Model Test Paper- CB

7/29/2019 Model Test Paper- CB

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MODEL TEST PAPER

CONSUMER BEHAVIOUR- MS-209

MBA III

Q1. a) Why is post-purchase consumption behavior important for marketers?

Ans. To meet consumer expectations, marketers need to focus on

i) Creating reasonable expectations among consumers through appropriate promotionalefforts

ii) Ensure consistency in product quality do that whatever expectations are created

among consumers through marketing communications are fulfilled.

It is advantageous for the concerned firma if the dissatisfied consumer directly communicates

with the firm and if the dissatisfied consumer directly communicates with the firm and to no

one else about her/his unhappiness with the product. This offers the firm an opportunity to

handle the problem quickly and decrease the chance of negative word-of-mouthcommunications. Research shows that consumers whose complaints are resolved to their

satisfaction are comparatively more satisfied than consumers who had no complaints andwere actually satisfied with the product. In a developing country like India, this is an area of

major opportunity for businesses because retaining once-dissatisfied consumers by

encouraging then and responding to their effectively if more economical than attracting new

customers in an increasingly competitive market environment. Also anticipatingdissatisfaction and acting promptly to remove the cause before it occurs. Many of the

satisfied customers switch brands; satisfied customers are more likely to repeat purchase the

brand than customers who are dissatisfied. Repeat purchasers continue to patronize the same brand without developing any kind of emotional attachment to it. Even some dissatisfied

customers may stay repeat purchasers because of non-availability of another satisfactoryalternative or because they believe that the expected benefits of renewed search are not worththe expected costs. Hence they may be vulnerable to competitor’s actions. The satisfaction,

repeat purchase and customer loyalty are dependent on the post-purchase consumption

behaviour.

b) Apply Maslow’s Hierarchy of Needs to consumer behavior.

Ans. The hierarchy of needs proposed by Abraham H. Maslow is perhaps the best known and isgood guide to general behaviour. Maslow classified needs into five groupings, ranking in order

of importance from low-level (biogenic) needs to higher-level (psychogenic) needs and

suggested the degree to which each would influence human behaviour.

• Physiological needs: Food, shelter, sexual satisfaction i.e. those needs needed for basicsurvival.

• Safety needs: The need to feel safe within your environment. Also refers to emotional and

physical safety.

• Social Needs: The need for love, friendship and belongingness

• Esteem needs: The need for self respect, status and recognition from others.

• Self actualisation: The point of reaching ones full potential.



The theory is useful framework for marketers trying to develop appropriate advertising appeals

for their products. It is adaptable in two ways: First, it enables marketers to focus their

advertising appeals on a need level that is likely to be shaped by a large segment of the targetaudience , because there are consumer goods designed to satisfy each of the need levels and

because most needs are shared by large segments of consumers. Individuals buy health foods,

medicines and , second it facilitates product positioning or repositioning.

Maslow’s concept suggests that needs change as we go along our path of striving for self-

actualisation. Supermarket firms develop value brands to meet the psychological needs of hunger and thirst. Harrods develops products and services for those who want have met their esteem

needs. So Maslow’s concept is useful for marketers as it can help them understand and develop

consumer needs and wants.

c) Describe the tri component model of attitudes.

Ans. The tri-component model of attitudes consists of three main components:

i) Cognitive component

ii) Affective componentiii) Conative component

i) Cognitive Component: It refers to the subjective judgment about the relationship

between two or more things. Consumers beliefs about an object are the attributes

they ascribe to it. These beliefs are based on a combination of the knowledge,

experience and perceptions about the attitude object. It is important to realize that beliefs need not be correct or true. They need to exist.

ii) Affective Component: The feelings and emotional reactions to an object represent the

effective component of an attitude. This relates to consumers overall evaluation of the attitude object. Consumer beliefs about a brand’s attributes are multi-

dimensional, but the feeling component is only one-dimensional. Consumers often

evaluate products in the context of a specific situation and a consumers feelingevaluation may change as the situation changes. Consumers feeling are often the

result of specific attribute evaluations of a product but sometimes feelings can

precede and influence beliefs. The affective component is central to studyingattitudes because it summarizes consumer’s predispositions to be favorable or

unfavorable towards the attitude object.

iii) Conative Component: It is the likelihood or tendency of an individual to responds in

a certain manner towards an attitude object. P.A.Dabholkar has noted that all the threeattitude components tend to be consistent. As a result of this, change in one attitude

component tends to trigger related changes in the other components.

d) What strategies do consumers use to reduce perceived risk?

Ans. The strategies used by consumers to deal with perceived risk are:

1. They acquire additional information. This allows them to better assess the risk.2. They remain brand loyal. They stay loyal to a brand, which has delivered

satisfaction instead of buying an untried brand.

3. They buy the most popular brand because they usually believe that well-known

and popular brands can be trusted.4. Consumers buy the most expensive model or brand because they usually believe

that price is associated with quality.



5. They relay on store image. They trust reputable retail outlets and depend on them

regarding their choice of merchandise for resale.

6. Consumers seek money back guarantees, warranties an pre-purchase trial.7. Buying the smallest pack size, or lowest priced item. In an attempt to reduce the

consequences, consumers buy the smallest size or the lowest priced item.

8. Reduce level of expectations to reduce psychological consequences beforemaking the purchase.

e) Explain the relevance of the concept of differential threshold to marketers.

Ans. Differential threshold is the smallest detectable difference between two values of the same

stimulus. This is also referred to as just noticeable difference (j.n.d). The j.n.d between two

stimuli is an amount relative to the intensity of the initial stimulus. To measure the differentialthreshold for a stimulus, one commonly changes its intensity in very small amounts. An

individual’s threshold exists when she/he first notices that the stimulus has changed. The

difference between this value and the starting value is the just noticeable difference. Weber’s law

states that stronger the initial stimulus, greater the additional intensity needed for the secondstimulus to be perceived as different.

