CHAPTER-II

Literature Review

THEORETICAL BACKGROUND ABOUT THE TOPIC

Consumer Behaviour, The Marketing Process and Models of Consumer Decision-

making Psychological influences: the consumer as an individual Perception, motivation,
learning, attitudes, attitude change and persuasive communications

Social and cultural influences: the consumer as a group member.

Group influence and opinion leadership; reference group influence; social class and
economic influences, lifestyles, ethnic, religious, age and regional groups

The consumer as a decision maker

Individual decision-making, demographics and household decision making; personality,
self-concept and sex roles, purchase and post-purchase
"Some issues that arise during stages in the consumption process" Consumer's
perspective

CONSUMER BEHAVIOUR

"A model in this context is a representation of Consumer Behaviour. The aim is to

provide a simplified portrayal of consumer processes to aid our description,
explanation and control of buying behavior".
Types of consumer behavior models: Simple models
 Black Box models
 Personal variable models
 Personal
 Engel, Blackwell and Minored
 Howard-Sheath
 Nicosia

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Perhaps the most useful set of categories is that of low, medium or high level models. In
this case the level refers to the level of complexity - so a low level model would be a
relatively simple representation of the phenomenon while a high level model of the
same event would be much more complex and detailed and include more variables.

In the marketing context the modeling approach has two key objectives:
1. description, explanation, prediction (and ultimately control of consume behaviors)
and/or
2. Aiding researchers in their task of developing 'better' hypotheses and theories about
the relationships and processes involved in consumer behaviour Models can be evaluated
against their ability to satisfy either or both of these objectives. Study on Consumer
Behaviour

SIMPLE MODELS OF CONSUMER BEHAVIOUR

Lower level or simple models, in contrast, fall into three broad categories - black box
models, decision process models and personal variable models.
Black Box models - do not consider internal variables. They focus on inputs and outputs
without concerning themselves with the intervening mental processes, which might
determine the outcomes.

Decision process models - attempt a simple description of the stages consumers'

progress through in reaching purchasing decisions. Most are variations on the classic
problem solving/decision making process of: Define problem - generate alternative
solutions - evaluate alternatives - decide - implement - monitor. These approaches give a
sound basis for marketers seeking to devise strategies that are appropriate for each
stage. Inevitably they are not strong on explanation or prediction without considerable
elaboration, which makes them, falls into the comprehensive model category.

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Personal variable models - the personal variable models omit external variables. So
these models focus on the mental processes of decision-making - internal elements and
processes such as perception, motivation, beliefs and values. One classic example of the
personal variable model is the fisheye model, summarized as
A, = B, o,
Where A0 = the attitude towards object o8, = the strength of belief about o a, = the
evaluation aspects of 6 n = the number of beliefs Study on Consumer Behaviour

Individual Determinants of Consumer Behaviors

Psychological Factors Influencing The Buying Decision Process
"Psychological factors operating within individuals partly determine people's general
Behaviour and thus influence their behaviour as consumers.

The primary psychological influences on consumer behaviour are:

 Perceptions
 Motives
 Ability and knowledge
 Attitudes
 Personality
Even though these psychological factors operate internally, it will become
apparent that consumers are also very much affected by social forces outside the
individual"

CONSUMER BEHAVIOUR: LEARNING AND MEMORY

Learning is a change in behaviour that is caused by experience.
Learning can occur through simple associations between a stimulus and response, or via a
complex series of cognitive activities
Behavioral learning theories assume that learning occurs responses to

Classical conditioning occurs when a stimulus that naturally elicits a response (an
unconditioned stimulus) is paired with another stimulus that does not initially elicit this

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response. Over time, the second stimulus (the conditioned stimulus) comes to elicit the
response as well
Study on Consumer Behavior

This response can also extend to other, similar stimuli in a process known as
stimulus generalization. This process is the basis for such marketing strategies as
licensing and family branding, where a consumer's positive associations with a
product are transferred to other contexts,

Operant or instrumental conditioning

Occurs as the person learns to perform behavior that produce positive
outcomes and avoid those that result in negative outcomes. While classical
conditioning involves the pairing of two stimuli, instrumental learning occurs
when reinforcement is delivered following a response to a stimulus.
Reinforcement is positive if a reward is delivered following a response. It is
negative if a negative outcome is avoided by not performing a response.
Punishment occurs when a response is followed by unpleasant events. Extinction
of the behaviour will occur if reinforcement is no longer received.
Cognitive learning occurs as a result of mental processes. For example,
observational learning takes place when the consumer performs behavior as a
result of seeing someone else performing and being rewarded for it.
Memory refers to the storage of learning information. The way information is
encoded when it is perceived determines how it will be stored in memory. The
memory systems known as sensory memory, short-term memory, and long-term
memory each play a role in retaining and processing information from the
outside world.

Information is not stored in isolation: it is incorporated into knowledge

structures, where it is associated with other related data. The location of product
information in associative networks and the level of abstraction at which it is
coded, help to determine when and how this information will be activated at a

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later time. Some factors that influence the likelihood of retrieval include the
level of familiarity with an item, its salience (or prominence) in memory, and
whether the information was presented in pictorial or written form.

