational levels and are reflected in the consumption of
services and brands, possessing an insurance, property, vehicle or latest mobile.
Involvement at Work: As a logical extension to the previous value,
contemporary consumers break away from traditional work practices and are
involved in high tension, fast passed jobs, distant assignments etc. they experience
time pressure and hence prefer time compression or convenience services. There is
a growing need of financial and insurance services that may offer high level of
satisfaction.
Changing Workplace Requirements and Policies: Some employers are offering
group and individual insurance policies for the secure future of employees.
Whereas other offer these policies as they have some contract with insurance
agencies for health and life insurance of employees.
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C) SITUATIONAL INFLUENCE
A number of features or characteristics of situation influence behaviours
across the various types of situations described below. We will describe five key
characteristics of situations that help to determine the situation's impact on
behaviour, physical features, social surroundings, temporal perspectives, task
objectives (definition) and antecedent states.
1. Physical Features: Physical surroundings include decor, sounds, aroma,
lighting, weather and configurations of merchandise or other material surrounding
the stimulus object. Physical surroundings are widely used type of situational
influence, particularly for retail applications.
2. Social Surroundings: Social surroundings are the other individuals present
during the consumption process. People's actions are frequently influenced by
those around them. Most people would change their apparel for at least some of
these situations. Social influence is a significant force for acting on our behaviour,
since individuals tend to comply with group expectations, particularly when the
behaviour is visible.
3. Temporal Perspective: Temporal perspectives are situational characteristics
that deal with the effect of time on consumer behaviour. Time as a situational factor
can manifest itself in a number of ways. The amount of time available for the
purchase has a substantial impact on the consumer decision process and
information search.
4. Task Definition: Task definition is the reason the consumption activity is
occurring. The major task dichotomy used by marketers between purchases for
self-use versus gift giving.
5. Antecedent Status: Feature of the individual person that are not lasting
characteristics such as momentary moods or conditions are called antecedent
states. Moods are transient feeling states that are generally not tied to a specific
event or object. They tend to be less intense than emotions and may operate
without the individual's awareness. Although moods may affect all aspects of a
person's behaviour, they generally do not completely interrupt ongoing behaviour
like emotions.
7.4 REVISION POINTS
1) There are various factors influencing buyer behaviour can be grouped in three
categories Internal Influence, External Influence and Environmental Influence.
2) Demographics describe population in terms of its size, distribution, structure
and vital characteristics or personal characteristics of individual buyers such
as age, education, economic conditions.
3) Income is an important variable for distinguishing market segments. A major
problem with segmenting market on the basis of income alone is that income
simply indicates the ability (or inability) to pay for a service. For this reason,
marketers often combine income with other demographic variable(s) to define
target markets accurately.
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LESSON – 8
PERCEPTION
8.1 INTRODUCTION
We all know that a motivated person is ready to act. How that person acts
is influenced by his or her perception of the situation. In the same situation, two
people with the same motivation may act quite differently based on how they
perceive conditions. You may perceive the waiters at MacDonald’s as casual and
unsophisticated, while your friend may view them as spontaneous with cheerful
personalities. MacDonald’s is targeting those in the second group. Why do people
have different perceptions of the same situation? All of us experience a stimulus by
the flow of information through our five senses: sight, hearing, smell, touch, and
taste. However, each of us receives, organizes and interprets this sensory
information in an individual way.
8.2 OBJECTIVES
After studying this lesson, you will be able to understand:
• Define perception and its key elements.
• Identify the various elements in perception
• Explain the perceptual process
• Explain the marketing applications of just noticeable difference
CONTENTS
Process of perception
Elements of perception
Marketing Application of Perception
Perception is the process of selecting, organizing and interpreting information
inputs to produce meaning. The above definition of perception of perception lays
emphasis on certain features:
• Perception is a mental process, whereby an individual selects data or
information from the environment, organizes it and then draws significance or
meaning from it.
• Perception is basically a cognitive or thinking process and individual activities;
emotions, feelings etc. are based on his or her perceptions of their
surroundings or environment.
• Perception being an intellectual and cognitive process will be subjective in
nature.
THE PROCESS OF PERCEPTION HAS THREE SUB STAGES -
1. Sensation- Attending to an object/event with one of five senses
2. Organisation - Categorizing by matching sensed stimulus with similar object
in memory, .eg. colour
3. Interpretation- Attaching meaning to stimulus, making judgments as to value
and liking, e.g. bitter taste
People can emerge with different perceptions of the same object because of
three perceptual processes:
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1. Selective attention
2. Selective distortion and
3. Selective retention.
1. Selective Attention. People are exposed to a tremendous amount of daily
stimuli: the average person may be exposed to over 1500 ads a day. A person
cannot possibly attend to all of these; most stimuli will be screened out. Selective
attention means that marketers have to work hard to attract consumers' notice. A
stimuli is more likely to be attended to if it is linked to an event, satisfies current
needs, intensity of input changes (sharp price drop).
2. Selective Distortion. Stimuli do not always come across in the way the
senders intend. Selective distortion is the tendency to twist information into
personal meanings and interpret information in a way that will fit our
preconceptions. Unfortunately, there is not much that marketers can do about
selective distortion. Advertisers that use comparative advertisements (pitching one
product against another), have to be very careful that consumers do not distort the
facts and perceive that the advertisement was for the competitor.
3. Selective retention. People will forget much that they learn but will tend to
retain information that supports their attitudes and beliefs. Because of selective
retention, we are likely to remember good points mentioned about competing
products. Selective retention explains why marketers use drama and repetition in
sending messages to their target market. We remember inputs that support our
beliefs, forgets those that don't.
ELEMENTS OF PERCEPTION
We will examine some of the basic concepts that underlie the perception
process.
Sensation is the immediate and direct response of the sensory organs to
stimuli (an advertisement, a package, and a brand name). A stimulus is any unit of
input to any of the senses.
Sensory receptors are the human organs (i.e., the eyes, ears, nose, mouth, and
skin) that receive sensory inputs, sight, sound, smell, taste, or touch. Human
sensitivity refers to the experience of sensation.
Sensitivity to stimuli varies with the quality of an individual's sensory
receptors and the amount or intensity of the stimuli to which he/she is exposed.
Sensation itself depends on energy change, the difference of input.
Thus, a constant environment, whether very busy and noisy or relatively quiet,
would provide little sensation because of the lack of change, the consistent level of
stimulation.
As sensory input decreases, the ability to detect changes increases. This ability
of the human organism to accommodate itself to varying levels of sensitivity as
external conditions vary not only protects us from damaging, disruptive, or
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irrelevant bombardment when the input level is high but has important
implications for marketers.
The Absolute Threshold - The lowest level at which an individual can
experience a sensation is called the absolute threshold. The point at which a person
can detect the difference between "something" and "nothing" is that
Sensory adaptation is a problem that causes many advertisers to change their
advertising campaigns regularly. Marketers try to increase sensory input in order to
cut through the daily clutter consumers experience in the consumption of
advertising. Some increase sensory input in an effort to cut through the advertising
"clutter." Other advertisers try to attract attention by decreasing sensory input.
The Nature and Process of Perception
Information processing is a series of activities by which stimuli are perceived,
transformed into information and stored. There are four major stages in the
information-processing model, viz., exposure, attention, interpretation and memory.
It is the first three, which constitute the perception process. Exposure occurs when
a stimulus such as an advertisement comes within range of a vision. Attention
occurs when the receptor nerves pass the sensation on to the brain for processing.
Target customer allocates cognitive processing capacity »i.e. pays attention to ad.
Interpretation is the assignment of meaning to the received sensations. Target
customer interprets the message »i.e.' message sent = message received' Memory is
the short-term use of the meaning for the immediate decision-making and the
longer-term retention of the meaning. -Target customer stores the advertisement
and message in memory so can be accessed when needed.
Process of Perception
There is normally a linear flow from exposure to memory.
Exposure - Attention - Interpretation - Memory Perceptual process
As we can see in the perceptual process in figure there is a linear flow from
exposure to memory. But, these processes occur virtually simultaneously and are
clearly interactive. It implies that our memory influences the information we are
exposed to, attend to, and the interpretation we assign. At the same time, memory
itself is being shaped by the information it is receiving. Much of the interpreted
information will not be available to active memory when the individual needs to
make a purchase decision. The perceptual process consists of many sub processes.
We can understand this by taking a note of the input-throughput - output
approach. This approach is based on the fact that there is an input, which when
processed gives outputs. That is, the perceptual inputs will comprise of stimuli in
the environment.
PERCEPTUAL PROCESSES
Perceptual Inputs: The first process in the perceptual processes the presence of
stimuli like people, objects, events, information etc.
Perceptual mechanism: We will discuss the mechanism of perception in the
next section.
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Expectations
People see what they expect to see. What they expect to see is usually based on
familiarity, previous experience, or preconditioned set expectations. Stimuli that
conflict sharply with expectations often receive more attention than those that
conform to expectations.
Motives
People tend to perceive things they need or want. The stronger the need, the
greater the tendency to ignore unrelated stimuli in the environment.
Selective Perception
The consumer's "selection" of stimuli (selective perception) from the
environment is based on the interaction of expectations and motives with the
stimulus itself. Selective exposure—consumers actively seek out messages they find
pleasant or with which they are sympathetic.
a. Consumers actively avoid painful or threatening messages. Selective
attention—consumers have a heightened awareness of the stimuli that meet their
needs or interests.
b. Consumers have a lower awareness of stimuli irrelevant to their needs.
c. People vary in terms of the kind of information in which they are interested
and the form of message and type of medium they prefer.
Perceptual defense—Threatening or otherwise damaging stimuli are less likely
to be perceived than are neutral stimuli. Individuals unconsciously may distort
information that is not consistent with their needs, values, and beliefs.
Perceptual blocking— consumers screen out enormous amounts of advertising
by simply "tuning out."
Perceptual Organization - People do not experience the numerous stimuli they
select from the environment as separate and discrete sensations. People tend to
organize stimuli into groups and perceive them as unified wholes. Gestalt
psychology (Gestalt, in German, means pattern or configuration) is the name of the
school of psychology that first developed the basic principles of perceptual
organization. Three of the most basic principles of perceptual organization are
figure and ground, grouping, and closure.
Figure and Ground
Stimuli that contrast with their environment are more likely to be noticed. The
simplest example is the contrast between a figure and the ground on which it is
placed. The figure is usually perceived clearly. The ground is usually perceived as
indefinite, hazy, and continuous. The figure is more clearly perceived because it
appears to be dominant—the ground appears to be subordinate and less important.
Advertisers have to plan their advertisements carefully to make sure that the
stimulus they want noted is seen as figure and not as ground. Marketers
sometimes run advertisements that confuse the consumer because there is no clear
indication of which is figure and which is ground.
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Grouping
Individuals tend to group stimuli in "chunks" rather than as discrete bits of
information. Grouping can be used advantageously by marketers to imply certain
desired meanings in connection with their products.
Closure
Individuals have a need for closure.
a. As a result, people organize a perception so they see a complete picture.
b. If the pattern of stimuli to which they are exposed is incomplete, they tend
to perceive it as complete—they fill in the missing pieces. The very act of completion
serves to involve the consumer more deeply in the message.
Perceptual Interpretation
The interpretation of stimuli is uniquely individual because it is based on what
individuals expect to see in light of their previous experience. Stimuli are often
highly ambiguous.
a. When stimuli are highly ambiguous, individuals usually interpret them in
such a way that they serve to fulfill personal needs, wishes, and interests. How
close a person's interpretations are to reality depends on the clarity of the stimulus,
the past experiences of the perceiver, and his or her motives and interests at the
time of perception.
Perceptual Distortion
With respect to perceptual distortion, individuals are subject to a number of
influences that tend to distort their perceptions.
Physical Appearances—people tend to attribute the qualities they associate
with certain people to others who may resemble them.
a. Attractive models are more persuasive and have a more positive influence on
consumer attitudes and Behaviour than do average-looking models. Stereotypes—
individuals tend to carry "pictures" in their minds of the meaning of various kinds
of stimuli.
First Impressions—these tend to be lasting but formed while the perceiver does
not know which stimuli are relevant, important, or predictive. Jumping to
Conclusions—many people tend to jump to conclusions before examining all the
relevant evidence—hearing the beginning of an ad and drawing the incorrect
conclusion. Halo Effect—describes situations where the evaluation of a single object
or person on a multitude of dimensions is based on the evaluation of just one or a
few dimensions.
b. Consumers often evaluate an entire product line on the basis of the one
product within the product line.
c. Licensing also is based on the halo effect—associating products with a well-
known celebrity or designer name. Consumer Imagery
Consumers attempt to preserve or enhance their self-images by buying
products they believe agree with that self-image and avoiding products that do not
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agree. This is called consumer imagery. Consumers tend to shop in stores that have
images that agree with their own self-images.
Perceptual Mapping
Perceptual mapping allows marketers to determine how their products appear
to consumers in relation to competitive brands on one or more relevant
characteristics. Perceptual mapping enables the marketer to see gaps in the
positioning of all brands in the product class and to identify areas in which
consumer needs are not being adequately met.
M ARKETING APPLICATION OF PERCEPTION
Positioning of Services
Compared with manufacturing firms, service marketers face several unique
problems in positioning and promoting their offerings. Services are intangible;
image becomes a key factor in differentiating a service from its competition. The
marketing objective is to enable the consumer to link a specific image with a
specific brand name. Many service marketers have developed strategies to provide
customers with visual images and tangible reminders of their service offerings.
Perceived Price
How a consumer perceives a price (perceived price)—as high, as low, as fair—
has a strong influence on both purchase intentions and purchase satisfaction.
Reference Prices
A reference price is any price that a consumer uses as a basis for comparison
in judging another price. Reference prices can be external or internal. An advertiser
generally uses a higher external reference price ("sold elsewhere at...") in an ad in
which a lower sales price is being offered, to persuade the consumer that the
product advertised is a really good buy.
Perceived Quality
Consumers often judge the quality of a product (perceived quality) on the basis
of a variety of informational cues.
a) Intrinsic cues are physical characteristics of the product itself, such as size,
colour, flavor, or aroma.
b) Extrinsic cues are such things as price, store image, service environment,
brand image, and promotional message.
Perceived Quality of Products
Intrinsic cues are concerned with physical characteristics of the product itself,
size, colour, flavor, etc.
a) Consumers like to think they base quality evaluations on intrinsic cues, but
in reality, they are often unable to identify that product in a taste test.
b) In the absence of actual experience with a product, consumers often
evaluate quality on the basis of extrinsic cues, price, brand image, store image, etc.
Many consumers use country-of-origin stereotypes to evaluate products.
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LESSON – 9
LEARNING
9.1 INTRODUCTION
Need to understand individual’s capacity to learn. Learning, changes in a
person’s Behaviour caused by information and experience. Therefore to change
consumers’ Behaviour about your product, need to give them new information
reproduct ... free sample etc.
When making buying decisions, buyers must process information. Knowledge
is the familiarity with the product and expertise. Inexperience buyers often use
prices as an indicator of quality more than those who have knowledge of a product.
Non-alcoholic Beer example: consumers chose the most expensive six-pack,
because they assume that the greater price indicates greater quality.
Learning is the process through which a relatively permanent change in
Behaviour results from the consequences of past Behaviour.
This chapter takes a brief look at the two major categories of learning theories
(Behaviourism and constructivism), the major theorists within those categories, and
the implications of those theories for the use of consumer Behaviour research.
9.2 OBJECTIVES
After studying this lesson, you will be able to:
• Explain consumer learning theory and identify the necessary elements.
• Discuss the elements of Classical Conditioning theory.
• Identify the three strategic applications of Classical Conditioning.
• Review the elements of Instrumental Conditioning.
• Discuss the strategic applications of Instrumental Conditioning.
9.3 CONTENTS
Introduction to consumer learning
Behavioural Learning Theories
Instrumental Conditioning
Modeling or Observational Learning
Cognitive Learning Theory
How Consumers Store, Retain, and Retrieve Information
Involvement Theory
Measures of Involvement
Marketing Applications of Involvement
Marketers are concerned with how individuals learn because they want to
teach them, in their roles as consumers, about products, product attributes, and
potential consumer benefits; about where to buy their products, how to use them,
how to maintain them, even how to dispose of them. Marketing strategies are based
on communicating with the consumer.
a) Marketers want their communications to be noted, believed, remembered,
and recalled.
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b) For these reasons, they are interested in every aspect of the learning
process. There is no single, universal theory of how people learn.
There are two major schools of thought concerning the learning process: one
consists of Behavioural learning theories, the other of cognitive learning theories.
Cognitive theorists view learning as a function of purely mental processes,
although Behavioural theorists focus almost exclusively on observable Behaviours
(responses) that occur as the result of exposure to stimuli.
INTRODUCTION TO CONSUMER LEARNING
Consumer learning can be thought of as the process by which individuals
acquire the purchase and consumption knowledge and experience that they apply
to future related Behaviour. Several points in this definition are worth noting.
a) First, consumer learning is a process; that is, it continually evolves and
changes as a result of newly acquired knowledge eor from actual experience.
b) Both newly acquired knowledge and personal experience serve as feedback
to the individual and provide the basis for future Behaviour in similar situations.
The role of experience in learning does not mean that all learning is deliberately
sought. A great deal of learning is also incidental, acquired by accident or without
much effort. The term learning encompasses the total range of learning, from
simple, almost reflexive responses to the learning of abstract concepts and complex
problem solving. c) Most learning theorists recognize the existence of different types
of learning and explain the differences through the use of distinctive models of
learning. Despite their different viewpoints, learning theorists in general agree that
in order for learning to occur, certain basic elements must be present—motivation,
cues, response, and reinforcement.
Motivation - Motivation is based on needs and goals.
a) The degree of relevance, or involvement, with the goal, is critical to how
motivated the consumer is to search for information about a product. Uncovering
consumer motives is one of the prime tasks of marketers, who try to teach
consumer segments why their product will best fulfill their needs.
Cues - If motives serve to stimulate learning, cues are the stimuli that give
direction to the motives. a) In the marketplace, price, styling, packaging,
advertising, and store displays all serve as cues to help consumers fulfill their
needs. Cues serve to direct consumer drives when they are consistent with their
expectations.
Response - How individuals react to a cue—how they behave—constitutes their
response. A response is not tied to a need in a one-to-one fashion. A need or motive
may evoke a whole variety of responses. The response a consumer makes depends
heavily on previous learning; that, in turn, depends on how related responses were
reinforced previously.
Reinforcement - Reinforcement increases the likelihood that a specific response
will occur in the future as the result of particular cues or stimuli.
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iii) Unlike the imitator who hopes consumers will generalize their perceptions
and attribute special characteristics of the market leader's products to their
own products, market leaders want the consumer to discriminate among
similar stimuli. Most product differentiation strategies are designed to
distinguish a product or brand from that of competitors on the basis of an
attribute that is relevant, meaningful, and valuable to consumers. It often is
quite difficult to unseat a brand leader once stimulus discrimination has
occurred.
iv) In general, the longer the period of learning—of associating a brand name
with a specific product—the more likely the consumer is to discriminate, and
the less likely to generalize the stimulus. The principles of classical
conditioning provide the theoretical underpinnings for many marketing
applications.
v) Repetition, stimulus generalization, and stimulus discrimination are all
major applied concepts that help explain consumer Behaviour.
INSTRUMENTAL CONDITIONING
Like classical conditioning, instrumental conditioning requires a link between
a stimulus and a response.
a) However, in instrumental conditioning, the stimulus that results in the most
satisfactory response is the one that is learned. Instrumental learning theorists
believe that learning occurs through a trial-and-error process, with habits formed
as a result of rewards received for certain responses or Behaviours.
b) Although classical conditioning is useful in explaining how consumers learn
very simple kinds of Behaviours, instrumental conditioning is more helpful in
explaining complex, goal-directed activities. According to American psychologist B.
F. Skinner, most individual learning occurs in a controlled environment in which
individuals are "rewarded" for choosing an appropriate Behaviour.
c) In consumer Behaviour terms, instrumental conditioning suggests that
consumers learn by means of a trial-and error process in which some purchase
Behaviours result in more favorable outcomes (i.e., rewards) than other purchase
Behaviours.
d) A favorable experience is instrumental in teaching the individual to repeat a
specific Behaviour. Like Pavlov, Skinner developed his model of learning by working
with animals. ) In a marketing context, the consumer who tries several brands and
styles of jeans before finding a style that fits her figure (positive reinforcement) has
engaged in instrumental learning.
Reinforcement of Behaviour
Skinner distinguished two types of reinforcement (or reward) influence, which
provided that the likelihood for a response would be repeated.
a) The first type, positive reinforcement, consists of events that strengthen the
likelihood of a specific response.
b) Negative reinforcement is an unpleasant or negative outcome that also
serves to encourage a specific Behaviour.
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mental activity. Cognitive learning theory holds that the kind of learning most
characteristic of human beings is problem solving, and it gives some control over
their environment.
Information Processing
The human mind processes the information it receives as input much as a
computer does.
a) Information processing is related to both the consumer's cognitive ability
and the complexity of the information to be processed. Individuals differ in terms of
their ability to form mental images and in their ability to recall information. The
more experience a consumer has with a product category, the greater his or her
ability to make use of product information.
HOW CONSUMERS STORE, RETAIN, AND RETRIEVE INFORMATION
The structure of memory—because information processing occurs in stages, it
is believed that content is stored in the memory in separate storehouses for further
processing; a sensory store, a short-term store, and a long-term store. Sensory
store—all data comes to us through our senses, however, our senses do not
transmit information as whole images. a) The separate pieces of information are
synchronized as a single image. b) This sensory store holds the image of a sensory
input for just a second or two. c) This suggests that it's easy for marketers to get
information into the consumer's sensory store, but hard to make a lasting
impression.
Short-term store—if the data survives the sensory store, it is moved to the
short-term store.
d) This is our working memory.
e) If rehearsal—the silent, mental repetition of material— takes place, then the
data is transferred to the long-term store.
f) If data is not rehearsed and transferred, it is lost in a few seconds. Long-
term store—once data is transferred to the long-term store it can last for days,
weeks, or even years. Rehearsal and encoding—the amount of information available
for delivery from the short-term store to the long-term store depends on the amount
of rehearsal an individual gives to it.
g) Encoding is the process by which we select and assign a word or visual
image to represent a perceived object.
h) Learning visually takes less time than learning verbal information.
i) How much consumers encode depends on their cognitive commitment to the
intake of the information and their gender. Information overload takes place when
the consumer is presented with too much information.
j) It appears to be a function of the amount of information and time frame of
that information.
k) There are contradictory studies on what constitutes overload.
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c) Thus, when involvement is high, consumers follow the central route and
base their attitudes or choices on the message arguments.
d) When involvement is low, they follow the peripheral route and rely more
heavily on other message elements to form attitudes or make product choices. The
marketing implications of the elaboration likelihood model are clear:
e) For high-involvement purchases, marketers should use arguments stressing
the strong, solid, high-quality attributes of their products—thus using the central
(i.e., highly cognitive) route.
f) For low-involvement purchases, marketers should use the peripheral route
to persuasion, focusing on the method of presentation rather than on the content of
the message(e.g., through the use of celebrity spokespersons or highly visual and
symbolic advertisements).
MEASURES OF INVOLVEMENT
Researchers have defined and conceptualized involvement in a variety of ways
including ego involvement, commitment, communication involvement, purchase
importance, extent of information search, persons, products situations, and
purchase decisions.
a) Some studies have tried to differentiate between brand involvement and
product involvement.
b) Others differentiate between situational, enduring, and response
involvement. The lack of a clear definition about the essential components of
involvement poses some measurement problems.
c) Researchers who regard involvement as a cognitive state are concerned with
the measurement of ego involvement, risk perception, and purchase importance.
d) Researchers who focus on the Behavioural aspects of involvement measure
such factors as the search for and evaluation of product information.
e) Others argue that involvement should be measured by the degree of
importance the product has to the buyer. Because of the many different dimensions
and conceptualizations of involvement, it makes sense to develop an involvement
profile, rather than to measure a single involvement level.
Marketing Applications of Involvement
Involvement theory has a number of strategic applications for the marketer. f)
The left-brain (cognitive processing)/right-brain (passive processing) paradigm
seems to have strong implications for the content, length, and presentation of both
print and television advertisements. g) By understanding the nature of low-
involvement information processing, marketers can take steps to increase
consumer involvement with their ads.
Measures of Consumer Learning Market share and the number of brand-loyal
consumers are the dual goals of consumer learning.
a) Brand-loyal customers provide the basis for a stable and growing market
share.
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b) Brands with larger market shares have proportionately larger groups of loyal
buyers.
Recognition and Recall Measures
Recognition and recall tests are conducted to determine whether consumers
remember seeing an ad, the extent to which they have read it or seen it and can
recall its content, their resulting attitudes toward the product and the brand, and
their purchase intentions. a) Recognition tests are based on aided recall, although
recall tests use unaided recall.
b) In recognition tests, the consumer is shown an ad and asked whether he or
she remembers seeing it and can remember any of its salient points.
c) In recall tests, the consumer is asked whether he or she has read a specific
magazine or watched a specific television show, and if so, can recall any ads or
commercials seen, the product advertised, the brand, and any salient points about
the product.
The learning processes among the customer roles
Learning User Payer Buyer
Process
Cognitive User learns about Payer learns about used Buyers learn about
learning the use of products car prices from the used new stores by word of
and services by car price book mouth and about
reading about them brand ratings from
choice etc.
Classical Food preferences Perceived fairness of Buyers are
conditioning are acquired in price levels is conditioned through
early childhood classically conditioned. patronage of the same
vendors.
Instrumental Users adopt new Payers 'buy cheap' at Buyers learn they can
conditioning products and first, then experience get better terms by
services if they find shoddy performance and changing vendors
them beneficial. learn to 'invest' more.
Modeling Users model their Budgeting decisions Buyers may switch
clothing and car mirror those of admired preferences to stores
choice after people companies. Payers learn and vendors that are
they admire. norms for tipping by trendy.
observing others.
Adoption of Users adopt Payers adopt financing Buyers adopt
innovation product and service innovations like credit purchase procedure
feature innovations cards, leasing etc. innovations like
buying through the
internet.
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the second stimulus (the conditioned stimulus) elicits the response even in the
absence of the first. This response can also extend to other, similar stimuli in a
process we call stimulus generalization. This process is the basis for such
marketing strategies as licensing and family branding, where a consumer’s positive
associations with a product transfer to other contexts.
9.7 TERMINAL EXERCISES
1) ---------- can be thought of as the process by which individuals acquire the
purchase and consumption knowledge and experience that they apply to
future related Behaviour.
2) ---------- is one of the prime tasks of marketers, who try to teach consumer
segments why their product will best fulfill their needs.
3) ---------- increases the likelihood that a specific response will occur in the
future as the result of particular cues or stimuli.
4) Two theories relevant to marketing are ---------- and ---------
5) ----------- theory holds that the kind of learning most characteristic of human
beings is problem solving, and it gives some control over their environment.
9.8 SUPPLEMENTARY MATERIALS
1) Sheth, J.N. (1973), “A model of industrial buyer Behaviour”, Journal of
Marketing, Vol 37, October, pp 50-65
2) Webster Jr. F.E. (1965). Modeling the Industrial Buying Process. Journal of
Marketing Research. Vol 2, pp 370-376.
3) Wind, Y.P. and Thomas, J.R. (1980), Conceptual and Methodological Issues in
Organizational Buying Behaviour, European Journal of Marketing, Volume 14,
No. 5, pp-239- 263
4) Johnston, W.J. and Lewin, J.E. (1996), “Organizational buying Behaviour:
toward an integrative framework”, Journal of Business Research, Vol.35, pp.
1-26
5) Dadzie, K, & Johnston, W 1999, 'Influence in the organizational buying center
and logistics automation technology adoption', Journal of Business &
Industrial Marketing, 14, 5/6, p. 433
9.9 ASSIGNMENTS
1) How can the principles of a) classical conditioning theory and b) instrumental
conditioning theory be applied to the development of marketing strategies?
2) Describe in learning terms the conditions under which family branding is a
good policy and those under which it is not.
3) Define the following memory structures: sensory store, short-term store
(working memory), and longterm store. Discuss how each of these concepts
can be used in the development of an advertising strategy.
9.10 SUGGESTED READINGS/ REFERENCE BOOKS
1) David L Loudon and Albert J Della Bitta, Consumer Behaviour, 4/e TMH, New
Delhi, 2002.
2) Schiffman, L.G. and Kanuk LL Consumer Behaviour, 8/e, Pearson Education,
New Delhi, 2003.
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3) Roger D.Black Well et al, Consumer Behaviour, 9/e Thomson, New Delhi,
2002.
9.11 LEARNING ACTIVITIES
1) Should Head and Shoulders Shampoo be sold worldwide with the same
formulation? In the same package? With the same advertising theme? Explain
your answers.
2) Mercedes-Benz, a German car manufacturer is using cross cultural
psychographic segmentation to develop marketing campaigns for a new two
seater sports car directed at consumers in different countries. How should the
company market the car in the United States? How should it market the car in
Japan?