Marketers use Weber’s law to predict how consumers will respond to differences between

marketing variables or changes in these variables. In certain situations, the marketer’s objective

is to have consumers detect differences such as when product improvements are made or price isreduced. In other cases, the objective is to have the differences escape attention such as

reductions in product size or quality, increases in product price, or changes in packaging when

package design is important for ready recognition by consumers.

f) Briefly explain the broad consumption pattern during the various stages of the family life

cycle.Ans. The concept of household or family life cycle is important for marketers in segmenting the

market. The following life cycle stages are typical of families:

1. The bachelor stage

2. Newly married 3. Full nest

4. Empty nest

1. Bachelor Stage: This stage consists of young single men and women who haveestablished house-holds apart form their parents. Young single adults are apt to spend

their incomes on rent, basic home furnishings, the purchase and maintenance of automobiles, travel and entertainment, and clothing and accessories. Members of the bachelorhood stage frequently have sufficient disposable income to indulge themselves.

Marketers target singles for a wide variety of products and services.

2. Newly married: It serves as a period of adjustment to married life. The dual income

couples often permits a lifestyle that provides them with the opportunities of more

indulgent purchasing of possessions or allows them to save or invest their extra income.They have considerable start-up expenses when establishing a new home i.e. major or

minor appliance, bedroom and living room furniture, carpeting, drapes, dishes and a host

of utensils and accessory items.



3. Full nest: This usually extends over more than a 20-year period. Throughout these

parenthood phases the interrelationships of family members and the structure of the

family gradually change. The financial resources also change. Products like diaper bags,high chairs, baby strollers, books, accessories etc.

4. Empty nest: This signifies for many parent almost a rebirth a time for doing all thethings they could not do while the children were at home and they had to worry about

soaring expenses. It is during this stage they are financially well off and this stage is an

important market for luxury goods, new automobiles, expensive furniture and vacationsto faraway places.

Q2. Explain the entire consumer decision making process in detail with suitable examples.

Ans. Traditionally, consumer researchers have approached decision making process from arational perspective. This dominant school of thought views consumers as being cognitive (i.e.,

problem-solving) and, to some but a lesser degree, emotional.i Such a view is reflected in the

stage model of a typical buying process (often called the consumer information processing

model ) depicted below

Problem Recognition

Information Search

Evaluation and Selection of Alternatives

Decision Implementation

Post-purchase Evaluation

Figure 1 The Consumer Information Processing Model

In this model, the consumer passes through five stages: problem recognition, information search,evaluation and selection of alternatives, decision implementation, and post-purchase evaluation.

Problem Recognition

In this information processing model, the consumer buying process begins when the buyer

recognizes a problem or need. For example, Doug may realize that his best suit doesn’t look

contemporary any more. Or, Kathleen may recognize that her personal computer is not performing as well as she thought it should. These are the kinds of problem that we as

consumers encounter all the time. When we found out a difference between the actual state and

a desired state, a problem is recognized. When we find a problem, we usually try to solve the

problem. We, in other words, recognize the need to solve the problem.



Information Search

When a consumer discovers a problem, he/she is likely to search for more information. Kathleen

may simply pay more attention to product information of a personal computer. She becomes

more attentive to computer ads, computers purchased by her friends, and peer conversationsabout computers. Or, she may more actively seek information by visiting stores, talking to

friends, or reading computer magazines, among others. Through gathering information, the

consumer learns more about some brands that compete in the market and their features andcharacteristics. Theoretically, there is a total set of brands available to Kathleen, but she will

become aware of only a subset of the brands (awareness set ) in the market. Some of these

brands may satisfy her initial buying criteria, such as price and processing speed (consideration

set ). As Kathleen proceeds to more information search, only a few will remain as strongcandidates (choice set ).

Evaluation and Selection of Alternatives

How does the consumer process competitive brand information and evaluate the value of the brands? Unfortunately there is no single, simple evaluation process applied by all consumers or

by one consumer in all buying situations.One dominant view, however, is to see the evaluation process as being cognitively driven and

rational. Under this view, a consumer is trying to solve the problem and ultimately satisfying

his/her need. In other words, he/she will look for problem-solving benefits from the product.

The consumer, then, looks for products with a certain set of attributes that deliver the benefits.Thus, the consumer sees each product as a bundle of attributes with different levels of ability of

delivering the problem solving benefits to satisfy his/her need. The distinctions among the need,

benefits, and attributes are very important. One useful way to organize the relationships amongthe three is a hierarchical one (Figure 2). Although simplified, Figure 2 is an example of how a

bundle of attributes (i.e., a product or, more specifically, personal computer) relates to the

benefits and underlying needs of Kathleen.

Underlying Needs

Benefits

AttributesSize

Portability

PriceCPU Speed

Computational

Horse Power Economy

Hard Drive Size

Software

Bundle

Helps Me Survive

Babson MBA Pogram

Doesn’t Break

down

Brand

Reputation

Warranty

GlobeNet

Ready



Figure 2 Hierarchical view of Needs, Benefits, and Attributes

From this figure and the preceding discussion, you might recognize that the product attributes arerelevant and important only to the extent that they lead to a certain set of benefits. Likewise,

benefits are meaningful only if they can address the problem and be instrumental to satisfy the

underlying need. Consumers differ as to their beliefs about what product benefits and attributesare more (or less) important and relevant in satisfying their needs. Based on their personal

judgment on importance of benefits and attributes, consumers develop a set of attitudes (or

preferences) toward the various brands. One may express his/her preferences of the brands interms of ranking, probability of choice, and so forth.