Products also play a role as memory markers: they are used by consumers to
retrieve memories about past experiences (autobiographical memories) and are often
valued for their ability to do this. This function also contributes to the use of nostalgia
in marketing strategies.
Memory for product information can be measured through either recognition or
Recall techniques. Consumers are more likely to recognize an advertisement if it is
presented to them than to recall one without being given any cues." (See Solomon 1994
137-138) Learning theories. Marketing and Involvement

Theory Examples of low involvement Examples of high involvement

Free sample of hair shampoo delivered Faced with mounting debts, individual through
front door and stored in responds to advertisement offering bathroom . When
usual shampoo runs to solve the problems with a single out, trial pack is used,
found acceptable loan. Learns the cost of borrowing and purchased (or not).From loan
sharks
A positive emotional response is the generation of higher-order
Generated by the use of a particulate conditioning allows the customer to
Classical pop tune. This becomes associated have positive feelings about a
Conditioning with a product, even though the product, which may be more
person does not consciously pay expensive than alternatives, e.g. attention
to the advertising luxury goods.
A common brand of baked beans id Clothes purchased and worn give
Operant purchased. They taste 'OK 1 . The rise to numerous complements,
conditioning consumer continues to purchase that Further cloths of the same label
are brand bought.

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An individual learns that Amstrad Keen cooks learn about various
Iconic rote makes personal computers without makes of kitchen knives by
careful learning ever consciously focusing on PCs or reading of advertisements
with the Amstrads advertisements find enjoyable Study on Consumer Behaviour

The Guardian' unavailable at Commuter, distressed by daily Insight newsagents

when on holiday, difficulties with parking decides to learning Customer buys 'the
Independent' purchase mountain bike to solve the instead problem Consumer spots 'low
salt, low sugar' Consumers as a family, having won Latent beans on the supermarket
shelf, the pools, decide that they can now learning Remembers healthy eating afford their
'dream car. Choose advertisements and purchases tin model they have always wanted A
child learns parental roles by Individual observes reaction to a Vicarious observation but
without really friend s new style sutt before deciding learning thinking about it to
purchase Car taken to garage for service. Commuter finds level of smoke Customer
offered a new higher-Experimental pollution on upper deck of bus too powered model to
use for the day-learning offensive to tolerate and decides to Impressed by the car, the
consumer travel on lower deck decides to move up the range when the time comes to
change car. Consumer Decision Processes The most common, everyday problem solving
sequence is:

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In the marketing context, Engel, Blackwell and Minored suggest
that this becomes:

S Information search S Evaluate alternatives S Purchase and Outcomes

Stage I: Information Search

The first step in this stage is often internal memory search to establish whether
the individual possesses enough information about the available options to make a
decision without further action.

In low involvement consumer decisions this may often be the case, but external
search is more usual with high involvement purchases.

Opinion leadership and word-of-mouth communication will be significant at this

stage, as well as the more formal marketing and advertising messages. Similarly,
past learning, stored in the memory system, is shown to be a significant source
even in extended problem solving situations.

The information search stage is also affected strongly by individual differences and
environmental factors e.g. the traits and orientation of some individual’s means that
they have the personality characteristic of caution - such people will tend to
conduct extensive and detailed information search. Similarly families and reference
groups are likely to make significant contributions to the amount and style of search
conducted.

Many of our decisions are often made on less than complete information. The
important point is that the purchaser feels that enough information has been
gathered.

Study on Consumer Behavior

In the light of the differences between high and low involvement purchasing,
the perception of the value of continued search is likely to be significantly higher
in high involvement decisions.

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The external search is dominated by marketing messages and the information
so gathered should be fed into the memory system via processes similar to the
research on Perception:

Exposure Attention Comprehension Acceptance Retention

Stage 2: Alternative evaluation

"Humans are apparently so constituted that they cannot refrain from evaluating,
judging, appraising or valuing almost everything that comes within their
purview".

Note the importance of the role of criteria in the process of evaluation - the
obvious criterion for a purchasing decision is 'did it achieve its objective?'
However a number of sub issues are involved here:

What objective? It is likely that we have multiple objectives.

Internal or external outcomes? These possibly conflicting objectives can be

seen as being internal or external to the decision-making unit - we may satisfy our
family but not impress our friends.

When should we measure outcomes? Here we may be looking at the

difference between first impressions and longer-term satisfaction

Do we look for unexpected outcomes?

The criteria we use stem from our values, beliefs, attitudes and intentions.

However it is not unusual for people to seek a single measure that will pin down
the payoffs required. Satisfaction is affected by a number of factors - motivation,
values, expectancy, and self-image - so a variety of criteria may be necessary
against which to judge the effectiveness of our purchase. The reality appears to
be that people adopt some form of compensation strategy in which a perceived
weakness in one attribute can be offset by strength in others.