3) Discuss a recent product purchase you regard as high involvement and
another one you view as low involvement with three classmates. Do they agree
with your selections? Describe how their points of view may be related to
a. Brand loyalty
b. Frequency of use
c. Price paid
d. Perceived risk associated with the purchase
9.12 KEYWORDS
Cognitive Learning, Classical Conditioning, Instrumental conditioning, Modeling,
Behaviourism, Constructivism, Social Learning, Locus of Control, Social
Reinforcement, Self Reinforcement
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LESSON – 10
ATTITUDE
10.1 INTRODUCTION
We as individuals learn attitudes through experience and interaction with
other people.
Our attitudes toward a firm and its products as consumers greatly influence
the success or failure of the firm’s marketing strategy. Attitudes and attitude
change are influenced by consumer’s personality and lifestyle. Consumers screen
information that conflicts with their attitudes. We distort information to make it
consistent and selectively retain information that reinforces our attitudes, in other
words, brand loyalty. But, there is a difference between attitude and intention to
buy (ability to buy).
For instance, Honda, dispelled the unsavory image of a motorbike rider, in the
late 1950s with the slogan “You meet the nicest people on a Honda”. But with the
changing market of the 1990s, and baby boomers aging, Hondas market was
returning to hard core. To change this they have a new slogan “Come ride with us”.
Through acting and learning, people acquire beliefs and attitudes, which in
turn, influence their buying behaviour. A BELIEF is a descriptive thought that a
person holds about something. A customer may believe that Taj group of Hotels
have the best facilities and most professional staff of any hotel in the price range.
These beliefs may be based on real knowledge, opinion, or faith. They may or may
not carry an emotional charge.
Marketers are interested in the beliefs that people have about specific products
and services. Beliefs reinforce product and brand images. People act on beliefs. If
unfounded customer beliefs deter purchases marketers will want to do a campaign
to change them.
Unfounded consumer beliefs can severely affect the revenue and even the life
of hospitality and travel companies. Among these beliefs might be the following:
• A particular hamburger chain served ground kangaroo meat.
• A particular hotel served as Mafia headquarters.
• A particular airline has poor maintenance.
• A particular country has unhealthy food-handling standards.
People have attitudes about almost everything: religion, politics, clothes, music
and food.
10.2 OBJECTIVES
After going through this lesson, you should be able to
• Describe attitude in terms of its four elements.
• Discuss the structural models of attitude: tricomponent, multi-attribute,
trying-to-consume, and attitude-toward the- ad.
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10.3 CONTENTS
Models of Attitude
Attitude Formation and Change
Cognitive Dissonance Theory
Attribution Theory
CONSUMER ATTITUDES
An attitude describes a person's relatively consistent evaluations, feelings, and
tendencies towards an object or an idea. Attitudes put people into a frame of mind
for liking or disliking things and moving toward or away from them. Companies can
benefit by researching attitudes toward their products. Understanding attitudes
and beliefs is the first step toward changing or reinforcing them. Attitudes are very
difficult to change. A person's attitudes fit into a pattern, and changing one attitude
may require making many difficult adjustments. It is easier for a company to create
products that are compatible with existing attitudes than to change the attitudes
toward their products. There are exceptions, of course, where the high cost of trying
to change attitudes may pay off. We can now appreciate the many individual
characteristics and forces influencing consumer behaviour. Consumer choice is the
result of a complex interplay of cultural, social, personal, and psychological factors.
We as marketers cannot influence many of these; however, they help the marketer
to better understand Customer's reactions and behaviour.
Attitudes are defined as a mental predisposition to act that is expressed by
evaluating a particular entity with some degree of favor or disfavor. The value of
attitude in marketing can be explained in terms of its importance in prediction,
diagnostic value and also as relatively inexpensive information that is easily
obtained.
MODELS OF ATTITUDE
We will now look at the various models of attitudes. But before looking at these
models, we have to understand the fact that many a times our attitudes depend on
the situations.
Structural models of attitudes: To understand the relationships between
attitudes and behaviour, psychologists have tried to develop models that capture
the underlying dimensions of attitude. To serve this purpose, the focus has been on
specifying the composition of an attitude to better explain or predict behaviour.
1. TRI-COMPONENT ATTITUDE MODEL
According to the tri-component attitude model, attitude consists of three
major components, viz., a cognitive component, an affective component, and a
conative component.
a. The cognitive component: The cognitive component consists of a Wledge and
perceptions (about an object). This knowledge and resulting perceptions commonly
take the form of beliefs, images, and long-term memories. A utility function
representing the weighted product of attributes and criteria would be used to
develop the final ranking and thus choice. This model represents the process used
by individuals with a strong Thinking Cognitive Style.
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seems to correspond somewhat more closely to actual behaviour than does the
attitude-toward-object model. So taking on from liking a BMW, we may say you are
not ready to buy/drive one because you believe that you are too young/old to do so
3) Theory of reasoned-action-model: This model represents a comprehensive
integration of attitude components into a structure that is designed to lead to both
better explanations and better predictions of behaviour. Similar to the basic tri-
component attitude model, the theory-of-reasoned-action model incorporates a
cognitive component, an affective component, and a conative component; however
these are arranged in a pattern different from that of the tricomponent model.
To understand intention, in accordance with this model, we also need to
measure the subjective norms that influence an individual's intention to act. A
subjective norm can be measured directly by assessing a consumer's feelings as to
what relevant others would think of the action being contemplated; i.e., would they
look favorably or unfavorably on the anticipated action?
3. THEORY OF TRYING TO CONSUME
The theory of trying to consume has been designed to account for the many
cases where the action or outcome is not certain, but instead reflects the
consumer's attempts to consume or purchase. In such cases there are often
personal impediments and/or environmental impediments that might prevent the
desired action or outcome from occurring. Here again, the key point is that in these
cases of trying, the outcome is not, and cannot be assumed to be certain. The focus
here is the "trying" or seeking part, rather than the outcome (consumption)
Attitude-toward-the-ad models
The gist of this model can be explained by the following: 1) Normally if you like
an ad, you are more likely to purchase the advertised brand. 2) For a new
product/brand, an ad has a stronger impact on brand attitude and purchase
intention.
4. ATTITUDE FORMATION AND CHANGE
1. How are attitudes formed?
We examine attitude formation by dividing into three areas: how attitudes are
learned, the sources of influence on attitude formation, and the impact of
personality on attitude formation. 1. How attitudes are learned:
1) The shift from having no attitude toward a given object to having an attitude
is learned. The learning may come from information exposure, consumers' own
cognition (knowledge or belief), or experience.
2) Consumers may form an attitude before or after a purchase. 2. Sources of
influence on attitude formation: personal experience, friends and family, direct
marketing, or mass media.
3) Personality factors: such as high/low need for cognition (information
seeking), and social status consciousness
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1. Learning of Attitudes
By formation of attitude, we mean a situation, where there is a shift from
having no attitude towards a given object to having some attitude toward it. This
shift from no attitude to an attitude or the formation of attitude is a result of
learning. Attitudes are generally formed through:
• Repeated exposure to novel social objects,
• Classical conditioning,
• Operant conditioning and
• Exposure to live and symbolic models.
Consumers generally purchase new products that are associated with a
favorably viewed brand name. Their favorable attitude toward the brand name is
frequently the result of repeated satisfaction with other products produced by the
same company. In terms of classical conditioning, an established brand name is an
unconditioned stimulus that has resulted in a favorable brand attitude through
past positive reinforcement. A new product, which is yet to be linked to the
established brand, would be the conditioned impulse. For example, by giving a new
anti-wrinkle lotion the benefit of its well-known and respected family name,
Johnson & Johnson may be counting on an extension of the favorable attitude
already associated with the brand name to the new product. They are counting on
stimulus generalization from the brand name to the new product. It has been
shown by research that the "fit" between a parent brand like in the case -wrinkle, is
a function of two factors:
(1) the similarity between the pre-existing product categories already
associated with the parent brand and the new extension, and
(2) the "fit" or match between the images of the parent brand and the new
extension. At times, attitudes follow the purchase and consumption of a product.
For example, a consumer may purchase a brand-name product without having a
prior attitude towards it, because it is the only product available like the last bottle
of shampoo in a hotel store). Consumers sometimes make trial purchases of new
brands from product categories in which they have little personal involvement. If
they find the purchased brand to be satisfactory, then they are likely to develop a
favorable attitude toward it. Life is too complicated to predict what attitudes will
persist and which will change but early socialization experiences do shape
attitudes.
2. Sources of Influence on Attitude Formation
The formation of consumer attitudes is strongly influenced by personal
experience, the influence of family and friends, direct marketing, and mass media.
Attitudes towards goods and services are primarily formed through the consumer's
direct experience
Personality Factors
We know that the personality of each individual is different and it plays a very
crucial role in formation of attitude. Say for example, if you have a high need for
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cognition, i.e., you crave for information and enjoy thinking. Then you are likely to
form a positive attitude in response to ads or direct mail that are rich in product
related information. On the other hand, your friend Ravi, who is relatively low in
need for cognition, is more likely to form positive attitudes in response to ads that
feature an attractive model or well-known celebrity.
2. Attitude Change and Persuasion
3. Strategies of Attitude Change
Bringing about a change in the consumer attitudes is a very important
strategic consideration for us marketing people. When the product or brand is the
market leader, the marketers will work at ensuring that their customers continue to
patronize their product with the existing positive attitude. Such firms also have to
ensure that their existing loyal customers do not succumb to their competitor's
attitude change ploys. But it is the firm whose is not the brand leader, which tries
to adopt marketing strategies so as to change the attitudes of the market leaders,
customers and win them over. Among the attitude change strategies that are
available to them are:
1) Changing the consumer's basic motivational function
2) Associating the product with an admired group or event
3) Resolving two conflicting attitudes
4) Altering components of the Multi-attribute model, and
5) Changing consumer beliefs about competitor's brands. Now let us look at each
of these strategies in greater details.
1. Changing the basic motivational function:
This strategy calls for changing consumer attitudes towards a product or
brand by making a new need prominent. One such method changing motivation is
called the functional approach. As per this approach, attitudes can be classified in
terms of four functions, viz:
1. The utilitarian function
2. The ego defensive function
3. The value - expressive function
4. The Knowledge function.
The utilitarian function: A consumer develops a brand attitude because of its
utility. In other words; we develop a favorable altitude towards a product because of
its utility function. So marketers try to change consumer attitudes in favor of their
products or brand by highlighting its utilitarian purpose, which they (the
competitors consumers;) may not have considered. Ego defensive function: Most
individuals want to protect their self-image. They want re-assurance about their
self-image from inner feelings or doubts. Firms marketing personal care and
cosmetics try to appeal to this need and develop a favorable attitude change
towards their products or brands by communicating a re-assurance to the
consumers self concept
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10.9 ASSIGNMENTS
1) “Do as I say, not as I do.” How does this statement relate to attitude models?
2) Construct a multiattribute model for a set of local restaurants. Based on your
findings, suggest how restaurant managers could improve their
establishment’s image via the strategies described in this chapter.
3) What are three obstacles to predicting Behaviour even if we know a person’s
attitudes?
10.10 SUGGESTED READINGS/ REFERENCE BOOKS
1) Hawkins, Best, Coney, Consumer Behaviour, 8/e, TMH, New Delhi, 2002 2.
2) Kumar: Conceptual Issues in Consumer Behaviour: The Indian Context,
Pearson Education, New Delhi 2003.
3) Jay D Lindquist and M Joseph Sirgy, Shopper, Buyer and Consumer
Behaviour, Second Edition, Bizttantra, New Delhi, 2003.
4) Loudon, D. and Bitta, A.D., Consumer Behaviour: Concepts and Applications,
4th Edition, Tata McGraw-Hill Education, 2001.
5) Majumdar, R., Consumer Behaviour: Insights from Indian Market, PHI
Learning, 2010.
10.10 LEARNING ACTIVITIES
1) Describe a situation in which you acquired an attitude toward a new product
through exposure to an advertisement for that product. Describe a situation
where you formed an attitude toward a product or brand on the basis of
personal influence.
2) Using the Internet, find two advertisements that are trying to persuade you.
Try to find an advertisement that is trying to persuade you to buy something
and one that is trying to persuade you to do something (e.g., vote for someone,
donate money to something).
3) Determine what processing route the ads are trying to use and how effective it
might be. Also try to generate some ideas about how a consumer could resist
the advertisement’s persuasive tactics.
10.12 KEYWORDS
Cognitive, Affective, Cognitive, Structural Model, Tricomponent Attitude model,
Multi-attribute attitude model, Attitude towards Object Model, Theory of reasoned
action model, Fishbein’s multi-attribute model, Theory of trying-to-consume,
Attitude-towards-the-ad model
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LESSON – 11
PERSONALITY
11.1 INTRODUCTION
”Personality is the supreme realization of the innate idiosyncrasy of a living
being. It is an act of high courage flung in the face of life, the absolute affirmation of
all that constitutes the individual, the most successful adaptation to the universal
condition of existence coupled with the greatest possible freedom for self-
determination.” - Carl Gustav Jung, 1934
We cannot define Personality very easily. Basically, ‘personality’ refers to our
attempts to capture or summarize an individual’s ‘essence’. Personality is
personality, the science of describing and understanding persons. Clearly,
personality is a core area of study for psychology, if not the core.
No two people are exactly the same - not even identical twins. Some people are
anxious, some are risk-taking; some are phlegmatic, some highly-strung; some are
confident, some shy; and some are quiet and some are loquacious. This issue of
differences is fundamental to the study of personality. Note also that in studying
these differences we will also examine where the differences come from: as with
intelligence we will find that there is a mixture of nature and nurture involved.
11.2 OBJECTIVES
After studying this lesson, you will be able to:
• Define personality
• Describe the nature and development of personality.
• Outline Freudian personality theory and the corresponding stages of
development.
• Discuss neo-Freudian personality theory and trait theory.
• Discuss the relationship of personality and consumer diversity.
• Enumerate cognitive personality factors, consumption, and possession traits.
11.3 CONTENTS
The Nature of Personality
Personality & Consumer Diversity
Consumer Innovativeness and Related Personality Traits.
Cognitive Personality Factors
Compulsive Consumption Behaviour
Brand Personality
Brand Personification
Personality and Colour
The word 'personality' derives from the Latin word 'persona' which means
'mask'. The study of personality can be understood as the study of 'masks' that
people wear. These are the personas that people not only project and display, but
also include the inner parts of psychological experience, which we collectively call
our 'self.
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motivation and personality. Id, Superego, and Egos, such as: thirst, hunger, and
sex, for which the individual seeks immediate satisfaction without concern for the
specific means of that satisfaction. Superego is the individual's internal expression
of society's moral and ethical codes of conduct.
a) The superego's role is to see that the individual satisfies needs in a socially
acceptable fashion.
b) The superego is a kind of "brake" that restrains or inhibits the impulsive
forces of the id. Internal monitor that attempts to balance the impulsive demands of
the id and the socio-cultural constraints of the superego. Freud emphasized that an
individual's personality is formed as he or she passes through a number of distinct
stages of infant and childhood development. These distinct stages of infant and
childhood development are: oral, anal, phallic, latent, and genital stages. An adult's
personality is determined by how well he or she deals with the crises that are
experienced while passing through each of these stages.
Structure of Mind: Freud's Id, Ego, and Superego
As mentioned above Freud came to see personality as having three aspects,
which work together to produce all of our complex Behaviours: the id, the ego and
the superego. As you can see, the Ego and Superego play roles in each of the
conscious, subconscious, and unconscious parts of the mind. All 3 components
need to be well balanced in order to have good amount of psychic energy available
and to have reasonable mental health.
Freudian Theory and Product Personality
Those stressing Freud's theories see that human drives are largely
unconscious, and that consumers are primarily unaware of their true reasons for
buying what they buy. These researchers focus on consumer purchases and/or
consumption situations, treating them as an extension of the consumer's
personality.
b. Neo-Freudian Personality Theory
Several of Freud's colleagues disagreed with his contention that personality is
primarily instinctual and sexual in nature. They argued that social relations are
fundamental to personality development. Alfred Adler viewed human beings as
seeking to attain various rational goals, which he called style of life, placing. Harry
Stack Sullivan stressed that people continuously attempt to establish significant
and rewarding relationships with others, placing emphasis on efforts to reduce
tensions.
Karen Horney focused on the impact of child-parent relationships, especially
the individual's desire to conquer feelings of anxiety. She proposed three
personality groups: compliant, aggressive, and detached. Compliant individuals are
those who move toward others—they desire to be loved, wanted, and appreciated.
Aggressive individuals move against others—they desire to excel and win
admiration. Detached individuals move away from others—they desire
independence, self-sufficiency, and freedom from obligations. A personality test
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based on the above (the CAD) has been developed and tested. It reveals a number of
tentative relationships between scores and product and brand usage patterns. It is
likely that many marketers have used some of these neo- Freudian theories
intuitively.
c. Trait Theory
Trait theory is a significant departure from the earlier qualitative measures
that are typical of Freudian and neo-Freudian theory. It is primarily quantitative or
empirical, focusing on the measurement of personality in terms of specific
psychological characteristics called traits. A trait is defined as any distinguishing,
relatively enduring way in which one individual differs from another. Selected
single-trait personality tests increasingly are being developed specifically for use in
consumer Behaviour studies. Types of traits measured include:
Consumer innovativeness — how receptive a person is to new experiences.
Consumer materialism — the degree of the consumer's attachment to "worldly
possessions."
Consumer ethnocentrism — the consumer's likelihood to accept or reject
foreign-made products.
Researchers have learned to expect personality to be linked to how consumers
make their choices, and to the purchase or consumption of a broad product
category rather than a specific brand.
PERSONALITY & CONSUMER DIVERSITY
Marketers are interested in understanding how personality influences
consumption Behaviour because such knowledge enables them to better
understand consumers and to segment and target those consumers who are likely
to respond positively to their product or service communications.
CONSUMER INNOVATIVENESS AND RELATED PERSONALITY TRAITS
Marketing practitioners must learn all they can about consumer innovators—
those who are likely to try new products. Those innovators are often crucial to the
success of new products. Personality traits have proved useful in differentiating
between consumer innovators and non-innovators.
Personality traits to be discussed include:
• Consumer innovativeness.
• Dogmatism.
• Social character.
• Need for uniqueness.
• Optimum stimulation level.
• Variety-novelty seeking.
1. Consumer Innovativeness
How receptive are consumers to new products, new services, or new practices?
Recent consumer research indicates a positive relationship between innovative use
of the Internet and buying online.
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2. Dogmatism
Dogmatism is a personality trait that measures the degree o rigidity an
individual displays toward the unfamiliar and toward information that is contrary
to their established beliefs. Consumers low in dogmatism are more likely to prefer
innovative products to established ones. Consumers high in dogmatism are more
accepting of authority- based ads for new products.
3. Social Character
Social character is a personality trait that ranges on a continuum from inner-
directed to other-directed. Inner-directed consumers tend to rely on their own
"inner" values or standards in evaluating new products and are innovators. They
also prefer ads stressing product features and personal benefits. Other-directed
consumers tend to look to others for direction and are not innovators. They prefer
ads that feature social environment and social acceptance.
4. Need for Uniqueness
These people avoid conformity are the ones who seek to be unique!
5. Optimum Stimulation Level
Some people prefer a simple, uncluttered, and calm existence, although others
seem to prefer an environment crammed with novel, complex, and unusual
experiences. Persons with optimum stimulation levels (OSL s) are willing to take
risks, to try new products, to be innovative, to seek purchase-related information,
and to accept new retail facilities. The correspondence between an individual's OSL
and their actual circumstances has a direct relationship to the amount of
stimulation individual's desire. If the two are equivalent, they tend to be satisfied. If
bored, they are under stimulated, and vice versa.
6. Variety-Novelty Seeking
This is similar to OSL. Primary types are variety or novelty seeking. There
appear to be many different types of variety seeking: exploratory purchase Behaviour
(e.g., switching brands to experience new and possibly better alternatives), vicarious
exploration (e.g., where the consumer secures information about a new or different
alternative and then contemplates or even daydreams about the option), and use
innovativeness (e.g., where the consumer uses an already adopted product in a new
or novel way). The third form of variety or novelty seeking—use innovativeness—is
particularly relevant to technological changes. Consumers with high variety seeking
scores might also be attracted to brands that claim to have novel or multiple uses or
applications. Marketers, up to a point, benefit from thinking in terms of offering
additional options to consumers seeking more product variety. Ultimately, marketers
must walk the fine line between offering consumers too little and too much choice.
The stream of research examined here indicates that the consumer innovator differs
from the non-innovator in terms of personality orientation.
COGNITIVE PERSONALITY FACTORS
Market researchers want to understand how cognitive personality influences
consumer Behaviour. Two cognitive personality traits have been useful in
understanding selected aspects of consumer Behaviour. They are:
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contexts consumers might select different self images to guide Behaviour. The
concept of self-image has strategic implications for marketers.
6) Marketers can segment their markets on the basis of relevant consumer self-
images and then position their products or stores as symbols for such self-
images.
11.4 REVISION POINTS
1) A personality is the inner psychological characteristics that both determine
and reflect how a person responds to his or her environment.
2) Consumer researchers using Freud’s personality theory see consumer
purchases as a reflection and extension of the consumer’s own personality
3) A compliant personality is One who desires to be loved, wanted, and
appreciated by others.
4) Personality is linked to how consumers make their choices or to consumption
of a broad product category - not a specific brand
5) A personality trait that reflects the degree of rigidity a person displays toward
the unfamiliar and toward information that is contrary to his or her own
established beliefs is known as dogmatism
11.5 INTEXT QUESTIONS
1) What is personality? Explain its nature
2) Explain Freudian theory.
3) Explain Neo-Freudian personality theory.
4) Explain Trait theory
5) Explain the need for cognition
6) Explain brand personality
11.6 SUMMARY
The word 'personality' derives from the Latin word 'persona' which means
'mask'. The study of personality can be understood as the study of 'masks' that
people wear. These are the personas that people not only project and display, but
also include the inner parts of psychological experience, which we collectively call
our 'self. Sigmund Freud's psychoanalytic theory of personality is the cornerstone
of modern psychology. This theory was built on the premise that unconscious
needs or drives, especially biological and sexual drives, are at the heart of human
motivation and personality. Those stressing Freud's theories see that human drives
are largely unconscious, and that consumers are primarily unaware of their true
reasons for buying what they buy. These researchers focus on consumer purchases
and/or consumption situations, treating them as an extension of the consumer's
personality.
11.7 TERMINAL EXERCISES
1) ---------- recasts consumers' perception of the attributes of a product or service
into the form of a "humanlike character
2) --------- is either be functional ("provides safety") or symbolic ("the athlete in all
of us").
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3) ---------- is a trait of people who feel their possessions are essential to their
identity.
4) --------- theory is a significant departure from the earlier qualitative measures
that are typical of Freudian and neo-Freudian theory
11.8 SUPPLEMENTARY MATERIALS
1) Consumer International, The State of Consumer Protection Around the World
20 (Apr. 2014) [Hereinafter Ci Report], Available at Http://Www. Consumers
international. Org/Media/1139641/English_Full_Report_April.P Df.
2) Govt. launches Consumer Protection Bill, NEWSDAY (Oct. 16, 2014),
3) Sakil A. Suleman, New UK Consumer Protection Law Raises Stakes For
Industry, LAW 360 (Oct. 7, 2014, 11:53 AM), http://www.law360.com/
articles/584606/new-uk-consumer-protection-law-raisesstakes-for-industry
11.9 ASSIGNMENTS,
1) How would you explain the fact that although no two individuals have
identical personalities, personality is sometimes used in consumer research to
identify distinct & sizeable market segments
2) What is Personality ? State different stages in the development of Personality.
Explain influence of Personality on Consumer Behaviour.
3) Compare the major characteristics in the Freudian Theory, Non Freudian
Theory and Trait Theory.
11.10 SUGGESTED READINGS/ REFERENCE BOOKS
1) Hawkins, Best, Coney, Consumer Behaviour, 8/e, TMH, New Delhi, 2002 2.
2) Kumar: Conceptual Issues in Consumer Behaviour: The Indian Context,
Pearson Education, New Delhi 2003.
3) Jay D Lindquist and M Joseph Sirgy, Shopper, Buyer and Consumer
Behaviour, Second Edition, Bizttantra, New Delhi, 2003.
4) Loudon, D. and Bitta, A.D., Consumer Behaviour: Concepts and Applications,
4th Edition, Tata McGraw-Hill Education, 2001.
5) Majumdar, R., Consumer Behaviour: Insights from Indian Market, PHI
Learning, 2010.
11.11 LEARNING ACTIVITIES
1) Form two groups among yourself in classroom and discuss the following topics
and present the results
2) the Consumer really the King in India?
3) Our world economy is based on personality of consumers. Will personality
always be predominant?
4) Does mass media and society affect personality of teenage?
5) A marketer of health foods is attempting to segment his or hermarket on the
basis of consumer self-image. Describe the four types of consumer self-image
and discuss which one(s) would be most effective for the stated purpose.
11.12 KEYWORDS
Consumer Innovativeness, Dogmatism, Social Character, Variety-Novelty
Seeking, Cognitive Personality Factors, Compulsive Consumption Behaviour,
Brand Personality, Brand Personification, Personality and Colour
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LESSON – 12
consumption of the new service or innovation, he feels it more logical and practical
to go for a trial before extending it to full fledge use.
(5) Adoption stage: After deriving the satisfaction from the purchase of new
service on a trial basis, the buyer decide upon whether to extend full fledge use or
not. This is the last stage in the adoption process. The buyer takes the final
decision for the further use of service. The adoption process model is suggested by
Everett M. Rogers describes five stages of adoption; knowledge (awareness stage),
persuasion (forming attitude), decision, implementation and confirmation.
BUYING PROCESS OR CONSUMER DECISION MAKING
A decision is the selection of an action from two or more alternatives. In other
words, in order to make a decision, there must be a choice of alternatives available.
If a person has a choice between making a purchase and not making a purchase, or
a choice between brands, we can say that this person is in a position to make a
decision. A “no-choice” decision is commonly referred to as a “Hobson’s choice.”
Buyer decision making is an attempt to solve consumer problems. A problem refers
to a discrepancy between a desired state and an ideal state which is sufficient to
arouse and activate a decision process. Thus problem can be major or minor and
the broader and more ambiguous a problem is, the more potential solutions are
generally available.
The study of buyer behaviour is the most dynamic marketing activities as the
buyer rapidly change their preferences and are affected by multiple factors at a
given point of time, are difficult to analyze. Therefore, it is necessary that
continuous study of buying behaviour must be conducted and extended. This
monitoring will make an understanding of marketing management to take effective
decisions regarding service price, distribution and promotion. A marketer
understands how buyer will respond to different service features, prices, advertising
appeals and so on will have an enormous advantage over his adversaries. When a
buyer takes a decision to buy there is no rigid rule to bind them. Sometimes the
decisions are taken on spot or after evaluating various alternatives available and
reassuring himself with the opinion of those who have already purchased the
service.
Four views of buyer Decision Making
Before presenting a simple model how consumers make decisions. For
depicting consumer decision making it‟s important to consider several models of
man. The term model of man refers to a general perspective held by a significant
number of people concerning how (and why) individuals behave as they do.
Following are the consumer-related models of man:-
(1) Economic man (Traditional view): Economics reflects a world of perfect
competition and the consumer is often characterised as an economic man. The
economic theory of consumer behaviour was synthesized by Alfred Marshall from
the ideas of Classical Economists and the proponents of theory of „Marginal Utility.‟
Economic view explains the consumer as an economic man who buys rationally to
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maximize the utility (benefits) derived from a service. To behave rationally in the
economic sense a consumer would have to be aware of all available service
alternatives. The consumer would have to be capable of correctly ranking each
alternative in terms of its benefits and disadvantages. According to leading social
scientists this view is unrealistic because of three reasons (a) people are limited by
their existing skills, habits and reflexes (b) people are limited by their existing
values and goals (c) people are limited by the extent of their knowledge. However,
consumers rarely have enough information, sufficient or sufficiently information, or
even an adequate degree of involvement or motivation to make perfect decision.
Consumers are living in an imperfect world where they do not maximise their
decisions in terms of economic considerations such as price- quantity relationships,
marginal utility or indifference curves. Indeed the consumers are often unwilling to
engage in extensive decision making activities and will instead settle for a
“satisfactory” decision, one that is “good enough.” For this reason, the economic
model is often rejected as too idealistic and simplistic. economists described man as
a rational buyer and viewed the market as a collection of homogenous buyers.
(2) Passive man: This model is quite opposite to the economic model of man.
The passive view depicts the consumer basically submissive to the self-serving
interest and promotional efforts of marketers. Consumers are perceived as
impulsive and irrational purchasers, ready to yield to the arms and aims of
marketers. At least to some degree the passive model of the consumer was
subscribed by the hard deriving salesman who is trained to manipulate customer.
The passive man view fails to recognize that the consumer plays an equal (if not
dominant) role in many buying situations by seeking information about service
alternatives and selecting the service that appears to offer greatest satisfaction.
(3) Cognitive man: According to this view consumer is defined as a thinking
problem solver. Within this framework consumers are frequently depicted as either
receptive to or actively seeking services that fulfill their needs and enrich their lives.
