CB Unit4

PIMG
M.B.A.-III Semester (Spl.-Marketing)
CONSUMER BEHAVIOUR
Consumer Behavior
Consumer Processes a consumer uses to

Consumer
Behavior
Behavior make purchase decisions, as
well as to use and dispose of
purchased goods or services;
also includes factors that
influence purchase decisions
and the product use.
Understanding the Cultural Influences
on
Consumer Buying Decisions
Identify and understand the cultural

factors that affect consumer
buying decisions
Factors Influencing Buying Decisions
Cultural Social
Factors Factors CONSUMER
DECISION- BUY /
MAKING DON’T BUY
Psycho- PROCESS
Individual
Factors logical
Factors
Culture
Set of values, norms,

Culture
Culture attitudes, and other
meaningful symbols that
shape human behavior and
the artifacts, or products, of
that behavior as they are
transmitted from one
generation to the next.
Components of Culture
Values
Values
Language
Language
Myths
Myths
Customs
Customs
Rituals
Rituals
Laws
Laws
Material
Material artifacts
artifacts
Culture is. . .
Pervasive
Pervasive
Functional
Functional
Learned
Learned
Dynamic
Dynamic
Value
Value
Value
Enduring belief that a
specific mode of conduct is
personally or socially
preferable to another mode
of conduct.
Core American Values
Success
Success
Materialism
Materialism
Freedom
Freedom
Progress
Progress
Youth
Youth
Capitalism
Capitalism
Subculture
Subculture A homogeneous group

Subculture
of people who share
elements of the overall
culture as well as unique
elements of their own
group.
Social Class
A group of people in a society

Social
Social Class
Class who are considered nearly
equal in status or
community esteem, who
regularly socialize among
themselves both formally and
informally, and who share
behavioral norms.
Social Class Measurements
Occupation
Occupation
Income
Income
Education
Education
Wealth
Wealth
Other
Other Variables
Variables
Social Class and Education
The Impact of Social Class on
Marketing
• Indicates which
medium to use for
communication
• Helps determine the

best distribution for
products
Cultural Factors
Social Influences on
Identify and understand the

social factors that affect consumer buying
decisions
Social Influences
Reference
Reference
Groups
Groups
Opinion
Opinion
Leaders
Leaders
Family
Family
Members
Members
Reference Group
Reference
ReferenceGroup
Group
A group in society that

influences an individual’s
purchasing behavior.
Reference Groups
Primary
Direct
Secondary
Reference
Groups
Aspirational
Indirect
Nonaspirational
Influences of Reference Groups
 They serve as information sources and

influence perceptions.
 They affect an individual’s aspiration

levels.
 Their norms either constrain

or stimulate consumer behavior.
Opinion Leaders
Opinion
OpinionLeaders
Leaders
An individual who influences
the opinion of others.
Opinion Leaders
Marketers are looking to Web logs, or blogs, to find
opinion leaders
 Teenagers
 Movie stars
 Sports figures
 Celebrities
Family
Purchase Process Roles in the Family
 Initiators
 Influencers
 Decision Makers
 Purchasers
 Consumers
Relationships among Purchasers and
Consumers in the Family
Social Factors – Re-cap
Constrain or
Reference Affect aspiration stimulate
Information sources
Groups levels consumer behavior
Opinion
People You Know Celebrities
Leaders
Socialization Process
Family Initiators Decision Makers Consumers
Influencers Purchasers
Individual Influences on
Identify and understand the individual

factors that affect consumer buying
decisions
Individual Influences
Personality
Personality
Age
Age
Gender
Gender Self-Concept
Self-Concept
Life
Life Cycle
Cycle Lifestyle
Lifestyle
Psychological Influences on
Identify and understand the psychological

decisions
Psychological Influences
Perception
Perception
Motivation
Motivation
Learning
Learning
Beliefs
Beliefs &
& Attitudes
Attitudes
Perception
Perception
Perception
Process by which people select,

organize, and interpret stimuli into a
meaningful and coherent picture.
Perception
Selective
Selective Selective
Selective
Exposure
Exposure Distortion
Distortion
Selective
Selective
Retention
Retention
Perception
Selective
Selective Consumer
Consumer notices
notices certain
certain stimuli
stimuli
Exposure
Exposure and
and ignores
ignores others
others
Consumer
Consumer changes
changes or or distorts
distorts
Selective
Selective information
information that
that conflicts
conflicts
Distortion
Distortion with
with feelings
feelings or
or beliefs
beliefs
Consumer
Consumer remembers
remembers onlyonly
Selective
Selective that
that information
information that
that
Retention
Retention supports
supports personal
personal beliefs
beliefs
Marketing Implications
of Perception
 Important attributes
 Price
 Brand names
 Quality and reliability
 Threshold level of perception
 Product or repositioning changes
 Foreign consumer perception
Motivation
Maslow’s
Maslow’s
Hierarchy
Hierarchy
of
of Needs
Needs A method of classifying human
needs and motivations into five
categories in ascending order of
importance.
Maslow’s Hierarchy of Needs
Types of Learning
Experiential
Experiential An
An experience
experience changes
changes behavior
behavior
Not
Not learned
learned through
through direct
direct
Conceptual
Conceptual experience
experience
Beliefs and Attitudes
An organized pattern of
Belief knowledge that an individual
Belief
holds as true about his or her
world.
A learned tendency to
Attitude
Attitude respond consistently toward a
given object.
LO7
Changing Attitudes
 Change beliefs about the brand’s attributes

 Change the relative importance of these beliefs
 Add new beliefs
Psychological Factors – Re-cap
Selective Exposure
Perception
Selective Retention Selective Exposure
Needs
Motivation
Psychological Safety Social Esteem Esteem
Learning Experiential Conceptual
Changing Changing
Beliefs & Adding
Beliefs about Importance of
Attitudes New Beliefs
Attributes Beliefs
PIMG
Unit III
Opinion Leadership
Opinion Leaders
Opinion
OpinionLeaders
Leaders
An individual who influences
the opinion of others.
Opinion Leaders
Marketers are looking to Web logs, or blogs, to find
opinion leaders
 Teenagers
 Movie stars
 Sports figures
 Celebrities
Family
Purchase Process Roles in the Family
 Initiators
 Influencers
 Decision Makers
 Purchasers
 Consumers
Relationships among Purchasers and
Consumers in the Family
Social Factors – Re-cap
Constrain or
Reference Affect aspiration stimulate
Information sources
Groups levels consumer behavior
Opinion
People You Know Celebrities
Leaders
Socialization Process
Family Initiators Decision Makers Consumers
Influencers Purchasers
Individual Influences on
Identify and understand the individual

decisions
Individual Influences
Personality
Personality
Age
Age
Gender
Gender Self-Concept
Self-Concept
Life
Life Cycle
Cycle Lifestyle
Lifestyle
Psychological Influences on
Identify and understand the psychological

