Consumer Behaviour

Consumer Behaviour
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Copyright PCTI Group 2009
Block 1
Consumer Behaviour Issues and Concepts
Nature of Consumer Behaviour

Consumer Behaviour can be defined as: "The decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services. Initiator The person who determines that some need or want is not being met. Influencer The person who intentionally/unintentionally influences the decision to buy the actual purchase and/or use of product or service.
Buyer The person who actually makes the purchase. User The person who actually uses or consumes the product or service.
THE DECISION PROCESS
INDIVIDUAL DETERMINANTS
Motivation and Involvement Attitudes Personality and Self-concept Learning and Memory Information Processing
EXTERNAL ENVIRONMENT
Cultural Influences Sub-cultural Influences Social Class Influences Social Group Influences Family Influences Personal Influences Other Influences
APPLICATIONS OF CONSUMER BEHAVIOUR IN MARKETING

Analyzing Market Opportunity Selecting the Target Market Determining the Product Mix Use in Non-profit and Social Marketing
CONSUMER BEHAVIOUR AND LIFESTYLE MARKETING
CHARACTERISTICS OF LIFESTYLE Lifestyle is a group phenomenon Lifestyle pervades various aspects of life Lifestyle implies a central life interest Lifestyles vary according to sociologically relevant variables
INFLUENCES ON LIFESTYLE
VALS SYSTEM OF CLASSIFICATION
ORGANISATIONAL BUYING BEHAVIOUR organizational buying as a complex process of decision making and communication, which takes place over time, involving several organizational members and relationship with other firms and institutions Buying decision process
ORGANISATIONAL BUYING BEHAVIOUR:
CHARACTERISTICS
Organizational buying is a multiperson buying activity It is a formal activity which follows the procedures laid down in an organization Longer time lag between efforts and results The uniqueness of organizations
Factors influencing Organizational Buying

External environment factors Economic Infrastructural Social Political Competition Regulatory
Organizational factors

objectives Policies objectives Procedures Organizational structure System
Interpersonal factors
Authority Status Empathy Persuasiveness Individual factors Age Income Education Job position Risk attitude
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Buying situation
Straight re-buy situation Modified re-buy New task
Buying Behavior Models

Simple model
Buy grid model
The fishers model
Block 2
Individual influences on buying behavior
Perception process
Stages in perceptual
Primitive categorization Cue check Confirmation check Confirmation completion
Sensory system
Vision Smell Sound Touch Taste
Sensory thresholds The absolute threshold The differential threshold The JND and Webers law
Perceptual selection
Subliminal perception Subliminal techniques embeds auditory messages consumer folklore low level auditory stimulation
Consumer motivation and involvement

Need and types of needs need for affiliation need for power need for uniqueness
Maslows hierarchy needs
Motivation
Refers to the process that cause people to behave as they do
Theories of motivation
Instinct theory Drive theory Expectancy theory
Motivational conflicts
Types of involvement
Purchase involvement message-response involvement ego involvement Measuring involvement Development of involvement Segmenting by involvement Strategies of to increase involvement
Attitude and its constituent

Attitude is learned predisposition to respond in a consistently favorable and unfavourable manner with respect to given stimuli
Functions of attitude
Attitude models
Multi-attribute model
ATO
These models seek information on the importance of brand attributes, belief about presence and absence of those attributes and information on their combined effect
algebraically
Behaviour intention model

This model predict intentions to behave Algebraically B=BI = W1 (AB) + W2 (SN): where B = behavior; BI = Behaviour Intention AB = attitude toward performing the behavior SN = the subjective norm W1 and W2, are empirically determined weights, through regression analysis. AB and SN are obtained directly from consumers via questionnaires. Thus, AB is obtained from the following equation: Where
where
SN = subjective norm;
NBj = the normative belief that a reference group of persons j thinks that the consumer should or should not perform the behaviour; MC = the motivation to comply with the influence of the referent j and n = number of relevant reference Copyright groups of individuals. PCTI Group 2009 | <document classification>
Learning and Memory

