INTRODUCTIONThis course introduces you to the influence that consumer behaviour has on marketing activities. You will apply theoretical concepts to marketing strategies and decision making. Topics include consumer and marketing segments, environmental influences, individual determinants, decision processes, and information research and evaluation.

Consumer Behaviour is an advanced marketing course designed to provide you with in-depth knowledge of the fundamentals of consumer behavior, with emphasis on the consumer in the marketplace, consumers as individuals, consumers as decision makers, and consumers as influenced by culture and subculture. A critical examination of consumer behavior theories and research will be undertaken. Further emphasis will be placed on understanding the application of consumer behavior concepts in a competitive, dynamic, and global business environment.OBJECTIVES

Upon successful completion of this course, you should be able to:

Explain and apply the key terms, definitions, and concepts used in the study of consumer behaviour.

Demonstrate how as a marketer you can use your knowledge of consumer behaviour concepts to develop better marketing programs and strategies to influence those behaviours.

Critically evaluate the effectiveness of various advertisement and promotions and their attempts to influence the behaviours of individuals.

Analyze the trends in consumer behaviour, and apply them to the marketing of an actual product or service.

1. To understand the fundamentals of consumer behavior, with emphasis on the consumer in the marketplace, consumers as individuals, consumers as decision makers, and consumers as influenced by culture and subcultures.

2. To develop your understanding of the consumer as an individual with emphasis on various psychological theories of motivation, learning, personality, and perception. To understand, discuss, and apply these theories to advertising design.

3. To expand your understanding of market segmentation strategy, focusing on sociological segmentation variables including social class; cultural, sub-cultural, and cross cultural influences, changing values and demographics; and traditional vs. modern family influences.

4. To understand the application of consumer behavior concepts in a competitive, dynamic, and global business environment.

5. To understand how consumer behavior highlights concerns about ethics and social responsibility in the marketplace.

6. To continue the development of analytical and communication skills.

7. To further develop your ability to perform thorough research, compile information in a meaningful way, and present information effectively in both a written and oral fashion.

8. To further develop your group interaction skills and the ability to perform effectively in a group context.

LECTURE ONE; MARKETING OVERVIEW/ REVISION1.1 Introduction

Welcome to our first lecture of the consumer behaviour course. This lecture will recap on some key marketing concepts you learn earlier in Principles of Marketing Course. These concepts are critical to our understanding and appreciating of consumer behaviour as a field of study. We shall remind ourselves some key definitions, and then revisit the subject of customer relationship Marketing.

1.2 Specific Objectives.

At the end of the lecture you should be able:

1) to Define the term Marketing

2) to define other key marketing concepts.

3) Describe elements of the marketing mix

4) Explain the concept of Customer Relationship Marketing

1.3 Lecture Outline Definition of Marketing

Core Marketing Concepts

The Marketing Mix

Customer Relationship Marketing

1.4 Marketing Overview

Definition of MarketingThe Chartered Institute of Marketing of the United Kingdom defines marketing as, The management process which identifies, anticipates, and supplies customer needs efficiently and profitably.

Kibera (1996) defines marketing as the performance of business and non-business activities which attempt to satisfy a target individual or group needs and wants for mutual benefit or benefits.

Kotler (2006), the American marketing guru provides the definition of marketing as A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others.

Kotler and Armstrong (2008) define marketing as The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

Core Marketing Concepts1. Needs The basic concept underlying marketing is that of human needs. Needs comprise of those things that human beings feel they cannot do without e.g. food, clothing, shelter, safety, education etc.

2. Wants Are forms of human needs that improve on their well being but which they can do without. Wants are the form of human needs taken as they are shaped by culture and individual personality for example urbanites want Television sets.

3. Demand Demand is the quantity of a commodity that consumers are willing and able to buy at a given price over a given time period other factors held constant. When a want is backed by buying power it becomes demand.

4. Product Is anything that can be offered to satisfy needs or wants. It can be tangible or intangible.

5. Market A constituency of potential customers sharing particular needs or wants and who might be willing and able to engage in exchange to satisfy that

need or want.

A market also refers to where buyers and sellers meet to transact.

6. Marketing offer Is a combination of products or service presented to the market to satisfy a need or a want.

7. Value and Satisfaction Value is the ability of a commodity to satisfy human wants. It also referred to as quality or utility. Customers look for value in a product before paying for it. The ability of a product to meet customer expectations results in customer satisfaction.

8. Exchange Is the act of obtaining a desired object from someone by offering something in return.

9. Transaction An exchange of values between two or more parties, where either party gains.

10. Marketing Management Is the art and science of choosing target markets and building relationships with them.

THE MARKETING MIX

The marketing mix is a combination of controllable, tactical marketing tools that a firm blends to produce the response it wants in the target market. The marketing mixes consist of everything the firm can do to influence the demand for its product.

The many possibilities can be collected into four groups of variables also known as the four Ps of marketing mix i.e. product, price, place and promotion.

The conventional 4 Ps of marketing have since been expanded to 7 Ps as :

Marketing MixDescription

ProductThe goods and services on offer and their quality, feature, and design.

PriceThat which consumers are willing to pay to get a unit of the product or services

PlaceThe distribution methodology of the products or service to the market place or target market

PromotionThe selling activity used to motivate the customers and entice them to buy more of the product

People People are the human beings who drive product or service delivery

ProcessThe framework that is followed in the marketing and delivery of products and services

Physical evidenceThe tangible elements of services, ideas or any other intangible products put on offer

CUSTOMER RELATIONSHIP MARKETING (CRM)

CRM is defined as the overall process of building and maintaining profitable ties between organizations and customers by delivering superior customer values and satisfaction.

Overtime, relationship marketing has grown and replaced transactional marketing as summarized in the table below.

Transactional marketing

(One way communication)Relationship marketing(Two way communication)

Focus on a single sale

Product features oriented

Short time scale

Little customer service

Limited customer commitment

Moderate customer contact

Quality is the concern of production

Focus on customer retention

Orientation on product benefits

Long timescale

High customer service

High customer commitment

High customer contact

Quality is the concern of all

CRM therefore involves attracting, retaining and growing customers.

Basic Tenets of CRM

To effectively manage customer relationship, marketers normally employ the following three approaches:

1.Customer Value and Satisfaction

Customer perceived value is the customers evaluation of the difference between the benefits and costs of a marketing offer relative to those of the competing offers. Whereas the customer may not be accurate in judging the cost and values, they would always want to maximize their benefits at minimum cost.

Customer satisfaction refers to a products perceived performance as compared to the buyers expectation. If the products performance falls short of expectation the customer is dissatisfied and vice versa. Smart companies aim at delighting customers by exceeding their expectation.

Satisfied customers produce several benefits to the company including

(a) They are less price sensitive.

(b) They spread a favourably word of mouth to others about the company

(c) They remain loyal for a longer time.

(d) They buy a wider range of products

(e) They cost less to service as they are familiar with the product and business design

(f) They exhibit strong Lifetime Customer Value (LCV)

2.Customer loyalty and retention

For successful CRM marketers must work to create customer loyalty. A loyal customer is one who buys the companys brand and no other. E.g a customer goes to the store to buy Kimbo{ not cooking fat} if Kimbo is not in the store he tries the next store rather than settling for another brand. Marketers must strive to grow the customer through the loyalty ladder from prospect, to customer, to client to a supporter, and finally to an advocate as shown below

Hence for companies to retain their customers for a longer period, they must aim high in satisfying their needs and wants.

3.Growing share of customers

Marketers are pre-occupied by the want to increase their share of customers i.e. the share they get of the customers purchasing in their product categories.

To increase share of customers,

(a) Firms can offer greater variety to current customers

(b) Train employees to cross sell - Cross selling means getting more business from current customers of one product by selling them additional offering e.g. offering a customer who comes to buy a suit, a shirt, tie, a belt and shoes.

1.5 Activities

Distinguish between Marketing and Selling Do Marketers create needs or do needs pre-exist marketers? discuss1.6 Summary

In this lecture you have learnt:

1. Marketing is the management process which identifies, anticipates, and supplies customer needs efficiently and profitably.2. How to define key marketing concepts like, needs, wants, market, marketing offer.

3. Traditional marketing mix had it 4ps, which was later extended to 7ps

4. Customer relationship marketing involves, attracting , retaining and growing the share of customers.

4.1 Suggestions for Further Readings. 1) Kotler P. and Armstrong G.,(2008), Principles of Marketing, 12th Edition, Prentice Hall.