decisions
Psychological Influences
Perception
Perception
Motivation
Motivation
Learning
Learning
Beliefs
Beliefs &
& Attitudes
Attitudes
Opinion Leadership
• 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
13-51
What is Opinion Leadership?
Opinion Opinion
Leader Receiver
Opinion
Seeker
13-52
Opinion Leadership
Reduce
Reduce
Risk
Risk
Similar “first to buy”
Similar Technically
Technically
Values
Values
“referent
“referentpower”
power”
Key Competent
Competent
Characteristic
s
of
Opinion
Leaders
Legitimate
Legitimate Knowledge
Knowledge
Power
Power Power
Power
Special Issues
• Opinion leaders are four times more
likely to be asked about political issues,
three times more likely to be asked about
computers or investments, and twice as
likely to be asked about restaurants
• Information seekers seek a “strong-tie”
source when they know little about a
topic, and “weak-tie” sources when they
have some knowledge
13-54
Purchase Pals and Surrogate
Buyers
• Purchase Pals
– Information sources who accompany a
consumer on a shopping trip
• Surrogate Buyers
– Professional buyers who help consumers with
their purchases
13-55
(continued)
13-56
Figure 13-1 (continued)
13-57
Market Maven
• Individuals whose influence stems from a
general knowledge or market expertise
that leads to an early awareness of new
products and services.
13-58
Motivations Behind Opinion
Leadership
• The Needs of Opinion Leaders
– To reduce their own post-purchase
dissonance
– For tangential personal benefits
– Because of high levels of product involvement
– Because of message involvement
» continued
13-59
Motivations Behind Opinion
Leadership
• Motivations of Opinion Seekers
– To obtain new product or new usage
information
– To reduce their risk by getting knowledge
– To reduce search time
– To receive the approval of the opinion leader
13-60
Reasons for the Effectiveness of
Opinion Leadership
• Credibility
• Positive and Negative Product Information
• Information and Advice
• Opinion Leadership Is Category-Specific
• Opinion Leadership Is a Two-way Street
13-61
13-62
13-63
13-64
The Interpersonal Flow of
Communication
• Two-Step Flow
– A communication model that portrays
opinion leaders as direct receivers of
information from mass media sources who,
in turn, interpret and transmit this
information.
• Multi-step Flow
– A revision of the traditional two-step theory
that shows multiple communication flows
13-65
13-66
13-67
Communication Process
Change in perspective of Group Influences on Communication
Static model…opinion leader absorbs and retransmits
Most product related

discourse is in the context of
a casual conversation
Measuring Opinion Leadership
OPINION LEADERSHIP SAMPLE

MEASUREMENT DESCRIPTION OF METHOD QUESTIONS
METHOD ASKED
SELF-DESIGNATING Each respondent is asked a “Do you influence

METHOD series of questions to other people in
determine the degree to their selection of
which he or she perceives products?”
himself or herself to be an
opinion leader.
SOCIOMETRIC Members of a social system “Whom do you

METHOD are asked to identify to ask?”“Who asks
whom they give advice and you for info about
to whom they go for advice. that product
category?”
13-69
Measuring Opinion Leadership -continued
OPINION
SAMPLE
LEADERSHIP
DESCRIPTION OF METHOD QUESTIONS
MEASUREMENT
ASKED
METHOD
KEY INFORMANT Carefully selected key informants “Who are the most
METHOD in a social system are asked to influential people
designate opinion leaders. in the group?”
OBJECTIVE Artificially places individuals in a “Have you tried

METHOD position to act as opinion leaders the product?
and measures results of their
efforts.
13-70
Opinion Leadership and
Marketing Strategy
• Identify and provide samples to opinion
leaders
• Design programs to stimulate opinion
leadership
• Develop ads simulating opinion leadership
• Create opinion leaders
• Control negative word-of-mouth
communication
13-71
PIMG
Unit IV
Diffusion of Innovation
New products in the market
Every year around 5000 new

products appear in the market.
However, most fail and only a few
remain ( around 20%). Products
which are innovative.
Why does this happen?
Macromarketing issues
• Valuable resources are wasted which might
have been deployed towards more productive
uses
• Products that might have helped people do
things more productively or attain higher levels
in their quality of life, fail to be used
• Successful products are those that become
culturally anchored.
Micromarketing issues
• Succesful new product development is an
important element in achieving long term
competitive superiority and
profitability,especially in low growth markets
• New product development plays an important
role in market leadership and profitability. Market
leaders normally have three times higher returns
than firms with lower market shares
• A successful new product can be the beginning
of a whole new company
The value chain
Contemporary firms are being attacked
by competitively on every dimension
and from every direction. The only way
to survive this onslaught is to create a
‘value chain’ to serve the customer,
which will serve to differentiate the
successful firm from its competitors
and will provide competitive superiority
on the critical attributes of importance
to the consumer
What is an innovation?
It is any idea or product perceived

by the potential adopter to be
new. New products are ideas,
behaviour or things that are
qualitatively different from existing
forms
Diffusion Process
• The process by which the acceptance of
an innovation is spread by communication
to members of social system over a
period of time.
13-78
Diffusion of innovation
• A process by through which a new product
moves from initial introduction to regular
purchase and use
• A process by which an innovation (idea) is
communicated through certain channels
over time among the members of a social
system – Everett Rogers
• The concept of diffusion of innovation was
developed by Everett Rogers who applied
the idea in agriculture and many other
fields.
• Diffusion is the process by which an
innovation is communicated through
certain channels over time among the
members of a social system
Four Elements of Diffusion of
Innovation Process
1. Innovation
2. Communication
3. Time, &
4. Social System
1.Innovation
• An innovation is an idea, practice, or
object that is perceived as new by an
individual or other unit of adoption. The
characteristics of an innovation, as
perceived by the members of a social
system, determine its rate of adoption.
Diffusion of Innovations
An innovation is an idea, practice, or product perceived to be

new by the relevant individual or group.
The manner by which a new

product spreads through a
market is basically a group
phenomenon.
New products can be placed
on a continuum from no
change to radical change,
depending on the market’s
perception.
7-83
 Categories of Innovation
 Adoption Process
 Diffusion Rate
 Adopter Categories
 Marketing Strategies and the Diffusion Process
7-84
Categories of Innovations
Continuous Innovation
Adoption of this type of innovation requires relatively minor
changes in behavior(s) that are unimportant to the consumer.
Dynamically continuous Innovation
Adoption of this type of innovation requires a moderate
change in an important behavior or a major change in a
behavior of low or moderate importance to the individual.
Discontinuous Innovation
Adoption of this type of innovation requires major changes in
behavior of significant importance to the individual or group.
7-85
Adoption Process and Extended Decision Making
7-86
Rogers’ (1995)
Stages of adoption:
Awareness - the individual is exposed to the

innovation but lacks complete information about it
Interest - the individual becomes interested in the

new idea and seeks additional information about it
Evaluation - individual mentally applies the

innovation to his present and anticipated future
situation, and then decides whether or not to try it
Trial - the individual makes full use of the

innovation
Adoption - the individual decides to continue the

full use of the innovation
Stages in the Adoption
Process
Awareness: Consumer is aware of
product, but lacks information.
Interest: Consumer seeks
Information about new product.
Evaluation: Consumer considers

trying new product.
Trial: Consumer tries new
product on a small scale.
Adoption: Consumer decides

to make regular use of product.
Diffusion Rates for Popular Consumer Electronics (Cumulative)
7-89
Factors Affecting the Spread of Innovations
Type of Group
Perceived Risk Type of Decision
Trialability Marketing Effort
Rate of Diffusion
Fulfillment of
Observability Felt Need
Complexity Compatibility
Relative Advantage
7-90
Adoption Process
• The stages through which an individual
consumer passes in arriving at a decision
to try (or not to try), to continue using (or
discontinue using) a new product.
13-91
Defining Innovations
• Firm-oriented definitions
• Product-oriented definitions
• Market-oriented definitions
• Consumer-oriented definitions
13-92
Product-Oriented Definitions
Continuous
Innovation
Dynamically
Continuous Innovation
Discontinuous
Innovation
13-93
Factors That Affect the Diffusion
of Innovations
• The Innovation
• The Channels of Communication
• The Social System
• Time
13-94
Product Characteristics That
Influence Diffusion
• Relative Advantage
• Compatibility
• Complexity
• Trialability
• Observability
• Felt Need
• Risk
13-95
Adoption Factors
• Five factors affect adoption:
– Relative advantage
– Compatibility
– Complexity
– Trialability
– Observability
Influence of Product Characteristics
on Rate of Adoption
Communicability Relative Advantage

