COURSE MATERIAL

Department : Management Studies

Academic Year : 2011 – 2013

Trimester : Third semester

Subject Code : MBA M0901

Subject : Consumer Behavior

Name of the Faculty : S.Dharmalingam

Designation : Asst Professor

Note:- This will be only a guideline not a study material

Consumer Behavior

Unit – 1Introduction:

Businesses stay in business by attracting and retaining customers. They do this by

engaging in exchanges of resources including information, money, goods, services,

status, and emotions with consumers, exchanges that both businesses and customers

perceive to be beneficial. When companies ask, who are our customers? How do we

reach them? What should we sell to them? What will motivate them to buy? What

makes them satisfied? They are asking questions that require sophisticated understanding

of consumer behaviour. This unit provides a brief insight into the meaning and

perspective of Consumer behaviour as well as understanding why it is important to study

consumers.

The term consumer behavior is defined as the behavior that consumer display in

searching for purchasing, using, evaluating and disposing of product and services that

they expect will satisfy their needs. Consumer behavior focuses on how individuals make

decisions to spend their available resources (time, money, effort) on consumption related

items. This includes what they buy, why they buy it, when they buy it, where they buy it,

how often they buy it, how often they use it, how they evaluate it after the purchase and

the impact of such evaluation on future, and how they dispose of it.

In another words, consumer behavior can be define as the behavior of individuals

in regards to acquiring, using, and disposing of products, services, ideas or experiences.

Consumer behavior also includes the acquisition and use of information. Thus,

communication with consumers and receiving feedback for them is a crucial part of

consumer behavior which is of great interest to marketers

American Marketing Association defines consumer behavior as “the dynamic

interaction of affect and cognition, behavior and the environment by which human beings

conduct the exchange aspects of their lives”

The Dictionary of Marketing and Advertising defines consumer Behaviour as

“Observable activities chosen to maximize satisfaction through the attainment of

economic goods and services such as choice of retail outlet, preference for particular

brands and so on”.

According to Loudon and Della Bitta, Consumer Behaviour is “ the decision

process and physical activity of individuals engage in evaluating, acquiring, using, or

disposing of goods and services.”

According to Schiffman and Kanuck, the term consumer Behaviour refers to

“the behaviour that consumers display in searching for, purchasing, using, evaluating,

and disposing of products and services that they expect will satisfy their needs” and the

study of Consumer behaviour is the study of how individuals make decisions to spend

their available resources – like time, money, and effort – on consumption related items.

It is important to recognize from this definitions that consumer behavior is

dynamic, involves interactions and involves exchanges.

CONCEPTS AND COMPONENTS OF CONSUMER BEHAVIOUR

To succeed in the market the marketer must have a through knowledge on

organization’s own capabilities, the capabilities of current and future competitors, the

consumption process of potential customers, and the environment such as economic,

physical and technological which interact with these concepts.

1. Consumer

2. Company

3. Competitors

4. Conditions

1. CONSUMER: It is not possible to anticipate and react to customers needs and desires

without a complete understanding of consumer behavior. Discovering customers’ current

needs is a complex process. But it can generally be accomplished by direct marketing

research.

2. COMPANY : A firm must fully understand its own ability to meet customer needs.

This involves evaluating all aspects of the firm, including its financial conditions,

general managerial skills, production capabilities, research and development capabilities,

technological sophistication, reputation, and marketing skills.

Marketing skills would include new product development capabilities, channel

strength, advertising abilities, service capabilities, marketing research abilities, market

and consumer knowledge and so forth.

3. COMPETITOR: It is not possible to consistently do a better job of meeting

customer needs than the competition without a thorough understanding of the

competitors’ capabilities and strengths. This requires the same level of knowledge of a

firm’s key competitors that is required of one’s own firm.

4. CONDITIONS: The state of the economy, the physical environment, government

regulations, and technological developments affect consumer needs and expectations as

well as company and competitor capabilities. The deterioration of the physical

environment has produced not only consumer demand for environmentally sound

products but also government regulations affecting product design and manufacturing.

SIGNIFICANCE OF CONSUMER BEHAVIOUR:

The study of consumers helps firms and organizations to improve their marketing

strategies by understanding issues such as

How consumers think, feel, reason, and select between different alternatives (e.g.,

brands, products);

How the consumer is influenced by his or her environment (e.g., culture, family,

signs, media);

How consumer behave while shopping or making other marketing decisions;

How the consumer knowledge or information processing abilities will influence

decisions and marketing outcome; 

How consumer motivation and decision strategies differ between products and to

measure the level of importance or interest on the difference; and

How marketers can adapt and improve their marketing campaigns and marketing

strategies to more effectively reach the consumer.

DIMENSIONS OF CONSUMER BEHAVIOR:

Consumers vary tremendously in their ages, incomes, education level, mobility

pattern, tastes and preferences. Around two decades ago, it was seen that their economic

and mental forces govern consumer purchase decision. But now, consumer behavior can

be said to be the melding of all those bodies of knowledge concerning with human

behavior – behavioral sciences.

THREE DIMENSIONS OF CB FROM CONSUMER’S PERSPECTIVE

1. Consumers are interested in evaluating information in light of their own needs. They

view information as a vehicle for making better choices.

2. Consumers often view an individual product as part of a larger constellation that

reflects their lifestyles.

3. In consumers view competition as an opportunity to gain additional alternatives,

frequently at lower prices.

THREE DIMENSIONS OF CB FROM MARKETER’S PERSPECTIVE

1. The manufacturer or marketers are profit motive. Managers have a vested interest in

presenting their products in the best light possible.

2. The marketers are product specific. Managers introduce, price, advertise, and distribute

individual brands. Consumers must make decisions across a range of brand alternatives.

3. In Marketers view Competition as a threat.

NEED FOR STUDYING CONSUMER BEHAVIOUR

1. Consumers do not always act or react, as the theory would suggest.

2. Consumer preferences are changing and become highly diversified.

3. Consumer research has vividly pointed out that consumers dislike using identical

products and prefer differentiated products.

4. Meeting of special needs of customers’ requirement market segmentation.

5. Rapid Introduction of new products with technological advancement has made the

job of studying consumer behavior more imperative.

6. Consumer behavior can be used to sell products that might not sell easily.

THEORIES OF CONSUMER BEHAVIOUR

1. ECONOMIC THEORIES :-

Law of Diminishing Marginal Utility

Indifference curve analysis

2. LEARNING THEORY

Stimulus Response theory

Classical Conditioning & Operant Conditioning

3. PERSONALITY THEORIES

Freudian Theory

Trait & Factor Theories

4. MOTIVATION THEORY

Maslow’s Theory of Motivation

DISCIPLINES HAVING INFLUENCE ON CONSUMER BEHAVIOR

S.NO DISCIPLINES COMPRISING OF (OR) GOVERNED BY

01 Economics Demand, supply, Income, Purchasing Power.

02. PsychologyNeeds & Motivation, Personality, (Visualizer,

Verbalizers) Perception, Learning and Attitudes.

03. Sociology

Society, Social class, Power, Esteem, Status.

(authority, power, occupation, education, learning,

wisdom, public service, morality, status,

associational ties and connections

04. Socio PsychologyGroup Behaviour, Conformity to group norms, Group

influences, Role leader, Values, Belief, Caste system.

05. Cultural Anthropology Attitude towards wealth, Joint family system.

APPLICATION OF CB KNOWLEDGE IN MARKETING DECISIONS:

Consumer behaviour is complex, dynamic, multidimensional process, and all

marketing decisions are based on assumptions about consumer behaviour.

Marketing Decisions are the game plan which the firms must adhere to, in order

to outdo the competitor or the plans to achieve the desired objective with the help of CB

knowledge.

MARKETING DECISIONS WITH THE KNOWLEDGE OF CONSUMER

BEHAVIOUR

( I ) MARKETING ANALYSIS

Consumer

Company

Competition

Condition

( II ) MARKETING SEGMENTATION

Identify product related needs

Group customers with similar need sets

Describe each group

Select Target market

( III ) MARKETING STRATEGY

Product

Price

Distribution

Communication

Service

( IV ) CONSUMER DECISION PROCESS

Problem recognition

Information Search – Internal, External

Alternative Evaluation

Purchase

Use

Evaluation

( V ) OUTCOMES

Customer Satisfaction

Sales

Product / Brand Image

APPROACHES TO THE STUDY OF CONSUMER BEHAVIOUR

The person who purchases a product is not always the user or only user of the

product. So the marketers have to identify the person who is most likely to influence the

decision – the buyer or user and direct their promotional efforts accordingly.

Marketer Approach: It is important to understand or predict how consumers are likely

to react to various informational and environmental cues and devise marketing strategies

accordingly. This will help to earn competitive advantage at the market place.

Human Behavior scholars approach: Gain insights into why individuals act in certain

consumption related ways and also in learning about the internal and external influences

which impel the consumers to act as they do.

Classical Approach: Consumer behaviour were based on economic theory, on the

perspective that individuals act rationally to maximize their benefits on their purchase of

goods and services and select only those which will give the highest utility at the lowest

cost.

Neo – Classical Approach: The study of consumer behavior from the perspective of

understanding consumer behavior and the meanings behind such behavior is called

Interpretive. Some times this is referred as post modernism.

Modernist approach or Perspective approach: The consumer behavior discipline was

considered to be an applied market science. That is if they could predict consumer

behavior, they could influence it. This approach came to known as positivism and such

consumer behavior researchers came to be known as positivists.

GENERAL APPROACHES TO THE STUDY OF CB:

APPROACHES CORE DISCIPLINE

PRIMARY OBJECTIVE

PRIMARY METHODS

Interpretive Cultural & Anthropology

Understand consumption and its meanings

Long interviews , Focus Groups

Traditional Psychology, Sociology

Explain consumer decision making and

behavior

Experiment surveys.

Marketing Science EconomicsStatistics

Predict consumer choice and behavior

Math – Modeling situation.

SEGMENTS OF CONSUMERS

EXPLORERS

PIONEERS

SKEPTICS

PARANOIDS

LAGGARDS

1. EXPLORERS

a) They are open to embracing the newest of technologies.

b) They are the first ones to be attracted to new technologies.

c) For them, technology is a source of mental stimulation

d) They believe that technology provides them freedom, control and efficiency.

e) They are thought leaders and become a source of information for their friends.

2. PIONEERS

a) They are open to trying new technologies but suffer from some degree of

insecurity.

b) They need some degree of assistance and guidance from the organisation during

their use of new technology.

c) They understand the benefits of technology and want the best and the latest.

d) They are also young; some of them work in technology professions.

e) Most of them have an incidence of computer use in their jobs.

3. SKEPTICS

a) Rank low on motivators but do not have any inhibitions about adopting

technology.

b) They will not be excited about new technology.

c) They wait to see the results of a new technology.

d) They have very low optimism and very low innovativeness.

4. PARANOIDS

a) They are attracted by technology but their insecurity and discomfort levels inhibit

them.

b) They need a little convincing from the marketers to adopt new technology.

c) They also enjoy technology and believe that it increases their efficiency.

d) They might be described as struggling middle class.

e) Most of them are females and not very affluent.

f) They will not take any initiative until they are sure that there are no risks.

5. LAGGARDS

a) Wait for others to adopt technology, and would try only when they convinced

about the benefits.

b) They completely lack faith in technology and not convinced about the benefits of

technology.

c) Most of the laggards are older in age and are in tired.

d) Therefore, efficiency and extended working hours do not attract them.

CUSTOMER

C – COMPANY

U – UTILITY

S – SATISFACTION

T- TECHNOLOGY

O– OPTIONS

M – MONETARY ASPECTS

E – EVALUATION

R – RESPONSE (By Buying / Not buying)

UNIT – 2

CONSUMER BEHAVIOR MODELS

INDUSTIRAL CONSUMER BEHAVIOUR MODELS

1. Nicosia Model

2. A Model of Industrial buying behavior

3. Webster and Wind Model of Industrial consumer behavior.

1. NICOSIA MODEL OF INDUSTRIAL CONSUMER BEHAVIOUR

This model explains Consumer Behavior on the basis of four fields shown in the

diagram.

Field 1 - Message Exposure

Field 2 - Search Evaluation

Field 3 - Act Of Purchase

Field 4 - Feedback & Experience

Sub Field 1 - Firm’s Attributes

Sub Field 2 - Consumer Attributes

Field 1 consists of subfields one and two.

Subfield 1 is the firm’s attributes and attributes of the product.

Subfield 2 is the predisposition of the consumer and his own characteristics and

attributes

Field 2 is the pre action field, where the consumer goes on for research and

evaluation and gets motivated to buy the product. It highlights the means and end

relationship.

Field 3 is the act of purchase or the decision – making to buy the product. The

customer buys the product and uses it.

Field 4 highlights the post purchase behavior and the use of the product, its storage

and consumption.

The feedback from Field 4 is fed into the firms’ attributes or field 1, and the

feedback from the experience is responsible for changing the pre – disposition of the

consumer and later his attitude towards the product.

In general, Nicosia Model is a comprehensive model of dealing with all aspects of

building attitudes, purchase and use of product including the post purchase behavior of

the consumer.

NICOSIA MODEL OF CONSUMER DECISION MAKING PROCESS

Sub Field 1Firm’s Attributes

Sub Field 2 Consumer Attributes

(Pre disposition)

PurchaseBehavior

Decision Action

Motivation

Search Evaluation

Consumption Storage

Field 3 Act of

Purchase

Field 4 Feedback

Field 4 Experience

Attitude

Field 2

Field 1MessageExposure

2. A MODEL OF INDUSTRIAL BUYER BEHAVIOUR

Three main features in this model:

1. Different individuals with different psychological makeup.

2. Conditions leading to joint decision -making.

3. Differences of opinion on purchases or conflicts to reach a decision.

The persons involved in the decision making are from quality control,

manufacturing, finance, research and development and other possible areas. These may

be named as purchase agents, engineers, and users, as referred to in the model.

This constitutes a purchasing committee:

( 1a ) . Different backgrounds

( 1b ) . Different information sources

( 1c ) . Undertake active research

( 1d ) . Perceptual distortion

( 1e ) . Satisfaction with past purchase.

(2a)Product specific factors :

1. Perceived risk – with higher risks joint decisions are favored.

2. Type of purchase – heavy investments are made through joint decision. Less costly

purchase decisions are made independently.