2) Kotler, P & Keller, K.L., (2006), Marketing Management. 12th ed. Upper Saddle River, NJ: Pearson Prentice Hall

3) Etzel, M.J., Walker, B.J. and Stanton, W.J., (2007), Marketing, 14TH edn. McGraw-Hill, Irwin.

LECTRE TWO: CUSTOMER DRIVEN MARKETING STRATEGY

2.1 IntroductionIn the last class, we revisited some definitions of key marketing concepts. This class shall also be a revision class as we recap on the process of market segmentation, targeting and positioning.

2.2 Specific Objectives

1) Define the terms Market Segmentation Market Targeting and Product Positioning

2) Describe the bases of segmenting Markets

3) Explain market targeting strategies

4) Describe bases for positioning a product.

2.3 Lecture Outline

Introduction Market Segmentation Bases for Segmentation Importance of Segmentation Requirements for effective segmentation Market Targeting Market Targeting Strategies Differentiation and Positioning2.4 CUSTOMER DRIVEN MARKETING STRATEGYINTRODUCTION

Prior to the adoption of market segmentation business was by way of mass marketing i.e. offering the same product and marketing mix to all consumers. The essence of this strategy was summed up by the entrepreneur Henry Ford, the manufacturer of the Model T automobile to the public in any colour they wanted as long as it was black. Mass or undifferentiated marketing strategy would be logical if all consumers were alike by having the same needs, wants, desires, background, education and experiences.

The primary advantage of mass marketing is that it costs less: only one advertising campaign is needed, one marketing strategy is developed and one standardized product is offered as is the case with agricultural companies and the very basic manufactured goods.

Companies today recognize the fact that they cannot appeal to all buyers in the market place in the same way. Thus firms have moved away from mass marketing to target marketing i.e. identifying market segments, selecting one of them and developing products and marketing programs tailored to them. The major steps toward designing a market driven marketing strategy include:

A. Market Segmentation

B. Market Targeting

C. Market Positioning

MARKET SEGMENTATIONMarket segmentation is a process of dividing a market into distinct subsets of consumers with common needs, characteristics or behaviour and selecting one or more segments to target with a distinct market mix. A market segment is therefore a group of customers who respond in a similar way to a given set of marketing effort.

The market segmentation strategy allows producers to avoid head on completion in the market place by differentiating their offerings not only on the basis of price but also styling, packaging, promotional appeal, distribution methods and superior service. The costs of consumer segmentation research, shorter production runs and differentiated promotional campaigns are more than offset by increased sales.

Market segmentation is the first step in a three phrase marketing strategy. After segmenting the market into homogeneous clusters, the marketer selects one or more segments to target by deciding a specific marketing mix i.e. a specific product, price, channel and or promotional appeal for each distinct segment.

The third step is market positioning of the product so that its perceived by the consumers in each target segment as satisfying their needs better other competitive offerings.

BASES FOR SEGMENTATION:

The first step in developing a market segmentation strategy is selecting the most appropriate base on which to segment the market. The main strategies used in segmenting consumer markets are Geographic, Demographic, Psychological, psychographic (Lifestyle) characteristics, sociocultural variables, use related characteristics, use situation factors, benefits sought, forms of hybrid segmentation and economic factors.

(a)Geographic Segmentation

Geographic segmentation means dividing the market into different geographical locations or units such as nations, states, regions, cities or estates. The theory behind this strategy is that people who live in a given area share some similar needs and wants that differ from those living in other areas.

Many companies in Kenya segment the country into five regions, Nairobi, Mountain, Rift Valley, Nyanza and Coastal.

Companies do localize their products, advertising, promotion and sales efforts to fit the needs of individual regions e.g. Daily Nation Newspapers has the Nairobi, Western and Coast editions. Marketing research shows divergent consumer purchasing patterns among the urban, suburban and rural areas.

Geographic segmentation is a useful strategy for most marketers. It is relatively easy to find geographically based differences for many products. The geographic segmentations are easily reachable through the local media including newspapers, TV and radio and regional editions of magazines.

(b)Demographic Segmentation

Demography refers to the vital and measurable statistics of a population. Demographic characteristics such as age, gender, marital status, income, occupation, family size, family life cycle, religion, race, generation, education and nationality are mostly used as the basis for market segmentation.

Using these variables, the market could be segmented as follows: Based on age (children, youth, and adults), based on income (high income, middle income, low income), and based on gender (for men, women).

Most cosmetic products are specially designed, promoted and advertised to reinforce the feminine image e.g. Nivea.

(c)Behavioural Segmentation

Divides buyers into groups based on their knowledge, attitudes, uses or response to a product. The segments that emerge include:

(i) Occasion segmentation Divides the market into groups according to occasions when buyers get the idea to buy, actually buy or use the purchased item e.g. coffee for cold season.

(ii) Benefit Segmentation Divides the market into groups according to the benefits that consumers seek from the product e.g. for a laundry detergent like Omo, Sunlight, Jik, etc. customer are segmented on the basis of benefits sought e.g. The product gives benefits like cleaning, fabric softening, strengthening and fresh smell.

(iii) Loyalty Status A market can be segmented by consumer loyalty. Consumers can be loyal to brands (Nike), stores (Nakumatt, Wal-mart, Bata) and companies (Toyota, Ford). Buyers can be divided according to loyalty as; completely loyal, somewhat loyal or not loyal. A company can target the less loyal customers and turn them to loyal customers.

(d)PsychographicSegments the market based on the social class, lifestyle and personality. Social class Lower lower; upper-lower; working class, middle class, upper-middle, lower upper; upper-upper.

b) Lifestyle Straights, swingers, longhairs.

c) Personality Compulsive, authoritarian, ambitious, high-achievers, gregarious.

Importance of Segmentation

(a) Its an acknowledgement that people are different and special

(b) It helps marketers define customer needs more precisely

(c) Helps marketers in developing market mixes and products to meet need

(d) Helps in the allocation of resources because segments differ in sizes

(e) Provides better evaluation of marketing performance in segments

Requirements for Effective Segmentation1. Measurable The size, purchasing power and profiles of segments can be measured.

2. Accessible The market segment can be reached and served. E.g if your target market is school going students, the best time to advertise is in the evenings.

3. Substantial The market segments should be large and profitable enough to serve e.g Toyota targets the African market with economical cars, because the larger populations are medium income earners.

4. Differentiable The segments are conceptually distinguishable and respond differently to different market mix elements and programs e.g. people in rural areas are price sensitive and averse to highly price urbanites are less price sensitive.

5. Actionable Effective programs can be designed for attracting and serving the segments.

MARKET TARGETINGA target market is a set of buyers sharing common needs or characteristics that the company decides to serve e.g. wholesalers who stock cooking oil products could be a target market for a cooking oil manufacturer like Bidco.

Market Targeting StrategiesAfter analyzing the various segments, the company must then decide on the method to use in approaching the market. The strategies for selecting a target market include:

(i) Undifferentiated marketing

(ii) Differentiated marketing

(iii) Concentrated marketing

(iv) Micromarketing

(i) Undifferentiated Marketing (Mass Marketing)This is a situation in which a firm decides to ignore the various market segments and go for the whole market with one type of product using one form of marketing mix e.g. mass advertising of Equity Bank, mass distribution of Jogoo maize flour, mass promotional campaigns of Coca-Cola.

The main advantage of this strategy is that it is a cost saving approach

The main undoing of this strategy includes:

Makes a firm unimaginative

Makes a firm vulnerable to competition

(ii) Differentiated Marketing (Segmented Marketing)Using this strategy, a firm decides to target several market segments and designs separated offers or market mix for each e.g. Toyota has differentiated markets as follows:

(i)Toyota Prado/Lexus For consumers who care about size, strength, safety and not price.

(ii)Toyota Corolla For consumers who care about fuel consumption and are price sensitive.

The main advantage of this strategy is that may yield financial success with economies of scale in production and marketing.

The main disadvantage of this strategy is that it is very costly strategy. The high cost originates from; Product design cost, promotion costs for different markets, inventory cost for various markets, research cost amongst others.

(iii) Concentrated Marketing (Niche Marketing)

This is a strategy where a firm selects a market niche and concentrates on it. It involves offering one product to one specific group.