Learning refers to the permanent change in the behavior caused by experience. Theories of learning Classical conditioning :theory given by Ivan Pavlov.Acc.to theory learning occurs when stimulus elicit a response paired with another stimulus that initially does not elicit as response on its own, but will cause a response over time since it is associated with the first stimulus
Operant conditioning
This is given by B.F.Skinner acc.to this theory individual learns to perform behaviors that produce positive outcome and avoid those having negative outcome. Instrumental learning occurs in 2 ways +ve reinforcement in the form of reward response is strengthened. _ve reinforcement strengthens responses so that Appropriate behavior is learned.
Issues of learning
Issue of consciousness Observational learning
Memory:structure and functioning

Is the process of acquiring information and storing it over time so that it will available when needed.
Relationship among memory systems
Retrieving information
is the process whereby information is accessed from long-term memory Measuring memory for advertising Recognition vs. recall Starch test Problems with memory measures Response biases Memory lapses Memory vs. feeling
Marketing applications
Repetition Conditioning product associations Stimulus generalizations Strategies on stimulus Family branding Product line extensions Licensing Look-alike packaging Reinforcement of consumption
Personality and self concept

Refers to a person's unique psychological make up and how it consistently influences the way a person response to the environment
Personality determinants
Theories of personality 1) Psychoanalytic theory

given by Sigmund freud . Acc. to this personality is the product of Id Ego Super ego 2) Neo-Freudian theory Acc .to this theory personality is classified into three groups
Compliant individuals Aggressive individuals Detached individuals
Trait theory
a person's unique psychological make up that allows him to respond in a consistent manner
THE THEORY OF SELF-CONCEPT

Self-Consciousness Self esteem Multiple selves Symbolic interactionism The looking-glass self
CONSUMPTION AND SELF-CONCEPT

Self Image-Product Image Congruence The Extended Self four levels of extended self a) Individual level b) Family level c) Community level d) Group level
Block 3
Group influences on consumer behaviors
REFERENCE GROUPS
reference groups are defined as groups that a person refers to, and identifies with, to the extent that the group becomes a norm, standard or point of reference. Types of reference groups 1) Membership or Non-membership groups 2) Formal or Informal Groups 3) Primary or Secondary Groups 4) Aspiration groups Anticipatory aspiration groups Symbolic aspiration groups
On the basis of function
normative group
comparative group status group dissociative group status group
Types of power 1) Reward Power

2) Coercive Power 3) Legitimate Power 4) Referent Power 5) Expert Power
REFERENCE GROUP INFLUENCE ON PRODUCTS 1) Influence on Product and Brand (Public

Luxuries) 2) Influence on Product only (Private Luxuries) 3) Influence on Brand only (Public Necessities) 4) No Group Influence (Private Necessities)
Reference Group Applications in Marketing

Use of celebrities for product endorsements Use of experts for product endorsements Use of spokespersons for product endorsements
OPINION LEADERSHIP
Opinion leadership has been defined as the process by which one person, the opinion leader, informally influences
OPINION LEADERSHIP PROCESS
THE CONCEPT OF SOCIAL CLASS: ITS NATURE AND MEANING

Social class refers to the social position that an individual occupies in society
SOCIAL CLASS AND SOCIAL STRATIFICATION

The significance of social stratification is that there are differences in values and attitudes of each of the classes. These differences are reflected in their lifestyles and their purchasing patterns and consumption characteristics and, therefore, provide a basis on which to segment the market
SOCIAL CLASS AND SOCIAL INFLUENCES Type of Social Influence normative social influence informational influence
SOCIAL CLASS CATEGORISATION
SOCIAL CLASS AND BUYING BEHAVIOUR