"Alternative evaluation represents the decision-making stage in which

consumers evaluate alternatives to make a choice. During this stage consumers
must

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  Determine the evaluative criteria to use for judging alternatives
 Decide which alternatives to consider
 Assess the performance of considered alternatives
 Select and apply a decision rule to make the final choice.

1) Determine the evaluative criteria to use for judging alternatives

Consumers may employ a number of different evaluative criteria, including: price,

brand name and country of origin, in making their decision.

These criteria will usually vary in their relative importance or salience. Price
may be a Dominant dimension in some decisions and yet rather unimportant in
others. The salience of evaluative criteria depends on a host of factors: e.g.
situational, product and individual factors.

2) Decide which alternatives to consider

Consumers must determine the set of alternatives from which a choice will be
made (that is, the consideration set).

(3) Assess the performance of considered alternatives

Consumers may also rely on their existing knowledge for judging how well
alternatives Perform along the salient evaluative criteria. The cutoffs or ranges of
acceptable values That consumers impose for evaluative criteria will strongly
determine whether a given Alternative is viewed as acceptable. Study on Consumer
Bead four

(4) Select and apply a decision rule to make the final choice

Finally, the strategies and procedures used for making the final choice are
called decision rules. Decision rules vary considerably in their complexity.
Another important distinction is between compensatory and no compensatory
decision rules.

Non-compensatory rules, such as lexicographic, elimination by aspects, and

conjunctive do not permit product strengths to offset product weaknesses. In
contrast compensatory rules do allow product weaknesses to be compensated by
product strengths.

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Non-compensatory rules:

Lexicographic under this decision strategy, brands are compared on the

most important attribute. If there is a tie, then the second the most important
attribute is considered; whilst ties continue, then comparisons continue down
the list of attributes in order of importance.

Elimination by Aspects: Very similar to lexicographic procedure. As before,

brands Are first evaluated on the most important attribute. Now, however
the consumer Imposes 'cutoffs' e.g.' must be under £2'; 'must be at least
nutritious'.

If only one brand meets the cutoff on the most important attribute it is
chosen. If several brands meet the cutoff, then the next most important
attribute is selected and the process continues until the tie is broken.

Conjunctive: Cutoffs are also important for the conjunctive decision

procedure. Cutoffs are established for each salient attribute. Each brand is
compared, on at a time against this set of cutoffs. Processing by brand is required.
If the brand meets the cutoffs For all attributes, then it is chosen. Failure to meet
the cutoff for any attribute leads to In contrast compensatory rules do allow
product weaknesses to be compensated by Product strengths. There are two types
of compensatory rules: simple and weighted additive.

1. Simple additive: here the consumer simply counts or adds the number of
times each alternative is judged favorably in terms of the set of sail evaluative
criteria. The alternative having the largest number of positive attributes is chosen.
2. Weighted additive: a more complex form of the compensatory rule. The
consumer engages in more refined judgments about the alternatives' performances
simple whether it is favorable or unfavorable.
The relative salience of relevant evaluative criteria is also incorporated into the
decision rule. In essence, a weighted additive rule is equivalent to the multi
attribute attitude models

Phased decision strategies: These involve the sequential use of at least

two different decision rules as a means of coping with a large number of
choice alternatives. Phased strategies typically consist of a two-stage
process.

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In the initial stage, one type of rule is used as a screening device to help
narrow down the choice set to a more manageable number. A second
decision rule is then applied to the remaining alternatives to make the final
choice.

Significance of Consumer Behaviour: The study of Consumer

Behavior is the study of how individuals make decisions to spend their
available resources (time, money, effort) on consumption related items. It
includes the study of

 What they buy

 Why they buy it
 When they buy it
 Where they buy it
 How often they buy it
 How often they use it

Study on Consumer Behavior

Consumer Behavior focuses on how and why consumers make decisions to buy
goods and services. Consumer Behaviors research goes far beyond these facets of
consumer behavior and encompasses all of the behavior that consumers display
in searching for. Purchasing, Using, Evaluating and Disposing of products and
services that they will satisfy their needs

Definition of Consumer Behaviour:

Consumer behavior is defined as activities undertake when obtaining, consuming,

and disposing of products and services. Simply stated, consumer behaviour has
traditionally been thought of as the study of "Why people buy". With the premise
that it becomes easier to develop strategies to influence consumers once a
marketer knows why people buy certain products or brands.

Consumer behaviour also can be defined as a field of study, focusing on

consumer activities. As the study of consumer behaviour has evolved, so has its
scope. Historically, the study of consumer behaviour focused on buyer behaviour
or "Why people buy". More recently, researchers and practitioners have focused
on Consumption analysis, why and how people consume in addition to why
and how they buy. Analysis of consumption behaviour represents a broader

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conceptual framework than buyer behaviour does because it includes issues that
arise after the purchase process occurs. There are several activities included in the
definition of consumer behaviour - obtaining, consuming, and disposing.

Obtaining: It refers to the activities leading up to and including the Purchase or

receipt of a product.

Consuming: It refers to how, where, when and under what circumstances

consumers use products.

Disposing: It includes how consumers get rid of products and packaging. Does it
affect the environment? If it does how far it is?

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