The cognitive man focuses on the process by which consumers seek and evaluate
information about the services. There are six types of consumer perceived risks
(functional risk, economic risk, physical risk, social risk, psychological risk and
time risk) which a consumer use to handle such as collecting information about
alternatives, patronizing specific agents, brand loyalty etc. These risks are key
components of cognitive view and consumers are viewed as information-processing
systems. Consumer may use a preference formation strategy that is “other-based”
in which they allow another person probably a trusted person or an expert to
establish preferences to them. (4) Emotional man: Marketers prefer to think of
customer in terms of either economic or passive models. Emotional man is also a
reality of each of us because of deeply rooted feeling and emotions: joy, fear, love,
hope, fantasy, sadness etc. These emotions have an impact on purchases and
possessions. 9 Such feelings or emotions are likely to be highly involved for making
a purchase decisions. When a consumer makes any emotional purchase decision,
122
2) --------- stage is based on all the information gathered by the individual buyer
will evaluate and make decision whether it is worthwhile or whether it will
make sense and do him good to try out the innovation.
3) After evaluating the worthiness of the new service the buyer may decide to try
out the innovation on a small scales basis initially to make an actual
assessment of the value of the new service is called --------- stage
4) After deriving the satisfaction from the purchase of new service on a trial
basis, the buyer decide upon whether to extend full fledge use or not is called -
--------
12.8 SUPPLEMENTARY MATERIALS
1) Stephenson, G. M., & Fielding, G. T. (1971). An experimental study of the
contagion of leaving Behaviour in small gatherings. Journal of Social
Psychology, 84(1), 81-91
2) Freedman, J. L., Birsky, J., & Cavoukian, A. (1980). Environmental
determinants of Behavioural contagion: density and number. Basic and
Applied Social Psychology, 1(2), 155-161.
3) Ogunlade, J. O. (1979). Personality characteristics related to susceptibility to
Behavioural contagion. Social Behaviour and Personality: an International
Journal, 7(2), 205.
4) Freedman, J. L., Birsky, J., & Cavoukian, A. (1980). Environmental
determinants of Behavioural contagion: density and number. Basic and
Applied Social Psychology, 1(2), 155-161.
12.9 ASSIGNMENTS
1) You are the marketing manager of a newly established company. Design the
segmenting and positioning strategy for a innovative product of your choice
12.10 SUGGESTED READINGS/ REFERENCE BOOKS / REFERENCES
1) Loudan, David L and Bitta, A.J. Della Consumer Behaviour
2) Schiffman LG and Kanuk LL Consumer Behaviour
3) Nair, Suja R, Consumer Behaviour in Indian Perspective
4) Bennet and Kasarjian Consumer Behaviour
5) Mowen, John Consumer Behaviour
6) Ajzen, I.,(1980), Understanding attitudes and predicting social Behaviour.
7) Approach, New York: Gardner Press, 246-249.
8) Aristotle, ( 350 B.C),_On the Soul and On Memory and Recollection, Amazon
Inc., 652-656.
9) Arnold, J., Robertson., (1991), Work Psychology: Understanding human
Behaviour in the workplace. 2nd ed. ed. London: Pitman, 45-111
10) Bagozi, R., (2002), The Social Psychology of Consumer Behaviour,
Buckingham:
11) Blackwell Roger D., Miniard W. Paul & Engel F. James – Consumer Behaviour
(Vikas Publishing House 2003)
12) Blackwell, R., Miniard., (2001), Consumer Behaviour, 9th ed. Orlando:
Harcourt,
125
13) Blackwell, R.,( 2001), Consumer Behaviour. 9th ed. Orlando: Harcourt, 98-
117.
14) Bozinoff, L., (1982), A script theoretic approach to information processing: an
15) Burger, J.M. (1993). Personality (3rd ed.) Pacific Grove, CA: Brooks/Cole.
16) Carver, C. S., & Scheier, M. F. (2000). Perspectives on Personality (4th ed.)
Needham Heights, MA: Simon & Schuster.
17) Carver, C.S., & Scheier, M.F. (2000). Perspectives on personality (4th ed.)
Boston: Allyn and Bacon.
18) Consumer Behaviour- Concepts , applications and Cases, M.S.Raju,
Dominique Xardel ( UK) Limited, New York, 65-69.
19) Consumer Behaviour ( Fourth edition )- David L.Loudon and Albert J.Della
Bitta.
20) Du Plessis,, (1991), Consumer Behaviour. A South African Perspective.
Pretoria: Sigma, 216-222.
21) Evans J.R., and Berman B - Marketing (Biztantra, 2003)
22) Eyesenck, M., Keane, (2000), Cognitive psychology: a student's handbook, 4th
Ed. ed. London: Lawrence Erlbaum, 156-177.
23) Fishbein, M., (1965), A Consideration of Beliefs, Attitudes, and their
Relationships, New York: Hold, Rinehart and Winston, 107-120.
24) Fishbein, M., (1975), Belief, attitude, intention and Behaviour: An introduction
to
25) Fishbein, M., (1975), Belief, attitude, intention and behaviour: An introduction
to
26) Foxall, G., (1993), ‘Situated Consumer Behaviour: a Behavioural interpretation
of purchase and consumption’, Research in Consumer Behaviour’, 6, 113-152.
27) Foxall, G., (1993), ‘Situated Consumer Behaviour: a Behavioural interpretation
of purchase and consumption’, Research in Consumer Behaviour, 6, 113-152.
28) Groome, D., et.al., (1999), An Introduction to Cognitive Psychology, Hove:
29) Hillner, K. P., (1984), History and Systems of Modern Psychology: A
Conceptual
30) Hines, C., et al., (2000), Ethical consumerism - a research study conducted for
the Co-operative Bank, London: Mori, 45-59.
31) Howard, J. A., (1969), The Theory of Buyer Behaviour. London: John Wiley
and
32) Howard, J. A.,(1969), The Theory of Buyer Behaviour, London: John Wiley and
33) Integrated Approach, London: Pitman, 24-86.
34) Jacoby.Y, J., (2002), ‘Stimulus-Organism-Response Reconsidered: An
Evolutionary Step in Modeling (Consumer) Behaviour’, Journal of Consumer
Psychology, 12, (1) 51-57.
35) Jobber, D. (2001), Principles & Practice of Marketing, McGraw-Hill
International
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LESSON - 13
CONSUMPTION ANALYSIS
13.1 INTRODUCTION
Consumer Behaviour has been conventionally thought of as the study of “Why
people buy?” Based on the acts of individuals the marketers can develop strategies
to influence consumers. The learners need to be acquainted with the buyer
Behaviour and analysis of consumption pattern. The knowledge on consumers
needs and wants help organizations to explore how the consumers think, feel,
comprehend in deciding among competing products, how they are influenced by the
environment, motivational parameters. These understandings form basis to make
changes in the process of diffusion and adoption.
This unit comprises of four lessons namely consumption Analysis, models of
buyer Behaviour, organizational Buying Behaviour and Diffusion of Innovations.
This unit focuses on the consumer decision making which deliberate on
different types of purchase situations and roles of the consumers, in a competition
environment, consumers have several options and alternatives which necessitates
the marketers to understand the consumer decision making process.
13.2 OBJECTIVES
• To provide insights on various aspects of consumer buying decision with
special reference to India.
• To vividly illustrate the different models of buyer Behaviour.
• To showcase the constructs of organizational buying Behaviour.
• To understand the diffusion and adoption process and the attributes of
innovation.
13.3 CONTENTS
The changing profile and preferences of consumers has led to innovative
trends in promoting products to satisfy the consumers’ desires. The Indian
consumer hardly ever has adequate information about a product towards making
purchase decisions. The marketers need to be aware of the purchase Behaviour of
consumers in order to elevate the customer satisfaction. Consumers make three
types of purchases namely trial purchases, repeat purchases and the L.T
commitment purchase. Trial purchase refers to purchase of a product for the first
time as a trial to experience the product in similar quantity. Repeat purchase is
that when consumer prefer to purchase the product repeatedly for a period of time.
The long term commitment purchase happens when the consumers become very
loyal to the product. It is very significant that the customer are aided in their
decision making process and consumers should be made to think that their
decision is wise.
Companies need to undergo a consumption analysis to keep them updated
about the customer profile, product usage rates, expenditure pattern of consumers.
Consumers are complex individuals. The decisions of consumers are influenced by
psychological and social needs of consumers belonging is different segments, it is
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essential for the marketers in the process of designing and marketing strategies, to
consider consumption pattern and analyze the consumer Behaviour.
The knowledge of consumers needs, wants, attitude and beliefs help firms to
renew their consumer satisfaction strategies by analysing issues related to
purchase Behaviour of the consumers. This requires the consumer pattern of
Behaviour. The determinants to analyse the consumption pattern:
a) Product usage Rate
The usage rate reflects the differences among heavy, medium and light users
and non-users of a specific product, service or brand. Companies of fast moving
Consumer products like soap, shampoo, food products have found that a relatively
small group of heavy users accounts for a disproportionately large percentage of the
total product usage. Targeting heavy users is a common marketing strategy and is
often more profitable than targeting other user categories. However, marketing to
this segment needs a lot of expensive promotion as all the competitors target the
same heavy users. Usage rate segmentation helps to identity the product usage
rate. This segmentation focuses on the factors that directly affect the usage
Behaviour. For example, a study of super market customers found differences
between two segments of buyers in terms of usage frequency which is defined as
the number of times per week buyers visited the super market. The researchers
also examined usage frequency in relation to buyers reasons for purchasing that
shop, levels of expenditure at the store, travel times to the store and modes of
transportation and whether consumers take efforts to reach the stores or were
simply passing by.
Rate of usage is strongly related to product awareness status, which is the
degree of a consumers awareness of the product and its features, and whether or
not he or she intends to buy it reasonably soon. The consumers degree of
awareness of the product, along with whether the consumer is unaware and needs
to be informed about the product, represent distinct targeting opportunities. A
related factor is product involvement, which specifies the degree of personal
relevance that the product holds for the consumer.
Another aspect of product usage is usage occasion, Vicco turmeric portrays
the occasion of marriage. Marie biscuits have been projected with tea time snack or
family time recreation. Nowadays consumers purchase products online, the
ecommerce sites markets showing month end bonanza, holidays, festival eve,
special days etc when the usage rates increases based on the schemes introduced
that time as a part of some occasion.
B) Expenditure
In the marketing era today, a marketer has to consider the value of the offering
and not just, the price of the brand. But with the onset of Net oriented Retailing, it
looks price plays a dominant role which drives consumers to spend in a particular
product or service as well as in a particular site or stores. There are certain factors
that influence consumers spending which are detailed below-
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time and items rather than on future looking nest eggs. Luxurious resorts, mainly
target these sort of customers.
Super rich – the super rich have income greater than US $ 22000 per annum.
Total number of super rich families in India exceeds 3 lakhs. They are mostly
modern professionals with high inclination towards consumerism. They often by a
number of durables and are quite sensitive about their status
The ultra rich – Indians with earnings of more than US $ 44000 per annum can
be demarcated as ultra rich. The number of ultra rich families in India is quite
meager (approx. a lakh some 6 years ago). Some middle-level managers or the first
generation industrialists are the visible entities in this cluster. Some rich farmers of
Punjab and Haryana also belong to this category.
The sheer rich – household crossing the income slab of US $ 110000 per
annum are known as sheer rich. However, in India hardly 20,000 families fall into
this category. They do portray similar silhouettes as they ultra rich, although the
extend varies. They look for possessing different brands of cars. They like to own
house and apartments in various posh locations of the country and abroad. They
desire social status and power
The obscenely rich – in India, around 6000 house holders having an income of
more than US $ 222000 per annum constitute this cluster. They are mainly the
first generation entrepreneurs or technocrats. These peoples are equivalent to the
moneyed class in the first world country. They yearn for elitism in every purchase.
Designer dresses, special diamond-studded watches, exclusive platinum jewelries
are some of the products especially targeted towards them. The event management
of marriage of the daughter of steel tycoon Lakshmi Mittal is one such service.
Segments of the consumers, depending on various social classes, place of
inhabitancy, caste, race, and various other spectra. Among the total 164.8 million
domestic units in India, 80.7 million constitutes the bottom of the pyramid (< US $
581), followed by the 50.4 million lower middle-income households ( US $ 581-
1162), 19.7 million middle- income group( US $ 1162-1190), 802 million upper
middle-income group(US $ 1790-2465), and 5.8 million high- income group (>US $
2465).
UNDERSTANDING CONSUMPTION
Consumption is a major concept in Economics. Economists are particularly
interested in the relationship between consumption and income, as modeled with
the consumption function, Different schools of economists define production and
consumption differently. According to mainstream economists, only the final
purchase of goods and services by individuals constitutes consumption, while other
types of expenditure in particular, fixed investment, intermediate consumption, and
government spending are placed in separate categories. Other economists define
consumption much more broadly, as the aggregate of all economic activity that
does not entail the design, production and marketing of goods and services (e.g. the
selection, adoption, use, disposal and recycling of goods and services).
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Consumption Function
The consumption is a mathematical function that expresses consumer
spending in terms of its determination, such as income and accumulated wealth.
Behavioural Economics and Consumption
The Keynesian consumption function is also known as the absolute income
hypothesis, as it only bases consumption on current income and ignores potential
future income (or lack of). Criticism of this assumption led to the development of
Milton Friedman’s permanent income e hypothesis and Franco Modigliani’s life
cycle hypothesis. More recent theoretical approaches are based on Behavioural
economies and suggest that a number of Behavioural principles can be taken as
microeconomic foundations for a Behaviourally based aggregate consumption
function.
CONSUMPTION AND HOUSEHOLD PRODUCTION
Consumption is defined in part by comparison to production. In the tradition
of the Columbia school of household economics, is also known as the New Home
economics, commercial consumption has to be analyzed in the context of household
production. The opportunity cost of time affects the cost of home-produced
substitutes and therefore, demands for commercial goods and services. The
elasticity of demand for consumption goods is also a function of who performs
chores in households and how their spouses compensate them for opportunity
costs of home production.
Different schools of economists define production and consumption differently.
According to mainstream economists only the final purchase of goods and services
by individuals constitutes consumption, while other types of expenditure--- in
particular, fixed investment, intermediate consumption, and government
spending—are placed in separate categories. Other economists define consumption
much more broadly, as the aggregate of all economic activity that does not entail
the design, production and marketing of goods and services (e.g. the selection,
adoption, use, disposal and recycling of goods and services).
Consumption can also be measured by a variety of different ways such as
energy in energy economics metrics.
Effects of Consumption
Aggregate consumption is a component of aggregate demand. According to the
UN, “Today’s consumption is undermining the environmental resource base. It is
exacerbating inequalities. And the dynamics of the consumption- poverty-
inequality-environment nexus are accelerating. If the trends continue without
changes---not redistributing from high-income to low-income consumers, not
shifting from polluting to cleaner good and production technologies, not shifting
priority from consumption for conspicuous display to meeting basic needs---today’s
problems of consumption and human development will worsen”. Developing
countries like India as they move down the path of copying the consumption
patterns of developed economies, will basically create demands that earth will not
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be able to fulfill. Some economists talk about putting a price on using earth’s
resources which is in addition to the cost of just extracting them.
CONSUMER ECONOMICS
Consumer economics is a branch of Economics. It is a broad field, principally
concerned with microeconomic analysis behaviour in units of consumers, families,
or individuals. It sometimes also encompasses family financial planning and policy
analysis. The term largely describes what was more commonly called “home
economics” in the past. Consumer economics has its roots in pre-world war
academia.
The traditional economists had little interest in analyzing family units. When
economic theory was insufficient to explain the phenomenon of women starting to
enter the labor force en masse, consumer economics both gained attention and
received important contributions from economic theorists. Major theoretical
cornerstones include Gary Becker’s Household Production model, time allocation
models and Stigler’s information search theory.
Consumer economics conclude the family-unit economists were strongly
influenced by the most recent “consumer era”; which was the “Modern Consumer
Movement” of the 1970’s.The connection between consumer economics and
consumer-related politics has been overt, although the strength of the connection
varies between universities and individuals.
Many facets of consumer economics are measured through a number of
indicators, such as personal income, total household debt, and the consumer
leverage ratio.
Consumer Spending
Consumer spending, consumer demand, consumption or consumption
expenditure is the purchasing of goods and services by individuals or families.
It is the largest part of aggregate demand at the macroeconomic level. There
are two components in the basic model: Induced consumption (which is offered by
the level of income) and Autonomous consumption (which is not).
Macroeconomic Factors Affecting Spending
(a) Taxes
Taxes are a tool in the adjustment of the economy. Tax policies designed by
governments affect consumer groups, net consumer spending and consumer
confidence. Economists expect tax manipulation to increase or decrease consumer
spending, though the precise impact of specific manipulation are often the subject
of controversy.
Underlying tax manipulation as a stimulant or suppression of consumer
spending is an equation for Gross Domestic Product(GDP). The equation is
GDP=C+I+G+NX, where (GDP) is the value of all final goods and services provided in
the economy(C) is private consumption, (I) is private investment, (G) is government
and (NX) is the net of exports minus imports. Increases in government spending
create demand and economic expansion. Government spending increases may
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translate to tax increases or deficit spending. Thus the expansions cannot be done
without a potential negative impact on private consumption(C) or one of the other
two elements, investment(I) or the net of exports and imports(NX).
(b) Consumer Sentiment
Consumers sentiments are the attitudes of households and other entities
toward economy and the health of the fiscal markets, and they are a strong
constitute of consumer spending. Sentiments have a powerful ability to cause
fluctuations in the company, because if the attitude of the consumer regarding the
state of the economy is bad, then will be reluctant to spend. Therefore, sentiments
prove to be a powerful predictor of the economy, because when people have faith in
the economy or in what they believe will soon occur; they will send and invest in
confidence. However sentiments do not always affect the spending habits of some
people as much as they do for others. For example, some households set their
spending strictly off of their income, so that their income closely equals, or nearly
equals their consumption (including savings). Others rely on their sentiments to
dictate how they spend their income and such.
(c) Government Economic Stimulus packages
In times of economic trouble or uncertainty, the government often tries to
rectify the issue by distributing economic stimuli, often in the form of rebates or
checks. However such techniques have failed in the past for several reasons. As
well discussed earlier, temporary financial reprieve rarely a success because people
do not often like rapidly shifting their spending habits. Also, people are many
timers intelligent enough to realize that economic stimulus packages are due to
economic downturns, and therefore they are even more reluctant to spend them.
Instead they put them into savings, which can potentially also help spur the
economy. By putting money into savings, banks profit and are to decrease the
interest rates, which then encourages others to save less and promote future
spending.
(d) Oil
Oil is an extremely valuable and vital resource to economies and societies
everywhere. There is a strong relationship between the increase in oil prices, and
real growth in the economy. When a society suffers a disturbance in energy
supplies, there is potential for a shock to expensive consumption or investment
goods that are heavily dependent on energy, like motor vehicles and machinery.
This is because disruption in energy supplies creates uncertainty regarding
availability and upcoming prices of these supplies. Often consumers attempt to
delay the purchase of such items until they have a better idea of what energy prices
are going to look like after the subsiding of the disruption. Increases in the price of
oil means a greater portion of the consumer’s income is required to purchase oil,
and therefore less than can be used in the purchase of other goods. Oil price
changes, both increases and decreases, have an extremely potent effect on
allocation channels. This affects the currency conversion, purchase of gold and
jewellery and related products where oil prices has much say.
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(e)Consumerism
While consumerism may not be an invisible stage in industrial
development it has been a frequent choice made within complex cultural, political
and social contexts. It explains the reasons how industrialism helped consumerism
along by providing the goods but at the same time it hurt consumerism along by
providing the goods but at the same time it hurt consumerism for the people who
kept the industrial world running. This happened because the workers were busy
trying to make their living making these goods that when it came down to trying to
buy any luxury goods they either didn’t have enough money or they didn’t have the
time to buy or use the luxury goods.
Look at the Data
United States
In 1929, consumer spending was 75% of the nation’s economy. This grew to
83% in 1932, when business spending dropped. Consumer spending dropped to
about 50% during world war II due to large expenditures by the government and
lack of consumer products. Consumer spending in the US rose from about 62% of
GDP in 1960, where it stayed until about 1981, and has since risen to 71% in
2013.
In the united states, the consumer spending figure published by the Bureau of
Economic analysis includes three broad categories of personal spending.
Durable goods: motor vehicles and parts, furnishings and durable household
equipment, recreational goods and vehicles and other durable goods.
Nondurable goods: food and beverages purchased for off-premises
consumption, clothing and footwear gasoline and other energy goods, and other
nondurable goods.
Services: housing and utilities, health care, transportation services recreation
services, food services and accommodations, financial services and insurance and
other services……
India
India Consumer Survey 2013
(28 January 2013 Asia Pacific/India Equity Research Consumer Discretionary
/ Consumer Staples Source: Credit Suisse India Consumer Survey 2013)
■ Consumer optimism still falling. The decline in Indian consumer optimism
observed in 2011 intensified on the back of continued adverse macro conditions.
Compared to 2011, more people expect lower salary increases and expect personal
finances to worsen, making it a bad time for large-ticket purchases. Only 5% of
consumers we surveyed expect inflation to fall. Confidence in the government is
also waning.
■ Signs of down-trading in discretionary items. Not surprisingly there was a
temporary reversal in 2012 of the up-trading trend observed in 2011. The
preference for purchasing unbranded products again rose. Fewer people bought
smartphones and more now want to buy an entry-level car. This trend is reflected
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this activity of maximizing utility has been demanded as the “rational” behaviour of
decision makers. More specifically, in the eyes of economists, all consumers seek to
maximize a utility function subject to a budgetary constraint. In other words,
economists assume that consumers will always choose the ‘best’ bundle of goods
they can afford. Consumer theory is therefore based around the problem of
generate refutable hypotheses about the nature of consumer demand from this
Behavioural postulate.
In order to reason from the central postulate towards a useful model of
consumer choice, it is necessary to make additional assumptions about the certain
preferences that consumers employ when selecting their preferred ‘bundle’ of goods.
These are relatively strict, allowing for the model to generate more useful
hypotheses with regard to consumer Behaviour than weaker assumptions, which
would allow any empirical data to be explained in terms of stupidity, ignorance, or
some other factor, and hence would not be able to generate any predictions about
future demand at all. For the most part, however, they represent statements which
would only be contradicted if a consumer was acting in (what was widely regarded
as) a stranger manner. In this vein, the modern form of consumer choice theory
assumes:
Preferences are complete
Consumer choice theory is based on the assumption that the consumer fully
understands his or her preference, allowing for a simple but accurate comparison
between any two bundles of good presented. That is to say, it is assumed that if a
consumer is presented with two consumption bundles A and B each containing
different combinations of n goods, the consumer can unambiguously decide if (s)he
prefers A to B, B to A, or is indifferent to both. The few scenarios where it is possible
to imagine that decision-making would be very difficult are thus placed “outside the
domain of economic analysis”. However, discoveries in Behavioural Economics has
found that actual decision making is affected by various factors, such as whether
choices are presented together or separately through the distinction bias.
Preferences are Reflexive
Means that if A and B are in all respect identical the consumer will consider A
to be at least as good as B. Alternatively, the axiom can be modified to read that
that the consumer is indifferent with regard to A and B.
Preference are Transitive
If A preferred to B and B is preferred to C then A must be preferred to C. This
also means that if the consumer is indifferent between A and B and is indifferent
between B and C she will be indifferent between A and C. This is the consistency
assumption. This assumption eliminates the possibility of intersecting indifference
curves.
PREFERENCES EXHIBIT NON-SATIATION
This is the “more is always better” assumption; that in general if a consumer is
offered two almost identical bundles A and B, but where B includes more of one
particular good, the consumer will choose B.
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spending includes spending on a computer, internet, car, cell phone, etc. Analysis
of consumer spending in the past 10 years reveals that the average consumer has
been spending on an increasing number of different goods. There are a number of
factors affecting the consumer spending pattern in India; these include growing
income levels resulting in more disposable income with individuals, changing
attitudes towards consumption, changes in prices, introduction of new products,
availability of credit such as loans, mortgages and credit cards, rising aspiration
levels, increased literacy, growing brand consciousness and rapid urbanization.
Spending habits are different for people belonging to different sections of
society. For instance, people belonging to the middle class consider basic
necessities and education and spending toward the future of their children as their
top priorities, followed by lifestyle goods. The rich class spends more on luxury
goods and international brands. The super rich class spends on ultra luxury goods.
It is observed that as disposable income increases, people prefer more of branded
goods, shift to processed foods, and the expenditure on food, beverages, tobacco,
and transport and communication also increases. A comparison of consumer
spending habits in 2002 with those in 2007 revealed that expenditure on food,
clothing and personal care has remained more or less constant, but expenditure on
entertainment has increased.
Shopping habits of Indians are changing due to their growing disposable
income, relative increase in the younger population, and the change in attitudes
towards shopping. The emphasis has changed from price consideration to design,
quality and trendiness. The desire to look and feel good is also guiding factor for
customers while making their purchase decisions. Growing disposable income is
also propelling demand for consumer durables and eating in restaurants among
Indians. Age is also a major factor that affects the spending decisions of an
individual. For instance, people in 20-24 years age group spend more on electronic
/ home appliances and movies, while people in the 45-48 years age group spend
more on vacations.
Consumer spending is an important factor that affects the economic growth
and development in a country.
All marketing strategies are based on explicit or implicit beliefs about
Consumer Behaviour . The integral part of analyzing this Behaviour is consumption
analysis which is done based on product usage rate and expenditure. The desirable
features for any customer are the price of the product and willingness to purchase.
Marketers must have a thorough understanding of their potential customers needs
and of their information acquisition process to succeed at their task. The customers
can be retained only when the brands meet their needs and offers superior value
after their consumption.
13.4 REVISION POINTS
1. Customer value and its importance to marketers.
2. Criteria of consumption analysis
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3. Types of consumers
4. Understanding consumers choice
5. Consumption function and its relevance
6. Consumer spending
13.5 INTEXT QUESTIONS
1. Give a detailed note on contemporary dimensions of Consumer Behaviour.
2. What are the factors that dominate consumer decision to purchase a
product or avail a service?
3. State the importance of understanding consumer behaviour .
4. Prepare a profile of Indian consumers
5. How do you understand product usage rate of consumers?
6. Give an elaborate note on consumer spending
13.6 SUMMARY
Marketing in India is going through a unique phase. Consumer Behaviour is
much complex to study but is very much imperative for the marketers to decide
several strategies. Consumer Behaviour is the psychological process of decision
making by consumers in a social context. There is a need to analyse the segments
of consumers, different purchase patterns, consumer choices, consumption
function and it is to be noted that consumption analysis based on product usage
rates and consumers expenditure. In the course of understanding consumption
analysis, it is vital to get insights in consumer economics which elaborates on
consumers preferences. Companies can aim for effective CRM (Customer
Relationship Management) only through effective Consumer Analysis. The
consumption analysis setting upon consumer purchase pattern, product usage
rate, expenditure, spending pattern would help in evolving right path towards
achieving the objectives of the organisation.
13.7 TERMINAL EXERCISES
1. A complete analysis of consumer behaviour should identify three types of
actors: marketers, public policy actors, and most
importantly___________________________
a. Government c. Consumers
b. Employers d. Suppliers
2. Which of the following family purchases are often influenced by children?
a. Housing c. Clothing
b. Consumer electronics d. Vehicle
13.8 SUPPLEMENTARY MATERIALS
1. Website- http://www.icmrindia.org/casestudies/catalogue
13.9 ASSIGNMENTS
1. Prepare a checklist and conduct a hidden survey of five of your friends
towards the choice of readymade apparels to understand purchase
Behaviour.
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LESSON - 14
14.2 OBJECTIVES
• To understand the areas of application of the models based on different
dimensions
• To present a models of Buyer Behaviour and understand how consumers get
cues from environment to decide the final purchase of a product.
• To critically evaluate the models in present scenario and enumerate the scope
of the models in the purchase decision.
14.3 CONTENTS
The contents would focus on
Factors to be considered in analyzing the buyer Behaviour
Application of models to understand the characteristics of consumers
Different classification of Buyer Behaviour Models.
Models of Buyer Behaviour
Early Stimulus-Organism-Response models as shown in Figure 1, suggest a
linear relationship between the three stages with environmental and social stimuli
acting as external antecedents to the organism. This approach assumes that
stimuli act upon an inactive and unprepared organism (Eysenck and Keane 2000)
Stimulus – Response Model of Buyer Behaviour
Exogenous Variables
realize a position where the following equation is valid for any number (n) of goods.
This means
MU1
The economists noted that if a product’s perceived marginal utility to price
ratio is higher than the others, the consumer will be able to obtain higher level of
satisfaction per unit of money from it and will opt for purchasing additional units of
it. Given the adequacy of budget, the consumer will keep on purchasing additional
units of the product until its marginal utility declines to the level where the
product’s MU/P ratio settles in an equal position to all other products MU/P ratios.
