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Consumer Behavior Study Material For MBA
Consumer Behavior Study Material For MBA
INTRODUCTION
CONCEPTS OF CONSUMER BEHAVIOUR:
Definition:
Consumer behaviour is defined, as a behaviour that consumers display in
searching for, purchasing, using, evaluating and disposing of products and services that
they expect will satisfy their needs.
- Schiffman
Observable activities chosen to maximize satisfaction through attainment of
economic goods and services such as choice of retail outlet, preference of particular
brands and so on.
- Dictionary of marketing and advertising
The decision process and physical activity individual engage in when evaluating,
acquiring, using or disposing of goods and services.
- Loudon & Della Bitta
Types of consumers:
Personal consumers
Organizational consumers
What is consumer behaviour?
Obtaining - purchase/ receipt of product
Consuming - how, where, when and under what circumstances use product
Disposing - get rid
Consumer behaviour roles:
Initiator: Individual who determines that some needs or want is not being met
and authorizes to rectify the situation.
Influencer: Individual who intentionally or unintentionally influence the
purchase decision.
Buyer: Individual who actually make the purchase transaction.
User: Individual who directly consume the product.
Importance of studying consumer behaviour:
Consumer is the king.
Consumers do not always act or react as the theory suggest.
Consumer preferences are changing and become highly diversified.
Consumer dislikes identical product and prefer differential products.
Segmenting the market to cater the special needs of consumers.
Rapid introduction of new products with technological advancement
O
Model of consumer behaviour:
Feedback to consumer
Individual
Consumer
Environmental
Influence
Consumer
Decision Making
Consumer
Response
Feedback to environment
Price
Place
Promotion
Physiological needs:
Basic level of human needs.
This need is required to sustain biological life.
This need is also called as biogenic need or physical need.
Ads for products and services that promote physical health is an appeal to
this level of the need hierarchy.
Eg: need for food, water, shelter, clothing, etc.
Safety and security needs:
Once the first level is satisfied this need become the driving force for
human behavior.
Focus on tomorrows life.
Eg: savings account, insurance policies, education, etc.
Social needs:
This level satisfies the need for human relationship.
Ads of personal care products appeal to this need.
Ego needs:
Self-actualization needs:
This need refers to individual desire to fulfill his or her potential or fully
exploiting ones potential.
Only few satisfy this need.
Eg: Player working single-mindedly for many years to excel in his sports.
Evaluation and marketing application:
It has received wide acceptance in various social discipline.
Problems:
It cannot be tested empirically.
No way to measure precisely how satisfied one level of need before the
next higher level become operative.
Useful tool to the marketer as well.
Marketing application:
Helps marketer to focus the advertisement appeal to the need level shared
by large segment.
Facilitate product positioning and repositioning.
Trio of needs:
Need for affiliation:
It is a social motive and it influences consumer behaviour.
Based on the desire for friendship,for acceptance,etc.
People with high affiliation needs are socially dependent on others.
Need for power:
This relate to individual desire to control his or her environment, to
control other persons,etc.
It is related to ego needs.
Need for achievement:
People with high achievement need regard personal accomplishment as an
end in itself.
They are more self-confident and risk-taking.
It is related to both ego need and self-actualization need.
MOTIVATION
Definition:
Motivation is a driving force within an individual that impels them to action.
Model of motivation:
This model portrays motivation as a state of need induced tension that drives the
individual to engage in behaviour that he or she believes will satisfy the need and thus
reduce the tension.
Learning
Learning
Needs
Needswants,
wants,
and
desires
and desires
Tension
Tension
Drive
Drive
Behavior
Behavior
Cognitiv
Cognitiv
ee
processes
processes
Tension
Tension
reduction
reduction
Goal
Goaloror
need
need
fulfillfulfillment
ment
Arousal of motives:
Four arousal of motives are:
Physiological arousal
Emotional arousal
Cognitive arousal
Environmental arousal
Physiological arousal:
Physiological cues are involuntary and it cause uncomfortable tension.
Eg: stomach contraction will trigger awareness of a hunger need.
Emotional arousal:
Autistic thinking(Daydreaming) arouse emotional need and drive them
into goal oriented behaiour.
Nature of personality:
Personality reflects individual difference:
Individual personality are unique combination of factors so no individuals
are alike.