3. Time pressure - if goods are urgently required, individual decisions are favored.

(2b) Company specific factors :

1. Size of the organization

2. Organization orientation

(3)Resolution of buying decision conflicts

Problem Solving

Persuasion

Bargaining

Politicking

(4) Influence of Situational Factors.

Inflation

Recession or Boom

Price Contracts

Rationing Foreign Trade

Strikes or Lockouts

Organizational change such as a Merger, Acquisition change of key personnel etc.,

3. Webster and Wind Model of Industrial Consumer Behaviour A somewhat more comprehensive model of the organizational buyer decision making

process has been developed by Webster and Wind.

According to their views a buying situation is created when some member of the

organization perceives a problem that can be solved through purchasing action.

In response to a buying situation, a buying center is created by the organization,

consisting of those members of the organization who will be involved in the buying

decision process.

According to this model the buying center consists of five buying roles, Users,

deciders, Influencers, Buyers and Gatekeepers.

Each members of the buying center is likely to have unique expectations, perceptions

and objectives, as a function of his role in the organization.

I)MAJOR INFLUENCERS

1. Environmental Determinants

Physical Environment – Supplier, Customer

Technological Environment - Information about supplier’s marketing

communication

Economic Environment - Availability of goods and services

Political Environment- Government, Labour Unions, Trade Associations

Legal Environment - Professional groups, Other social Institutions & Other

Business Firms

Cultural Environment - General Business Conditions & Values and Norms

2. Organizational Determinants

Organizational Climate

Organizational Structure

Organizational Technology

Organizational Goals and Tasks

3. Buying Center

Buying group structure

Group task

Members and leader of the buying center

Member characteristics and goals

Group process through task, activities, Interaction and sentiments

4. Individual participants

Motivation

Cognitive Structure

Personality

Learning process

Perceived Roles

By this way at last the Industrial buying process can be decided either by

Individual Decision making unit, or by Group decision making unit.

INDIVIDUAL CONSUMER DECISION MAKING MODELS

1. Economic Model

2. Psychological Model

3. Pavlovian Model

4. Input , Process ,Output Model

5. Sociological Model

6. Howarth Sheth Model

7. Engel - Blackwell - Kollat Model

8. Model of Family decision making

1. ECONOMIC MODEL

PRICE EFFECT - Lesser the price of the product more will be the quantity purchased.

SUBSTITUTION EFFECT - Lesser the price of the substitute product, lesser will be

the utility of the original product bought.

INCOME EFFECT - When more income is earned, or more money is available, more

will be the quantity purchased.

2. PSYCHOLOGICAL MODEL

3. PAVLOVIAN LEARNING MODEL

• DRIVE - Strong internal stimuli. It stimulates a person to fulfill his desires.

• CUES - Weak stimuli. It determines when the buyer will respond.

a) Triggering Cues: activate decision process.

b) Non triggering cues: Influence the decision process, but do not activate it.

1. Product cues

2. Informational cues

c) Reinforcement : Marketer try to create a good image of the product in the mind of

the consumer for repeat purchases through learning.

4. INPUT, PROCESS AND OUTPUT MODEL

INPUT, PROCESS AND OUTPUT MODEL

NEEDRECOGNITION INTENT ION

PRODUCTAWARENESS INTEREST EVALUATION

INTERESTBREAK DOWN

ATTITUDES

MOTIVATION

PERSONALITY

PERCEPTION

FIRM’S MARK E TING

EFFORT

SOCIALENVIRONMENT

PURCHASE

P-P BEHAVIOR

REPEAT

PURCHASE

DISCONTINUAT

ION

5. BUYERS BLACKBOX MODEL

• BUY ERS BLACK BOX MODEL

PRODUCT ECONOMICALPRICE CULTURALPROMOTION TECHNOPRICE LOGICAL

POLITICAL

MARK ETINGSTIMULI

OTHERSTIMULI

BUY ERS BLACK BOX

BUY ERSCHARACTERS

CULT URAL SOCIAL

PERSONALPSY CHOLOG

ICAL

BUY ERSDECISIONSPROBLEM

RECOGNITIONINFORMATION

SEARCHEVALUATION

DECISIONPOST -

PURCHASEBEHAVIOR

BUY ERSRESPONSE

1. PRODUCT CHOICE

2. BRANDCHOICE3. DEALER

CHOICE4. PURCHASETIMING5. PURCHASEAMOUNT

6. SOCIOLOGICAL MODEL

£ A consumer is a part of the society.

£ His buying behavior is influenced by groups.

£ Primary groups : family members, relatives close associates

£ Secondary groups: member of a political party, dress norms are different.

£ As a member of an elite organization, his dress requirements may be different.

7. HOWRATH SHETH MODEL

• The decision making model is applicable to individuals.

• It has four sets of variables.

First set: Input

(a) Significative stimuli - Physical tangible characteristics, price , quality,

distinctiveness services rendered , and availability of the product .

(b) Symbolic stimuli -

o Same as significative.

o But include the perception of the individual.

o Price is high or low

o Quality is up to the mark or below average.

o How quickly or easily is the product available.

(c) Social stimuli - Provided by family, friends, social groups, and social class.

Second set - Perceptual and learning constructs

Psychological variables - motives, attitudes, & perception.

Third set - out put

Purchase decision - after purchase - satisfaction - positive attitude -

increase brand comprehension. Vice versa

Fourth set - Exogenous or External variables:

Personality traits, social class, importance of purchase, final status

8. ENGEL - BLACKWELL - KOLLAT MODEL

IT CONSISTS OF FOUR COMPONENTS :

1. Information processing

2. Central control unit

3. Decision process

4. Environmental influences.

INFORMATION PROCESSING :

(A). Exposure

(b). Attention

(c). Comprehension

(d). Retention of the marketing and non - marketing stimuli.

9. MODEL OF FAMILY DECISION - MAKING

How The Family Members Interact With Each Other In The Context Of Their

Decision Making.

Different Consumption Role:

1. Influencers

2. Gate Keepers

3. Deciders

4. Buyers

5. Preparers

6. User

Implications of the models in marketing decisions:

Over the years several models have been put forward with the intention of

explaining individual buying behavior and industrial buying behavior. This various

models help the marketer to derive a solution to their market problem.

The individual consumer behavior models show the influence of family members

during purchase. So, the marketer must target the not only the specific target category,

but also the entire family member of the specific family.

As like as in industrial consumer behavior models, the company may forced by its

competitors and customers indirectly to manufacture the product, to modify, to formulate,

the production strategies.

UNIT- III

CONSUMER BEHAVIOUR INTERNAL INFLUENCES

CONSUMER NEED & MOTIVES

The role of Needs and Motives in Consumer Behaviour is very important.

Because every consumer wants to purchase any item only by his needs and desires. That

needs and desires are clearly formulated by some external motivating factors like, film,

advertisement etc.

NEEDS :

Needs can be said to be a state of felt deprivation in a person. That is needs are a

basic part of human make – up.

CHARACTERISTICS OF NEED:

Needs are never fully satisfied.

New needs emerge as old needs are fully satisfied.

The nature and persistence of an individual’s behaviour are often influenced by

the success and failure in satisfying the needs and reaching the goal.

Substitute goals, on account of defensive reaction from an individual may

influence need negatively.

Needs and goals vary among individuals.

TYPES OF NEEDS:

1. Biogenic Needs – Need for air, water, and sunlight are called as biogenic.

Because they can be physical.

2. Psychogenic Needs – Need of food, shelter, cloth is called psychogenic. Ex:

Becoming a member of a particular society, (or) accumulate wealth for

daughter’s marriage is very high psychogenic need.

3. Utilitarian or Hedonic Needs – This needs implies that consumers will

emphasize the “Objective” and “ Tangible” quality of the products. Product

satisfying hedonic need can be an efficient washing machine, a dishwasher, a

fuel-efficient car. Etc. They also try to satisfy the consumer’s dreams, fantasies

and build up self-confidence.

(Ex: Eureka Vacuum Cleaner, Pillsbury chalky fresh atta, Sun drop edible oil)

Concept of Motivation and Motives

Motivation may be defined as psychological forces that determine the direction of

person’s behaviour, a person’s level of effort, and a person’s level of persistence in the

face of obstacles. In another words, motivation is the process that account for an

individual intensity, direction, and persistence of effort towards attaining a goal.

Motivation is the reason for behavior. A motive is a construct representing an

unobservable inner force that stimulates and compels a behavioral response and provides

specific direction to that response. A motive is why an individual does something.

Theory of Motivation

There are numerous theories of motivation, and many of them offer useful

insights for the marketing manager. This section describes Maslow’s motive hierarchy

approach to understanding consumer motivation. Abraham Maslow organized five major

types of human needs into a hierarchy. The need hierarchy illustrates maslow’s

conception of people satisfying their needs in a specified order, from bottom to top. The

need, in ascending order are; physiological needs (Food, Water, Sex and Shelter), Safety

needs (Protection against threat and deprivation), Belongingness needs (Friendship,

Affection, Affiliation and Love), Esteem needs (Independence, Achievement,

recognition, Self respect, Accomplishment and Freedom), Self-Actualization (Realizing

one’s full potential or Self Fulfillment).

Maslow’s hierarchy of needs approach is based on four premises

All human acquire a similar set of motives through genetic endowment and social

interaction.

Some motive are more basic or critical than others

The more basic motives must be satisfied to a minimum level before other

motives are activated

As the basic motive become satisfied, more advanced motives come into play.

Marketing Strategy and Maslow’s Motive Hierarchy

1. PHYSIOLOGICAL: Food, water, sleeps, and, to an extent, sex, are

physiological motives.

Product Health foods, medicines, sports drinks, low-cholesterol foods, and

exercise equipment.

2. SAFETY: Seeking physical safety and security, stability, familiar surroundings,

and so forth are manifestations of safety needs.

Product: Smoke detectors, preventive medicines, insurance, retirement

investments, seat belts, burglar alarms, and sunscreen.

3. BELONGINGNESS: Belongingness motives are reflected in a desire for love,

friendship, affiliation, and group acceptance

Products: Personal grooming, foods, entertainment, clothing, and many others.

4. ESTEEM: Desires for, superiority, self-respect, and prestige are examples of

esteem needs. The needs relate to the individual’s feelings of usefulness and

accomplishment.

Products Clothing, furniture, liquors, hobbies, stores, and cars amongst others.

5. SELF-ACTUALIZATION: This involves the desire for self fulfillment, to

become all that one is capable of becoming.

Products: Education, hobbies, sports, some vacations, museums.

Classifications of Motives

McGuire has developed a motive classification system that is more specific in

understanding consumer behaviour. McGuire’s motives that are of most use to marketing

are briefly described in the following sections.

Need for Consistency: A basic desire is to have all facets or parts of one consistent with

each other. These facets include attitudes, behaviors, opinions, self-images, views of

others, and so forth. Marketers use this in several ways. First, it makes clear the need for

a consistent marketing mix. The second area of marketing interest with consistency is

called cognitive dissonance. This refers to a tendency of consumers to worry about the

wisdom of major purchases after they have been made. Often making a major purchase is

not consistent with the need to save money or to make other purchase.

Need to Attribute Causation: This set of motives deals with our need to determine who

or what causes the things that happen to us. Do we attribute the cause of a favorable or

unfavorable outcome to ourselves or to some outside force? Attributing cause is part of

the foundation for the use of rhetorical theory to understand consumers’ responses to

persuasive messages.

Need to Categorize: we have a need to categorize and organize information and

experiences in some meaningful yet manageable way. So we establish categories or

mental partitions that allow us to process large quantities of information.

Need for Cues: These motives reflect needs for observable cues or symbols that enable

us to infer what we feel and know. Impressions, feelings, and attitudes are subtly

established by viewing our own behavior and that of others and drawing inferences as to

what we feel and think. In many instances, clothing plays an important role in presenting

the subtle meaning of a desired image and consumer lifestyle.

Need for Independence: The need for independence and individuality is a characteristic

of some culture. It is likely that all individuals in all cultures have this need at some level.

Americans are taught that it is proper and even essential to express and fulfill this need.

In contrast, in countries such as Japan, fulfillment of this need is discouraged, while

fulfillment of the need for affiliation is socially acceptable. Owning or using products and

services that are unique is one way consumers express their independence.

Need for Self-Expression: This motive deals with the need to express one’s identity to

others. We feel the need to let others know by our actions (which include the purchase

and display of goods) who we are and what we are. The purchase of many products such

as clothing and automobiles allows consumers to express their identity to others, since

these products have symbolic or expressive meanings.

Need for Ego-Defense: The need to defend our identities or egos is another important

motive. When our identity is threatened, we are motivated to protect our self-concept and

utilize defensive behaviors and attitudes. Many products can provide ego-defense. A

consumer who feels insecure may rely on well-known brands for socially visible products

to avoid any chance of making a socially incorrect purchase.

Need for Reinforcement: We are often motivated to act in certain ways because we are

rewarded for doing so. Products designed to be used in public situations (clothing,

furniture, and artwork) are frequently sold on the basis of the amount and type of

reinforcement that will be received.

Need for Affiliation: Affiliation is the need to develop mutually helpful and satisfying

relationship with others. Marketers frequently use such affiliation-based themes as “Your

kids will love you for it” in advertisements.

Need for Modeling: The need for modeling reflects a tendency to base behavior on that

of others. Modeling is a major means by which children learn to become consumers. The

tendency to model explains some of the conformity that occurs within reference groups.

Marketers utilize this motive by showing desirable types of individuals using their

brands.

Need for Novelty: We often seek variety and difference simply out of a need for novelty.

Marketers refer to the outcome of this motive as variety-seeking behavior. This may be a

prime reason for brand switching and some so-called impulse purchasing. The need for

novelty is curvilinear and changes over time. That is, individuals experiencing rapid

change generally become satiated and desire stability, while individuals in stable

environments become “bored” and desire change.

Need for Assertion: The need for assertion reflects a consumer’s need for engaging in

those types of activities that will bring about an increase in self-esteem as well as esteem

in the eyes of others. Individuals with a strong need for assertion are more likely to

complain when dissatisfied with a purchase.

Role of Motives

The role of motives is to arouse and direct the behavior of consumers. The arousal

component activates bodily energy so that it can be used for mental and physical activity.

In their directive role, motives have several important functions for guiding behavior.

These are discussed below:

Defining Basic Strivings: Motives influence consumers to develop and identify their

basic strivings. Included among basic strivings are very general goals such as safety,

affiliation, achievement, or other desired states which consumers seek to achieve. They

serve to guide behavior in a general way across a wide variety of decisions and activities.