People's buying behavior is strongly influenced by the social class to which they belong.Social class measures have also been linked to demographic and geographic data
CONSUMER SOCIALISATION
Consumer socialization is the process by which young people acquire the skills, knowledge and attitudes relevant to their functioning as consumers Factors
Influencing Consumer Socialization 1)The Background/Environmental Factors 2)The Socializing Agents
INTERGENERTIONAL INFLUENCES
FAMILY ROLE STRUCTURE AND BUYING BEHAVIOUR The Instigator (Initiator): This is the person who first suggests the idea of a product or service and initiates the purchase process, to begin with The Influencer: This is someone whose opinion is valued in the decision-making process. An influencer may be a friend, brother, sister, spouse, doctor The Decider: This is the person who makes the final decision on what brand or make to buy, after all aspects such as price, quality, servicing, have been thought over.
The Purchaser (Buyer): This is the individual who actually purchases the product, pays for it, takes it home or arranges for delivery The Consumer: He is the user of the goods or service. Family Decision Stages Problem recognition Search for information Evaluation of alternatives
Final decision Purchase
THE DYNAMICS OF FAMILY DECISION-MAKING

Wife-dominant decisions: Wives have been found to dominate decisions on food purchase, groceries, household furniture and appliances. Husband-dominant decisions: Husbands have been found to dominate the decisions on purchases such as automobiles and life insurance. Syncratic decisions (Joint decisions): These are decisions in which husbands and wives share influence. Vacations, choice of schools for children, for example, are jointly decided. Autonomic decisions (Unilateral decisions): Decisions of lesser importance that either the husband or wife make independently
The element of power within the family is obtained from a variety of sources Economic resources Cultural norms Expert power Legitimate power Bargaining power Bargaining power Emotional power
The family Life Cycle Stages

The Bachelor Stage (Young and single) In the bachelor stage of the life cycle, income is low, few financial burdens The Newly Married Couples (Young, no children) the requirements and resources change. Household requirements increase. In addition, in some cases, both partners may be working. This stage therefore represents a high expenditure period.
Full Nest 1 (Young, married, with child) The arrival of a child creates major changes. The financial resources change.Child rearing and educational responsibilities increase. Full Nest 2 (Older, married, with children) The family's financial position starts to improve because of career Full Nest 3 (Older, married, with dependent children) Income is high. they represent experienced buyers and less interested in new product purchases. Expenditures continue to be high
Empty Nest (Older, married, with no children living with them) financial position stabilizes Savings accumulate. Hobbies become an important source of satisfaction. More is spent on luxury appliances Solitary Survivor (Older, single, retired people) more economical lifestyle lower income due to retirement
Culture and subculture

Culture is defined as: "a complex set of values, ideas, beliefs, attitudes and other meaningful symbols, created by human beings to shape human behaviors and the artifacts of that behavior as they are transmitted from one generation to another . culture is divided into two components 1) internal mental culture 2) The external material culture
THE CHARACTERISTICS OF CULTURE

Culture is invented Culture is a set of learned responses Culture is shared Culture is gratifying and persistent Culture is dynamic and adapts Culture is an organized and integrated whole
Cultures are similar yet different
Culture is prescriptive
CULTURAL VALUES
A cultural value can be defined as a widely held belief that endures over time Two types of values Instrumental values Terminal values
SUBCULTURES AND THEIR INFLUENCE

Subcultures can be defined as a distinct cultural group that exists within a layer, complex society as an identifiable segment in terms of its beliefs customs and values Types of subcultures Racial or nationality subcultures Religious subcultures Geographical and regional subcultures Age subcultures
Block 4
The buying process
PROBLEM RECOGNITION
INFORMATION SEARCH
Is the search for information Types of information search
Types of Information Search

