CONSUMER BEHAVIOUR• Definition• Consumer behavior is defined as the behavior that consumers display in searching

for, purchasing, using, evaluating and disposing of products and services that the consumers 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.

• Scope of Consumer Behavior

• 1. Personal consumer – buys goods and services for his or her own use. - Products are bought for final use by individuals as end users.

• 2. Organizational consumer – includes profit, or non-profit businesses, government agencies, institutions. All buy products, goods,

services in order to run their organizations.

CUSTOMER VERSUS CONSUMER

• The term ‘Customer’ is specific in terms of brand, company, or shop.

• It refers to person who customarily or regularly purchases particular brand, purchases particular company’s product, or purchases from particular shop.

• Thus a person who shops at Bata Stores or who uses Raymond's clothing is a customer of these firms.

• ‘Consumer’ is a person who generally engages in the activities - search, select, use and dispose of products, services, experience, or ideas.

ORGANIZATIONAL BUYER VERSUS INDIVIDUAL BUYER

Individual Buyer Organizational Buyer

• Purchases goods / services for own use * Buys goods / services for business use.• No geographical concentration * Org. buyers are geographically concentrated.• No bulk purchases, larger in Nos. * fewer in numbers & bulk purchases. • Elastic Demand from individuals * Fluctuational & In-elastic demand.• Individual decision making mostly impulsive * many individuals or group involved in decision

in nature making.• Buying motive is mostly rational. * Buying motive is mostly rational than individual• Lack of professionalism in buying * Org. buyers are knowledgeable & professional• No formalities in buying * formalities like quotations, proposals are to be

followed.• Decision making process is easy * complex decision making with high financial

risk, technical aspects, multiple influencing

factors etc.,• Requires less time in negotiation * Requires more extensive negotiation over

larger period of time.

CUSTOMER VALUE

• Customer value is defined as the ratio between the customer’s perceived benefits( economic, functional, psychological ) and the resources ( monetary, time, effort, psychological ) used to obtain those benefits.

• Customer Satisfaction

• Customer satisfaction is the individual’s perception of the performance of the product or service in relation to his or her expectations.

• Concept of customer satisfaction is a function of customer expectations.

• A customer whose experience falls below expectations will be dissatisfied.

• A customer whose experience exceeds his or her expectations, will be very satisfied or delighted.

CUSTOMER RETENTION• Customer Retention

• Customer Retention is in the best interest of customers stay with the company rather than switch to another firm.

• In all business situations , it is more expensive to win new customers than to keep existing ones. Customer retentions increases profits in business because,

• 1. loyal customers buy more products• 2. loyal customers are less price sensitive and pay less attention to competitor’s advertising.• 3. servicing existing customers ( familiar with company’s offerings, processes ) is cheaper.• 4. loyal customers spread positive word of mouth and refer other customers.

• A customer retention driven company closely monitors its customers’ consumption volume and patterns, establishes tiers of customers according to their profitability levels, develops distinct strategies towards each group of customers.

CONSUMER MOTIVES• Consumer Motives

• Consumer has a motive for purchasing a particular product.

• Motive is a strong feeling, urge, instinct, desire or emotion that makes the buyer to make a decision to buy.

• Buying motives thus are defined as ‘those influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods or service.

• These motives are generally controlled by economic, social, psychological influences etc.

• Motives which Influence Purchase Decision

• The buying motives may be classified into two:

• i. Product Motives

• ii. Patronage Motives

CONSUMER MOTIVES• Nature of Motive Purchase Decision• Desire for money : Purchasing when price falls down

• Vanity : Getting costly Items, to be admired by others

• Fear : Purchasing Insurance policy

• Pride : Purchasing premium products

• Fashion : Rural people imitate urban

• Possession : purchasing antiques

• Health : Buying health foods, membership in health clubs

• Comfort : Purchasing micro-oven, washing machine, mixy

• Love and affection : Purchasing gift items

NEED FOR STUDY OF CONSUMER BEHAVIOUR

• Marketer gains insight in to the attitudes, interests, lifestyles, of the target segment.

• To plan out an effective marketing strategies & promotional messages for the target customers.

• Pertinence to Decision Making – Micro & Macro perspectives involve understanding the consumers for the purpose of helping a firm to achieve its objectives.

• Study of consumer behavior may suggest ways to increase the efficiency of the market system and improve the well-being of people in society.

• Studying consumer behavior plays significant role in our lives, when we do shopping, thinking about products and services , hearing advertisements.

• Consumers are often studied because certain decisions are significantly affected by their behavior or expected actions.

• Understanding consumer behavior can provide insight in to aggregate economic and social trends and perhaps even predict such trends.

APPLICATIONS OF CONSUMER BEHAVIOR STUDIES • A sound understanding of consumer behavior is essential to the long-run success of any

marketing program.• To identify and satisfy the consumer’s wants and needs.• To achieve the company objectives.• To devise integrated strategy in achieving a firm’s objective through consumer satisfaction.• To do Market-Opportunity analysis, for the company• To identify and select the target market and to offer the unique market offerings.• To develop and implement a strategy for delivering an effective combination of want satisfying

features to consumers within target markets.• To offer the physical product and service features which have major influences among

customers.• To make decisions regarding the prices to charge for the company’s products and services and

any modification to those prices.• To consider of where and how to offer products and services for sale.• To design the goals and methods of communicating aspects of the firm and its offerings to

target customers.• In the decision making of the Governmental agencies, for the provision of public services.

FACTORS INFLUENCING CONSUMER BEHAVIOR• Influences on Consumer Behaviour

• Interpersonal Influences – Family, Society,

• Reference Groups ( consists of people whose approval matter to us, whom we may wish to copy . This group could be personal ( family, co-worker, friends ) or impersonal ( movie star, celebrity ) .

• Opinion Leader ( any person or organization whose opinions in his field of expertise is respected by us )

• Culture & Sub-Culture.

• Non-Personal Influences – Environment, Place, Time

CONSUMER RESEARCH PROCESS

• CB research is a scientific enquiry to collect information about the consumer in all possible details and dimensions.

• 1. Determining demographics of existing and potential users.

• 2. Identifying consumer needs and product expectation levels.

• 3. Identifying factors influencing purchase decisions.

• 4. Ascertaining the level of customer satisfaction.

• 5.To predict how consumers will react to promotional messages.

• 6. To understand why consumers make the purchase decisions.

TYPES OF CONSUMER RESEARCH• Primary Vs Secondary Research• Internal Vs External Research• Qualitative Vs Quantitative Research

• Primary Research Secondary Research• Primary data pertains to firsthand information collected * Secondary data collected originally for a specific purpose. Original research performed for a more general purpose, usually by individual researchers or organizations to meet the by a third party. specific objectives called Secondary Research.

• Primary research is specially commissioned since * provides wealth of information to the it is unlikely that related data is available already. Market researcher.

• Ex. The potential of sale for an innovative new product * Govt. statistics, popular media can only be found through the primary research. Technical / specialist publications third party data services, casual research, online services, competitive market intelligence, company accounts, patent application

job advertisements.

TYPES OF CONSUMER RESEARCH

• Internal Research External Research

• The information available within the organization * Information collected by outside bodies is termed as Internal Research. Census survey, market research comps such as NCAER, IMRB etc.

• Internal research is relatively rapid and require * External research data is descriptive &

minimal resources. More precise, and requires maximum

resources like money, time, effort etc.,

• Internal Research data can only be primary data. * External research data can be primary or

secondary.

• Ex. Internal data would include sales, production * Ex. Census, Market survey data

distribution records, customer data base etc.,

TYPES OF CONSUMER RESEARCH• Quantitative Research Qualitative Research• Qualitative research mostly deals with * Quantitative research deals with less tangible

numerical information. Data such as consumer opinions.

• Consists of experiments , survey techniques * methods mainly consists of depth interviews

and observation etc. Focus group, metaphor analysis, collage

research, projective techniques etc.,

• Primarily to understand effects of various * to obtain new ideas for promotional campaign

promotional inputs on the consumer & to and products that can be tested more

predict the consumer behavior. Thoroughly in larger, & more comprehensive

studies.

• This research approach is known as’ Positivism’. * the research approach is termed as

‘ inter- pretivism’.• The findings are descriptive, empirical and can * the findings cannot be generalized to a

be generalized to a larger populations. large populations.

TYPES OF CONSUMER RESEARCH• Exploratory Research

• Used to identify variables influencing consumers and discover how consumers may tend to react to these factors.

• This research occurs in situations when there is not enough known about consumers to draw conclusions about what variables are influencing their behavior.

• Two significant methods used in exploratory research are * Consumer Suggestions

* Focus Groups.

• Consumer Suggestions• Many influences and problems encountered by consumers are discovered through the

spontaneous suggestions of consumers themselves. Many retailers conduct an informal type of research similar to the familiar ‘ suggestion box’.

• In this method, customers with complaints or new ideas are able to express them in timely fashion.

TYPES OF CONSUMER RESEARCH- EXPLORATORY RESEARCH • Methods used in Exploratory Research - Focus Group Interview

• Focus groups generally bring together in a casual setting eight to ten people with similar backgrounds to apply the principles of group dynamics and free association to a marketing problem.

• A moderator guides the discussions but allows consumers to interact with each other.

• The session which lasts about two hours , are usually videotaped.

• Advantages in Focus Group Interview• Generate hypotheses about consumers and market situations.• Suggest fresh & revitalized ideas.• Check an advertisement, package, or product concept to determine if anything about it

confusing, misleading, or negative.• Understands consumers language and motivations.• Understands consumers lifestyles and personalities.• Explores new areas as a prelude to a quantitative study.• Do a postmortem on a failed product.

TYPES OF CONSUMER RESEARCH – CONCLUSIVE RESEARCH

• Conclusive Research

• Conclusive research build upon exploratory research.

• The major goals of conclusive research are to describe consumers’ behavior and to offer explanations for its causes.

• The prediction of consumer’s behavior and methods of influencing it can be suggested by conclusive research.

QUALTITATIVE RESEARCH METHODS• Depth Interviews

• The aim of depth interview is to secure the maximum amount of useful information from the respondent on a particular topic with the minimum intervention from the interviewer.

• A depth interview is an unstructured discussion between the interviewer and the respondent.

• Depth interview is generally lengthy ( anything up to 1 Hr. ) and is best carried out by trained and experienced interviewer.

• The role of the interviewer is to obtain detailed information on the topic needed within the time available, balance the need for open ended discussion with the need to address certain topics.

• Depth interviews are particularly useful during the early stages of a product / brand development when new ideas are required and little leads been decided.

QUALITATIVE RESEARCH METHODS • Projective Techniques

• Projective techniques are used by trained psychologists to understand the respondent’s hidden attitude , motivation, and feeling.

• Projective techniques are used to explore associations with the particular brand, in the Marketing context.

• There are a number of projective techniques available.

• 1. word association

• 2. sentence completion

• 3. thematic apperception test

• 4. role play

QUALITATIVE RESEARCH PROCESS

• Focus Group Interview

• Focus groups generally bring together in a casual setting eight to ten people with similar backgrounds to apply the principles of group dynamics and free association to a marketing problem.

• A moderator guides the discussions but allows consumers to interact with each other.

• The session which lasts about two hours , are usually videotaped.

• Advantages in Focus Group Interview• Generate hypotheses about consumers and market situations.• Suggest fresh & revitalized ideas.• Check an advertisement, package, or product concept to determine if anything about it

confusing, misleading, or negative.• Understands consumers language and motivations.• Understands consumers lifestyles and personalities.• Explores new areas as a prelude to a quantitative study.• Do a postmortem on a failed product.

QUALITATIVE RESEARCH METHODS• Metaphor Analysis

• Metaphor is the expression of consumers’ thought processes in the form of series of images, or pictures in their mind, a non-verbal form, through the use, say, of sounds, music, drawings or pictures to describe or represent feelings about another.

• Consumer theorists believe that people use metaphors as the most basic method of thought and communication.

• Metaphor analysis relies on visual images to assess consumer’s deep and sub-conscious thoughts about products, services, and marketing strategies.

• In metaphor analysis, consumer perceptions on advertising, pre-screened respondents were asked to bring in to a depth interview pictures that illustrated their perceptions of the value of advertising.

QUANTITATIVE RESEARCH METHODS• Quantitative primary data can be basically be collected through

• Observation method• Surveys and questionnaires ( including interviews, telephone, dairy, and postal survey )

• Observations• A researcher can actually observe the behavior of the consumer.• Observation method is quite useful under those circumstances where we are more interested in

behavior than in any mental process.• Observations can be of three types.• Secretive – when the subject of observation is unaware that he is being observed , through a

hidden camera , or by an unknown observer ( to the person being observed )• Non-participatory – where the subject knows that he is being observed but the researcher takes

no part in the activity being conducted by the person being observed• Participatory – here the subject and the researcher interact.

• Observations can be carried out in the field or laboratory setting.• Lab observations are naturally in artificial setting and therefore may not reflect true behavior.

QUANTITATIVE RESEARCH METHODS• Mystery Shopping• In this method the researcher simply poses as a customer and reports on the nature and quality

of the service he receives.

• Survey Methods• Most commonly used method.

• The following are the sequential steps in survey methods.• 1. decide on your survey goals-what do you want to learn• 2. determine your sample-who will you survey• 3. select methodology• 4. design the questionnaire• 5. pretest the questionnaire• 6. administer-ask questions• 7.enter the data• 8. analyze the data• 9. present the findings.•

THE CONSUMER BEHAVIOR RESEARCH PROCESS

DevelopObjectives

Collect Secondary data

Design Qualitative Research•Method

•Screener Questionnaire•Discussion Guide

Conduct Research( using highly trained

Interviewers )

Analyze Data( Subjective )

PrepareReport

Design Quantitative Research•Method

•Screener Questionnaire•Discussion Guide

Collect Primary Data( Usually by field

Staff )

Analyze Data( Objective )

PrepareReport

ExploratoryStudy

THE CONSUMER BEHAVIOR RESEARCH PROCESS

• Developing Research Objectives• The first step in the consumer behavior research process is to carefully define the objectives of

the study.• The objectives could be to segment the market, to study consumer attitudes, percentage of

households use email.• The marketing manager and the researcher to agree at the outset on the purposes and

objectives of the study to ensure that the research design is appropriate.• A carefully thought-out statement of objectives helps to define the type and level of information

needed.• Collecting Secondary Data• Secondary information is any data originally generated for some purpose other than the present

research objectives.• Secondary information includes findings based on research done by outside organizations, data

generated in-house for earlier studies and even customer information collected by the firm’s sales or credit departments.

• Secondary research findings sometimes provide sufficient insight in to the problem at hand to eliminate the need for primary research.

• If more detailed information on purchasing patterns or product usage is needed or if psychological or socio-cultural consumer information is sought , then primary data must be collected.

THE CONSUMER BEHAVIOR RESEARCH PROCESS• Designing Primary Research• The design of a research study is based on the purposes of the study.• If descriptive information is needed , then a quantitative study is likely to be undertaken.• If the purpose is to get new ideas ( for exp. Repositioning a product ) then a qualitative study is

undertaken.• The method of data collection, sample design, type of data collection instrument used, will differ for

each of the research approach.• Sampling and Data Collection• The sampling plan addresses three questions : whom to survey ( the sampling unit ), how many to

survey ( the sample size ), how to select them ( the sampling procedure ).• Interviewing the correct target market or potential target market is basic to the validity of the study.• The size of the sample is dependent both on the size f the budget and on the degree of confidence

that the market wants to place in the findings.• Larger the sample size, the more likely the response will reflect the total universe under study.• Smaller sample size, will provide highly reliable findings, depending on the sampling procedure

adopted.• If the researcher wants the findings project able, to the total population, then a probability sample

should be chosen.• If the findings have the sufficient representative of the total population, then a non-probability sample

can be selected.

THE CONSUMER BEHAVIOR RESEARCH PROCESS• Data Analysis and Reporting Research findings• In qualitative research, the moderator or test administrator usually analyzes the responses

received.• In quantitative research, the researcher supervises the analysis.• Open ended responses are first coded and quantified ( i.. e converted in to numerical scores )

then all of the responses are tabulated and analyzed using sophisticated analytical programs that correlate the data by selected variables and cluster the data by selected demographic characteristics.

• Reporting Research findings• In both qualitative and quantitative research, the research report includes a brief executive

summary of the findings.• Depending on the assignment from marketing management, the research report may or may

not include recommendations for marketing action.• The body of the report includes a full description of the methodology used and for quantitative

research, also includes tables and graphics to support the findings.• A sample of the questionnaire is usually included in the appendix to enable management to

evaluate the objectivity of the findings.

CONSUMER MARKET SEGMENTATION

• Market segmentation can be defined as the process of dividing a market in to distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix.

• Bases for Segmentation• Geographic segmentation – division of market by locations.• Demographic segmentation – division of market based on the demographic variables such as

age, gender, marital status, income, occupation and education. Demography means to the vital and measurable statistics of a population.

• Psychological Segmentation – Consumer segmentation based on the specific psychological variables which refers to the inner or intrinsic qualities of the individual consumer.