Decision Implementation

To actually implement the purchase decision, however, a consumer needs to select both specificitems (brands) and specific outlets (where to buy) to resolve the problems. There are, in fact,

three ways these decisions can be made: 1) simultaneously; 2) item first, outlet second; or 3)

outlet first, item second.ii In many situations, consumers engage in a simultaneous selection

process of stores

iii

and brands. For example, in our Kathleen’s personal computer case, she mayselect a set of brands based on both the product’s technical features (attributes) and availability

of brands in the computer stores and mail-order catalogs she knows well. It is also possible, thatshe decides where to buy (e.g., CompUSA in her neighborhood) and then chooses one or two

brands the store carries. Once the brand and outlet have been decided, the consumer moves on to

the transaction (“buying”).

Post-purchase Evaluation

Post-purchase evaluation processes are directly influenced by the type of preceding decision-making process. Directly relevant here is the level of purchase involvement of the consumer.

Purchase involvement is often referred to as “the level of concern for or interest in the purchase”iv situation, and it determines how extensively the consumer searches information in making a purchase decision.v Although purchase involvement is viewed as a continuum (from low to

high), it is useful to consider two extreme cases here. Suppose one buys a certain brand of

product (e.g., Diet Pepsi) as a matter of habit (habitual purchase). For him/her, buying a coladrink is a very low purchase involvement situation, and he/she is not likely to search and

evaluate product information extensively. In such a case, the consumer would simply purchase,

consume and/or dispose of the product with very limited post-purchase evaluation, and generally

maintain a high level of repeat purchase motivation (Figure 3).

Purchase Product UseSimple

Evaluation

DispositionRepeat Purchase

MotivationFigure 3 Low Involvement Purchase

However, if the purchase involvement is high and the consumer is involved in extensive purchase decision making (e.g., personal computer), he/she is more likely to be involved in more

elaborate post-purchase evaluation – often by questioning the rightness of the decision: “Did I

make the right choice? Should I have gone with other brand?” This is a common reaction after making a difficult, complex, relatively permanent decision. This type of doubt and anxiety is

referred to as post-purchase cognitive dissonance (Figure 4).



Purchase Product UseElaborate

EvaluationDisposition

Dissatisfaction

Repeat Purchase

Motivation

Post-purchase

Dissonance

Figure 4 Elaborate Post-purchase Evaluation

Q3. a) Discuss applications of the concepts of stimulus generalization and stimulus

discrimination for marketers. Give examples.

Ans. Stimulus generalizations occur when two stimuli are seen as similar and the effects of one

therefore, can be substituted for the effects of the other. This principle states that a new butsimilar stimulus or stimulus situation will produce a response that is the same or similar as that

produced by original. It makes consumer’ life easier and allows them to simplify the process of

evaluation because they do not have to make separate judgments for each and every stimuli.Some local or regional marketers make use of this principle generalization by using nearly look-

alike packaging for their products so that they resemble some well-known brands in appearance.

This practice can also be seen, for example, in case of various brands of cooking oils prepared

from sunflower or soyabean, or different brands of iodised table salt. For example, Bajaj,Philips, Sony, Lakme, Pepsi and Coke etc follow a policy of generalization and use family

branding.

A product line extension is the strategy of introducing variations of the same product.

This variation may be simply of colour, packaging, size, or flavor etc. but the core product value remains the same. Palmolive available in different colors, Maggi noodles

in different flavors.

Product form extension means that the same product is available in different physical

forms such as Dettol soap and liquid soap.

Product category extension is diversifying into producing products in different categories

and using the established brand name. Maggi noodles and Tomato chilli sauce etc.

Family branding refers to the practice of marketing the entire product mix of a company

under the same family name. The aim of the company is to take advantage of consumer’stendency to generalize favorable brand associations form one successful products to the

next. Ex Lakme, Ponds, Tata Canon.

Stimulus Discrimination: It is the opposite of stimulus generalization. It is a reaction to

differences among similar stimuli. The ability of humans to discriminate among stimuli islearned. The concept of brand positioning is based on stimulus discrimination which strives to

create a brand’s unique image in the consumer’s minds. Innovators and market leaders strive to

convince consumers to discriminate and consider their brands as different from generic-type of

products and other brands in the same product category. Maggi Hot and Sweet Tomato ChilliSauce focused on convincing consumers that “its different “and thereby position the brand.



b) Suggest ways in which marketers can design their promotional messages to capture

consumer attention.

Ans. It is suggested that although exposure and sensory processes both selectively filter

information processing, some additional points of selectivity must also exist. One such filtering

mechanism is attention which can be viewed as the allocation of processing capacity to stimuli.Attention regulates the amount of additional processing that a stimulus will receive. Certain

characteristics of stimuli attract attention. The marketers should design their promotional

messages in accordance with:

• Color: Color advertisements are found to be more attractive than the black white ones.

The attractive power of color may be a result of its novelty, common use of it in any

medium such as television may reduce its attention-attracting power unless more intense

or unusual hues are employed- which is being done now-a-days.

• Novelty and Contrast: Stimuli that stand out against their background attract attention.

Novel stimuli achieve this through unique images, shapes, sounds and colors. Noveltycan also be achieved through messages that seem at odds with commonly held beliefs.

Contrast also attracts attention through its distinctiveness.

• Size and Position: Attention increases with the size of an advertisement. Position also is

an important influence in terms of layout and position.

• Humor: Practitioners feel that humor can attract attention to a certain extent. The

effectiveness of humor depends on the characteristics of audience members

Q 4. Explain the importance of studying psychology of the consumer to understand hisconsumer behavior. What are the various aspects of pshycology relevant to marketer .

Ans. Psychology plays a significant role in the consumer buying behavior process rather it

governs the entire process of purchase.Consumer psychology comprises of some the core dimensions which affects the buying process.