Internal search External search Sources of Information Internet Advertising In-store promotion Dealer information package information Sales personnel samples and demonstrations
INFORMATION PROCESSING
a series of activities by which stimuli are transformed into information, stored and used Information processing consists of two separate terms: Information and Processing Information is "all facts, estimates, predictions, and generalized relationships which affect a decision maker's perception of the nature and extent of uncertainties associated with a given consumption problem or opportunity
Processing Processing refers to the act(s) by which the stimulus is converted into response
THE INFLUENCING FACTORS

demographics of the consumers psychographic factors information characteristics themselves cultural environment media characteristics
ALTERNATIVE EVALUATION IN BUYING DECISIONS
ALTERNATIVE EVALUATION : FOUR COMPONENTS Product Attributes Utility Function Importance Weights of Attributes Brand Beliefs Based on Consumer Perception
FORMATION OF BRAND SETS FOR ALTERNATIVE EVALUATION
THE CHOICE-MAKING RULES Consumers

Consumers make a variety of choices. These are made on the basis of certain criteria known as choice rules or heuristics. The Benefits of Choice Heuristics provide with guidance while making decisions; offer a short cut to a decision; allow them to integrate and arrange information In consumer information processing help them better in facing complexities
The Use of Choice Rules

The most complicated buying decision behavior is known as Extended Problem Solving (EPS). It is seen mostly for high involvement products. The second type is the Limited Problem Solving (LPS). It is The most common and routine process is called Routine Response Behaviour (RRB). The last one is most evident in respect of low involvement products.
The Choice Rules and the Multi-Attribute Choice Models

Multi-attribute choice models explain how consumers combine their beliefs about product attributes to form their attitudes about various brand alternatives. These models assume that the brand which receives the best attitude will be chosen. The Choice Rules and the Ideal Brand Model This model prescribes that a consumer will compare actual brands to his ideal brand. The closer an actual brand comes to this ideal, the more it will be preferred.
THE BASIC CHOICE HEURISTICS
THE MARKETING RESPONSE TO THE CHOICE HEURISTICS Relying on a product signal Market beliefs as heuristics Price as a heuristics Brand name as a heuristic
PURCHASE PROCESS & POSTPURCHASE BEHAVIOUR

PURCHASE PROCESS Consumers make two types of purchases Trial purchase and repeat purchases. `If a consumer purchases or is induced to purchase for the first time, a smaller quantity than usual this is termed as a product trial. Repeat purchase on the other hand, indicates commitment on the part of the customer towards the product, company and others. It is closely related to concept of development of brand loyalty and signifies that the product has met with the consumers' expectations.
Determinants of Choice Process
STEPS TO BENEFIT FROM SITUATIONAL INFLUENCES

Identify the relevance of each situational factor on his buying process; Determine the impact of relevant situational variables through appropriate research; Consider appropriate segmentation and positioning based on the findings;
Develop an appropriate marketing mix,

incorporating the above; Remember the general findings and hypothesized relationships between situational variables and purchase process.
AN ANATOMY OF NON-STORE BUYING

non-store buying is known as direct marktingThe Direct Mail Marketing Association (DMMA) has defined Direct Marketing as follows: "Direct (response) marketing is the total of activities by which products and services are offered to market segment in one or more media for information purposes, or to solicit a direct response from a present or prospective customer or contributor by mail, telephone or other access."
ROUTES OF NON-STORE BUYING

The in-home buyer Tele Marketing Mail-order buying Direct in-home sales
Interactive video selling
POST-PURCHASE BEHAVIOUR
Post purchase activities
Formation of Satisfaction/Dissatisfaction
THEORIES OF POST-PURCHASE EVALUATION
Responses of a Dissatisfied Customer
Block 5
MODELLING BUYER BEHAVIOUR
EARLY MODELS
ECONOMIC MODELS The economic theory, which largely explains behaviour on the basis of allocation of scarce resources among unlimited needs and wants, has given alternative views of the consumer from the view point of its sub-disciplines, i.e. micro-economic and macro economics. Micro economic models:The focus was on the act of purchase in terms of what customer bought and how much would be purchased
Macro economic perspective