Identifying Goal Objects: Although there are exceptions, people often view products or

services as means by which they can satisfy their motives. In fact, consumers often go

one step further and think of products as their actual goals, without realizing that they

actually represent ways of satisfying motives. This motivational push that influences

consumers to identify products as goal objects is of great interest to marketers,

particularly since it appears that it can be influenced. Certainly, the features designed into

a product can affect the degree to which consumers may accept it as a goal or means for

achieving some goal.

Influencing Choice Criteria: Motives also guide consumers in developing criteria for

evaluating products. Thus, for a car buyer strongly influenced by the convenience motive,

features such as electronic speed control and automatic driver-seat adjustments would

become more important choice criteria than would style or mileage.

Directing Other Influences: Motives affect the individual determinants of perception,

learning, personality, attitudes, and how people process information. This also results in

directional influences on behavior. For example, motives influence information

processing, which in turn regulates how we interpret and respond to our environment.

Motives Arousal

A variety of mechanisms can trigger the arousal of motivates and energize

consumers. The following may work alone or in combination to activate behavior.

Physiological Conditions: This source of arousal acts to satisfy our biological needs for

food, water, and other life-sustaining necessities. Depriving such a bodily need generates

an uncomfortable state of tension. When this tension is sufficiently strong, arousal occurs

to provide energy necessary to satisfy the need. The consumer’s previous experience and

present situation will strongly influence the directions any heightened activity will take.

Cognitive Activity: Humans engage in considerable cognitive activity (thinking and

reasoning) even when the objects of their thoughts are not physically present. This

thinking, considered by some to be daydreaming or fantasy, can also act as a motive

trigger. One way this occurs is when consumers deliberate about unsatisfied wants.

Situational Conditions: The particular situation confronting consumers may also trigger

arousal. This can occur when the situation draws attention to an existing physiological

condition, for example an advertisement for Coca-cola suddenly makes you aware of

being thirsty. Here, the need for liquids may have been present, but not yet strong enough

to trigger arousal. Seeing the advertisement draws attention to the condition and leads to

activity. Situational conditions can also work alone to generate motive arousal. This

appears to occur when circumstances draw consumers’ attention to the disparity between

their present state and something viewed as a better condition.

Stimulus Properties: Certain properties of external stimuli themselves also seem to have

the power to generate arousal. These collative properties include the characteristics of

novelty, surprising ness, ambiguity, and uncertainty. Stimuli possessing and sufficient

amount of these properties have the potential of drawing attention to themselves by

arousing an individual’s curiosity or desire for exploration. As such, they represent a

special type of situational condition. Stimuli with arousal potential are important for

marketers because they can be used to attract and focus consumers’ attention.

MODEL OF MOTIVES AND NEEDS

CONSUMER PERCEPTION

Perception is defined as the “process by which an individual selects, organizes and

interprets stimuli into a meaningful and clear picture of the world.”

In simple, “How we see the world around us”. {Ex: There is a glass filled with fifty

percent water, while a person may say that the glass is “Half Filled”. another person may

finds the glass to be “Half Empty”. technically speaking, both the interpretations are

same, but the fifty percent filled or empty glass is seen or perceived differently by the

two people.

Unfulfilled needs Wants

& desiresTension Drive Behaviour

Goal or

Need Fulfillment

Cognitive Processes

Learning

Tension Reduction

Consumer Research, in fact, proves that after the consumer develops a perception

of some “object” to follow the initial message, the consumer actually feels the needs to

hear or se the rest of it because a sense of having closure prevails,

This is called Zeigernik Effect.

It is not an uncommon situation which observes when we go to a bank. If three

customers go to a bank to withdraw money,

The first may chose to go to an ATM, Where no one is waiting in line.

Second person stands in a waiting line and

Third one may ask his wife to go to the withdrawal window.

Why these varying modes of behavior by each one when they have gone to buy the

same service offering (of withdrawing money from the bank)?

It is because; each individual brings a unique set of perceptions and attitudes to the

process that influences behavior.

Perception is made up of different concept. However within the frame work of

consumer behaviour, the basic elements or concept of perception include; Sensation,

Absolute Threshold, Differential Threshold, Subliminal Perception.

Sensation: Sensation is the immediate and direct response of the sensory organs to

stimuli. A stimuli is any unit of input to any of the senses. Examples of stimuli (i.e.

sensory input) include products, packages, brand names, advertisements, and

commercials. Sensory receptors are the human organs (the eyes, ears, nose, mouth, and

skin) that receive sensory inputs. Their sensory functions are to see, hear, smell, taste and

feel. All of these functions are come to play, either singly or in combination, in the

evaluation and use of most consumer products.

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 and differentiate

between “something” and “nothing” is that person’s absolute threshold for that stimulus.

Package designers try to determine consumers’ absolute thresholds to make sure that their

new-product designs will stand out from competitors’ packages on retailers’ shelves.

Differential Threshold: The minimal difference that can be detected between two

similar stimuli is called differential threshold, or the just noticeable different. When it

comes to product improvements, marketers very much want to meet or exceed the

consumer’s differential threshold; that is, they want consumers to readily perceive any

improvements made in the original product.

Subliminal Perception: Stimuli that are too weak or too brief to be consciously seen or

heard may nevertheless be strong enough to be perceived by one or more receptor cells.

This process is called subliminal perception. Because the stimulus is beneath the

threshold, or “limens”, of conscious awareness, though obviously not beneath the

absolute threshold of the receptors involved.

Perception Process

In studying consumer behaviour, perception process are divided into five parts

this includes; Pre-attentive Processing, Selection, Organization, Interpretation and

Elaboration.

Pre-attentive Processing: Pre-attentive processing refers to the simultaneous

preconscious monitoring of all sensory channels for events that will require a shift in

attention. This kind of pre-attentive processing is what makes it possible for us to

suddenly hear our name spoken across a crowed, noisy room or wake at the cry of a baby.

Selection: Perceptual selection refers to the fact that consumers select only a small

portion of the stimuli to which they are exposed for conscious processing, or what we

might term focal attention. To get the consumer’s focal attention, an escalation of sensory

impulses is required.

Organization: The third part in the perceptual process is perceptual organization.

Consumers classify perceptions into categories and apply prior knowledge about the

categories to organize them. Basically, categorization involves comparison between a

perceived target and categorical knowledge. Categorization is a fundamental sense-make

activity that encompasses all forms of stimulus situations.

Interpretation: The fourth part in the perceptual process is interpretation. The

interpretation of perceptual stimuli involves the application of learned associations

between perceptual cues, or signs, and meanings to novel stimuli. These associations are,

on turn, based on individual expectations, motivations, and experiences grounded in

cultural convention. Hence, interpretation depends on consumer knowledge structures. At

least two different sorts of knowledge structures are important to interpretation. One type,

called schemas. Schemas includes organized collections of beliefs and feelings that a

person has about objects, ideas, people, of situations. The second type of knowledge

structure, called scripts, includes sequences of actions associated with objects, ideas,

people, or situations.

Elaboration: Sometimes consumer interpretation of perceptual stimuli also includes

high levels of elaboration. Elaboration reflects the extent to which perceptual stimuli are

integrated with prior knowledge structures. Interpretation always involves some

elaboration, that is, some accessing of prior knowledge structures; but this can be at low

levels such as simply recognition. At high levels of elaboration, people engage in

processes such as counter arguing, problem solving, daydreaming, and fantasizing.

Elaboration produces freedom of memory and attitude from the specific details of the

original message or its setting. It can even result in a boomerang effect where the attitude

change is opposite to that advocated in the persuasive message.

ELEMENTS OF PERCEPTION:

People’s perceptions are limited by three ongoing processes of selectivity:

1. SELECTIVE EXPOSURE : It is the process by which people avoid stimuli in their

environment such as leaving the cinema hall when a song sequence is shown or

leaving the room while commercials are on a TV. The process is explained below:

People are more likely to notice stimuli that relate to current need.

For Example

A person, who is not in the market for a personal loan, will not even look at the ad

showing low interest rates whereas one who is looking for a personal loan will

notice and even go through such an ad.

People are more likely to notice stimuli that they expect or anticipate.

For Example

If a bank is promoting non – traditional bank service like, mutual funds or travel

related services and it has placed a mutual fund counter or travel agent’s desk in

the bank, many customers may not notice it, because they do not expect these

from a bank. Therefore, for calling attention of the people to those non –

traditional services “Promotional techniques” must be used.

People are more likely to notice stimuli that are large in relation to normal

size of stimuli.

For Example:

Generally, companies selling cellular phone or credit card and even bankers run

quarter page or one – third of page ads in newspapers. If these are running for

nearly a month and suddenly there is a full page colorful ad for a week readers are

more likely to notice the “AD” because it is large in relation to useful ads.

2. SELECTIVE DISTORTION: It is the Phenomenon in which an individual

compares new information with his existing store of knowledge or frame of reference

and then in the case of an inconsistency, alerts the new information to confirm to he

established beliefs.

3. SELECTIVE RETENTION: It is the Phenomenon of retaining in memory only

part of what is perceived and particularly information that supports their existing

attitudes and beliefs. It has been found that consumers are much more likely to recall

seeing ads for their own bank than ads for other banks. Their own bank’s ads support

their choice of the bank. A large number of consumers cannot remember a typical

TV commercial one day after seeing it, if they are not using the product or if the ad is

nothing extraordinary.

The four factors that influence the way people perceive stimuli are:

Social Factors

Cultural Factors

Psychological Factors

Personal Factors.

EXTERNAL FACTORS INFLUENCING CONSUMER PERCEPTION:

1. NATURE: When the consumer sees any advertisement or product they may be

captured by the object which is visual or auditory, and whether it involves pictures,

people or animals. Pictures attract attention more readily than words, a picture with a

human beings attracts attention more than a picture of inanimate objects alone.

2. LOCATION: The consumer may be easily attracted by a picture. The best location

of a visual picture is directly in the front of the eyes or centre of a page. In newspaper

a position in the upper portion of a page is more favorable than; one in the lower

portions, left hand side receives more attention then the right hand side.

3. INTENSITY: Higher intensity always attracts rather than lower intensity. For ex; A

loud noise, Strong odour, bright light will be noticed more than a soft sound, weak

odour or dim light.

4. SIZE: Generally objects of larger size attract more attention then the smaller ones. In

advertising full page spread attracts more attention than a few lines in the classified

section.

5. CONTRAST: Usually plant safety signs which have black lettering on a yellow

background or white lettering on a red background are attention drawing.

6. MOVEMENT: The moving object receives more attention than an object standing

still.

7. REPETITION: Advertisement of a product flashed daily on TV is based on the

principle of repetitions.

8. NOVELTY AND FAMILIARITY: New objects in the familiar settings or familiar

objects in new setting will draw the attention of the perceiver.

ROLE OF STIMULI IN CONSUMER PERCEPTION:

In our daily life, we are constantly bombarded with the inputs from the external

environment. If our brain starts processing each and every stimulus, we will be in a

perceptual state of confusion.

Fortunately, receiving of stimuli by our sensory organs has an automatic check.

There is a threshold limit that puts a stop on the receiving process.

To perceive any idea about an object, there has to be a minimum receipt of

stimuli, this is called absolute threshold.

Stimuli intensity to reach the absolute threshold level will vary from sensory

organ to sensory organ and from person to person.

Sometimes marketers and advertisers purposely keep the level of stimuli below

the absolute threshold. This is to create a background atmosphere.

Subliminal perception can be either in the form of very briefly presented visual

stimuli, or accelerated sound track, usually at a low volume or hidden “meaningful”

word, hidden meaning words are generally sexual in nature and are also called disguised

stimuli.

PERSONALITY AND CONSUMER BEHAVIOUR

Personality can be defined as those inner psychological characteristics that both

determine and reflect how a person responds to his environment.

INNER CHARACTERISTICS: Attributes, Traits, and Mannerisms that distinguish

one individual from other individuals.

FACTORS INFLUENCING PERSONALITY:

1. Parent Inheritance

2. Brought up environment

3. Own individuality

NATURE OF PERSONALITY:

Personality reflects Individual differences

Personality is consistent and enduring

Personality can change.

PERSONALITY THEORIES:

1. Sigmund Freud’s Psycho Analytic Theory of Personality

2. Neo – Freudian Personality Theory

3. Trait Theory

4. The Theory of Self Concept

1. SIGMUND FREUD’S PSYCHO ANALYTIC THEORY OF PERSONALITY:

This theory is based on

Unconscious Needs or Drives

Recollection of Early Childhood Experiences

Analysis of Dreams

Specific nature of their mental and physical problems

Interacting Systems of Personality:

1. ID - Relates with immediate satisfaction – Like Thirsty & Hunger

2. SUPEREGO – Individual’s internal expression of society’s moral and ethical code

of conduct - like marriage ceremony, wedding anniversary, earring function

3. EGO – Internal Monitor that attempts to balance the impulsive demands and socio

– cultural constraints.

Stages of Personality Development:

1. ORAL STAGE : ( 0 – 18 months ) – The interaction of an infant with the outside

world is through its mouth by the way of drinking and eating.

2. ANAL STAGE : (18 months – 3 years) – A Crisis develops in child’s life when

parents try to train the child. { Ex : Forcing the child to send the school }

3. PHALLIC STAGE : ( 3 – 7 years) – Child may feel attracted towards the parents

of the opposite sex. [ Ex. girl child have more affection on father vice versa].

4. LATENCY STAGE : (5 – 12 years) – There is no important change in this age.

But children like to enjoy friendship in this stage.

5. GENITAL STAGE: (12 – 20 years) – The opposite sex becomes center of

attention. They may away from self – oriented and parented love. {Ex. Day

dreaming and TV watcher}

2. NEO – FREUDIAN PERSONALITY THEORY:

This theory was propounded by 3 authors.

a) Alfred Adler: Individual’s effort to overcome the feeling of inferiority {By

striving for superiority.}

b) Harry Stack Sullivan: Concerned with individual’s effort to reduce tension

c) Karen Harney: Focused the impact of child – parent relationships.

Karen Harney’s Classification Of Three Personality Groups;

Compliant Individuals : Those who move toward others. Their desire to be

loved, wanted & Appreciated.

Aggressive Individuals: Those who move against others. Their desire to excel

and win admiration.

Detached Individuals: Those who move away from others. In- dependence, self

– reliance, self – sufficiency, and freedom from obligation.

CAD – Test Developed and Tested among College Students.