Psychology comprises of:

Consumer Motivation

Consumer personality

Perception

Learning & Attitude

Motivation as a Psychology Factor

Motivation is the driving force within individual that impels them to actions, marketer don’tcreate needs although in many instances they strive to make consumers more keenly aware of

unfelt or dormant needs.



Consumer’s needs may be related to any of the following associations like affiliation, aggression,

dominance, exposition nurturance or autonomy and all such needs are governed by the needhierarchy theory.

Several products hold the sub conscious meaning within themselves, which affects the buying

process.Also the marketer take advantage of the consumer’s mental insight while designing their ads, and

thus affecting the buying process.

Liril soap was launched in 1970s after a research agency found that housewives had a distinctive penchant for fantasying and this was captured in the advertisement for Liril-waterfall, fresh green

& indulgence of model in the ad.

For eg; while purchasing the TV, consumer has the some needs and every need is related to the product aspects.

Aspects of the product Intrinsic need Extrinsic need

Aesthetic Appeal Gratification on the offering

and affordability

Status symbol

Sound quality Sensual pleasure Appear as a state of art

Brand equity Reassurance (perceived risk) Symbolic association

Special features Variety seeking tendencies To encourage word of mouth

for oneself

Also, now days the companies define their USP in term of the motivation those forces the buyers

to go for the product. Thus motivation playing a bigger psychological factor being used by thefirms to manage the buying process.

In a nut shell, all behavior are goal oriented. Goals are the sought after result of motivated

behavioral individuals has need wants and desires, the individual sub conscious drive to reduceneed induced tension results in behavior that he/she anticipates will pacify it.

Personality as a Psychology Factor

Personality traits differentiate the consumers as

• Consumer innovators- provide the insight into consumers’ willingness to innovate.



• For eg; special types of watches like Eco drive by citizen, hybrid cars coal fortified withvitamins etc.

• Innovators form the good base o consumers who spread the word about a category or

brand by talking about it.

• Dogmatism-it talks about the rigidity that individual displays towards the unfamiliar andtowards information that is contrary to their own established beliefs.

• Social character – the personality trait known as social character has its origin in

sociological research, which focuses on the classification of individual into distinct sociocultural types.

• Personality trait ranges from inner directedness to outer directness.

• Need for uniqueness-consumers who are inclined towards making unique choicesgenerally avoid common object purchases.

• Optimum stimulation level-associated with greater willingness to take risk, to try new products, to innovate, to seek purchase related information and to accept new retail facilities.

Shows exploratory behavior

• Sensation seeking –trait characterized by the need for varied, novel and complexsensations and experience and the willingness to take social risk for the sake of such

experience.

Perception as a psychological factor

People tend to perceive the things they need or want; the stronger the need, greater the tendencyto ignore unrelated stimuli in the environment. Someone overweight is more likely to notice ads

for diet foods.

Learning as a psychological factor

Consumer learning- is the process by which individuals acquire the purchase and consumption

knowledge and experience they apply to future related behavior. Although some learning isintensional, much learning is incidental.

Basic elements that contribute to understanding learning are

Motivation- motives

Cues-stimuli that directs these motives.

Eg consumer expects designer clothes to be expensive and to be sold in upscale retail stores,

thus they are sold through exclusive stores.

Response-how consumers behave

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



Attitude as psychological factor

It shows learned predisposition to behave in a consistently favorable or unfavorable manner.

Attitude New Product Categories Few Brands Creation of A Category In

the Mindset

Use

Consumer familiarity

Brands Attitudinal Components Attitude towardsBrand

Above figure shows the attitude of the consumer towards brands/product categories.

As a potential buyer of a latest DVD brand, the following social and cultural factors would be

affecting the purchase decision.

Social factors

Social class and social status is being affected by family income. Income plays crucial role in

product purchase. Being a member of upper middle class of the society being a technology

related product, I would definitely go for a high end purchase involving a good sum of money onits attributes.

Occupational status-being a student one is more fantasized towards extra features related to

technology ends so will surely look for the features that are available in the peer group and classmates. Will surely compare the product with what all my friends have.

Educational attainment- qualification and education surely affects some of the aspects like;

Brand awareness

Search capacity



Comparison behavior

Rational purchase decision

Thus, being an MBA pre purchase search and evaluation will be a part of the buying process and

purchase will being well accordance with the social status hierarchy and the class to which one

belongs.Cultural factors

Sum total of beliefs values and customs directly affect the behavior, the brand selection will beas per the family choice.

Family orientation will be greatly reflected in the purchase, product features like

Color, Shape, Size, Brand, and Design will be on the basis of mutual understanding of the entire

family. And savings, credits and spending habit will also be the part of the buying process.

Q5. Describe the product characteristics that influence the likelihood of consumer

acceptance of an innovation. Give examples

Ans. An innovation’s success is dependent upon successfully responding to consumer needs andcommunicating benefits in a believable persuasive manner. Consumers respond to good taste,convenience, and health enhancing properties.

Diffusion of Innovations is a theory of how, why, and at what rate new ideas and technology spread

through cultures The key elements in diffusion research are: the innovation, types of communication

channels, time or rate of adoption, and the social system which frames the innovation decision process.

The adoption process

Diffusion of an innovation occurs through a five–step process. This process is a type of decision-making. It occurs through a series of communication channels over a period of time among the

members of a similar social system.

Five stages of the adoption process

http://en.wikipedia.org/wiki/File:DoI_Stages.jpg



• Knowledge - In this stage the individual is first exposed to an innovation but lacks

information about the innovation. It should be noted that during this stage of the processthe individual has not been inspired to find more information about the innovation.

• Persuasion - In this stage the individual is interested in the innovation and actively seeks

information/detail about the innovation.