Is especially appealing when company resources are limited. Instead of going after small share of large markets, the firm goes after a large share of one or a few segments or niches e.g. KCB has branches all over the country, I & M Bank, has branches only in cities i.e. Nairobi, Kisumu, Mombasa. I & M is applying niche marketing.

(iv) Micromarketing (One to One Marketing)

Micromarketing is the practice of tailoring products and marketing programmes to suit the tastes of specific individuals and locations. It is broadly divided into local marketing and individual marketing.

Local marketing is tailoring brands and promotions to the needs and wants of local customer groups i.e. cities, neighborhoods or specific stores

Individual marketing is the tailoring of products and marketing programs to the needs and preferences of individual, customers also called one to one marketing.

DIFFERENTIATION AND POSITIONING Product positioning means the way the product is defined by consumers on important attributes i.e. the place the product occupies in the mind of the consumers relative to competitors products. One positioning expert once commented that products are created in the factory, but brands are created in the mind

Toyota 110 is positioned as an economical car, Volvo positions on safety and Mercedes is a luxurious car, Hummer positioned on a very high performance with a price tag to match.

Examples of positioning slogans:

(a) Safaricom: The better option

(b) Nakumatt: You need it weve got it

(c) Nation newspaper: The Truth

(d) Mash : We lead the leaders

(e) Kenya Airways: The pride of Africa

(f) Lexus: The passionate pursuit of excellence

(g) Mercedes: In a perfect world, everyone would drive a Mercedes

The Nature of Positioning

Positioning assumes that consumers compare products along important features. To simplify the buying process, consumers organize companies, products and services into categories and position them in their minds

Positioning must clearly indicate these features lest it fails. The marketer must position the market offer so that it gives them the greatest possible advantage

Marketers must come up with excellent positioning maps. A positioning map is an effort of the marketer to show consumer perception of their brands versus competing products on important dimensions.

Positioning must be built around a differentiation gimmick

Marketing mix is used to facilitate positioning.

Poor Positioning May Lead to:

1. Undesirable positioning: head on with stronger competition

2. Undesirable position: Position without demand from customers

3. Fuzzy positioning: Nobody knows what the distinctive feature really is.

4. No positioning: Nobody has heard of the positioning

Bases for Positioning a Product

1. Benefits

2. Price and quality combination

3. Uses and application

4. Product user position

5. Product class position

6. Positioning against Competitor (comparative)

7. Origin positioning

Choosing a Differentiation and Positioning StrategyPositioning task takes four steps:

(1)Identifying a set of possible competitive advantages

(2)Choosing the right competitive advantages

(3)Selecting an overall positioning strategy

(4)Developing a Position Statement

(1)Identifying Possible Competitive Advantage

A competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices.

A companys marketing offer must be differentiated from those of competitors along the lines of product attributes, services quality, channels, people or physical evidence.

The company must constantly compare the customer satisfaction of its products, prices, channels and promotion with those of chosen competitors.

(2)Choosing the Right Competitive Advantage

Sometimes a company realizes that it has several advantages compared to competitors. It then has to choose how many differences to promote and which ones.

HOW MANY DIFFERENCES TO PROMOTE Often companies choose one unique feature and insist that they are number one in that area. But a company can also promote a number of differences.

WHICH DIFFERENCES TO PROMOTE Not all differences are worth promoting. A difference is worth establishing to the extent that it satisfies the following criteria: Important, Distinctive, Superior, Communicable, pre-emptive (robust), affordable and profitable.

(3)Selecting an overall positioning strategy

The full positioning of a brand is called value positioning. Value positioning tells the customer everything about the benefits they will get from a brand. There are four approaches to value positioning i.e. More for more(pay more get more value), more for same, the same for less, less for much less and more for less.

(4)Developing a Position Statement

-A positioning statement summarizes company or brand positioning.

-A good positioning statement should follow this form:

To (target segment and need) our (customers), our (brand) is (concept) the best in the market (point of difference).

e.g to all trendy men, Sir Henrys Suits offers the latest designer suits, specially tailored to fit the modern fashion and a look of elegance. Non compares with us in mens wear.

Sir Henrys, the best a man can get.

Challenges of Positioning

(a) Over positioning

(b) Under positioning

(c) Confused positioning

(d) Doubtful positioning: Buyers cannot believe

Tools to Facilitate Positioning

1. Advertising

2. Pricing

3. Personnel

4. Product features

5. Branding

6. Slogan

7. Service environment

2.5 ActivitiesDescribe the Segmentation, Targeting and Positioning strategy that your organization adopts with respect to its products. In other words, identify the target segments, as well as how the organization wants its product(s) to be viewed by the targeted segments.

Note: If your organization produces many goods and/or services, you may want to pick a particular one and provide more depth on that particular one, rather than being very general about the entire organization.

2.6 Summary

Marketing Segmentation refers to divided the target market into smaller sub- markets [segments], each that has similar response to your offering.

Four main bases used in segmenting markets include the Geographical, Demographic, Behavioral, and Psychographic.

The process of determining how many and which particular segments to serve is known as Market targeting. It comes after market segmentation

Four commonly used market targeting strategies are; Undifferentiated Marketing, Differentiated Marketing, Focus/Niche Marketing & Micro marketing.

Product positioning refers to the place the product takes in the mind of the target customer, on certain attributes relative to competing products.

2.7 Suggestions for Further Readings1. Kotler P. and Armstrong G.,(2008), Principles of Marketing, 12th Edition, Prentice Hall.

2. Kotler, P & Keller, K.L., (2006), Marketing Management. 12th ed. Upper Saddle River, NJ: Pearson Prentice Hall

3. Etzel, M.J., Walker, B.J. and Stanton, W.J., (2007), Marketing, 14TH edn. McGraw-Hill, Irwin.

LECTURE THREE: CONSUMER BEHAVIOUR3.1Introduction

In our last lesson we looked at the segmentation, targeting and positioning process. This class shall now introduce consumer behaviour by defining consumer behaviour, discussing the types of consumer entities and analysing some models of consumer behaviour.

3.2Specific Objectives

At the end of the lecture you should be able:

4. Define the term Consumer behaviour5. Identify two types of consumer entities

6. Explain why we need to study consumer behaviour

7. Discuss the stimulus-response model of consumer behaviour

3.3Lecture Outline

Definition of Consumer behaviour Types of Consumer Entities

Why Study Consumer Behaviour

Models of Consumer behaviour

3.4 Consumer Behaviour

DEFINITION OF CONSUMER BEHAVIOURConsumer behaviour studies how individuals, Groups and Organizations, Select, Buy, Use and Dispose of Goods, services, ideas or experiences to satisfy their needs and wants. It refers to the behaviour that customers exhibit in: Searching for, Purchasing Using Evaluating and Disposing of products.

TYPES OF CONSUMER ENTITIESThe term consumer is often used to describe two different types of consumer entities, i.e.

(i) The personal consumer and

(ii) The organizational consumer

The personal consumer

The personal Consumer is an individual who buys products or services for personal use and not for manufacture or resale . He buys goods and or services for personal use for the use of the household or as a gift for a friend. i.e he buys goods and services for people referred to as end users or ultimate consumers.

The organizational consumer

An organization that may be profit or nonprofit businesses, government agencies (local, state or national) and institutions (schools, hospitals, prisons) that buy products, equipment and or services in order to run their institutions. All these buy products, equipment and services in order to run their operations.

Despite the existence of these two categories of consumers, the end-use consumption is perhaps the post pervasive of all types of consumer behavior, for it involves individual, of every age and background, in the role of either buyer or user or both.

WHY STUDY CONSUMER BEHAVIOUR?Reasons why people study consumer behavior are diverse. The field of consumer behavior holds great interest for us as:

Consumers,

As marketers and

As schools of human behavior.

(i) As consumers:

We benefit from insights into our own consumption related decisions:

What we buy

Why we buy

How we buy and the

Promotional influences that persuade us to buy.

The study of consumer behavior enables us to become better, i.e. wiser consumers.

(ii) As marketers and future marketers:

It is important for us to recognize why and how consumers make their consumption decisions for a number of reasons:

(a) So as to make better strategic decisions,

(b) If marketers understand consumer behavior, they are able to predict how consumers are likely to react to various informational and environmental cues and are able to shape their marketing strategies accordingly.

(c) Marketers who understand consumer behavior have greater competitive advantage in the market place.