Many individuals may be similar in terms of single personality
characteristic which help marketers to categorize consumers into different
groups and identify their market segment.
Personality is consistent and enduring:
Personality has both consistency and endurance.
Personality can change:
Some major life events and gradual maturing process changes the
personality.
Theories of personality:
Personality theories are:
Freudian theory.
Neo-Freudian theory.
Trait theory.
Freudian theory:
This theory is proposed by Sigmund Freuds.
This theory is built on the premises Unconscious needs or drives are at
the heart of human motivation.
Human personality consist of 3 interacting systems:
o Id
o Superego
o Ego
Id:
Warehouse of primitive or instinctual needs for which individual seeks immediate
satisfaction. Eg: hunger, thirst, etc.
Superego:
Individuals internal expression of societys moral and ethical codes of conduct.
It sees whether individual satisfies the need in the socially acceptable fashion.
Ego:
Individuals conscious control that balances the demands of the id and superego
Neo-Freudian personality theory:
Social relationships are fundamental to the formation and development of
personality.
Three personality group of individuals are:
o Compliant individuals: those who move towards others.
o Aggressive individuals: those who move against others.
o Detached individuals: those who move away from others.
Trait Theory:
This theory is a quantitative measure.
Personality theory with a focus on psychological characteristics
Trait - any distinguishing, relatively enduring way in which one individual
differs from another
Personality is linked to how consumers make their choices or to
consumption of a broad product category - not a specific brand.
The traits that are measured are:
o Consumer innovativeness: how receptive a person is to a new
experience.
o Consumer materialism:: the degree of consumer attachment to a
wordly possession.
o Consumer ethnocentrism: the consumers likelihood to accept or
reject foreign made products
Consumer innovativeness:
How receptive a person is to a new experience.
Consumer innovators are the first to try new product.
Examples:
Volvo - safety
Perdue - freshness
Nike - the athlete
BMW - performance
Levis 501 - dependable and rugged
Brand personification:
Associating a human-like character to a brand is called as brand
personification.
Eg: dishwashing liquid demanding task master.
Product personality and gender:
Associating a product or brand with a gender.
Eg: Mr.coffee masculine personality.
Bath soap feminine personality.
Product personality and geography:
Certain product possess strong geographical association.
Eg: salem jasmine.
Personality and color:
Associating product personality with color.
Eg: coca-cola with red connotes excitement.
CONSUMER PERCEPTION
Definition:
The process by which an individual selects, organizes, and interprets stimuli into a
meaningful and coherent picture of the world. [How we see the world around us]
Elements of perception:
The elements of perception are:
Sensation
Absolute threshold
Differential threshold
Subliminal perception
Sensation:
o Sensation is the immediate and direct response of the sensory organs to
stimuli.
o Stimulus or stimuli is any unit of input to any of the senses. e.g.: ads,
brand name, etc.
o Sensory receptors are human organs like eyes, nose, ears, mouth and skin.
o A perfectly unchanging environment provides little or no sensation at all.
E.g.: honking horn is never noticed in heavy traffic.
Absolute threshold:
o The lowest level at which an individual can experience a sensation is
called the absolute threshold.
o The point at which a person can detect a difference between something &
nothing.
o Eg: the distance at which the driver can note a specific billboard on a
highway.
o Sensory adaptation is getting used to certain sensations so advertisers try
to change their advertisement campaigns regularly.
Differential threshold:
o The minimal difference that can be detected between two similar stimuli is
called the differential threshold or just noticeable difference(j.n.d).
o Webers law is the theory concerning the perceived differentiation
between similar stimuli of varying intensities.
o Webers law states that stronger the initial stimulus, the greater the
additional intensity needed for the second stimulus to be perceived as
different.
o Eg: Increase of 25 cent to a orange juice worth$5.50 is not
noticeable(below j.n.d) but same increase of 25 cent to a gasoline is
quickly noticed by the consumer(above j.n.d)
o Marketing Applications of the JND
o :
o Marketers use this concept for the following reasons:
o Negative change is not noticed by the consumers (below j.n.d).eg:
reduction in product size or quality
o Product improvement is noticed by the consumers (above j.n.d).eg:
improved packing , lower price, etc.