• Decision - In this stage the individual takes the concept of the innovation and weighs theadvantages/disadvantages of using the innovation and decides whether to adopt or reject

the innovation. Due to the individualistic nature of this stage Rogers notes that it is the

most difficult stage to acquire empirical evidence

• Implementation - In this stage the individual employs the innovation to a varying degree

depending on the situation. During this stage the individual determines the usefulness of

the innovation and may search for further information about it.

• Confirmation -Although the name of this stage may be misleading, in this stage the

individual finalizes their decision to continue using the innovation and may use the

innovation to its fullest potential.

Adopter categories

An adopter category can be defined as a classification of individuals within a social system on

the basis of innovativeness. Five categories of adopters have been discussed in order to

standardize the usage of adopter categories in diffusion research. It should be noted that the

adoption of an innovation follows an S curve when plotted over a length of time. The categoriesof adopters are: innovators, early adopters, early majority, late majority, and laggards.

• Innovators - Innovators are the first individuals to adopt an innovation. Innovators are

willing to take risks, youngest in age, have the highest social class, have great financial

lucidity, very social and have closest contact to scientific sources and interaction with

other innovators.• Early Adopters - This is second fastest category of individuals who adopt an innovation.

These individuals have the highest degree of opinion leadership among the other adopter categories. Early adopters are typically younger in age, have a higher social status, have

more financial lucidity, advanced education, and are more socially forward than late

adopters

• Early Majority - Individuals in this category adopt an innovation after a varying degree

of time. This time of adoption is significantly longer than the innovators and early

adopters. Early Majority tend to be slower in the adoption process, have above average

social status, contact with early adopters, and show some opinion leadership

• Late Majority - Individuals in this category will adopt an innovation after the average

member of the society. These individuals approach an innovation with a high degree of skepticism and after the majority of society has adopted the innovation. Late Majority are

typically skeptical about an innovation, have below average social status, very little

financial lucidity, in contact with others in late majority and early majority, very little

opinion leadership.

• Laggards - Individuals in this category are the last to adopt an innovation. Unlike some

of the previous categories, individuals in this category show little to no opinion

leadership. These individuals typically have an aversion to change-agents and tend to beadvanced in age. Laggards typically tend to be focused on “traditions”, have lowest social



status, lowest financial fluidity, oldest of all other adopters, in contact with only family

and close friends, very little to no opinion leadership

Product characteristics affecting diffusion of Innovation

•Type of target group – The target market for the new product is an important factor ininfluencing the rate of diffusion. Some groups are more inclined to accept change than

others. In general, affluent, young and highly educated group tend to try and accept new

products readily.

• Number of people involved in decision making – This refers to whether the decision is

made by an individual or a group. If fewer individuals are involved in making the

purchase decision, the innovation is likely to spread more rapidly. When two or more

family members are involved in making the purchase decision, the diffusion will beslower the innovation that primarily affect one individual

• Extent of marketing efforts involved - The diffusion of innovation is very significantlyinfluenced by the extent of marketing efforts undertaken. No matter how wonderful an

innovation, unless sufficient numbers are informed and convinced of what it can do for them, the diffusion would be adversely affected.

• Need fulfillment – The more involving and obvious the need that the innovationsatisfies, the faster the innovation. The rate of diffusion of anti-dandruff shampoos has

been fast as they gain rapid trial among those who were uncomfortable with dandruff

• Compatibility – This refers to the degree to which the innovation is consistent with theindividual and groups needs, attitudes, beliefs, and past experiences,. The greater is

constituency, the faster its diffusion. Internet banking or shopping is not consistent with

established habits of most Indian consumers resulting in very slow diffusion of thisinnovation.

• Relative advantage – If consumer perceives and innovation as better in meeting their

relevant need compared to their existing ones, the diffusion will be more rapid. Whileconsidering the relative product advantage, consumers considers both the cost and the performance.

• Complexity – If an innovation is difficult to understand and also difficult to use itsdiffusion would be slower. Product simplicity and ease of use are important factors in

speeding up the process of diffusion. Computer manufacturers such as IBM and Apple

have tried to overcome the initial complexity of using personal computers by

communicating with consumers that their computers are user friendly

• Observability – This refers to the ease with which consumers can observe the positive

effects of adopting an innovation. Products such as cellular phones, fashion items and

autos, etc. are highly visible.

• Traibility – It is a degree to which a product can be tried before adoption. This is muchless a problem with low cost items such as cold remedies but cellular phones, fax

machines and computers, etc. in actual use and tried on a limited scale.

• Perceived risk – The greater risk associated with trying a new product, slower thediffusion process. The risk in adopting an innovation can be financial, physical,

performance or social.

Q6. Explain how new culture acts as an ‘invisible hand’ that guides consumption related

attitudes, values and behaviour.



Ans: Culture is the sum total of learned beliefs, values, and customs that serve to regulate the

consumer behaviour of members of a particular society.

Offers order, direction, and guidance in all phases of human problem solving: When to eat,where to eat, what to eat for each meal, what to serve guests at a dinner party, picnic, or

wedding.

Aspects of Culture• Ecology: Way in which a system is adapted to its habitat.

Eg: The Japanese, greatly value products that are designed for efficient use of space

• Social Structure: Way in which orderly social life is maintained

Eg: nuclear family vs. extended family

• Ideology: Mental characteristics of people and way in which they relate to their

environment and social group.

A Theoretical Model of Cultures’ Influence on Behavior

Issues in Culture

Enculturation-The learning of one’s own culture.

Acculturation-The learning of a new or foreign culture.

Language and symbols

Without a common language, shared meaning could not exist

Marketers must choose appropriate symbols in advertising

Marketers can use “known” symbols for associations

• Rituals



Set of multiple, symbolic behaviours that occur in a fixed sequence and that tend to be

repeated periodically

Rituals extend over the human life cycle

Marketers realize that rituals often involve products (artefacts)

Selected Rituals and Associated Artefacts

The Measurement of Culture

Content Analysis-A method for systematically analyzing the content of verbal and/or

pictorial communication. The method is frequently used to determine prevailing social

values of a society.