• Psychological variable or Psychographics are motivations, personality, perceptions, learning, and attitudes.

• The above referred psychological variables are influencing the consumer decision making and consumption behavior.

• Social Segmentation – market segmentation based on the sociological ( group ) and anthropological variables, i.e division based on the family life cycle, social class, core cultural values, sub-cultural memberships and cross-cultural affiliation.

CONSUMER BEHAVIOR - PSYCHOGRAPHICS

• Psychographics : The science of describing a consumer on the basis of his psychological characteristics. Values, Personality, and life style constitute psychographics.

• Values • Values are enduring beliefs that a given behavior or outcome is desirable or good.

• Consumer is more likely to attend to some information if he finds it relevant to his values. The reason for this is that our values guide what we see as relevant for ourselves.

• Values act as powerful force ( motivators ) influencing consumer behavior.

• Goals• Goals reflect the objectives we would like to achieve in a given situation.

• Thus, goals are simultaneously determined and are specific to a given behavior or action.

• When goals are activated we feel motivated to engage in behavior that are relevant to the goals.

THEORY OF MOTIVATION• Motivation is the driving force within individuals that impels them to action.

• A motive is a construct representing an observable inner force that stimulates and compels a behavioral response and provides specific directions to that response.

• Consumer motivation is one of the driving forces of consumer behavior.

• Consumers buy and use products because they are motivated by the need and desire to do so.

• The consumer motivation is the process through which needs are satisfied.

• The consumer motivation comprises of five stages.

• 1. Latent need becoming explicit.• 2. Once the need satisfied potential consumer feels a drive to reduce the same.• 3. Need converts itself in to want and desire to obtain the need satisfying object.• 4. Desire is manifested in a specific goal as the customer searches his memory for the product.• 5. Based on the prior knowledge and fresh search he satisfies the need and achieves the goal.

MOTIVATION PROCESS Need Regulation

Drive Reduction

Manifestation of desire

Goal attainment

Tension Reduction

Need

Drive

Want

Goal

Behavior

MOTIVATION – HIERARCHY OF NEEDS• Dr. Abraham Maslow , a clinical psychologist , formulated a widely accepted theory of human

motivation based on the notion of a universal hierarchy of human needs.

Self –

Actualization

( self-fulfillment)

Ego Needs

( prestige, status , self esteem )

Social Needs ( attraction, friendship

, belonging)

Safety & Security Needs (Protection, order, stability )

Physiological Needs ( Food, water, air, shelter )

THEORY OF HIERARCHY OF NEEDS• Maslow’s theory identifies five basic levels of human needs, which rank in order of importance

from lower level needs ( biogenic ) to higher – level needs.• The theory postulates that individuals seek to satisfy lower – level needs before higher-level

needs emerge.• This model is based on four premises.• A. all humans acquire a similar set of motives through genetic endowments and social

interaction.• B. Some motives are more basic and critical than others.• C. More basic motive must be satisfied at least to some minimum levels before other motives • are activated.• D. As the basic motives are satisfied , more advanced motives come in to play.

• Maslow believed that these motivating forces operate more or less in a sequential fashion.

• As the needs at one level are particularly or fully satisfied , those at the next level are felt more intensely.

• Even if no level or need may be completely satisfied , as satisfaction at one level increases, the next level becomes a strong motivator.

HIERARCHY OF NEEDS – MARKETING APPLICATIONS

• Limitations of Theory of Hierarchy of Needs

• 1. the theory can not be tested empirically.

• 2. there is no way to measure precisely how satisfied one level of need must be before the next higher need becomes operative.

• 3. the need hierarchy also appears to be very closely bound to the contemporary American culture.

• Marketing Applications of Theory of Hierarchy of Needs

• 1. This theory offers useful framework for marketers trying to develop appropriate advertising

appeals for their products.

• 2. The theory facilitates product positioning or repositioning.

McGUIRE’S THEORY OF PSYCHOLOGICAL MOTIVATION• McGuire has developed a motive classification system which is more specific than Maslow’s.• The list of motives, as applicable in marketing context, are listed below.

• 1. Need for consistency – to observe consistency among various facets like attitude, behavior, opinions, self image, other’s view point about ourselves.

• 2. Need to assign cause to an event – these motives deal with one’s need to determine who and what causes things to happen.

• 3. Need to categorize – information and experiences in a certain meaningful manner.

• 4. Need for cues- these motives reflect the need for observable cues and symbols that enable us to understand what we feel and know.

• 5. Need for independence – this arises from the motive to establish a sense of self worth and meaning by achieving self actualization.

• 6. Need for novelty – seeking variety and difference out of a need for novelty.

• 7. Need for self expression – this motive is externally oriented and deals with the need to express one’s identity to others.

• 8. Need for ego defense- need to defend our identities and egos is another important motive.

• 9. Need for assertion – reflects a consumer’s need or engaging in those type of activities that will bring about an increase in self esteem as well as esteem in the eyes of others.

•

THEORY ON CONSUMER MOTIVES• Jagdish Seth identified five consumer motives each oriented to the achievement of specific goals.

• Functional needs –Those needs which satisfy a physical/functional purpose, e.g. soap

- involves the utility of the product / service or the function it performs.

- Ex : purchase of a car because of its fuel efficiency, space, reliability.

• Social needs – Needs that Allow identification with desired group, e.g. logos

- reflected in the status and esteem value of product / service.

- Ex. Purchase of the car because it shows that the buyer is ‘ cut above’.

• Emotional needs –Those needs which, create appropriate emotions, e.g. joy on getting gift.

- involves the appearance or attractiveness of the product / service.

- Ex : purchase of a car because of its color, size, shape.

• Epistemic needs –The Need for knowledge/information, e.g. newspaper

- interest arises by a product / service Ex. Purchase of a car for new experience.

• Situational needs –The needs, which are contingent on time/place, e.g. emergency repairs.

- inferred by an un-expected benefit of a product/service, Ex. Purchase for immediate

• delivery, discounted price.

Theory of Needs

• McCLELLAND’S Three Needs Theory• As we know, having studied this before McClelland had identified three

types of needs: Need for achievement, Need for Power, and Need for affiliation

• nACH:

• need for achievement: drive to excel: drive to achieve in relation to a set of

• standards; to strive to succeed.

• nPOW:

• need for power: the need to make others behave in a way that they would not have behaved otherwise.

• nAFF:

• need for affiliation: the desire for friendly and close interpersonal relationships.

Some important terms in Motivation Theory Motives: Motives give direction to human behavior. We can say that a motive is an inner state that energizes, activates, or moves and directs or channels behavior towards the goal.

• Motivating: This implies an activity engaged into by an individual, by which he or she will channelise the strong motives in a direction that is satisfactory.

Motivation: Motivating can be described as the driving force within individuals that impels them into action. For instance, at the basic level, our body has a need (say hunger), which will translate into a drive (here the drive will e to obtain food) and the goal will be to satisfy the need (in this example to fee full in the stomach).

• Positive or negative MotivationMotivation can be either positive or negative. A positive motivation happenswhen an individual experiences a driving force towards an object or person orsituation. This is also called person motivation. On the other hand, a drivingforce compelling the person to move away from someone or something will beknown as negative motivation.

Impact of Motivational Research on Marketing Strategies• Conclusions from Motivational Research Studies

• 1. For numerous products or situations, many consumers are quite un-interested in learning about alternative brands and their characteristics.

• 2. Consumers may make many purchase decisions without first developing clear brand attitudes or even having much knowledge about alternative brands.

• Marketing Strategy Implications.

• 1. Differentiate Marketing Communications for each condition.

• 2. Moving low involvement customers to higher levels.

• 3.Segmenting consumers in to high and low involvement groups and tailoring marketing programs for each.

CONCEPT OF PERSONALITY• Personality is defined as those inner psychological characteristics ( those specific qualities,

attributes, traits, factors and mannerisms that distinguish one individual from other individuals ) that both determine and reflect how a person responds to his or her environment.

• Personality is consistent pattern of responses to the world across situations and over time.

• The identification of specific personality characteristics associated with consumer behavior has proven to be highly useful in the development of a firm’s market segmentation strategies.

• Nature of Personality

• 1. Personality reflects individual differences.

• 2. Personality is consistent and enduring

• 3. Personality can change.

• 4. Personality is an internalized system which includes all those aspects of a person that are inherited as well as those hat are learned.

Characteristics of Personality

• Personality is the sum total of ways in which an individual reacts and interacts.

• 1. Marketers use personality traits to first differentiate individuals, and then only group them according to their behavioral similarity.

• 2. Personality dictates responses that are consistent across situations and endure overtime. Thus marketers cannot change individual’s personality. The individual has to appeal to the relevant personality traits inherent in target customer groups.

• 3.Personality change overtime in response to situations and events in life on one hand, and as part of gradual maturing process on the other, as learning which contributes to personality formation is a continuous process.

• 4. Personality traits are an important and dominant factors dictate an individual’s purchase behavior.

Marketing Applications of Personality

• Understanding consumer personality and personality traits helps marketers

• 1. To Position brands to enhance their appeal to target customers by communicating the brand benefits that match consumer personality types.

• 2. To target less known brands and technological innovations to consumers with high level of self esteem and self confidence.

• 3. To avoid targeting innovative products to rigid consumers and consumers with low tolerance for ambiguity.

• 4. To identify the extent to which consumers of the product category are prone to discounts / rebates and how value conscious they are, then market accordingly.

Theories of Personality• The following theories have played a prominent role in the study of the relationship between

consumer behavior and personality.

• 1. Freudian Theory 2. Neo – Freudian Theory 3. Trait Theory.

• 1. Freudian Theory

• Also known as ‘ Psychoanalytic Theory’ proposed by Sigmund Freud.

• Freud constructed his theory based on the patient’s recollection of early childhood experiences, analysis of their dreams, and the specific nature of their mental and physical adjustment problem.

• According to Sigmund Freud, every individual’s personality is the product of a struggle among three interacting forces – the id , the ego and the super ego.

• id is the source of strong inborn drives – considered as ‘ warehouse’ of primitive & impulsive drives- basic psychological needs such as thirst, hunger, etc.,

Theories of Personality• Freudian Theory

• The id operates on what is called ‘ Pleasure Principle’ – id acts to avoid tension and seeks immediate pleasure.

• The id operates at a very subjective and un-conscious level and is not fully capable of dealing with objective reality. Also many of the id impulses are not acceptable to the values of organized society.

• Ex. When an individual is hot and thirsty, his id would urge him to grab something cold to drink. There would be no concern about how the drink was acquired or whether it belonged to someone else.

• Gratification IDSystem 1

EGOSystem 3

Super EgoSystem 2

Theories of Personality – Freud’s Psychoanalytic Theory• The ego state is individual’s conscious control.

• Ego state functions as an internal monitor that attempts to balance the impulsive demands of the id and develops capabilities of realistic thinking and ability to deal appropriately with the individual’s environment.

• Ego state operates on the ‘ Reality Principle’. – which is capable of postponing the release of tension until that time when it will be effectively directed at coping with the external environment.

• Ex. The hungry person’s id will encourage him to take away the food from his friend, the ego might reason that asking for the food may take longer but may also result in getting a greater portion.

• Ego is serving as organized focal point for effective action in the environment.

• Ego is the executive of the personality

Freud’s Psychoanalytic theory of Personality• The super ego is the third component of personality.

• Super ego is conceptualized as the individual’s internal expression of society’s moral and ethical codes of conduct.

• The super ego’s real is to see that the individual satisfies needs in a socially acceptable fashion.

• The superego constitutes the moral part of the individual’s psychic structure through internalizing the values of society.

• Super ego represents the ideal by defining what is right and good and it influences the individual to strive for perfection.

• Super ego controls basic strivings of the id which could disrupt the social system and influences the ego to strive for socially approved goals rather than purely realistic ones.

Freud’s Psychoanalytic Theory of Personality• According to Freud, the individual’s total personality develops and is defined by the relationships among the

id, ego and super ego states.

• Ego is capable of resolving many of the conflicts that arise between the three personality components. When No resolutions achieved for resolving conflicts, defense Mechanisms work.

• Defense Mechanisms are unconsciously determined techniques for avoiding or escaping from high levels of tension brought about by unresolved conflicts between components of the personality.

• Applications of Freud’s Psychoanalytic Theory

• 1. Advertising Appeals - Freudian proponents suggest that various appeals can assist in resolving the conflict which can develop between the id, ego and super-ego in some purchase situations. The ego directs behavior that is also acceptable to id and super ego. This idea has been translated in to advertising themes.

• This approach in advertising is also known as ‘ Triple Appeal’.

• The ego arbitrates the acceptability of the two forms of expressions of id and super ego in an advertising campaign.

• 2. Understanding the operation of defense mechanisms can assist the marketers in developing marketing and promotional strategies.

NEO-FREUDIAN PERSONALITY THEORY• Among those who rejected Freud’s id based personality theory , some reasoned that individual develops a

personality through numerous attempts to deal with others in a social setting.

• According to Neo – Freudian theory, Individuals are striving to over-come feelings of inferiority and searching for ways to obtain love, security, and brotherhood.

• The childhood experiences in relating to others produce feelings of inferiority , insecurity and lack of love. These feelings motivate individuals to perfect themselves and also to develop methods to cope with anxieties produced by such feelings of inferiority.

• Karen Horney proposed the first theoretical scheme based on Neo-Freudian approach.

• Horney identified ten major needs which are acquired as a consequence of individuals attempting to find solutions to their problems in developing a personality and dealing with others in a social environment.

• These ten needs were classified in to three major orientations.

• 1. compliant orientation – those move toward people and stress the need for love, approval, modesty, affection. These individuals tend to exhibit large amounts of empathy and humility and are selfish.

•

NEO-FREUDIAN THEORY OF PERSONALITY• 2. Aggressive orientation – Those who move against people and stress the need for power ,

strength, and the ability to manipulate others.

• 3. Detached orientation – Those move away from people. These individuals stress the need for independence, freedom, and self-reliance in their dealings with others.

• A CAD ( Compliant, Aggressive, Detached ) instrument was developed to measure people’s interpersonal orientations within a consumer context.

• Many marketers have used some of the Neo-Freudian theories in marketing applications.

• TRAIT Theory

Trait theory is a significant departure from the earlier qualitative measures that are typical of Freudian and neo-Freudian theory.

It is primarily quantitative or empirical, focusing on the measurement of personality in terms of specific psychological characteristics called traits

TRAIT THEORY OF PERSONALITY• A trait is defined as any distinguishing, relatively enduring way in which one individual differs

from another.

• Selected single-trait personality tests increasingly are being developed specifically for use in consumer behavior studies.

• Types of traits measured include:

• Consumer innovativeness — how receptive a person is to new experiences.

• Consumer materialism — the degree of the consumer’s attachment to “worldly possessions.”

• Consumer ethnocentrism — the consumer’s likelihood to accept or reject foreign-made products.

• Researchers have learned to expect personality to be linked to how consumers make their choices, and to the purchase or consumption of a broad product category rather than a specific brand.

PERSONALITY TRAITS• Personality traits to be discussed include:

• Consumer innovativeness.• Dogmatism.• Social character.• Need for uniqueness.• Optimum stimulation level.• Variety-novelty seeking.

• Consumer Innovativeness• How receptive are consumers to new products, new services, or new practices?• Recent Consumer research indicates a positive relationship between innovative use of the

Internet and buying online.

• Dogmatism

• Dogmatism is a personality trait that measures the degree o rigidity an individual displays toward the unfamiliar and toward information that is contrary to their established beliefs.

• Consumers low in dogmatism are more likely to prefer innovative products to established ones.• Consumers high in dogmatism are more accepting of authority- based ads for new products.

INFLUENCE OF PERSONALITY TRAITS IN CONSUMPTION BEHAVIOUR

• Social Character• Social character is a personality trait that ranges on a continuum from inner directed to other-directed.

• Inner-directed consumers tend to rely on their own “inner” values or standards in evaluating new products and are innovators. They also prefer ads stressing product features and personal benefits.

• Other-directed consumers tend to look to others for direction and are not innovators. They prefer ads that feature social environment and social acceptance.

• Need for Uniqueness• These people avoid conformity are the ones who seek to be unique!

• Optimum Stimulation Level

• Some people prefer a simple, uncluttered, and calm existence, although others seem to prefer an environment crammed with novel, complex, and unusual experiences.

• Persons with optimum stimulation levels (OSL s) are willing to take risks, to try new products, to be innovative, to seek purchase-related information, and to accept new retail facilities.

• The correspondence between an individual’s OSL and their actual circumstances has a direct relationship to the amount of stimulation individual’s desire.

• If the two are equivalent, they tend to be satisfied. If bored, they are under stimulated, and vice versa.

INFLUENCE OF PERSONALITY TRAITS IN CONSUMPTION BEHAVIOUR

• Variety-Novelty Seeking.

• This is similar to OSL.

• Primary types are variety or novelty seeking.

• There appear to be many different types of variety seeking:

• Exploratory purchase behavior (e.g., switching brands to experience new and possibly better alternatives),

• Vicarious exploration (e.g., where the consumer secures information about a new or different alternative and then contemplates or even daydreams about the option), and

• Use innovativeness (e.g., where the consumer uses an already adopted product in a new or novel way).