Can results be easily
observed or described Is the innovation
superior to existing
to others?
products?
Divisibility Compatibility
Can the innovation Does the innovation
be used on a fit the values and
trial basis? experience of the
target market?
Complexity
Is the innovation
difficult to
understand or use?
Relative Advantage
• The degree to which an innovation is
perceived as better than the idea it
supersedes.
• Perception is more important than real
advantage.
• Relative advantage may be measured in
many ways including economics, social
prestige, convenience, and satisfaction
Compatability
perceived as being consistent with the
existing values, past experiences, and
needs of potential adopters.
• Compatible innovations will be more
rapidly adopted.
Complexity
perceived as difficult to understand and
use.
• More complex innovations will be slower to
be adopted.
Trialability
• The degree to which an innovation may be
experimented with on a limited basis.
• Innovations that can be tried out are more
likely to be adopted.
Observability
• The degree to which the results of an
innovation are visible to others.
• The easier it is for individuals to see the
results of an innovation, the more likely
they are to adopt it.
Innovation characteristics (in brief)
• Relative Advantage
– The degree to which the innovation is perceived to be superior to
current practice
• Compatibility
– The degree to which the innovation is perceived to be consistent
with socio-cultural values, previous ideas, and/or perceived needs
• Trialability
– The degree to which the innovation can be experienced on a
limited basis
• Complexity
– The degree to which an innovation is difficult to use or
understand.
• Observability
– The degree to which the results of an innovation are visible to
potential adopters
Class Assignment
Based on the Five - Factors of Adoption (Innovation
Characteristics) Identify these in each of the following brands:
BRAND FACTORS ADOPTION BRAND FACTORS ADOPTION
(Innovation) (High/Medium/ RATE (Innovation) (High/Medium/ RATE
Low) (Fast/Medium Low) (Fast/Medium
/Slow) /Slow)
Maruti 800 Relative Adv., Fast Scorpio
(H)
Compatibility,(H)
Trialability,(H)
Complexity (L) &
Observability (H)
Splender Reva
Minute EduComp
Maid
VLCC Ezee
Bravia Lumia
Yo Bike Diet Coke

Faster Adoption
• Innovations that are perceived by
individuals as having greater relative
advantage, compatibility, trialability,
observability, and less complexity will be
adopted more rapidly than other
innovations.
2.Communication Channels
• How information gets from person to
person.
• Whereas mass communication is good for
creating knowledge of innovation,
interpersonal communication is more
effective for forming and changing
attitudes about an innovation.
3. Time
• Diffusion of innovation occurs over time,
and different innovations are adopted at
different rates.
• In any given social system, there are
different categories of adopters who adopt
innovations differently.
Categories of Adopters
• Innovators – 2.5%
• Early adopters – 13.5%
• Early majority – 34%
• Late majority – 34%
• Laggards – 16%
http://riccistreet.net/port80/charthouse/present/diffusion.htm
4.Social System
• Innovations are adopted within a social
system.
• Social systems are governed by norms
and influenced by opinion leadership,
change agents, and the consequences of
adoption.
Critical Mass
• The point at which enough individuals have
adopted an innovation that the innovation's
further rate of adoption becomes self-
sustaining.
• Early adopters are instrumental in getting
an innovation to the point of critical mass,
and hence, in the successful diffusion of an
innovation.
Implications
• For technology adoption, focus on those
factors (e.g., relative advantage) that are
positive.
• Showcase examples of practice that others
can relate to, and rely on interpersonal
communication to spread the word.
• Cultivate the early adopters who have the
potential to create a critical mass.
“ Diffusion is the process in which an innovation is

communicated through certain channels over time among
the members of a social system. ”
–––– Everett M. Rogers *
• “innovation”: Friendship Quiz – a Facebook application

• “Communicated”: Invitations among Facebook friends
• “time”: September 25, 2008 – Now
• “social system”: Facebook
* Rogers, Everett M. (2003). Diffusion of Innovations, 5th ed.. New York, NY: Free Press, pp 5-6
Adopter Categories
• A sequence of categories that describes
how early (or late) a consumer adopts a
new product in relation to other adopters.
13-113
Copyright © 2006 Pearson 13-114
Education Canada Inc.
Innovators: Description
• 2.5% of population
• Venturesome
• Very eager to try new ideas
• Acceptable if risk is daring
• More cosmopolite social relationships
• Communicates with other innovators

Innovators:
Technology Enthusiasts
• Appreciate technology for its own sake
• Motivated by idea of being a change agent
• Will tolerate initial glitches
• Will develop make-shift solutions
• Willing to alpha/beta test and work with technical
personnel in compensation with lower pricing
• Provide early revenue for marketers—but not a
large group
• Importance: They are the gatekeeper to the next
group of adopters.
Early Adopters: Description
• 13.5% of population
• 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
13-117
Early Majority: Description
• 34% of population
• Deliberate
• Adopt new ideas just prior to the average time
• Seldom hold leadership positions
• Deliberate for some time before adopting
13-118
Early Majority: “Pragmatists”
• Comfortable with only evolutionary changes in
business practices, in order to gain productivity
enhancements
• Risk aversion to disruptions in their operations
• Want proven applications, reliable service
• Seek the convenient “whole product” design
– A total solution provided at once
• Buy only with a reference from trusted colleague in
same industry
Pragmatists (Cont.)
• This group is the bulwark of the mainstream

market:
– They want to move together (herd mentality).
– They want to pick the same technology solution
(avoid risk).
– Once they make a decision, they want to
implement it quickly (high visibility of performance).
• Requires industry standards
Late Majority: Description
• 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
13-121
Laggards: Description
• Traditional
• The last people to adopt an innovation
• Most “localite” in outlook
• Oriented to the past
• Suspicious of the new
13-122
Laggards: “Skeptics”
• Want to maintain status quo