Result: Highly Compliant Students – Prefer Name Brand Products

Highly Aggressive Students – Prefer Selective and Particular Brand

Highly Detached Students- Less Likely to be Brand Loyal and were more

likely to try different brands.

3. TRAIT THEORY :

This Theory is Primarily quantitative or empirical. A Trait is defined as “ any

Distinguishing, relatively enduring way in which one individual differs from other.”

Trait Theory is based on certain Assumptions:

1. Relatively stable in Characters.

2. Limited number of trait common to most of all.

3. People only differ in the degree of position.

Selected Single Trait Personality Test – {Which measure just one trait, like self-

confidence}.

1. CONSUMER INNOVATIVENESS: How a person responds to new

experiences.

2. CONSUMER MATERIALISM : The degree of the Consumer’s attachment to

“Worldly Possessions”.

3. CONSUMER ETHNOCENTRISM : The consumer’s likelihood to accept or

Reject Foreign Made Products.

4. THE THEORY OF SELF – CONCEPT

In this self concept theory, the concept of self refers to, the attitude people

hold about their own self. The overall classification follows.

Actual Self Image – How the consumer feels about himself.

Ideal Self Image - How the consumer would like to himself

Social Self Image - How the consumer thinks others see him.

Ideal Social Self Image – How the consumer wants others to see him.

Four Categories of Consumers:

1. Personal Level

2. Family Level

3. Community Level

4. Group Level.

PERSONAL LEVEL: Consumer includes things of personal possession like

jewelleries, dresses, cosmetics etc. in defining one’s self. Understanding the

range of moods and personalities can help the marketer offer products which

implicitly carry the message “you are what you wear”.

FAMILY LEVEL : This part of the extended self includes a consumer’s

residence and the things in it. The home is a symbolic body of the extended self

at the family level. “Dressing your home ….. Reflects the unique aura of your

own personality.

COMMUNITY LEVEL : Whereby the consumer tends to personalize the

environment in which he has grown up, the neighborhood where he stays or

stayed, this is basically coming from sense of belonging. A marketer can use the

extended self image at the community level by evoking the nostalgic feeling of

the childhood memory. People are generally nostalgic about the place where they

have spent their childhood.

GROUP LEVEL : When one feels attached to certain social group. The

consumer feels part of a crowd of cricket spectators, part of a sports team, etc.

[Ex: To evoking the self image at the group level is the famous Cadbury Milk

Chocolate bar where the husband is playing cricket and the wife is eating

chocolate out of tension]

PERSONALITY AND ITS RELEVANCE TO CONSUMER BEHAVIOUR

While walking through the shopping centre, all of us have, sometime or the other,

felt attracted towards a particular product, may be due to the way it is displayed or

the way its is advertised or the look of the model.

However, certain products attract only certain type of people, while others just go

past the same product without paying mush attention or even no attention.

Hence, Nokia seems to project itself as a “Human technology, connecting

people.”

Charms Cigarette projects itself as a “Person with image of its own”.

The imported thing to be noted is that such a trend of personalizing, giving the

product a separate personal identity, is increasing.

The reason being, marketers have realized that personality plays a vital role in the

purchase behavior, and if the right product is given the right personality touch,

marketer will meet with great success.

CONSUMER LEARNING

According to Oxford Dictionary “Learning is knowledge got by study of a

subject of systematic investigation.

In Marketing Management, “Consumer learning holds lot of significance for a

marketer and he is vitally interested in teaching the consumer about the product, Its

attributes, how to buy it, how to use it, and even how to dispose it.”

In a Marketer’s language, “learning is an ongoing process by which consumers

get the knowledge about purchase and consumption of a product and use the experience

of one time buying for future buying.”

In overall Consumer Learning is defined as the process by which individuals

acquire the purchase and consumption knowledge and experience they apply to future

related behaviour.

ELEMENTS OF LEARNING:

Despite their different viewpoints, learning theorists in general agree that in order for

learning to occur, certain basic elements must be present. The elements included in most

learning theories are

Motivation

Cues

Response

Reinforcement

1. MOTIVATION: Motivation plays a vital role in consumer learning, it acts as an

initial impetus to learning.

{For Example, a career minded student who wants to do a MBA course to

enhance the chances of a bright career will be “motivated” to search for a MBA

admission advertisement. The student will try to get information about the time of

admission test, fees structure of various MBA schools, placement scenario etc.}

On the other hand, a well established professional will be relatively disinterested

ion all such information. While, a retired person will be completely dis interested in

these kinds of information. Once the marketers know consumer motive, they try to teach

the consumer about the product.

2. CUES: Cues give direction to a motivated consumer. An aspiring MBA student will

get the cue from an advertisement, talking about a MBA programme, the type of course,

number of specialization the student can avail, and computer facility in the college and

quality of the faculty, all are cues, which guide the consumer.

3. RESPONSE: The aspiring MBA student, who gets a positive cue from the

advertisement, will respond to the advertisement. If he takes action in the favor of the ad

then it will be a positive response. If he further searches for other similar ads his

response to the original ad is a negative one, while if he simply overlooks the ad he is

giving a neutral response.

4. REINFORCEMENT: The memorable learning experience reinforces the buying

behavior, negative memories will take the consumer away from previous buying behavior

or pattern, while positive memories will reinforce the previous buying behavior as is

likely to happen to the computer student.

BEHAVIOURAL THEORIES OF LEARNING1. Classical Conditioning Theory:

Early classical conditioning theory was based on a simple experiment performed

by the Russian Physiologist Ivan Pavlov.

THEORIES OF CONSUMER LEARNING

BEHAVIOURAL THEORIES OF LEARNING

1. Classical Conditioning Theory2. Instrumental (Or) Operant Conditioning Theory

COGNITIVE THEORIES OF LEARNING

1. Involvement Theory2. Central And Peripheral Routes To Persuasion Theory

An analogous model is one experiment with the human beings. Think when you

have your dinner everyday at 9”0” clock along with watching your favorite program

Crorepathi on TV.

Eventually, with the theme music of the program you will feel like eating even if

you are not actually hungry because you are unconsciously associating the two, theme

music and dinner.

THREE CONCEPTS ASSOCIATED WITH CLASSICAL CONDITIONING:

I) REPETITION: People have a tendency to forget, hence to be a part of consumer

memory, repetition of the action is necessary. EX : THUMSUP Advertisement with

the punch line of “ The taste of thunder”

a) ADVERTISING WEAROUT: Too little of repetition may be of no use, similarly

over repetition can be harmful. Hence the message can not be sent across. In advertising

jargon, it is called ADVERTISING WEAROUT.

b) COSMETIC VARIATION: Advertising wear out can be avoided only by changing

the format of advertising, but continue with the same theme, in other words it can be says

the message is same but the way of presentation is changed. This is called Cosmetic

variation.

c) SUBSTANTIVE VARIATION: The changes occur in the basic content of the

advertisement in the different versions with no change in the cosmetic features. In this the

consumers gain more stable long lasting experience from substantive variation.

CONDITIONED STIMULUS : 9 O’ clock T.V. Programme

UNCONDITIONED RESPONSE : SALIVATION

CONDITIONED STIMULUS : 9 O’ clock T.V. Programme

CONDITIONED RESPONSE: SALIVATION

UNCONDITIONED STIMULUS : Dinner Aromas

II) STIMULUS GENERALISATION: Pavlov found that the dogs salivated not only to

the sound of the bell but also to similar sound of jangling keys. As like as this, if the

consumer learns certain attributes about a particular product of a particular brand,

through SG he will associate other products of the same brand with similar attributes.

PRODUCT LINE EXTENSION: This is commonly practiced marketing strategy

of adding related products to an established brand. The products vary from each other

only superficially, may be in terms of the package, flavor, added facility etc., EX :

Britannia Bread. They are marketing different types bread. Premium Quality White

Bread, Spongy Sandwich Milk Bread, Energy plus – Whole Meal Bread, Fruity –

Sliced Fruit Bread.

PRODUCT FORM EXTENSION: When the same product is offered in different

physical form, EX: Lifebuoy soap is obtained in bar form and liquid form. Raga

Herbal Shampoo was obtained in powder form and liquid form.

PRODUCT CATEGORY EXTENSION: Originally the company starts with few

products. Once the brand name is established, the company diversifies into making

other products. EX: LG is a known name in Color TV. This is now followed by

Refrigerator, Washing Machines, Personal Computer, Cell Phone, and Air Cooler. As

like as this BPL, Britannia, ITC, HLL are also example for PCE.

FAMILY BRANDING: This is the practice of marketing a whole line of products

under the same brand name. EX: Maggi Soup Range. Initially only tomato soup was

introduced followed by various other flavors such as Chicken Soup, Mixed Vegetable

Soup, Mushroom Soup, and Tomato Soup. Nestle- Milkmaid – Gulab Jamun Mix,

Kesar Kulfi, and Chocolate pudding.

LICENSING: When a well known brand allows its name to be used by another

brand. Well known people allow their names to be associated with certain products

like EX: Scooty Pep with Preethi Zintha, Sharukkan with Hyundai. Sonya Mirza

with Getz, Dairy Milk with Amithap Batchan , Toyota Innova with Aamir Khan.

Sachin with MRF.

III) STIMULI DISCRIMINATION : It is the ability in the consumer to discriminate

one stimulus from the other and position them , according to his need. This is key to the

marketers success. That is why from time to time the marketers reward the loyal

customers by the way of providing discount coupons for traveling by the same airline

above a certain KM. Regular buyers in super market also get similar kinds of discounts.

2. INSTRUMENTAL ( Or ) OPERANT CONDITIONING THEORY

American Psychologist B.F.Skinner demonstrated this theory through the process

of trial and error. Once you come across a favorable outcome, it reaches the individual to

repeat the behaviour. Consumers, to satisfy their needs, may have tried various

alternative options and will remember products which satisfied or made them feel good,

and will respond to those products positively in future. It is called Positive

Reinforcement Or Rewarded Performance. Suppose, the product did not satisfy the

consumer means they shirk away from such products and also have Negative

Reinforcement Or Unrewarded Performance .

The Advertisement of Detegerents, Deodorants, and Footwear often use this

concept.

EX: Wheel Soap Ad. – It is based on housewife’s agony of washing clothes with various

other brands but not able to clean properly her husband’s clothes causing embarrassment

to the husband, till the wife discovers “Wheel”.

The message is that we should avoid the ordinary soaps which will bring in negative

outcome and only use the advertised product.

Stimulus Situation - Need a Good Washing Soap

Try Soap I

Try Soap II

Try Soap III

Try Soap IV

UNREWARDED – Chemicals are too

Strong

UNREWARDED – Less in Quantity

UNREWARDED – Lacks the freshness

and fragrance

REWARDED – PERFECT SOAP

The Reinforcement Rate and frequency can be of various types. At what rate an

advertisement should be shown to the consumer for a proper learning will vary on

product type, stage of product life cycle etc., Following is the reinforcement schedule.

1. FIXED – INTERVAL REINFORCEMENT : There is a fixed time gap between the

response and reward. Under such circumstances consumer tends to respond slowly

after the reinforcement.

2. VARIABLE - INTERVAL REINFORCEMENT: The marketer or advertiser wants

to keep an element of surprise and expectancy in the consumers so the reinforcement

is delivered at intervals varying in length.

3. FIXED – RATIO REINFORCEMENT: Reinforcement can be given at fixed ratio.

4. VARIABLE – RATIO REINFORCEMENT: Consumer learns after certain number

of responses, but how many that neither the learner nor the teacher knows. Here again

predicting the appearance of consumer’s learned response is difficult.

COGNITIVE THEORIES OF LEARNING

Learning is seen as an intellectual activity, whereby consumers continuously

restructure the cognitions about a specific problem or product. These perpetual

restructuring results in insight which is a distinctive characteristic of intellectual activity.

Knowledge of products and brands is obtained deliberately or accidentally, the

knowledge is received, assimilated and retained in the memory, like other experiences.

The Basic Building Blocks of Cognitive Theory:

1. Information Processing: This is related to processing of the new information on the

basis of the attributes, brands, comparisons among the brands etc. The ability to form

the mental image varies from consumer to consumer, and is based on the imagery,

which depends on how the information is assimilated, stored and retrieved later on.

More previous knowledge the consumer has about the product greater will be the

learning capacity and clearer will be imagery.

2. Memory : Memory deals with how the consumer stores, retains and retrieves

information.

3. Structure of Memory: Information processing is a multistage process whereby,

initially memory is kept in sensory store, where the information is received through

our eyes, ears, nose, touch, tongue. But if this information is not processed, it is

deleted from the memory. EX: Air India uses its “ Maharaja” symbol as a symbol of

hospitality in a royal style, this is selection of an image to store the information.

Memory -----------Sensory Store------Short Term Store-

----- Forget(eyes, ears,

nose)

Long term Memory <---------- Rehearsal

4. Retention:

Memory Product Information New Information Knownbrand

Organised Reorganized Old Information Information in the memory is constantly encourages the consumer to explore and

examine the new information. So the consumer always relates to a known brand or name

in the market more easily and quickly.

5. Retrieval : Accessing of information from long-term storage is called Retrieval.

Basically consumers tend to remember the benefits rather than the attributes. In general,

consumer’s retrieval process depends on : age of the consumer, as younger people are

able to retrieve more clearly.

1) INVOLVEMENT THEORY:

Our Human Brain can be divided into two parts, LEFT BRAIN and RIGHT BRAIN.

LEFT BRAIN - Responsible for – Reading, Writing, Speaking –Print Medium

High Involvement - While seeing any AD related with Financial Investment, High Rate

of return.

Low Involvement - RIGHT BRAIN – Responsible for – Emotional and intuitive

activities, Pictorial Version, Imagination ---Picture or TV Media, Seeing a

advertisement related with nail polish and cosmetics.

2) CENTRAL AND PERIPHERAL ROUTES TO PURSUASION THEORY:

Accessing of Information

Long Time Storage

Retrieval

Whenever the consumer is buying a low involvement product, consumer engages

in limited information search. And is less motivated to exert cognitive effort, this shows

the consumers peripheral route to persuasion .If the consumer follows the central routs to

persuasion, he will weigh each merit and demerit carefully before deciding on his buying

behaviour.as well as go for a comparative study with other competing products,

{EX: If you are buying a car, the marketer can take the peripheral route of

persuasion by highlighting the color and shape of the car and can take the Central Route

to Persuasion by talking about the engine and other machineries of the car.

General Characteristics of Learning

Regardless of which approach to learning is applicable in a given situation, several

general characteristics of learning are relevant and of interest to marketing managers.