• The third form of variety or novelty seeking—use innovativeness—is particularly relevant to technological changes. Consumers with high variety seeking scores might also be attracted to brands that claim to have novel or multiple uses or applications. Marketers, up to a point, benefit from thinking in terms of offering additional options to consumers seeking more product variety.

• Ultimately, marketers must walk the fine line between offering consumers too little and too much choice. The stream of research examined here indicates that the consumer innovator differs from the non-innovator in terms of personality orientation.

THEORY OF PERCEPTION• CONSUMER PERCEPTIONS- Perception is the process of selecting, organizing and

interpreting information inputs in to a meaningful and coherent picture of the world.

• Characteristics of Perception

• Perception is a mental process, whereby an individual selects data or information from the environment, organizes it and then draws significance or meaning from it.

• Perception is basically a cognitive or thinking process and individual activities; emotions, feelings etc. are based on his or her perceptions of their surroundings or environment.

• Perception being an intellectual and cognitive process will be subjective in nature.

• The process of perception has three sub stages -

• 1. Sensation– Attending to an object/event with one of five senses.

• 2. Organization – Categorization by matching sensed stimulus with similar object in memory. Ex. Color

• 3. Interpretation– Attaching meaning to stimulus, making judgments as to value and liking, e.g. bitter taste

Theory of Perception• Perceptual Processes:

• 1. Selective attention 2. Selective distortion 3. Selective retention.

• Selective Attention.

• Selective attention means that marketers have to work hard to attract consumers’ notice.

• A stimuli is more likely to be attended to , if it is linked to an event, satisfies current needs, intensity of input changes (sharp price drop).

• Selective Distortion.

• Selective distortion is the tendency to twist information into personal meanings and interpret information in a way that will fit our pre-conceptions.

• Unfortunately, there is not much that marketers can do about selective distortion.

• Advertisers that use comparative advertisements (pitching one product against another), have to be very careful that consumers do not distort the facts and perceive that the advertisement was for the competitor.

Theories of Perception• Selective retention.• People will forget much that they learn but will tend to retain information that supports their

attitudes and beliefs.• Because of selective retention, we are likely to remember good points mentioned about

competing products. • Selective retention explains why marketers use drama and repetition in ,sending messages to

their target market. We remember inputs that support our beliefs, forgets those that don’t.• Basic Concepts in Perception Process

• Sensation is the immediate and direct response of the sensory organs to stimuli.

(an advertisement, a package, and a brand name).

* A stimulus is any unit of input to any of the senses.• Sensory receptors are the human organs (i.e., the eyes, ears, nose, mouth, and skin) that

receive sensory inputs, sight, sound, smell, taste, or touch.• Human sensitivity refers to the experience of sensation. Sensitivity to stimuli varies with the

quality of an individual’s sensory receptors and the amount or intensity of the stimuli to which he/she is exposed.

• Sensation itself depends on energy change, the difference of input.

Sensory Perception• The five senses – sight , smell, touch, hear and taste govern sensory perception.• Sensory perception focuses on specific attributes of a product or service and how these

attributes are understood and evaluated by consumers.

• Factors influencing Sensory Perception• 1. Stimulus Factors• 2. Individual Factors

• Stimulus Factors• Sensory cues are such attributes as colour, shape, and size, tempo and pitch, sweet, bitter and

floral etc.,• Colour is a powerful cue in visual perception.• Marketers recognize the importance of colours and use it intelligently and extensively in product

design, packaging, promotion, and store décor.

• Individual Response factors• The following are the individual factors affecting the sensory perceptions, they are sensory

acuity, sensory preferences and consumer expectations.• Sensory acuity – different people used to have different capacities to recognize and differentiate among certain sensory cues.

Marketing Applications of Perception• Positioning of Services

• Compared with manufacturing firms, service marketers face several unique problems in positioning and promoting their offerings. Services are intangible image becomes a key factor in differentiating a service from its competition.

• The marketing objective is to enable the consumer to link a specific image with a specific brand name. Many service marketers have developed strategies to provide customers with visual images and tangible reminders of their service offerings.

• Perceived Price

• How a consumer perceives a price (perceived price)—as high, as low, as fair— has a strong influence on both purchase intentions and purchase satisfaction.

• Reference Prices

• A reference price is any price that a consumer uses as a basis for comparison in judging another price.

• Reference prices can be external or internal. An advertiser generally uses a higher external reference price (“sold elsewhere at...”) in an ad in which a lower sales price is being offered, to persuade the consumer that the product advertised is a really good buy.

Marketing Applications of Perception• Perceived Quality

• Consumers often judge the quality of a product (perceived quality) on the basis of a variety of informational cues.

• a) Intrinsic cues are physical characteristics of the product itself, such as size, color, flavor, or aroma.

• b) Extrinsic cues are such things as price, store image, service environment, brand image, and promotional message.

• Perceived Quality of Products

• Intrinsic cues are concerned with physical characteristics of the product itself, size, color, flavor, etc.

• a) Consumers like to think they base quality evaluations on intrinsic cues, but in reality, they are often unable to identify that product in a taste test.

• b) In the absence of actual experience with a product, consumers often evaluate quality on the basis of extrinsic cues, price, brand image, store image, etc.

• Many consumers use country-of-origin stereotypes to evaluate products.

• Perceived Quality of Services

• It is more difficult for consumers to evaluate the quality of services than the quality of products. Consumers are unable to compare services side-by-side as they do products, so consumers rely on surrogate or extrinsic cues when purchasing services.

• Marketers try to standardize their services in order to provide consistency of quality. Service is consumed as it is being produced. As a result, defective services are difficult to correct. Researchers have concluded that the service quality that a customer perceives is a function of the magnitude and direction of the gap between expected service and the customer’s assessment of the service actually delivered.

Marketing Applications of Perception• Price/Quality Relationship

• Perceived product value has been described as a trade-off between the product’s perceived benefits (or quality) and perceived sacrifice required to acquire it. • A number of research studies support the view that consumers rely on price as an indicator of product quality.

* Other studies suggest consumers are actually relying on a well-known brand name as a quality indicator. Because price is so often considered to be an indicator of quality, some products deliberately emphasize a high price to underscore their claims of quality.

• Marketers have used the price/quality relationship to position their products as the top-quality offering in their product category.

• b) There is a positive price/quality relationship.

• c) Consumers use price as a surrogate indicator of quality if they have little information or little confidence in their ability to make a choice.

Gestalt Theory of Perception• Consumers perceive the overall form of a product , not its individual features.

• Gestalt principle implies that the process of perception is influenced by stimulus factors & individual response factors. The Stimulus factors are physical, chemical, electro-magnetic and other observable characteristics of person , object , and situation perceived.

• The stimulus factors which affect sensory perception include colour, contrast, size, intensity, movement, position, and isolation.

• Colour & Contrast – color perception involves subjective judgments.

• Size – Large sizes tend to attract greater attention than small.

• Intensity – More attention is usually gained as intensity increases.• Position • Isolation – centering a small object in a virtually blank page draws the eyes to it immedaitely.• Individual Response factors• 1. Interest• 2. Involvement• 3. Needs• 4. Values

CONSUMER LEARNING• Consumer learning is a process by which individuals acquire the purchase and consumption

knowledge and experience that they apply to future related behavior.

• Several points in this definition are worth noting.

• a) First, consumer learning is a process; that is, it continually evolves and changes as a result of newly acquired knowledge from actual experience.

• b) Both newly acquired knowledge and personal experience serve as feedback to the individual and provide the basis for future behavior in similar situations.

• The term learning encompasses the total range of learning, from simple, almost reflexive responses to the learning of abstract concepts and complex problem solving.

• c) Most learning theorists recognize the existence of different types of learning and explain the differences through the use of distinctive models of learning. Despite their different viewpoints, learning theorists in general agree that in order for learning to occur, certain basic elements must be present—motivation, cues, response, and reinforcement.

PRINCIPAL ELEMENTS OF LEARNING• Motivation is based on needs and goals and Motivation acts as a spur to learning.

• For Ex. Men and women who want to become good tennis players are motivated to learn all they can about tennis and to practice whenever they can. They may seek information concerning the prices, quality and characteristics of tennis racquets. Conversely, individuals who are not interested in tennis are likely to ignore all information related to the game.

• The degree of involvement determines the consumer’s level of motivation to search for knowledge or information about a product or service.

• Uncovering consumer motives is one of the prime tasks of marketers who then try to teach motivated consumer segments why and how their products will fulfill the consumer’s needs.

• Cues are the stimuli that give direction to the motive of learning.

• a) In the marketplace, price, styling, packaging, advertising, and store displays all serve as cues to help consumers fulfill their needs.

• Cues serve to direct consumer drives when they are consistent with their expectations.

PRINCIPAL ELEMENTS OF LEARNING

• Response - How individuals react to a cue—how they behave—constitutes their response.

• A response is not tied to a need in a one-to-one fashion.

• A need or motive may evoke a whole variety of responses.

• The response a consumer makes depends heavily on previous learning; that, in turn, depends on how related responses were reinforced previously.

• Reinforcement - Reinforcement increases the likelihood that a specific response will occur in the future as the result of particular cues or stimuli.

• Reinforced behavior tends to be repeated, consumers can learn to develop successful means of responding to their needs or changing conditions.

CHARACTERISTICS OF LEARNING• There are several characteristics of learning which are relevant and of interest to marketers.

• 1. Strength of Learning – heavily influenced by importance, reinforcement, repetition, and imagery.

• Learning lasts longer, when the more important the material to be leaned.• more reinforcement received during the learning process.• The greater the number of stimulus repetitions that occurs.• The more imagery contained in the material. • Importance – refers to the value that the consumer places on the information to be learned.• Reinforcement is anything which increases the likelihood that a given response will be repeated

in the future.• Repetition is the more times we are exposed to the information or practice a certain kind of

behavior , the more likely we are to learn it.• Imagery refers to the images created by words.• 2.Extinction• Extinction or forgetting occurs when the reinforcement for the learned response is withdrawn.• The rate at which extinction occurs is inversely related to the strength of the original learning.

CHARACTERISTICS OF LEARNING• 3.Stimulus Generalization• Stimulus generalization occurs when a response to one stimulus is elicited by a similar but

distinct stimulus.• This characteristic of consumer learning is used by marketers to develop brand extensions.

• 4.Stimulus Discrimination• Stimulus Discrimination refers to the process of learning to respond differently to somewhat

similar stimuli.• Marketers use Advertising as one of the ways to differentiate their products from others by

brand differences, real or symbolic advertising.

• 5.Response Environment• The stronger the original learning, the more likely relevant information will be retrieved when

required.• The more the retrieval situation offers cues similar to the cues present during learning, the more

likely effective retrieval is to occur.• Many a time, the shopping environment is replicated to bring the learning environment much

closer to the retrieval environment.

Behavioural Learning TheoriesLearning Theories

Connectionist Learning Cognitive Learning

( Development of connections between stimulus – Response )

Classical Conditioning Instrumental Conditioning

Conditioning

Conditioning refers to learning based on association of stimulus ( information ) and response ( behaviour or feeling )

PAVLOVIAN MODEL OF CLASSICAL CONDITIONING

AFTER REPEATED PAIRINGS

Unconditioned StimulusMeat Paste

Conditioned StimulusBell

Conditioned StimulusBell

Conditioned ResponseSalivation

Unconditioned ResponseSalivation

CLASSICAL CONDITIONING• Early classical conditioning theorists regarded all organisms ( both animal & human ) as relatively passive entities that could be

taught certain behaviors through repetition ( or conditioning ).

• a) Conditioning involved building automatic responses to stimuli.

• Ivan Pavlov was the first to describe conditioning and to propose it as a general model of how learning occurs.

• b) For Pavlov, conditioned learning results when a stimulus that is paired with another stimulus elicits a known response and serves to produce the same response when used alone.

• c) He used dogs to demonstrate his theories.

• d) The dogs were hungry and highly motivated to eat.

• e) Pavlov sounded a bell and then immediately applied a meat paste to the dogs’ tongues, which caused them to salivate.

• f) After a sufficient number of repetitions of the bell sound, followed almost immediately by the food, the bell alone caused the dogs to salivate.

• In a consumer behavior context, an unconditioned stimulus might consist of a well-known brand symbol (e.g., the Microsoft “windows” icon) that implies technological superiority and trouble-free operation (the unconditioned response).

• Conditioned stimuli might consist of new products bearing well-known symbols.

COGNITIVE ASSOCIATIVE LEARNING• Classical conditioning is seen as cognitive associative learning not the acquisition of new reflexes, but the

acquisition of new knowledge about the world.

• Optimal conditioning—that is, the creation of a strong association between the conditioned stimulus (CS) and the unconditioned stimulus (US)—requires forward conditioning; that is, the CS should precede the US, repeated pairings of the CS and the US, a CS and US that logically belong together, a CS that is novel and unfamiliar, and a US that is biologically or symbolically salient. This model is Neo- pavlovian Conditioning.

• Under neo- Pavlovian conditioning, the consumer can be viewed as an information seeker who uses logical and perceptual relations among events, along with his or her own preconceptions, to form a sophisticated representation of the world.

• Strategic Applications of Classical Conditioning

• Three basic concepts derive from classical conditioning: repetition, stimulus generalization, and stimulus discrimination.

• 1. Repetition works by increasing the strength of the association and by slowing the process of forgetting.

• a) After a certain number of repetitions retention declines.

• b) This effect is known as advertising wear out and can be decreased by varying the advertising messages.

• c) Wear out may be avoided by varying the message through cosmetic variation or substantive variation.

STRATEGIC APPLICATIONS OF CLASSICAL CONDITIONING• 2. Stimulus generalization explains why imitative “me too” products succeed in the marketplace: consumers

confuse them with the original product they have seen advertised.

• a) It also explains why manufacturers of private label brands try to make their packaging closely resemble the national brand leaders.

• The principle of stimulus generalization is applied by marketers to product line, form, and category extensions.

• b) In product line extensions, the marketer adds related products to an already established brand, knowing that the new product is more likely to be adopted when it is associated with a known and trusted brand name.

• c) Marketers offer product form extensions that include different sizes, different colors, and even different flavors.

• d) Product category extensions generally target new market segments.

• i) The success of this strategy depends on a number of factors. ii) For example, if the image of the parent brand is one of quality, consumers are more likely to bring positive associations to the new category extensions.

• Family branding—the practice of marketing a whole line of company products under the same brand name—is another strategy that capitalizes on the consumer’s ability to generalize favorable brand associations from one product to the next.

• Retail private branding often achieves the same effect as family branding.

STRATEGIC APPLICATIONS OF CLASSICAL CONDITIONING• 3. Stimulus discrimination is the opposite of stimulus generalization and results in the selection of specific

stimulus from among similar stimuli.

• a) The consumer’s ability to discriminate among similar stimuli is the basis of positioning strategy, which seeks to establish a unique image for a brand in the consumer’s mind. The key to stimulus discrimination is effective positioning, a major competitive advantage.

• b) The image, or position, that a product or service has in the mind of the consumer is critical to its success.

• c) Unlike the imitator who hopes consumers will generalize their perceptions and attribute special characteristics of the market leader’s products to their own products, market leaders want the consumer to discriminate among similar stimuli.

• Most product differentiation strategies are designed to distinguish a product or brand from that of competitors on the basis of an attribute that is relevant, meaningful, and valuable to consumers. It often is quite difficult to unseat a brand leader once stimulus discrimination has occurred.

• d) In general, the longer the period of learning—of associating a brand name with a specific product—the more likely the consumer is to discriminate, and the less likely to generalize the stimulus.

• The principles of classical conditioning provide the theoretical underpinnings for many marketing

applications.

• e) Repetition, stimulus generalization, and stimulus discrimination are all major applied concepts that help explain consumer behavior.

INSTRUMENTAL CONDITIONING• Instrumental Conditioning also called as ‘ Operant Conditioning’.

• Like classical conditioning, instrumental conditioning requires a link between a stimulus and a response.

• a) In instrumental conditioning, the stimulus that results in the most satisfactory response is the one that is learned.

• Instrumental learning theorists believe that learning occurs through a trial-and error process, with habits formed as a result of rewards received for certain responses or behaviors.

• b) Although classical conditioning is useful in explaining how consumers learn very simple kinds of behaviors, instrumental conditioning is more helpful in explaining complex, goal-directed activities.

• According to American psychologist B. F. Skinner, most individual learning occurs in a controlled environment in which individuals are “rewarded” for choosing an appropriate behavior.

• c) In consumer behavior terms, instrumental conditioning suggests that consumers learn by means of a trial-and error process in which some purchase behaviors result in more favorable outcomes (i.e., rewards) than other purchase behaviors.

• d) A favorable experience is instrumental in teaching the individual to repeat a specific behavior.

• In a marketing context, the consumer who tries several brands and styles of jeans before finding a style that fits her figure (positive reinforcement) has engaged in instrumental learning.