Critical evaluation
Although the microeconomic models are the pioneering attempts to
understand the choice processes, due to their several unrealistic assumptions, their
applications are highly restricted. The concept of utility maximization does not
always hold true in case of the ‘bottom-of-the-pyramid’ consumers who usually
strive for acceptable levels of satisfaction. Besides, in many cases the consumers
lack perfect knowledge regarding products, and they frequently manipulate each
other’s preferences. Also, today’s customers are subjected to many variables in
addition to the price to assess a product’s cost. Finally, customers simply do not
appear to be perfectly rational in all their purchase decisions. In reality, lots of
psychological and social variables influence each other before a customer reaches
his/her final buying decision. These impracticable of an entire economic system,
but they are certainly not useful in understanding how actually the individual
consumers behave in specific purchase situations.
Nonetheless, in spite of several shortcomings, the microeconomic models have
been useful in providing a pioneering perspective which has built the base to
comprehend the contemporary models of the consumer Behaviour. Finally, because
economists have restructured some critical aspects of the microeconomic models, it
contains to exert significant influence on the contemporary thinking of the
consumer Behaviour.
Macroeconomics Viewpoints
Macroeconomics school of thought, on the other hand, stresses on the
summative flows in the economy in terms of the monetary value of goods and
resources, the directions, and the extent of their change over time. Given the
knowledge of these aggregate flows, the macroeconomics school attempts to analyze
the behavioural responses of the consumer who stimulate and direct the extent of
financial flows. Even though the school did not produce a full-proof model of
consumer buying behaviour, it has successfully provided some food for thought to
analyze the contemporary models formulated in the latter half of the 20th century.
One particular aspect which has been stressed in macro-models pivots around
how consumers allocate their income between consumption and saving. The
underlying assumption of the macro-models is –higher the income of the families,
smaller is their marginal propensity to consumer and, thereby, they spend relatively
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scope of the syllabi only a few of the widely quoted models will be reviewed in the
following sections.
CONTEMPORARY MODELS
Since consumer behaviour has emerged as a separate discipline, several
attempts have been made to conceptualize the buying behaviour through
comprehensive models. Nonetheless, five major comprehensive contemporary
models are most coveted in the arena of consumer behaviour. The models range
from the oldest Andreason model(1965) to the latest Engel-Kollat-Miniard and
Sheth-Newman-Gross models (1991). The five models are discussed below
Andreason Model (1965)
One of the earliest models of consumer decision-making was propose by
Andreason (1965) whose model focuses on the acceptance and interpretation of the
information in the consumer decision-making process. It is assumed that message
reach the consumer’s memory through five basic senses. The message can either be
personal or non-personal (i.e., either word of mouth or advertisements designed by
the marketers). Therefore, a filter is created by individual’s perception, with attitude
as determining factor, through which the information flows. Nonetheless, the model
seems to have laid too much emphasis on the aspects of attitude while ignoring its
relevance in terms of repeat purchase situations. However, attitudes can be altered
in several ways. For example, when a person interacts within a group, he/she is
often subject to different groups norms. Further, the new information obtained
would certainly experience, and wants will also shape the information processing of
an individual and thereby arriving at the final choice.
Critical evaluation
For most of the complex buying models, the decision-making process starts
much before the information search stage. Even Kotler’s black-box model begins
with the ‘need-recognition’ of the customers due to marketer-provided,
environment, and other stimuli. In reality, if these stimuli reach towards the
perceptual threshold of the customers, then and only then the customer will be
attentive towards the marketing communication and search for information
regarding the intrinsic or extrinsic benefits of the products or brands, secondly, the
model is devoid of detailed analog of repeat purchase situation or impulse buying
situation. Thirdly, it is difficult to generalize the model in the absence of any
validation methods used.
Nicosia Model (1966)
Nicosia’ model (1966) focuses on the buying decision, especially for a new
product. It is a four-field-model, in which the first three fields elucidate various
decision-making steps that the consumers espouse before buying goods or services.
Nicosia had resorted to a detailed computer flowchart for this purpose. For ease of
comprehension, all the mental situation of the consumer has been classified into
various fields and subfields.
Thereafter, all the elements of the model are connected through direct as well
as feedback loops. Hence, the model stresses on the association between the firm
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and its prospective consumer. The firm communicates with consumer through its
stimuli (in terms of all the four Ps), and the consumers respond to these messages
by forming their attitudes towards the product/brands and finally purchase/reject
it. A careful watch on the model may project that the two basic entities of the
market place namely, the firm and the consumer, are neatly connected with each
other, and mutually influence each other’s strategies and actions. The major fields
and subfields of the model are as follows.
Field 1: the consumer’s attitude based on the firm’s massages
The first field that deals with the consumer’s initial attitude after being
exposed to the firm’s message is sub-divided into two subfields.
The first subfield explains how the firm’s marketing environment effort are
shaped by its attribute and trains, given the existing competitive and
communication effort are shaped by its attributes and traits, given the existing
competitive environment and features of the target market. The second subfield
portrays the consumer’s individual characteristics, e.g., experience, personality,
and how he perceives the market’s communications regarding the product. In this
phase, the consumer develops his attitude towards the firm’s product depending on
the way he interprets the firm’s messages.
Field 2: Search and evaluation
In the second phase, the consumer beings to search for attributes of other
firm’s offerings and compares them with the concerned firm’s brand. At this phase,
it is the task of the marketer to provide adequate information about the product,
highlight their USPs, shape the consumer’s evaluative criteria (as Nicosia talks
about new purchase only), and motivate them in favour of its brand through its
promotional messages.
Purchase Stage
Field 4: Feedback
Finally, the model interprets the post-purchase feedback of the consumers.
The firms may use the sales data as a feedback and modify the brands traits or
promotion/distribution strategies if required, and the consumer is supposed to use
his experience to develop notions about the product/firm.
Critical evaluation
The worth of Nicosia’s model, however, rests on the integration of insights
about the ‘non-action’ kind of variables present in the environment and the ways
they prompt actions from the consumers. But it does not unveil the impact of the
internal factors on the consumer and the ways they shape the consumer’s attitude
towards the product.
Moreover, the Nicosia model overlooks the aspects of predisposition and
perceptual bias-the two most crucial aspects of understanding the customer’s
expectation from a product or brand. Besides, this model has been severely
criticized by the behavioural scientists as it was not empirically tested, and many of
the variables were not clearly defined and hence could not be measure.
Though the flowchart approach of the model organized and structured the
presentation considerably but on the flip side these posed boundaries on the set of
possible interfaces among the variables.
Howard – Sheth Model (1969)
The most widely used consumer behaviour model is the Howard-Sheth model
of buyer behaviour, which was formulated by the eminent professor John Sheth
in1969. The model is highly significant and distinct from the other models as it
puts forward the relevance of inputs to the consumer buying process and
comments on the ways in which the consumer organizes and interprets these
inputs before arriving at final decisions.
This process of learning serves to influence the extent to which the consumer
considers future purchases, and seeks new information. Howard and Sheth
suggested that consumer decision making differs according to the strength of the
attitude toward the available brands; this being largely governed by the consumer’s
knowledge and familiarity with the product class.
In situations where the consumer does not have strong attitudes they are said
to engage in Extended Problem Solving (EPS), and actively seek information in order
to reduce brand ambiguity. In such situations the consumer will also undertake
prolonged deliberation before deciding which product to purchase or indeed,
whether to make any purchase. As the product group becomes more familiar, the
processes will be undertaken less conscientiously as the consumer undertakes
Limited Problem Solving (LPS) and eventually Routine Problem Solving (RPS) (Foxall
1990).
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Outputs
Inputs
Search for Inhibitors Purchase
Brands (A,B,C…) Information Behaviour
Significative
1 Quality
2 Price
3 Distinctive Intention
4 Availability
5 Service
Symbolic Predisposition Attitudes
1 Quality
2 Price
3 Distinctive Comprehension
4 Availability
5 Service
Social Environment Non-specific Specific Decision Evoked Attention
Motives Motives Mediators Set
Perceptual Learning
Input-output flow of
Constructs Constructs information
and affects
Feedback effects
Source: (Howard & Sheth 1969, Loudon Influence of exogenous
&Della Bitta 1993) variables
a) Inputs
These input constructs are comprised of three different types of stimuli
(information sources) in the consumers environment. The marketers at this phase
usher the consumers with product or brand-related information in terms of
physical brand characteristics (significant stimuli) and verbal or visual traits of the
product(symbolic stimuli).on the other hand, the social environment of the
consumer(e.g. family, reference group, and social class)significantly influences the
consumer’s black box and is referred as ‘social stimulus’ in the consumer decision
making process. Together, these three types of stimuli endow the customers with
inputs relating to the traits of product class as well as brands.
b) Processing of inputs
Similar to the consumer black box concept, the most fundamental part of this
model too consists of several psychological variables involved when the consumer is
envisioning a decision. The perceptual variables determine how the consumer
interprets the information from the input stimuli, memory and other sources.
Improper comprehension of the environmental stimuli results in ‘stimulus
ambiguity’. A further consequence of stimulus ambiguity is ‘perceptual bias’ which
is formed when the consumer distorts the information received in a way it fits with
his established needs or experience. While mentally processing the information or
stimuli received from the environment, the consumer may resort to some other
decision – making parameters which sheth at al.refered as learning constructs. the
learning constructs include confidence on the product/brand, intention to
purchase, motives behind the choice, choice criteria, brand comprehension, and
level of perceived satisfaction from the product/brand. The possible interface
amongst the perceptual and learning constructs endows the model with
considerable improvement over the traditional models
However, some exogenous variables, which are not direct part of the decision-
making process, pose some influence on the importance of the purchase,
consumers personality traits, religion, time pressure, etc.
c) Outputs
The outputs are the resultant Behaviours of the consumers exposed in the
market place based on their interpretation of the received environmental stimuli
through the interface of perceptual and learning constructs. These response
Behaviours can be measured in terms of attention, brand comprehension,
attitudes, and intention.
Critical evaluation
Howard-Sheth model focuses on three input stages- significative, symbolic,
and social stimuli. While explaining both the significative and symbolic stimuli, the
model has over-emphasized on the material aspects, such as price and quality.
Conversely, at the point of interpretation of the social stimuli, the model fails to
explain how the dynamics of social variables differ across the societies and event
geographic regions and in particular how those changes in social dynamics
influence the decision-making process. for example, the family values and
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influences of the Indian rural bottom –of-the –pyramid customers are significantly
different from that of the double income urban literate customers. Moreover, the
model has mentioned about various input –processing variables, but has not
mentioned how they inter mingle and correlate amongst themselves to develop the
perceptual bias or predispositions of the customers. Finally, no direct relation has
been drawn on the role of religion in influencing the customer’s decision-making
process. Religion is evaluated just as an external factor without any real sway on
the consumer and, therefore, might be considered as the pilpavle weakness while
interpreting this model. In a country like India, where many of the social stimuli,
like family structure, festivals, etc., vary with religion, the model may significantly
fail to explain the pragmatic situation, especially in the rural contest. in particular,
while targeting the rural bottom- of-the-pyramid customers, having clear-cut idea
about the level of literacy, prevailing myths, and superstitions about the
adoptability of a particular product or the calls for the day. Another weakness
stems from the fact that there being ample of measurement errors, the theory
cannot be practically tested. The distinction between exogenous and endogenous
variables is also not and ambiguous. Some of these constructs are really difficult to
practically measure (for example, perceptual bias and attitude). While howard and
sheth attempted to generalize their conclusions, loudon et al.(1993)pondered over
its unsuitability in explaining joint or group decision-making. jagdish sheth,later on
propounded his open ‘family decision-making model’(1974),but there too, he had
mentioned about several individual and group constructs that influence a family-
purchase Behaviour. but once again, the measurement methods of these variables
where not clear and hence, this model too, could hardly be generalized.
ENGEL- KOLLAT-BLACKWELL MODEL (1972)
Engel- Kollat-Blackwell (EKB) model, as other basic models of consumer
Behaviour, has undergone several modifications and improvisations to enhance its
evocative power of the basic relationships between constructs and sub-constructs.
The latest version coined up was the Engel-Kollat-Miniard (EKM) model, which
principally portrays the four stages explained below.
First stages: Decision- process stage
The pivotal point of the model is the five stages basic decision-process-
problems recognition, search for alternatives, alternative evaluation (at some point
in which consumer’s beliefs may lead to formation of attitude and subsequently
purchase intention), purchase, and outcomes (in terms of satisfaction or
dissatisfaction). Nonetheless, as discussed in the earlier chapter, in all purchase
situations the consumers are not passed through all five stages; only in case of
extended problem situation Behaviour, all the five stages are visible. In case of the
choice of hi-tech and hi-end mobiles, as discussed in the earlier case study (high-
involvement purchase), the consumer will behave as an extended problem-solving
situations and undergo all five relevant stages of decision-making.
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and the individual variables like esteem needs, social needs, trendy lifestyle, happy-
go-lucky, or chic-urbanite personality, etc.
This model, therefore, incorporates, any important individual and social
parameters such as values, lifestyle, personality, and culture, which significantly
influence the consumer decision-making.
fails to showcase which factors will shape these individual and social variables, and
why different types of personality traits result in difference in consumer’s choice
processes. In countries like India, Pakistan, or Bangladesh, religion can also play a
major role to elucidate some Behavioural characteristics of the consumer, and,
therby, lead to better understandings of the model. However, this link is completely
missing in the model.
Further, the roles of individual purchase motives are only consider to be
constructive for need recognition, and, thereby, this crucial theoretical aspects
seems to be undervalued in analyzing the decision-making process (Bagozzi,
Gurhan-Canti et al.,2002; London et al., 1993). The model has been criticized for its
mechanistic treatment with highly flexible psychological and social constructs
(Loudon et al., 1993).
14.4 REVISION POINTS
1) Classification of Models based on Traditional and Contemporary
2) Compare the different models and apply to an Indian buyer
3) Examine each model based on its relevant applicability to the Indian Context.
14.5 INTEXT QUESTIONS
1) State the basis of formulating the buyer Behaviour models?
2) How do you think the models can contribute to the buyer’s decision making?
3) Consider any one model that may suit Indian marketing condition and Justify?
4) Give your opinion about the shortcomings of the contemporary model?
5) What are the two major cognitive models of Consumer Behaviour?
6) Explain the Analytical Models of Consumer Behaviour.
14.6 SUMMARY
This chapter explains the importance of Buyer Behaviour Models and how the
determinants influence them to purchase a product. The factors can be of a great
study to the marketers to well understand the cognitive process to design
strategies. The categories of models really provide inputs as to how the pragmatic
process of buyer decision making happens. The review of the decision making
models undertaken here highlights the complexity of consumer choices and
identifies the key processes that lead to behaviour. A wide range of variables have
been posited across the models, and each has evidence to justify its inclusion in
attempts to explain Behaviour.
14.7 TERMINAL EXERCISES
1) If a consumer places great importance on a purchase, that product would be
considered as ______________________ product..
a. salient c. high-impact
b. high involvement d. expensive
2) __________________ are the things that people are, while behavioural processes
are the tools people apply in deciding.
a. Consumer background characteristics c. Personality traits
d. Consumer features d. Reference characteristics
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LESSON - 15
Most organisational purchases map little effect almost other members of the
organisation, best family quotes directly affect the other member of the family.
Consumer buyer behaviour is considered to be an inseparable part of marketing
and Kotler and Keller (2011) state that consumer buying behaviour is the study of
the ways of buying and disposing of goods, services, ideas or experiences by the
individuals, groups and organizations in order to satisfy their needs and wants.
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Decision process
External influence Situations
• Firmographics
• Culture Problem recognition
• Government
Information Search
• Reference groups
• Marketing Activities Organisational
Alternative Evaluation
culture
and selection
Internal influence
• Organisational Outlet selection and
values purchases
• Perception
• Learning
• Memory Post-purchase
• Motives processes
• Emotions
The process family is used to make Purchase Decision and the outcome of
those purchases have important impacts on the well being of the individual family
members and the family itself. These practices are operative in organisational
buying decisions. Thus while organisational decision making has something in
common with family decision making it is not the same.
Decision Making Unit
Decision Making Unit (DMI) is the individuals within an Organisation who
participate in a given Purchase Decision. These often functions as buyer Centre
when they comfort of individual from various area of the firm such as accounting,
engineering, manufacturing and marketing who meet specifically to make a
purchase Decision. They are often relatively permanent for recurring decision and
ad hoc for non routine ones. Large signing structured organisation ordinarily
involves more individuals in up purchase Decision than do smaller, less formal
organisations. Important decisions are likely to involve individual form a wide
variety of functional area and organisational level than are less important Purchase
Decision.
Purchase situation
The buying process is influenced by the importance of the purchase and the
complexity and difficulty of the choice. Simple, low risk, routine decisions are
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Commercial form can be usefully divided into public firm and private firm. in
public firm management is generally expected to operate the firm in a manner that
will maximize economic gain of the shareholders. This organisation face consistent
pressure to make economically sound if not Optimal decision.
II CULTURE/GOVERNMENT
Variations in values find a way of cross culture affect organisational as well as
individual. for example, in most Americans firm shareholder or owner wealth is a
dominant decision criterion. Corporate downsizing has resulted in hundreds of
thousands of worker and manager losing their job in order to enhance profitability.
This action has been acceptable in American society. similar corporate behaviour
could not be accepted much of Europe or Japan. Society worker welfare is on which
all about control about corporate profit. Plant closure laws, layoff Regulation and
worker benefits tend to be much higher than in America.
III REFERENCE GROUP
Reference group influence organizational behaviour and purchasing decisions.
Perhaps the most powerful type of reference group in industrial market is that of
lead users. Innovative organisation derived a great deal of their success from
leading change. As a result the adoption of a new product services Technology
manufacturing process is often emulated by the majority.
a) Internal factors:
Organisational values:
IBM and apple computer both manufacture and market computers. However,
each organization has a distinct organizational culture. IBM is corporate, formal,
and takes itself seriously. Apple is less formal, creative, and promotes a more open
organizational culture. Marketing managers must understand these differences in
order to best serve the respective organizational needs.
As you examine the eight common business values shown below, think of how
IBM might differ from Apple, Macy’s from target, amazon.com from buy.com, or
Fedex from the U.S. postal service. Each is a large organization, but each has a
unique set of values that underlies its organizational culture. To the degree that
organizations differ on these values, a firm marketing to them will have to adapt its
marketing approach.
1) Risk taking is admired and rewarded.
2) Competition is more important than cooperation.
3) Hard work comes first, leisure second.
4) Individual efforts take precedence over collective efforts.
5) Any problem can be solved.
6) Active decision making is essential.
7) Change is positive and is actively sought.
8) Performance is more important than rank or status.
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Perception:
Depending on the various messages received and experiences lived through,
the buyer has a different perception of the various services and brands available to
him. Following on from the first stage, if the individual is motivated, he will be more
likely to increase his level of information to optimize his decision. Motivated by the
purchase of a particular product, he will pay greater attention to the zadvertising by
different brands. It should be noted that the brand concept can modify perception
of a product category, even if this does not necessarily seem logical. A consumer
often has preconceived ideas about the different competitor brands. When the
consumer’s brand preference is adversely affected by a disappointing experience,
“cognitive dissonance” allows him to adapt the company’s message to what he really
wants to hear
To process information, a firm must go through the same sequential stages of
exposure, attention, and interpretation as consumers. Of course, given the more
complex nature of organizations, the processes involved are also more complex. A
business customer develops certain images of seller organizations from their
products, and organizational activities. Like people, organizations have memories
and base their decisions on images or memories they have developed. Once an
image is formed by an organization, it is very difficult to change. Therefore, it is
important for an organization to develop a sound communications strategy to build
and reinforce a desired image or brand position.
Learning:
Like individuals, organizations learn through their experiences and
perceptions. Positive experiences with vendors are rewarding and tend to be
repeated. Purchasing processes and procedures that prove effective tend to be
institutionalized in rules and policies. Likewise, negative experiences with vendors
produce learning and avoidance behaviour, and purchasing procedures that don’t
work are generally discarded. Developing the capacity to learn efficiently is
increasingly a key to organizational success.
Motives and emotions:
Organizational decisions tend to be less emotional than many consumer
purchase decisions. However, because humans with psychological needs and
emotions influence these decisions, this aspect of marketing to an organizational
customer cannot be overlooked or underestimated.
MODEL OF ORGANISATIONAL BUYER BEHAVIOUR
Webster’s buying process model Webster (1965) introduced a model of four
stages for the industrial buying process in order to better analyse and identify the
important variables and causal relationships that exist in this complex
environment. However, this model was just an introduction and was aimed at and
has been further developed for greater specificity. The first stage of Webster’s (1965)
model is problem recognition, where a buying situation is created by an identified
need which may be solved through a purchase. A problem or need arises when
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there is a gap between the actual performance of the organisation and the
organisation’s goals.
Further, there are both external and internal factors that may influence the
goal-setting and problem recognition, thus research is needed to recognise the
major influences. The second stage is buying responsibility, which includes
selecting the buyer in the organisation, which is influenced by the organisation,
industry, product, as well as individual factors. The third stage is the search
process, which entails the gathering of information in order to find alternative
solutions and establishing criteria for evaluating buying alternatives. The search
process may also change the goals. The fourth and last stage is the choice process,
which involves the selection of one or more suppliers. Further, this stage may be
influenced by the order in which the alternatives are evaluated, the relationship
between price-quality-service, as well as the priorities assigned to price-quality-
service.
Webster’s (1965) general model is good to use for understanding the basic
process of organisational buying, however Webster and Wind (1972) as well as
Sargeant and West (2001) have further developed it to achieve a deeper
understanding.
The Nelson box model
This model, according to Agbonifoh, et al. (2007) combines elements of
organizational buyer behaviour with those of consumer behaviour. The model is
built around two important assumptions: a. That decisions at different levels of the
organization neither always involve the same individuals nor identical work. b. That
decision taken at one level forms the basis for all subsequent decision. The Nelson
model describes four levels of decision making in an organization. They are: 1. The
general buying decision which includes the decision to initiate a project (and may
not, therefore, result from a former decision). It may contain the establishment of a
new building, new product, etc. 2. The concrete buying decision which comprise
selection of a definite project, including the objectives, and project specifications. 3.
The decision which is concerned with the most appropriate suppliers/vendors and
products. 4. The technical buying decision which involves decisions related to the
actual mechanics of transportation, drawing up of contracts, final price and
payment negotiations and the stipulation of other details. It is worthy of note that
the Nelson model also captures the individuals, social, organizational and
environmental factors as well as the task and non-task factors that influence
organizational buying Behaviour.
Buying Center Concept
Webster and Wind in the model they proposed to describe organizational
buying process, identified the organizational buying process as a team process and
called the team or the buying decision-making unit of the organization as buying
center. The buying center consists of all persons of the organizations who are
involved in the buying process playing one or the other seven roles: Initiators,
Users, Influencers, Deciders, Approvers, Buyers, and Gatekeepers.
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Users
The persons who use the item. Say for safety equipments for the operators.
Initiators
The persons who request the purchase. The safety officer may initiate the
request for the purchase.
Influencers
Persons who held define specifications. In this case of safety gloves, the safety
officer may himself define specifications. If an industrial engineer is in the
organization, he may also be consulted. There can a different gloves for different
working situations and industrial engineer may be more aware of specific
requirements due to his special nature of work - human effort engineering.
Buyers
They are the person who actually do the buying transaction.
Gatekeepers
They control access to personnel in a company. The receptionist, the
secretaries etc.
Deciders
People who decide on product requirements and suppliers. It is the final
approval for product specifications and suppliers' list.
Approvers
Persons who approve the purchase. In the case of safety gloves, the personal
manager may have the power to approve.
Organizational buying behaviour is a complex process involving many persons,
multiple goals and potentially conflicting decision criteria. And for the business
marketing manager, understanding the consumer and how organizations buy is
fundamental to success. Modeling simplifies the purchase decision process and
gives the marketing manager a fair picture of who the consumer is and how he is
likely to behave towards his marketing strategies. It is therefore recommended that
business goods suppliers should strive to understand the process their consumers
go through from the point of need recognition to when actual purchase takes place.
This should be done for each product/service.
The Organizational Purchase
A purchase will be considered to be Business to Business or organizational
from the moment that it is made in the name of a company or organization,
regardless of size, from a medium sized company up to a multinational or state
company. Professional purchases essentially cover6 : – The purchase of entering
goods, necessary for making the final product: this can be raw materials
(aluminum, titanium, etc.), transformed materials or components, spare parts, sub-
assemblies (cables, braking systems, aircraft windscreens, etc.)
The purchase of foundation goods, necessary for the company to function, e.g.
office supplies, IT equipment, digitally controlled machine tools and production
robots; – The purchase of facilitating goods, from the supply of energy (electricity,
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Modified Re-buy
This situation involves the desire to modify the response to an existing need.
This is true for example of a product in the mature phase, for which the company
would like an improvement in quality and/or reduced costs. This situation can also
hide an underlying dissatisfaction with the present suppliers who, if they had only
recognized the company’s expectations soon enough could have proposed a
modification or at the very least a direction in which to conduct improvement
research. In this buying situation, there is a modification to the specifications of the
product or specifications related to delivery. Executives apart from the purchasing
department are involved in the buying decisions. The company is looking for
additional suppliers or is ready to modify the approved vendors list based on the
technical capabilities and delivery capabilities.
New Task
This involves the most number of people within the buying center. There are
numerous interactions between the marketing department, the technical
department management (Method, Engineering, Quality), and the Production and
Buying Department. Here, the risk is at a maximum, which is why the opinions of
the influencers and advisors predominate. The buying department’s opinion no
longer takes priority over that of the technical management. This is the most open
type of buying situation for the non-appointed suppliers. In order to obtain new
solutions, information is crucial and members of the buying center should spend a
lot of time collecting and selecting it.
In this situation, the buyer is buying the product for the first time. As the cost
of the product or consumption value becomes higher, more number of executives is
involved in the process. The stages of awareness, interest, evaluation, trial, and
adoption will be there for the products of each potential supplier. Only the products
which pass all the stages will be on the approved list and price competition will
follow subsequently.
Systems buy
A system buying is a process in which the organization gives a single order to a
single organization for supplying a full system. The buying organization knows that
no single party is producing all the units in the system. But it wants the system
seller to engineer the system, procure the units from various vendors and assemble,
fabricate or construct the system.
15.4 REVISION POINTS
1) Organisational buying process
2) Models in Buying decision process
3) Buying Centre
4) Factors influencing organsiational buying process
5) Purchase situations
15.5 INTEXT QUESTIONS
1) Is there any difference between the organizational buying and household
buying practices?
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LESSON - 16
DIFFUSION OF INNOVATION
16.1 INTRODUCTION
In today’s competitive context marketers are not only concerned with
launching brands but also with how consumers are accepting them. Diffusion of
innovation is associated with
i) How consumers accept new products and brands?
ii) How they accept a set of marketing mix elements formulated for a brand
over a period of time?
Though traditionally diffusion of innovation has been concerned only with new
products, it can be applied to existing products and brands given the intense
competition in almost any product category.
16.2 OBJECTIVES
• To understand the diffusion of Innovation
• To know the characteristics of diffusion of innovation
• To identify the process of adoption
16.3 CONTENT
The following contents are covered:
Defining new products
Types of Innovations
Diffusion Process
Adoption Process and Extended Decision Making
Framework for diffusion of innovation
Attributes of Innovation and Rate of Adoption
DEFINING ‘NEW’ PRODUCTS
New products can be divided into
i) Continuous Innovation
ii) Dynamically Continuous Innovation
iii) Discontinuous innovations based on the degree of innovation.
The division of ‘new’ among products launched in the market is based on two
aspects:
i) The changes required in consumer Behaviour to use the innovations;
ii) Degree of innovation
In the case of an electric car, the degree of change in Behaviour as well as
innovation is high, this can be categorized as discontinuous innovation. Similarly
foe products like electric shavers, when buying a digital camera or considering
internet shopping, the change in Behaviour on the part of the consumer is
moderate as in the degree of innovation. Hence, these will fall under dynamically
continuous innovations. When the remote switch of a TV is considered, consumers
have to use the remote along with their TV. Hence it is part of continuous
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Trial Purchase
Post - purchase
Adoption
evaluation
The market can range the entire society (for a new soft drink, perhaps) to the
students at a particular high school (for an automated fast-food and snack outlet).
For most innovations, the diffusion process appears to follow a similar pattern
over time: a period of relatively slow growth, followed by a final period of slower
growth. However, there are exceptions to this pattern. In particular, it appears that
for continuous innovations such as new ready-to-eat cereals, the initial slow-growth
stage may be skipped.
An overview of innovation studies reveals that the time involved from
introduction until a given market segment is saturated (i.e. Sales growth has
slowed or stopped) varies from a few days or weeks to years. This leads to two
interesting questions (1) what determines how rapidly a particular innovation will
spread through a given market segment (2) In what ways do those who purchase
innovation relatively early differ those who purchase them later?
Factors affecting the spread of innovations
The rate at which an innovation is diffused is a function of the following ten factors.
1) Type of group: some groups are more accepting of change than others. In
general young, affluent, and highly educated groups accept change, including
new products, readily. Thus, the target market for the innovation is an
important determinant of the rate of diffusion.