Five of the most important are strength of learning, extinction (or forgetting), stimulus

generalization, stimulus discrimination, and the response environment.

Strength of Learning: The strength of learning is heavily influenced by four factors:

importance, reinforcement, repetition, and imagery. Generally, learning comes about

more rapidly and lasts longer; the more important the material to be learned; the more

reinforcement received during the process, the greater the number of stimulus repetitions

that occurs, and the more imagery contained in the material.

Importance: Importance refers to the value that the consumer places on the information

to be learned. The more important it is for you to learn a particular behavior or piece of

information, the more effective and efficient you become in the learning process.

Reinforcement: Anything that increases the likelihood that a given response will be

repeated in the future is considered enforcement. While learning frequently occurs in the

absence of reinforcement (or punishment), reinforcement has a significant impact on the

speed at which learning occurs and the duration of its effect. A negative reinforcement

involves the removal or the avoidance of an unpleasant consequence.

Punishment: Punishment is the opposite of reinforcement. It is any consequence that

decreases the likelihood that a given response will be repeated in the future. Basically,

there are two very important reasons for marketers to determine precisely what reinforces

specific consumer purchase: to obtain repeat purchases, the product must satisfy the goals

sought by the consumer; and to induce the consumer to make the first purchase, the

promotional messages must promise the appropriate type of reinforcement – that is,

satisfaction of the consumer’s goals.

Repetition: Repetition increases the strength and speed of learning. Quite simply, the

more times we are exposed to information or practice a behavior, the more likely we are

to learn it. The effects of repetition are, of course, directly related to the importance of the

information and the reinforcement given. Less repetition of an advertising message is

necessary for us to learn the message if the subject matter is very important or if there is a

great deal of relevant reinforcement. Since many advertisements do not contain

information of current importance to consumers or direct rewards for learning, repetition

plays a critical role in the promotion process for many products.

Imagery: Imagery Words, whether a brand name or a corporate slogan, create certain

images. The theory behind the imagery effect is that high imagery words leave a dual

code since they can be stored in memory on the basis of both verbal pictorial dimensions,

while low-imagery words can only be coded verbally. High-imagery brand names are

learned more quickly than are low-imagery names. Likewise, advertising claims

consistent with the image evoked by the brand name are easy to recall.

Extinction: Extinction, or forgetting as it is more commonly termed, occurs when the

reinforcement for the learned response is withdrawn, the learned response is no longer

used, or the individual is no longer reminded of response. The rate at which extinction

occurs is inversely related to the strength of the original learning. That is, the more

important the material, the more reinforcement, the more repetition, and the greater the

imagery and the more resistant the learning is to extinction.

Stimulus Generalization: Stimulus generalization (often referred to as the rub-off effect)

occurs when a response to one stimulus is elicited by a similar but distinct stimulus.

Thus, a consumer who learns that cookies taste good and therefore assumes that their new

Chocolate cones will also taste good has engaged in stimulus generalization. The fact that

stimulus generalization is common provides a major source of brand equity and brand

extensions based on brand equity.

Stimulus discrimination: Stimulus discrimination refers to the process of learning to

respond differently to similar but distinct stimuli. At some point, stimulus generalization

becomes dysfunctional because less and less similar stimuli are still being grouped

together. At this point, consumers must begin to be able to differentiate among the

stimuli.

Response Environment: Consumers generally learn more information than they can

readily retrieve. That is, we frequently have relevant information stored in memory we

cannot access when needed. One factor that influences our ability to retrieve stored

information is the strength of the original learning. A second factor affecting retrieval is

the similarity of the retrieval environment to the original learning environment. Thus, the

more the retrieval situation offers cues similar to the cues present during learning, the

more likely effective retrieval is to occur.

Matching the retrieval and learning environments requires an understanding of

when and where consumers make brand or store decision. Decision on brand or store

made at home do not have the same set of cues that are available at a retail outlet.

CONSUMER ATTITUDES

In general Attitude is “Learned predisposition to respond in a consistently

favourable and unfavourable manner with respect to a given stimuli.”

Attitude may also be defined as “an enduring organization of motivational,

emotional, perceptual, and cognitive process with respect to some aspect of the

individual’s world. This views attitude as being made up of three components: the

cognitive or knowledge component, the affective or emotional component and the

cognitive or behavioral tendency component.

Attitude Function

Attitudes serve four key functions for individuals:

Knowledge function: some attitudes serve primarily as a means of organizing beliefs

about objects or activities such as brands and shopping. These attitudes may be accurate

or inaccurate with respect to “objective” reality, but the attitude will often determine

subsequent behaviors rather than “reality”.

Value-expressive function: Other attitudes are formed and serve to express an

individual’s central values and self-concept. Thus, consumers who value nature and the

environment are likely to develop attitudes about products and activities that are

consistent with that value. These consumers are likely to express support for environment

protection initiatives, to recycle, and to purchase and use “green products.

Utilitarian function: This function is based on operant conditioning. We tend to form

favorable attitudes toward objects and activities that are rewarding and negative attitudes

toward those that are not. Marketers frequently promise rewards in advertising and

conduct extensive product testing to be sure the products are indeed rewarding.

Ego-defensive function: Attitudes are often formed and used to defend our egos and

images against threats and shortcomings. Products promoted as very macho may be

viewed favorably by men who are insecure in their masculinity. Or, individuals who feel

threatened in social situations may form favorable attitudes toward products and brands

that promise success or at least safety in such situations. Any given attitude can perform

multiple functions, though one may predominate. Marketers need to be aware of the

function that attitudes relevant to the purchase and use of their brands fulfill or could

fulfill for their target markets.

Characteristics of Attitude

Attitudes have several important characteristics or properties; namely, they have

an object; direction, intensity, and degree; have structure, and are learned.

Attitudes Have an Object: By definition, attitudes must have an object. That is, they

must have a focal point whether it is an abstract concept, such as “ethical behavior”. Or a

tangible item, such as a motorcycle. The object can be a physical thing, such as a product,

or it can be an action, such as buying a refuse bin. In addition, the object can be either

one item, such as a person, or a collection of items such as a social group; it also can be

either specific.

Attitudes Have Direction, Degree and Intensity: An attitude expresses how a person

feels toward an object. It expresses direction-the person is either favorable or unfavorable

toward, or for or against the object; degree- how much the person either likes or dislikes

the object; and intensity-the level of sureness or confidence of expression about the

object, or how strongly a person feels about his or her conviction. The direction, degree,

and intensity of a person’s attitude toward a product have been said to provide marketers

with an estimate of his or her readiness to act toward, or purchase, the product. However,

a marketer must also understand how important the consumer’s attitude is viz -a-vis other

attitudes, and the situational constraints, such as ability to pay, that might inhibit the

consumer from making a purchase decision.

Attitude Have Structure: Attitudes display organization, which means that they have

internal consistency and possess inter-attitudinal centrality. They also tend to be stale, to

have varying degrees of salience, and to be generalizable. The structure of human

attitudes may be viewed as a complex set erected in a type of circular pattern. At the

center of this structure are the individual’s important values and self-concept. Attitudes

close to the hub of this system are said to have a high degree of centrality. Other attitudes

located farther out in the structure possess less centrality. Attitudes do not stand in

isolation. They are associated with each other to form a complex whole. This implies that

a certain degree of consistency must exist between them. That is, because they are

related, there must be some amount of “fit” between them, or conflict will result. Also,

because the more central attitudes are related to a larger number of other attitudes, they

must exhibit a greater degree of consistency than more peripheral attitudes do. Because

attitudes cluster into a structure, they tend to show stability over time. The length of time

may not be infinite, but it is far from being temporary. Also, because attitudes are

learned, they tend to become stronger, or at least more resistant to change, the longer they

are held. Thus, newly formed attitudes are easier to change and less stable than are older

ones of equal strength. Attitudes tend to be generalizable. That is, a person’s attitude

toward a specific object tends to generalize toward a class of objects.

Attitude Are Learned: They develop from our personal experiences with reality, as well

as from information from friends, salespeople, and news media. They are also derived

from both direct and indirect experiences in life. Thus, it is important to recognize that

learning precedes attitude formation and change, and that principles of learning can aid

marketers in developing and changing consumer attitudes.

STIMULI: In Consumer Behavior, Stimuli could be a Product, Product Category, Brand,

People related to the product, etc.,

ATTITUDE FORMATION: Attitude is learned and not acquired unconsciously, people

pickup attitude depending on the basis of their need along with the environment they are

living in.

FACTORS INFLUENCING ATTITUDE FORMATION:

1. INFORMATION: Acquired from mass media, friends and other people with

whom there is “communication”. Ex: An Advertisement coming in a leading daily will

be considered reliable.

2. EXPOSURE: “Net Effect” people are simultaneously exposed to information

coming from all type of sources.

3. GROUP MEMBERSHIPS: The people’s interaction can be voluntary or

involuntary. Groups can be primary groups like family, friends colleagues at the work

place, class mates etc. Ex: Bata Shoes “ The world at your feet” . Some times this type

of AD links you to evoking “ I am part of the Group”. The group may also be

membership group, to which a person belongs to which he aspires to belong. Ex: some

people have an attitude, aspiring to be the part of glamorous and rich life style –

OBEROI Hotel Advertisement.

4. ENVIRONMENTAL INFLUENCES: If people work for prolonged time in a

certain atmosphere, knowingly or unknowingly, they may be addicted the work culture.

CHANGE IN ATTITUDE:

Attitude Change can be defined as “ a finding that at a given time, a significantly

higher or lower proportion of the population holds certain attitudes than at an earlier

time”. In marketing, a consumer’s attitude towards a particular brand may be because of

his belief about certain attributes present in the brand and the relative importance of these

attributes.

So marketers try to bring about attitude changes by the following way.

ATTITUDE NOT ONLY BRAND

EVEN FOR PRODUCTS

MESSAGES

CLUB MEMBERSHIPS

PUTTING CHILDREN IN CERTAIN TYPE OF SCHOOLS

Strategies Adopted by Marketers to bring Attitudinal Change :

1. Change Consumer’s Basic Motivational Function: The Classic example, can be of

Milk. This is traditionally taken to be strong food for children, patients and old

people. (NDDB) National Dairy Development Board, the apex body of Amul Dairy at

Anand, decided to promote milk as a drink for every Indian including young

generation. The main idea is to change people’s attitude of considering milk as an

avoidable product by health. Through Jingles and Advertisements an effort was

being made to make milk as a healthy fashionable drink. {Increasing Knowledge,

Value, Utility of product Etc.}EX: BURNOL can be used for burns and also as an

antiseptic cream.

2. Associating the Product with an admired group, special group and an event or

cause – People’s attitude to an extent are related to certain groups, social events

causes etc. Marketers some times take this path to change people’s attitudes.{ITC

Classic Cigarettes is associated with people who play golf etc.}

3. Relating Two Conflicting Attitudes: Advertisement shows, how by using less fat,

Cholesterol content oil “Saffola” helped the husband in recovering from severe heart

problem, and this made the housewife switch over to using “Saffola”. Today the

consumer prefers healthy and fat free oil, unlike the “Dalda” days when the consumer

preferred a cooking medium which delivered taste.

SELF - IMAGE (OR) SELF – CONCEPT

Self-image is defined as the totality of the individuals’ thoughts and feelings

having reference to him as an object.

It is our perception of ourselves and our feelings toward ourselves. In other

words, your self-concept is composed of the attitudes you hold toward yourself. The Self

Image can be divided into four basic parts.

That is Actual Versus Ideal, Private Versus Social.

DIMENSIONS OF SELF

CONCEPT (OR) IMAGEACTUAL SELF IMAGE IDEAL SELF IMAGE

PRIVATE SELFHOW I ACTUALLY SEE

MY SELF

HOW I WOULD LIKE TO

SEE MYSELF.

SOCIAL SELFHOW OTHERS

ACTUALLY SEE ME

HOW I WOULD LIKE

OTHERS TO SEE ME.

LIFE STYLE ANALYSIS

INTRODUCTION:

Life Style marketing is a process of establishing relationships between products

offered in the market and targeted life style groups.

DEFINITION:

The Marketing Dictionary Defines Lifestyle as “ Distinctive mode of behaviour

centered around activities, interests, opinions, attitudes and demographic characteristics,

distinguishing one segment of a population from another.”

Life style is an integrated system of a person’s attitudes, values, interests,

opinions and his over behavior.

CHARACTERISTICS OF LIFE STYLE:

LIFE STYLE IS A GROUP PHENOMENON: A person’s life style bears the

influence of his participation in social groups and of his relationships with others. Ex.

Two clerks in the same office may exhibit different lifestyles.

LIFE STYLE PERVADES VARIOUS ASPECTS OF LIFE: An Individual’s life

style may result in certain consistency of behavior. Knowing a person’s conduct in one

aspect of life may enable us to predict how he may behave in other areas.

LIFESTYLE IMPLIES A CENTRAL LIFE INTEREST: For every individual there

are many central life interests like family, work, leisure, sexual exploits, religion,

politics, etc. that may fashion his interaction with the environment.

LIFE STYLES VARY ACCORDING TO SOCIOLOGICALLY RELEVANT

VARIABLES: The rate of social change in a society has a great deal to do with

variations in lifestyles. So do age, sex, religion, ethnicity and social class. The increase

in the number of double income families and that of working women have resulted in

completely different lifestyles in the 1980’s in India.

FACTORS INFLUENCING THE LIFE STYLE ANALYSIS:

1. Culture and Society

2. Group and Individual Expectations and Values

3. Life Style Patterns and Values

4. Purchase Decisions

5. Market Reaction Consumer.

APPROACHES TO STUDY LIFE STYLE:

The study of life style is interdisciplinary. IT draws on a variety of disciplines

such as Anthropology, Psychology, Sociology and Economics. Basically

1. Products and Services Consumed.

2. Activities, Interests and Opinions.

3. Value Systems

4. Personality Traits and Self – Conception

5. Attitude towards various product classes.

APPLICATION OF AIO APPROACH:

AIO - ACTIVITIES, INTERESTS AND OPINIONS:

Studying the lifestyle closely through the AIO inventory of Heavy / Medium /

Light users of a product has been found to be immensely useful for markets.

US Studies have been done regarding The Heavy Use of Beer,

23 % of the People who drink Beer consume 80 percent of the beverage sold,

The heavy Beer user became the advertising target of the new campaign.

Willian Wells and Douglas Tigert used an AIO inventory to probe the Heavy User of

Eye Cosmetics.