CLASSICAL CONDITIONING Vs INSTRUMENTAL CONDITIONING

Classical Conditioning Instrumental Conditioning

• Involves an already established response to * No previous stimulus – response connection

another stimulus necessary. Learners discover appropriate

response.

• The outcome of classical conditioning is not * The outcome of instrumental conditioning dependent on learner’s actions. Dependent on learner’s actions.

• Classical conditioning influences development * The instrumental conditioning influences

and changes in opinions, tastes and goals. Changes in goal-directed behavior.

• Useful in explaining how consumers learn * Learning to adapt and control one’s

brand names and acquire / change their environment is better explained by this theory.

opinions, tastes , goals.

REINFORCEMENT BEHAVIOUR• Reinforcement of Behavior• Skinner distinguished two types of reinforcement (or reward) influence, which provided that the

likelihood for a response would be repeated.

• a) The first type, positive reinforcement, consists of events that strengthen the likelihood of a specific response.

• b) Negative reinforcement is an unpleasant or negative outcome that also serves to encourage a specific behavior. Fear appeals in ad messages are examples of negative reinforcement.

• c) Either positive or negative reinforcement can be used to elicit a desired response.

• d) Negative reinforcement should not be confused with punishment, which is designed to discourage behavior.

• Forgetting and extinction—when a learned response is no longer reinforced, it diminishes to the point of extinction; that is, to the point at which the link between the stimulus and the expected reward is eliminated.

• a) Forgetting is often related to the passage of time; this is known as the process of decay.

REINFORCEMENT BEHAVIOUR

• b) Marketers can overcome forgetting through repetition and can combat extinction through the deliberate enhancement of consumer satisfaction.

• Reinforcement schedules—marketers have found that product quality must be consistently high and provide customer satisfaction with each use for desired consumer behavior to continue.

• Marketers have identified three types of reinforcement schedules: total (or continuous) reinforcement, systematic (fixed ratio) reinforcement, and random (variable ratio) reinforcement.

• Variable ratios tend to engender high rates of desired behavior and are somewhat resistant to extinction—perhaps because, for many consumers, hope springs eternal.

• Shaping—the reinforcement of behaviors that must be performed by consumers before the desired behavior can be performed is called shaping.

• a) Shaping increases the probabilities that certain desired consumer behavior will occur.

Modeling or Observational Learning• Learning theorists have noted that a considerable amount of learning takes place in the absence of direct

reinforcement, either positive or negative, through a process psychologists call modeling or observational learning (also called vicarious learning).

• They observe how others behave in response to certain situations (stimuli), the ensuing results (reinforcement) that occur, and they imitate (model) the positively reinforced behavior when faced with similar situations.

• a) Modeling is the process through which individuals learn behavior by observing the behavior of others and the consequences of such behavior.

• b) Their role models are usually people they admire because of such traits as appearance, accomplishment,

skill, and even social class.

• c) Children learn much of their social behavior and consumer behavior by observing their older siblings or their parents.

• Advertisers recognize the importance of observational learning in their selection of models, whether celebrities or unknowns.

• Sometimes ads depict negative consequences for certain types of behavior.

• d) This is particularly true of public policy ads, which may show the negative consequences of smoking, of driving too fast, or taking drugs.

Cognitive Learning Theory• Cognitive learning is based on mental activity. Cognitive learning theory holds that the kind of learning most

characteristic of human beings is problem solving, and it gives some control over their environment.

• Information Processing

• The human mind processes the information it receives as input much as a computer does.

• a) Information processing is related to both the consumer’s cognitive ability and the complexity of the information to be processed. Individuals differ in terms of their ability to form mental images and in their ability to recall information.

• The more experience a consumer has with a product category, the greater his or her ability to make use of product information.

• How Consumers Store, Retain, and Retrieve Information

• The structure of memory—because information processing occurs in stages, it is believed that content is stored in the memory in separate storehouses for further processing; a sensory store, a short-term store, and a long-term store.

• Sensory store—all data comes to us through our senses, however, our senses do not transmit information as whole images.

Cognitive Learning Theory• Information Processing & Memory Stores

Sensory Rehearsal Encoding Retrieval

Input

Forgotten Forgotten Forgotten Lost lost unavailable

Sensory StoreWorking Memory

( Short term store )Long Term

Store

Cognitive Learning Theory• a) The separate pieces of information are synchronized as a single image.

• b) This sensory store holds the image of a sensory input for just a second or two.

• c) This suggests that it’s easy for marketers to get information into the consumer’s sensory store, but hard to make a lasting impression.

• Short-term store—if the data survives the sensory store, it is moved to the short term store.

• d) This is our working memory.

• e) If rehearsal—the silent, mental repetition of material— takes place, then the data is transferred to the long-term store.

• f) If data is not rehearsed and transferred, it is lost in a few seconds.

• Long-term store—once data is transferred to the long-term store it can last for days, weeks, or even years.

• Rehearsal and encoding—the amount of information available for delivery from the short-term store to the long-term store depends on the amount of rehearsal an individual gives to it.

Cognitive Learning Theory• g) Encoding is the process by which we select and assign a word or visual image to represent

a perceived object.

• h) Learning visually takes less time than learning verbal information.

• i) How much consumers encode depends on their cognitive commitment to the intake of the information and their gender.

• Information overload takes place when the consumer is presented with too much information.

• j) It appears to be a function of the amount of information and time frame of that information.

• k) There are contradictory studies on what constitutes overload.

• l) The difficulty is determining the point of “overload.

• Retention—information is constantly organized and reorganized as new links between chunks of information are forged.

• m) In fact, many information-processing theorists view the long-term store as a network consisting of nodes (i.e., concepts) with links among them.

Cognitive Learning Theory• n) As individuals gain more knowledge they expand their network of relationships, and

sometimes their search for additional information.

• o) This process is known as activation, which involves relating new data to old to make the material more meaningful.

• p) The total package of associations brought to mind when a cue is activated is called a schema.

• q) Research has found that older adults appear to be more reliant on scheme based information processing strategies than younger adults.

• r) Consumers’ information search is often dependent upon how similar or dissimilar (discrepant) presented products are to product categories already stored in memory.

• i) Consumers recode what they have already encoded to include larger amounts of information (chunking).

• s) The degree of prior knowledge is an important consideration.

Cognitive Learning Theory• t) Knowledgeable consumers can take in more complex chunks of information than those who

are less knowledgeable in the product category.

• u) Information is stored in long-term memory in two ways: episodically (i.e., by the order in which it is acquired) and semantically (according to significant concepts).

• v) Many learning theorists believe that memories stored semantically are organized into frameworks by which we integrate new data with previous experience.

• Retrieval is the process by which we recover information from long-term storage.

• w) A great deal of research is focused on how individuals retrieve information from memory.

• x) Studies show that consumers tend to remember the product’s benefits, rather than its attributes.

• y) Motivated consumers are likely to spend time interpreting and elaborating on information they find relevant to their needs; and are likely to activate such relevant knowledge from long-term memory.

Cognitive Learning Theory• z) Research findings suggest that incongruent (e.g. unexpected) elements pierce consumers’

perceptual screens and improve the memorability of an ad when these elements are relevant to the advertising message.

• a) Incongruent elements that are not relevant to an ad also pierce the consumer’s perceptual screen but provide no memorability for the product. Interference effects are caused by confusion with competing ads and result in a failure to retrieve.

• b) Advertisements for competing brands or for other products made by the same manufacturer can lower the consumer’s ability to remember advertised brand information.

• c) There are actually two kinds of interference.

• i) New learning can interfere with the retrieval of previously stored material.

• ii) Old learning can interfere with the recall of recently learned material.

Models of Cognitive Learning

PROMOTIONAL

MODELTRICOMPONENT

MODEL

DECISION-MAKING MODEL

INNOVATION

ADOPTION MODEL

INNOVATION DECISION PROCESS

ATTENTION COGNITIVE AWARENESS

KNOWLEDGE

AWARENESS KNOWLEDGE

INTEREST

DESIRE

AFFECTIVE EVALUATION INTEREST

EVALUATION

PERSUATION

ACTION CONATIVE PURCHASE

POSTPURCHASE

EVALUATION

TRIAL ADOPTION DECISION

CONFIRMATION

SEQUENTIALSTAGES OFLEARNING

SPLIT – BRAIN THEORY• Split Brain theory developed from a stream of research called hemispheral lateralization.

• Split Brain Theory states that the right and left hemispheres of the brain specialize in the kinds of information they process. The left hemisphere is primarily responsible for cognitive activities such as reading, speaking, and attributional information processing.

• The Individuals who are exposed to verbal information cognitively analyze the information through the left brain processing and form mental images.

• The left side of the brain is rational, active, and realistic.

• The right hemisphere of the brain is concerned with non-verbal , timeless, pictorial, and holistic information.

• The right side of the brain is emotional, metaphoric, impulsive, and intuitive.

• Limitations of Split – Brain Theory

• Research suggests the spheres of the brain do not always operate independently of each other, but work together to process information.

• There is evidence that both sides of the brain are capable of low- and high-involvement. It does seem the right side is more cognitively oriented and the left side more affectively oriented.

INVOLVEMENT THEORY & MEDIA STRATEGY• Individuals passively process and store right-brain information.

• a) Because it is largely pictorial, TV viewing is considered a right hemisphere activity.

• b) Passive learning was thought to occur through repeated exposures to low involvement information.

• c) The left hemisphere is associated with high-involvement information. Print media (newspapers and magazines) are considered left hemisphere or high-involvement activity.

• Right-brain theory is consistent with classical conditioning and stresses the importance of the visual component of advertising.

• d) Recent research suggests that pictorial cues help recall and familiarity, although verbal cues trigger cognitive functions, encouraging evaluation.

• e) The right-brain processing theory stresses the importance of the visual component of advertising, including the creative use of symbols.

• f) Pictorial cues are more effective at generating recall and familiarity with the product, although verbal cues (which trigger left-brain processing) generate cognitive activity that encourages consumers to evaluate the advantages and disadvantages of the product.

MEASURES OF INVOLVEMENT• Researchers have defined and conceptualized involvement in a variety of ways including ego

involvement, commitment, communication involvement, purchase importance, extent of information search, persons, products situations, and purchase decisions.

• a) Some studies have tried to differentiate between brand involvement and product involvement.

• b) Others differentiate between situational, enduring, and response involvement.

• The lack of a clear definition about the essential components of involvement poses some measurement problems.

• c) Researchers who regard involvement as a cognitive state are concerned with the measurement of ego involvement, risk perception, and purchase importance.

• d) Researchers who focus on the behavioral aspects of involvement measure such factors as the search for and evaluation of product information.

• e) Others argue that involvement should be measured by the degree of importance the product has to the buyer. Because of the many different dimensions and conceptualizations of involvement, it makes sense to develop an involvement profile, rather than to measure a single involvement level.

Marketing Applications of Involvement

• Involvement theory has a number of strategic applications for the marketer.

• f) The left-brain (cognitive processing)/right-brain (passive processing) paradigm seems to have strong implications for the content, length, and presentation of both print and television advertisements.

• g) By understanding the nature of low involvement information processing, marketers can take steps to increase consumer involvement with their ads.

• Measures of Consumer Learning Market share and the number of brand-loyal consumers are the dual goals of consumer learning.

• a) Brand-loyal customers provide the basis for a stable and growing market share.

• b) Brands with larger market shares have proportionately larger groups of loyal buyers.

CULTURE• Definition of ‘ Culture’

• Culture is defined as the complex whole that includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society.

• Culture is defined as the sum total of learned beliefs, values and customs that serve to direct the consumer behaviour of members of a particular society.

• Culture is the collective programming of human mind that distinguishes the members of one human group from those of another. Culture is a system of collectively held values.

• Beliefs & Values

• Beliefs & Values are mental images that affect a wide range of specific attitudes that , in turn, influence the way a person is likely to respond in a specific situation.

• Customs

• Customs are overt modes of behaviour that constitute culturally approved or acceptable ways of behaving in specific situations.

• Customs consist of everyday or routine behaviour

WAYS OF LEARNING CULTURE• Culture is learned through the following three ways.

• 1. Formal learning: parents and elders teach children the proper way to behave. For instance, you have been taught that you need to study to be successful and happy in life. This learning may influence your response both as a student and individual towards education.

• 2. Informal learning: we learn by imitating the behaviour of our parents, friends, or by watching TV and film actors in action

• 3. Technical learning: instructions are given about the specific method by which certain things to done such as painting, dancing, singing etc.

• Elements of Culture

• Culture is exhibited by the customs, language, symbols and rituals within the society.

• These elements are the observable in nature.

CHRACTERISTICS OF CULTURE• Culture is learned – by interacting with other members of the cultural group

• Culture regulates society –Norms, standards of behaviour, rewards and punishments.

• Culture makes life more efficient

• All members of a certain cultural group follow same norms.

• Culture is adaptive – it changes in response to the needs of the society.

• Culture is environmental and exists to serve the needs of the society.

• Culture is cumulative and transferred from one generation to another.

• Culture is socially acquired. We are not born with any cultural knowledge.

• Multiple cultures are nested hierarchically.

SOME CHANGES IN OUR CULTURE• 1. Convenience: as more and more women are joining the work force there is an increasing

demand for products that help lighten and relieve the daily household chores, and make life more convenient. This is reflected in the soaring sale of Washing machines, microwaves, Pressure cookers, Mixer grinders, food processors, frozen food etc.

• 2. Education: People in our society today wish to acquire relevant education and skills that would help improve their career prospects. This is evident from the fact that so many professional, career oriented educational centers are coming up, and still they cannot seem to meet the demand. As a specific instance count the number of institutions offering courses and training in computers that has opened in your city.

• 3. Physical appearance: Today, physical fitness, good health and smart appearance are on premium today. Slimming centers and beauty parlors are mushrooming in all major cities of the country. Cosmetics for both women and men are being sold in increasing numbers. Even exclusive shops are retailing designer clothes.

• 4. Materialism: There is a very definite shift in the people’s cultural value from spiritualism towards materialism. We are spending more money than ever before on acquiring products such as air-conditioners, cars CD players etc, which adds to our physical comfort as well as status.

TYPES OF CULTURE• National culture

• The culture prevalent in a nation, common to everyone.

• Popular culture

• The culture of the masses with norms of mass appeal.

• Subculture

• The culture of a group within the larger society.

• Group identification based on nationality of origin, race, region, age, religion, gender, etc.

• Corporate culture

• The company’s values, rituals, customs, myths and heroes

Sub - Culture• A subculture is an identifiable distinct, cultural group, which, while following the dominant cultural values of

the overall society also has its own belief, values and customs that set them apart from other members of the same society.

• Sub-culture categories are:

• Nationality: Indian, Srilankan, Pakistani, Chinese, American, Japanese

• Religion: Hinduism, Islam, Sikhs, Christians

• Race: Asian, black, white

• Age: young, middle aged, elderly, teens, youth, matured

• Sex: Male, Female

• Occupation: Farmer, teacher, business

• Social class: upper, middle, lower

• Geographic regions: South India, North-eastern India

Influences of Sub- Cultures on Consumer Behaviour

• 1. Regional, Ethnic, and Religious Influences on Consumer Behavior

• The three major aspects of culture that have important effects on consumer behavior are regional, ethnic, and religious differences.

• Firstly, consumption patterns may differ in various regions of India and the world, and marketing strategy can sometimes be tailored specifically to these regions.

• Secondly, our country has a number of different ethnic groups, and population trends will dramatically alter the demographic profile of the country in the next 50 years. The very diverse Asian American subculture is described as young and having higher socioeconomic status, placing strong value on the family and the group, and being strongly brand loyal. In spite of its diversity, marketing strategies can be developed for this group.

• Finally, religious beliefs and values can influence consumer. Many marketers now becoming multicultural in their marketing activities by trying to appeal to a variety of cultures at the same time.

• 2. Age, Gender, and Household Influences on Consumer Behavior• Among the four major age groups, Teens, who need to establish an identity, are the consumers of tomorrow

and have an increasing influence on family decisions.. Sex roles are changing. Women are becoming more professional and independent, and men are becoming more sensitive and caring. Also, men and women can differ in terms of traits, information processing, decision styles, and consumption patterns.

• Gender is consistent throughout lifetime, influencing customer values and preferences. Gender shows different consumption patterns and perceptions of consumption situations –E.g. the wedding ceremony.

Influences of Sub- Cultures on Consumer Behaviour• Households play a key role in consumer behavior. The proportion of nontraditional households has increased due to factors

such as

• (1) later marriages, (2) Cohabitation, (3) Dual-career families, (4) Increased divorce, and (5) Fewer children.

• Households also exert an important influence on acquisition and consumption patterns. First, household members can play different roles in the decision process (gatekeeper, influencer, decider, buyer, and user).

• Second, husbands and wives vary in their influence in the decision process, depending on the situation husband- dominant, wife-dominant, autonomic, or syncratic.

• 3. Psychographics: Values, Personality, and Lifestyles• The roles of psychographics in affecting consumer behaviour are detailed below.

• Values are enduring beliefs about things that are important. They are learned through the processes of socialization and acculturation. Our values exist in an organized value system, with some values being viewed as more important than others.