(d) Customers are the reason for any business existence since without them, a business cannot exist. Meeting the needs of the customers more effectively than competitors do is the key to continued profitable existence for any business.

(e) It is important that each customer who deals with an organization is left with a feeling of satisfaction. This may lead to increased sales or willingness to pay higher prices thus higher profits.

(f) Anyone who buys takes a risk. Everyone likes to get value for money. It is important that marketers help reduce the risk for consumers so that they are more likely to become regular customers.

(g) Loyal customers will support the organization in hard times.

(h) Customer loyalty is a source of companys goodwill.

(iii) As scholars of human behavior, we are concerned with understanding consumer behavior with:

Gaining insights into why individuals act in certain consumption-related ways and

With learning what internal and external influences impel them to act as they do.

MODELS OF CONSUMER BEHAVIOUR

7Os Framework for Consumer Research

This model is useful in gathering market intelligence or in conduction a research about a market. It seeks answers to the following questions.

Who constitutes the Market? - Occupants

What does the Market Buy?

- Objects

Why does the Market Buy?

- Objectives

Who Participates in the Buying?- Organization How does the Market Buy?

- Operations

When does the Market Buy?

- Occasions

Where does the Market Buy?- Outlets

Black Box Model/ Stimulus- Response ModelENVIRONMENTAL FACTORSBUYER'S BLACK BOXBUYER'S RESPONSE

Marketing StimuliEnvironmental StimuliBuyer CharacteristicsDecision Process

ProductPricePlacePromotionEconomicTechnicalPoliticalCulturalAttitudesMotivationPerceptionsPersonalityLifestyleProblem recognitionInformation searchAlternative evaluationPurchase decisionPost-purchase behaviourProduct choiceBrand choiceDealer choicePurchase timingPurchase amount

The black box model shows the interaction of stimuli, consumer characteristics, and decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people). The black box model is related to the black box theory of behaviorism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer. The marketing stimuli are planned and processed by the companies, whereas the environmental stimuli are given by social factors, based on the economical, political and cultural circumstances of a society. Marketing and environmental stimuli enter the buyers consciousness. The buyers black box contains the buyer characteristics and the decision process, which determines the buyers response. The buyers characteristics and decision making process leads to certain purchase decision.The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer.3.5 ActivitiesUsing real life examples, discuss how the following factors can stimulate purchase decisions. 8. Marketing Mix9. PEST forces

10. Buyer Characteristics

11. Buyer Readiness stage

3.6Summary

In this lesson we have:

Defined consumer behavior

Identified two types of consumer entities;- personal and organizational

Stated reasons why we study consumer behavior:- as Consumers, Marketers and as Scholars

Discussed two models of consumer behaviour; 70s Framework and Black box Model

3.7 Suggestions for Further Readings

12. Eric A. Linda P. and George Z. (2002), Consumer Behaviour.New York: McGraw-Hill Irwin.

2. James F. E. Roger D.B and Paul W.M. (1990), Consumer Behaviour, U.S.A: The Dryden Press

LECTRUE FOUR: THE BUYING DECISION 4.1Introduction

People do not just make a purchase, but rather go through a series of steps before they make the actual process. This lesson will look at various buying situations, the buying roles, stages in consumer buying decisions and the types of buying behaviors.

4.2 Specific Objectives

At the end of the lecture you should be able:

1. Explain three types of buying situations

2. Explain consumer buying roles

3. Describe the consumer buying decision process

4. Discuss consumer buying behaviours

4.3 Lecture Outline Buying Situations Consumer Buying Roles

Consumer Buying Decision Process

Consumer Buying Behavior4.4 The Buying Decision

INTRODUCTION

To be successful, marketers have to develop an understanding of how consumers actually make their buying decisions. Specifically marketers have to identify the following;

The Buying Situations

Who makes the buying decisions Steps in the buying decision

Types of buying decisions behaviourTHE BUYING SITUATION

There are 3 types of buying situations:

a) Extensive problem solving situation (EPS)

b) Limited problem solving situation (LPS)

c) Automatic response.

a) Extensive problem solving situation

It refers to the purchase of expensive items e.g. expensive stereo, clothing, automobiles;

in these cases one needs to make the right choice.

In buying such items, careful reasoning and information is necessary. All the stages of consumer decision-making process have to be followed.

To buy products, consumers look for information from internal and external sources.

External information is preferred where:

One has little or no previous experience to draw from;

Previous choices have resulted in dissatisfaction;

A long time has expired since the product was purchased last;

Benefits offered by current product differ from earlier product;

The consumer has little or no confidence in himself/herself;

Future purchases are based on inertia.

b) Limited problem solving situation

This is purchase of products that have one or a few uses e.g. bread, detergents. These items are bought often. For these items, information sought is very little. They are not bought necessarily by planning. Future purchases of such items are based on habit.

c) Automatic response

Once a consumer has bought for the time future purchases will be dictated by habit (for limited problem solving product) and inertia (for extensive problem solving products).

CONSUMER BUYING ROLES- {who makes the buying decisions}

Marketers should identify the buying roles for their products. Where purchase decisions are made by a group rather than an individual these roles become apparent. However note that these roles keep changing from one purchase decision to the next. Five roles have been distinguished.

The following are the various roles in the consumer buying process:

1. The Initiator This is the person who first suggest or thinks of the idea of a particular product or service.

2. The Influencer This is the person in the active buying process whose views or advice influence the buying decision.

3. The Decider This is the person who finally makes the final buying decisions, or any part of it. This includes the decisions on whether to buy, when to buy, how to buy and from whom to buy.

4. The buyer This is the person who finally makes the actual buying. He carries out the actual and physical purchase of the object.

5. The User This is the person who uses the purchased product. In marketing there is a great need to differentiate between the customer and consumer of the product.

6. The Gatekeepers The person who may make it more difficult to make the decisions or prevents the decision from being made.

A marketer must know these roles in order to ably develop a systematic way of evaluating and negotiating a purchase especially for organizational markets.

THE CONSUMER/ BUYER DECISION PROCESS :{ Steps in the buying decision}This is how consumers make buying decisions. A consumer goes through a series of rational steps in the buying decision process. The process consists of five distinct stages that include need recognition, information search, and evaluation of alternatives, purchase decision and post purchase behaviour.

1.Need Recognition

At this decision stage, the buyer recognizes a problem or need. The buyer senses a difference between his actual state and some desired state.

A need can be triggered by internal stimuli when one of the persons normal needs e.g. hunger, thirst, desire etc. rises to a level high enough to become a drive. The need may also be triggered by external stimuli like an advert, a discussion with a friend or a sales person talking of the product.

The marketer at this stage should carry out market research to understand consumer needs, what triggers the needs, how they led a consumer to a particular product and looks for ways of satisfying them.

2.Information Search

This is the stage in which the consumer is aroused to search for more information. An aroused consumer may or may not search for more information. The consumer may move from a state of active information search to a state of heightened attention where the consumer actively seeks information. The following are the sources of information that a consumer can turn to:

Personal sources (Buyer sources)

This may be from the family, friends, neighbours, acquaintances, etc. These sources may be used when:

Performance risks are high

The buyer is particularly interested in avoiding mistakes and hence actively seeks negative or unfavourable information if it is available.

(ii)Commercial sources.

These include all information sources controlled by the seller. They include:

Advertising and

Personal selling

They are used when:-

The perceived task is too low

Higher cost of using alternative sources is not justified.

(iii)Public sources:

E.g.-Mass media and

-Consumer organizations

(iv)Experiential sources:

E.g.-Handling

-Examining and

-Using the product.

The relative influence of these sources varies with the product and the buyer. The consumer receives the most information from the commercial source which is controlled by the marketer. However, the most effective information source is the personal one. While the commercial source informs the buyer, the personal source legitimizes and or evaluates the product for the buyer.

Companies have realized that people who ask others (word of mouth sources) end in buying. It is convincing and a more cost effective strategy.

The amount of information sought depends on:

Whether the consumers is buying the product for the first time;

Cost of the product;

Durability;

How often the product is biught;

Importance of the product; and

Image of the product.

3.Evaluation of Alternatives

At this stage, the consumer uses the available information to evaluate alternative brands in the choice set. It indicates how a consumer chooses from among the alternative brands.