SELECTED RITUALS TYPICAL ARTIFACTS

Wedding White gown

Birth of child U.S. Savings Bond, silver baby spoon

Birthday Card, present, cake with candles

50th Weddinganniversary

Catered party, card and gift, display of photos of the couple’s life together

Graduation Pen, U.S. Savings Bond, card, wristwatch

Valentine’s DayCandy, card, flowers

New Year’s EveChampagne, party, fancy dress

ThanksgivingPrepare a turkey meal for family and friends



Consumer Fieldwork - A cultural measurement technique that takes place within a

natural environment that focuses on observing behaviour (sometimes without the

subjects’ awareness).

Characteristics of Field Observation

Takes place within a natural environment

Performed sometimes without the subject’s awareness

Focuses on observation of behaviour

Value Measurement Instruments

Rokeach Value Survey (RVS): A self-administered inventory consisting of eighteen

“terminal” values (i.e., personal goals) and eighteen “instrumental” values (i.e., ways of

reaching personal goals).

List of Values (LOV): A value measurement instrument that asks consumers to identify

their two most important values from a nine-value list that is based on the terminal values

of the Rokeach Value Survey

Values and Lifestyles (VALS): A value measurement based on two categories: self-

definition and resources.

Q 7. Describe the various consumer decision rules that are used by consumers to facilitate

brand choice. Use suitable example to illustrate your answer.

Ans. Decision Rules

Branding is a marketing strategy that often functions as a heuristic. People form preferences for a

favorite brand, and then they literally may never change their minds in the course of a lifetime. A brand that exhibits that kind of staying power is treasured by marketers and for good reason. Brands

that dominate their markets are as much as 50 percent more profitable than their nearest competitors.

Consumer attachments to certain brands are so powerful that this loyalty is often considered as a positive product attribute in and of itself.

Consumer considers sets of products attributes by using different rules, depending on the complexityof the decision and the importance of the decision to them. In some cases these rules are quitesimple; People simply rely on a shortcut to make a choice. In other cases, though, more effort and

thought is put into carefully weighing alternatives before coming to a decision. However, the above

discussed rules help us increase our understanding of how consumers make decisions.

There are two approaches to making decisions:

1. Non-compensatory decision rules

2. Compensatory decision rules



NON-COMPENSATORY DECISION RULES

Simple decision rules are non-compensatory, meaning that a product with a low standing on oneattribute cannot make up for this position by being better on another attribute. In other words, people

simply eliminate all options that do not meet some basic standards. A consumer, who uses the

decision rule, would not consider a new brand, even if it was equal or superior to existing ones.When people are less familiar with a product category or are not very motivated to process complex

information, they tend to use simple, non-compensatory rules which are summarized below:

• Conjunctive Decision Rule - Following this rule, the consumer establishes minimum levels

of acceptability for each evaluative criterion (brand attributes) and selects one or more brands

that surpass these minimum performance levels. In effect, each evaluative criterion important tothe consumer will have a cut off point.

• Disjunctive Decision Rule - Consumers use disjunctive rules when they establish a

minimum acceptable performance level that each brand must meet. That is, all brands that meet

or exceed the minimum performance standard for any key attribute are viewed as acceptable.The decision rule will then be to choose the brand that beats others by the maximum margin with

regard to criterion selected

• Elimination-by-aspects Decision Rule - In this approach to decision-making, attributes are

first listed in terms of their importance and a cut off point for each criterion is established. Firstof all, the brands are evaluated on the most important criterion and the ones that do not exceed

the cut off point are dropped from further consideration. In case two or more brands exceed the

cut off point, the second most important criterion is compared on these brands. The processcontinues until only one brand emerges as meeting all the criteria.

• Lexicographic Decision Rule - In the lexicographic decision approach, consumers rank thecriteria in order of importance and select the brand that outperforms others on the most importantattribute. If a tie develops among two or more brands on this attribute, they are evaluated on the

second most important attribute. The process of attribute evaluation continues until only one

option emerges as the winner, outperforming all others.

In case of lexicographic rule, the highest ranked attribute often may reveal something about the

consumer's shopping orientation. For example, the consumer's "buy the best" approach mightindicate that the consumer places more value on quality.

This rule is similar to elimination-by-aspects approach except that it seeks maximum performance at

each stage unlike elimination-by-aspects process, which seeks satisfactory performance at each stageof evaluation.

COMPENSATORY DECISION RULES

A compensatory decision rule gives a product a chance to make up for its shortcomings.

Consumers who employ these rules tend to make up for its shortcomings. Consumers whoemploy these rules tend to be more involved in the purchase and thus are willing to exert the

effort to consider the entire picture in a more exacting way. Two basic types of compensatory

rules have been identified.



• Simple additive rule – Through this rule, consumer merely chooses the alternatives that

have the largest number of positive attributes. This choice is most likely to occur when one’sability or motivation to process information is limited.

• Weighted additive rule – In this, consumer also takes into account the relative

importance of positively rated attributes, essentially multiplying brand ratings by importanceweights.

Q 8. When would consumer behaviour researchers like to use qualitative research

techniques? Describe the major types of qualitative research techniques used by

researchers to gain consumers insights.