• Some are regarded as terminal values and reflect desired end states that guide behavior across many different situations.

• Instrumental values are those needed to achieve these desired end states.

• Domain-specific values are those that are relevant within a given sphere of activity.

• Western cultures tend to place a relatively high value on material goods, youth, the home, family and children, work and play, health, hedonism, and technology.

• Marketers use tools like value segmentation to identify consumer groups with common values.

Influences of Sub- Cultures on Consumer Behaviour

• Personality consists of the distinctive patterns of behaviors, tendencies, qualities, and personal dispositions that make people different from one another. Approaches to the study of personality include

• 1. The psychoanalytic approach, which sees personality arising from unconscious internal struggles within the mind at key stages of development;

• 2. Trait theories, which attempt to identify a set of personality characteristics that describe and differentiate individuals, such as introversion, extroversion, and stability;

• 3. Phenomenological approaches, which propose that personality is shaped by an individual’s interpretation of life events

• 4. Social-psychological theories, which focus on how individuals act in social situations (e.g., compliant, detached, or aggressive); and

• 5. Behavioral approaches, which view an individual’s personality in terms of past rewards and punishments.

Influences of Sub- Cultures on Consumer Behaviour• Influences of cultural values on the purchase decisions.

Terminal Values

InstrumentalValues

Product ClassChoice criteria

( critical productAttributes )

Beliefs and Attitudes aboutProduct class

Brand ChoiceCriteria

( critical brand Attributes )

Beliefs and Attitudes about

brands

Product classSelection

Brand selection

CROSS - CULTURES• CROSS CULTURAL CONSUMER BEHAVIOUR

• Cross cultural marketing: Objectives and Policies

• Cross-cultural marketing is defined as “the effort to determine to what extent the consumers of two or more nations are similar or different. This will facilitate marketers to understand the psychological, social and cultural aspects of foreign consumers they wish to target, so as to design effective marketing strategies for each of the specific national markets involved.”

• A company can enter a foreign market as a• Domestic exporter• Foreign importer• Foreign government-solicit the firm to sell abroad

• The firm’s objectives could be:

• To determine how consumers in two or more societies are similar/different and devise suitable, appropriate strategies·

• Devise individualized marketing strategy if cultural beliefs, values and customs of a specific country are different.

CHRACTERISTICS OF CROSS-CULTURAL MARKETING• 1. High market share in the domestic market• 2. Advantageous economies of scale• 3. Access to marketing/manufacturing bases across global borders• 4. Availability of resources and capability to absorb huge losses• 5. Product/technology clout• 6. Cost and differentiation advantages• Problems in Cross Cultural marketing

• 1. Problems related to product selection: The marketer going for cross cultural marketing has to select the customers/ market not on the basis of the superficial similarities of age or income, but by using the real motivating factors that prompt them to accept or reject products.

• 2. Problems related to promotion/marketing communication: e.g. Ariel in the middle east and also Pepsi

• 3. Problems related to pricing: the marketer has to adjust his pricing policies according to the local economic conditions and customs.

• 4. Problems related to selection of distribution channels: in Japan, P & G used this to sell soap.

CROSS – CULTURES – CULTURAL VALUES• I. Other Oriented Values• This shows the relationship between individuals and the society. The relationship influences marketing

practices. If the society values collective activity, decisions will be taken in a group. It gives rise to following questions which affect consumer behaviour.

• Individual/ collective: Whether individual initiation has more value than collective activity?• Romantic orientation: This depicts whether the communication is more effective which emphasizes

courtship or otherwise. In many countries a romantic theme is more successful.• Adult/ child theme: Is family life concentrated round children or adults? What role do children play in

decision-making?• Masculine/ Feminine: Whether the society is male dominant or women dominant or balanced.• Competitive/ Cooperation: Whether competition leads to success. This is achieved by forming alliances

with others.• Youth/ age: Are prestige roles assigned to younger or older members of the society. American society is

youth oriented and Korean is age oriented. Decisions are taken by mature people in Korea.• II. Environment Oriented Values• Cleanliness: If a culture lays too much stress on cleanliness. There is scope for the sale of beauty creams,

soaps, deodorants, insecticides, washing powder, vacuum cleaner, etc. In western countries, a lot of emphasis is placed on this aspect and perfumes and deodorants are widely used.

• Performance/ status: A status oriented society cares for higher standards of living, and chooses quality goods and established brand names and high prices items. This is true for the United States, Japan, Singapore, Malaysia, Indonesia, Thailand and most Arabic countries.

• In performance oriented societies, where rewards and prestige is based on an individual's performance, less importance is given to brand names. Products which function equally well and may not be big brand names are used. Germans do not give the same amount of emphasis to brand names. The marketers adopt strategies accordingly.

CROSS – CULTURAL CONSUMER ANALYSIS

• Cross-cultural consumer analysis can be defined as the effort to determine to what extent the consumers of two or more nations are similar or different. Such analysis can provide marketers with an understanding of the psychological, social, and cultural characteristics of the foreign consumers they wish to target, so that they can design effective marketing strategies for the specific national markets involved.

• Similarities & Differences among people

Japanese Culture Traits American Culture traits

* Homogenous

· Harmony to be valid and preserved

· Group, not individual, important

· Ambiguous

· General

· Hold back emotions in public

· Process-oriented

· Make a long story short

· Nonverbal communication important

· Interested in who is speaking

* Diverse

· Fight for one’s beliefs/positions

· Individualistic

· Clear-cut

· Specific

· Display emotions in public

· Result oriented

· Make a short story long

· Verbal communication important

· Interested in what is spoken

CROSS- CULTURES & MULTINATIONAL MARKETING STRATEGIES

• Alternative Multinational Strategies• The differences between consumers of various nations are far too great to permit a

standardized marketing strategy. • Whether to use shared needs and values as a segmentation strategy or to use national borders

as a segmentation strategy? • Shared needs and values would mean to appeal to consumers in different countries in terms of

their common needs, values, and goals. • Using national borders as a segmentation strategy would mean to use relatively different local

or specific marketing strategies for members of distinctive cultures or countries.• Alternative Global Marketing Strategies

Product Strategy Standardized Communications Localized Communications

Standardized

Product

Global strategy: Uniform

product/ Uniform Message

Mixed strategy: Uniform

Product/ Customized message

Localized Product Mixed Strategy: Customized

Product/ Uniform Message

Local strategy: Customized

Product/ Customized Message

CROSS-CULTURES & MULTINATIONAL MARKETING STRATEGIES

• 1. Favoring a World Brand: A lot of companies have created world brand products that are manufactured, packaged, and positioned in exactly the same way regardless of the country in which they are sold. For instance, Sony sells its Walkman in this fashion.

• 2. Adaptive Global Marketing: In contrast to the above, some other organizations imbibe a strategy that adapts their advertising messages to the specific values of particular cultures. A very good example here would be that of McDonald’s, which tries to localize its advertising to consumers in each of the cross-cultural markets in which it operates.

• Tangible Benefits of Global Brand Building

• Global brand building drastically reduces marketing investments. A strong brand needs lower and lower levels of incremental investment to sustain itself over time. A new and unknown player will have to spend two to four times more than the market leader to achieve the same share of mind. Given the huge difference in business volumes, the pressure of the bottom-line is much higher for an unestablished player.

• Strong global brands always account for more stable businesses. Global brand building commands a premium. As long as there is a distinct value attached to your offering, the consumer will always be willing to pay more for it. That is the only reason why an unknown brand called Titan could command a substantial premium over HMT. That is the same reason why a brand such as BPL at a higher cost beat the stuffing out of companies such as Akai, Sony and Philips in the CTV wars.

• Global brand building builds entry barriers. Human beings as a species love status quo. Therefore, a brand which is entrenched in the consumer’s mind is very difficult to dislodge. Global brand building increases cash flow efficiency: Global brand building also increases value of the business due to the international presence. Phillip Morris bought Kraft from General Foods in 1991 for $13 billion, more than three times its book value. Coca-Cola paid $60 million to acquire Thumbs-Up from Parle.

• Neither buyer had any lacunae in manufacturing, finance or human resources. They merely bought business with very powerful brand equities and therefore paid more than the net worth of the businesses.

Strategic Implications of Multinational Marketing Strategies • There is an assumption that the world is becoming homogenized; yet national and sub-regional

cultures do exist. This makes global branding a tough challenge and one that is handled differently from organization to organization.

• Some companies pursue strategies based upon the identification of common elements among countries, whilst others find it more profitable to adapt and adjust according to specific conditions in various markets.

• There are five basic propositions that a global brand manager has to take note of while developing strategy at the global level.

• Many marketers operate in global markets with a strategy still rooted in the domestic market. The strategy needs to embrace the opportunities and the costs of working in multiple countries. The marketer has to look for his competitive advantage outside the country of origin.

• What will allow one to compete and win in a strange country? Are the product and the brand in particular needed in another culture?

• Only careful consideration of these questions will create the right platform for a global branding strategy.

GROUPS• A group may be defined as two or more people who interact to accomplish some goals.

• Types of Groups - Four different types of group classification:

• 1.Primary versus Secondary groups, • 2.Formal versus Informal groups,• 3.Large versus Small groups, • 4.Membership versus Symbolic groups.

• 1. Primary versus Secondary Groups

• If a person interacts on a regular basis with other individuals (with members of his or her family, with neighbors, or with co-workers whose opinions are valued), then these individuals can be considered as a primary group for that person.

• On the other hand, if a person interacts only occasionally with such others, or does not consider their opinions to be important, then these others constitute a secondary group for that person.

• From this definition, it can be seen that the critical distinctions between primary and secondary groups are the frequency with which the individual interacts with them and the importance of the groups to the individual.

TYPES OF GROUPS• 2. Formal versus Informal Groups• Another useful way to classify groups is by the extent of their formality; that is, the

extent to which the group structure, the members' roles, and the group's purpose are clearly defined.

• If a group has a highly defined structure (e.g., a formal membership list), specific roles and authority levels (a president, treasurer, and secretary), and specific goals (to support a political candidate, improve their children's education, increase the knowledge or skills of members), then it would be classified as a formal group.

• The local chapter of the American Red Cross, with elected officers and members who meet regularly to discuss topics of civic interest, would be classified as a formal group.

• On the other hand, if a group is more loosely defined, if it consists, say, of four women who were in the same college sorority and who meet for dinner once a month, or three co-workers who, with their spouses, see each other frequently then it is considered an informal group.

TYPES OF GROUPS• 3. Large versus Small Groups• It is often desirable to distinguish between groups in terms of their size or complexity. A large group might be thought of as

one in which a single member is not likely to know more than a few of the group's members personally, or be fully aware of the specific roles or activities of more than a limited number of other group members.

• Examples of large groups include such complex organizations as General Motors, with its numerous subordinate divisions, and the American Bar Association, with its many state, county, and city chapters.

• In contrast, members of a small group are likely to know every member personally and to be aware of every member's specific role or activities in the group. For example, each staff member of a college newspaper is likely to know all the other members and be aware of their duties and interests within the group.

• In the realm of consumer behavior, we are principally concerned with the study of small groups, since such groups are more likely to influence the consumption behavior of group members.

• 4. Membership versus Symbolic Groups

• Another useful way to classify groups is by membership versus symbolic groups. A membership group is a group to which a person either belongs or would qualify for membership. For example, the group of women with whom a young homemaker plays golf weekly or with whom she hopes to play golf when an opening occurs would be considered, for her, a membership group.

• In contrast, a group in which an individual is not likely to receive membership, despite acting like a member by adopting the group's values, attitudes, and behavior, is considered a symbolic group. Clearly, actual membership groups offer a more direct, and thus a more compelling, influence on consumer behavior.

• In summary, we can say that small, informal, primary membership groups are of the great interest to marketers because they exert the greatest potential influence on consumer purchase decisions.

SIX BASIC CONSUMER RELEVANT GROUPS• The Six basic consumer-relevant groups are

• 1. The Family – the family has a greater extent of influence on the establishment of a wide range of values, attitudes, and behavior.

• 2. The Friendship Groups - Friendship groups are informal groups because they are, usually unstructured and lack specific authority levels. In terms of relative influence, after an individual's family, it is friends who are most likely to influence the individual's purchase decisions.

• 3. Formal Social Groups- , formal social groups are more remote and serve a different function for the individual. A person joins a formal social group to fulfill such specific goals as making new friends, meeting "important" people (e.g., for career advancement), or promoting a specific cause. Because members of a formal social group often consume certain products together, such groups are of interest to marketers.

• Membership in a formal social group may influence a consumer's behavior in several ways. For example, members of such groups have frequent opportunity to informally discuss products, services, or stores. Some members may copy the, consumption behavior of other members whom they admire.

TYPES OF GROUPS• 4. Shopping Groups - Two or more people who shop together-whether for food, for clothing, or simply to

pass the time, can be called a shopping group. Such groups are often offshoots of family or friendship groups.

• People like to shop with others who they feel have more experience with or knowledge about a desired product or service. Shopping with others also provides an element of social fun to an often boring but necessary task.

• A special type of shopping group is the in-home shopping group, which typically consists of a group of women who gather together in the home of a friend, to attend a "party" devoted to the marketing of a specific line of products.

• The in-home party approach provides marketers with an opportunity to demonstrate the features of their products simultaneously to a group of potential customers.

• 5. Consumer Action Groups - A particular kind of consumer group-a consumer action group- has emerged in response to the consumerist movement. This type of consumer group has become increasingly visible since the 1960s and has been able to influence product design and marketing practices of both manufacturers and retailers.

• Consumer action groups can be divided into two broad categories: those that organize to correct a specific consumer abuse and then disband, and those that organize to address broader, more pervasive, problem areas and operate over an extended or indefinite period of time.

TYPES OF GROUPS• A group of tenants who band together to dramatize their dissatisfaction with the quality of

service provided by their landlord, or a group of irate community members who unite to block the entrance of a fast-food outlet into their middle-class neighborhood, are examples of temporary, cause-specific consumer action groups.

• 6. Work groups.

• The sheer amount of time that people spend at their jobs, frequently more than thirty-five hours per week, provides ample opportunity for work groups to serve as a major influence on the consumption behavior of members.

• Both the formal work group and the informal friendship/work group have the potential for influencing consumer behavior.

• The formal work group consists of those individuals who work together as a team. Their direct and sustained work relationship offers substantial opportunity for one or more members to influence the consumer-related attitudes and activities of other team members.

• Members of informal work groups may influence the consumption behavior of other members during coffee or lunch breaks or after-hours meetings.

SOCIAL CLASS• Social class can be defined as ‘The division of members of a society into a hierarchy of distinct

status classes, so that members of each class have relatively the same status and the members of all other classes have either more or less status.’

• Social class is more of a continuum, i.e., a range of social positions, on which each member of society can be placed. But, social researchers have divided this continuum into a small number of specific classes. Thus, we go by this framework, social class is used to assign individuals or families to a social-class category

• Characteristics of Social Classes:• The main characteristics of Social class• 1. Persons within a given social class tend to behave more alike• 2. Social class is hierarchical

• 3. Social class is not measured by a single variable but is measured as a weighted function of one’s occupation, income, wealth, education, status, prestige, etc.

• 4. Social class is continuous rather than concrete, with individuals able to move into a higher social class or drop into a lower class.

SOCIAL CLASS• Social Stratification - Hierarchical organization of social classes is called social stratification.• The status, at the end result of stratification, could be inherited or earned.• The inherited status is an outcome of a person’s birth in a particular family , the earned status is

based on a person’s actions and performance.

S. No. Status, Value & Prestige enjoyed

Social Class Factors affecting Social Class

1 Low Lower Class Lower level occupation with no authority, less income, and no education or minimum education, For example, Labour class or clerks etc.

2 Medium Middle Class Graduates, or postgraduates, executives’

managers of companies with authority, drawing handsome salary of which certain amount can be saved and invested. For example, executives or middle level managers of companies.

3 High Higher Class Authoritative person, drawing handsome salary, very often professionally qualified, working in a very senior position or a person born into a rich family, with a good background of education

Impact of social class• Provides a sense of identity

• Imposes a set of ‘normative’ behaviors

• Classes share values, possessions, customs and activities

• Marketing response to customers of different economic means

• Marketing to the low-income consumer

• Some marketers ambivalent as not perceived as long-term customers constitutes a substantial group

• Target with value-oriented strategies

• Social Class & Buying Behavior

• People’s buying behavior is strongly influenced by the social class to which they belong, aspire to belong, rather than by income alone.

• Besides , it has also been observed that people from similar social classes are living in common geographical clusters.

• Upper upper class has access to prosperity , prestige, and power. With an appropriately large slice of income this class offers attractive opportunities to the marketers of designer clothing, local and foreign vacations, leisure related items. Etc.,

REFERENCE GROUPS

• Reference groups are groups that serve as a frame of reference for individuals in their purchase decisions.

• This basic concept provides a valuable perspective for understanding the impact of other people on an individual's consumption beliefs, attitudes, and behavior.

• It also provides some insight into methods that Groups can be used to effect desired changes in consumer behavior.

• A reference group is any person or group that serves as a point of companion (or reference) for an individual in the formation of either general or specific values, attitudes, or behavior.