Subliminal perception
:
o Perception of very weak or rapid stimuli received below the level of
conscious awareness is called as subliminal perception.
o Perception of stimuli that are above the level of conscious awareness is
called as supraliminal perception or perception.
Model or process of perception:
Dynamics of perception:
Perception is the result of two kinds of input:
Physical stimuli from outside world
Based on previous experience of individual
Stimulus are selected, organized & interpreted in line with their needs and
wants
.
Three aspects of perception are:
Perceptual selection.
Perceptual organization.
Perceptual interpretation.
Perceptual selection:
Consumers subconsciously exercise a great deal of selectivity in the
environment.
e.g: women in a supermarket gets exposed to numerous stimuli but select
the item she needs and leave because she exercise selectivity in
perception.
Stimuli get selected depends on two major factors:
Consumers previous experience
Consumers motives at that time
Factors for the stimulus to be perceived or selected:
Nature of the stimulus:
Marketing stimuli includes a number of variables that effect
perception like brand name, ad, package design, etc.
The variables should be attention-compelling to get selected.
Eg: contract in package, poster like ads in magazines, etc
Expectations:
People see what they expect to see and they expect to see is based
on familiarity, previous experience and
expectations(preconditioned set).
Eg: when a person expect the movie to be terrifying will find it so.
Motives:
People tend to perceive the things they need or want.
Concepts Concerning Selective Perception
:
Concepts Concerning Selective Perception
are:
Selective Exposure
Selective Attention
Perceptual Defense
Perceptual Blocking
Selective Exposure:
Consumers view messages that are pleasant and sympathetic and avoid
painful or threatening one.
Selective Attention:
Consumer exhibit high awareness for the stimuli that meet their needs
and lo awareness for stimuli that are irrelevant.
Perceptual Defense:
Consumers subconsciously avoid stimuli that are psychologically
threatening.
Perceptual Blocking:
Consumers are bombarded with numerous stimuli and they block from
conscious awareness.
Perceptual organization:
Perceptual organization principles are based on gesalt psychology.
People do not experience the numerous stumili as separate instead they
perceive them as unified whole.
The basic principles are:
Figure and ground
Grouping
Closure
Figure and ground:
Stimuli that contrast with their environment are more likely to be
noticed.
Eg: Lufthansa ad featured a jet flying between two glass high-rise
building.
Grouping:
Consumers group the stimuli to form a unified picture and
facilitate their memory.
Grouping is advantageous to the marketer to associate a meaning
for their product.
Eg:ad for tea which shows a couple associate tea drinking with
romance and fine living.
Closure:
Incomplete message are better remembered than complete ones.
Perceptual interpretation:
The interpretation of stumili is uniquely individual.
Influences of Perceptual Distortion:
o Physical Appearances
o Stereotypes
o First Impressions
o Jumping to Conclusions
o Halo Effect
Physical Appearances:
People tend to attribute the quality of the product based on the
qualities of personality featuring in the ad.
Attractive models are perceived to have more expertise regarding
enhancing product(jewelry) and problem solving products(product to
avoid dandruff).
Stereotypes:
People tend to form their own picture in their mind for various stimuli.
First Impressions:
First impression is ever lasting and it is the challenge for the marketer
to form so.
Jumping to Conclusions:
Consumer jump to conclusion before examining all the complete
evidence.
E.g.: hearing the first line of ad consumer draw conclusion about
the product.
Halo Effect:
Evaluation of multiple objects on the basis of the evaluation of just one
dimension.
CONSUMER LEARNING:
Definition:
Consumer learning is the process by which individuals acquire the purchase and
consumption knowledge and experience that they apply to future related behaviour.
Importance of Learning:
Marketers must teach consumers:
where to buy
how to use
how to maintain
how to dispose of products
Types or process of learning:
Two types are:
Intentional learning: acquired as a result of careful search.
Incidental learning: acquired by accident without much effort.
Elements of Learning Theories:
Motivation
Cues
Response
Reinforcement
Learning theories:
Behavioural learning theories
Cognitive learning theories
Unconditioned Stimulus
Meat paste
Unconditioned Response
Salivation
Conditioned Stimulus
Bell
Conditioned Stimulus
AFTER REPEATED
PAIRINGS
Bell
Conditioned Response
Salivation
Stimulus Generalization:
The inability to perceive differences between slightly dissimilar stimuli.