Consumers sometimes make careful calculations and logical thinking of the product benefits and features (complex buying behaviour). At other times, consumers do little or no evaluation; instead they buy on impulse and rely on intuition. Some other times consumers make buying decisions on their own, sometimes they turn to friends, consumer guides or salespeople.

The marketer needs to understand about the alternative evaluation i.e. how a consumer processes information to arrive at brand choice. Consumers never apply a simple and single evaluation process in all the buying situations. Several evaluation processes are put in play dependent on the buying situation. Marketers should study buyers to find out how they actually evaluate brand alternatives.

The information obtained helps the consumer to clarify and evaluate the alternatives under consideration.

The consumer will look at:-

(i) Various product attributes, e.g. type, shape, appearance, texture, aging, cost, colour, effectiveness, taste/flavour, comfort, fit, style, safety, quality, etc.

(ii) Important weights attached to the attributes.

(iii) The brand image or brand beliefs should also be considered.

(iv) How the consumer expects product satisfaction to vary with different levels of each attribute.

(v) The consumer will arrive at attitudes towards the brand alternative through some brand evaluation procedure. These differ among consumers.

Each buyer must arrive at a decision as to what attributes are important and the evaluation criteria that must be used to compare different alternatives. consumers evaluate products based on a number of criteria namely and also on the basis of their Beliefs, attitudes and intentions.

Evaluation criteria

These are dimensions used by consumers to compare or evaluate products or brands e.g. for a car it is the:

Cost;

Economy;

Service availability etc.

ii) Beliefs

These are the degree to which the consumers believe that the product has certain characteristics e.g. safety, quality etc.

iii) Attitudes

These are the degree of liking or disliking for a product which in turn determines whether the customer will buy it or not.

iv) Intentions

These measure the probability of buying the product. A marketer should assist consumers to acquire information that will help them to make the purchase decision.

4.Purchase Decisions

At this stage, the buyer makes a decision of which brand to buy. At the evaluation stage, the consumer ranks the brands and forms purchase intentions. Their purchase decision will be to buy the most preferred brand. Two factors may influence the buyers decision at this stage:

(a) Others attitude over the product: the influence of someone important to the consumer or the views of friends, mates and or relatives.

(b) Unexpected situational changes: Where the consumer form a purchase intention based on such factors as expected income, price and product benefits which change prior to the purchase.

Unexpected event may change a buyers purchase intention e.g. positive growth, a drop of product price by a competitor or expression of after purchase dissonance (discomfort) of the product by a friend. Hence preferences or purchase intentions do not always result into the actual purchase choice.

5.Post-purchase Behaviour

At this stage, the consumers take further action after purchasing the product based on their satisfaction or dissatisfaction.

If the product falls short of expectations, the consumer is dissatisfied.(cognitive dissonance). A dissatisfied consumer may:-

Take legal action

Seek Redress from the company

Keep quiet

Talk to others badly about the company

If it meets expectations, the consumer is satisfied. A satisfied consumer will:-

Speak well of a companys product

Buy the product again

Buy other products from the company

Talk to others about the companys products

If it exceeds expectations, the consumer is delighted.

The larger the gap between expectations and performance the greater consumer dissatisfaction.

Marketers must at all times strive to satisfy the consumer in order to retain the existing customers and get new customers. One must promise only what their products or services can deliver and satisfy the buyers.

Cognitive Dissonance

Is a buyer discomfort caused by post purchase conflict that all major purchases or complex buying situations result into. After purchase consumers are satisfied with the benefits of the chosen brand and are glad to avoid the drawbacks of the brands not bought. Every purchase involves a compromise. Consumers feel uneasy on the drawbacks of the chosen brands and about losing the benefits of the brands not chosen. Hence they feel at least some post purchase dissonance with every purchase.

Marketers have a duty to reduce this cognitive dissonance by:

Writing congratulatory letters to the customers for the wise choice they made in purchasing that particular brand;

Having trade-in arrangements;

Visiting the consumers to see how they are getting on with the product;

Guarantees and warranties;

Providing after sales service.

TYPES OF CONSUMER BUYING-DECISION BEHAVIOURThere are four types of consumer buying decision behaviour namely:

a) Complex buying behaviour

b) Dissonance reducing buying behaviour.

c) Habitual buying behaviour

d) Variety seeking buying behaviour

High InvolvementLow Involvement

Significant difference between brandsComplex buying behaviourVariety seeking buying behaviour

Few difference between brandsDissonance reducing buying behaviourHabitual buying behaviour

a. Complex Buying Behaviour

This is a buying behaviour characterized by high consumer involvement in a purchase and significant perceived differences among brands.

The consumer involvement is high when the product is expensive, risky, purchased infrequently and it is highly self expressive. Hence the consumer has a lot to learn about the product e.g. buying a computer, car etc. The buyer first develops beliefs about the product, then attitudes, and then makes a thoughtful purchase choice.

Marketers of high involvement products must help buyers learn about the product benefits and features. They can do this by availing a catalogue or describing the brands benefits using print media.

b. Dissonance Reducing Buying Behaviour

This is a buying behaviour that occurs when consumers are highly involved with an expensive infrequent or risky purchase, but sees little difference among brands e.g. buying a music system, a carpet etc.

A consumer buying a music system may face a high involvement decision because the system is expensive and self-expressive yet buyers may think all the music systems in a given price range are the same. After purchase a consumer might experience post-purchase dissonance (discomfort). The marketers must provide after sales services and reassure the consumers that all is well.

c. Habitual Buying BehaviourIt is a consumer buying behaviour characterized by low consumer involvement and a few significant perceived brand differences.

Consumers have little involvement in this product category, for example bread. They simply go to a shop and pick a loaf of bread. If they keep buying the same brand, it is out of habit rather than strong brand loyalty. Consumers appear to have low involvement with low priced products.

Because buyers are not committed to any brands, marketers of low-involvement products will use price and sales promotions to create brand familiarity. Television ads are more effective in such promotions.

d. Variety-Seeking Buying BehaviourThis is a consumer buying behaviour characterized by low consumer involvement but significant perceived brand differences. A consumer may buy Kasuku brand of cooking fat, without much evaluation then evaluate the brand during consumption. Next time the consumer may buy Tily, yet another time Kimbo or Cowbouy. Brand switching occurs for the sake of variety rather than because of dissatisfaction.

For such products, the marketing strategy may differ for the market leader and for followers. The market leader will try to encourage habitual buying behaviour by dominating shelf space, running frequent reminder adverts e.g. Kimbo, Kasuku. Challenging firms will encourage variety seeking by offering lower prices, special deals, and free samples e.g. Mpishi Poa.

4.5Activities

Discuss Impulse buying behavior and explain how marketers can use this behavior to his advantage. 4.6 Summary

In this lecture we have looked at:

Buying Situations

Consumer Buying Roles

Consumer Buying Decision Process

Consumer Buying Behavior4.7 Suggestions for Further Readings1 Leon Schiffman, Leslie Kanuk, and Mallika Das. Consumer Behaviour. Canadian (1st) edition. Pearson Education, 2006.Type: Textbook. ISBN: 0131463047

LECTURE FIVE: FACTORS AFFECTING CONSUMER BUYING BEHAVIOUR5.1IntroductionIn our last class we discussed the types of behaviours exhibited by consumers as they attempt to make their purchase decisions. This class shall focus on the factors that affect these behaviours. We shall discuss this factors under four major classifications i.e Cultural factors, Social Factors, Personal Factors and Psychological factors.

5.2Specific ObjectivesAt the end of the lecture you should be able:

1. To Describe the cultural factors influencing consumer behaviour

2. To Explain the social factors influencing buyer behaviour

3. To Discuss the Personal factors influencing buyer behaviour

4. To Discuss the psychological factors influencing buyer behaviour.

5.3Lecture Outline Factors influencing buyer behaviour Cultural Factors

Social Factors

Personal Factors

Psychological Factors

5.4 Factors Influencing Buyer BehaviourThese are also known as the characteristics affecting consumer buying behaviour. The character of a consumer will largely be affected and or influenced by the following factors:

1.Cultural factors: (Culture, Sub Culture and Social Class)2.Social factors: (Reference Groups, family and roles and Status)3.Personal factors: (Age and Life Cycle Stage, Occupation, Economic Situation, Lifestyle, Personality and Self Concept).4.Psychological factors: (Motivation, Attitudes, Perception, Learning and Beliefs)Factors influencing buyer behavior:

1. Cultural factors

2.Social factors

3.Personal factors

4.Psychological

Factors

1.Cultural Factors (Characteristics)The marketer must understand the role played by the buyers culture, subculture and social class.