Ans. The early consumer researchers gave little thought to the impact of mood, emotion, or situation on consumer decisions. They believed that marketing was simply applied economics,

and that consumers were rational decision makers who objectively evaluated the goods and

services available to them and selected those that gave them the highest utility. Later on,

researchers realized that consumers were not always consciously ware of why they made thedecisions they did. Even they are not willing to disclose those reasons. So, the concept of

research is designed to search deep within the consumer’s psyche, consumer researcher’s todayuse two different types of research methodology to study consumer behaviour:

• Qualitative research

• Quantitative research

QUALITATIVE RESEARCH

Qualitative research is a method of inquiry appropriated in many different academic disciplines,

traditionally in the social sciences, but also in market research and further contexts. Qualitativeresearchers aim to gather an in-depth understanding of human behavior and the reasons thatgovern such behavior. The qualitative method investigates the why and how of decision making,

not just what , where, when.

Qualitative means a non-numerical data collection or explanation based on the attributes of the

graph or source of data

The role of Qualitative Research

Qualitative research tools are used primarily to define a problem and generate hypotheses. They

are often used as the prelude to quantitative research in order to identify determinants, anddevelop quantitative research designs. They can be better than quantitative research at probing

below the surface in order to understand what drives and motivates behaviour.

Because of the low number of respondents involved and the idiosyncratic nature of some datacollection methods (e.g. unstructured interviews), findings from qualitative marketing research

should be applied to larger populations with caution. They are however, very valuable for

exploring an issue and are used by almost all researchers at various points during large research

campaigns.



Qualitative research is often used for policy and program evaluation research since it can answer

certain important questions more efficiently and effectively than quantitative approaches. This is

particularly the case for understanding how and why certain outcomes were achieved (not justwhat was achieved) but also answering important questions about relevance, unintended effects

and impact of programs such as: Were expectations reasonable? Did processes operate as

expected? Were key players able to carry out their duties? Were there any unintended effects of the program? Qualitative approaches have the advantage of allowing for more diversity in

responses as well as the capacity to adapt to new developments or issues during the research

process itself. While qualitative research can be expensive and time-consuming to conduct, manyfields of research employ qualitative techniques that have been specifically developed to provide

more succinct, cost-efficient and timely results.

Qualitative research is used to gain insight into people's attitudes, behaviors, value systems,concerns, motivations, aspirations, culture or lifestyles. It’s used to inform business decisions,

policy formation, communication and research. Focus groups, in-depth interviews, content

analysis, ethnography, evaluation and semiotics are among the many formal approaches that are

used, but qualitative research also involves the analysis of any unstructured material, includingcustomer feedback forms, reports or media clips.

The main types of qualitative research are

1. Depth Interviews

• Interview is conducted one-on-one, and lasts between 30 and 60 minutes

• Best method for in-depth probing of personal opinions, beliefs, and values

• Very rich depth of information

• Very flexible

•

Probing is very useful at uncovering hidden issues• They are unstructured (or loosely structured)- this differentiates them from survey

interviews in which the same questions are asked to all respondents

• Can be time consuming and responses can be difficult to interpret• Requires skilled interviewers - expensive - interviewer bias can easily be

introduced

• There is no social pressure on respondents to conform and no group dynamics

• Start with general questions and rapport establishing questions, then proceed to

more purposive questions

• Laddering is a technique used by depth interviewers in which you start withquestions about external objects and external social phenomena, then proceed to

internal attitudes and feelings

• Hidden issue questioning is a technique used by depth interviewers in which theyconcentrate on deeply felt personal concerns and pet peeves

• Symbolic analysis is a technique used by depth interviewers in which deeper

symbolic meanings are probed by asking questions about their opposites

2. Focus Groups

• An interactive group discussion lead by a moderator

• Unstructured (or loosely structured) discussion where the moderator encourages

the free flow of ideas



• Usually 8 to 12 members in the group who fit the profile of the target group or

consumer but may consist of two interviewees (a dyad) or three interviewees (a

triad) or a lesser number of participants (known as a mini-group)

• Usually last for 1 to 2 hours

• Usually recorded on video/DVD

•

May be streamed via a closed streaming service for remote viewing of the proceedings

• The room usually has a large window with one-way glass - participants cannot see

out, but the researchers can see in

• Inexpensive and fast

• Can use computer and internet technology for on-line focus groups

• Respondents feel a group pressure to conform

• Group dynamics is useful in developing new streams of thought and covering anissue thoroughly.

3. Projective Techniques

• These are unstructured prompts or stimulus that encourage the respondent to project their underlying motivations, beliefs, attitudes, or feelings onto an

ambiguous situation

• They are all indirect techniques that attempt to disguise the purpose of the

research• Examples of projective techniques include:

o Word association - say the first word that comes to mind after hearing a

word - only some of the words in the list are test words that the researcher is interested in, the rest are fillers - is useful in testing brand names -

variants include chain word association and controlled word association

o Sentence completion - respondents are given incomplete sentences and

asked to complete them

o Story completion - respondents are given part of a story and are asked to

complete it

o Cartoon tests - pictures of cartoon characters are shown in a specific

situation and with dialogue balloons - one of the dialogue balloons is

empty and the respondent is asked to fill it ino Thematic apperception tests - respondents are shown a picture (or series of

pictures) and asked to make up a story about the picture(s)

o Role playing - respondents are asked to play the role of someone else -

researchers assume that subjects will project their own feelings or behaviours into the role

o Third-person technique - a verbal or visual representation of an

individual and his/her situation is presented to the respondent - therespondent is asked to relate the attitudes or feelings of that person -

researchers assume that talking in the third person will minimize the social

pressure to give standard or politically correct responses



4. Random Probability Sampling

• This type of qualitative research conducts random interviews within a defined

universe, e.g. a city- to understand consumer behavior beyond basic age-gender variables.

•

Examples of random sample interviewing include telephone interviewing,mailing-questionnaire's/booklets, personal interviewing,

• Consumer response for this type of qualitative research could be product usage; personal opinion, events and activities consumers participate in.