• Technology is a hindrance to operations
– Luddites (the guys resist to the technological progress)
• Buy only if all other alternatives worse
The Profile of a Consumer
Innovator
• Interest in the Product Category
• The Innovator Is an Opinion Leader
• Personality Traits
• Purchase and consumption characteristics
• Media Habits
• Social Characteristics
• Demographic Characteristics
• Are There Generalized Consumer Innovators?
13-126
Diffusion Process and
Marketing Strategy
• Identify diffusion inhibitors and find ways
to compensate for these
• Identify innovators and early adopters and
cater to them
• Move consumers from awareness to
adoption
• Make effective use of word-of-mouth
communications
13-127
Consumer Decision Making
Understanding Consumer
Behavior
consumers
consumers make
make
purchase
purchase decisions
decisions
Consumer
Consumer
behavior
behavior = HOW
consumers
consumers useuse and
and
dispose
dispose of
of product
product
The Consumer
Decision-Making Process
The components
of the consumer decision-making
process
Consumer
Consumer
Consumer
Decision-Making
Decision-Making
Process
Process A five-step process used
by consumers when
buying goods or services.
Consumer
Need
Need Recognition
Recognition
Information
Information Search
Search
Cultural,
Cultural, Social,
Social,
Individual
Individual and
and
Psychological
Evaluation
Evaluation
Psychological of
Factors
Factors of Alternatives
Alternatives
affect
affect
all
all steps
steps Purchase
Purchase
Postpurchase
Postpurchase
Behavior
Behavior
1. Need Recognition
Need
Need
Recognition
Recognition
Result of an imbalance between

actual and desired states.
1. Need Recognition
Int
e
Sti rnal
mu
li
Preferre
Preferre
Present
Present ddState
State
Status
Status
n al
t er li
Ex timu
S Marketing helps consumers recognize
an imbalance between
present status and preferred state.
Problem/Need Recognition
• Consumer recognizes a gap or
discrepancy between his/her current state
and his/her desired state.
Stimulus
Stimulus
Stimulus
Any unit of input affecting

one or more of the five senses:
sight
smell
taste
touch
hearing
Recognition of
Unfulfilled Wants
 When a current product

isn’t performing properly
 When the consumer is
running out of a product
 When another product seems
superior to the one currently
used
2. Information Search
Internal Information Search
 Recall information in memory
External Information search
 Seek information in outside

environment
 Nonmarketing controlled
 Marketing controlled
2. Information Search
(Contd.)
• Deliberate attempt to gain knowledge
about a purchase decision; goal is to
reduce uncertainty.
• Internal search
– Retrieve information from long term
memory
• External search
– Gather information from external sources,
e.g., ads, media, friends, stores
Determinants of External
Search
External Information
Searches
Need Less Need More
Information Information
Less Risk More Risk

More knowledge Less knowledge
More product experience Less product experience
Low level of interest High level of interest
Confidence in decision Lack of confidence
3. Evaluation of Alternatives
and Purchase
Evoked Set
Analyze
Analyze product
product
attributes
attributes
Use
Use cutoff
cutoff criteria
criteria
Rank
Rank attributes
attributes by
by
importance
importance
Purchase!
3. Evaluation of Alternatives
and Purchase (Contd.)
• Occurs either separately or in conjunction
with information search.
• We rely on internal processes to help us
organize the evaluation process.
– Consideration (evoked set)
– Decision rules (heuristics)
Consideration Set
Decision Rules
• Strategies used by consumers to guide
decision making.
• Some decision rules use product
characteristics to guide decisions.
– Compensatory
– Noncompensatory
• Some decision rules rely on stored information
in consumers’ memories to guide decisions.
Compensatory Decision Rule
• Select the best overall brand
– Consumer evaluates brand options in terms of
each relevant attribute and computes a
weighted or summated score for each brand.
The consumer chooses the brand with the
highest score.
• A compensatory model because a positive
score on one attribute can outweigh a
negative score on another attribute.
Noncompensatory Decision
Rules
• Conjunctive Decision Rule
– Consumer sets a minimum standard for each
attribute and if a brand fails to pass any
standard, it is dropped from consideration.
• Reduces a large consideration set to a
manageable size.
• Often used in conjunction with another
decision rule.
Noncompensatory Decision Rules
• Disjunctive Decision Rule
– Consumer sets a minimum acceptable standard
as the cutoff point for each attribute--any brand
that exceeds the cutoff point is accepted.
• Reduces large consideration set to a more
manageable number of alternatives.
• Consumer may settle for the first satisfactory
brand as final choice or may use another
decision rule.
Noncompensatory Decision
Rules
• Lexicographic Decision Rule
– The consumer ranks the attributes according
to importance and then selects the brand that
is superior on the most important attribute.
• If one brand ranks sufficiently high on just
one attribute, it will be selected regardless
of how it scores on other attributes.
Affect-Referral Rule
• Synthesized decision rule
– Consumers maintain overall evaluations of
brands in their long term memories. Brands
on not evaluated on individual attributes but
on the highest perceived overall rating.
Frame of Reference
• Another way in which consumers evaluate
information is the frame of reference from
which s/he subjectively evaluates
messages related to a decision problem.
– “Percent lean” vs. “Percent fat”
– “Sale” vs. “Clearance”
Hypothetical Use of Popular Decision Rules in
Making a Decision to Purchase an Ultralight Laptop
DECISION RULE MENTAL STATEMENT
Compensatory rule “I selected the computer that came out best when I
balanced the good ratings against the bad ratings.”
Conjunctive rule “I selected the computer that had no bad features.”
Disjunctive rule “I picked the computer that excelled in at least one

attribute.”
Lexicographic rule “I looked at the feature that was most important to
me and chose the computer that ranked highest on
that attribute.”
Affect referral rule “I bought the brand with the highest overall rating.”
Cognitive Dissonance
Cognitive
Cognitive Inner tension that a
Dissonance
Dissonance consumer experiences after
recognizing an
inconsistency between
behavior and values or
opinions.
4. Purchase Decision
5. Postpurchase Behavior
Consumers can reduce dissonance by:
 Seeking information that reinforces positive

ideas about the purchase
 Avoiding information that contradicts the

purchase decision
 Revoking the original decision by returning

the product
Marketing can minimize through:

Effective Communication
Follow-up
Guarantees
Warranties
Post-Purchase Evaluation
• Consumers evaluate purchases during
consumption process.
• Three possible outcomes.
• Postpurchase cognitive dissonance.
• Complaining behavior.
Outcomes
• Actual product performance matches
prepurchase expectations
– Neutral Feeling
Outcomes
• Actual product performance exceeds
prepurchase expectations.
– Positive disconfirmation of expectations

– Satisfaction
Outcomes
• Actual product performance is below
prepurchase expectations.
– Negative disconfirmation of expectations

– Dissatisfaction
A Continuum of Satisfaction
Dissatisfaction Satisfaction Delighted