• The usefulness of this concept is enhanced by the fact that it places no restrictions on group size or membership, nor does it require that consumers identify with a tangible group (i.e., the group can be symbolic: prosperous business people, rock stars, and sports heroes).

Classification of Reference Groups• Reference groups that influence general values or behavior are called normative reference

groups.

• An example of a child's normative reference group is the immediate family, which is likely to play an important role in molding the child's general consumer values and behavior (e.g., which foods to select for good nutrition, appropriate ways to dress for specific occasions, how and where to shop, what constitutes "good" value).

• Reference groups that serve as benchmarks for specific or narrowly defined attitudes or behavior are called comparative reference groups.

• A comparative reference group might be a neighboring family whose lifestyle appears to be• admirable and worthy of imitation (the way they maintain their home, their choice of home

furnishings and cars, the number and types of vacations they take).

• Both normative and comparative reference groups are important. Normative reference groups influence the development of a basic code of behavior; comparative reference groups influence the expression of specific consumer attitudes and behavior.

• It is likely that the specific influences of comparative reference groups are to some measure dependent upon the basic values and behavior patterns established early in a person's development by normative reference groups.

TYPES OF REFERENCE GROUPS• Reference groups can be classified in terms of a person's membership or degree of

Involvement with the group and in terms of the positive or negative influences they have on his or her values, attitudes, and behavior.

• Four types of reference groups that emerge from a cross-classification of these factors:

• 1. Contactual groups,

• 2. Aspirational groups,

• 3. Disclaimant groups, and

• 4. Avoidance groups.

• 1. A contactual group is a group in which a person holds membership or has regular face-to-face contact and of whose values, attitudes, and standards he or she approves.

• Thus a contactual group has a positive influence on an individual's attitudes or behavior.

TYPES OF REFERENCE GROUPS• 2. An aspirational group is a group in which a person does not hold membership and does not have face-

to-face contact, but wants to be a member. Thus it serves as a positive influence on that person's attitudes or behavior.

• 3. A disclaimant group is a group in which a person holds membership or has face-to-face contact but disapproves of the group's values, attitudes, and behavior. Thus the person tends to adopt attitudes and behavior that are in opposition to the norms of the group.

• 4. An avoidance group is a group in which a person does not hold membership and does not have face-to-face contact and disapproves of the group's values, attitudes, and behavior. Thus 'the person tends to adopt attitudes and behavior that are in opposition to those of the group.

• Factors that Affect Reference Group Influence

• The degree of influence that a reference group exerts on an individual's behavior usually depends on the nature of the individual and the product and on specific social factors.

• Information and Experience

• An individual who has firsthand experience with a product or service, or can easily obtain full information about it, is less likely to be influenced by the advice or example of others.

• On the other hand, a person who has little or no firsthand experience with a product or service, and does not expect to have access to objective information about it (e.g., a person who believes that relevant, advertising may be misleading or deceptive), is more likely to seek out the advice or example of others.

Factors affecting Reference Group’s Influence• Credibility, Attractiveness, and Power of the Reference Group

• A reference group that is perceived as credible, attractive, or powerful can induce consumer attitude and behavior change.

• For example, when consumers are concerned with obtaining accurate information about the performance or quality of a product or service, they are likely to be persuaded by those they consider to be trustworthy and knowledgeable.

• Conspicuousness of the Product

• The potential influence of a reference group varies according to how visually or verbally conspicuous a product is to others.

• A visually conspicuous product is one that can be seen and identified by others, and that will stand out and be noticed (e.g., a luxury item or novelty product).

• Even if a product is not visually conspicuous, it may be verbally conspicuous it may be highly interesting or it may be easily described to others. Products that are especially conspicuous and status-revealing (a new automobile, fashion clothing, home furniture) are most likely to be purchased with an eye to the reactions of relevant others.

• Products that are less conspicuous (canned fruits, laundry soaps) are less likely to be purchased with a reference group in mind.

Reference Group Impact on Product and Brand Choice

• In some cases, and for some products, reference groups may influence both a person's product category and brand (or type) choices. Such products are called pro- duct-plus, brand-plus items.

• In other cases, reference groups influence only the product category decision. Such products are called product-plus, brand minus items.

• In still other cases, reference groups influence the brand (or type) decision. These products are called product-minus, brand-Plus items.

• Finally, in some cases, reference groups influence neither the product category nor the brand decision; these products are called product-minus, brand-minus items.

• The idea of classifying products and brands into four groups in terms of the suitability of a reference group appeal was first suggested in the mid-1950s, along with an initial classification of a small number of product categories

Reference Group & Consumer Conformity

• Reference Groups and Consumer Conformity

• Marketers are particularly interested in the ability of reference groups to change consumer attitudes and behavior (i.e., to encourage conformity). To be capable of such influence, a reference group must

• 1. Inform or make the individual aware of a specific product or brand;

• 2. Provide the individual with the opportunity to compare his or her own thinking with the attitudes and behavior of the group;

• 3. Influence the individual to adopt attitudes and behavior that are consistent with the norms of the group;

• 4. Legitimize an individual's decision to use the same products as the group.

• The ability of reference groups to influence consumer conformity is demonstrated by the results of a classic experiment designed to compare the effects.

Benefits of the Reference Group Appeal• Increased Brand Awareness

• Reference group appeals provide the advertiser with the opportunity to gain and retain the attention of prospective consumers with greater ease and effectiveness than is possible with many other types of promotional campaigns.

• Celebrity – The reference group appeal, where the personality employed is generally well known to the relevant target segment.

• Celebrities tend to draw attention to the product through their own popularity. This gives the advertiser a competitive advantage in gaining audience attention, particularly on television where there are so many brief and similar commercial announcements.

• Reduced Perceived Risk• The use of one or more reference group appeals may also serve to lower the consumer's

perceived risk in purchasing a specific product. • The example set by the endorser or testimonial-giver may demonstrate to the consumer that

uncertainty about the product purchase is unwarranted: Following are examples of how reference group appeals serve to lower the consumer's perceived risk.

Examples of how reference group appeals serve to lower the consumer's perceived risk

• Celebrity. Consumers who admire a particular celebrity often have the following reactions to the celebrity's endorsement or testimonial.

• For eg. "She wouldn't do a commercial for that product if she didn't believe it was really good."

• Expert. When consumers are concerned about the technical aspects of a product, they welcome the comments of an acknowledged or apparent expert.

• For eg. "If he says it works, then it really must work."

• Common Man. When consumers are worried about how a product will affect them personally, they are likely to be influenced by a common man endorsement or testimonial.

• For eg. "People just like me are using that product,"

OPINION LEADER• An opinion leader acts as an information broker between the mass media and the opinions and

behaviour of an individual group.

• Opinion leaders are people whose position, experience, and knowledge renders them particularly suitable for providing relevant and credible information.

• Opinion leaders could be personally known people like friends, etc., or those could be people like reviewers, critics, etc.,

• Opinion leaders develop first hand experience with products and communicate their reactions to consumers subsequently.

• Opinion leadership is product specific – thus opinion leader for one product category may become an opinion follower for another.

• Opinion leaders are a part of general category of gate keepers. Gate keepers have special influence or power in offering information about any offering to a market.

Characteristics of opinion leaders• 1. Opinion leaders have the same social class position as non-leaders, although they may

have higher social status within the class.

• 2. opinion leaders have great exposure to mass media that are relevant to their area of interest.

• 3.Opinion leaders have greater interest and knowledge of the area of interest than non-leaders.

• 4. opinion leaders are more gregarious than non-leaders. This is because opinion leaders have to interact with those they have to influence. Thus opinion leaders are generally more sociable.

• 5.Opinion leaders have more innovativeness than do non-leaders.

• 6. Opinion leaders are more familiar with and loyal to group standards and values than are non-leaders.

• 7. Opinion leaders exhibit the trait of public and individuation which is a state in which they feel differentiated to some degree from other people and choose to act differently from them.

OPINION LEADERS – REASONS WHY OPINION LEADERS ATTEMPT TO INFLUENCE OTHER

• 1. Product – involvement – use of a product or service may create a tension that may need to be reduced by way of talk , recommendation , and enthusiasm.

• 2. Self – involvement – more emphasis on ways in which an influencer can gratify certain emotional needs.

• 3. other involvement – product talk fills the need to give something to the listener. To share one’s happiness with the influence , or to express love, care, or friendship therefore can be the reason.

• 4. Message – involvement – talking may also be stimulated by great messages that are used to present the product.

FAMILY• A family is a group of two or more persons related by blood, marriage, or adoption who reside together. The

nuclear family is the immediate group of father, mother, and children) living together.

• The extended family is the nuclear family, plus other relatives, such as grandparents, uncles and aunts, cousins, and parents-in-law. The family into which one is born is called the family of orientation, whereas the one established by marriage is the family of procreation.

• Structural Variables Affecting Families and Households

• Structural variables include the age of the head of household or family, marital status, presence of children, and employment status.

• For example, consumer analysts have enormous interest in whether families have children and how many they have.

• Children increase family demand for clothing, food, furniture, homes, medical care, and education, while they decrease demand for many discretionary items, including travel, higher-priced restaurants, and adult clothing.

• Other structural changes affect the types of products that are manufactured.

• For example, in Japan, high-tech companies have formed a consortium to standardize technology that has been developed to monitor and manage households.

SOCIOLOGICAL VARIABLES AFFECTING FAMILY• Marketers can understand family and household decisions better by examining the sociological dimensions of

how families make consumer decisions.

• Three sociological variables that help explain how family’s function includes cohesion, adaptability, and communication.

• Cohesion is the emotional bonding between family members. It measures how close to each other family members feel on an emotional level.

• Cohesion reflects a sense of connectedness to or separateness from other• family members.

• Adaptability measures the ability of a family to change its power structure, role relationships, and relationship rules in response to situational and developmental stress. The degree of adaptability shows how well a family can meet the challenges presented by changing situations.

• Communication is a facilitating dimension, critical to movement on the other two dimensions. Positive communication skills (such as empathy, reflective listening, supportive comments) enable family members to share their changing needs as they relate to cohesion and adaptability.

• Negative communication skills (such as double messages, double binds, criticism) minimize the ability to share feelings, thereby restricting movement in the dimensions of cohesion and adaptability. Understanding whether family members are satisfied with family purchase requires communication within the family.

FUNCTIONS OF THE FAMILY• Four basic functions provided by the family are particularly relevant to a discussion of consumer

behaviour. These include

• (1) Economic well-being - Providing financial means to its dependents is unquestionably a basic family function.

• (2) Emotional support - The provision of emotional nourishment (including love, affection, and intimacy) to its members is an important basic function of the contemporary family. In fulfilling this

function, the family provides support and encouragement and assists its members in coping with personal or social problems.

• (3) Suitable family lifestyles - Family lifestyle commitments, including the allocation of time, greatly influence consumption patterns.

• (4) Family-member socialization - The socialization of family members, especially young children, is a central family function. In large part, this process consists of imparting to children the basic value and modes of behaviour consistent with the culture.

• These generally include moral and religious principles, interpersonal skills, dress and grooming standard, appropriate manners and speech, and the selection of suitable educational and occupational or career goals.

• Socialization skills (manners, goals, values, and other qualities) are imparted to a child directly through instruction and indirectly through observation of the behaviour of parents and older siblings.

FAMILY LIFE CYCLE• Families pass through a series of stages that change them over time. This process historically

has been called the family life cycle (FLC).

• The concept may need to be changed to household life cycle (HLC) or consumer life cycle(CLC) in the future to reflect changes in society.

• Consumer researchers have always been attracted of a series of family life cycle ( FLC ) to understand the behaviour of consumers at various stages of their lives so as to effectively design the right marketing strategy.

• The traditional FLC describes family patterns as consumers marry, have children, leave home, lose a spouse, and retire. But consumers don’t necessarily have to pass through all these stages-thy can skip multiple stages.

• The four basic stages in Family Life Cycle ( FLC ) may be summarized as• Stage : I : Bachelorhood : Young single adult living apart from parents.• Stage : II : Parenthood : Married couple with at least one child at home.• Stage : III : Post parenthood : An older married couple with no children living at home.• Stage : IV : Dissolution : one surviving spouse.

Family Life Cycle ( FLC )Stages in Family Life Cycle

Economic circumstances Likely Buying Behaviour

Bachelorhood

(Young, single staying alone )

Earning reasonable good salary,

no financial burdens

Buy,basic kitchen equipment

basic furniture, two wheeler,

vacation with friends

Parenthood

(young married

just attained

Parenthood )

Better off financially, though home purchases at peak, less liquid assets, not able to save more.

Buys baby food,toys, diapers,

chest & cough medicines

Post parenthood

(growing children or grown up

Children)

Financial position improved with wife working, probability of home ownership on the higher side).

Concentrates on home

improvements. Buy more

tasteful furniture, car, home

appliances, and magazines.

Interested in vacation packages

Dissolution

(retired & lone

survivingspouse)

Income though good, not interested in spending. At times drastic cut in income is likely.

Buy more medicinal products

other products like the retired

people. Seeks more of attention,

affection and security conscious

Family Life Cycle ( FLC )• Young Singles

• Young singles may live alone, with their nuclear families, or with friends, or they may co- habitate with partners in this stage. Although earnings tend to be relatively low, these consumers usually don’t have many financial obligations and don’t feel the need to save for their futures or retirement.

• Many of them find themselves spending as much as they make on cars, furnishings for first residences away from home, fashions, recreation, alcoholic beverages, food away from home, vacations, and other products.

• Newly Married Couples

• Newly married couples without children are usually better off financially than they were when they were single, since they often have two incomes available to spend on one household. These families tend to spend a substantial amount of their incomes on cars, clothing, vacations, and other leisure activities.

• They also have the highest purchase rate and highest average purchases of durable good (particularly furniture and appliances) and appear to be more susceptible to advertising.

• Full Nest I

• With the arrival of the first child, parents begin to change their roles in the family, and decide if one parent will stay to care for the child or if they will both work and buy daycare services. In this stage, families are likely to move into their first home; purchases furniture and furnishings for the child; and purchase new items such as baby food, toys, sleds, and skates.

• These requirements reduce families’ ability to save, and the husband and wife are often dissatisfied with their financial position.

Family Life Cycle ( FLC )• Full Nest II• In this stage, the youngest child has reached school age, the employed spouse’s income has improved.

Consequently, the family’s financial position usually improves, but the family finds itself consuming more and in larger quantities.

• Consumption patterns continue to be heavily influenced by the children, since the family tends to buy large-sized packages of food and cleaning suppliers, bicycles, music lessons, clothing, sports equipment, and a computer.

• Full Nest III• As the family grows older and parents enter their min-40s, their financial position usually continues to improve

because the primary wage earner’s income rises, the second wage earner is receiving a higher salary, and the children earn from occasional and part-time employment.

• The family typically replaces some worn pieces of furniture, buys some luxury appliances, and spends money on education.

• Families also spend more on computers in this stage, buying additional PCs for their older children. Depending on where children go to college and how many are seeking higher education, the financial position of the family may be tighter than other instances.

• Married, No Kids

• Couples who marry and do not have children are likely to have more disposable income to spend on charities, travel, and entertainment than others in their age range. Not only do they have fewer expenses, these couples are more likely to be dual-wage earners, making it easier for them to retire earlier if they save appropriately .

Family Life Cycle ( FLC )• Older Singles

• Single, age 40 or older, may be single again (ending married status because of divorce or death of a spouse), or never married (because they prefer to live independently or because they co-habitate with partners), either group of which may or may not have children living in the household. This group now has more available income to spend on travel and leisure but feels the pressure to save for the future, since there is no second income on which to rely as they get older.

• Empty Nest I

• At this stage, the family is most satisfied with its financial position. The children have left home and are financially independent allowing the family to save more. In this stage discretionary income is spent on what the couple wants rather than on what the children need. Therefore, they spend on home improvements, luxury items, vacations, sports utility vehicles, food away from home, travel, and product for their grand children.

• Empty Nest II

• But this time, the income earners have retired, usually resulting in a reduction in income and disposable income. Expenditures become health oriented, centering on such items as medical appliances and health, and medicines.

• But many of these families continue to be active and in good health, allowing them to spendtime traveling, exercising, and volunteering. Many continue working part time to supplement their retirement and keep them socially involved.

Family Life Cycle ( FLC )• Solitary Survivor

• Solitary survivors be either employed or not employed. If the surviving spouse has worked outside the home in the past, he or she usually continues employment or goes back to work to live on earned income (rather than saving) and remain socially active. Expenditures for clothing and food usually decline in this stage, with income spent on health care, sickness care, travelentertainment, and services.

• Those who are not employed are often on fixed incomes and may move in with friends to share housing expenses and companionship, and some may choose to remarry.

• Retired Solitary Survivor

• Retired solitary survivors follow the same general consumption patterns as solitary survivors; however, their income may not be as high. Depending on how much they have been able to save throughout their lifetimes, they can afford to buy a wide range of products.

• These individuals have special needs for attention, affection, and security based on their lifestyle choices.