The study revealed that such women were young, well educated and metropolitan.

They are very high and heavy smoker.

When compared with average women they make long distance telephone calls.

They need always fantasies about trips around the world.

They wanted a very stylish home.

In a study of Joseph T. Plummer’s AIO inventory to probe the Male Bank Credit

Card Users.

Males who used bank charge cards heavily were described as urbane and active

with high income level and occupational and educational achievements.

These persons places high value on personal appearance consistent with his career

and life style.

They may buy at least three new suits a year

They belong to several organizations and revealed contemporary attitudes and

opinions.

By using this AIO Inventory we have identified five female lifestyle groups and five

male lifestyle groups.

FIVE FEMALE LIFESTYLE TYPES:

1. Mrs. GUPTHA - {The content housewife}

2. JUHI - {The smart Urbanite}

3. KARISHNA - {The elegant socialite}

4. RADHA - { The middle aged mother}

5. SRIMATHIJI - { The old fashioned traditional women}

FIVE MALE LIFE STYLE TYPES:

1. TARUN DHANRAJ -{ The successful self entrepreneur }

2. RATAN TATA -{ The Epitome of a successful professional}

3. SURESH KUMAR GUPTHA -{ The devoted family man}

4. RAJESH ARYA -{ A frustrated middle aged man}

5. ISHWAR LAL -{ An affectionate grandfather}

CONSUMER EXPECTATION AND SATISFACTION

Before a company or a marketer can delight the consumer, it must have an in –

depth knowledge of the consumer’s expectations, so that not only are they able to meet,

but exceed the expectation, to delight the consumer. For this knowledge of the core

elements of the products and services are essential.

The core elements of a product are its

Shape, quality, color, quantity, packaging, price, brand name

differentiation, etc. While the core elements of service are Reliability, usefulness,

responsiveness to specific needs assurance and acceptability etc. from the service

provider.

A Consumer expects fundamental benefits, not fancies.

A Consumer expects performance and not empty promises.

A Consumer expects Competency.

IN CASE OF AN AUTOMOBILE REPAIR:

A Consumer expects things to be explained.

A Consumer expects to know why you have suggested repairs.

A Consumer wants to be shown respect.

A Consumer wants competency ( Job done right, the first time)

IN CASE OF HOTELS :

A Consumer expects a clean and secure room to be provided.

A Consumer wants to be treated as a guest.

A Consumer wants the premises to be kept.

IN CASE OF INSURANCE:

A Consumer wants up to date information.

A Consumer wants to be treated fairly in case of claims, etc.

A consumer wants to be provided with prompt service.

FOR OTHER SERVICES AND PRODUCTS:

A Consumer wants reliability which is the ability to perform the promised service,

dependability and accuracy.

A Consumer wants tangibility or the appearance of physical facilities,

equi9pment, personnel and other materials.

A Consumer wants responsiveness – the responsiveness to a query or to a call, ex.

Telephone enquiries. Sometimes nobody picks up the phone for a long time,

which irritates and turns off a consumer.

A Consumer wants assurance – the knowledge and courtesy of employees and

their ability to convey trust and confidence.

A Consumer wants empathy – the caring individual attention provided to

customers. Salesman putting himself in the customer’s shoes.

CONSUMER SATISFACTION

In Marketing, customer is very often referred to as a “King”. Customers are value

maximizers. Consumer Satisfaction is defined by Webster’s Dictionary as, “Fulfillment

of a need or want.”

Satisfaction is a person’s feelings of pleasure or disappointment, resulting from

comparison of a product’s perceived and actual performance in relation to his

expectations.

Satisfaction is often a subjective phenomenon and depends on the consumer’s

state of mind at the time of purchase and more importantly at the time of consumption. It

is important because in a large number of cases, some degree of post purchase dissonance

is evident among customers.

Many companies are aiming at high satisfaction because customers who are just

satisfied find it easy to switch when a better offer comes along. Those who are highly

satisfied are much less ready to switch. In fact, emphasis has shifted from mere

satisfaction to delight of customers. High satisfaction or delight creates an emotional

affinity with the brand and the supplier, not just a rational preference. The result is high

customer loyalty.

From the marketing viewpoint, products should have the ability to deliver value

satisfaction to consumers for whom these are intended. This satisfaction may be both

real and / or psychological. For example, when a house wife buys a Lakeme Lipstick,

she not only buys a chemical compound having some tangible features but also buys

beauty. The former may deliver a real value but the psychological value is delivered by

the latter.

Some Cautions in Measuring Customer Satisfaction:

When Customers rate their satisfaction with an element of the company’s

performance – say, delivery – the company needs to recognize that customers vary in

how they define good delivery. It could mean early delivery, on time delivery, order

completeness, and so on. It is not sufficient if a product enjoys a good market share. If

the company sits back. One fine day it might find that the market share enjoyed by it was

only a mirage created by artificial market conditions. It is essential for companies to

periodically assess customer satisfaction levels and take remedial action if needed.

Indicators of a satisfied customer

Repeat orders in a competitive market

A positive word of mouth reference about the product to likely users in the

industry.

Response the product receives to any new launch

Interest shown by visitors to the stall in industrial exhibitions.

Brand awareness and recall. If the customer is loyal/ satisfied, the product will be

on the top of his mind.

CONSUMER LOYALTY

Brand is a comprehensive term and could be a name, sign symbol, logo etc. which

is used to differentiate the product or services of one seller / sellers from those of

competitors.

From the buyers’ point of view, a brand conveys a promise from the manufacturer

or seller in the form of specific attributes like, quality, value, services etc. to the

purchaser or user.

For example in the car category, firms have used brand names associating it with

a particular customer personality or image.

BRAND NAME CUSTOMER PERSONALITY

MARUTI 800 Economical, Fuel efficient car for higher

middle class customer

MARUTI ZEN Rich young upwardly mobile people.

CIELO Family car of the young rich

CONTESSA, MARUTI ZEN & CIELO Corporate cars

MERCEDES BENZ Car of super rich

TATA SUMO, SIERA, GYPSY & TATA

ESTATE

Utility vehicle for rough ‘n’ tough

conditions.

The exact meaning of the term consumer loyalty itself is not very clear.

Sometimes people may buy a particular product due to force of habit or the product may

be more economically priced as compared to its competitors and so on. So it would not

be right or correct to say that these people have consumer loyalty. But innovating firms

are interested in knowing the answers to certain questions:

1. Why did consumer buy a particular product?

2. How do consumers develop store and brand loyalty?

CONSUMER LOYALTY

Brand is a comprehensive term and could be a name, sign symbol, logo etc. which

is used to differentiate the product or services of one seller / sellers from those of

competitors.

Types of Loyalty Programmes

A market can be segmented based on consumer loyalty pattern. Each consumer

may be loyal to brands or stores or other entities.

1. THE HARDCORE LOYALS

2. SOFT CORE LOYALS

3. SHIFTING LOYALS

4. SWITCHERS

THE HARDCORE LOYALS: They are the consumers who buy the same brand all

the time. So the buying pattern will be in the form A, A, A, A, A. The consumer is a

committed person with undivided loyalty to brand A. These type of consumers

always speak in favor of the brand, like a spokesperson they consider their brands as

icons.

SOFT CORE LOYALS: These are consumers who are loyal to two or three brands.

The buying pattern adopted by them will take the form A, A, B, B, A, B. This

represents a consumer with divided loyalty between A and B. It is these consumers

who play a greater part in maintaining loyalty. EX: coke, pepsi, colgate, closeup,

amul butter etc.

SHIFTING LOYALS: These are consumers who shift loyalty from favoring one

brand to another. The buying pattern of A, A, A, B, B, B shows a consumer who is

shifting brand loyalty from A to B. the attitude is seen in case of computer hardware

and software, banking services, durables that offer long term service contracts, retail

stores, airlines offering frequent flyer schemes etc.,

SWITCHERS: These are consumers who show no loyalty to any brand. They are

very often referred to as deal a prone (buy the brand on sale) or variety prone and

fickle minded buyers their buying pattern A, C, E, B, D, B suggest a non loyal

customer.

So, in order to meet and beat competition, marketers are also interested in finding

out ways to have brand loyal customers. And they have to retain consumer loyalty.

Concept of Group

A group consists of people who have a sense of relatedness as a result of

interaction with each other. Not every collection of individuals is a group, as the term is

used by sociologists. Actually, we can distinguish three different collections of people:

aggregations, categories, and groups. An aggregation is any number of people who are in

close proximity to one another at a given time. While, a category is any number of people

who have some particular attributes in common.

Classification of Group

Groups may be classified according to a number of dimensions, including

function, degree of personal involvement, and degree of organization.

Group by Content of Function

Group can viewed from the content of their function. Group can be categorized

along such lines as students, factory workers, church members, and so on. Actually, these

are subtypes of the major kinds of groups that we encounter in a complex society, which

could generally be categorized along such lines as family, ethnic, age, sex, political,

religious, residential, occupational, educational and so forth.

Group by Degree of Personal Involvement

By using this criterion, we can identify two different types of groups: primary and

secondary. The hallmark of a primary group is that interpersonal relationships take place

usually on face-to-face basis, with great frequency, and on an intimate level. These

groups have shared norms and interlocking roles. Families, work groups, and even

recreational groups (if individuals have some depth of personal involvement) are

examples of such groups.

Secondary groups are those in which the relationship among members is

relatively impersonal and formalized. This amounts to a residual category that includes

all groups that are not primary, such as political parties, unions, occasional sports groups.

Although such groups are secondary, the interpersonal relationships that occur may

nevertheless be face-to-face. The distinction lies in the lack of intimacy of personal

involvement.

Group by Degree of Organization

Groups range from those that are relatively unorganized to highly structured

forms. This continuum are usually simplify into two types: formal and informal. Formal

groups are those with a definite structure (for example, they may have a president, vice

president, secretary, and treasurer). They are likely to be secondary groups designed to

accomplish specific goals, whether economic, social, political, or altruistic. Informal

groups are typically primary groups, characterized by a relatively loose structure, a lack

of clearly defined goals or objectives, unstructured interaction, and unwritten rules.

Because of the extent of their influence on individuals’ values and activities, informal

groups are probably of greater importance in seeking to understand consumer behavior.

Group Properties

In order to understand the nature of groups better, we need to examine several

other important concepts, including status, norms, role, socialization, and power and their

significance for consumer behavior.

Status- Status refers to the achieved or ascribed position of an individual in a group or in

society, and it consists of the rights and duties associated with that position. Status also

may refer to some grouping on the basis of age or sex, family, occupation, and friendship

or common interest.

Norms - Norms are the rules and standards of conduct by which group members are

expected to abide. For informal groups, norms are generally unwritten but are,

nevertheless, usually quite well understood. For example, as a general manager for a

large financial institution, such as First Bank Nigeria Plc, you might be expected to live

in a certain area of town, drive a certain type of car, and dress well. Behavior deviation

outside these latitudes might result in slower advancement in the organization. Thus, as

employees or consumers, we often readily know what we can and cannot wear, drive,

say; eat, and so on, in order to be well accepted within the relevant groups.

Role - This term is used to designate all of the behavior patterns associated with a

particular status. Role is the dynamic aspect of status and includes the attitudes, values,

and behavior ascribed by the society to persons occupying this status. The social structure

partially prescribes what sort of role behavior is acceptable and thus what is expected.

For instance, an upper-class husband who is a successful physician may feel that in his

position he is expected to drive an expensive car, live in an exclusive neighborhood, dress

in fashionable clothes, and give generously to charities. Conversely, a lower-class

husband who is an assembly-line worker may feel comfortable in a role in which he

drives a pickup truck, lives in a bungalow, wear jeans and boots, and drinks beer with his

friends. Role has a strong, pervasive influence on our activities as consumers. For

example, other people have expectations regarding the products we buy to meet the needs

of our roles. Just a few of the many consumption decision directly affected include the

places we shop, the clothes we wear, the cars we drive, the house in which we live, and

the recreational activities we engage in. marketers, therefore, help individuals play their

roles by providing the right costumes and props to be used in gaining acceptance by some

group. Again, it’s the symbols of products that provide so much of the satisfaction that

accrues from a product.

Socialization - Socialization refers to the process by which a new member learns the

system of values, norms, and expected behavior patterns of the groups being entered.

When a new student arrives on a university campus, she or he soon learns from fellow

students what is expected in the way of dress, eating patterns, class attendance, extra-

curricular activities, and so on. Residents new to a neighborhood soon learn what patterns

are expected in the group concerning home maintenance; learn lawns and landscaping,

interior decoration, entertaining and so on. Thus, individuals are continually engaging in

the process of socialization (although it is more intense at an early age) as they encounter

new groups that have an impact on their lives. Consumer socialization, therefore, is the

process by which individuals acquire skills, knowledge, and attitudes relevant to their

effective functioning as consumers in the marketplace. This is particularly relevant to

young people, although, as an ongoing process, it has usefulness in other situations, too,

as was indicated above.

Power - Groups have power to influence their members’ behavior. Various sources of

social power may be operative in different social group situations: reward power,

coercive power, legitimate power, expert power, and referent power. Marketers seek to

use these forms of power to influence consumers.

SOCIAL CLASS

Social class is defined as ranking of people within a culture. Social classes are

based on such attributes as income, occupation, education and type of dwelling.

The social class based on three variables.

1. Family Income

2. Occupational Status

3. Education Attainment.

Types of Social class system:

1. Upper Class: Members of this highest class, the social elite, come from old and

usually well known families and live on inherited wealth, although some work at formal

jobs.

2. Lower Upper Class: These professionals and business people often start life in the

middle class but rise by virtue of their outstanding abilities and high earnings.

3. Upper Middle Class: This class is made up of professionals, small business owners

and corporate managers with comfortable incomes.

4. Middle Class: The middle class is composed of both white and blue collar workers

who earn an average salary.

5. Working Class: Made up largely of blue collar workers. This largest of the social

classes also includes people who earn average salary but apt for a blue – collar life style.

6. Upper Lower Class: These working poor perform unsupplied labor and memorial

work for minimal wages.

7. Lower Lower Class: The members of the lowest class dwell in poverty: they are

unemployed and often on welfare.

Class Structure in India:

The class structure in India is different from those of the other nations.

Brahmins

Kshatriyas

Vasihyas

shudras

These four castes have further sub groups nearing 3000. The relative sizes and

structures of social class vary by culture.