If dissatisfied….
• Alternative actions
– Do nothing
– Avoid seller/brand in the future
– Negative WOM to friends
– Seek redress of problem from seller
– Complain to outside agency
– PORTABILITY! (If possible)
Decision to complain...
• Is based on:
– Level of dissatisfaction
– Importance of decision/purchase
– Costs/benefits of actions
– Personal characteristics
– Attribution of blame
Managerial Implications Related
to Consumer Decision Making
• Understanding decision making process
enables marketers to assist consumers
along decision pathway.
– Offer products that meet needs/wants
– Advertising
– Making information available
– Making product available
– Follow-up sales calls, good service
and Consumer Involvement
Identify the types of consumer buying

decisions and discuss the significance
a of consumer involvement?
and Consumer Involvement
Routine
Routine Limited
Limited Extensive
Extensive
Response
Response Decision
Decision Decision
Decision
Behavior
Behavior Making
Making Making
Making
Less More
Involvement Involvement
Five Factors
Influencing Decisions
1.
1. Level
Level of
of consumer
consumer involvement
involvement
2.
2. Length
Length of
of time
time to
to make
make decision
decision
3.
3. Cost
Cost of
of good
good or
or service
service
4.
4. Degree
Degree of
of information
information search
search
5.
5. Number
Number of
of alternatives
alternatives considered
considered
Continuum of Consumer
Buying Decisions
Routine Response Behavior
 Little involvement in selection process
 Frequently purchased low cost goods
 May stick with one brand
 Buy first/evaluate later
 Quick decision
Limited Decision Making
 Low levels of involvement
 Low to moderate cost goods
 Evaluation of a few alternative

brands
 Short to moderate time to decide

Extensive Decision Making
 High levels of involvement
 High cost goods
 Evaluation of many brands
 Long time to decide
 May experience cognitive dissonance

Factors Determining the Level
of Consumer Involvement
Previous
Previous Experience
Experience
Interest
Interest
Perceived
Perceived Risk
Risk of
of
Negative
Negative Consequences
Consequences
Situation
Situation
Social
Social Visibility
Visibility
Marketing Implications
of Involvement
High-involvement
High-involvement Extensive
Extensiveand
andinformative
informative
purchases
purchases require:
require: promotion
promotionto
totarget
targetmarket
market
In-store
In-storepromotion,
promotion,
eye-catching
eye-catching package
package
Low-involvement
Low-involvement design,
design,and
andgood
gooddisplays.
displays.
purchases
purchases require:
require: Coupons,
Coupons,cents-off,
cents-off,
2-for-1
2-for-1offers
offers
PIMG
Unit IV
Communication and
Persuation
PERSUASIVE COMMUNICATION
THEORIES OF PERSUASION AND
ATTITUDE CHANGE
YALE ATTITUDE CHANGE

PROGRAM
YALE ATTITUDE CHANGE
PROGRAM
• PROCESSES: The Yale approach
specifies four kinds of processes that
determine the extent to which a person will
be persuaded by a communication.
PROCESSES:
• 1. ATTENTION: One must first get the intended
audience to listen to what one has to say.
• 2. COMPREHENSION: The intended audience must

understand the argument or message presented.
• 3. ACCEPTANCE: The intended audience must accept

the arguments or conclusions presented in the
communication. This acceptance is based on the
rewards presented in the message.
• 4. RETENTION: The message must be remembered,

have staying power.
VARIABLES
• The Yale approach identifies four
variables that influence the acceptance of
arguments.
VARIABLES
• 1. SOURCE: What characteristics of the speaker affect
the persuasive impact?
• 2. COMMUNICATION: What aspects of the message

will have the most impact?
• 3. AUDIENCE: How persuadable are the individuals in

the audience?
• 4. AUDIENCE REACTIONS: What aspects of the

source and communication elicit counter arguing
reactions in the audience?
The Persuader
• 1. There will be more opinion change in the
desired direction if the communicator has high
credibility than if he or she has low credibility.
Credibility is: Expertise,
Trustworthiness, Dynamism & Sociability
• 2. The credibility of the persuader is less of

factor in opinion change later on than it is
immediately after exposure.
The Persuader Cont.
• 3. A communicator's effectiveness is increased if
he/she initially expresses some views that are also held
by the audience
• 4. What an audience thinks of a persuader may be

directly influenced by what they think of the message.
• 5. Communicator characteristics irrelevant to the topic

of the message can influence acceptance of its
conclusion.
How To Present the Issues
1. Present one side of the argument when the audience is generally friendly, or
when your position is the only one that will be presented, or when you want
immediate, though temporary, opinion change.
2. Present both sides of the argument when the audience starts out disagreeing
with you, or when it is probable that the audience will hear the other side
from someone else.
3. When opposite views are presented one after another, the one presented
last will probably be more effective.
4. There will probably be more opinion change in the direction you want if you
explicitly state your conclusion than if you let then audience draw their own,
except when they are rather intelligent: Then implicit conclusions are better.
5. Fear appeals: The findings generally show a positive relationship between
intensity of fear arousal and amount of attitude change if recommendations
for action are explicit and possible, but a negative reaction otherwise.
Audience as Individuals
1. The people you may want most in your audience are often least likely to be there.
2 . The level of intelligence of an audience determines the effectiveness of some

kinds of appeals.
3. Successful persuasion takes into account the reasons for underlying attitudes as
well as the attitudes themselves.
4. Individual's personality traits affect his/her susceptibility to persuasion, people are
more easily influenced when their self esteem is low.
5. There are individuals who are highly persuadable and who will be easily changed
by any influence attempt, but who are then equally influenced when faced with
counter communication.
6. Ego-involvement with the content of the communication (it's relation to value of
the audience) increases the acceptance of its conclusion
The Persistence of Opinion Change
1. In time, the effects of a persuasive communication tend to wear off.
a) A communication from a positive source leads to more rapid decay of

attitude change over time than one from a negative source.
b) A complex or subtle message produces slower decay of attitude

change.
c) Attitude change is more persistent over time if the receiver actively

participates in, rather than passively receive, the communication.
2. Repeating a communication tends to prolong its influence.
3. More of the desired opinion change may be found some time after
exposure to the communication than right after exposure (the sleeper
effect).
Postpurchase Processes,
Customer Satisfaction, and
Customer Commitment
Postpurchase Consumer
Behavior
Class Discussion
Based on those characteristics that

contribute to postpurchase dissonance,
discuss several product purchases that
are most likely to results in dissonance
and several that will not create this
effect.
Postpurchase Dissonance
• Postpurchase Dissonance: a consumer
reaction after making a difficult decision
that involves doubt and anxiety
• Probability of experiencing dissonance
increases based on:
– Degree of commitment or irrevocability
– Importance of the decision
– Difficulty in choosing
– Individual’s tendency to experience anxiety
Postpurchase Dissonance
• Approaches to reduce dissonance:
– Increase the desirability of the brand
purchased
– Decrease the desirability of rejected brand
– Decrease the importance of the purchase
– Reverse the purchase decision (return before
use)
Consumer Insight
• What ethical issues, if any, are there with s
tate lotteries encouraging counterfactual a
nd prefactual thinking about winning the lot
tery?
• Why is counterfactual thinking so common
among consumers (it is common)?
Disposition Alternatives
Expectations, Performance,
and Satisfaction
Dissatisfaction Response
Creating Committed Customers
Sources of Increased Customer
Profitability over Time
Consumer Insight
• What ethical issues, if any, do you see fro
m collecting and using individual data this
way?
• What risks, if any, do you see from this ap
proach to providing service?
Customer Satisfaction Outcomes
PIMG
Unit IV
Models of Consumer
Decision Making
A Simple Model of Consumer Decision Making
External Influences
Firm’s Marketing Efforts Sociocultural Environment
1. Product 1. Family
Input 2. Promotion 2. Informal sources
3. Price 3. Other noncommercial sources
4. Channels of 4. Social class
distribution 5. Subculture and culture
Consumer Decision Making
Psychological Field
1. Motivation
Need Recognition 2. Perception
3. Learning
Process Prepurchase Search 4. Personality
5. Attitudes
Evaluation of Alternatives
Experience
Postdecision Behavior
Output Purchase
Postpurchase
1. Trial
2. Repeat purchase Evaluation
Model of Buyer Behavior
Marketing and Buyer’s Black Box Buyer Responses