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In contrast, the innovation adoption process in micro process that focuses the
states through which an individual consumer fastest when deciding to accept or
reject a new product.
Adopter categories
Researchers have found it useful to divide the adopters of any given innovation
into five groups based on the relative time at which they adopt. These groups,
called Adopter categories.
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards
Innovators venture some risk takers. They are capable of absorbing the
financial and social costs of adopting an unsuccessful product. They are
cosmopolitan in outlook and the user other innovators rather than local peers as a
reference group. They tend to be younger, better educated, and more socially mobile
than their peers. Innovators make extensive use of commercial media sales
personnel and professional sources in learning of new products.
Early adopters tend to be opinion leaders in local reference groups. They are
successful, well educated, and somewhat younger than their peers. They are willing
to take a calculated risk on an innovation but are concerned with failure. Early
adopters also use commercial, professional and interpersonal information sources
and they provide information to others.
Early majority consumers tend to be cautious about innovations. They adopt
sinner than most of their social group but also after the innovation has proven
successful with others. They are socially active but seldom leaders. They tend to be
somewhat older, less socially mobile than the early adopters. The early majority
relies heavily on interpersonal sources of information.
Late majority members are skeptical about innovations. They often adopt
more in response to social pressures or a decreased availability of the previous
product than because of a positive evaluation of the innovation. They tend to be
older and have less social status and mobility than those who adopt earlier.
Laggards are locally oriented and engage in limited social interaction. They
tend to be relatively dogmatic and oriented toward the past. Laggards adopt
innovations only with reluctance
Diffusion and existing products
Diffusion can be applied to existing products. For example, marketers can consider
i) Categories, if not brands, with which consumers are familiar;
ii) Brands with which consumers are familiar even if the categories are new to
them because of high advertising. New brands in familiar categories have to
address diffusion problems differently from old brands in new or unfamiliar
categories.
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Relatively new brands in consumer durables like Kenstar, LG, Samsung and
Whirlpool have to follow a different kind of strategy in order to compete with
strongly entrenched brands. LG, for instance, has been able to achieve by its focus
on new features/benefits is familiar product categories. LG’s proposition in
refrigerators was ;preservation of nutrition’; in microwave Owen ‘health’; in washing
machines ‘fabric care”, in air-conditioners “healthy air”, LG was able to capture a
significant market share at the premium end of respective product categories,
especially when markets were experiencing a downturn.
Even in consumables, brands new to the market have to adopt strategies with
a strong differentiation. A brand called Pass Pass offered dry fruits as a chewing
option in direct competition with other chewing products. Red Label, through a
well-known brand, introduced a nutritive tea variant when faced with competition.
This was a case of an old brand in a familiar category reacting to competition.
Britannia introduced a number of variants to diffuse itself in the market. It created
a new brand-Tiger for the lower end of the market.
Marketers should remember that diffusion of a product does not just depend
only on competition between brands. It may also depend on competition between
product categories. But PCs, which probably took off during the mid-nineties, have
sold about 1.6 million. Ice-creams can compete with chocolates, snacks and
aerated soft drinks.
This comes at a time when colouring hair is becoming a range the world over.
Sunsilk also has launched a few versions of hair colours with its entry into the
category. Companies in the contact lens market are using a variety of strategies to
diffuse the product. Positioning contact lenses as a fashion accessory is one of
them. In country like India, lowering costs and thereby, enhancing the total value of
the offering should enable brands to diffuse faster in the market.
Product features that affect adoption
Not all new products are equally likely to be adopted by consumer. Some
products catch on very quickly whereas other take a very long time to gain
acceptance Or never seen to achieve widespread consumer acceptance. Rogers
(2003) has identified five product characteristics that influence consumer
acceptance of new products which are detailed next.
1) Relative advantage is the degree to which potential customers perceive the
new product as superior to existing substitute. The cost of purchase, social status
of the customer and his motivation aspects of adopting comprise relative advantage.
2) Compatibility is the degree to which potential consumers free need a new
product is consistent with their present needs, values and practices. for instance an
advantage of 3M Scotch pop up tape strips Is that they are easier to use than roll
tape for certain task, yet they represent no new learning for the user. Similarly in
the realm of shaving products, it is not too difficult to imagine that a few years ago,
when Gillett introduced the fusion razor, some men made the transition from
inexpensive disposable razors, and some other men shifted from competitive non-
disposable razors to using the new product. This newer product is fully compatible
with the established wet shaving rituals of many men. However, it is difficult to
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imagine male shavers shifting to a new depilatory cream designed to remove facial
hair. Although potentially simpler to use, such a cream is incompatible with most
men’s current values regarding daily shaving practices. Compatibility varies across
cultures. For example, although shelf-stable milk has been successfully sold for
years in Europe, Americans thus far have generally resisted the aseptic milk
package.
3) Complexity- The degree to which a new product is difficult to understand
or use-affects product acceptance. Clearly the easier it is to understand and use a
product, the more likely that product it is to be accepted. For example,the
acceptance of such convenience foods as frozen French fries,instant puddings,
microwave dinner is generally due to their ease of preparation and use.
Interestingly although DVD players can be found in most American homes, many
adults require the help of their children to use the device to record particular
television program. The introduction of cable boxes with built-in DVRs has helped
to reduce the ongoing challenge involved in easily recording a TV program.A study
of the adoption of mobile commerce transactions conducted via a mobile device or
wireless telecommunication found that “perceived ease of use” had a positive effect
on the intention to adopt/
The issue of complexity is especially important when attempting to gain
market acceptance for high-tech consumer products. Four predominant types of
“technological fear” act as barriers to new-product acceptance:1)fear of technical
complexity2)fear of rapid obsolescence,3)fear of social rejection, and 4)fear of
physical harm. Of the four, technological complexity was the most widespread
concern of consumer innovators.
4) Trialability refers to the degree of which a new product can be tried on a
limited basis. The greater the opportunity to try a new product,the easier it is for
consumers to evaluate the product and ultimately adopt it. In general, frequently
purchased household products tend to have qualities that make trial relatively
easy, such as the ability to purchase a small or “trial” size. Because a computer
program cannot be packaged in a smaller size, many computer software companies
offer free working models of their latest software to encourage computer user to try
the program and subsequently buy the program.
After firmly established fairness as its benefits, air and lovely’s extension into
face wash is likely to trigger trialability among consumers especially when the
category is growing at a fast pace.
Aware of the importance of the trial, marketers of new supermarket products
commonly use substantial cents-off coupons or free samples to provide consumers
with direct product experience. In contrast, durable items, such as a major
commitment .This may explain why publications such as consumer reports are so
widely consulted for their ratings of infrequently purchased durable goods.
5) Observability is the ease with which a product’s benefit or attributes can
be observed, imagined, or described to potential consumers. Products that have a
high degree of social visibility, such as fashion items, are more easily diffused than
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products that are used in private, such as a new type of deodorant. Similarly, a
tangible product is promoted more easily than an intangible product.
FRAMEWORK FOR DIFFUSION OF INNOVATION
There are two processes which must be used together if a product/brand is to
diffuse in through the appropriate target segment. One is the adoption process
consisting of Awareness, Interest, Evaluation and Trial; Two, the innovation
decision process comprising Knowledge, Persuasion, Decision, Implementation and
Confirmation.
The combination of the two processes, usage of the characteristics of diffusion
of innovation and adopter categories and the variation of marketing mix elements
will depend on the nature of the product category; b)the social context in which the
product is positioned and c) the level of awareness/perceived risk associated with
the product category.
The following sequence gives an indication about the approach for a brand of
electric shavers launched in the Indian context:
Phase 1 Awareness Knowledge strategy
A well-known brand can reduce perceived risk. But apprehensions associated
with electric shavers will still have to be addressed not only in communication but
also be effectively demonstrated at the retail outlet. Researching a ‘niche’ innovator
profiling is a prerequisite. Appropriate media vehicle is critical.
Phase 2: Interest Persuasion strategy
A database on interested prospective consumers should be collected. This can
be done through a contest among the target segment using appropriate media
vehicles. One to one marketing should be done after the database is obtained.
Phase 1 and phase 2 should lead to positive evaluation
Consumers who are interested in observing the trial may not visit retail outlet
only to express their interest in electric shavers.
Hence, demonstrations should be done at ‘high service ‘outlets where
prospective consumers visit for their regular shopping.
Phase 3 Decision implementation strategy
As consumers for this product category are not likely to be price-sensitive, a
discount may not be required to generate trials. Decision to buy could be reinforced
by allowing life-time free service.
Phase 4 confirmation Strategy
This is probably the most critical aspect of the diffusion process. The
satisfaction levels associated with trials, positive word of mouth and subsequent
usage depend on this stage. All costs incurred by the brand at this stage should be
treated as an investment in brand-building. The following strategies can be used in
this stage:
1. In order to arrest dissonance full refund should be provided to a consumer
who expresses dissatisfaction for a speck period.
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On the other hand chick shampoo introduced a 50p sachet to create a relative
advantage. It is essentially the value perception that matters along with the product
attributes or benefits. But a brand also needs to be careful about the manner in
which a category is received, Ariel detergent powder was launched with proposition
that consumers need not use washing bar in context where rubbing clothes with a
washing bar is a ritual. But it introduced a washing bar soon afterwards. In this
example, it is the comparability of consumer habits with the product that mattered.
Gillette vector introduced low-priced razor that helps to get rid of even hard
stubble. This was compatible with the shaving practice in India, where electric
shavers have not become diffused. Besides reasons for pricing, consumers had to
alter their regular shaving practice and this may have created barriers in diffusion.
The perception of consumers about dishwashers may be influenced by
comparability aspects, preserved risk, and complexity aspects associated with
diffusion. Baby powder, over-counter medicine, and electrical appliance are
categories that may be associated with high preserved risk. As one of earliest brand
in the Indian market, Johnson&Johnson have established trust among its
consumers (mothers)of baby product. Himalaya, the brand that has product based
on the alternative system of medicines (ayurveda), has built its trust through a
scientific system of testing, as reported in its website. It is interesting to note that
“triability”, complexity preserved, and “observability”, are together useful in the cell
phone category in India with millions of users,
Parachute after shower used several diffusion characteristics to develop the
hair care market. L’Oreal and Garnier timed their promotional aspects to increase
visibility among target segments in urban markets where there is increase in focus
on personal grooming. Moov pain balam, by positioning itself as a backache
specialist, created relative advantage associated with the proposition. Dove used the
moisturizer route to diffuse itself in the soap category (existing category).
Sometimes an attitude needs to be created through cognitive believes to convey the
relative advantage.
Diffusion of innovation in the Indian context has an interesting trial of history,
category development, timing of the brand’s introduction and cultural aspects and
some of the important aspects that affect the diffusion of brands.
The following are some examples with comments associated with the
respective brand/category:
Brand /category Comments on diffusion of the category/brand
Ezee, Genteel liquid Available in the market for several decades.hoe
detergents should the brands in this category get into the
virtual of the consumers of washing of clothes.
Cadbury Drinking Available in the market for several decades. Does
Chocolate culture aspects of taste acts as a barrier for greater
diffusion of the category?
After –shower hair cream Vrylcreem wash pioneering brand in the category.
Did after shower brand diffuse fast as it become a
part of the dressing rich will among the youngster?
Tea bag (Tajmahal) The brands created awareness about teabag during
mid80’s have tea bags diffused adequately among
consumers. Are taste on ritual of making
tea(cultural aspects providing to be barriers?
Cafe culture Socializing over coffee was pioneered by Indian
coffee house ICH(Indian coffee board) in few cities
and towns during 60’s.consumers of the bygone era
would have nostalgic memories of ICH.
contemporary version of ICH or the cafe faces we
find today(café coffee day and barista for example).
Innovation and Diffusion Enhancement Strategies
The framework given helps to create strategies to enhance market acceptance
of an innovation. The critical aspect of this process is to analyse the innovation
from the target market’s perspective. The decision maker’s task is to overcome
these inhibitors with diffusion enhancement strategies.
Diffusion determent Diffusion inhibitor Diffusion enhancement strategies
Nature of group Conservative Search for other markets
Target innovators within group
Type of decision Group Choose media to reach all decider
Provide conflict reduction themes.
Marketing effort Limited Target innovators within group
Use regional rollout
Felt need Weak Use extensive advertising to show
importance of benefits
Compatibility Conflict Emphasize attributes consistent with
normative values
Relative advantage Low Lower price
Redesign product
Complexity High Distribute through high-service outlet
Use skilled sales force
Use product demonstrations
Undertake extensive marketing efforts
Observability Low Use extensive advertising
Trialiobity Difficult Use free samples to early adopter types
Offer special pieces to rental agencies
Use high-service outlets
Perceived risk High Document success
Highlight endorsement by credible
sources
Provide guarantees
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LESSON - 17
Situation
Situation Situation Marketing
Characteristics Activity
Communications Physical features Product
Purchase Social Surroundings Package
Use Temporal Perspectives Advertisement
Disposition Task Definition Sales Presentation
Antecedent States Retail Outlet
Individual Consumption
Characteristics Responses
Culture and Subculture Problem Recognition
Demographics Information Processing
Social Class Alternative Evaluation
Motivation Purchase
Personality Use
Attitudes Disposition
Lifestule Evaluation
Moods - Moods are transient feeling states that are generally not tied to a
specific event or object. They tend to be less intense than emotions and may
operate without the individual’s awareness. Although moods may affect all aspects
of a person’s Behaviour, they generally do not completely interrupt ongoing
Behaviour as an emotion might. Individuals use such terms as happy, cheerful,
peaceful, sad, blue, and depressed to describe their moods.
Moods both affect and are affected by the consumption process. For example,
television, radio, and magazine program content can influence consumers’ moods
and arousal levels, which, in turn, influence their information-processing activities.
Moods also influence perceptions of service and waiting time.
TYPES OF CONSUMER DECISIONS
The consumer decision-making process consists of five steps, which are need
recognition, information search, evaluations of alternatives, purchase and post-
purchase Behaviour. These steps can be a guide for marketers to understand and
communicate effectively to consumers. One note is that consumers do not always
move in the exact order through the process; it can depend on the type of product,
the buying stage of the consumer and even financial status.
The term decision produces an image of an individual carefully evaluating the
attributes of a set of products, brands, or services and rationally selecting the one
that solves a clearly recognized need for the least cost. It has a rational, functional
connotation. Consumers do make many decisions in this manner; however, many
other decisions involve little conscious effort. Further, many consumer decisions
focus not on brand attributes but rather on feelings or emotions associated with
acquiring or using the brand or with the environment in which the product is
purchased or used. Thus, a brand may be selected not because of an attribute
(price, style, functional characteristics) but because “It makes me feel good” or My
friends will like it.”
There are various types of consumer decision processes. As the consumer
moves from a very low level of involvement with the purchase to a high level of
involvement, decision processes. As the consumer moves from a very low level of
involvement with the purchase to a high level of involvement, decision making
becomes increasingly complex. While purchase involvement is a continuum, it is
useful to consider nominal, limited, and extended decision making as general
descriptions of the types of processes that occur along various points on the
continuum. Keep in mind that the types of decision processes are not distinct but
rather blend into each other.
Before describing each type of decision process, the concept of purchase
involvement must be clarified. We define purchase involvement as the level of
concern for, or interest in, the purchase process triggered by the need to consider a
particular purchase. Thus, purchase involvement is a temporary state of an
individual or household. It is influenced by the interaction of individual, product,
and situational characteristics.
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LESSON - 18
PERCEPTION
18.1 INTRODUCTION
Consumer perception theory attempts to explain consumer Behaviour by
analysing motivations for buying or not buying particular items. The study of
consumers helps firms and organisations improve their marketing strategies by
understanding issues such as how
• The psychology of how consumers think, feel, reason, and select between
different alternatives (e.g., brands, products, and retailers);
• The psychology of how the consumer is influenced by his or her environment
(e.g., culture, family, signs, media);
• The Behaviour of consumers while shopping or making other marketing
decisions;
• Limitations in consumer knowledge or information processing abilities
influence decisions and marketing outcome;
• How consumer motivation and decision strategies differ between products that
differ in their level of importance or interest that they entail for the consumer;
and
• How marketers can adapt and improve their marketing campaigns and
marketing strategies to more effectively reach the consumer.
18.2 OBJECTIVES
• To understand the concept of perception and its application in consumer
buying process
• To find out to what extent consumers organise consumption related
information and interpret
• To note the different perceptual thresholds
• To know the process of perception
18.3 CONTENTS
Consumer perception
Elements of Perception
Levels of Perceptual Thresholds
Perception Process
Perceptual Distortion
Areas of Consumer Perception Theory
CONSUMER PERCEPTION
Perception is the process by which individuals select, organize, and interpret
stimuli into a meaningful and coherent picture of the world. It can be described as
“how we see the world around us”. Two individuals may be exposed to the same
stimuli, but how each person recognizes, selects, organizes, and interprets these
stimuli is a highly individual process based on each person’s own needs, values,
and expectations.
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Consumers act and react on the basis of their perceptions, not on the basis of
reality. For each individual, “reality” is a totally personal phenomenon, based on
that person’s needs, wants, values, and personal experiences. Thus, to the
marketer, consumers’ perceptions are much more important than their knowledge
of objective reality. For if one thinks about it, it’s not what actually is so, but what
consumers think is so, that affects their actions and their buying habits. And,
because individuals make decisions and take actions based on what they perceive
to be reality, it is important that marketers understand the notion of perception
and its related concepts to determine more readily what factors influence
consumers to buy. Lifebuoy has always been at the forefront of saving lives through
its promise of germ kill over the decades. In this particular campaign, Lifebuoy
spreads the message on how washing hand with soap can help prevent flu and 10
such other infections during monsoons.
The concept of the just noticeable difference (JND), maintains that any changes
in logos and packages must be within certain “limits” in order to ensure that
consumers still recognize the items instantly after the changes. Companies focus on
JNDs for two reasons. First, they want to prevent changes (like Increase in product
price). Second, they want to ensure that product improvements are shown vividly to
consumers( New package).
THE ELEMENTS OF PERCEPTION
Perception is all about consumers’ subjective understandings and not objective
realities. Altering subjective “wisdom” is difficult, or even impossible. For instance,
for decades, Pedigree—sold mostly in specialty stores and priced quite high—has
been the premier dog and cat food because it was based on the claims that,
following scientific laboratory research, the food included vitamins, grains, and
other special ingredients. However, in recent years, consumers’ preferences
changed and pet owners became fond of pet foods that follows their own diets, such
as natural and organic foods.
Perception: Basic Concepts
Perception is the sensory understanding of the world around us. It basically
means how we receive environmental stimuli and react to them. In other words,
perception consists of a set of actions by which an individual receives a stimulus
and comprehends it. therefore, the first step of the perceptual process is the
exposure to a message. Exposure happens when our sensory receptors are exposed
to certain colour, texture, or sound associated with certain products or brands (e.g.
the red waves of Coca-Cola or the puppy and jingle of Vodafone). Thereafter, the
consumers selectively attend to those stimuli that catch their attention and rest are
simply received by the sensory receptors, but are not processed. For example,
consider a person aspires to buy a Mercedes Benz car but does not have the
financial capability to buy the same. Naturally, he might attend to the pictorial
projections of the said car in commercials, however, there is a low chance that he
would resort to a mental processing of the information received from the
commercials given his low financial status. Usually, once attended, the consumer
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processes the information based on his own judgemental norms and forms his
perception about the product/brand. In short, this is the gamut of perception.
In short, perception can be defined as the active process of selecting,
organising and interpreting the information brought to the brain by the
senses(Solomon, 2006).
Although the consumer perception process is significant in all facets of
marketing, the strategic implications of the same to the brand builders and
advertisers are worth mentioning.
Factors in Perception
Several sequential factors influence our perception.
Exposure
It involves the extent to which we encounter a stimulus. An initial stage of
perception where some sensations come within range of sensory receptors. For
example, we are exposed to numerous commercial messages while driving on the
freeway: bill boards, radio advertisements, bumper-stickers on cars, and signs and
banners placed at shopping malls that we pass. Most of this exposure is random—
as it is not planned. However, if we are shopping for a car, we may deliberately seek
out advertisements and “tune in” when dealer advertisements come on the radio.
Exposure is not enough to significantly impact the individual—at least not
based on a single trial (certain advertisements, or commercial exposures such as
the “Swoosh” logo, are based on extensive repetition rather than much conscious
attention). Weber’s Law suggests that consumers’ ability to detect changes in
stimulus intensity appear to be strongly related to the intensity of that stimulus to
begin with. The principle advocates that the stronger the initial stimulus, the
greater its change must be for it to be noticed.
Before you can communicate anything, you have to get the potential
customer's attention. This perceptual process has two parts. The marketing process
has to create an initiative that draws the attention away from other, competing
activities, and it has to ensure that the target recognizes the product or brand. For
example, a poster has to attract attention, possibly though colour, attractive
imagery or position, but it also has to highlight the brand or product. The ideal
reaction, in terms of the perceptual process, is that the potential customer notices
the poster with the brand and goes over to read it.
Attention and Adaptation
In order for stimuli to be consciously processed, attention is needed. Attention
is actually a matter of degree—our attention may be quite high when we read
directions for getting an income tax refund, but low when commercials come on
during a television program. Note, however, that even when attention is low, it may
be instantly escalated—for example, if an advertisement for a product in which we
are interested comes on. In consumer information processing, attention occurs
when a person lingers and gives mental processing capacity to the external
stimulus from a product or brand. Selective perception is when a consumer pays
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attention to messages that are consistent with her attitudes, beliefs and needs.
When a product is inconsistent with these factors, the consumer will withdraw
attention.
Adaptation happens when a sensation becomes so familiar that it is no longer
the focus of attention Habituation is a decrease in response to a stimulus after
repeated presentations
A. Personal Selection Factors
i. Experience determines what we attend to:
• Perceptual Filters based on past experience influence us;
• Perceptual Vigilance (that which relates to our current needs; example: UPS
breaks down, you suddenly notice ads for UPS);
• Perceptual Defense (we see what we want to see, and ignore what we don't
want to see; example Smokers blocks out the warning signs and pictures on
cigarette package)
ii. Adaptation also determines attention.
• Adaptation occurs when something is so familiar, we no longer pay attention.
Like a drug we need a larger dose to notice;
• Intensity: Less intense habituates because of lowers sensory impact;
• Duration: stimuli that needs lengthy exposure habituates because of need for
long attention span;
• Discrimination: simple stimuli habituate because they don't require attention
to detail;
• Exposure: frequently encountered habituates as exposure increases;
• Relevance: irrelevant or unimportant habituate because they don't attract
B. Stimulus Selection Factors
• Characteristics of the stimulus itself are important
• Stimuli that differs or contrasts is more likely to be noticed
• Size: Larger ad in magazine is noticed. Is larger always better?
• Colour: What colours attract?
• Position: What position on shelf, what position in magazine?
• Bold: Headline- does it stand out; italics; font
• Novelty: Is it in an unexpected place? Totally new.
• Depth perception can make us believe an object is real
Interpretation
Interpretation involves making sense out of the stimulus. For example, when
we see a red can, we may categorize it as a Coke. Interpretation occurs when a
person assigns a meaning to the sensory stimulus from a product or brand
marketing. Comprehension is aided by expectations and familiarity. A consumer
scans his memory to retrieve previous experiences with the brand or a similar
brand. Store-brand marketing frequently capitalizes on the interpretation stage
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when product packaging design contains logos, colours and other elements that are
similar to national brands that consumers are generally more familiar with.
Several factors influence the extent to which stimuli will be noticed. One
obvious issue is relevance. Consumers, when they have a choice, are also more
likely to attend to pleasant stimuli (but when the consumer can’t escape, very
unpleasant stimuli are also likely to get attention—thus, many very irritating
advertisements are remarkably effective). One of the most important factors,
however, is repetition. Consumers often do not give much attention to a stimuli—
particularly a low priority one such as an advertisement—at any one time, but if it
is seen over and over again, the cumulative impact will be greater.
Surprising stimuli are likely to get more attention—survival instinct requires us
to give more attention to something unknown that may require action. A
greater contrast (difference between the stimulus and its surroundings) as well as
greater prominence (e.g., greater size, center placement) also tend to increase
likelihood of processing.
Subliminal stimuli. Back in the 1960s, it was reported that on selected
evenings, movie goers in a theater had been exposed to isolated frames with the
words “Drink Coca Cola” and “Eat Popcorn” imbedded into the movie at New Jersey.
These frames went by so fast that people did not consciously notice them, but it
was reported that on nights with frames present, Coke and popcorn sales were
significantly higher than on days they were left off.
Perception establishes the meaning about a product or brand when a
consumer makes initial contact. In marketing, this is described as consumer
information processing. At this stage all of the senses are engaged in receiving
brand marketing communicate messages. In marketing literature, four distinct
stages of perception occur during consumer information processing: sensation,
attention, interpretation and retention.
Certain principles form base for perception, Schema, priming, Gestalt
psychology, Closure, Figure Ground, Similarity, Perceptual positioning and
positioning strategy.
Sensation
Sensation describes what occurs when a person's senses are initially exposed
to the external stimulus of a product or brand marketing. The sensory receptors of
a consumer are engaged by product or brand cues through sight, sound, smell,
taste and texture. For example, Starbucks engages all the senses in its sensory
brand marketing. A customer who enters a Starbucks coffee shop may hear the
sounds and smell the aroma of the grinding of fresh coffee in the store. Background
music and a unique store design round out the experience of the taste of hot or cold
coffee and food products that can be enjoyed in-store at quaint cafe tables.
Retention
The conclusion of the consumer perception process is the retention stage. This
is marked by the storage of product or brand information in short-term and long-
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term memory. The marketer's goal is to provide positive stimuli in the proceeding
stages that translate into consumers storing the information about the product or
brand into long-term memory.
One of the key factors of successful marketing is effective communication of
the characteristics of a product. Such communication has to result in a favorable
perception of the product by the target audience. Companies can fine-tune the
marketing effort by breaking down the communication into separate perceptual
processes to enhance the chances of success. They can use different marketing
initiatives and complementary ways of presenting their selling proposition to
support these perceptual processes.
Message
Once you have the attention of the potential customer and he or she is aware
of the brand or product involved, you can communicate the message. The
perceptual process involved is the receiving of the information that the company is
presenting. The information has to match the medium. A message on a poster must
be brief and to the point. A television commercial can contain a more elaborate
message. A catalog might have even more details. The message must be clear and
easy to understand, and it must present the selling proposition. For a successful
perceptual process at this stage, the message delivers the reasons for purchasing
the product.
Comprehension
Delivery of the message is a separate perceptual process from understanding
it. A potential customer may read the message in an ad but come away from it
without understanding what the company was trying to communicate or with an
incorrect impression. The actions that a company wants the potential customer to
take, or the reasons for taking the action, are sometimes not clear. Breaking the
message into three parts, with an introduction of the product, the advantages and
the call to purchase, often makes it more comprehensible.
Context
An important part of all three perceptual processes is the context of the
presentation. The aim is to situate the initiative in an attractive context. In this
way, product exposure can take place in friendly surroundings, such as showing a
food item in the context of a party with attractive, fun people. Other strategies
include showing the product or brand at sports events or concerts. When potential
customers associate a product or brand with a positive experience, they are more
likely to receive and understand the message and act upon it.
LEVELS OF PERCEPTUAL THRESHOLDS
The exposure methods of active search and passive reception generate a lot
more stimuli than the normal consumer’s processing capability. The gate keeping
devices that trim down this blooming confusion about the attention of stimuli
involve consumers physiological precincts viz. awareness thresholds. It means that
any given stimulus can be either too small or weak to notice, or too huge that it
gets above from the awareness levels. The second question related to this concept is
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how the level of awareness can be changed. There are four such thresholds –
absolute, terminal, differential, and subliminal – to classify the consumers zones of
stimulus awareness (stimulus refers to something that causes a change in an
organism).
Absolute Threshold
Absolute threshold is the minimum value of a stimulus, which can be
consciously noticed. In other words, absolute threshold is the lowest level at which
an individual can experience a sensation. It is that end at which a person can
distinguish between ‘something’ and ‘nothing’.
Marketers must try to boost the sensory input in order to be noticed through
the daily clutter of advertising messages individuals are exposed to. Packaging
should be attractive enough to catch the attention of the consumers. For example,
without a colourful glossy package, kids attention cannot be grabbed. Point of
purchase displays often play the role of stimulus for the children to notice the
chocolates.
Terminal Threshold
Terminal threshold is the maximum value of the stimulus that can be noticed.
For example, an average person passes by a billboard within 20 seconds. The part
of the billboard that cannot be read in 20 seconds is left unnoticed. So the readable
and viewable information in 20 seconds is the terminal threshold for that customer.
Differential Threshold
The minimal noticeable difference between two comparable stimuli is called
the differential threshold or the just noticeable difference (JND). The JND between
two stimuli is not merely an absolute value of the stimulus but the difference
between the awareness generated by the two levels of stimuli.
The famous German psychologist of 19th century, Ernst Weber, revealed that
the just noticeable difference between two stimuli was not an absolute amount, but
an amount relative to the magnitude of the initial stimulus. It was the first thought
on JND.