(a) Culture Culture is a societys personality. It is the sum total of learned beliefs, values and customs that serve to direct and regulate the consumer behaviour of members of a particular society. It affects a persons wants and behaviour. Beliefs and values are guides for consumer behaviour. Customs are usual and accepted ways of behaving.The impact of culture on society is so natural and so ingrained that its influence on behaviour is rarely noted. Yet culture offers order, direction and guidance to society members in all phases of human problem solving Growing up in a society a child learns the basic values, perceptions, wants and behaviours from the family and other important cultural institutions e.g. different cultures assign different meanings to colour. White is usually associated with purity and cleanliness in Western communities. However it can signify death in Asian countries. Also according to Taiwan culture, a man puts on green cloths to signify his wife has been unfaithful.

(b) Subculture Subculture is a distinct cultural group that exists as an identifiable segment within a larger, more complex society. It includes nationalities, religions, racial groups, age subcultures, gender subcultures and geographic regions. Many subcultures make up important market segments and marketers often design products tailored to their needs e.g. the Black Americans in the United States are strongly motivated by quality and selection. They place more importance on brand names and are more brand loyal.

Sub cultural analysis enables the marketer to focus on sizeable and natural market segments. The marketer must determine whether the beliefs, values and customs shared by the members of a specific subgroup make them desirable candidates for special marketing attention. Subcultures are hence relevant units of analysis for market research.(c) Social Class is a continuum or a range of social positions on which each member of the society may be placed. It is 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 members of all other classes have either more or less status. Social classes are societys relatively permanent and ordered divisions whose members share similar values, interests and behaviours e.g. of social class: upper class, middle class, lower class.

Social class is determined by many factors like income, occupation, education, wealth and other variables. Marketers are interested in social class because people within a given social class tend to exhibit similar buying behaviour. Social classes show distinct product and brand preferences in areas like clothing, home furnishings, automobiles etc.

2.Social Factors

The buyers behaviour may also be influenced by social factors, such as groups, the family, social roles and status.

(a)Reference Groups A group is a combination of two or more people who have come together or interact to accomplish individual or mutual goals.

A group member is influenced by the other members as one strives to belong. Marketers try to identify the reference groups of their target markets. Reference groups expose a person to new behaviours, lifestyles and create pressure to conform e.g. a group of young people can be attracted to the football game and would wish to put on branded products just like the football player whom they wish to imitate.

(b)Family

Marketers are interested in the roles and influence of the husband, wife, children and house help on the purchase of different products and service. In most families, the wife is the main buyer of food, household products and clothes. The husband is the main buyer f hardware, car or even a home. However changes in the market trend have seen women take up the reverse roles.

Children and house helps are the main consumers of T.V. adverts and may from time to time influence the family buying decisions.

(c)Roles and Status

A role consist of the activities a person is expected to perform according to the people around them e.g. Mary is a daughter to her parents, she plays the role of a daughter, in her family, she plays the role of a wife, in her company she plays the role of the brand manager. Each of her roles influences her buying behaviour.

3.Personal factors

These are common individual characteristics that can influence ones behaviour or decisions. They include the buyers age and life cycle stage, occupation, economic situation, lifestyle, personality and self concept.

(a)Age and Lifecycle Stage

Marketers often define their target markets in terms of the life-cycle stage and develop appropriate products and marketing plans for each stage.

Traditionally family life-cycle include:

StageBuying/behaviour pattern

Bachelor stage:

Young, single people Few financial burden

Fashion opinion leaders

Recreation orientated

They Buy: Basic kitchen equipment, basic furniture, cars, vacations.

Newly married couples

Young, no childrenBetter off financially than they will be in the near future. Highest purchase rates and highest average purchase of durables.

They Buy: Cars, fridges, stoves, furniture, vacations.

Full nest I

Oldest child under sixHome purchasing at peak.

Interested in new product, likes advertised products.

Buys: TV, baby food, toys.

Full nest II

Youngest child over six.Financial position better less influenced by advertising.

Buy: Many foods, Music lessons.

Full nest III

Older married couples with dependent children.

Home ownership at peak, not interested in new products.

Empty nest I

Older married couples

No children living with themHome ownership at peak, not interested in new products.

Empty nest II

Older married

Head of household retiredDrastic cut in income. Keep home.

Buy: Medical appliances, medical care products that aid in sleep, health and digestion.

Solitary survivor, in labour force.Income still good but likely to sell house.

Solitary survivor.

Retired.Medical needs

Drastic cut in incomes. Special need for attention, affection and security.

(b)Economic SituationProduct choice is greatly affected by ones economic circumstances. Peoples economic circumstances consist of: Their spendable incomes (level, stability and time pattern)

Savings

Assets

Debts

Borrowing power and

Attitude toward spending verses savings, among others

Economic situation of an individual affect his/her buying ability. A high income earner has more income to spend and a low income earner has little income to spend. Marketers of income sensitive goods watch trends in personal income, savings and interest rates. During economic recession, marketers must re-price reposition or even redesign their products.(c)Lifestyle

Lifestyle is a persons pattern of living as expressed in his or her activities, interest and opinions. Marketers classify people based on how they spend their money and time as follows:

(ii) Status oriented buyers Base their purchases on the actions and opinions of others.

(iii) Action oriented buyers Are driven by their desire for acting, risk taking and variety.

(iv) Principle oriented buyers Consumers who buy based on their views of the world.

Based on lifestyle, consumers can also be classified as:

(i) Actualisers People with so many resources that they can indulge in any of the orientations above.

(ii) Achievers People with middle income and just enough resources. They strive to be actualisers and are often status oriented.

(iii) Strivers People with little resources and are principle oriented.

(iv) Strugglers People with too few or no resources. They are often not included in any consumer orientation.

(v) Other life style classifications such asa. Those interested in change

b. Followers

c. Traditionalists

d. Contented

e. Under achievers, etc.

Lifestyle study is used by marketers to design appropriate adverts for each class of consumers.

(e)Personality and Self-concept

Personality is the distinguishing psychological characteristic that leads to relatively consisted and lasting responses to ones own environment.

Personality can be described as self-confident, dominant, social, defensive, adaptable and aggressive.

Personality is useful in analyzing consumer behaviour for certain products e.g. coffee marketers have discovered that heavy coffee drinkers are highly sociable.4.Psychological Factors

A persons buying choices are further influenced by motivation, perception, learning, beliefs and attitudes.

(a)Motivation

A motive (drive) is a need that is sufficiently pressing to direct the person to seek satisfaction.

Many marketers develop adverts bearing in mind their products ability to quench the buyers motive e.g. the Pepsi slogan dear for more, The Sprite advert obey your thirst, Nakumatt slogan You need it weve got it, Toyota Pickup advert, Shujaa wa Kazi etc.

Abraham Maslow

Abraham Maslow (1908-1970) forwarded the theory of motivation. Maslow concluded that the needs that people are motivated to satisfy fall into a well defined hierarchy.

Physiological needs are at the bottom of the hierarchy and they include the need for food and shelter. Management ensures this is done by paying employees good wages.

Safety needs include assuring employees of security of tenure. Managers see to the safety needs by paying employees well to avoid employee turnover.

Belongingness requires that employees be able to recognize with certain groups and that such groups should equally recognize the employee. Management takes care of this level of needs by grouping employees into departments e.g. Production, Sales and Accounts amongst others.

Esteem needs are those that are realized when the employee is allowed to be responsible for an activity or a group of people. Management ensures this level of need is met by giving employees an opportunity of leading the group e.g. becoming the Production Manager, Sales Manger etc.

Self Actualization needs are at the top of the hierarchy. Employees attain self actualization when they are allowed to reach their highest potential i.e. when they are doing the very best they can do under given circumstance. The motivating factor at this level of needs is recognition. Employees will appreciate rewards such as employee of the year, Sales man of the year, C.E.O of the year amongst others.

Maslow theory of motivation was based on three assumptions about human nature;

i. Human beings have needs that are never completely satisfied

ii. Human action is aimed at fulfilling the needs that are unsatisfied at a given point in time.

iii. Human needs fit into a predictable hierarchy, ranging from basic, lower levels needs to higher needs at the top.