Other Stimuli
Marketing Buyer Characteristics Product Choice

Product Buyer Decision Process Brand Choice
Price Dealer Choice
Place
Promotion
Other
Economic
Purchase Timing
Technological Purchase Amount
Political
Cultural
Approaches to Study of
Buyer Behavior
• Economic model
• Learning theory model
• Psycho-analytic model
• Information processing model
The EBM model of buyer behavior
(Engel, Blackwell, and Miniard)
Factors Affecting Consumer
Behavior: Culture
Culture is the Most Basic Cause of a Person's
Wants and Behavior.
Subculture
• Group of people with shared
value systems based on
common life experiences.
• Hispanic Consumers
• African American Consumers
• Asian American Consumers
• Mature Consumers
Behavior: Culture
Culture is the Set of Values, Perceptions, Wants &
Behavior Learned by a Member of Society from
Family.
Social Class
• Society’s relatively permanent
& ordered divisions whose
members share similar values,
interests, and behaviors.
• Measured by: Occupation,
Income, Education, Wealth and
Other Variables.
Behavior: Social
Groups
Groups
••Membership
Membership
••Reference
Reference
Family
Family (most
(most important)
important)
••Husband,
Husband, wife,
wife, kids
kids Social
Social Factors
Factors
••Influencer,
Influencer, buyer,
buyer, user
user
Family Buying Influence

Children can exert a
strong influence on
family buying decisions.
Roles
Roles and
and Status
Johnson & Johnson reminds
Status customer’s of its commitment

to the American Family.
What other companies use

children to influence
family buying decisions?
Click or pre ss spa cebar to return

Behavior: Personal
Personal Influences
Personal Influences
Age
Age and
and Life
Life Economic Personality
Personality &
&
Occupation
Occupation Situation Self-Concept
Cycle
Cycle Stage
Stage Self-Concept
Lifestyle
Lifestyle Identification
Identification
Activities
Activities Interests
Interests Opinions
Opinions
Behavior: Psychological
Motivation
Psychological
Factors
Beliefs and Affecting Perception
Attitudes Buyers
Choices
Learning
Maslow’s Hierarchy of Needs
Self
Actualization
(Self-development)
Esteem Needs
(self-esteem)
Social Needs
(sense of belonging, love)
Safety Needs
(security, protection)
Physiological Needs
(hunger, thirst)
Consumer Evaluation
What criteria do consumers use to make
evaluations? What do consumers care
about?
• Values
• Benefits
• Attributes
• Means-End Value Chains
Means-End Value Chains
Multi-attribute evaluation
Belief x Importance Model:

• Evaluation is reflected by brand attitude
• Attitude is the sum of salient beliefs,
• Weighted by the importance of each belief
Atto = Σ(Bi x Ii) Summed for each attribute i.
• The Bi component indicates the strength of the association.
• The Ii component indicates the importance of that
association to brand attitude.
Buyer Decision Process
Purchase
Decision
Evaluation Postpurchase
of Alternatives Behavior
Information
Search
Need
Recognition
Buyer Decision Process
Step 1. Need Recognition
Buyer
Recognizes a Needs Arising From:
State Where the Problem or a
Buyer’s Needs are Internal Stimuli –
Need.
Fulfilled and the Buyer Hunger
is Satisfied.
External Stimuli-
Friends
The Buyer Decision Process
Step 2. Information Search
Personal •Family, friends, neighbors

PersonalSources
Sources •Most effective source of
information
Commercial •Advertising, salespeople

CommercialSources
Sources •Receives most information from
these sources
Public •Mass Media

PublicSources
Sources •Consumer-rating groups
•Handling the product

Experiential
ExperientialSources
Sources •Examining the product
•Using the product
Step 4. Evaluation of Alternatives
Consumer May Use Careful
Calculations & Logical Thinking
Consumers May Buy on Impulse and

Rely on Intuition
Consumers May Make Buying Decisions
on Their Own.
Consumers May Make Buying Decisions

Only After Consulting Others.
Marketers Must Study Buyers to Find Out

How They Evaluate Brand Alternatives
Step 5. Purchase Decision
Purchase Intention
Desire to buy the most preferred brand
Attitudes of Unexpected
Others Situational
Factors
Purchase Decision
Step 6. Postpurchase Behavior
Satisfied Customer!
Consumer’s
Cognitive Dissonance
Expectations of Product’s Performance.
Product’s Perceived
Performance.
Dissatisfied Customer
Role of Consumer Involvement
• Sometimes consumers make
evaluations/choices very carefully
• Sometimes consumers make
evaluations/choices with little care
• Involvement—strength of motivation,
importance
• High involvement—B X I model
Low involvement evaluations
• Cognitive shortcuts (heuristics)
• Habit
• Affective responses
Consumer Mind: A Black Box
Stimulus
Company Buy
Controlled
Product
Price Consumer
Advertising Response
Mind
Promotion (Black Box)
Display
Distribution
Social
Word of No Buy
Mouth
Reference
Group
Customer Decision Making Process
Drivers of Change
Technology
Development/
New Generations
CUSTOMER
Awareness Personality
•Assertive
•Exhibitionist
•Self Concept
Values Social Structure •Life-Style
•Differ Pleasure vs. •Individualism vs. •Aspirations
•Instant Pleasure •Collectivism
How they Buy ?
• High involvement products:
 High price
 Complex features
 Significant differences between alternatives
 High perceived risk
 Reflect self concept of buyer
 E.g. Selection of a Car
How they Buy ?
• Low involvement products
 Alternatives within the same product class are
similar
 Does not reflect buyers self concept
 Frequent brand switching behaviour
• E.g. buying a bathing bar (Toilet Soap)
Purchase decision in low involvement
products
Theory of evoked set
(Howard & sheth’s theory)
Its not product but the Situation
• Routinized response
• Limited problem solving
• Extensive problem solving
Types of Buying Behavior
High Low Involvement

Involvement
Significant Complex Buying Variety Seeking
Differences Behaviour Buying
Between Brands Behaviour
Few Differences Dissonance Habitual Buying
Between Brands Reducing Buying Behaviour
Behaviour
Motivational reasons
• Sheth’s consumer motives
– Five dimensions of motivation concerning
products/services benefits
• Functional – utility or function performed
• Aesthetic/emotional – appearance or attractiveness
• Social – status or esteem value
• Situational – unexpected benefit
• Curiosity – interest aroused
Purchase decision in high involvement
products
Routinized response
(straight re buy)
• Customer is aware of his /her choice

• Decision is based on personal experience
• Spends little /no time in choosing an alternative
• Perceives low risks
Limited problem solving
(modified re buy)
• Launch of a new product which leads in a

change in the customer’s decision criteria.
• Buying leads to trial purchase
• Brand extension helps in removing obstacles
• Perceives moderate risk
Extensive problem solving
(new task)
• Requires extensive learning