Imitative Me-too product succeed in the market place because of this.
Stimulus generalization helps marketer for:
Product line extension.
Product form extension.
Product category extension.
Family branding.
Licensing.
Stimulus Discrimination:
The ability to select a specific stimulus from among similar stimuli because of
perceived differences is called as stimulus discrimination
Positioning: the image or position that the product or service holds in the mind of
consumer is critical for its success.
Product differentiation: this strategy is designed to distinguish a product or brand
from its competitors on the basis of attribute that is relevant and valuable to the
consumers.
Instrumental or operant conditioning:
B.F.Skinner, American psychologist developed this theory.
Consumers learn by means of trial and error process in which some purchase
behaviors result in more favorable outcomes (rewards) than other purchase behaviors.
A favorable experience in instrumental is teaching the individual to repeat a
specific behavior.
It is helpful in complex goal oriented activity.
Rat kept in skinner box experiment.
Reinforcement of behaviour:
Positive Reinforcement: Positive outcomes that strengthen the likelihood of a
specific response
Example: Ad showing beautiful hair as a reinforcement to buy shampoo
Negative Reinforcement: Unpleasant or negative outcomes that serve to
encourage a specific behavior
Example: Ad showing wrinkled skin as reinforcement to buy skin cream.
Strategic application of Instrumental Conditioning:
Customer Satisfaction (Reinforcement)
Reinforcement Schedules
Shaping
Massed versus Distributed Learning
Observational Learning
A process by which individuals observe the behavior of others and consequences
of such behavior. Also known as modeling or vicarious learning.
Sensor
y Store
Rehearsal
Forgotten;
lost
Workin
g
Memor
y
(Shortterm
Long
-term
Store
Encoding
Forgotten;
lost
Retention:
Information is stored in long-term memory
Episodically: by the order in which it is acquired
Semantically: according to significant concepts.
Models of cognitive learning:
Retrieval
Forgotten;
unavailable
Involvement theory:
It is also called as split-brain theory and is developed from the research stream
called hemispheral lateralization.
Involvement theory of consumer learning postulates that consumers engage in a
range of information processing activity from extensive to limited problem solving,
depending on the relevance of the purchase.
Left hemisphere of the brain is responsible for cognitive activities and it is
rational, active and realistic.
Right hemisphere of the brain is concerned with nonverbal, pictorial information
and it is emotional,implusive and intuitive
Issues in Involvement Theory
Involvement Theory and Media Strategy
Involvement Theory and Consumer Relevance
Central and Peripheral Routes to Persuasion
Measures of Involvement
Involvement theory and media strategy:
Right brain:
Individual passively process information in right brain with low involvement so
repetition produces a change in consumer behaviour (eg: product purchase) which intern
change the attitude of the consumer.
Consistent with classical conditioning.
Central
HIGH
Route
Involvement
Peripheral
LOW
Route
Message
Arguments
Influence
Attitudes
Peripheral
Cues
Influence
Attitudes
Cognitive Component:
The knowledge and perceptions that are acquired by a combination of direct
experience with the attitude object and related information from various sources.
This knowledge and perception take the form of belief.
Affective Component:
A consumers emotions or feelings about a particular product or brand.
Conative Component
Consumers purchase new product that are associated with the favourably know
brand (ie the brand name towards which the consumer already have favourable attitude).
Experience:
Attitudes follow purchase and consumption of a product.
Sometimes consumer try new brand and they form favourable attitude towards it
if it gives satisfactory experience.
Information:
When consumers try to satisfy their needs they form the attitude about the product
based on the information exposure of that product.
Sources of influence on attitude formation:
Four main sources are:
Personal experience.
Influence of family and friends.
Direct marketing.
Mass media.
Personality factors:
Personality plays a role in attitude formation.
Eg: individual with high need for cognition form positive attitude towards ad that
are rich with information and viceversa.
Strategies of Attitude Change:
Changing the basic motivational function:
Utilitarian function.
Ego-defensive function.
Value-expressive function.
Knowledge-expressive function.
Associating the product with special group, event or cause.
Resolving two conflicting attitudes.
Altering components of multiattribute model.
Change brand belief
Improve your brand rating
Add attribute
Change the relative evaluation of attribute
Changing belief about competitors brand.