Social Class Mobility:

1. Upward Mobility: individuals can achieve a higher status. Usually this is achieved

either through educational or occupational achievements.

As an example, a person who is a simple graduate and is working at a salary of

Rs. 4000 p.m. does MBA and gets a salary of Rs.10000 p.m. achieves a higher social

status due to his higher income.

An auto mechanic, who starts his own shop to repair automobiles, raises his status

by excelling in his occupation.

2. Downward Mobility: Due to socio economic pressure, the upper middle class and

middle class individuals are not able to maintain their life style as per their social class

level. The downward mobility causes frustration, insecurity and disappointment.

The individual undergoes tremendous stress to maintain his honour in the society. It

sometimes leads to dispossession of one’s prestigious possessions like home or car.

3. Social Class Fragmentation: The media explosion, particularly TV has exposed

consumers to beliefs and values of other classes of society. Internet has made the

communication boundryless. Internationalization is occurring at the speed of sound.

Applications of Social Class to Consumption:

Social class provides consumer researchers an insight of values, attitude and

behavior that distinguishes the members of various classes. The marketers make their

strategies based on these factors.

1. Clothing, fashion and shopping: What is fashion or taste? Each social class differs in

the perception of fashion or taste. Lower class generally has a preference for a typical

type of clothing and color as it offers them identification.

For example, most of the lower class people will use bright colors or similar

clothes as used by film stars as they want to be identified in the society.

The upper class select clothes having established brands like Arrow, Benetton or

Park Avenue and they will try to look suitable.

2. The Pursuit of Recreation and Leisure: Members of upper social class tend to relate

themselves with recreational and leisure activities related to their status. Golf, bridge,

theatre and concerts are the recreational activities related to upper class, whereas going to

pools or billiards is now associated with young upper middle class.

3. Savings, Spending and credits: Upper Class consumers are more conscious about

their future. They prefer to invest in real estate and stocks. They are the big insuring

customers. They believe in long – term in contrast to short – term gratifications.

The lower class believes in immediate gratification and their savings are linked to

safety and security.

How credit card is used, is typical phenomenon. An individual of upper class uses

a credit card to meet his credit bills.

Whereas middle class credit card holder uses it for installment purchases.

CULTURE

Concept and Nature of Culture

Culture refers to a set of values, ideas, artifacts, and other meaningful symbols

that help individuals communicate, interpret, and evaluate as members of society. Culture

does not include instincts, nor does it include idiosyncratic behavior occurring as one-

time solution to a unique problem.

Culture provides people with a sense of identity and an understanding of

acceptable behavior within society. Some of the more important attitudes and behaviors

influenced by culture are the following; Sense of self and space; Communication and

language; Dress and appearance; Food and feeding habits; Time and time

consciousness; Relationships (family, organizations, government, etc.); Values and

norms; Beliefs and attitudes; Mental process and learning; Work

habits and practices.

The purpose of our discussion on consumer behaviour and not withstanding the

diversity of the concept, culture can be defined as the sum total of learned beliefs, values,

and customs that serve to direct the consumer behavior of members of a particular

society.

In other words, Culture is the complex whole that includes knowledge, belief, art,

law, morals, customs, and any other capabilities and habits acquired by humans as

members of society.

Several aspects of culture require elaboration. First, culture is a comprehensive

concept. It includes almost everything that influences an individual’s thought process and

behaviors. While culture does not determine the nature of frequency of biological drives

such as hunger or sex, it does influence if, when, and how these drives will be gratified. It

not only influences our preferences but how we make decision and even how we perceive

the world around us. Second, culture is acquired. It does not include inherited responses

and predispositions. However, since much of human behavior is learned rather than

innate, culture does affect a wide array of behaviors.

Third, the complexity of modern societies is such that culture seldom provides

detailed prescriptions for appropriate behavior. Instead, in most industrial societies,

culture supplies boundaries within which most individuals think and act. Finally, the

nature of cultural influences is such that we are seldom aware of them. One behaves,

thinks, and feels in a manner consistent with other members of the same culture because

it seems “natural” or “right” to do so. The influence of culture is similar to the air we

breathe; it is everywhere and is generally taken for granted unless there is a fairly rapid

change in its nature.

Basic Characteristics of Culture

Although the definitions of culture presented earlier are excellent, they seek to

characterize culture in only a few words. It is evident that the concept is difficult to

convey clearly in any definition. However, despite the challenges involve in defining the

concept, many social scientists agree that the following features are essential.

Culture is invented - Culture does not simply “exist” somewhere waiting to be

discovered. People invent their culture. This invention consists of three interdependent

elements: (1) an ideological component, that consists of the ideas, beliefs, values and

ways of reasoning that human beings learn to accept in defining what is desirable and

undesirable; (2) a technological component that consists of the skills, crafts, and arts that

enable humans to produce material goods derived from the natural environment; and (3)

an organizational component (such as the family and social class) that makes it possible

for humans to coordinate their behavior effectively with the actions of others.

Culture is learned - Culture is not instinctive, but is learned beginning early in life and

is charged with a good deal of emotion. The great strength of this cultural stamp handed

down from one generation to another is such that at an early age, children are firmly

imbued with their culture’s ways of acting, thinking, and feeling. This obviously has

important implications for the behavior of consumers because these preconditions of that

behavior are molded by their culture from birth.

Culture is Social Shared - Culture is a group phenomenon, shared by human beings

living in organized societies and kept relatively uniform by social pressure. The group

that is involved in this sharing may range from a whole society to a smaller unit such as a

family.

Cultures are Similar but Different - All cultures exhibit certain similarities. For

example, each of the following elements is found in all societies: a calendar, cooking,

courtship, dancing, education, family, gestures, government, housing, language, law,

music, and religious ritual. There is, however, great variation from society to society in

nature of each of these elements, which may result in important consumer-behavior

differences around the world.

Culture is Gratifying and Persistent - Culture satisfies basic biological needs as well as

learned needs. It consists of habits that will be maintained and reinforced as long as those

who practice them are gratified. Because of this gratification, cultural elements are

handed down from generation to generation. Thus, people are comfortable doing things in

the customary way, such as traditional marriage found in Nigeria.

Our thorough inculcation with culture causes it to persist even when we are

exposed to other cultures. No matter where we go or what we do, we cannot escape our

cultural heritage.

Culture is Adaptive - In spite of our resistance to change, cultures are gradually and

continuously changing. Some societies are quite static, with a very slow rate of change,

while others are more dynamic, with very rapid changes taking place.

Culture is Organized and Integrated - A culture “hangs together” that is, its parts fit

together. Although every culture has some inconsistent elements, it tends to form a

consistent and integrated whole.

Culture is Prescriptive - Culture involves ideal standards or patterns of behavior so that

members of society have a common understanding of the right and proper way to think,

feel, and act. Norms are society’s rules or guidelines specifying what behavior are

appropriate or inappropriate in given situations.

Concept and Types of Cultural Values

From sociological perspective, cultural value can be defined as “a widely held

belief or sentiment that some activities, relationships, feelings, or goals are important to

the community’s identity or wellbeing.” In a psychological vein, Milton Rokeach defines

values as centrally held and enduring beliefs that guide actions and judgments across

specific situations and beyond immediate goals to more ultimate end states of existence.

Values, therefore, produce inclinations to respond to specific stimuli in standard ways.

That is, a specific behavior is expected to either help or hinder the attainment of some

value or group of values. Consumers, then, are motivated to engage in behaviors designed

to enhance the achievement of certain values and to avoid those behaviors perceived to

hinder the attainment of certain value states.

Values are cultural determined; this means that they are learned from social

interaction, largely from our families and friends in settings such as schools and places of

worship such as mosques and churches. Values strongly influence consumer behavior;

even though specific situations may dictate slightly different actions, overall there is

much similarity in consumer behavior within a given culture, such as in tastes, methods

of shopping and so forth.

It is crucial for the marketer to understand society’s basic value structure so that

strategy decisions do not fly in the face of ingrained cultural patterns. It is much easier to

harmonize with the culture than to attempt to change fundamental cultural values.

Types of Cultural Values

Values transcend specific objects and situations. They deal with modes of conduct

(termed instrumental values) and end-state of existence (called terminal values). That is,

an individual who has a “value” has an enduring belief that a particular mode of conduct

or end-state existence is preferable to some other mode of conduct or end-state of

existence. Values serve as standard or criteria that tell us how to act, what to want, and

what attitudes to hold, and they allow us to judge and compare ourselves with others.

Culture Sub – Culture and Cross Cultural Aspects of CBCulture and Subculture

Culture refers to the set of values, ideas and attitudes that are accepted by a

homogeneous group of people and transmitted to the next generation.

o Subcultures - groups within the larger, or national, culture with unique

values, ideas, and attitudes.

o three largest racial/ethnic subcultures in the U.S

Hispanics,

African-Americans

Asians  .

o Each of these groups exhibits sophisticated social and cultural behaviors

that affect their buying patterns.

1. African-American Buying Patterns

African-Americans have the largest spending power of the three subcultures

While price conscious, they are motivated by product quality and choice.

Respond to products and advertising that appeal to their African-American pride

and heritage as well as address their ethnic features and needs.

2. Hispanic Buying Patterns

Hispanics represent the largest subculture

About 50% are immigrants

The majority are under the age of 25.

Marketing to Hispanics has proven to be a challenge because

oThe diversity of this subculture

oThe language barrier.

Sensitivity to the unique needs of Hispanics by firms has paid huge dividends.

3. Asian Buying Patterns

The Asian is the fastest growing subculture.

About 70% of Asians are immigrants

Most are under the age of 30.

Asians represent a diverse subculture, including Chinese, Japanese, Filipinos,

Koreans, Asian-Indians, people from Southeast Asia, and Pacific Islanders.

Two groups of Asian-Americans have been identified:

Assimilated Asians are conversant in English

Highly educated

Exhibit buying patterns very much like "typical" American consumers.

Non assimilated Asians are recent immigrants who cling to their native

languages and outcomes .

FAMILY GROUP

The term Family is a basic concept; it is not easy to define because family

composition as well as the roles played by family member is almost always in transition.

Family is defined as “Two or more persons related by blood, adoption or marriage

who reside together”.

Family Types:

1. Nuclear Family: It consists of two adults of opposite sex living in a socially approved

sex relationship with their children. It consists of husband, wife and their offspring.

2. Joint Family: It includes a nuclear family and other relatives such as parents of

husband/wife, aunts, uncles and grand parents, also.

Key Family Consumption Roles:

1. Influencers: Family members who provide information to other members about a

product or service.

2. Gate keepers: Family members who control the flow of information to other members

about a product or service into the family.

3. Deciders: Family members with a power to determine unilaterally or jointly whether to

shop for, purchase use, consume or dispose off a specific product or service.

4. Buyers: Family members who make the actual purchase of a particular product or

service.

5. Preparers: Family members who transform the product into a form suitable for

consumption by other family members.

6. Users: Family members who use or consume a particular product or service.

7. Maintainers: Family members who service or repair the product so that it will provide

continual satisfaction.

8. Disposers: Family members who initiate or carry out the disposal or discontinuation of

a particular product or service.

Family Life Cycle:

The family life cycle is a composite variable created by systematically combining

such commonly used demographic variables as marital status, size of the family, age of

family members, and employment status of the head of the household.

Traditional Family Life Cycle:

This FLC basically consists of five stages.

STAGE 1: BACHELORHOOD.

Young single adults living apart from the parents. Young single adults are apt to

spend their incomes on rent, basic home furniture, the purchase and maintenance of

automobiles, travel and entertainment, and clothing and accessories.

They tend to be more fashion and recreation oriented, spending a substantial proportion

of their income on clothing, alcoholic beverages, food away from home, vacations,

leisure time pursuits and other products and services involved in the matting game.

STAGE 2: HONEYMOONERS.

The young newly married couple. After getting married, the life style changes

slightly. They lead a joint life style. They share new experiences and responsibilities.

Start spending on furnishing and house hold goods. They also tend to have a dual income

and spend heavily on outings, vacations, luxury, restaurants, meals, etc.

STAGE 3: PARENT HOOD – FULL NEST – I .

Young married with child. With the addition in family, purchases are

concentrated on baby foods, clothing’s, medical care, health products. A change is

brought about in the lifestyle and most activities revolve round the care of the child.

STAGE 4: FULL NEST – II.

Older married with children. More children lead to more expenses. Children start

going to school and there is more expenditure on books, stationary and college fees.

Toys, bicycle, insurances also become a part of the expenses, and parents start spending

less on them.

STAGE 5: FULL NEST – III.

Older married with dependent children. Income is high at this stage. Parents grow

older. They become experienced buyers and are less interested in new product purchases.

Expenditure high due to replacement buying luxury products.

STAGE 6: EMPTY NEST

Older married with no children living with them. Financial position stabilizes and

there is no expense on children. The couple is free to enjoy their own pursuits and spend

on luxury or self improvement items and medical care.

STAGE 7: SOLITARY SURVIVOR

Older single retired people. Retired people living alone, after the death of a

partner. Life becomes lonely and income may reduce due to retirement. This again

changes the consumption pattern and living style of old people.

Modern Family Life Cycle

During recent years, many changes in the family have occurred, particularly in

smaller family size, postponement of marriage, and rising divorce rates. Thus, another

conception of the family life cycle, which includes such stages as divorced, single parents

and middle-aged married without children, has been offered. This modernized version is

described as consisting of the following groups.

i. Bachelor I: head is 18-34, single (never married, divorced, separated, widowed), no

dependent children.

ii. Young Couple: female head is 18-34, couple (marriage or unmarried), and no children.

iii. Full Nest I: female head is 18-34, couple (married or unmarried), youngest child

under 6.

iv. Full Nest II: female head is 18-34, couple (married or unmarried), youngest child 6 or

over.

v. Single Parent I: head is 18-34, single (never married, divorced, separated, widowed),

youngest child 6 or over.

vi. Single Parent II: head is 18-34, single (never married, divorce, separated, widowed),

youngest child 6 or over.

vii. Bachelor II: head is 35-64, single (never married, divorced, separated, widowed) no

dependent children.

viii. Childless Couple: female head is 35-64, couple (married or unmarried), and no

dependent children.

ix. Delayed Full Nest: female head is 35-64, couple (married or unmarried), youngest

child under 6.

x. Full Nest III: female head is 35-64, couple (married or unmarried), youngest child 6 or

over.

xi. Single Parent III: head is 35-64, youngest child 6 or over.

xii. Bachelor III: head is 65 or older, single (never married, divorced, separated,

widowed), not dependent children.

xiii. Older Couple (Empty Nest): female head is 65 or older, couple (married or

unmarried), no dependent children.