• Awareness about alternatives is zero
• Has no decision criteria
• Unable to evaluate different brands
• Relocating to a new & unknown environment
Rational behind behaviour
Psychological Factors
Motivation
Learning
Perception
Motivation
(Sigmund Freud)
Influence on Buyer Behaviour
Values motivates in buying
• Functional value
• Conditional value
• Social value
• Emotional value
• Knowledge value
• (according to Sheth , Newman & Gross)
Learning Theory
• Human behaviour is learnt
One learns @ the pain of punishment
Or @ the lure of rewards
• Directing human behaviour is done by developing
stimuli and cues which bring to fore the latent need
• Attractive advertisement , shelf display, packaging,
how to use instructions ,store layout ,availability &
sales persons are examples of cues developed by a
marketer.
Basis of Differences
• Gender differences –
hunter=men,
nurse=women
• Intelligence differences –
caste,
class,
education, etc.
• Personality differences –
job specializations
• Plato stated more than 2000 years ago:
“No two persons are born exactly alike; but

each differs from the other in natural
endowments, one being suited for one
occupation and the other for another.”
Cognitive dissonance theory
• Leon Festinger-1957 ,wrote the theory of
cognitive dissonance
• Psychological discomfort caused by
inconsistency among a person’s beliefs ,
attitudes / actions e.g. smoking
• Varies in intensity based on importance of
issue & degree of inconsistency
Lifestyles
(Indian Perspective)
Buyer lifestyle
• Survivors: Price conscious , not very knowledgeable , depressed.
• Sustainers: Strugglers , swayed by brand guarantee , impulse
buyers.
• Belongers: Conventional conservative , nostalgic , unexperimental.
• Emulators : Ambitious , upwardly mobile , status conscious , buy
to impress others.
• Achievers : Leaders , work in hi tech top line products.
• I-am-me: Young , Self engrossed , impulsive.
• Experimental : Pursue a rich inner life , High sense of social resp.
• Integrate : Fully matured psychologically , combination of best
elements
CONSUMER DECISION-MAKING
MODEL
INPUT PROCESS
FIRMS MARKETING EFFORTS NEED PSYCHOLOGICAL

FIELD
• PRODUCT RECOGNITION
• PRICE MOTIVATION
• PROMOTION PERCEPTION
• DISTRIBUTION PRE-PURCHASE LEARNING
SEARCH PERSONALITY
SOCIO-CULTURAL ATTITUDES
ENVIRONMENT
EVALUATION OF
• FAMILY ALTERNATIVES EXPERIENCE
• INFORMAL SOURCES
• OTHER NON-COMMERCIAL
SOURCES
PURCHASE
• SOCIAL CLASS
• SUB-CULTURE
• TRIAL
AND CULTURE
• REPEAT PURCHASE
POST-PURCHASE
EVALUATION OUTPUT
Organizational Buyer
Behavior
250
What is a Business Market?
• A business market comprises all the

organizations that buy goods and services
for use in the production of other products
and services that are sold, rented, or
supplied to others.
• The business market is huge and involves
many more dollars and goods than do
consumer markets.
Characteristics of Business
Markets
Contain
Containfewer,
fewer,but
but
Marketing Structure larger
largerbuyers
buyers
and Demand Customers
Customersare
aremore
more
geographically
geographicallyconcentrated
concentrated
Buyer
Buyerdemand
demandisisderived
derivedfrom
from
final
finalconsumer
consumerdemand
demand
Demand is often more inelastic
Demand often fluctuates more, and

more quickly
Markets
• Nature of the Buying
Unit
– Business purchases
involve more buyers.
– Business buying
involves a more
professional purchasing
effort.
Markets
Types of Decisions and the
Business buyers
usually face more
Decision Process
complex buying
Business buying
decisions.
process is more
formalized. In business
buying, buyers
and sellers work
more closely
together.
Click to return
To develop
long-term
partnerships,
business
marketers work
closely with
their customers.
Fujitsu promises high-end

support to go along with
its high-tech products.
Model of Business Buyer
Behavior
Buyer Responses
The Environment The Buying
Organization
Product or
Marketing
The buying service choice
Stimuli:
•Product center
•Price Supplier Choice
•Place Buying decision
•Promotion process Order Quantities
Other Stimuli: (Interpersonal and Delivery terms

