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 promotional efforts 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-mouth communications. Research shows that consumers whose complaints are resolved to their satisfaction are comparatively more satisfied than consumers who had no complaints and were 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 anticipating dissatisfaction 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 satisfactory alternative or because they believe that the expected benefits of renewed search are not worth the expected costs. Hence they may be vulnerable to competitors actions. The satisfaction, repeat purchase and customer loyalty are dependent on the post-purchase consumption behaviour. b) Apply Maslows Hierarchy of Needs to consumer behavior. Ans. The hierarchy of needs proposed by Abraham H. Maslow is perhaps the best known and is good 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 basic survival. 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 target audience , 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. Maslows concept suggests that needs change as we go along our path of striving for selfactualisation. 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 Maslows 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 component iii) 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. 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 brands attributes are multidimensional, but the feeling component is only one-dimensional. Consumers often evaluate products in the context of a specific situation and a consumers feeling evaluation 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 studying attitudes because it summarizes consumers predispositions to be favorable or unfavorable towards the attitude object. 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 three attitude components tend to be consistent. As a result of this, change in one attitude component tends to trigger related changes in the other components.

ii)

iii)

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 before making 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 differential threshold for a stimulus, one commonly changes its intensity in very small amounts. An individuals 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. Webers law states that stronger the initial stimulus, greater the additional intensity needed for the second stimulus to be perceived as different. Marketers use Webers law to predict how consumers will respond to differences between marketing variables or changes in these variables. In certain situations, the marketers objective is to have consumers detect differences such as when product improvements are made or price is reduced. 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. 2. 3. 4. The bachelor stage Newly married Full nest Empty nest

1. Bachelor Stage: This stage consists of young single men and women who have established 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 the things 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 vacations to 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 a rational 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 doesnt 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 conversations about 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 and characteristics. 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 strong candidates (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 among the 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.
Helps Me Survive Babson MBA Pogram

Underlying Needs

Benefits

Portability

Doesnt Break down

Economy

Computational Horse Power

Warranty Attributes Size Brand Reputation Software Bundle CPU Speed

Price

Hard Drive Size 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 are relevant 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 attributes are 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 in terms of ranking, probability of choice, and so forth. Decision Implementation To actually implement the purchase decision, however, a consumer needs to select both specific items (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 storesiii and brands. For example, in our Kathleens personal computer case, she may select a set of brands based on both the products technical features (attributes) and availability of brands in the computer stores and mail-order catalogs she knows well. It is also possible, that she 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 decisionmaking 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 cola drink 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 Use Disposition Simple Evaluation Repeat Purchase Motivation

Figure 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).

Post-purchase Dissonance Elaborate Evaluation

Dissatisfaction Repeat Purchase Motivation

Purchase

Product Use

Disposition

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 but similar 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 lookalike 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 consumers tendency 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 is learned. The concept of brand positioning is based on stimulus discrimination which strives to create a brands unique image in the consumers 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 Chilli Sauce 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. Novelty can 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 his consumer 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 dont create needs although in many instances they strive to make consumers more keenly aware of unfelt or dormant needs.

Consumers 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 need hierarchy theory. Several products hold the sub conscious meaning within themselves, which affects the buying process. Also the marketer take advantage of the consumers 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 Status symbol and affordability 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 the firms 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 reduce need 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 with vitamins 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 and towards 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 socio cultural types.

Personality trait ranges from inner directedness to outer directness.

Need for uniqueness-consumers who are inclined towards making unique choices generally 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 complex sensations 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 tendency to 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 is intensional, 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 a result 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 Brand

Attitudinal Components

Attitude

towards

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 on its 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 class mates. 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 be as 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 innovations success is dependent upon successfully responding to consumer needs and communicating 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 fivestep process. This process is a type of decisionmaking. 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

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 process the 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 the advantages/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 categories of 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 be advanced 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 in influencing 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 be slower the innovation that primarily affect one individual Extent of marketing efforts involved - The diffusion of innovation is very significantly influenced 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 innovation satisfies, 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 the individual 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 this innovation. 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. While considering 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 its diffusion 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 much less 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 the diffusion 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 ones 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 SELECTED RITUALS Wedding Birth of child Birthday 50th Wedding anniversary Graduation Valentines Day New Years Eve Thanksgiving TYPICAL ARTIFACTS White gown U.S. Savings Bond, silver baby spoon Card, present, cake with candles Catered party, card and gift, display of photos of the couples life together Pen, U.S. Savings Bond, card, wristwatch Candy, card, flowers Champagne, party, fancy dress Prepare a turkey meal for family and friends

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.

 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 subjects 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: selfdefinition 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 complexity of the decision and the importance of the decision to them. In some cases these rules are quite simple; 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. 2. Non-compensatory decision rules Compensatory decision rules

NON-COMPENSATORY DECISION RULES Simple decision rules are non-compensatory, meaning that a product with a low standing on one attribute 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 to the 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. First of 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 process continues until only one brand emerges as meeting all the criteria. Lexicographic Decision Rule - In the lexicographic decision approach, consumers rank the criteria in order of importance and select the brand that outperforms others on the most important attribute. 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 might indicate 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 stage of 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 who employ 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 ones ability 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 importance weights. 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 the decisions they did. Even they are not willing to disclose those reasons. So, the concept of research is designed to search deep within the consumers psyche, consumer researchers today use 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. Qualitative researchers aim to gather an in-depth understanding of human behavior and the reasons that govern 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, and develop 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 data collection 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 just what 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, many fields 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. Its 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, including customer 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 with questions 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 they concentrate 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 an issue 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:
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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 Sentence completion - respondents are given incomplete sentences and asked to complete them Story completion - respondents are given part of a story and are asked to complete it 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 in Thematic apperception tests - respondents are shown a picture (or series of pictures) and asked to make up a story about the picture(s) 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 Third-person technique - a verbal or visual representation of an individual and his/her situation is presented to the respondent - the respondent 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 neuroscience 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 being informed of this, and people from different cultures may feel uncomfortable in each others presence without knowing exactly why (for example, two speakers may unconsciously continue to 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 the concept 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 facilitates memorizing 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 tea with 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 a need 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 consumers 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 consumers 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 that has dramatically changed the way we live. With, a. Abundance and diversity of information, b. Easily found and conveniently shared facilities, internet use has grown exponentially reshaping 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 organization sells 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. III. IV. V. VI. VII. customer support, quality of products/services, legitimacy of firm selling product/ service price, privacy, and documentation

The challenges faced are the following 5 Cs: 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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