The modernized family life cycle is based on age (of the female in the household,

if appropriate), which is traced through the groups of young, middle aged, and elderly.

These various ages are affected by two types of critical events: (1) marriage and

separation (by divorce or death), and (2) arrival of the first child and departure of the last

child. Thus, the modernized family life cycle accounts for four household types over

three age groups through a person’s lifetime.

CONSUMER REFERENCE GROUPS:

Reference groups are groups that serve as a frame for purchase decisions. A

Reference group may be defined as “Any person or group that serves as a point of

comparison for an individual in the formation of either general or specific values,

attitudes or behaviors.”

Types of Reference Groups:

a) Normative Reference Groups: Reference groups that generate values or behavior of

a person are called Normal Reference Groups. Such groups are those with whom the

person came to contact directly, almost daily and learn the early behavior and attitude

there. Ex: College – molding the student’s general consumer values and behavior,

appropriate ways to dress for specific occasions, how and where to p, what constitutes

‘good’ values.

b) Comparative Reference Groups: Reference group that serve as benchmarks for

specific narrowly defined attitudes or behavior are called comparative reference

groups. Such group may be a friend’s family whose lifestyles may be admirable and

worthy of imitation {The way they maintain their home, their choice of home

furnishings, etc.}

c) Contractual Reference Group: This group is one in which a person holds a

membership or has regular face to face contact and whose values, attitudes and

standards he approves. Thus, a contractual group is likely to have a congruent

influence on an individual’s attitudes on behavior

d) Aspirational Reference Group: It is one in which person doesn’t have a

membership but aspires to be a member. Thus, this has a positive influence on the

behavior.

e) Disclaimant Reference Group: It is the group in which a person holds membership

but whose values, attitudes and standards he disapproves. Hence, it has a negative

impact on the behavior of the person.

f) Avoidance Reference Group: This group is one in which neither a person holds

membership nor he aspires to be the part of the group. Thus, person tends to adopt

attitudes and behaviors that are opposite to the norms of such group.

Factors Affecting Reference Group Influence:

Each reference group influences the individual behaviour. The degree of influence

that a reference group exerts on the individual’s behaviour usually depends upon the

nature of individual and the product and other social factors. The following factors

influence on the reference group;

1) Information and Experience: If the individual himself has first hand knowledge and

experience with a product or service, or can easily obtain full information about the

product or service, is less likely to be influenced by the advice of any other person or

group.

On the other hand, if he has little or no knowledge or experience about the

product or service, and does not have an excess objective information about the

product or service, is more likely to seek out the advice or example of others whom

he thinks have sufficient and reliable information about the product or service. Thus if

a person has insufficient experience or information concerning a product, he will be

more susceptible to the influence, either positive or negative.

2) Credibility, Attractiveness and Power of the reference Group: When consumers

are concerned with obtaining accurate information about the performance or quality

of the product or service, they are likely to be persuaded by the sources considered

credible. When consumers are primarily concerned with the acceptance or approval

of others they like, with whom they identify or who offer them status or other

benefits, they are likely to adopt their product, brand or other behavioural

characteristics.

Reference Group Influence on Product & Brand

NECESSITYWeak reference group influence on product {-}

LUXURYStrong reference group influence

on product { + }

PUBLICStrong reference group influence on brand {+ }

Public NecessitiesInfluence: Weak product and string. Brand Examples: Wristwatch, automobile, man’s suit

Public LuxuriesInfluence: Strong product and brand Examples: Golf clubs sail boat.

PRIVATEWeak reference group

influence on brand { - }

Private NecessitiesInfluence: Weak product and brand Examples: mattress, floor lamp, refrigerator.

Private LuxuriesInfluence: Strong product and weak brand Examples: home video game, icemaker.

Reference Group Application in Consumer Behaviour:

The reference group concept is used by advertisers to persuade consumers to

purchase products and brands by portraying products being consumed in socially pleasant

situations, or else, using prominent and attractive people to endorse products or services

and, often, by using stereotyped group members as spokespersons in advertising.

Mainly three major reference group appeals are used for promotional purposes.

These are – Celebrity appeals, Experts’ appeals and Common man appeals.

CELEBRITY APPEAL

Celebrity – Celebrities are persons who are admired by the public on one count and the

other. Such persons are athletes, cine-stars, sports-heroes and TV personalities.

Advertisers use these celebrities for promoting their products with the expectation that

their appeal would influence the readers or viewers.

Celebrity Appeal can be further divided in to 4 types.

1) Testimonial: A testimonial appeal is one where a celebrity is known to be using a

particular product and appeals to the audience to use the same product. EX:

Aishwarya Roy making an appeal to donate your eyes to eye bank.

2) Endorsement: Endorsement appeal is one where celebrity has allowed his name to

be used along with the product. EX: Sachin Tendulkar has endorsed himself with

MRF Tyres.

3) Actor : In this type of appeal, the celebrity is not acting as himself but posing just as

an actor EX: Jyotika coming in ads of RMKV silks, Akshaya Kumar coming in ads

of Ruf & Tuf.

4) Spokesperson: In this type of appeal, a celebrity is associated with a particular brand

for a long time, so that name of the celebrity itself becomes a symbol of that brand.

EX: Kapil Dev acting as a spokesperson for Samsung. Ajay Devgan and Kajol acting

as a spokesperson for whirlpool refrigerator and washing machine.

EXPERT APPEAL :

Expert is a person who is in a unique position by his occupation, special training

or experience and therefore, he influences the prospective consumers by his advice for

purchasing the product. EX: L & T Product Ultra Tech Cement has the tie line of

“Engineers’ Choice”.

COMMON MAN APPEAL:

Marketers also employ common man for promoting their product. It is because of

consumers that he is also among us. Such appeals are more effective. A group of

common man is also used for such appeals. EX: Arokiya Milk with the tag line of

“Arjunoda Amma Yaru”.

DIFFUSION OF INNOVATION

Diffusion is a process by which a new product is accepted and spreads

through a market. It is a group phenomenon, in which first an idea is perceived, then it

spreads through out the market, and then individuals and groups adopt the product.

DEFINITION:

“Diffusion is a process by which the acceptance of an innovation and new

product, a new idea, a new service, is spread by communication to members of a social

system over a period of time.”

Types of Diffusion Process

1. Typical Diffusion Process: It shows a slow growth or adoption. It later rises

rapidly, and then a period of slow growth is noticed.

2. Fast Diffusion Process: The product clicks immediately. The spread of

innovation is very quick. People patronize the product immediately and later on

there is again slow diffusion.

3. Slow Diffusion Process: The product takes a lot of time to diffuse or spread, and

the consumer follows a pattern of adoption slowly by getting acquainted with the

product.

The rate of spread of innovation depends on a number of factors:

1. Type of Group: Some groups, who are young, affluent and highly educated,

accept changes faster than the old, traditional and poor groups. This shows that

the target market is an important determinant of the rate of diffusion.

2. Perceived Risk: The more the risk associated with changing to new innovation,

the slower is the rate of diffusion. The risk consists of the product not performing

as expected, the risk of the consequences of change – over, and the risk of

reverting back to the old product, if not satisfied with the innovative product.

3. Type of Decision: An individual decision is faster then collective ones.

4. Marketing Effort: This also affects the diffusion process. More aggressive

marketing effort, consisting of high and continuous advertising expenditure,

diffuses faster then otherwise.

5. Trial: The trial can be taken at low cost and low risk, the diffusion is faster.

Some products can be borrowed, rented or, their trial can be taken at retail outlets.

These products like medicines and other low priced items have faster diffusion.

6. Fulfillment of felt need: The faster a need is satisfied or fulfilled by a product,

the greater is the rate of its diffusion.

7. Compatibility: The more the product is compatible with the beliefs, attitudes and

values of the individual or group the faster the diffusion – vegetables soup for

vegetarians, ordinary microwave no roasting.

8. Relevant Advantage: The advantage could be of price, quality, ease of handling,

product quality. To have quick diffusion, the product must offer either a price

advantage or a performance advantage. Washing machine is expensive but a

labour saving device.

9. Complexity: If the product is complex {difficult to understand and use} the

diffusion is slower. The product may be complex but its use must be easy.

10. Observability: The more easily the positive effects of the products can be

observed, the more discussion takes place and faster the diffusion process. Eg.

Cell phones.

CLASSIFICATION OF ADOPTERS:

Adopters can be classified into five groups based on the time when they adopt.

INNOVATORS: The first 2.5% adopt innovation

EARLY ADOPTERS: The next 13.5% to adopt.

EARLY MAJORITY: The next 34% to adopt.

LATE MAJORITY: The next 34% to adopt

LAGGARDS: The final 16% to adopt.

INNOVATORS:

They are venturesome risk takers. They are younger, more educated and socially

mobile. They have the capacity to absorb risk associated with the new product. They are

cosmopolitan in outlook, are aware and make use of commercial media. And are eager to

learn about new products, are progressive, ready to use new products.

EARLY ADOPTERS:

They take a calculated risk before investing and using new innovations. They are

opinion leaders and provide information to groups, but they are also concerned about

failure. Therefore, they weigh advantages and disadvantages of the product before

plunging in for a purchase.

EARLY MAJORITY:

They tend to be more continuous and use the product after the innovators and

early adopters seem to be satisfied with it. They are elders, well educated and less

socially mobile. They rely heavily on inter personal source of information. They

constitute 34 percent of the consumers.

LATE MOJORITY:

They are doubtful and skeptical about the innovation of new products. They tend

to use the product not so much because of innovation, but because of other pressures –

non availability of the product and social pressures. They have less social status, and less

socially mobile then the previous group.

LAGGARDS:

They are more traditional. They possess limited social interaction and are

oriented to the past. They adopt the innovations with great reluctance. They constitute a

small portion of 16 percent of the consumers.

MARKET STRATEGY RELATED TO DIFFUSION:

There are differences in the early purchasers or innovators and late purchasers.

The strategy for the target market adopted, is a “ moving target market “ approach.

Diffusion Enhancement Strategies:

The idea is to find out the diffusion inhibitors and to eliminate them for the

enhancement of diffusion. For this the diffusion determinants are analyzed, and diffusion

strategies framed.

DIFFUSION

DETERMINANT

DIFFUSION

INHIBITOR

DIFFUSION ENHANCEMENT

STRATEGIES

Type of groupConservative

traditionalTry other marketers modern consumer

Perceived Risk HighGive guarantees; reduce risk by

endorsing with credible sources.

Type of decision Group decisionsChoose media to reach all deciders and

provide conflict reduction themes.

Marketing Effort LimitedExtensive and aggressive marketing

effort.

Trial DifficultDistribute free samples to early

adopters. Use high service outlets.

Fulfillment of felt need WeakShow importance of benefits use

extensive advertising

Compatibility ConflictStress attributes consistent with values

and norms

Relevant advantage Low Lower the price – redesign the product.

Complexity High

Use extensive marketing effort. Use

skilled sales force. Use demonstration

of product.

Observables LowExpose the product more through

promotion and advertising

INDUSTRIAL OR ORGANISATIONAL BUYER BEHAVIOUR

Organizational buyer behavior is important as it is done for the organization by a

group of human beings constituting the power center.

It is the decisions making process by which organizations establish the need for purchase

of products, and services, and identify, evaluate and choose among alternative brands and

suppliers.

DEFINITION: Organizational buying is a process by which a company and organization

establishes a need for purchasing products and choose among competing brands and

suppliers.

Decision Making Unit (Buying Center)

Major task of industrial marketer is to identify those individuals who are in any

way involved in purchasing decision process. Buying centre has common goal to achieve

which shares the risks arising from the decision. It is not unusual to encounter groups

consisting of 15 to 20 individuals.

In Industrial Marketing, these decision makers are referred to as the buying centre.

BUYING CENTRE ROLES

1. PRIMARY ROLES

Deciders: Organizational members who have decision making power and who decide

about the purchase (Ex: Engineer deciding specification or Vice President Finance)

Influencers: Individuals in the organization, influence the decision making process by

providing information on criteria for buying consultants. (Ex: Inside the organization –

R&D Specialist – Outside the Organization – Consultants.

2. SECONDARY ROLES

Users: They use the products thus, initiating the purchase process. They report on the

product performance (Ex. Worker.)

Buyers: Formal authority, high level officers, major role is selection of suppliers and

negotiating purchases (Ex; Purchase Department)

Gate keepers: Control the flow of information into buying centre identifies key buying

influence: (Ex: Receptionist, Secretary)

TYPES OF BUYING SITUATIONS:

1. STRAIGHT REBUY: This type of situation is found when there is repetitive or

routine basis order given by the buyer to older. (in) supplier. Reasons can be numerous –

small orders, satisfaction with present suppliers, time shortage etc., but this gives

opportunities for out suppliers to step in and even supply the real orders so as to step in

the organization. (Ex: when company faces a situation of computer stationary shortage,

company orders in routine, to the old supplier of computer stationery.)

2. MODIFIED REBUY: This situation occurs when buyer wants to modify any

purchase, which is improvement in product specification, price reduction, and change in

terms and conditions, etc. This poses a threat and opportunity to in supplier. Out supplier

can take this as a good chance to make an entry by meeting this expectation, (EX: if the

company has computer PC of 32 MB CD, now wants a new computer supplied to be of

64 MB).

3. NEW TASK: This is the most risky decision of buyer. Buyer goes for first time

purchase of product. Buyer does not have any previous knowledge, information or data

to compare. Naturally the buyer takes a lot of time to decide about the purchase. The

first supplier becomes the benchmark for the next purchases. Buyer’s advantage of

learning curve is not there.

This new task division requires maximum sales persons convincing. New task

usually involves more number of persons in buying centers compared to other two buying

situations, (Ex: company is planning to buy a palm top computer for the first time)

FACTORS INFLUENCING INDUSTRIAL BUYER BEHAVIOUR

1. ENVIRONMENTAL FACTOR

Level of Demand

Economic Outlook

Value of Money

Supply Conditions

Technology Improvement

Political Environment

Competition Level Changes

2. ORGANISATIONAL FACTOR

Objectives

Policies

Procedures

Organizational Structure

Organizational System Followed

3. INTERPERSONAL FACTOR

Authority

Status

Empathy

Persuasiveness

4. INDIVIDUAL PARTICIPANT

Age

Income

Educational qualification

Job position

Personality

Attitude towards risk