Behavior precede or follow attitude formation:
Cognitive dissonance theory:
According to cognitive dissonance theory discomfort or dissonance occurs when
a consumer holds conflicting thoughts about a belief or an attitude object.
When cognitive dissonance occurs after purchase it is called as post purchase
dissonance.
Tactics to overcome post purchase dissonance:
Rationalize the decision being wise.
Sender
Receiver
Medium
Message
Feedback
Communication process:
Message initiator(source).
Target audience(receiver).
Feedback(receivers response).
Designing persuasive communication:
Communication strategy:
Establish communication objective. E.g.: promoting sales of a product.
Perception, experience and memory are the factors of persuasion.
Target audience:
Identify appropriate audience and segment them to identify target group to
develop a particular message strategy.
Media strategy:
Placement of ad in the specific media is important for success of the message.
Message strategy:
Message is a thought, idea, image or attitude..
Sender should analyze the target audience personal characteristic like
education, needs, interest, etc to design a effective message.
Message structure and presentation:
Resonance:
It is defined as a wordplay, often used to create double meaning.
Eg: Pepsis slogan hit the beach topless next to Pepsi bottle cap lying in the
sand.
Message framing:
Positive Message framing: stress the benefit of using specific product.
Negative Message framing: stress the benefit to be lost of not using specific
product.
Comparative ad:
Ad for a particular brand that says the advantage of their product and
disadvantage of the competitors product
Order effects:
Primary effect
Recency effect
Repetition:
Repetition aids in retention.
UNIT III
CONSUMERS IN THEIR SOCIAL AND CULTURAL SETTINGS
GROUP DYNAMICS AND CONSUMER REFERENCE GROUPS:
Group:
Group may be defined as two or more people who interact to accomplish either
individual or mutual goals.
Classification of groups:
Households:
Family Households:
Married couple,
Nuclear family,
Extended family
Households
Non-Family Households:
Unmarried couples,
Friends/ Roommates,
Boarders
Types of families:
Married couple: a husband and a wife.
Nuclear family: A husband and wife and one or more children.
Extended family: a husband, wife, children and atleast one grandparent.
Single-parent family: one parent and atleast one child.
Consumer socialization:
The process by which children acquire the skills, knowledge, and attitudes
necessary to function as consumers.
Socialization begins in early childhood and extends throughout a persons
entire life.
Model of socialization (slide)
Consumer socialization of children:
examples
Indian, American
Hindu, Muslim
Northeast, Midwest
Tamilian, keralite
Age
Gender
Occupation
Social class
Nationality subculture:
Nationality is an important subcultural reference that guides in what customer
value and what they buy.
Hispanic subculture:
Traditional Characteristics of the Hispanic American Market:
Prefer well-known brands.
Buy brands perceived to be more prestigious.
Are fashion conscious.
Historically prefer to shop at smaller personal stores.
Buy brands advertised by their ethnic-group stores.
Tend not to be impulsive buyers
.
Increasingly clipping and using cents-off coupons.
Likely to buy what their parent brought.
Prefer fresh to frozen or prepared items.
Religious Subcultures
200+ organized religious groups in the U.S.
Primary organized faiths include:
Protestant denominations
Roman Catholicism
Judaism
Consumers purchase decision are influenced by their religious identity.
Consumer Behavior is directly affected by religion in terms of products that are
symbolically and ritualistically associated with the celebration of religious holidays.
Eg: Christmas has become a gift-purchasing season of the year.
Geographic and Regional subculture:
Individuals have the sense of regional identification and they use this
identification to as a way of describing others.
Many regional differences exist in consumption behavior
Westerners have a mug of black coffee
Easterners have a cup of coffee with milk and sugar
White bread is preferred in the South and Midwest
Rye and whole wheat are preferred on the East and West coasts.
Racial subculture:
African-American Consumer
Largest racial minority in U.S.
PRODUCT
STRATEGY
COMMUNICATON
STRATEGY
STANDARDIZED
COMMUNICATIONS
LOCALIZED
COMMUNICATIONS
STANDARDIZED
PRODUCT
Global strategy:
Uniform Product/ Uniform
Message
Mixed Strategy:
Uniform Product/
Customized Message
LOCALIZED
PRODUCT
Mixed strategy:
Customized Product/
Uniform Message
Local Strategy:
Customized Product/
Customized Message
Product Problems
Promotional Problems
Pricing and Distribution Problems
Product Problems:
Sometimes marketers neglect to modify their products to meet local customs and
taste.