Weber’s law states that stronger the first stimulus, bigger is the added
intensity required for the next stimulus to be perceived as different, and there is a
fixed proportion by which with the change of the stimuli the level of response is
changed.
Subliminal Perception
Subliminal perception refers to the level where the stimulus provided to the
consumers goes completely unnoticed. When the stimulus level is much below the
absolute threshold, it develops subliminal perception. For example, display of a very
light coloured saree will never catch the attention of a lady who likes to wear dark
shades. Psychological concept applied to consumers buying patterns holds that the
consumers are more prone to buy products based on the perceived divergence
between the traits of the products.
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PERCEPTION PROCESS
Perception process is a chain of events that starts with our exposure to stimuli
and leads successively, by our own comprehension mechanism, to interpret them.
perception is formed in three stages: selection, organization, and interpretation.
Selection
Selection is the first stage in the perception process. Selection rests on the
verity that the consumers opt for a small portion of the stimulus to which they are
exposed for conscious processing; it is alternatively termed as focal attention. To
obtain the consumer’s focal interest, an intensification of the sensory impulses is
necessary.
Nevertheless, the schemas also form errors, in particular erroneous recalls of usual
events and omission of unusual ones, or improper association of the attributes. For
example, Sundar bought a branded refrigerator and has been using it for the last
two years with certain complaints about its performance. Shyam, his friend, knows
about this matter. Therefore, Shyam perceives that the brand always supplies
erroneous products, which in reality is not true. This distorted perception is
alternatively known as halo effect, which means one trait of a product/brand
shapes the perception about the product/brand as a whole. Understanding an
advertising message often results in perceptual distortion, where the message from
the marketer and the understanding by the customer do not match.
However, perceptual distortion can be rectified through effective marketing
strategies. For example, in India, more than 600,000 children aged below 5 years
are subjected to annual morbidity due to Diarrhea. Diarrheal death causes at least
one-third of the death cases across the globe in infectious disease category.
Researchers revealed that the diarrheal morbidity rate can be cut down to at least
50% by simply resorting to safe hygiene practices, like drinking safe water and
washing hands with soap before eating.
Keeping this notion into consideration, the FMCG giant Hindustan Unilever, in
partnership with the local government bodies, designed a campaign named
‘Lifebuoy Swasthya Chetna Programme’ to spread awareness about the significance
of washing hands with soap. Swasthya Chetna, which literally means ‘Health
Awakening’, is however, a multi-stage campaign the targets to change the
consumer’s perception to ‘visibly clean is not really clean’. Together, the famous
advertising agency Ogilvy & Mather and FMCG major HUL coined the word ‘Active-
B’ to highlight the soap’s anti-bacterial characteristics as its unique selling
proposition. The result of this campaign was phenomenal.
Customers that are satisfied with a product or business have an overall good
perception of that product or business. When consumers’ perceptions are good,
they will continue purchasing goods from this company. These customers also will
avoid spreading disappointing experiences to others. Consumer perceptions are
based on feelings. A customer perception measurement is an important tool used
by companies that expresses how well the companies are satisfying customers.
Three areas of consumer perception theory relate to consumer perception theory:
self perception, price perception and perception of a benefit to quality of life.
Self Perception
Self perception theory attempts to explain how individuals develop an
understanding of the motivations behind their own Behaviour. Self perception by
customers relates to values and motivations that drive buying Behaviour -- which is
also an important aspect of consumer perception theory. The researchers
concluded that consumers' self perception was a driving factor in whether or not
they placed a priority on socially conscious purchase and consumption practices.
Consumers who viewed themselves as socially conscious tended to place more
weight on issues such as environmental impact when making buying decisions
than consumers who did not hold similar views of themselves.
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Price Perception
While mass merchandisers such as Wal-Mart emphasize low prices as an
inherent virtue, upscale merchants attempt to emphasize quality and value for
money to appeal to potential customers. The researchers concluded that price
perception strongly influenced whether customers were satisfied with their
purchases and whether they would make future purchases. Two factors that
shaped price perception were the perceived quality of the merchandise or service in
question and price comparisons with merchants offering similar merchandise or
services.
Benefit Perception
"It's good, and it's good for you." Many consumers are familiar with this phrase
frequently associated with purchase of a product. The researchers also theorized
that consumers would demonstrate a trend toward applying more scrutiny to
claims mentioned and would demand more specific information about the products
they purchase.
Perceived Value
Perceived value may be seen as an “an overall assessment of the utility of a
product based on perceptions of what they receive (quality) versus what they give
(price)”. If consumers perceive a product as highly valued, they get satisfaction from
actively engaging themselves in the decision making process. This perceived value
tends the consumers to decide about their final choice.
If the perception fails, consumers feel remorse. Buyer’s remorse is a strong
feeling of regret which occurs after a purchase has been made. It is a specific case
of cognitive dissonance, or the psychological state of worry or unease which comes
about when attempting to come to terms with conflicting ideas, perceptions or
motives. Buyer’s remorse usually occurs after a consumer has made a purchase he
or she has come to regret. Generally, it involves the realisation that the opportunity
of purchasing one product or service over another in some way outweighs the value
of the purchase. In this regard, it occurs when a consumer’s perception of a
purchase changes after he or she has already invested in it.
Buying decision involves consumers to undergo several cognitive and affective
mental stages before they make a choice. When consumers recognise a need by
themselves or upon provoking, they start to actively collect information available
across various channels. Based on what is presented to them during these stages,
they form an attitude towards particular choices they begin to trust. After a choice
is made, and consumer decides to make a purchase they continue to evaluate their
decision while enjoying the product experience. To ease the burden of making a
buying decision, consumers seek inputs from their reference groups — family,
friends, colleagues, reviews on online forums, and several other means. Each of
these inputs acts as a signal that affects their attitudes and perception towards the
product. But filtering information to find the right signals is difficult and it is even
harder to retain this information. There are evidences showing that consumers
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retain only the information that either appeals to them emotionally or one that
strengthen their beliefs.
18.4 REVISION POINTS
1) Elements of Perception
2) Levels of Perceptual Thresholds
3) Perception Process
4) Perceptual Distortion
5) Areas of Consumer Perception Theory
18.5 INTEXT QUESTIONS
1) What is meant consumer perception?
2) Explain the perception of consumers during purchase decisions.
3) Enumerate on the process of perception.
4) Discuss the various levels of perceptual thresholds.
5) Differentiate between the absolute threshold and the differential threshold.
18.6 SUMMARY
Consumer perception theory is any attempt to understand how a consumer’s
perception of a product or service influences their Behaviour. Those who study
consumer perception try to understand why consumers make the decisions they
do, and how to influence these decisions. Perception is the understanding of the
environment by organising and interpreting the available information. Companies
need to focus on how the consumers perceive and act in response to the products
in relation to quality, artistic sense, price and image. Perception starts with
exposure when a stimulus comes within the range of one of an individual’s primary
sensory receptors.
18.7 TERMINAL EXERCISES
1) The "absolute threshold" refers to-
a) the minimum difference that can be detected between two stimuli
b) the difference between the minimum and maximum levels of stimulation
that can be detected on a given sensory channel
c) the maximum amount of stimulation that can be detected on a given
sensory channel
d) the minimum amount of stimulation that can be detected on a given
sensory channel
Ans: d
2) Which of the following most accurately reflects the current thinking about the
use of subliminal perception in marketing promotion and advertising?
a) There is some evidence that subliminal perception can have limited effects,
but they are not specific enough to make subliminal messages effective in
advertising
b) It comes down to a matter of attention. If a viewer will pay enough attention
to a subliminal message, then it can have some specific effects
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LESSON - 19
CONSUMER MOTIVATION
19.1 INTRODUCTION
Consumer motivations are the forces that activate Behaviour and provide
purpose and direction to that Behaviour. Consumers are often aware of the motives
causing a certain Behaviour. It represents the reasons one has for acting or
behaving in a particular manner. Needs are the base behind motivation. Motivation
encourages consumers to purchase in order to fulfill their needs. Individuals strive
consciously and sub consciously to reduce this tension through selective goals and
fulfillment of needs subsequently reduces their tension.
19.2 OBJECTIVES
• To understand the dynamics of motives, needs and goals and how they
influence consumer behaviour
• To know various motivation theories and their implications on consumer
Behaviour.
• To analyse the consumer involvement and marketing tactics to improve high
involvement
19.3 CONTENTS
Importance of understanding Consumer Motives
Process of Motivation
Theories of Motivation
Motivation and Personality
Consumer Involvement
IMPORTANCE OF UNDERSTANDING CUSTOMER MOTIVES
Marketers are fascinated by the motivation of customer normally when it is
related to purchase behaviour. This behaviour recounts to the intension for the
aspiration to possess the particular goods or service, and it can also be expressed
as ‘goal-related behaviour’. Behind every motive there lies an analogous need. Some
motives are physiological in nature. These are basic human needs like hunger,
thirst, warmth, shelter, etc. some motives. Such as desire for approval, success,
and prestige are psychological. Most often, buying decisions are a blend of motives.
In the alternative evaluation stage, in choice heuristics, some motives might seem
to be stronger than others, and the final choice might be a negotiable solution. For
example, price might be the deciding parameter, where more evidently financial
restrictions dominate the motive. It can, therefore, be seen that a number of
motives might play significant roles while taking a purchasing decision.
As a result of increasing globalization, economic in W1 countries have
developed a large scale of differentiated and value-added customer-friendly
products. Besides, consumers now have not only the option to differentiate
amongst various alternatives of goods and service to fulfil their needs but also
multiplicities of companies that offer different brands of similar products. In fact, to
become the market leader within its industry, a marketer needs to understand the
market properly and comprehend the latent needs of its customers very well.
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have the same importance for an individual and that they can be put into a
hierarchy, Maslow developed the idea that it is necessary to have satisfied a first
type of need before taking on the next one. Physiological needs correspond to the
vital necessity to eat and drink to remain healthy. Safety needs correspond to being
able to protect oneself from the elements and from possible danger (animals,
criminals, etc.). Once both of these basic needs are satisfied, the individual begins
to be interested in the need for belonging and affection (social needs). In this case it
is a question of belonging to a community which can be sports oriented, cultural,
religious or a certain style of life. Needs related to esteem correspond to a wish to be
appreciated by one’s close friends and family or within the work environment.
These can translate into external signs of way of life or wealth. The fifth category
involves the need to accomplish something in terms of personality, by traveling far
away or achieving some complex sporting or cultural goal. Whatever the need
whether psychological or material, the greater the lack, the stronger the motivation
to satisfy it.
The process of motivation has sequential steps which begins with Drive-----
Goal Directedness------- Motivational Conflicts----- Outcome and there is a feedback
loop which takes to Drive segment. If the need is not satisfied the cycle starts with
the drive based on the feedback of the purchases made.
THEORIES OF MOTIVATION
(a) Drive or Arousal
When a person feels a difference between the present state and the ideal state,
an inner force directs him towards attainment of the ideal state. This inner force is
called the drive. It can be explained in terms of the degree to which an individual is
eager to spend energy to achieve one goal ahead of their many other goals. Drive
theory is centred at biological needs that create disturbed states or arousal, foe
example, hunger, thirst, etc. Vroom’s expectancy theory states that actions are
mostly drawn by expectations of derived outcomes, for example, some positive
incentives, rather than pushed from within. Drive may also result from hedonic
needs, i.e., to utilise products emotional arousal, sensory pleasure, aesthetic
pleasure, emotional experience, fun, and enjoyment.
(b ) Goal Directedness
Motivation is directed towards the attainment of one’s goal. Marketers try to
produce goods and services that will endow the customers with desired benefits and
allow them to trim down the state of tension.
(c) Motivational Conflicts
Kurt Lewin, a distinguished German-Born psychologist and the founder of
social psychology, shaped the conflict theories about individual’s experience as:
approach – avoidance, approach – approach, and avoidance – avoidance.
Approach - approach conflict: An individual must opt between two enviable
alternatives. In fact, the theory of cognitive dissonance is based on the hypothesis
that people normally want regulation and stability in their lives and a state of
tension is created only when beliefs, values, or actions conflict with one another.
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social interfaces, and are prone to endure with solitude when the social contacts
are somehow reduced. Murray’s list, however, is too explicit in spotting the latent
motives lying beneath customers particular marketplace actions. It gives a
comprehensive look that can be considered by the marketers.
Maslow’s Hierarchy of Needs
Psychologist Abraham Maslow formulated a theory of human motivation based
on the notion that there is a hierarchy of human needs. Maslow’s hierarchy of
needs consists of five levels of human needs, which rank in order of importance
from lower-level(biogenic)needs to higher-level(psychogenic) needs. The theory
states that individuals seek to satisfy lower-level needs before higher-level needs.
The lower-level of unsatisfied needs motivates a person’s Behaviour. When that
need is fairly well satisfied, the individual is motivated to fulfill a need in the next
level of hierarchy. When that need is satisfied, the need in the next level is one’s
primary motivator, and so on. How-ever, if a person experiences renewed
deprivation regarding formerly met lower-level need, that becomes the dominant
factor in the person’s motivation, even if only temporarily. For example, if a person
who is well off and trying to satisfy his ego needs loses his job, he reverts or “goes
back” to trying to satisfy his security needs; if he gets a new job that pays well, thus
satisfying security needs, he will once again “move” to a higher level in the
hierarchy.
Safety needs
After physiological needs have been satisfied, safety and security needs
become the driving force behind an individual’s Behaviour. These needs are
concerned not only with psychical safety, but also with order, stability, routine,
familiarity and control over one’s life and environment. For example, health and the
availability of health care are important safety concerns. Savings accounts,
insurance policies, education, and vocational training are all means by which
individuals satisfy the need for security
Social needs
The third level of Maslow’s hierarchy consists of social needs, such as love,
affection, belonging and acceptance. Maslow’s concept of social needs, affiliations or
belongingness has been used by Levi’s to connect with hipsters at an individual
level.
Egoistic Needs/ Esteem Needs
When social needs are more or less satisfied, the fourth level of Maslow’s
hierarchy becomes operative. This level includes egoistic needs, which can take
either an inward or an outward orientation:
1) Inwardly directed ego needs reflect an individual’s need for self-acceptance,
self-esteem, success, independence, and personal satisfaction.
2) Outwardly directed ego needs include the needs for prestige, reputation,
status, and recognition from others.
Need for Self-Actualization
According to Maslow, once people sufficiently satisfy their ego needs, they
move to the fifth level. The Self-Actualization need refers to an individual’s desire
to fulfill his or her potential - to become everything that he or she is capable of
becoming. For example, an artist may need to express herself on canvas; a research
scientist may strive to find a new drug that eradicates cancer.
Evaluation of Maslow’s Theory
Maslow’s theory states that higher-order needs become the driving force
behind human Behaviour as lower-level needs are satisfied. The theory says, in
effect, that dissatisfaction, not satisfaction, motivates behaviour. The need
hierarchy has received wide acceptance in many social disciplines because it
appears to reflect the assumed or inferred motivations of many people in American
society. The five levels of needs are sufficiently generic to encompass most
individual needs. The major problem with the theory is that it cannot be tested
empirically; there is no way to measure precisely how satisfied one level of need
must be before the next higher need becomes operative.
Marketing Applications of Maslow’s Theory
Despite its limitations, Maslow’s hierarchy has been a highly useful framework
for marketers. Maslow’s needs hierarchy is readily adaptable to market
segmentation and the development of advertising and other marketing
communications appeals, because there are consumer goods designed to satisfy
each of the need levels, and because most needs are shared by large segments of
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consumers. For example, individuals buy health foods, medicines, and low-fat
products to satisfy physiological needs. They buy insurance, preventive medical
services, and home security systems to satisfy safety and security needs.
Consumers buy personal care and grooming products (e.g., cosmetics, mouthwash,
shaving cream), as well as most clothes, in order to satisfy social needs. They
purchase high-tech and luxury products, such as elaborate sound systems, high-
end wristwatches, sports cars, and expensive furniture, to fulfill ego and esteem
needs. Postgraduate college education, hobby-related products, and exotic and
physically challenging adventure trips are often sold as ways of achieving self-
actualization.
Advertisers and other forms of marketing messages can also use the need
hierarchy to position products; that is, to develop a strategy that will make
consumers perceive a product or brand as its marketer intends. The need hierarchy
is a versatile tool for developing positioning strategies because different appeals for
the same product can be based on different needs.
Ernest Ditcher’s Consumption Motives
In the early to mid 1900s, Ernest Dichter, the famous Viennese psychoanalyst,
emerged as a profounder in the arena of qualitative marketing research. He
recommended that consumer motives were time and again elicited by concealed
comatose needs. The marketing promotions that are based on Ditchter’s theories on
buyer motives in case of selling cars, furs, cell phones, and even paper towels have
demonstrated accomplishment by augmented sales.
The needs identified by Dichter can be classified into six categories-
Autonomy, Dominance, Nurturance, Exhibition, Cognizance, Exposition.
Independent and impulsive decisions come under the autonomy needs. In
many cases, these may be irrational, irresponsible and unconventional. Wearing a
dress or buying some edibles without any prior planning can be an example of this
kind of motive. A child suddenly asking for an ice-cream just by seeing the point of
purchase stimulus also demonstrates autonomous motive. Purchase of a dress
without prior planning by a working lady can be an independent and impulsive
decision satisfying her autonomy need.
Influencing other’s purchase behaviour leads to satisfying the dominance
need. The floor manager of a tourism company may motivate his customers towards
a specific package because of her better knowledge in the field. On the other hand,
in a family decision to purchase a music system, Mr. Ramani, being the father of
Sonu and Head of the family, may dominate Sonu’s choice of a music system. One
may recollect the vision of Dr. Govindappa Venkataswamy while he pioneered
‘Aravind Eye Care System’ to ensure ‘Eye Care for all’ and eradicate the curse of
blindness from the country.
Exposition needs mean information sharing, elucidating or interpreting
something to the customers, shareholders, or anybody linked to the business.
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Business give press briefs about their company policies/performance and their
products regularly.
Table 3: List of Dichter’s needs
Needs Definition Examples
Autonomy Independent and impulsive decisions. In Impulsive purchase
many cases irrational, irresponsible, and
unconventional. For example, buying a dress
Dominance Influencing other’s purchase behaviour Influencing others
choice
Nurturance Fellow feelings and protectiveness for poor or Corporate Social
distressed responsibility
Exhibition To impress others and be recognized and Fashion wear
appreciated by others, i.e., to excite, amaze,
fascinate, entertain, shock, intrigue, amuse
or entice others. For example, wearing high
fashion dresses, buying a luxurious car, etc.
Cognizance To explore, be inquisitive, and knowledge Information kiosk
seeking
Exposition Information sharing, elucidating or Interviews with
interpreting something CEOs
CONSUMER INVOLVEMENT
Involvement refers to a heightened state of awareness that motivates
consumers to seek out, attend to, and think about product information prior to
purchase .With high involvement, attention is increased and more importance is
attached to the stimulus object. Memory is enhanced. Highly involved consumers
tend to place greater importance on information sources. They are heavy users of
newspapers and advertising.
Effects of Consumer Involvement
• Information search- High involvement ? greater information search (more
shopping around) and Information processing
• Depth of comprehension - High involvement ? deeper comprehension
• Extent of cognitive elaboration -High involvement ? more thinking
• Extent of external arousal- High involvement ? greater emotional arousal
• Information transmission -High involvement ? more frequent information
transmission (talking about products) to others
Consumer Involvement Theory categories (CIT):
• The idea behind consumer involvement theory is simply this: that there are
two main forces that drive most purchase decisions.
• One is the time and energy an individual devotes to making the decision.
• A second factor is the degree to which emotion or reason - feelings or logic -
influence a purchase decision.
There are four general CIT categories:
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Object Factors
Differentiation of alternatives Level of Involvement
Source of Communication
Content of Communication
through the purchase and use of products and services. Motivation is an inner
feeling that stimulates the action that is to be taken by an individual. It provides a
specific direction or, results in a response. Motivation, personality and emotion are
all influential factors that affect consumer decision making and also marketing
strategies. In order to better understand the buying habits of consumers these
three elements are important to recognize. Marketing strategies were emphasized in
this text as marketer’s have the greatest interest in exploring consumer motivation
and behaviour. Their strategies are based on explicit and implicit beliefs about
consumer behaviour. Marketing research aims to increase the knowledge of
consumers to gain perceptive and competitive advantage in order to better predict
consumers’ needs and desires.
19.7 TERMINAL EXERCISE
1) The psychological factors influencing consumer Behaviour are
(a) motivation, perception, learning, beliefs and attitudes
(b) reference groups, family, roles and status
(c) culture, subculture, social class
(d) cultural, organisational, Personal, Social
Ans:a
2) People get attracted towards fast cars, robust engines and speed. This exhibits
the need for __________.
a) Achievement b) Power c) Affiliation d) Esteem
Ans: b
3) The entire process of need – action-- goal -- want -- the satisfaction chain
comprises which of following components:
a) cognition b) affect c) Behaviour d) all of the above.
Ans: d
4) The antecedents, moderators and the properties of involvement finally
converge to a response in terms of:
a) information search b) information transmission
c) Only “a” d) Both “a” and “b”
Ans: b
5) Promotional messages for Information Seekers must lay emphasis on
_______________ rather than emotions.
a) Information b) Behaviour c) Trial d) Preference
Ans: a
6) “A majority of human drives being unconscious, consumers themselves are
often unaware of the true reasons for buying a particular product or brand”.
This statement finds its roots in the works of _______________.
a) Carl Jung b) Sigmund Freud c) Honey d) Murray
Ans: b.
19.8 SUPPLEMENTARY MATERIALS
1) https://www.scribd.com/document/159481272/Unit-5-Consumer-
Motivation-and-Involvement
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19.9 ASSIGNMENTS
1) Consider the products of School bags and Holiday Homes. Having Maslow’s
Need Hierarchy as the base, describe how would you use the need to promote
the products?
2) List the acquired needs which can be used to design promotional strategies for
the products- Smart phones, Digital Classrooms and Dish washers.
19.10 SUGGESTED READINGS/ REFERENCE BOOKS
1) Del Hawkins, Roger J Best, Kenneth A Coney, Amit Mookherjee (2007),
Consumer Behaviour, Tata McGraw Hill, New Delhi.
2) M. Joseph Sirgy, Don R. Rahtz, and Laura Portolese (2014), Consumer
Behaviour Today, Vol.1,Irvington, NJ
3) Srabanti Mukherjee(2013), Consumer Behaviour, Cengage Learning, India
19.11 LEARNING ACTIVITIES
1) Visit several company websites and analyse the effective use of appeal based
on any one theory of Motivation.
2) Identify all the purchases made by you in a particular time frame and compare
the buying motives based on Dichter and Murray’s Need Hierarchies.
19.12 KEY WORDS
Motivation
Motives
Drives
Involvement
Physiological needs
Safety need
Social need
Esteem Need
Self-actualisation need
Ambition needs
Materialistic needs
Motivational Conflicts
Power needs
Affection needs
Information needs
Autonomy
Dominance
Nurturance
Exhibition
Cognizance
Exposition.
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LESSON - 20
CONSUMER ATTITUDE
20.1 INTRODUCTION
The nature of attitude are multi-faceted and perhaps constitute the most
important dimensions explicate, comprehend, and foresee possible changes in
human behaviour. The spirit of the psychological aspect of attitude is articulated by
Baron, Branscombe, and Byrne (2008). In their opinion, attitude refers to ‘people’s
evaluation of virtually any aspect of their social worlds’. In their process of constant
evaluation of people, objects, and situations, Dennis and Wartella (1996),
concluded that we have a natural propensity to evaluate stimuli (provided by the
marketer environment) as favourable and unfavourable. These evaluations, or
beliefs, form our attitude for any product and, thereafter, are reflected in our
purchase actions.
20.2 OBJECTIVES
• To understand the concepts of Attitude
• To know how attitude is formed
• To make out the different models of attitude formation
• To find out how attitude can be altered
20.3 CONTENTS
Concept of Attitude
Functions of Attitude
Consumer attitude formation and change
Alteration of Attitude
Attitude change strategies
Individual and situational features that affect Attitude
Attitude models
CONCEPT OF ATTITUDE
Attitude Defined
Of late, a new definition of attitude is gradually emerging. This definition
illustrated that a person’s overall attitude towards an object is explained as a
function of (a) strength of each belief that a person holds about various
products/brands and (b) what is an individual’s evaluation towards each belief
associated with the particular tangible or intangible object. In short, attitude may
be defined as a ‘learnt predisposition to behave in a consistently favourable or
unfavorable manner towards a given object’. The term ‘object,’ in marketing
purview, refers to products, brands, service, usage, promotional measures, price,
point of purchases, etc.
The latter definition, however, seems to be more appealing as it is quite
conclusive about the consumer’s evaluative criteria and how they form attitude
towards a brand depending on these criteria. For example, when a middle-class
consumer wants to buy a small car, the evaluation criteria are generally price, fuel
efficiency, purchase schemes, available bank loans, comfort, etc. Tata Nano car
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scores high in the minds of the middle-class consumers in terms of all criteria, and
hence could be chosen easily. Therefore, it may be stated that
• An attitude is a resultant factor of learned predisposition.
• Attitudes are targeted at specific objects, individuals, groups, or situations.
• The motivational-affective feature of attitude distinguished it from simply being
the predisposition or habit.
Consumer attitudes are a composite of a consumer’s (1) beliefs about, (2)
feelings about, (3) and Behavioural intentions toward some object--within the
context of marketing, usually a brand or retail store. These components are viewed
together since they are highly interdependent and together represent forces that
influence how the consumer will react to the object.
Beliefs. The first component is beliefs. A consumer may hold both positive
beliefs toward an object (e.g., coffee tastes good) as well as negative beliefs (e.g.,
coffee is easily spilled and stains papers). In addition, some beliefs may be neutral
(coffee is black), and some may be differ in valance depending on the person or the
situation (e.g., coffee is hot and stimulates--good on a cold morning, but not good
on a hot summer evening when one wants to sleep).
Affect. Consumers also hold certain feelings toward brands or other objects.
Sometimes these feelings are based on the beliefs (e.g., a person feels nauseated
when thinking about a hamburger because of the tremendous amount of fat it
contains), but there may also be feelings which are relatively independent of beliefs.
For example, an extreme environmentalist may believe that cutting down trees is
morally wrong, but may have positive affect toward Christmas trees because he or
she unconsciously associates these trees with the experience that he or she had at
Christmas as a child.
Behavioural Intention: The Behavioural intention is what the consumer plans
to do with respect to the object (e.g., buy or not buy the brand). As with affect, this
is sometimes a logical consequence of beliefs (or affect), but may sometimes reflect
other circumstances--e.g., although a consumer does not really like a restaurant,
he or she will go there because it is a hangout for his or her friends.
Attitude-Behaviour Consistency: Consumers often do not behave
consistently with their attitudes for several reasons:
• Ability. He or she may be unable to do so. Although junior high school student
likes pick-up trucks and would like to buy one, she may lack a driver’s license.
• Competing demands for resources. Although the above student would like to
buy a pickup truck on her sixteenth birthday, she would rather have a
computer, and has money for only one of the two.
• Social influence. A student thinks that smoking is really cool, but since his
friends think it’s disgusting, he does not smoke.
• Measurement problems. Measuring attitudes is difficult. In many situations,
consumers do not consciously set out to enumerate how positively or
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negatively they feel about Vehicles and when a market researcher asks them
about their beliefs about mopeds, how important these.
Attitudes, hence, can be strongly positive, undecided, to strongly negative,
and can either be unambiguous/explicit or implicit/hidden. An attitude can also be
intense, as in the case of prejudice, which can lead to perceptual bias and vice
versa.
FUNCTIONS OF ATTITUDE
Attitudes serve the following four major functions.
Utilitarian function Consumers form a particular attitude about as an object
primarily based on its utility. If the consumer has a favourable prior experience
with any brand or product, or has been exposed to some positive word of mouth by
formal or informal sources, the consumer’s attitude towards it may tend to be
favourable. Normally, to highlight the brand’s positive aspects, the marketing
communication is directed at evaluative attributes, like reliability, safety, cost-
effectiveness, and definite need fulfilment. Women’s Horlicks depicts in its
advertisements the importance of consuming iron and calcium especially for Indian
women. Similarly low calorie Horlicks Lite focuses on middle-aged customers (for
maintain calorie level) and Mothers Horlicks (supporting the nutritional
requirement) on the lactating mothers.
Ego-defensive function Consumers develop attitudes to attain personal goals
and defend their self-images. For example, most of the commercials on cosmetics
and personal care products stress on the sense of personal confidence and at
sometimes on the fear of embarrassment. Indian skin care market is dominated by
enormous traditional beauty care products like besan, multani mitti, talcs, creams,
etc. Indians have a tendency to believe that fairness and beauty are synonymous.
Fair & Lovely encashed this prejudice and generated z revolution in the market.
Specially focusing on the fairness benefits, Fair & Lovely was launched in 1988.
Today, with a successful positioning, Fair & Lovely leads the Rs.1000 crore Indian
fairness cream market with a share of over 70%. Krack cream was also a big hit in
Indian market because it addressed to the issues of winter scratches and crack
marks by the ‘fati ediah’ advertisement.