• Marketers use the descriptions of these FLC stages when analyzing marketing and communication strategies for products and services, but they often add additional information about consumer markets to analyze their needs, identify niches, and develop consumer-specific marketing strategies.

FAMILY DECISION MAKING• Families use products even though individuals usually buy them. Determining what products should be

bought, which retail outlet to use, how and when products are used, and who should buy them is a complicated process involving a variety or roles and actors.

• Role Behavior• Families and other groups exhibit what sociologist Talcott Parsons called instrumental and expressive role

behaviors.

• Instrumental roles, also known as functional or economic roles, involve financial, performance, and other functions performed by group members.

• Expressive roles involve supporting other family members in the decision making process and expressing the family’s aesthetic or emotional needs, including upholding family norms.

• Individual Roles in Family Purchases

• Family consumption decisions involve at least five definable roles, which may be assumed by spouses, children, or other members of a household.

• Both multiple roles and multiple actors are normal. Marketers need to communicate with consumers assuming each of these roles, remembering that different family members will assume different roles depending on the situation and product. Children, for example, are users of cereals, toys, clothing, and many other products but may not be the buyers.

• One or both of the parents may be the decider and the buyer, although the children may be important as influencers and users.

Key Family Consumption Roles• There are eight distinct roles in the family decision-making process.

• 1. Influencers: Those family members who provide information and advice and thus influence the purchase. The housewife tells her family about the new eatery that has opened in the neighborhood and her favorable description about it influences her husband and teenaged children.

• 2. Gatekeepers: Those family members who control the flow of information about a product/service thus influencing the decisions of other family members. The teenaged son who wants a racing bicycle, may withhold from his father much of the relevant information on all brands except the one that he fancies, thereby influencing his father’s decision in favour of his

preferred brand.

• 3. Deciders: Family members who have the power to unilaterally or jointly decide whether or not to buy a product or service. The husband and wife may jointly decide about the purchase of a new refrigerator.

• 4. Buyers: Those family members who actually buy a particular product or service. A housewife may be the person who actually buys all the foodstuffs, rations and toiletries, which are consumed by all the family members.

Key Family Consumption Roles

• 5. Preparers: Those family members who transform or prepare the product into the form in which it is actually consumed. The housewife may prepare the family meal using raw vegetables, lentils, spices, oil and other ingredients.

• 6. Users: Those family members who use or consume a particular product or service. All family members may use the car, watch the television, and listen to the stereo music system

• 7. Maintainers: Family member(s) who service or repair the product so that it will provide continued satisfaction.

• 8. Disposers: Family member(s) who initiate or carry out the disposal or discontinuation of a particular product or service.

CONSUMER DECISION PROCESS• LOW PURCHASE INVOLVEMENT HIGH PURCHASE

INVOLVEMENT• Habitual Decision Making Limited Decision Making Extended Decision

MakingProblem Recognition

SelectiveProblem Recognition

GenericProblem Recognition

Generic

Information SearchLimited internal

Information Research• Internal

• Limited external

Information Search• Internal• External

Alternative Evaluation• Few Attributes

• Simple Decision Rules• Few Alternatives

Alternative Evaluation•Many attributes

• Complex decision rules• many alternatives

Purchase Purchase Purchase

Post Purchase•No dissonance

• Very limitedevaluation

Post Purchase•No dissonance

• Limited evaluation

Post Purchase•Dissonance

• Complex Evaluation

Consumer Decision Process• Problem Recognition• Problem recognition or need recognition is the first step of the five steps consumer takes as he

moves through the decision process.

• Problem recognition occurs when a person recognizes a gap of significant magnitude between a perceived desired state and the actual state. This arouses and activates the consumption related decision process.

• Reasons for buying are motives, the personality traits of an individual, social environment and various other internal & external factors.

• The motives are grouped in to five types.• 1. Satisfaction optimization• 2. Satisfaction maintenance• 3. prevention of possible failure problems• 4. problem avoidance• 5. conflict resolution

Types of Problem Recognition• Problems can fall in various categories. The problem situation could be routine, emergency,

planning, and evolving immediacy, etc.,

• 1. Routine Problems – these are due to difference between actual and desired states which requires immediate solution by way of purchasing goods such as convenience goods, etc.,

• 2. Emergency Problem – these problems occur suddenly and solution to be found immediately.

• 3. Planning Problem – problem which do not require immediate solution.

• 4. Evolving Problem – problem arrives unannounced, yet needs no immediate solution.

• Situations leading to problem recognition• 1. Depleted or inadequate stock of goods• 2.Discontent with existing stock of goods• 3. Changing financial circumstances• 4.marketing effort

Information Search & Decision Making• Need for search of Information - Information may be sought on

• ( 1 ) appropriate evaluation criteria for the solution of the problem

• ( 2 ) the existence of various alternative solutions

• ( 3 ) the performance of each alternative solution on each evaluation criterion.

• Different types of Information Search

• 1. Pre-purchase Search

• Once the consumer has recognized a problem and feels motivated to solve it, he will engage in pre-purchase search.

• Customer has clear and conscious objective to collect information for solving a specific problem

• Browsing, window shopping, thumbing through catalogues and magazines, reading brochures all fall in this category.

• 2. Post-Purchase search

• A consumer continues to evaluate other options available in the market place. It may be due to increased interest in product category and the desire to stay-up-to date.

Types of Search – Internal & External Search• Internal search involves consumer’s own recall from memory, knowledge, and experience.

• External search involves that information can be gathered from an almost unlimited variety of sources outside of the individual.

• Dimensions of Internal search

• 1. extent of search – internal search can vary from a simple recall of only a brand name to a more complete search through memory for relevant information , feelings and experiences.

• 2.kind of information retrieved – four major kinds of information namely brand name, attributes, evaluation done earlier and experience.

• External Search – if the information in the memory is misleading, inadequate, or is suspect, then an external search is required. External search sources could be from personal sources ( friends, experts, sales people ) or from impersonal sources ( advertising, media reports, window displays etc., )

Information Search - External Search • Factors responsible for External search Activity

• 1. Perceived value of search Vs perceived costs attached

• 2. Customer’s own characteristics

• 3.Situational factors

• 4. Actual or perceived risk in decision making

• 5.type of product sought

Strategies for information search• Maintenance strategy – • Disrupt Strategy• Capture Strategy• Intercept strategy• Preference Strategy• Acceptance Strategy

Evaluation of Alternatives• Information gathered from sponsored and non-sponsored sources by a customer forms the

basis of evaluation. This evaluation in turn leads to formation of attitude. • Evaluation criteria are the various features that a customer looks for in response to a particular

type of problem.• Evaluation criteria are typically product features or attributes associated either with benefits

desired by the customer or the costs he has to incur.• Evaluative criteria can be tangible, such as price, color, size, shape, or performance

characteristics or intangible such as brand image or feelings associated with ownership or use.• Evaluative criteria can differ in number, type, and importance. Evaluating criteria vary from

consumer to consumer, from product to product, and situation to situation.

Evaluate criteria

Importance of criteria

Alternatives considered

Evaluation of Alternatives

On Each

criterion

Application of Decision Rules

Selection ofalternatives

Evaluation of alternatives – Evaluative criteria• Price as Evaluative criteria – Price acts as most significant influences in alternatives evaluation.

• A consumer is more or less price elastic depending on the degree of substitutability of one brand by the others.

• Brand Reputation – brand name is perceived frequently to be an indicator of product or service quality by the customers.

• This apparent brand quality relationship is most likely tied to the perceived risk associated with a poor purchase decision.

• Decision Rules

• Consumer decision rules govern the way in which different consumers evaluate different products in different buying situations.

• Consumers may use either compensatory or non-compensatory processes as decision rules in evaluating attributes of the alternative products under consideration.

• Non-Compensatory Decision Rules

• A non-compensatory rule is one in which the weaknesses of a possible alternative are not offset by its strengths.

• If the product does not prove satisfactory on all the evaluative criteria , the consumer will not buy the product.Disjunctive

• Non-Compensatory Decision Rules are of 4 types. Conjunctive

elimination by aspects

lexicographic rules

Consumer Decision Rules• Disjunctive Rule• Using this rule, the consumer first decides which criteria are determinants of his choice while which ones are

not. Then he establishes a minimum score on each one.• Any product alternative considered must meet this score on each determinant attribute in order that it is

accepted. If more than one brand meets this minimum , then there is no clear winner. Then some other rule has to be used to decide about the brand to be purchased.

• Conjunctive Rule• Using the rule, a consumer considers all evaluative criteria as determinant and a minimum acceptable value

or score is established for each one.• Brands which do reach the minimum acceptable score don’t have to be evaluated any further.

• Lexicography Rule• Using this rule, ranks each of the evaluative criteria in order of importance.• This rule seeks maximum performance at each stage.

• Elimination by aspects rule

• The consumer ranks the evaluative criteria and also sets minimum scores that must be met on each of them.• The alternatives that don’t meet each minimum are eliminated.• The remaining alternatives are then compared using the process of elimination, as with the lexicographic

rule.

Consumer Decision Rules• Compensatory Decision Rule – compensatory rule are more practical as the consumer is able to make trade-

off while comparing alternatives.

• If one attribute is very strong, it may compensate for the weakness in another.

• This approach uses more than one evaluation criterion for assessment by consumers.

• This decision rule evaluates brand individually along all dimensions or attributes , with the overall evaluation being the sum of the weighted ratings along each attribute.

• Simple Addictive Rule

• Using this rule, the consumer totals the score on all evaluative criteria for each alternative and the highest score wins.

• This rule assumes that all criteria are of equal importance.

• Weighted additive rule

• Using this rule, the consumer assigns a relative weight to each evaluative criterion based on its perceived importance.

• Then the score on each evaluative criterion is multiplied by the relative weight to produce a weighted score.

• These weighted scores are summed up and the brand with highest weighted score is chosen.

Outlet Selection• Reasons for shopping by consumers• Personal Motives• Role Playing – shopping activities are learned behavior & accepted as part of one’s role. • Diversion – shopping can offer a diversion from the routine of daily life.• Self- Gratification – shopping is motivated by the utility of the buying process itself.• Learning about new trends – shopping provides information about trends and movements.• Physical Activity – shopping provides considerable amount of physical exercise.• Sensory stimulation- shopping provides sensory benefits such as looking at and handling

merchandise, listening to sounds.

• Social Motives• Shopping provides opportunities for seeking new acquaintances, encounters with friends.• Communication with others having a similar interest.• Peer group attraction – certain stores provide a meeting place for peer groups may gather.• Status & Authority – shopping may provide an opportunity to attain a feeling of status & power.• Pleasure of bargaining – shopping provides enjoyment of gaining a lower price through

bargaining, companion shopping, visiting special sales.

Factors determining retail outlet selection• 1. Store location – the closer consumers are to store, the greater is heir likelihood to purchase

from that store.

• 2. Store Design and Physical Facilities – the design characteristics of a store visibly reflect its image and can dramatically influence patronage.

• 3.Merchandise – quality, selection or assortment, fashion , guarantees and pricing are considered important.

• 4. Advertising and Sales Promotion – to inform, to persuade, to remind the customers of the store .

• 5. Personnel – employees of a retailer are also instrumental in influencing the store’s image.

• 6. Customer Services – retail stores offer numerous services to attract customers.

• 7. Clientele – consumers tend to patronize those stores where people belonging to similar social class are perceived to be shopping.

Consumer characteristics to store choice• Perceived Risk

• The risk of purchase of products involves economic and social consequences.

• Certain products , because of their expense or technical complexity , represent high levels of economic complexity.

• Products closely related to a consumer’s public image present high levels of social risk.

• The perception of these risks differs among consumer, based partly on their past experiences and partly on their lifestyles.

• Shopping orientation

• Individuals go shopping to seek diversion from routine activities, sensory stimulation, social interaction, learning about new trends etc.,

• The relative importance of these motives varies both across individuals and within individuals over time as the situation changes.

• A shopping style that puts particular emphasis on certain activities is called shopping orientation.

In store Purchasing Behavior

Displays

Alternative Evaluation

Sales Personnel

Price Reductions

Store Layout

Stockouts

ModifyIntendedPurchaseBehavior

In store purchasing behaviour• 1. Point-of –Purchase Displays – visual representation and location of the POP material lends to the

effectiveness of the stores.

• 2. Price reductions and promotional deals – In-store price reductions do affect brand decisions.

• 3. store layout – the location of items within a store has an important influence in the purchase of both product categories and brands.

• 4.Store Atmosphere – stores atmosphere or environment affects the shopper’s mood and willingness to visit and linger.

• 5.Store atmosphere is influenced by such attributes as lighting, layout , presentation of merchandise, air conditioning, floor coverings, music, dress and behaviour of sales personnel etc.,

• 6.Stockouts – store being temporarily out of a particular brand, affect a consumer purchase decision.

• 7. Sales Personnel – the sales person’s knowledge , skill, and authority, the nature of the customer’s buying task and the customer – sales person relationship will have major impact on consumer purchases.

PURCHASE• Once the brand and the store have been identified , the consumer must complete the

transaction.

• This involves what is normally called ‘ purchasing’ the product.

• Traditionally the purchase involves paying cash to acquire the right of the product. However credit plays a major role in consumer purchases in today’s society.

• Marketing implications of purchase behavior

• The marketer can segment the market on the basis of purchaser influences.

• The marketer can make an appropriate offer and position the offer.

• The marketer can identify the relevance of each situational factor on the buying process of his customers.

Consumption and Post-Consumption responses• Types of consumption

• 1. Ritual consumption – rituals are patterns of behaviour tied to events that we consider important in our lives.

• Rituals usually have some special symbolic meaning to us, occur in fixed or predictable sequence, and are repeated with some regularity.

• Because, rituals involve the use of goods / services , it is important for marketers to understand them and the ritualistic behaviours they give rise to.

• 2. Sacred and Profane consumption• Consumption arising out of special events are considered sacred consumptions.• Consumptions which are part of everyday life are considered to be profane consumption.

• Marketing applications of consumption behaviour – Marketers to • 1. respond to changing consumer needs with new products and promotions.• 2. position products to match the physical and social contexts of the consumption situation.• 3. develop and market products around needs triggered by consumer rituals.

Customer satisfaction Vs Dissatisfaction• If the customer is happy with the product he bought, he is likely to buy it again, as also other products by the

same marketer. The customer even tell his friends about the product and they buy it , too.

• On the other hand, if the customer is not happy with the purchase, he will not only write off that product, he will not buy anything from that marketer and he will his friends to do the same.

• Satisfaction refers to the buyer’s state of being adequately rewarded in a buying situation for the sacrifice he has made.

– Post – Consumption outcomes

Evaluation of alternatives

Purchase

Product Performance

Dissatisfaction

Confirmation or disconfirmationProduct Expectation

satisfaction

Post consumption outcomes• Consumers form certain expectations prior to the purchase. The level of satisfaction or

dissatisfaction depends upon how well the product’s performance meets our expectations.

• Post – Purchase Dissonance - Post-purchase dissonance occurs before the consumer make a determination concerning whether a product or service is satisfactory, there is a feeling of uncertainty about whether the right choice is being made.

• The experience and intensity of post-purchase dissonance varies from customer to customer , from situation to situation and from purchase to purchase.

• Post-purchase dissonance is a function of To reduce Dissonance, the consumer may adopt the following.

• 1. importance of the purchase decision. ( a ) change his evaluation of alternatives

• 2.consumer’s tendency toward anxiety. ( b ) seeking new information

• 3.finality of the purchase decision ( c ) changing attitudes

• 4.clarity of the final purchase choice.

Post-Purchase Behaviour• The most positive outcome from achieving customer satisfaction is to gain customer loyalty.• Loyalty is a feeling of commitment on the part of the consumer to a product, brand, marketer, or

outlet which results in repeated purchase.• Factors influencing Brand Loyalty• 1. Number of brands available.• 2. frequency of purchase• 3. perceived difference among brands• 4. level of involvement• 5. level of perceived risk• 6. brand benefits.• Marketing Applications of Post-Purchase behaviour – Marketers will be able to • 1. Encourage brand and outlet loyalty• 2. respond promptly to dispel rumors and other negative communications• 3. offer swift redress to consumers who complain and thereby regain a positive brand or outlet

image.• 4. use feedback from both positive and negative post-purchase behaviours to improve products

and promotions.

Dis- satisfaction responses of a customer Dissatisfaction of customer

Take actions Take no action( by consumer )

Less favourable attitude

Complain to

Legal authority

Store or

manufacturer

Stop buying That brand

Or store

Warnfriends

Complain to

Private or

Government

agencies

Initiateaction

Disposition of the Product• Disposition of the product and or its container may occur before, during , and after product use.

• No disposition is involved for products that are fully consumed ( ice cream in cones ).

Product

Keep itGet rid of

ItPermanently

Get rid of ittemporarily

Rent it

Use it to Serve

Originalpurpose

Convert it toServe new

purposeStore it

Loan it

Recycle itThrow it

awayGive itaway Trade it Sell it

To be sold

To beused

Direct toconsumer

Thru’middlemen

Tomiddleman

Disposition of the Product• Disposition behaviour is primarily determined by situational variables such as availability of storage space,

current needs of friend, availability of recycling and so on.