Maslows work dramatized to managers that workers have needs beyond the basic requirement of earning money to put food on the table. This concept conflicted with the scientific management approach that emphasized the importance of pay.

(b)Perception

Perception refers to the process of receiving, organizing, and assigning meaning to information or stimuli detected by the five senses from the environment to help to make a choice. It is a way consumers interpret or give meaning to the environment surrounding them. It involves seeing, hearing, feeling, tasting and smelling.

Consumers will perceive a certain market offering only after they have perceived sensory stimuli. Eg

Seeing plays a role in purchasing such items as; jewelry and fashion clothes

Hearing plays a role in purchasing musical equipment and electronic equipments.

Feeling plays a role in purchasing clothes/materials and even fruits.

Tasting plays a role in purchasing sweets, food stuffs.

Smelling plays a role in purchasing deodorants, perfumes, flowers.

There are certain factors that play a role in perception. They include

Perception being selective whereby individuals are exposed to a lot of information whereby they select only a relatively small percentage of it. (Perceptual defense)

Perception being subjective when individuals see and hear what they are interested in because of what they are, what they believe, what their values are etc.

Perception being based upon individuals past experience where by the experience has built up a relatively stable cognitive organization within the individual that determines the meaning of a particular perception.

There are certain Perceptual defense mechanisms that consumers tend to have against undesirable stimuli from the environment. They include:Selective exposure

Occurs when people selectively choose to expose themselves only to certain stimuli. Eg turning of the television when commercials come on, quickly paging through a magazine and missing adverts.

Selective attention

Occurs when the individual doesnt pay full attention to the stimuli picked up by the senses. It makes or causes a consumer not to comprehend the content of the marketing message.

Selective interpretation

Occurs when the stimuli are perceived but the message itself is not interpreted as it was intended to be. Consumers can interpret the marketing message incorrectly by distorting the meaning or by misunderstanding it.

Selective recall

Refers to the individual ability to remember only certain stimuli, and to forget others which may be important.

A marketing department may find different ways to deal with the above defense mechanisms.

1. Selective attention and recall

Large stimuli can be offered to the market e.g. One page advertisements in newspapers, higher frequency i.e. repetition in TV and radio

Use both color and movements when advertising which attracts attention.

In supermarkets objects can be placed near the center of the visual fields.

2. Selective Interpretation

Marketers should pre test their message so as to achieve correct interpretation of the message

Marketers should determine how cultural differences influence the use of colors, symbols and numbers so as to correctly pass the message appropriately to certain cultures, races etc.

Marketers should not set unrealistic expectations.

3. Selective retention

For effective retention marketers should incorporate visibility of their products through demonstrations

Repetition of the message is important to reinforce the message

Marketers should make use of the consumers ability to learn.

(c)Learning

Learning describes changes in an individuals behaviour arising from experience. Most human behaviour is learned. Learning occurs through the interplay of drives, stimuli, cues, responses and reinforcement e.g. if a consumer buys a Nokia phone, if his experience with the phone is rewarding he will in future reinforce this behaviour by buying it again. But if it is not rewarding he will not reinforce the need for that product.

(d)Beliefs

A belief is a descriptive thought that a person has about something e.g. Kenyans have an attitude that Nissan cars are not durable on Kenyan roads and are highly in favour of Toyota cars. These beliefs may be based on real knowledge, opinion or faith.

Marketers must understand the beliefs that people formulate about a specific product because the belief make up product and brand images.

If some beliefs are wrong and prevent purchase, a marketer launches a campaign to correct them e.g. the Jik advert on detergents that bleach and tear your garments, the Nissan X-trail advert that depicts Nissan on rough roads.

(e) Attitudes

Attitude is a persons consistently favourable or unfavourable evaluation, feelings and tendencies toward an object or idea e.g. people have the attitude that Japanese electronics are quality products while Chinese electronics are poor quality products.

A marketer must understand peoples attitudes and try to change them to their benefit.

5.5 ActivitiesDiscuss the effect of Motivation on consumer behaviour.

5.6Suggestions for further Readings.

1) Kotler P. and Armstrong G.,(2008), Principles of Marketing, 12th Edition, Prentice Hall.

2) Kotler, P & Keller, K.L., (2006), Marketing Management. 12th ed. Upper Saddle River, NJ: Pearson Prentice Hall

3) Etzel, M.J., Walker, B.J. and Stanton, W.J., (2007), Marketing, 14TH edn. McGraw-Hill, Irwin.

LECTRUE SIX: THE BUYING DECISION PROCESS FOR A NEW PRODUCT

6.1Introduction

In this lesson, we shall look at the mental processes consumers go through in their endeavour to make decisions about new products in the Market. We shall then classify people on the basis of the time that elapses before they make a decision of trying a new product.

6.2Specific ObjectivesAt the end of the lecture you should be able:

1) To describe the consumer adoption process.2) To explain the adopter categories.3) To discuss the influence of product characteristics on adoption rate.

6.3Lecture Outline

Introduction

Consumer adoption Process

Stages in the adoption process

Adoption rate of a new product

Influence of Product characteristics on adoption rate

6.4Buying Decision for a new Product

6.4.1 Introduction

A new product is a good or service or idea that is perceived by some potential customers as new.

New products take some time before they are finally adopted for use by the consumers. The process through which a new idea or product is received and consequently accepted by consumers is referred to as the consumer adoption process.Consumer Adoption ProcessThis is the mental process through which an individual passes from first hearing about an innovation to final acceptance of the product. It is how a buyer approaches the purchase of a new product, a good, a service or an idea that is perceived by some potential consumers as new.The product may have been around for a while. However, the interest is in how consumers learn about it for the first time and make decisions on whether to adopt it or not. Adoption is the decision by an individual to become a regular user of the product.Stages in the Adoption Process:Consumers go through five stages in the process of adopting a new product:

(i) Awareness The consumer gets to know of the new product, but lacks information about it.

(ii) Interest The consumer seeks information about the new product.

(iii) Evaluation On receiving additional information on the product, the potential consumer make a consideration as to whether trying out the new product makes sense.

(iv) Trial The consumer makes a trial of the new product on a small scale. This is to help in estimation of the products value.

(v) Adoption On receiving full satisfaction after the trial, the consumer decides to make full use and adoption of the new product.Adoption Rate of a New ProductAccording to Rogers theory of innovation, people differ greatly in their readiness to try new products. There are five groups of people based on their adoption rate.

(i) Innovators Are venturesome. Try new ideas as soon as they get to know of it irrespective of the risk. Are eager, daring, more

cosmopolite in social relationships and communicate with other

innovators. (2.5%).(ii) Early adopters Are guided by respect. They are opinion leaders in their communities and adopt new ideas early but carefully. Are role

models for people to check with before adopting a new idea,

product or service. (13.5%).(iii) Early majority Are deliberate, rarely leaders but they adopt new ideas before the average person and time. Deliberate for sometime before

adopting a new idea. (34%).(iv) The late majority Are skeptical individuals. They adopt an innovation only after a majority of people have tried it. Adoption is due to economical necessity and a reaction to peer pressure. The adoption is approached cautiously. (34%)(v) Laggards Are traditions bound. They are suspicious of changes and adoptan innovation only when it has become something of a tradition itself. (16%). Rogers classified these grioupings as shown below:

X-20 X-0

XX+0In general, innovators and early adopters are relatively younger, better educated, and higher income than late adopters and non adopters. Marketers with new innovations should research the characteristics of innovators and early adopters and should direct marketing efforts towards them.The Influence of Product Characteristics on Adoption Rate

The characteristics of a new product affect its adoption rate. While some new products catch on almost immediately or overnight, others take a long time to gain acceptance. The five product characteristics are significant in influencing an innovations adoption rates are:a) Relative Advantages: Is the degree to which an innovation appears superior to

the existing products or services. The greater the perceived

relative advantage in picture, quality and ease of operation the sooner the adoption.b) Compatibility: Is the degree to which an innovation fits the values and experiences of potential consumers.c) Complexity: Is the degree to which an innovation is difficult to understand or use.d) Divisibility: Is the degree to which an innovation may be tried on a limited basis. Deer innovations have a slow adoption rate.e) Communication: Is the degree to which the results of using an innovation may

be observed or experienced to others. An innovation that leads itself to demonstration and description will be adopted faster by the consumers.Other characteristics are like initial and on-going cases, risks and uncertainty and social approval. A new product marketer must research on all the factors when developing the new product, idea or service and its marketing program.Non adopter Categories

A classification of the non-adopter categories would include:

a. The unaware group: Those consumers who are not aware of the new product

b. Symbolic rejectors: Who, though aware of the product, have decided against

buying it.

c. Symbolic adopters: Who know the product will be useful for them but have not tried it.

d. Trial adopters: Who have tried the product and also rejected the same.

e. Trial rejectors6.5 ActivitiesReflect in your own life as to how you came to adopt or reject some recently new products/brands. Describe your experience stating which adopter category you fall into.