Knowledge function Consumers strongly insist on more information about
the products they use or want to use, often to assure their right selection. This
information helps the marketers to make the customers recall about the advertising
messages or themes and in resorting subsequent positioning/repositioning
decisions. This facilitates the consumer’s evaluation of alternatives and, thereby,
assists their decision-making process. For example, Dell, Apple or Sony laptops
always advertise about their performance superiority and dependability features,
and form the consumers’ presumption about certain configuration of the systems.
This trims down uncertainty and perceived risk of buying the product from
consumer’s view point. For majority of the hi=tech products’/brands’ advertising
message is primarily designed to inform the consumers about the key features or
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appeals of the product and, thereby, help the customers to understand why the
brand would fit with their requirements.
Value-expressive function Attitudes are shaped to exhibit consumer’s own
values, lifestyle, and outlook. Sometimes, advertisers appeal to self-upgradations,
accomplishments, or liberty. For stylish or noticeable consumption objects, most of
the products/brands take an attempt to highlight their value-expressive functions
or advanced lifestyle. This distribution outlets of Alley Solley, Louis Philippe, Peter
England, provide a portrayal of their lifestyle positioning while targeting towards the
urban elites.
Impact of fast Changing Lifestyle
Internet marketing, Mobile marketing, Digital Marketing, Social Media
Marketing bring about changes in the life style of youth consumers. Just a decade
ago, people sent letters and hand-made cards to each other. People used to think
twice before calling in the odd hours of the day. Emails, mobile phones, social
networking Web sites, and digital camera have changed the dynamics of
communication. People who grew up in the end of the last century were always in a
psychological pressure to communicate. It’s like what the others would think is
they did not frequently update their status message on Facebook. No doubt
technology has made life faster but in no way simpler. This throws more challenges
to marketers to live long in the minds of the customers and pull them towards
purchase of their brands.
CONSUMER ATTITUDE FORMATION AND CHANGE
An Attitude is a learned predisposition to behave in a consistently favorable
or unfavorable way toward a given object. In the context of consumer behaviour, an
“object” can be a product, brand, service, price, package, advertisement,
promotional medium, or the retailer selling the product, among many other aspects
of consumption.
Attitudes are learned from direct experience with the product, word-of-mouth,
exposure to mass media, and other information sources, that consumers are
exposed to. Attitudes reflect either favorable or unfavorable evaluations of the
attitude object and motivate consumers to either buy or not buy particular
products or brands. Consumers buy products toward which they have positive and
favorable feelings; therefore, marketers must ensure that consumers maintain
these attitudes following the purchase so that they keep buying same products
repeatedly.
Marketers who introduce new items strive to form favorable consumer
attitudes toward the new products in order to get consumers try them, like them,
and continue buying them. Doing so is difficult because people are often
unreceptive to the unfamiliar, at least initially. One way to establish positive
consumer attitudes toward new products is to capitalize on products that
consumers already like and buy regularly. When a new product is introduced in a
market that is unfamiliar with it, the brand has to build an attitude toward both
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the category and the brand. Hand sanitizer is a very new category in India and so
the ad explains the concept of a sanitizer and the necessity for such a product
(through the mention of swine flu, along with other infections) in order to build
attitudes toward the brand and the category.
Attitudes and Their Formation
As consumers, all of us have many attitudes toward products, services,
advertisements, the Internet, and retail stores, among many others. Whenever we
are asked whether we like or dislike a product (e.g., Choco and Oats cookies), a
service (Indian Airlines), a particular retailer (e.g., Relaince), a specific direct-online
marketer (e.g., Amazon.com), or an advertising theme (e.g., “ Life’s Good ”), we are
being asked to express our attitudes. By studying consumers’ attitudes, marketers
try to determine whether consumers will accept new products the company is
considering, gauge why market segments were not persuaded by promotional
themes, or learn how target customers are likely to react to new products,
packages, and the like. To illustrate, Nike or Reebok frequently study consumers’
attitudes towards the functional and aesthetic design of athletic footwear. They
regularly gauge reactions to their latest advertising and other marketing messages
designed to form and change consumer attitudes.
Consumers Learn Attitudes
Consumers form new attitudes and also change existing attitudes. They often
form positive attitudes towards new items under the same brand that they have
been buying repeatedly and have been satisfied with. Nevertheless, consumers often
try new products, product models, and different brands. If such trial purchases
meet or exceed their expectations, then they develop favorable attitudes toward
those objects. Generally, the more information consumers have about a product or
service, the more likely they are to form attitudes about it, either positive or
negative. However, if the product is irrelevant to them, the consumers will not
cognitively process any of the available and applicable information. Furthermore,
consumers often use only a limited amount of the information available to them.
Typically, only two or three prominent beliefs about a product play a role in the
formation of attitudes, and less important beliefs carry little weight. Therefore,
advertisements should be focused on the key points that differentiate products from
competitors, and not detail too many of the products’ features.
How do consumers form their initial attitudes toward “things?” For example
how do young adults form attitudes toward Hanes or Calvin Klein underwear, or
J. Crew or Gap casual wear, or Anne Klein or Brooks Brothers business clothing?
Would they buy their underwear, casual wear, and business clothing at Walmart,
Sears, Saks Fifth Avenue, or Nordstrom? How do family members and friends,
admired celebrities, mass-media advertisements, and even cultural memberships,
influence the youngsters’ attitudes about buying apparel? Why do some attitudes
persist for a long time while others change often? Marketers must know the
answers to such questions in order to influence the applicable attitudes.
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(h) Shifting general brand rating This implies to changing the consumer’s
overall assessment of a brand depending on the changed notion about the product
and brand attributes. For example, due to rapid escalation of trendy designs and
value-added service of the mobile handsets, the product’s positioning has evolved
from being just a ‘communication medium’ to a ‘style statement’.
ATTITUDE CHANGE STRATEGIES.
Changing attitudes is generally very difficult, particularly when consumers
suspect that the marketer has a self-serving agenda in bringing about this change
(e.g., to get the consumer to buy more or to switch brands).
Changing affect. One approach is to try to change affect, which may or may not
involve getting consumers to change their beliefs. One strategy uses the approach
of classical conditioning try to “pair” the product with a liked stimulus. For example,
we “pair” a car with a beautiful woman. Alternatively, we can try to get people to
like the advertisement and hope that this liking will “spill over” into the purchase of
a product. For example, the Pillsbury Doughboy does not really emphasize the
conveyance of much information to the consumer; instead, it attempts to create a
warm, fuzzy image. Although Energizer Bunny ads try to get people to believe that
their batteries last longer, the main emphasis is on the likeable bunny. Finally,
products which are better known, through the mere exposure effect, tend to be
better liked--that is, the more a product is advertised and seen in stores, the more
it will generally be liked, even if consumers to do not develop any specific beliefs
about the product.
Changing Behaviour. People like to believe that their Behaviour is rational; thus,
once they use our products, chances are that they will continue unless someone is
able to get them to switch. One way to get people to switch to our brand is to use
temporary price discounts and coupons; however, when consumers buy a product on
deal, they may justify the purchase based on that deal (i.e., the low price) and may
then switch to other brands on deal later. A better way to get people to switch to our
brand is to at least temporarily obtain better shelf space so that the product is more
convenient. Consumers are less likely to use this availability as a rationale for their
purchase and may continue to buy the product even when the product is less
conveniently located. (Notice, by the way, that this represents a case of shaping).
Changing beliefs. Although attempting to change beliefs is the obvious way to
attempt attitude change, particularly when consumers hold unfavorable or
inaccurate ones, this is often difficult to achieve because consumers tend to resist.
Several approaches to belief change exist:
Change currently held beliefs. It is generally very difficult to attempt to change
beliefs that people hold, particularly those that are strongly held, even if they are
inaccurate. For example, the petroleum industry advertised for a long time that its
profits were lower than were commonly believed, and provided extensive factual
evidence in its advertising to support this reality. Consumers were suspicious and
rejected this information, however.
Change the importance of beliefs. Although the sugar manufacturers would
undoubtedly like to decrease the importance of healthy teeth, it is usually not
feasible to make beliefs less important--consumers are likely to reason, why, then,
would you bother bringing them up in the first place? However, it may be possible
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Consumers and
Durables
MAO
High Low
Focus on celebrity or
Attribute/ Benefit- Based
background in
Communication
advertisement
mostly the social and environment pressures that the consumers come across as
restraining or forming parameters for developing behavioural intention. The beliefs
of customers, weighted by the importance one attribute to each of these opinions,
influence one’s behavioural intention. Hence, behavioural intention is a function of
both attitude towards behaviour and subjective norms towards that behaviour.
Cognitive dissonance model
Holds that discomfort or dissonance occurs when a consumer holds
conflicting thoughts about a belief or an attitude object.
Post-purchase Dissonance
Cognitive dissonance that occurs after a consumer has made a purchase
commitment
Attribution theory
Examines how people assign casualty to events and form or alter their
attitudes as an outcome of assessing their own or other people’s
behaviour.
Examples
Self-perception Theory
Self-Perception Theory: Consumers are likely to accept credit for successful
outcomes (internal attribution) and to blame other persons or products for failure
(external attribution).
Foot-In-The-Door Technique
It specifies that making people to agree to large request through small and
modest request first.
Door-in-the-face Technique
This is in contrast to the above, in which a large, costly first request that is
likely to be declined by a second one more realistic and less costly request.
20.4 REVISION POINTS
1) Concept of Attitude
2) Functions of Attitude
3) Consumer attitude formation and change
4) Alteration of Attitude
5) Attitude change strategies
6) Individual and situational features that affect Attitude
7) Attitude models
20.5 INTEXT QUESTIONS
1) What do you understand by consumer Attitude? Do you feel Attitudes can be
changed?
2) Explain TRA model
3) Sketch ELM Model and explain.
4) What are the functions of Attitude?
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20.9 ASSIGNMENTS
1) Assume you wanted to create a favourable attitude among consumers of
products like McDonalds, KFC, Pizza Hut. What strategies would you apply
and justify?
2) Visit entertainment sites and describe an advertisement that attempts to
change the attitude.
20.10 SUGGESTED READINGS / REFERENCE BOOKS
1) Del Hawkins, Roger J Best, Kenneth A Coney, Amit Mookherjee (2007),
Consumer Behaviour, Tata McGraw Hill, New Delhi
2) S. Ramesh Kumar (2006), Conceptual Issues in Consumer Behaviour- The
Indian Context, Pearson Education, 1st Edition, New Delhi.
3) Srabanti Mukherjee (2013), Consumer Behaviour, Cengage Learning, New
Delhi, India.
20.11 LEARNING ACTIVITIES
1) Describe a situation in which you have changed your attitude towards a
product after watching an advertisement.
2) Find advertisements that illustrate each of the functions of Attitude.
20.12 KEY WORDS
Affective component
Attitude
Behavioural intention
Beliefs
Cognitive dissonance
Conative Component
Door-in-the-face technique
Ego-defensive function
Elaboration Likelihood Model
Foot-in-the-door technique
Knowledge function
Multi- Attribute Attitude Model
Self-Perception
Theory of Reasoned Action
Tri-component Attribute Model
Utilitarian function
Value-expressive function
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LESSON - 21
BUYING PROCESS
21.1 INTRODUCTION
Consumer Behaviour includes mental, physical and emotional activities which
people do or use when they want to select, purchase, use or throw away the
product or the service that provide their needs and demands (Jeddi et al., 2013).
Knowing these attitudes help marketers to get familiar with the way costumers
think and feel, as well as the way they choose various brands, products and etc.
Understanding consumer buying Behaviour can help marketers get more familiar
with their customers; moreover, it could be the basis for marketers to develop
appropriate marketing strategies. If marketers be familiar with consumer buying
process, they know how costumers try to get information about the thing they want
to buy, what factors can encourage them and what factors influence their decision
to buy it (Bakhshi, 2012). The classical principle of consumer Behaviour was a five-
step Decision-Making Model includes: 1. Identifying problem, 2. Information
Retrieval, 3.Evaluating Alternatives, 4.Selecting the product, 5.Evaluating after the
purchase (Bakhshi, 2012).
21.2 OBJECTIVES
• To identify the problem recognition process as the first stage of buying
process.
• To find the sources of information available for purchase decision
• To know the techniques of evaluation of alternatives
• To identify how alternatives are shortlisted and purchase made finally.
21.3 CONTENTS
Consumer Decision process and Problem recognition
Information Search
Alternative Evaluation and Selection
Outlet Selection and Purchase
CONSUMER DECISION PROCESS AND PROBLEM RECOGNITION
Consumer decision on purchasing a product involves evaluating attributes of a
set of products, brands or services and rationally select out of the choices available.
This decision making process was categorized as Nominal Decision making
(habitual decision making), Limited Decision making (internal search and select
from few alternatives), Extended decision making (extensive information search and
complex evaluation of several alternatives and focus on post purchase evaluation).
The buying process has certain stages which starts with problem recognition and
ends with post purchase evaluation.
Customers Becoming Loyal
A marketer to be aware of the process which is stated below which explains a
person’s pattern of becoming a loyal customer.
1) Awareness: They notice that you offer something that could help.
2) Interest: They decide to find out a little bit more.
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decision making. A person feeling restless may eat snack food without really
thinking about it. In this case, the problem remains unrecognized (at the conscious
level) and the solutions tried are often inappropriate (eating may not reduce
restlessness).
Marketers develop products to help consumers solve problems. They also
attempt to help consumers recognize problems, sometimes well in advance of their
occurrence .
The Nature of Problem Recognition
Problem recognition is the first stage in the consumer decision process.
Problem recognition is the result of a discrepancy between a desired state and an
actual state that is sufficient to arouse and activate the decision process. An actual
state is the way and individual perceives his or her feelings and situations to be at
the present time. A desired state is the way an individual wants to feel or be at the
present time. For example, you probably don’t want to be bored on Friday night. If
you find yourself alone and becoming bored, you would treat this as a problem
because your actual state (being bored) and your desired state (being pleasantly
occupied) were different. You could then choose to consume a television program,
rent a video, call a friend, go out, or take a wide array of other actions.
Marketers often attempt to cause consumers to recognize potential problems
for which the marketer has a solution. As this ad illustrates, this sometimes
involves making consumers aware of problems well before they arise.
The kind of action taken by consumers in response to recognized problems
relates directly to its importance to the consumer, the situation, and the
dissatisfaction or inconvenience created by the problem.
Without recognition of a problem, there is no need for a decision. when there is
no discrepancy between the consumer’s desired state (what the consumer would
like) and the actual state (what the consumer perceives as already existing). If as a
consumer, he wants to enjoy good music during week end and he gets tickets from
his friend, therefore there is no need to such an alternative.
On the other hand, when there is a discrepancy between a consumer desire
and the perceived actual state, recognition of a problem occurs, it means a problem
exists. For example, being actively work occupied (desired state) would generally
exceed being bored (actual state) and result in problem recognition.
i. The Process of Problem Recognition
Perceptions of the actual state are also determined by a consumer’s lifestyle
and current situation. Consumers’ lifestyles are a major determinant of their actual
state because that is how they choose to live given the constraints imposed by their
resources. Thus, a consumer who has to chose a raise a family, have significant
material possessions, and pursue a demanding career is likely to have little free
time for outdoor activities (actual state). The current situation-a day off work, a big
project due, or a sick child-also has a major impact on how consumers perceive the
actual situation.
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type of research can sometimes identify functional problems that consumers are
unaware of. For example, the difficulties in handling electronic gadgets.
Emotion Research – Understand customers through research on the role of
emotions in the decision process. Common approaches are focus group research
and one-on-one personal interviews that focus on either (1) the emotions associated
with a certain product or (2) the products associated with reducing or arousing
certain emotions..
(e) Responding to Consumer Problems
The problems of a consumer need to be identified, and accordingly the
manager may design the marketing mix to solve the problem. This can involve
developing a new product or altering an existing one, modifying channels of
distribution, changing pricing policy, ore revising advertising strategy. For example,
after completion of graduation, there are several organizations helps in career
identification or Higher education abroad. Companies need to help consumers to
identify their problem and provide a solution.
(f ) Helping Consumers identify Problems
There are instances when the manager will want to cause problem recognition
rather than react to it. Sometimes companies need to work on problem
identification itself and later move on to solution.
Generic versus Selective Problem Recognition- Two basic approaches to
causing problem recognition are generic problem recognition and selective problem
recognition. Generic problem recognition involves a discrepancy that a variety of
brands within a product category can reduce. Generally, a firm will attempt to
influence generic problem recognition when the problem is latent or of low
importance and one of the following conditions exists:
• It is early in the product life cycle.
• The firm has a high percentage of the market.
• External search after problem recognition to be limited.
• It is an industry wide cooperative effort.
Marketers will focus on this as they feel a distinctive factor in their product
can pull more customers. The products in this category provide the same value and
help to solve the problem and the distinctiveness is less.
Selective problem recognition involves a discrepancy that only brand can solve.
For example, Insurance policy to specifically available to suit the need of the
customer like House, life, Unit linked, Medical etc.,
Activating Problem Recognition - How can a firm influence problem
recognition? Recall that problem recognition is a function of the (1) importance and
(2) magnitude of a discrepancy between the desired state or the perceptions of the
existing state. Or the firm can attempt to influence the perception of the importance
of an existing discrepancy. Many marketing efforts attempt to influence the desired
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state; that is, marketers often advertise the benefits their products will become
desired by consumers.
INFORMATION SEARCH
Consumers after understanding the problem, it necessitates information
search both internally and externally. Once a problem is finalised, relevant
information from long-term memory is used to determine if a satisfactory solution is
already stored, It may be related to what the characteristics of potential solutions
are, what are appropriate ways to compare solutions, and so forth. This is internal
search, if a resolution is not reached through internal search, then the search
process is focused on external information relevant to solving the problem. This is
external search.
It is important to note that even in extended decision making with extensive
external search, the initial internal search generally produces a set of guides or
decision constraints that limit and guide external search. Such constraints might
be a price range, a set of manufacturers, “must have” performance criteria etc.
Many problems are resolved by the consumer using only previously stored
information. If, in response to a problem, a consumer recalls a single, satisfactory
solution (brand or store), no further information search or evaluation may occur.
The consumer purchases the recalled brand and nominal decision making has
occurred. For example, a consumer who catches a cold may recall that syrup
provided relief in the past. He or she then purchases same syrup at the nearest
store without further information search or evaluation.
Likewise, a consumer may notice a new product in a store because of the
attention-attracting power of a point-of-purchase display. He or she reads about the
attributes of the product and recalls an unresolved problem that these attributes
would resolve. The purchase is made without seeking additional information. This
represents limited decision making, involving mainly internal information.
As we move into extended decision making, the relative importance of external
search tends to increase. External information can include,
• The opinions, attitudes, Behaviours, and feelings of friends, neighbors,
relatives, and, increasingly, strangers contacted on the Internet.
• Professional information that is provided in pamphlets, articles, books,
websites, and personal contacts.
• Direct experiences with the product through inspection, trial, or observation.
• Marketer-generated information presented in advertisements, websites, and
displays and by sales personnel.
(i) Types of Information Sought
A consumer decision needs information on the following:
1) The appropriate evaluative criteria for the solution of a problem.
2) The existence of various alternative solutions.
3) The performance level or characteristics of each alternative solution on each
evaluative criterion.
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time physical and psychological effort. Frustration and conflicts between the search
task and other more desirable activities, as well as fatigue, may shorten or
otherwise alter the search effort.
(vi) Market characteristics
Market characteristics include the number of alternatives, price range, store
distribution, and information availability. It is important to keep in mind that it is
the consumer’s perception or beliefs about, the market characteristics that
influence shopping Behaviour.
When there are more number of alternatives (products, stores brands)
available to resolve a particular problem, the more external search there is likely to
be. At the extreme, there is no need to search for information in the face of a
complete monopoly such as utilities or driver licenses.
(vii) Product Characteristics
Product differentiation – features and quality variation across brands – is
associated with increased external search.
In addition, consumers appear to enjoy shopping for positive products – those
whose acquisition results in positive reinforcement. Thus, shopping for flowers and
plants, dress clothing, sports equipment, and cameras is viewed as a positive
experience by most consumers.
(viii) Consumer Characteristics
A variety of consumer characteristics affect perception of expected benefits,
search costs, and the need to carry out a particular level of external information
search.
A satisfying experience with a particular brand is a positively reinforcing
process. It increases the probability of a repeat purchase of that brand and
decreases the likelihood of external search. As a result, external search is generally
greater for consumers who have limited purchase experience with brands in a
particular product category.
Consumers tend to form general approaches or patterns of external search.
These general approaches are termed shopping orientations. While individuals will
exhibit substantial variation from the general pattern across situations and product
categories, many do take a stable shopping approach to most products across a
wide range of situation. Consumers who are highly involved with a product category
generally seek information relevant to the product category on an ongoing basis.
(ix) Perceived Risk
The perceived risk is associated with unsatisfactory product performance, either
instrumental or symbolic, increases information search prior to purchase. Higher
perceived risk is associated with increased search and greater reliance on personal
sources of information and personal experiences.
Perceived risk is a function of the individual, the product, and the
situation. It varies from one consumer to another and for the same consumers from
one product to another and from one situation to another. Perceived risk is high for
products whose failure to perform as expected would results in a high
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• Social cost (e.g., a new suit that is not appreciated by one’s peers)
• Financial cost (e.g., an expensive vacation during which it rained all the time).
• Time cost (e.g., an automobile repair that required the car to be taken to the
garage, left, and the picked up later).
• Effort cost (e.g., a computer that is loaded with important software before the
hard drive crashes).
• Physical cost (e.g., a new medicine produces a harmful side effect).
discussion will make consumer choice seem more logical, structured, rational, and
deliberated than it often is. Fortunately, we have all made numerous consumer
choices and we know that they are frequently circular, emotional, incomplete, and
based on expediency rather than optimality. We also know that the situation plays
an important role in the processes we use to make consumer choices. For example,
when we are tired or hurried, we are very likely to use different choice processes
than we would if we had more energy or time.
A substantial amount of research and marketing strategy has assumed a
rational consumer decision maker with well-defined, stable preferences. The
consumer is also assumed to have sufficient skills to calculate which option will
maximize his or her value, and will choose on this basis. This approach is referred
to as rational choice theory. The task in rational choice theory is to identify or
discover the one optimal choice for the decision confronting the decision maker.
The decision maker simply collects information on the levels the attributes of the
alternatives, applies pre-existing values to those levels, applies the appropriate the
choice rule, and the superior option is revealed.
blind tests. A blind test is one in which the consumer is not aware of the product
and to determine if an advantage over a particular competitor has been obtained
without the contaminating, or halo, effects of the brand name or the firm’s
reputation. Marketers also make direct use of surrogate indicators.
OUTLET CHOICE AND PURCHASE
There are three basic sequences a consumer can follow when making a
purchase decision: (1) brand (or item) first, outlets second; (2) outlet first, brand
second; or (3) brand and outlet simultaneously.
On the basis of this information, the consumer may select a brand and
purchase it from the outlets with the lowest price (or easiest access, best image,
service, or other relevant attributes).
Table 1 Marketing Strategy Based on the Consumer Decision Sequence
Levels in the channel
Decision Sequence Retailer Manufacturer
Outlet first, Image advertising. Distribution in key outlets.
brand second Margin management on shelf Point-of-purchase, shelf
space, displays. spacing, and position.
Location analysis. Programs to strengthen
Appropriate pricing. existing outlets.
Brand first, Many brands or key brands. More exclusive distribution.
outlet second Co-op ads featuring brands. Brand availability advertising
Pricing specials on brands. (Yellow pages).
Yellow Pages listings under Brand image management.
brands.
Based on point of Sale displays, price reduction, promotional deals, outlet
atmosphere, stocks available, sales persons deployed, the purchase of a product or
a brand is decided. Once the consumer has selected the brand and the shop, the
purchase transaction is completed. Marketers need to reduce the cumbersome
purchase formalities due to advent of on line shopping mode. Consumers moving
out of home for stores to purchase is getting reduced even in recent future, petrol
and diesel are going to be home delivered. It is also to be noted that not only the
external factors are responsible for the final purchase of a product but the product
itself. The marketers need to help consumers in recognising their problem,
information search, choices for comparison and final purchase.
21.4 REVISION POINTS
• Consumer Decision process and Problem recognition-Process-Determinants-
Marketing Strategy
• Information Search – Internal and External- marketing Strategies
• Alternative Evaluation and Selection
• Outlet Selection and Purchase
21.5 INTEXT QUESTIONS
1) What is problem recognition?
2) How can firm cause problem recognition?
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LESSON - 22
disappointed and may even return or exchange the product. In general, the post-
purchase process includes four steps: decision confirmation, experience evaluation,
satisfaction or dissatisfaction, and future response.
POST PURCHASE DISSONANCE
This is a common consumer reaction after making a difficult, permanent
decision. Doubt or anxiety of this type is referred to as post purchase dissonance.
The probability of a consumer experiencing post purchase dissonance, as well as
the magnitude of such dissonance, is a function of
• The degree of commitment or irrevocability of the decision. The easier it is to
alter the decision, the less likely the consumer is to experience dissonance.
• The importance of the decision to the consumer. The more important the
decision, the more likely dissonance will result.
• The difficulty of choosing among the alternatives. The more difficult it is to
select from among the alternatives, the more likely the experience and
magnitude of dissonance. Decision difficulty is a function of the number of
alternatives considered, the number of relevant attributes associated with each
alternative, and the extent to which each alternative offers attributes not
available with the other alternatives.
The individual’s tendency to experience anxiety. Some individuals have a
higher tendency to experience anxiety than do others. The higher the tendency to
experience anxiety, the more likely the individual will experience post purchase
dissonance. Hawkins et al. (2001: 629)
After the purchases made, the consumer may utilize one or more of the
following approaches in reduce dissonance:
• Increase the desirability of the brand purchased.
• Decrease the desirability of rejected alternatives.
• Decrease the importance of purchase decisions.
• Reverse the purchase decisions.
Although post purchase dissonances maybe reduced by internal re-
evaluations, searching for additional external information that serves to confirm the
wisdom of a particular choice is also a common strategy. Normally, information that
supports the consumer’s choice acts to strengthen confidence in the correctness of
the purchase decision.
To build customer confidence is choosing their brand, many marketers of
consumer durables such as major appliances and automobiles send purchasers
direct-mail materials designed in large part to confirm the wisdom of the purchase.
Local retailers can place follow-up calls to make sure the customer is not
experiencing any problems with the car or appliance and to reduce any dissonance.
Even a simple message such as “Thanks for Visiting”, “Is there anything we can do
to help you enjoy your food ?” can reduce dissonance and increase satisfaction.
A concept very similar to post purchase dissonance is consumption guilt.
Consumption guilt occurs when negative emotions or guilt feelings are aroused by
the use of a product or a service.
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PRODUCT DISPOSITION
Product Use
Most consumer purchases involve nominal or limited decision making and
therefore arose little or no post purchase dissonance. Instead, the purchaser or
some other member of the household uses the product without first worrying about
the wisdom of the purchase.
Marketers need to understand how consumers use their products for a variety
of reasons. Understanding both the functional and symbolic ways in which a
product is used can lead to more effective product designs. For example, marketers
observe the consumers like for Eg., Milo distributed the products in Schools and
understood straight how do they enjoy the taste of Milo and what changes are
required further.
Product Nonuse
Product non use occurs when a consumer actively acquires a product that is
not used. For many products and most services, the decision to purchase and to
convince on made simultaneously. A person who orders a meal in a restaurant is
also deciding to eat the meal at the time. However, a decision to purchase food at a
supermarket requires a second decision to prepare and consume the food. The
second decision occurs at a different point in time and in a different environment
from the first. For example, a point of purchase display featuring a new food item
shown as part of an appealing entrée might cause a consumer to imagine an
appropriate usage situation and to purchase the product.
Disposition
Disposition of the product or the products container may occur before, during
or after product are or for product that are completely consumed, such as an ice
cream cone, no disposition maybe involved. This after use containers and packing
causes greater challenges.
Millions of pounds of products packages are disposed of everyday. These
containers are throws way a garbage or litter, used in some capacity by the
consumer or recycled. Creating packages that utilizes normal amount of resources
is important for economic reasons as well as being a matter of social responsibility.
Many firms are responding to this issue as the examples below illustrate:
• Rubber maid repositioned its trash barrel line to a recycling container line. The
new line has four model designed to store newspaper, cans, bottles and yard
waste.
• Procter and gamble uses recycled paper in 80% of its product packaging and
its packaging liquid and span, tide, cheer and downy in container made from
recycled packages.
Product Disposition and Marketing Strategy
Why should a marketing manager be concerned about the disposition of a
used product? The cumulative effect that these decisions have on the quality of the
environment on the current and future generation is of much concern. However,
there are also short term economic reasons for concern.
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Disposition Alternatives
There are five major ways in which disposition decisions can affect a firm’s
marketing strategy.
• First in most durable goods, consumers are reluctant to purchase a new item
until they have ‘received their money worth’.
• Second disposition sometimes must occur before acquisition of a replacement
because of the space for financial limitations.
• Third, frequent decisions by consumers to sell trade or give away used
products may result in a large used-product market that can reduce the
market for new products.