Eg: Snapple failed because Japanese consumers preferred clear, less sweet iced
tea but it is unwilling or too slow to alter its ingredients.
Colour is a critical variable because it has different meaning in different culture.
Eg: Meanings of Blue:
Holland - warmth
Iran - death
Sweden - coldness
India - purity
Promotional problem:
The promotional message must be consistent with the language and customs of
the particular target society.
Pricing and Distribution Problems:
Pricing and Distribution Policies should meet the local economic condition and
customs of the target market.
Eg: in many nations small sized product packages are necessary because
consumers are not affordable for larger packs.
SOCIAL CLASS CULTURAL ASPECTS:
Definition:
Social class is defined as the division of members of a society into a hierarchy of
distinct status classes, so that members of each class have relatively the same status and
members of all other classes have either more or less status.
Social class and social status:
Social class is measured in terms of social status.
Social stratification: Social status is frequently thought of as the relatively
rankings of members of each social class in terms of specific status factors.
Status factors are wealth, power and prestige.
Social comparison theory: individuals quite normally compare their own material
possession with those owned by others in order to determine their relative social standing.
Status and consumer purchasing power are related, individuals with more
purchasing power have more status.
Status consumption: The process by which consumers endeavor to increase their
social standing through conspicuous consumption or possession.
Socioeconomic variables as expression of status are family income, occupational
status and educational attainment.
Upper class consumers are more future oriented and invest in insurance, stocks
and real estates.
Lower class consumers seeks immediate gratification and are interested in safety
and security.
Lower class purchaser use credit cards to buy now and pay later.
Upper class consumers use credit card as a substitute for money.
CULTURE:( (slide)
Definition:
The sum total of learned beliefs, values, and customs that serve to regulate the
consumer behavior of members of a particular society
Culture satisfies needs:
Culture exist to satisfy the needs of the people within a society.
Culture 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.
Culture is learned:
3 forms of cultural learning are:
Formal learning: the elders of the family teach a young family member
how to behave.
Informal learning: child learns by imitating the behaviour of friends or
family members.
Technical learning: teacher instructs a child in educational settings to
behave in a certain manner.
Issues in culture:
Enculturation and acculturation
Language and symbols
Ritual
Sharing of Culture
Enculturation and acculturation:
The learning of ones own culture is known as enculturation.
The learning of a new foreign culture is known as acculturation.
Language and symbols:
Members of common culture share common language for efficient
communication.
Symbol is anything that stands for something else.
Marketers use verbal or non-verbal symbols to convey desired product images.
Verbal symbols are ad in magazine or TV announcements.
Nonverbal symbols are figures, colors, shapes, etc.
Ritual:
Ritual is a type of symbolic activity consisting of a series of steps occurring in a
fixed sequence and repeated overtime.
Sharing of Culture:
Culture is viewed as a group customs that link together the members of a society.
Other institutions, which share the responsibility of cultural transfer, are:
educational institution and houses of worship.
Measurement of culture:
Content Analysis
Consumer Fieldwork
Value Measurement Instruments
Content Analysis
Content analysis is a
method for systematically analyzing the content of verbal, written and pictorial
communication.
The method is frequently used to determine prevailing social values of a society.
Consumer Fieldwork:
A cultural measurement technique that takes place within a natural environment that
focuses on observing behavior (sometimes without the subjects awareness).
Characteristics of Field Observation
Takes place within a natural environment
Performed sometimes without the subjects awareness
Focuses on observation of behavior
Participant-Observers
:
Researchers who participate in the environment that they are studying without notifying
those who are being observed.
Value Measurement Survey 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.
UNIT IV
CONSUMER DECISION PROCESS AND POST-PURCHASE
BEHAVIOUR
PERSONAL INFLUENCE AND OPINION LEADERSHIP:
Definition:
Opinion leadership is the process by which one person (the opinion leader)
informally influences the consumption actions or attitudes of others who may be opinion
seekers or opinion recipients.
Elements of opinion leadership:
Opinion
Opinion
Leader Opinion Receiver
Seeker
OPINION LEADERSHIP
MEASUREMENT
METHOD
DESCRIPTION OF METHOD
SAMPLE
QUESTIONS ASKED
SELF-DESIGNATING
METHOD
Do you influence
other people in their
selection of
products?