Macro economics, focused on aggregate flows in the economy, their direction and change over time. Macro economic field are important for our understanding of consumer behaviour. These are the relative income hypothesis hypothesis Higher income families spend a lower portion of their disposable income as compared to the lower income families. thesis. the permanent income hypothesis is that individuals are slow to change their consumption patterns even when there are sudden changes in their income.
stimuli are inputs which are capable of arousing drives or motives. Cues is a sign or signal which acts as a stimulus to a particular drive. The way an individual reacts to the stimuli is known as his response. If the response to a given stimulus is "rewarding", it reinforces the possibility of similar response
THE PSYCHOLOGICAL MODEL (THE PAVLOVIAN LEARNING MODEL)

The learning model was first introduced by Ivan Pavlov.The model suggests that human behaviour is based on some central concepts the drives, stimuli, cues, responses and reinforcements which determine the human needs and needs satisfying behaviour a drive is a strong internal stimulus which compels action.
stimuli are inputs which are capable of arousing drives or motives. The way a person responds to a given stimulus would depend upon the Configuration of cues. Cues is a sign or signal which acts as a stimulus to a particular drive. The way an individual reacts to the stimuli is known as his response. Copyright PCTI Group 2009 | | <document classification>
THE GESTALT MODEL Empahsis on man and his environment. individuals perceive and interpret the stimuli in relation to their own individual experiences. the gestalt theory dealt specifically with the physical perception of stimuli
THE PSYCHOANALYTIC MODEL Sigmund Freud is the founder of this model. Pioneered the procedure of observation and analysis to understand the personality complexities
THE COGNITIVE DISSONANCE

Leon Festinger, the propounder of the theory hypothesised that: The existence of dissonance (a state of imbalance in the cognitive structure) is psychologically uncomfortable and will lead the person to reduce dissonance and achieve consonance (i.e. balance)
Whenever dissonance exists, the person will

try to avoid situations and information which add to dissonance.
SOCIOLOGICAL MODEL
This model is given by thorsteine veblen He suggested that man's needs and behaviour are dependent upon and shaped by the social groups and forces.
HOWARDSHETH MODEL
TYPES OF PROBLEM SOLVING BEHAVIOUR

1) Extensive problem solving behaviour repetitive decision making where the buyer has not yet developed strongly predispositions 2) Limited problem solving behaviour where because of learned experience about the brands, the choice criteria have a clear definition and organization, but the buyer is still undecided about the actual choice among the alternatives.
3) Routinised response behaviour The buyer on account of the learned experience has now well defined evaluative criteria and strong predisposition towards one particular brand
THE EVALUATIVE CRITERIA The evaluative criteria are the consumer's reference scale on which he judges the brands as alternative choices
CLASSIFICATION OF CURRENT MODELLING EFFORTS Modelling Objectives Description of buying behaviour Describing the consumer processes Predictability and Control of Consumer behaviour
Support of Basic Disciplines

Decision Sciences Anthropology Systems Dynamics and Simulation
Support of Analytic Techniques

stepwise regression analysis, correspondence analysis are very often used for identifying the salient variables and their relationships out of the observed data. Factor analysis and multidimensional scaling techniques are used for reducing data. Conjoint analysis has come as a handy tool for such purposes.
SOME RECENT MODELS

a) Nicosia's Model of Consumer Decision Process This model elaborates the decision making steps that the consumers adopt before buying goods or services.
BETTMAN'S INFORMATION PROCESSING MODEL OF CONSUMER CHOICE
The main components of the model are the following Processing Capacity Motivation Attention and perceptual encoding Information acquisition and evaluation Memory Decision process Consumption and learning processes Scanner and interrupt mechanisms
EVALUATION OF CONSUMER BEHAVIOUR MODELS i) External validity

ii) Internal validity iii) Robustness iv) Generalisability v) Descriptive ability vi) Predictability vii) Simplicity viii) Comprehensiveness

Consumer Behaviour

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Consumer Behaviour

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