LECTURE SEVEN: DIFFUSION PROCESS AND CONSUMERISMIntroduction

Consumers always find a new innovation-idea or product or even new service attractive. However, for the firm which is trying its hand at the new innovation, there is always a question hanging around How fast will the diffusion of the innovation take place? This is to say that any innovation has got an element of risk involved. The firm will introduce a new concept or a new product after an intensive research is carried out. The process of diffusion of an innovation is very critical to a firm. 1. Diffusion

Diffusion is a macro process concerned with the spread of a new product an innovation from its source to the consuming public.

Adoption is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product.

Diffusion of innovations is the process by which acceptance of an innovation (new products or new service or new idea) is spread by communication (mass media, sales people, informal conversation) to members of the target market over a period of time.

2. The Diffusion Process

The diffusion process the spreading of an innovations acceptance and use through a population. Diffusion is the process by which the acceptance of an innovation (a new product, a new service, new idea or new practice) is spread by communication (mass media, salespeople, or informal conversations) to members of a social system (a target market) over a period of time. The four basic elements of the diffusion process are the: Innovation, Channels of Communication, Social System and Time1. The Innovation: Various approaches which have been taken to define a new product or a new service include:a. Firm-oriented definitions: A firm oriented approach treats the newness of a product from the perspective of the company producing or marketing it. When the product is new to the firm it is considered to be new.

b. Product oriented definitions: Product-oriented approach focuses on the features inherent in the product itself and on the effects these features are likely to have on consumers established usage patterns.Three types of product innovations could be:

i. Continuous Innovation having the least disruptive influence on established patterns involving the introduction of a modified product, rather than a totally new product. E.g., latest version of Microsoft Office; ii. Dynamically Continuous Innovation which may involve the creation of a new product or the modification of an existing product e.g., disposable diapers, CD players; iii. Discontinuous Innovations requiring consumers to adopt new behavior patterns e.g., TV, fax machines, Internet

c. Market oriented definitions: Judges the newness of a product in terms of how much exposure consumers have to the new product. The definitions could be:

i. A product id considered new if it has been purchased by a relatively small (fixed) percentage of the potential market.

ii. A product is considered new if it has been in the market for a relatively short specified) period of time.

d. Consumer oriented definitions: A new product is any product that a potential consumer judges to be new.2. The Channels of Communication

How quickly an innovation spreads through a market depends to a great extent on communications between the marketer and consumers, as well as communication among consumers i.e., word-of-mouth communication.

Thus the communication is of two types of communication:

a. Communication between marketers and consumers

b. Communication among consumers i.e., word of mouth.

Consumer information sources fall into four categories:

Personal sources: Family, friends, neighbors, and acquaintances.

Commercial sources: sales people, advertising, sales promotion techniques.

Public sources: Mass media, consumer rating organisations

Experimental sources: Demonstration, handling samples.Depending on the innovation or new product, and the prospective customers, the firms try to adopt a cost effective way of communicating with them.

3. The Social System: The diffusion of a new product usually takes place in a social setting frequently referred to as a social system. In our case, the terms market segment and target segment may be more relevant than the term social system used in diffusion research. A social system is a physical, social, or cultural environment to which people belong and within which they function. For example, for new hybrid seed rice, the social system might consist of all farmers in a number of local villages. The key point to remember is that a social systems orientation is the climate in which marketers must operate to gain acceptance for their new products. For example, in recent years, the World has experienced a decline in the demand for red meat. The growing interest in health and fitness throughout the nation has created a climate in which red meat is considered too high in fat and calorie content. At the same time, the consumption of chicken and fish has increased, because these foods satisfy the prevailing nutritional values of a great number of consumers.

4. Time: Time pervades the study of diffusion in three distinct but interrelated ways:

a. The Amount of Purchase Time:

Purchase time refers to the amount of time that elapses between consumers initial awareness of a new product or service and the point at which they purchase or reject it. For instance, when the concept of Home Land super market was introduced by Asha Chavan in Pune, apart from offering a variety of quality products, also give an unconditional guarantee of replacement or refund, home delivery of all, even single item telephonic orders at no extra cost. And beyond business, Homeland also offers free services like phone, electricity, credit card and cell phone bill payments.

b. The Identification of Adopter Categories:

The concept of adopter categories involves a classification scheme that indicates where a consumer stands in relation to other consumers in terms of time. Five adopter categories are frequently used viz., innovators, early adopters, early majority, late majority, and laggards.CONSUMERISM

Is an organized consumer movement of citizens and Govt. Agencies to improve on the rights of buyers in relation to the product and service sellers. The first consumer movement took place in the early 1900s fueled by the rising prices of commodities and upon Sinclairs writing on the conditions in the beef industry and scandals in the drug industry.The second consumer movement was in the mid 1930s sparked off by factors in the consumer prices during the great depression and yet another drug scandal. The third consumer movement began in the 1960s when consumers had become better educate, more learned, products becoming more and more complex and potentially hazardous and the people were unhappy with business institutions.TRADITONAL SELLERS RIGHTS

Introduce any product in any size and style in the market provided it is not hazardous to health and safety or if it is, to include prior warnings and controls as in cigarettes in Kenya. Charge any price for the product or service provided no discrimination exists among similar kinds of buyers.

Spend any amount of finances to promote a product or service provided it is not defined as unfair practice or competition.

Use any product or service message provided it is not misleading or dishonest in context or execution.

Use any buying incentive programs provided they are not unfair or misleading.TRADITONAL CONSUMERS RIGHTS

Not to buy a product or service offered for sale.

Expect the product or service to be safe.

Expect the product or service to perform as claimed by the sellers.

In comparison it is believed that the balance of the pointers lies on the sellers side. While the buyers refuse to buy they have very little information, education and protection to make wise decisions when facing the complicated sellers.

Consumerism calls for such rights to:

Be well informed about the important aspects of products or services.

Be protected against questionable products or services and marketing practices.

Influence product or service and marketing practices in ways that improve the whole quality of life.The right to be informed includes the right to know the true interest on a loan (truth in lending), the true cost per unit of a brand (unit pricing), the nutritional value of food (nutritional labeling), product ingredients (content labeling), product freshness (open dating) and the true benefits of a product (truth in advertising).

Consumer protection rights proposals include strengthening consumer rights in case of business fraud, requiring greater product safety, ensuring information privacy and providing more pointers to the Govt. Agencies. Quality of life proposal rights include:

Controlling the ingredients that go into certain products and packaging.

Reducing the level of advertising noise.

Putting consumer representatives on the organization boards to protect consumer interests.

Not only do consumers have the right but responsibility to protect themselves instead of leaving the function to someone else. Those who get bad or poor deals have remedies available as in contacting the concerned firm, the Govt. The local agencies and or the small claims court.

LECTURE EIGHT CONSUMER LEARNING

Learning can be defined as the act of acquiring new or modifying and reinforcing, existing knowledge, behaviors, skills, values or preferences and it may involve synthesizing different types of information.

Therefore any facet of a persons behavior is dependent on past learning situations.

According to marketers, learning is the process by which individuals acquire the buying and consumption knowledge and experience they apply to future related behavior.

ELEMENTS OF LEARNING

Stimulus- this is anything that is used to stimulate interest. It can be; physical things, for example; the product size, brand and so on.

It can also be intangible things such as; services, quality of the product and satisfaction.

After interest has been perceived, the learner must be motivated to seek the object before learning occurs. The stronger the motivation the quicker the customer learns. Motivation can take any form as long as it encourages the person to want to know more about the product thus learning takes place.

Response- this is any action, reaction or state of mind resulting from a particular stimulus. Marketers may not always stimulate the buyer to buy, but they can create a favorable image of their product in the in the consumers mind. By creating a positive image in the mind of the consumer, he/she will be interested to learn more about the product in futur