SOCIOMETRIC
METHOD
Whom do you
ask?Who asks you
for info about that
product category?
OPINION
LEADERSHIP
MEASUREMENT
METHOD
KEY INFORMANT
METHOD
OBJECTIVE
METHOD
DESCRIPTION OF METHOD
SAMPLE
QUESTIONS ASKE
Step 1
Mass
Media
Step 2
Opinion
Leaders
Opinion
Receivers
(the
masses)
Multistep Flow:
A revision of the traditional two-step theory that shows multiple communication
flows.
Opinion leaders both influence and are influenced by opinion receivers.
Firm-oriented definitions
Product-oriented definitions
Market-oriented definitions
Consumer-oriented definitions
Firm-oriented definitions:
This approach defines a product as new when the company produces it or markets
it for the first time.
Product-oriented definitions:
This approach defines the newness of the product based on the feature inherent in
the product and on the effect these features are likely to have on consumers.
Market-oriented definitions:
This approach defines the newness of the product in terms of how much exposure
consumers have to the new products.
Consumer-oriented definitions:
Consumer-oriented approach a new product is any product that a potential
consumers judges to be new.
The channels of communication:
Communication channels helps in spreading the innovation to the target market.
Some of the sources of communication are:
Word-of-mouth communication.
Impersonal sources (advertising and editorial matters)
Interpersonal sources (salespeople and informal opinion leaders)
The social system:
A social system is a physical, social or cultural environment to which people
belong and within which they function.
Eg: for a new hybrid seed corn the social system is all the farmers.
Time:
Time is a backbone of diffusion process.
Three aspects under this are:
The amount of purchase time
The identification of adopter categories
The rate of adoption
Purchase time:
Purchase time is the amount of time that elapses between consumers initial
awareness of a new product and point at which they purchase or reject it.
This gives information about the total time taken by the new product to achieve
widespread adoption.
Adopters categories:
A sequence of categories that describes how early (or late) a consumer adopts a
new product in relation to other adopters.
Adopter categories are:
Innovators:
Venturesome
Very eager to try new ideas
Acceptable if risk is daring
More cosmopolite social relationships
Communicates with other innovators
Early Adopters:
Respected
More integrated into the local social system
The persons to check with before adopting a new idea
Category contains greatest number of opinion leaders
Are role models
Early Majority:
Deliberate
Adopt new ideas just prior to the average time
Seldom hold leadership positions
Deliberate for some time before adopting
Late Majority:
Skeptical
Adopt new ideas just after the average time
Adopting may be both an economic necessity and a reaction to
peer pressures
Innovations approached cautiously
Laggards
:
Traditional
The last people to adopt an innovation
Most localite in outlook
Oriented to the past
Suspicious of the new
Rate of adoption:
The time taken by a new product to get adopted to the members of social system.
Marketers adopts two types of policy to increase the adoption rate:
Penetration policy
Skimming policy
Adoption Process
:
NAME OF
STAGE
EXAMPLE
Awareness
Interest
Evaluation
Once the purchase habits are formed then consumers always search and buy the
same brand in spite of its availability.
Brand loyalty:
Factors influencing brand loyalty:
In addition to satisfaction with the purchase experience there are several other
factors that influence brand loyalty.
Number of brands available: the smaller the numbers of brands available
customers are more likely to be brand loyal.
Frequency of purchase: the more frequently customers purchase a product the
most likely they are brand loyal.
Perceived difference among brands: if the customers perceive significant
difference among brands they tend to be brand loyal.
Level of involvement: customers remain loyal to high involvement products than
low involvement products.
Level of perceived risk: brand loyalty is high when the level of perceived risk
associated with the choice is high.
Brand benefits: when customer needs are satisfied by a particular brand then it
gains loyalty.
Negative post purchase behaviour:
Negative post purchase behaviour effect the future sales of the product and some
times damages the reputation of the firm.
Negative post purchase behaviour takes several forms such as:
Negative word-of-mouth: consumers express their dissatisfaction with the
purchase to others.
Rumor: rumors are not only negative information but also untrue
information about products and brands. Some rumors are unintentional but some
are purposely constructed and voiced to do damage.