• Fifth reason is that environmentally sound disposition decisions benefit society
as a whole
sufficiently large, or if initial expectation for the consumer may restart the entire
decision process.
Figure 3: Perceived Performance, Satisfaction and Expectation level
needs and provide help and advice when needed. Relationship marketing attempts
to accomplish the same results, but because of the large sale of most operations,
the firm must use database, customised mass Communication and advanced
employee training and motivation.
Relationship marketing has five key elements :
1) Developing a core service or product around which to build a customer
relationship.
2) Customising the relationship to the individual customer.
3) Argumenting the core services or product with extra benefit.
4) Pricing in a manner to encourage loyalty.
5) Marketing to employees so that they will perform well for customers.
22.4 REVISION POINTS
1) Post purchase consumer Behaviour
2) Product Use and Non-Use
3) Post Purchase dissonance
4) Product disposition
5) Perceived performance, satisfaction and Expectation levels.
6) Purchase Evaluation and Customer satisfaction
22.5 INTEXT QUESTIONS
1) What are the major post-purchase processes experienced by customers?
2) Explain the Post-Purchase dissonance.
3) Give a note on Product Use and Non use
4) Explain in detail the Post Purchase Behaviour Process.
5) Enumerate on the courses of action a consumer can take in response to
dissatisfaction?
6) Comment on the perceived performance, satisfaction and expectation level of
customers
7) Write about product disposition
8) Examine Relation marketing and how important it is to hold customers?
22.6 SUMMARY
Marketers should seek to sell a product that satisfies the buyer‟s needs. In
doing so, it should be remembered that the sale is made only when the actual
purchase is complete and marketers should continue to reinforce the buyer’s
attitudes about the product at all times, even after the sale.
The chapter discussed the effects of cognitive dissonance on consumers. The
literature review shows that when consumers are faced with cognitive dissonance
they seek ways in which to reduce this phenomenon. It also shows that marketers
can develop ways in which they can help reduce the effects of cognitive dissonance
as these can also affect their products.
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3) https://mrktspnkr.wordpress.com/2012/06/29/post-purchase-and-
satisfaction/
22.9 ASSIGNMENTS
1) Develop a list of non-use products among your friends and the reasons for it
2) Analyse the data base of an University and necessity to maintain that data.
22.10 SUGGESTED READINGS / REFERENCE BOOKS
1) Del I. Hawkins, Foula Kopanidis, Pascale Quester, Sally Rao Hill, Simone
Pettigrew (2013), Consumer Behaviour: Implications for Marketing Strategy,
McGraw-Hill, Australia.
2) Del Hawkins, Roger J Best, Kenneth A Coney, Amit Mookherjee (2007),
Consumer Behaviour – Building Marketing Strategy, Tata McGraw Hill, New
Delhi.
22.11 LEARNING ACTIVITIES
1) Interview your neighbours and list out various loyalty programs they have
experienced as well as their expectations.
2) Identify the disposition Behaviour of your family for the products like New
papers, Food Cans, Worn out Dresses, Food waste.
22.12 KEY WORDS
Brand Loyalty
Cognitive Dissonance
Affective Performance
Post purchase Behaviour
Customer commitment
Product non-use
instrumental performance
Symbolic Performance
Repeat purchase
Brand Switching
Relationship marketing
Consumption guilt
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LESSON - 23
• Rural FMCG market accounts for 40 per cent of the overall FMCG market in
India, in revenue terms
• Amongst the leading retailers, Dabur generates over 40-45 per cent of its
domestic revenue from rural sales. HUL rural revenue accounts for 45 per cent
of its overall sales while other companies earn 30- 35 per cent of their
revenues from rural areas
According to the Third Annual Edition of Accenture Research, “Masters of
Rural Markets: From Touch points to Trust points - Winning over India's Aspiring
Rural Consumers,” rural consumers are particularly aspiring or striving to
purchase branded, high quality products. Consequently, businesses in India are
optimistic about growth of the country's rural consumer markets, which is expected
to be faster than urban consumer markets. The report highlights the better
networking among rural consumers and their tendency to proactively seek
information via multitude sources to be better informed while making purchase
decisions. Importantly, the wider reach of media and telecommunication services
has provided information to India’s rural consumers and is influencing their
purchase decisions. In line with general trend, rural consumers are evolving
towards a broader notion of value provided by products and services which involves
aspects of price combined with utility, aesthetics and features, and not just low
prices.
The hinterlands in India consist of about 650,000 villages. These villages are
inhabited by about 850 million consumers making up for about 70 per cent of
population and contributing around half of the country's Gross Domestic Product
(GDP). Consumption patterns in these rural areas are gradually changing to
increasingly resemble the consumption patterns of urban areas. Some of India's
largest consumer companies serve one-third of their consumers from rural India.
Owing to a favourable changing consumption trend as well as the potential size of
the market, rural India provides a large and attractive investment opportunity for
private companies.
As is the trend with urban India, consumers in the rural regions are also
expected to embrace online purchases over time and drive consumption digitally.
The rural regions are already well covered by basic telecommunication services and
are now witnessing increasing penetration of computers and smart phones. Taking
advantage of these developments, online portals are being viewed as key channels
for companies trying to enter and establish themselves in the rural market. The
Internet has become a cost-effective means for a company looking to overcome
geographical barriers and broaden its reach.
Accenture is major objective of the research is to understand how Indian rural
consumers' behaviour and attitudes have evolved in the past few years and what
influences their buying behaviour the most. First, rural consumers are more
inspirational. Accenture research findings indicate that Indian rural consumers are
fuelled by a deep desire to provide their children a better future through education
and healthcare.
Second, rural consumers are better networked. They are better connected in
both the physical and digital sense. Technological developments, particularly
deeper penetration of mobile telephony and direct-to-home (DTH) television into
India's hinterlands, have also reshaped lifestyle and consumption patterns
among rural consumers. The total number of telecom subscribers (mobile plus
landline) in rural India crossed 378 million in July 2014. And of the 205 million
internet users in India in 2013, 68 million lived in rural areas. Even more
impressive, one-fourth of the 100 million people in India who access the Internet
using mobile devices live in rural areas. Women and children now play a more
empowered role in purchase decisions.
Third, rural consumers are more discerning. Rural consumers are street-smart
about common retailer ploys and schemes and view value through a broader lens
and share more information with more peers. While companies might feel that a
rural consumer can be swayed by celebrity endorsements or catchy ad lines, in
reality, consumers don't fall for such tactics.
While the rural consumers' needs at different points in the purchase cycle are
evolving, they are also quite different from those of their urban counterparts.
Companies need to develop products and services that address the unique needs of
customers, innovate on the mobility platform to drive awareness for
their brands and increase their physical as well as mental reach to win loyalty.
Government Initiatives
The Government of India has planned various initiatives to provide and
improve the infrastructure in rural areas which can have a multiplier effect in
increasing movements of goods, services and thereby improve earnings potential of
rural areas subsequently improving consumption.
• The Government has introduced various reforms in the Union Budget 2017-18
to uplift the rural markets. Some of the key highlights of the Budget are:
• Rs 187,223 crore (US$ 28.08 billion) has been allocated towards rural,
agriculture and allied sectors.
• The Allocation for Pradhan Mantri Aawas Yojana-Gramin has been increased
from Rs 15,000 crore (US$ 2.25 billion) to Rs 23,000 crore (US$ 3.45 billion) in
the year 2017-18 with a target to complete 10 million houses for the houseless
by the year 2019.
• The pace of roads construction under Pradhan Mantri Gram Sadak Yojana
(PMGSY) has been accelerated to 133 kms per day as against an average of 73
kms per day during the years 2011-14.
• The allocation to the Mahatma Gandhi National Rural Employment Guarantee
Act (MGNREGA) has been Rs 48,000 crore (US$ 7.2 billion) in the year 2017-
18, which is the highest ever allocated amount.
• The Government of India is looking to install Wi-Fi hotspots at more than
1,000 gram panchayats across India, under its ambitious project called Digital
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2. Income fluctuations
The pattern of income generation in rural areas based on agriculture is
seasonal and highly unreliable unlike the fixed monthly income in the urban areas.
This created a consumption pattern that is quite different from the urban one.
3. Lifestyle
The lifestyle and daily routine of consumers in two markets is markedly
different. This creates significantly different profile of urban and rural consumers
for the same product.
4. Context
Because of variation in infrastructure, lifestyle and the income aspects, the
context in which an individual exists in rural areas is very different from the one
urban area. This creates difference in nature and priorities.
5. Socio-cultural Profile
Value system and thus perception towards goods/services and consumption in
general is quite different. Cultural pattern in rural areas determine whether a
culture is traditional or modern in its outlook and that is a factor that can have a
major impact on consumption pattern.
6. Accessibility
The cost and logistics of accessing consumers in a highly widespread and
heterogeneous rural market are very different as compared to reach urban
consumers who generally are concentrated in good number in a single location.
7. Media reach and habits
The reach of media vehicles and the media habits, varying widely in rural and
urban markets, requires different type of promotional strategy in these two
markets. But social media seems to be a better option in both markets.
8. Nature of competition
The nature and intensity of competition amongst the brands is very different in
the two markets.
9. Consumer Behaviour
It is in the purchase of high-involvement products that a rural consumer
display different motives relating to the problem recognition, source of information,
Evaluation procedures, collective decision and different post purchase Behaviour.
This creates need to treat each stage of the marketing process differently for rural
and urban consumers.
RURAL M ARKETING STRATEGIES
Rural Marketing has a number of strategies, which comprise:
Client and Location specific promotion involves a strategy designed to be
suitable to the location and the client.
Joint or co-operative promotion strategy involves participation between the
marketing agencies and the client.
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LESSON - 24
E-CONSUMER BEHAVIOUR
24.1 INTRODUCTION
E-commerce, Internet shopping, Digital Marketing and cyber malls have
become very common words among common consumers.. While the impact of
internet marketing (business to consumer) on the Indian environment has been
insignificant, it is also true that there is a niche market which is likely to develop in
the times to come. Marketers will have to adapt themselves to be a part of this
digital economy. Now IT experts denote Digital Economy as Global Grid. The niche
market is likely to grow significantly. Advances in technology, the ease and control
with which consumers can get high-quality information and the boundary-less
markets are some of the distinguishing features of this global grid.
One of the opportunities the growth of the Internet has provided is the ability
for users to browse commercial products shown on the Internet, and in some cases
to order them over from a computer. The act of ordering is called e-commerce. The
amount of spending by households depends on three factors ñ the percentage of
households that have access to the internet, the degree to which, having access,
households choose to use it for buying particular products, and the range of
products available.
A study by US-based networking solution giant CISCO, reveals that in India,
the second-largest smart phone market globally, the number of smart phones is
expected to grow strongly to over 650 million by 2019. Indian smart phone
shipments reached 103.6 million in 2015, thus crossing the 100 million mark, and
becoming one of the fastest growing smart phone markets in Asia Pacific region.
Smartphone shipments rose to 30 million in July-September 2016 quarter,
maintaining its healthy traction with 11 per cent of growth. It is estimated that
smart phone sales in India will be about 15 per cent to 125 million in 2017.India,
one of the world’s fastest growing Internet market. The online retail sector in India
is expected to be a US$ 1 trillion (Rs 660,000 crore) market by 2020.
Amazon expects India to become its quickest market to reach US$ 10 billion in
Gross Merchandise Value (GMV) and to become its largest overseas market
surpassing Japan, Germany and the UK. The Indian beauty, cosmetic and
grooming market is likely to reach US$ 20 billion by 2025 from the current US$ 6.5
billion, on the back of growing aspirations and rising disposable income of middle
class. Digital Revolution has brought a significant change in consumer Behaviour.
With the recent changes in demands and Behaviour of customers, only those
companies are succeeding who are able to understand these changing patterns of
their customers need.
24.2 OBJECTIVES
• To gain knowledge about e-consumer Behaviour
• To know the changes in consumer buying decision process
• To understand emerging trends towards e –consumers.
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24.3 CONTENTS
Product/Services Customisation
E-tailing
Importance of Technology for e-shopping
Behaviour patterns and Retail outlets
Consumer Behaviour and Internet Shopping
Consumer Behaviour of Online Shoppers
Bricks and Clicks Model
Characteristics of online Shoppers
Mobile marketing
PRODUCT/SERVICES CUSTOMISATION
Traditionally, marketers created market segments to divide consumers into
meaningful and similar groups to enable the formulation of strategies. Internet has
provided the discerning consumers the power and ability to monitor and track
information on prices and brands. These consumers are acutely aware of the value
of time and convenience. In such a scenario, marketers need data-mining
techniques to target individual consumers.
The objective of marketers should not be only to maximise the market share. It
should be also to maximise the lifetime value of the individual consumer. This
requires involving the consumer, establishing an ongoing dialogue with him/her
and customizing the product to his/her needs. There is an interesting implication of
the strategy of customization. While services (travel, financial, hotel and hospital)
offer a wide scope for customisation, product related customisation is limited.
Decades ago, Theodre Levitt published a simple but profound article (even in the
digital economy) which looks at products essentially as services because they result
in end benefits.
E-TAILING
The following observations remind us that e-commerce is a reality and not a myth.
• Amazon.com, which deals in books and music software, is accessible to
consumers around the world.
• B2B marketing is already experiencing the impact of the internet.
• Electrolux has introduced a web-based washing machine abroad.
• Hindustan Lever Ltd plans to use e-commerce to unlock an inventory worth
Rs. 1,400 crore, which is generally stocked by its 7,000 stockists and over a
million retailers. It has 14 manufacturing locations.
• Amazon.com looking for drone delivery of its products
E-commerce will certainly change the way consumers, manufacturers,
intermediaries and suppliers communicate with each other. But, with all these
developments, marketers have to consider a few fundamental questions before they
build brands on the Net or woo customers through it.
IMPORTANCE OF SUPPLEMENTARY TECHNOLOGIES
Internet marketers will have to, at a fundamental level, consider the
demographics and penetration levels of prerequisite durable to calculate the
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Target-segments
The companies selling durables also has to market his products to different
segments through a complete productline—washing machines can start from the
‘no-frill’ semi-automatic to ‘fuzzy logic’ ones. Even if internet shopping is
introduced, only a small segment with access to the internet may be interested. The
majority of the sales (for instance, 70 per cent of washing machines sold fall under
the semi-automatic sub-category) will be from non-internet shoppers.
Going by the demographics, it is likely that the major chunk of prospective
customers (first-time buyers as well as replacement buyers) may prefer the
conventional route to buy durables. There may be a small segment, probably a
“multiple-ownership” segment which may be interested in cyber transactions.
One area where internet may have a rapid and direct impact is online trading
of shares and securities. The ICICI has firmed up plans on these lines. Share
brokers may have to offer portfolio management packages to suit different segments
of investors, besides being a part of the trading process.
CONSUMER BEHAVIOUR OF ONLINE SHOPPERS
E-commerce and e-tailing has become a subject of some lively boardroom
discussions. Though there is skepticism about the feasibility of ‘e-models’, the
general feeling is that retailing in India can employ both ‘click and bricks’—meaning
most retailers (in consumer product categories or in business-to-business market)
can integrate e-commerce with their traditional methods. As the penetration of
PCs/ Smart Phone increases, marketers while attempt to employ different models of
e-commerce. This will strengthen their existing distribution system and logistics.
There is need to closely monitor the online behaviour of consumers (both causal
suffers or prospective consumers and serious shoppers) to ensure that e-commerce
is timed appropriately and meaningfully.
Unlike developed markets, the emergency of e-commerce in India is likely to
follow a unique pattern in terms of diffusion due to a host of factors, low
penetration of PCs, development of telecom infrastructure and the uniqueness of
the Indian consumer are some of them. Even in the developed markets which
appear to be idle for e-commerce, several e-ventures seem to be in the red
(including Amazon.com which is yet to post-profits though it is a very consumer
centric company).
Consumer behaviour offers several aspects to the internet marketer. There is
need to develop an infrastructure after ascertaining what a company wants to
accomplish over the internet in a given period. This approach also suggests that
there can be a few more objectives than just selling to the end-consumer. Hence,
internet usage will have to be tailored to the needs of the company. The prerequisite
is creating awareness about the website itself for which advertising in the
traditional media is imperative.
A few aspects of monitoring online consumer behaviour are discussed below-
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ensure the marketeer has a long-term and sustainable advantage. The price will
also have to factor in delivery costs.
Brand Switching Behaviour
Once a company has a base of online shoppers, it may want to probe the
switching behaviour of consumers. The findings can be useful in devising loyalty
programmes. While most consumers may switch because of prices, there may be a
group which may be interested in exclusive services. Consumers spend money on
different kinds of categories. There may be a need to introduce a loyalty programme
which goes beyond the products of the online store. The psychographics of a section
of consumers may reveal that they are movie buffs or theatre lovers. For example
Vodafone or Airtel provides exclusive user offers of their longtime loyalists.
The ‘Snowballing’ Effect on the Web
Research indicates that a huge number of surfers visit specific sites on
recommendation. It may be worthwhile for an online store to have a mechanism
which can help analyse the impact of this word of mouth on the sale or on the
traffic through the Net. The company can also get an idea on the profile of
consumers who spread the word of mouth either with regard to the online store or
on the brands which they had bought through the store.
Web as Interactive ‘Pull’ Medium
As internet evolves, marketers can use it as a medium for conventional
advertising pull. Though advertising on the internet is getting cluttered and there is
uncertainty regarding its effectiveness, it can be used to ‘pull’ the consumer to
retail outlets once interest in the brand is created. A brand like LG which has taken
the innovation route to enter India across durable categories (TV, refrigerator and
microwave) can use graphics to demonstrate the features and their benefits to
convey a ‘value’ proposition at a higher price point.
What is unique about advertising on the web is interactivity which is absent in
the traditional media. Messages and information can be customized to segments
and even individuals. This aspect could be used to explain a specific feature and its
benefits to a consumer. The website can provide pre-sale information which a
consumer expects at retail outlets before he/she buys the durable. Provision of
information isn’t exactly the tops in most outlets (including large outlets which deal
with the number of categories and brands and which also offer products at a lower
price). Internet can come in useful to cater to such a need.
Impact of reviews on consumer Behaviour
One of the great benefits of online shopping is the ability to read product
reviews, written either by experts or fellow online shoppers.
The Nielsen Company conducted a survey in March 2010 and polled more
than 27,000 Internet users in 55 markets from the Asia-Pacific, Europe, Middle
East, North America, South America to look at question such as “How do
consumers shop online?”, “What do they intend to buy?”, “How do and other factors
online shopping web pages?”, and the impact of social media and other factors that
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come into play when consumers are trying to decide how to spend their money on
which product or service. According to the research, reviews on electronics (57%)
such as DVD players, cell phones, or Play stations, and so on, reviews on cars
(45%), and reviews on software (37%) play an important role in influencing
consumers who tends to make purchases online. Furthermore, 40% of online
shoppers indicate that they would not even buy electronics without consulting
online reviews first.
In addition to online reviews, peer recommendations on online shopping pages
or social media websites play a key role for online shoppers when they are
researching future purchases.90% of all purchases made are influenced by social
media. Each day, over million buyers are shopping online for jewelry.
Impact on Markets and Retailers
Economists have theorised that e-commerce ought to lead to intensified price
competition, as it increases consumers’ ability to gather information about products
and prices. Research by four economists at the University of Chicago has found
that the growth of online shopping has also affected industry structure in two areas
that have seen significant growth in e-commerce, bookshops and travel agencies.
Generally, larger firms are able to use economies of scale and offer lower prices. The
lone exception to this pattern has been the very smallest category of bookseller,
shops with between one and four employees, which appear to have withstood the
trend. Depending on the category, e-commerce may shift the switching costs-
procedural m relational and financial-experienced by customers.
Individual or business involved in e-commerce whether buyers or sellers rely
on Internet –based technology in order to accomplish their transactions-commerce
is recognized for its ability to allow business to communication and to form
transaction anytime and anyplace. The power of e-commerce allows geophysical
barriers to disappear, making all consumers and businesses on earth potential
customers and suppliers. Thus, switching barriers and switching costs may shift.
eBay is a good example of e-commerce businesses are able to post their items and
sell them around the Globe.
In e-commerce activities, supply chain and logistics are two most crucial
factors need to be considered. Typically, cross-border logistics need about few
weeks time around. Based on this low efficiency of the supply chain services,
customer satisfaction will be greatly reduced.
BRICKS AND CLICKS BUSINESS MODEL
A Bricks and Clicks Business Model can benefit various members of a
customer base. For example, supermarkets often have different customer types
requiring alternative shopping options; one group may wish to see the goods
directly before purchase and like the convenience of quickly shopping on-the-fly,
while another group may require a different convenience of shopping online and
getting the order delivered when its suits them.
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Having a Bricks and Clicks Model means both customer groups is satisfied.
Online- retailers have stated that they have found benefit in adding a brick-and –
mortar presence to their online-only business, as customers can physically see and
test products before purchase as well as get advice and support on any purchase
they have made. Additionally, consumers are likely to feel safer and have more
confidence using a bricks- and –clicks business if they already know the brand
from a Brick-and-Mortar store.
For Consumers
• Some argue that online shopping, which makes price comparison easier for
customers, encourages a ‘race-to-the-bottom’, where retailers only compete on
price, with quality and service deteriorating as a result. This is especially
prevalent when comparison shopping websites such as my supermarket allows
prices to be compared without even visiting a retailers’ website.
• The prices listed online may not match the prices listed offline. The reasons for
this include mis-management, and economics (overhead cost of an online
purchase and offline purchase is different. This may result in confusion and
deviation of exceptions for the buyers.
• Buyers may end up buying more items than they need, because online
businesses are able to show them items, more promotions and more
advertisements.
More recently, brick and mortar business owners, and big-box retailers in
particular, have made an effort to take advantage of mobile commerce by utilizing a
number of mobile capabilities such as location-based services, barcode scanning,
and push notifications to improve the customer experience of shopping in physical
stores. By creating what is referred to as a ‘bricks and clicks’ environment, physical
retailers can allow customers to access the common benefits of shopping online
(such as product reviews, information, and coupons) while still shopping in the
physical store. This is seen as a bridge between the gap created by e-commerce and
in-store shopping, and is being utilised by physical retailers as a way to compete
with the lower prices typically seen through online retailers.
The Google Wallet Mobile App launched in September in 2011 and the M-
commerce joint venture formed in June 2011 between Vodafone, 02, Orange and T-
mobile are recent developments of note. A survey states that in 2012, 41% of
Smartphone customers have purchased retail products with their mobile devices.
Some people have suggested that the Internet may be a less expensive way to
distribute products than traditional “brick-and-mortar” stores. However, in most
cases, selling online will probably be more costly than selling in traditional stores
due to the high costs of processing orders and direct shipping to the customer.
Some products may, however, be economically marketed online.
Some factors that are relevant in assessing the potential for e-commerce to be
an effective way to sell specific products are:
• “Value-to-bulk” ratio. Products that have a lot of value squeezed into a small
volume (e.g., high end jewelry and certain electronic products) are often more
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to log in to her laptop and try to recall the web address of the store she visited last
week, and surely no need to find a babysitter to cover for her while she runs to the
local store.
Research demonstrates that consumers of mobile and wireline markets
represent two distinct groups who are driven by different values and behaviours,
and who exhibit dissimilar psychographic and demographic profiles. Research
shows that how individuals relate to four situational dimensions- place, time, social
context and control determine to what extent they are ubiquitous or situated as
consumers. These factors are important in triggering m-commerce from e-
commerce. As a result, successful mobile commerce requires the development of
marketing campaigns targeted to these particular dimensions and according user
segments.
Uses of the Internet in Marketing
Online marketing can serve several purposes:
• Actual sales of products—e.g., Amazon.com.
• Promotion/advertising: Customers can be quite effectively targeted in many
situations because of the context that they, themselves, have sought out. For
example, when a consumer searches for a specific term in a search engine, a
“banner” or link to a firm selling products in that area can be displayed.
• Customer service: The site may contain information for those who no longer
have their manuals handy and, for electronic products, provide updated
drivers and software patches.
• Market research: Data can be collected relatively inexpensively on the Net
There are a number of economic realities of online competition:
• The costs of handling online orders are often higher than that of distributing
through traditional stores.
• Even if online selling is more cost effective in some situations, a firm selling
online will, in the long run, be competing with other online merchants—not
just against traditional “brick-and-mortar” stores. By the forces of supply and
demand, online prices will then be driven down so that the profit from selling
online will be no greater than that from traditional retailing. Any reduced costs
would then be expected to go to customers.
• Competition will be greater for products that have large markets than for those
where markets are smaller and more specialized. Amazon.com, for example,
has found it necessary to discount bestselling books deeply. Higher prices—
closer to the list price—can be charged for specialty books, but for a large part
of the market, competition will be intense.
• A new online merchant will face competition from established traditional
merchants. These will often have the cash reserves to stay in business for a
long time even with temporary competition. The online merchant, if it has no
cash reserves other than stockholders’ investment, may run out of cash before
it can become profitable.
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• Relevant keywords. Note that the ranking algorithm tests for “spam.” Reckless
repeating keywords may actually count against the rating of the site.
• The “click-through” share of the site. Since late 2006 or early 2007, Google
reportedly fine-tunes rankings by observing the percentage of the time that a
particular site is chosen for a given set of search terms. Sites that are selected
more frequently may improve in rank .
Other methods include “viral” campaigns wherein current users are used to
spread the word about a site, firm, or service. Amazon.com at one point invited
people, when they had completed a purchase, to automatically e-mail friends whose
e-mail addresses they provided with a message about what they had just bought. If
the friend bought any of the same items, both the original customer and the friend
would get a discount.
Another method of gaining traffic is through online advertising. Sites like
Google are mainly sponsored by advertisers, as are many sites for newspapers and
magazines. Individuals who see an ad on these sites can usually click to go to the
sponsor’s web site. Occasionally, a firm may advertise their sites in traditional
media..
Viral marketing is more suitable for some products than for others. To get
others involved in spreading the word, the product usually must be interesting and
unique. It must also be simple enough so that it can be explained briefly. It is most
useful when switching or trial costs are low. For Google’s one gigabyte e-mail
account, for example, there are large costs that may be covered by advertising
revenues from ads aimed at people who can afford to buy products and services.
Advertisers, however, may not be willing to pay for targets who cannot afford their
products. It is also difficult to control “word of mouth” (or “word of keyboard).
Online promotions: One way to generate traffic is promotions. Many sites
often offer new customers discounts or free gifts. This can be expensive, but
sometimes, the gifts can be ones that have a low marginal cost. For example, once
the firms pays for the development of a game, the cost of letting new users
download it is modest. The U.S. army uses this approach in making a game
available. To be allowed to use some of the “cooler” features, the user has to go
through various stages of “basic training.”
The Retail Scene
Retail scene outlet to refer to any source of products or services for consumers.
In earlier editions of this text, we used the term store. However, increasingly
consumers see or hear descriptions of products in catalogues, direct-mail pieces, or
various print media; on television or radio; or on the internet; they then acquire the
products through mail, telephone, or computer orders. Generally referred to as in-
home shopping, these sources represent a small but rapidly growing percentage of
total retail sales.
Internet Retailing
Based on the purchase characteristics relative to internet shopping,
consumers are categorised as:
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group if their fears about credit card security, shipping charges, and buying
products sight unseen were overcome.
• Shopping avoiders: they have an appealing income level, but their values make
a poor target for online retailers. They don’t like to wait for products to be
shipped to them, and they like seeing merchandise in person before buying.
They have online shopping issues that retailers will not easily be able to
overcome.
• Technology muddlers: they spend less time than any other segment online and
show little excitement about increasing their online comfort level. They are not
an attractive market for online retailers.
• Fun seekers: they see entertainment value in the internet, but buying things
online frightens them. Although security and privacy issues might be
overcome, the spending power of segment suggests that only a marginal long-
term payback would be possible.
With the sudden rise of e-Commerce, most brand and cost conscious
consumers are turning towards portals for buying or comparing product price with
brick – N – Mortar stores. Currently the products Indian consumers are buying
through online are smart phones, clothes, books, low value white goods, stationery,
electronics, educational material and lately e Learning courses.
The Indian consumers today wants to lead a life full of luxury and comfort.
The want to live in present and does not believe in savings for the future.
Consumers now have the power of information at their fingertips, enabling them to
compare and shop wide range of goods and services anytime, anywhere. Lately, this
trend has accelerated, as mobile apps have been playing larger transformative role
to consumer fingertips. An online business must have their different identity from their
competitors so that it can sustain in business market among various online websites.
Consumer satisfaction is vital factor for the online business to remain competitive
24.4 REVISION POINTS
1) E-tailing
2) Importance of Technology for e-shopping
3) Behaviour patterns and Retail outlets
4) Consumer Behaviour and Internet Shopping
5) Consumer Behaviour of Online Shoppers
6) Online Marketing
7) Issues in website designing
8) Bricks and Clicks Model
9) Characteristics of online Shoppers
10) Mobile marketing
24.5 INTEXT QUESTIONS
1) Give a note on progress in e-commerce
2) State the reasons for why e-commerce is a reality
3) Explain the characteristics of e-shoppers
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