• One key benefit of the random probability sampling technique is the ability to

project your results as they are reflected back to or representative of your universe. For example how many consumers in a city are republican, democrats,

independent, or indifferent?

5. Observational Research

One of the more fundamental uses of qualitative research understands fundamental consumer behaviour through Observational research. The roots for this come from Anthropological studies

where trained researchers went to observe tribes / cultures / societies - for periods as long as a

couple of years.

Nowadays, this kind of research is being supplemented by more cutting edge fields like neuro-science where the observation is accompanied by measuring brain activity. This is under the

assumption that very often our brain reacts without us even knowing it and asking questions or

pure observation by themselves are not enough to really pinpoint what goes on.

Culture is a problematic issue for many marketers since it is inherently nebulous and often

difficult to understand. One may violate the cultural norms of another country without beinginformed of this, and people from different cultures may feel uncomfortable in each other’s

presence without knowing exactly why (for example, two speakers may unconsciously continueto attempt to adjust to reach an incompatible preferred interpersonal distance).

Q9. Write short notes on any two:

(a) Perceptual organization:

Ans: People do not perceive the numerous stimuli they receive from the environment as

different; rather they tend to organize them into groups and perceive them as unified wholes. 3 of

the most basic principles of perceptual organization are:

Figure and Ground Stimuli that contrast with their environment are more likely to be noticed. The figure is perceived

more clearly because in contrast to its ground, it appears to be well defined, solid and in the

forefront. The ground is usually perceived as indefinite, hazy and continuous. Marketers use theconcept of ‘product placement’ or ‘branded entertainment’ to use this principle.

Grouping

Individuals tend to group stimuli so that they form a unified picture or impression, as it facilitatesmemorizing and recalling. Marketers use grouping to imply certain desired meanings in

connection to their products. For e.g. an ad for tea may show a young couple sipping tea in a

beautiful room. The overall mood implied leads the consumer to associate the drinking of teawith romance and fine living.



Closure

Individuals express this need by organizing their perceptions so that they form a complete

picture. Incomplete pictures are better remembered. An individual who begins a task develops aneed to complete it. If he or she is prevented from this he develops a state of tension that

manifests itself in improved memory for the incomplete task. This has interesting implications

for marketers.

(b) Engel- Blackwell- Miniard Model

This model was created to describe the increasing, fast-growing body of knowledge

concerning consumer behavior. This model, like in other models, has gone through many



revisions to improve its descriptive ability of the basic relationships between components

and sub-components; this model consists also of four stages;

First stage: decision-process stages

The central focus of the model is on five basic decision-process stages: Problem

recognition, search for alternatives, alternate evaluation (during which beliefs may lead to

the formation of attitudes, which in turn may result in a purchase intention) purchase, and

outcomes. But it is not necessary for every consumer to go through all these stages; it

depends on whether it is an extended or a routine problem-solving behavior.

Second stage: Information input

At this stage the consumer gets information from marketing and non-marketing sources,

which also influence the problem recognition stage of the decision-making process. If the

consumer still does not arrive to a specific decision, the search for external information

will be activated in order to arrive to a choice or in some cases if the consumer experience

dissonance because the selected alternative is less satisfactory than expected.

Third stage: information processing

This stage consists of the consumer’s exposure, attention, perception, acceptance, and

retention of incoming information. The consumer must first be exposed to the message,

allocate space for this information, interpret the stimuli, and retain the message by

transferring the input to long-term memory.

Fourth stage: variables influencing the decision process

This stage consists of individual and environmental influences that affect all five stages of

the decision process. Individual characteristics include motives, values, lifestyle, and

personality; the social influences are culture, reference groups, and family. Situational

influences, such as a consumer’s financial condition, also influence the decision process.

This model incorporates many items, which influence consumer decision-making such as

values, lifestyle, personality and culture. The model did not show what factors shape these

items, and why different types of personality can produce different decision-making? How

will we apply these values to cope with different personalities? Religion can explain some

behavioral characteristics of the consumer, and this will lead to better understanding of the

model and will give more comprehensive view on decision-making.



(c) Online Consumer Behavior

Ans: Online consumer behavior is a broad area of study that can benefit organizations in their

efforts to market and sell products online. Internet is a new information technology device thathas dramatically changed the way we live. With,

a. Abundance and diversity of information,

b. Easily found and conveniently shared facilities, internet use has grown exponentiallyreshaping peoples’ informational and social needs.

As Internet usage rapidly grew and spread across the country, it fuelled the growth of Internet

commerce. The term “Internet Commerce” refers to online transactions where an organizationsells its products or services to consumers over the Internet.

It provides both organizations and consumers, with endless options to choose from various

transactions.

Factors that affect online consumer behavior are:

Price of product/service

Quality of service

Speed and relevance of information about the product

Reliability of delivery

Ease of on-line ordering

Trust towards vendors

There are however some concerns that need to be addressed. Some of them are:I. Security of transactions,

II. customer support,

III. quality of products/services,

IV. legitimacy of firm selling product/ service

V. price,

VI. privacy, and

VII. documentation

The challenges faced are the following 5 C’s:

Company

◦ Employee growth rate: higher in the infrastructure segment, lower in the

intermediary segment

◦ Decreased employee productivity due to Web surfing

Channel



◦ The Internet as a distribution channel

◦ Infomediaries: Manage the transmission of distribution-related information

Consumer

◦ Lower search costs Empowered consumers

(Market) Condition

◦ Marketing activities more directly affected by the environmental factors such as

technology and public policy.

Competition

◦ Internet Time Shorter product cycles & Decreased product differentiation

◦ Strategic alliances rather than zero-sum approaches (eg. AOL & Time Warner

merger)

◦ Same product & different means of consumption (eg. E*TRADE vs. Merrill

Lynch)



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Documents

Model Test Paper- CB