Complaint behaviour: dissatisfied consumers respond in one of the three
ways.
No action
Private action: warn family and friends or decide not to buy.
Public action: seek redress from firm, complaint to government
agency or take legal action to obtain redress.
CONSUMER EXPECTATION AND SATISFACTION:
Customer satisfaction is the individuals perception of the performance of the
product or service in relation to his expectation.
Customer satisfaction is the function of customer expectations.
Customer experience < expectation = Dissatisfied consumer
Customer experience = expectation = Satisfied Consumer
Customer experience > expectation = Delighted consumer
Link between customer satisfaction and customer behaviour identifies different
types of customers. They are:
Satisfaction
Expectation
Perceived
Performance
Dissatisfaction
UNIT V
ADDITIONAL DIMENSIONS
CONSUMERISM:
Definition:
Consumerism is defined as social force designed to protect consumers interests in
the marketplace by organizing and exerting consumer pressure on business.
Roots of consumerism/ problems that underlie consumer moments:
Disillusionment with the system: consumers feel their bargaining position is
weakening.
Dissatisfaction with the quality of goods and services: the quality of the product is
below their expected level.
Consumer information gap: because of time pressure consumers are not able to
collect information so they fail to consume the best.
Anti-advertisement attitude: Ads are sometimes the source of unrealistic
information, irrational facts or brain washing.
Fall in standard of living: the real purchasing power of the consumers is getting
eroded.
Government:
Government protects the consumer against exploitation through its interventions.
Consumers:
Consumers should be aware of their rights and should raise voice against illegal
practices.
Consumer protection act 1986:
This act was enacted to promote and protect the rights of the consumers.
It provides for simple, speedy and inexpensive redressal of grievances.
Extend and coverage of the act:
The act applies to all goods and services whether in private, public or cooperative
sectors.
Who can file a complaint?
A consumer or any voluntary organization or the government.
What constitutes a complaint?
A complaint in writing should state whether one have suffered a loss due to unfair
trade practices.
Where to file a complaint?
District forum: compensation < 5 lakhs
State commission: 5 lakhs to 20 lakhs
National commission: > 20 lakhs
How to file a complaint?
Complaint can be made in person or by post or through authorized agents.
Relief available to consumers:
The redressal forum may gives order for removal of defects from goods,
replacement of goods or refund the price.
Time limit for deciding the case:
The redressal foreum should address the issue within the period of 3 months from
the date of notice received by the opposite party.
The features of the act are:
Social welfare legislation
Effective provisions and safeguards
Special consumer courts
Simple, speedy and inexpensive redressal machinery
Convenient procedure
Covers goods and services
Time-limits
Class action
Check on unfair practices
Price
Consumer councils
ORGANIZATIONAL BUYER BEHAVIOUR:
Definition:
Organizational buying is the process by which a company/organization establishes
a need for purchasing products and choose among competing brands and suppliers.
Decision making unit[buying center]:
Buying center is an informal, cross department decision unit in which the primary
objective is the acquisition, impartation and processing of relevant purchasing related
information.
Buying center roles:
Primary roles deciders and influencers
Secondary roles users, buyers and gatekeepers
Different departments role in business buying:
Marketing: purchasing decision has an effect on marketability of product so they
are active influencers in purchase decision process.
Manufacturing: responsible for determining the feasibility and economic
consideration of producing end products.
R & D: initial development of product and set board specification for
components.
Purchasing: they are negotiable experts dominant in straight rebuy.
Buying situation:
3 types of situation are:
Straight rebuy:
Straight rebuy is a repetitive or routine buying order placed by the buyer to the
supplier.
Modified rebuy:
This situation occurs when buyer wants to modify any purchase ie improvement
in product specification and this poses a threat and opportunity to suppliers.
New task:
This is most risky decision of buyer. Buyer goes for first time purchase so take lot
of time to decide about the purchase.
Model of industrial buyer behaviour:
The different aspects of this model are:
Difference between individuals involved and psychological make up
Joint decision making
Product specific factors
Organization factors affecting purchase
Situational factors
Ways of information search
Conflict resolution among individuals
Industrial buying behaviour is affected by the background of the individuals
involved in the purchase. The factors are:
Specialized education
Roles and status
Lifestyle
Expectation from the product