• The method of disposition may vary considerably across products. The method of disposition depends on the following factors.

• 1. psychological characts. Of the decision maker.

• 2. Factors intrinsic to the product.

• 3. situational factors extrinsic to the product.

• How the disposition decisions affect the Marketing Strategies of the firm ?

• Dispositions decision affect the purchase decisions of both the individual making the disposition and other individuals in the market for that product category.

• to aid the consumers in the disposition of the product, marketers have initiated exchange schemes where the consumer is given the option of buying anew product in exchange for his older one.

• The frequent decisions by consumers to sell, trade, or give away used products may result in a large second hand market which can reduce the market for new products.

MODELS OF CONSUMER BEHAVIOUR• A model can be defined as simplified representation of reality.

• Model simplifies by incorporating only those aspects of reality that interest the model builder.

• Consumer behaviour models can be classified in terms of scope. Some models are designed to represent a very specific aspect of behaviour, such as consumer’s repetitive purchase of the same brand over a period of time.

• Other models are comprehensive models, as they attempt to include a great variety of consumer behaviours. These comprehensive models are less detailed in nature so that they can represent many diverse situations.

• Uses of Consumer Models

• 1. to assist in constructing a theory that guides research on consumer behaviour.

• 2. to facilitate learning what is presently known about consumer behaviour.

• 3. consumer models serves to structure systematic and logical thinking about consumers.

• 4. Models aid in understanding the complex relationship between variables influencing a consumer.

Building Blocks of consumer decision making models• The variables employed in consumer decision making models can be categorized as follows.

• 1. Stimulus and Response – A stimulus is an input to consumer behaviour and a response is the observable manifestation of consumer – behaviour.

• A response may be a result of either a certain stimulus acting forcefully on the consumer or it may arise as a result of processes internal to a customer.

• 2. Intervening Variables – these variables exists between stimulus and response. The intervening variables modify the relationship between the stimulus received and the response made but cannot be observed.

• These intervening variables are exogenous , though in turn they could be internal or external.

• 3. Internal and External Variables – internal variables are a result of internal physiological processes or psychological processes.

• External variables arise as a result of external influences like economic , social , cultural and other factors.

• 4. Exogenous and Endogenous variables – variables that have a clearly defined effect on consumer behaviour are included in a model and are thus called Endogenous variables.

• The variables which have a poorly defined effect on behaviour and are not included in the consumer models are called Exogenous consumer models.

MODELS OF CONSUMER BEHAVIOUR• Black Box Model ( stimulus response model, consumer centre model, & input-output model )• Black Box refers to the human mind.• Black Box model rely solely on observable stimulus variables and responses.• Stimulus Response Model• Stimulus Response

• Simplest form of black box model of consumer decision-making.• This model ignores the internal processing of stimulus in the consumer mind.

• Consumer Centre Model ( considers many variables together which influence purchase behaviour )• Marketer controlled variables positive response ( ad, availability, brand) ( purchase )

• Marketer Non-Controlled variables Negative response ( economic, social, reference group) ( rejection of offer )

Consumer MindBlack Box

Consumer mind

Black Box Models of consumer decision making• Input – Output Model - This model was developed by Kotler.

• This model talks about buying influences ( stimuli ) and the purchase related responses ( response variables).

• This model ignores the internal processes.

INPUTS

STIMULUS

CHANNELS

Communication

PROCESSOR

Consumer

Outputs

Response

• Product • Availability

• Quality,• Style

• Options• Image

• Service•Price

• Personal• Acquaintances• Observations, • Non-personal

• Advertisements• Sales force

Black Box

Choices about+ Product

• Brand• Quantity

• Frequency• Dealer

MODELS OF CONSUMER BEHAVIOUR• Traditional Models of Consumer Behaviours - ECONOMIC MODEL

• This theory was first advanced by the economists. They gave formal explanation of buyer behaviour.

• According to this theory the consumers are assumed to be rational and conscious about economic calculations.

• They follow the law of marginal utility. An individual buyer seeks to spend his money on such goods which give maximum satisfaction (utility) according to his interests and at relative cost.

• The buying behaviour is determined by the income – its distribution and level - affects the purchasing power.

• The economic factors which affect the buyers behaviour are:

• 1. Disposable Personal Income

• The economists attempted to establish relationship between income and spending. Disposable personal income represents potential purchasing power that a buyer has.

• The change in income has direct relation on buying habits.

• Personal consumption spending tends both to rise and fall at a slower rate than what disposable personal income does.

Economic Model of Consumer Behaviour• 1. Size of family income• Size of family and size of family income affect the spending and saving patterns.• Usually large families spend more and small families spend less in comparison.

• 2. Income Expectation• The income expected to get in future has direct relation with the buying behaviour. The expectation of higher

or lower income has a direct effect on spending plans.

• 3. Tendency to Spend and to Save• This goes to the habit of spending or saving with the disposable income of buyers. If the buyers give

importance to the present needs, they dispose of their income. And buyers spend less if they give importance to future needs.

• 4. Liquidity of Funds• The present buying plans are greatly influenced by liquidity of assets readily convertible into cash. For

example, readily marketable shares and bonds, bank balances come into this category. However, this convertable assets influence and offer freedom to buyer, who actually buys with current income.

• 5. Consumer Credit• Facility of consumer credit system - hire purchase, installment purchase etc., play an important role in

purchase decision. A buyer can command more purchasing power. ‘Buy now and pay later’ plays its role effectively in the rapid growth of market for car, scooter, washing machine, furniture, television and so on.

• The economic model of consumer behaviour is uni -dimensional. It is based on certain predictions of buying behavoiur. They are:

Economic Model of Consumer Behaviour

• a. Lower the price of the product, higher the sales

• b. Lower the size of substitute product, lower the sale of this product

• c. Higher the real income, higher the sales of this product

• d. Higher the promotional expenses, higher are the sales

• Limitations of Economic Model

• The behavioral researchers believe that this model ignores all the other aspects such as perception, motivation, learning, attitude and personality, and socio-cultural factors.

• Further, it is also observed that consumer also gets influenced by other marketing variables such as products, effective distribution network and marketing communication. Hence, it is felt that the economic model is inadequate.

• It assumes that market is homogeneous where markets are assumed to be heterogeneous.

Models of Consumer Behaviour – Sociological Model

• According to this theory the individual decision and behaviour are quite often influenced by the family and the society.

• The individual gets influenced by it and in turn also influences it in its path of development.

• The individual plays many roles as a part of formal and informal associations or organizations i.e., as a family member, employee of a firm, member of professional forum, and as an active member of an informal cultural organization.

• Hence the individual is largely influenced by the group in which he is a member.

• For example, the decision may be made by one, actual buying may be done by another, and the product is used by yet another member of the family.

• Here, a mother takes a decision to buy a tiny cycle for her child, the cycle is purchased by the father and the user is the child.

HOWARD - SHETH MODEL• The Howard - Sheth model shows the processes and variables influencing the buyer behaviour before and during the

purchase.

• It emphasizes three key variables- perception, learning and attitude formation. It explains the way consumers compare available products in order to choose the best which fits their needs and desires.

• Consumers learn by finding out the relevant information about products through two sources of information:

• ( a ) Social sources ( b ). Commercial sources

• The gathered information is used for comparison of alternative brands according to various choice criteria.• BASIC STRUCTURE OF BUYING BEHAVIOUR

Social class, financial status

Exogenous variable

Drive Stimuli Perception Learning outputs

HOWARD - SHETH MODEL• The following predictions can be made about the model

• i. Stimuli or perceived learning occurs and results in output

• Ii. Output occurs on the basis of the perception and learning- non observable variables.

• iii. Exogenous or outside variables such as social class, financial status etc., are used to predict perception and learning.

• This model describes the buying behaviour in various stages.

• Stage 1: Motives are based on needs demanding satisfaction. They lead to goal directed behaviour satisfaction.

• Motives ignite a drive to search and secure information from alternatives. Stimulus- input variables are marketing programme and social environment.

• Input or stimuli:

• i. Product themselves in the market

• ii. Commercial information on them, say quality, price, availability and distinctiveness

• ii. Product information obtained from friends acquaintances and reference groups.

• Thus, a number of products or brands are perceived and considered by the consumers mind. In this manner the resulting perception is selected.

HOWARD - SHETH MODEL• Stage 2: While evaluating, many brands are eliminated or left out for further consideration. Now, only few will

receive further consideration. Each will have plus / minus points.

• These choice considerations act as connecting links between motives and selected brands choice consideration which provide a structure to motives and the process of learning and experience.

• These considerations develop as criteria / rule to decide on the goods that have the prospects of yielding maximum satisfaction.

• The market must offer a good marketing-mix that is used by the buyer to influence the choice criteria.

• Stage3: The choice criteria gives rise to predisposition- the relative preference in favour of particular brand. Sudden hindrances may sometimes stop the process.

• This may be in form of price, inadequate supply of brand, external variables such as financial status, time pressure etc. If they do not occur, the preference results in a response output such as attention, comprehension, attitude, buying intention and preferably actual purchase.

• Stage 4: Feedback of purchase experience is sent to the buyer which shows if the actual satisfaction was equal to the expected satisfaction. Satisfaction leads to repurchase, and repeat orders indicate brand loyalty.

• The marketer is interested in this outcome. Buying behaviour is influenced by motives (rational / emotional curiosity) attitudes, perception, social factors and personal factors.

HOWARD - SHETH MODEL Black Box of the Buyer Behaviour

Marketing

Policy

stimulus input

variable

Brand in the

shop

Social

information

Commercial

information

Response output

variable

Purchase

Intention

Attitude

comprehension

of the brand

Attention

motives inhibitors

alternatives predisposition

Choice criteria

Selectionperception

Evolved set satisfaction

Marketing – Mix of the product

HOWARD - SHETH MODEL• Thus models of buyer behaviour are generally based on certain factors internal to the consumer e.g.,

learning, personality, attitudes and perceptions.

• The external factors may be in the form of group, cultural and inter-personal influences and effects advertising and communications.

• The action of individuals is the result of both internal / external factors and interactions to the consumer decision making processes.

• The modern concepts of the buying behaviour state that the behaviour is the result of interaction between people centered factors and situation centered factors. The marketer is expected to be aware of the person centered factors such as buyer motivation, learning,

perceptions, attitudes, values and beliefs.

• Similarly, marketers must be aware of social environment and internal personal interactions influencing the buyer behaviour

• Outside Variables• Personality• Social Class• Financial Status and Trial• Culture• Importance of Purchase• Time Pressure

NICOSIA MODEL OF CONSUMER BEHAVIOUR• The buyer behaviour model is taken from the marketing mans point of view.

• It is also called systems model as the human is analysed as a system, with stimuli as the input to the system and the human behaviour as an output of the system.

• Francesco Nicosia, an expert in consumer motivation and behaviour has developed this in 1966. He tried to explain buyer behaviour by establishing a link between the organization and its prospective consumer.

• Here the messages from the company initially influence the predisposition of the consumer towards the product and service. Based on the situation, the consumer will have a certain attitude towards the product.

• This may result in a search for the product or an evaluation of the product attributes by the consumer.

• If this step satisfies the consumer, it may result in a positive response, with a decision to buy the product or else the reverse may occur.

• The Nicosia model divides the above activity explanation into four basic areas:

NICOSIA MODEL OF CONSUMER BEHAVIOUR

• Area 1: Field one has two sub areas-the consumer attributes and the firms attributes. The advertising message from the company will reach the consumers attributes.

• Certain attributes may develop sometimes depending upon the way the message is received by the consumer. The newly developed attribute becomes the input for area 2.

• Area 2: This area is related to the search and evaluation undertaken by the consumer of the advertised product and also to verify if other alternatives are variable. If the above step motivates to buy the product / service, it becomes the input for the third area.

• Area 3: This area explains as how the consumer actually buys the product .

• Area 4: This is related to the uses of the purchase items. This can also be used as an out put to receive feedback on sales results to the firm.

Nicosia Model of consumer behaviour Field 1 from source of a message to consumer attitude

Attitude

Message

Exposure

experience field 2 search for field 2 search for

& evaluation of means

field 4 feedback

motivation

field 3

purchasing action

Sub Field 1Firm’s attributes

Sub field 2Consumers attributes

Search

Evaluation

Decision

Action

ConsumptionStorage

NICOSIA MODEL• Consumers usually go through five stages in arriving at a purchase decision.

• In the first stage, the customer identifies an unsatisfied need.

• In the second stage consumer collect information about the product and brands.

• In a third stage, the consumer evaluates all the alternatives with the help of available information.

• Later in stage four, the customer makes a purchase decision.

• And finally in the fifth stage, consumer experiences post-purchase satisfaction or dissatisfaction.

• The degree of involvement has a lot of impact on search of information, Information processing, and Transmission of information.

• The various models of consumer involvement help marketers to study purchase behaviour across product segments

ENGEL – BLACKWELL-MINIARD MODEL• The Engel – Blackwell- Miniard model was originally developed in 1968 by Engel- Kollat,

Blackwell and has gone through numerous revisions.

• This model stands as one of the most popular representations of consumer behaviour.

• This model has a decision process of five activities which occur over time.• 1. motivation and need recognition• 2.search for information• 3. alternative evaluation• 4.purchase• 5.outcomes.

• The variables are grouped in to four general categories.• ( a ) stimulus inputs• ( b ) information processing• ( c ) decision-process• ( d ) variables influencing the decision process

ENGEL – BLACKWELL-MINIARD MODEL

StimuliMarketer

Dominatedother

Exposure

Attention

comprehension

acceptance

retention

Externalsearch

Memory

Internalsearch Search

Needrecognition

Alternativeevaluation

beliefs

attitudes

intention

purchase

outcomes

dissatisfactionsatisfaction

EnvironmntInfluences•Culture

•Social class•Personal Influence•Family

•situation

Individual Differences•ConsumerResources•Motivation

•Involvement•Knowledge•Attitudes

•Personality•Lifestyle

•demographics

ENGEL – BLACKWELL-MINIARD MODEL• According to this model, there are two significantly different modes of operation by consumers.

• 1. Extended problem-solving behaviour ( EPS ) –

• EPS characterized by high levels of involvement and high levels of perceived risk.

• Under EPS, the product evaluation process will be very rigorous and if necessary the consumer will shop at many outlets.

• Satisfaction with brand is crucial for continued commitment to use the brand.

• 2. Limited problem solving behaviour ( LPS )

• Consumer is operating under low levels of involvement and low levels of perceived risk.

• Consumer has low motivation to search for brand information and is only willing to engage in a non-rigorous evaluation of alternatives.

• Consumer is not motivated to shop at many outlets and satisfaction with the purchase will encourage repurchase because of inertia , not real loyalty with the product.

ENGEL – BLACKWELL-MINIARD MODEL• Under EPS , consumers , the model is activated with the consumer recognizing the need from three possible

influences.

• 1. information stored in memory

• 2. environmental influences

• 3. individual characteristics such as involvement level of consumer.

• The next stage is information search. The consumer searches internal memory to determine what is known about the alternatives and how to choose among them.

• External search for information will be activated if the consumer does not feel comfortable with his existing knowledge.

• Any informational inputs are subjected to information processing , activities which the consumer uses to derive meaning from stimuli.

• The first step in processing involves exposure to such stimuli.

• After the exposure the stimuli must capture the consumer’s conscious attention to significantly influence extensive problem solving.

ENGEL – BLACKWELL-MINIARD MODEL• The attention stage is highly selective since it tends to ignore most stimuli and admit only those

that the individual believes are important.

• The comprehension stage then involves deriving meaning from information that has been attended to , and holding this meaning in short – term memory, for further processing.

• The alternative evaluation stage involves comparing information about the alternative brands gained through the search process to evaluate criteria which are product –judging standards that have been stored in permanent memory.

• The alternative evaluation process leads to an intention to make a purchase of the most favourably evaluated brand. The intention will then lead to purchase behaviour.

• At this point the consumer begins to use the product and evaluation continues by comparing performance to expectations.

• One outcome is satisfaction, but if the alternative does not meet the expectations, dis -satisfaction is the result. These results may lead to further search for information about the brand and or changes in beliefs. Hence, the process is a continuous one and does not stop with the purchase.

ENGEL – BLACKWELL-MINIARD MODEL• In- limited problem solving situations the consumer is not highly involved and a number of

stages are shortened or pursued by the consumer with less vigor.• External search also likely to b minimal and often information is acquired by just seeing ads and

‘ running into’ the sources of the product information.• Alternatives are often evaluated by determining whether they meet some minimal level of

acceptability , and purchase is made with minimal deliberation.• If the brand meets expectation, repurchase is likely but brand loyalty is not likely due to the lack

of involvement.• Advantages of Engel-Blackwell-Miniard Model• 1. considers many variables in influencing consumers• 2. focus on levels of consumer’s involvement• 3. its emphasis on the decision-making process regarding purchases.• 4. flow of the model is quite flexible and incorporates many theories such as motivation,

information processing, attitude change.• Limitations• Vagueness regarding the role of some variables.• Role of motives in influencing behaviour is also quite vague.