•Economic
individual influences) and times
•Technological
•Political Service terms
•Cultural (Organizational
•Competitive Influences)
Payment
FACTORS INFLUENCING
ORGANIZATIONAL BUYERS
• ENVIRONMENT FACTORS- factors in current &
expected economic environment, such as primary demand,
economic, outlook, cost of money.
• ORGANIZATIONAL FACTORS-specific
objectives,policies,procedures, organizational structure &
system.
• INTERPERSONAL FACTORS- includes several
participants with different status, authority, empathy &
persuasiveness .
• INDIVIDUAL FACTORS – personal motives, perceptions
& preferences. These factors are further affected by personal
characteristics like age,income,education,styles &attitudes.
Organizational Buying
Professional purchasing
Fewer buyers
Larger purchases
Closer, longer relationships/ reciprocity
Geographic concentration
Derived demand
Lower price sensitivity
Buying center
Participants in the Business
Buying Process
Ethical
Unexpected
Unexpected
Situational
Situational Users
Factors
Factors Influencers
Decision-Making Unit
of a Buying
Organization is Called
Roles Include Its Buying Center. Buyers
Attitudes
Attitudes
of
of
Others
Others Deciders
Gatekeepers
• Difference between Consumer and
Organizational Buying
• Fewer organizational buyers
• Close, long-term relationship between
organizational buyers and sellers
• Organizational buyers are more rational
• Organizational buying may be to
specific requirements
• Reciprocal buying may be important in
organizational buying 259
• Organizational selling/ buying may be more
risky
• Organizational buying is more complex
• Negotiation is often more important in
organizational buying
Consumer Buyer Behavior
• An understanding of customers can only be
obtained by answering the following
questions
• Who is important in the buying decision?
• How do they buy?
• What are their choice criteria?
• Where do they buy?
• When do they buy?
260
Organizational Buyer Behavior:
Organizational buyer behavior has usefully
been broken down into three elements by
Fisher. They are
• Structure – who participates in the decision
making process and their particular roles
• Process – the pattern of information getting,
analysis, evaluation and decision- making
which takes place as the purchasing
organization moves towards a decision
• Content – the choice criteria used at different
stages of the process and by different
members of the decision- making unit 261
• Structure: An essential point to understand
in organizational buying is that the buyer or
purchasing officer is often not the only
person who influences the decision, or who
actually has authority to make the ultimate
decision. Rather, the decision is in the
hands of a decision making unit (DMU), or
buying center as it is sometimes called
262
• Process: Need or problem recognition
• Determination of characteristics,
specification and quantity of needed item
• Search for and qualification of potential
sources
• Acquisition and analysis of proposals
• Evaluation of proposals and selection of
suppliers
• Selection of an order routine
• Performance feedback and evaluation
263
• Content: This aspect of organizational buyer
behavior refers to the choice criteria used by the
members of DMU to evaluate supplier proposals
• Quality
• Price and life-cycle costs
• Continuity of supply
• Perceived risk
• Office politics
• Personal liking / disliking: As with consumer
behavior, three selective processes may be at
work on buyers such as
• Selective exposure, selective perception, selective
retention 264
Factors affecting Organizational buyer
behavior:
Cardozo identified three factors:
• The buy class
• The product type
• The importance of purchase to the buying
organization
The buy class:
• Straight re-buy
• Modified re-buy
• New task 265
TYPES OF BUYING SITUATIONS
• Straight rebuy- purchase department reorders
on a routine basis, such as office stationery.
• Modified rebuy- buyer wants to modify
product specifications, prices, other terms of
suppliers , such as new electronic components.
• New task- buying for first time. This is
marketer’s greatest opportunity &challenge.
The product type:
• Products can be classified according to four types
• Materials
• Components
• Plant and equipment
• Products and services for maintenance, repair,
and operation (MROs) e.g. spanners, welding
equipment
Importance of purchase to the organization:
• Involves large sums of money, considerable
uncertainty about the outcome of alternative
offerings 267
Development in Purchasing Practice:
• A number of trends have taken place within the
purchasing function which have marketing
implications for supplier firms
They are
• Just in time purchasing (JIT)
• The just in time (JIT) concept aims to minimize
stocks by organizing a supply system which
provides materials and components as they are
required
• Centralized purchasing
• Where several operating units within a company
have common requirements and there is
opportunity to strengthen a position by bulk
buying, centralized purchasing is an attractive
option
268
• Reverse marketing
• Purchasing is taking on a more proactive,
aggressive stance in acquiring the products
and services needed to compete.
• This process whereby the buyer attempts to
persuade the supplier to provide exactly what
the organization wants is called reverse
marketing
• It provides an opportunity to develop a stronger
and longer relationship
• It could be a source of new product
opportunities that may be developed to a
broader customer base.
269
• Leasing
• A lease is a contract by which the owner
of an asset grants the right to use the
asset (e.g. a car ) for a period of time to
another party in exchange for payment of
rent
• There are two main types of lease
• Financial lease or full payment lease
• Operating lease sometimes called rental
agreements
270
Professional Buying
Goods purchased by professionally trained
persons. The characteristics of industrial
buying are –
• Direct purchasing – buy directly from
producer than middle man
• Reciprocity - select suppliers who also buy
from them finished products
• Leasing - equipment leasing instead of
outright purchase
ORGANIZATIONAL BUYING
PROCESS
• Problem recognition – recognition of need by someone in the company that
could be met by purchasing a particular product or service. New ideas may
come through trade shows, advertisement, sales person.
• General need decision- the features & quantity of the needed item are
described by the originating department in consultation with technical
service people.
• Product specialization – technical specifications of the required product are
developed .
• Supplier search – search for the best vendors using database or directories.
• Proposal solicitation - inviting bids from vendors .vendor’s salesmen may
give presentation.
• Supplier selection – analysis of proposals.
• Order routine specification- preparation of purchase order /supplier
contract which includes technical specification , quantity to be supplied,
delivery schedules, price, guarantees.
• Performance review- the buyer reviews the performance of the supplier.
The feedback normally comes from the user department . Based on the
review , the buyer may decide to continue the contract or cancel further
supply .
Consumerism
• In today’s date, business is confronted with growth of
consumerism and legislative measures to protect
consumers.
• Consumer movement is growing in India.
• There is growing consumer awareness about products
failing to satisfy quality requirements.
• Exploitation of consumers by unfair trade practices, poor
quality and spurious products and overpricing is very
widespread.
• Misleading false or deceptive advertisements is
common. At times the advertisement gives only half the
information so as to give a different impression than is
the actual fact.
Misrepresentation about the quality of a product or
the potency of a drug or a medicine can be
projected without much risk.
There are organisations such as Consumer
Guidance Society of India, Mumbai and Consumer
Education and Research Centre, Ahmedabad.
These organisations are active in conducting
product testing and exposing substandard quality
and adulteration. Outcome of consciousness
regarding consumer rights has led to ISI
certification of food colors now being mandatory.
Consumer organisations also play an important
role in addressing consumer greivances.
Consumer Rights
Some of the rights of consumers are:
Right against exploitation by unfair trade practices.
Right to protection of health and safety from goods
and services that are available to the consumer.
Right to be informed about the quality and
performance standards, ingredients of the products,
possible adverse effects etc.
Right to be heard if there is any grievance or
suggestion.
Right to get genuine grievances redressed.
Right to a physical environment that will protect and
enhance the quality of life.
Responsibility of Consumers
• Consumer should not make vague or general complaints
and should also have supporting information and proof
such as a bill.
• Consumer should try to understand the viewpoint of the
seller.
• Consumers in asserting their rights should not
inconvenience or hurt other sections of the public ie
resort to rasta roko movements, bandh etc.
• Consumers should complain against a system and not
attack individuals.
Consumerism
• Kotler has defined Consumerism as “ a social
movement seeking to augment the rights and
powers of the buyers in relation to others”.
• Consumerism as a collective endeavor of the

consumers to protect their interests, is a
manifestation of the failure of the business,
including that of the public sector, and the
government to guarantee and ensure the
legitimate rights of the business.
Consumer Protection
• For consumer protection all stakeholders
especially Business, Government and
consumers are equally responsible.
• Business, comprising producers and all
elements of distribution channels have to
pay due regard to consumer rights.
– Producer should not charge exorbitant prices
in a sellers market.
– Hoarding and blackmarketing is illegal.
Consumer Protection
Government should come to the rescue of the consumer to
avoid him from being misled, duped, cheated and exploited.
As per the UN Guidelines for Consumer Protection
Role of Government in consumer protection is vital and is
through policy making, legislation and development of
institutional capacity for its enforcement.
Government to establish distribution facilities for essential
consumer goods and services.
Encourage establishment of consumer cooperatives and
related trading activities.
Establish legal measures to enable consumers to obtain
redress through formal or informal procedures.
Consumer Protection
Consumers should accept consumerism as a means of
asserting and enjoying their rights.
As per Kotler” addition of long run consumer welfare asks the
businessman to include social and ecological considerations in
his product ad market planning.”
NGOs have an important role in consumer protection. As per

the UN Guidelines one of the objectives is to facilitate the
development of independent consumer groups which should
have the freedom to present their views in the decision making
processes affecting them. Consumer organisations should be
encouraged to monitor adverse practices, such as the
adulteration of foods, false or misleading claims in marketing
and service frauds.
Utility of Consumerism
• Producers and sellers will not take the consumer for
granted.
• Consumerism will provide feedback for businesses and
enable producers to understand consumer grievances,
needs and wants.
• Consumerism will make the Government more
responsive to consumer interests, prompt it to take
necessary measures to protect the rights of consumers.
• Help consumer and producer to get together and co-
operate to get rid of unscrupulous traders.
Consumerism
• Consumerism has the following roles to play:
– Consumer Education: Consumer is given
information about various consumer goods and
services in relation to prices, standard trade
practices etc.
– Product Rating: Agencies such as Consumer
Education and Research Society (CERS),
Ahmedabad; carry out tests and report the result
of such tests.
– Liaison with Government and with Producers
UN Guidelines for Consumer
Objective:
Protection
1. To assist countries in achieving or maintaining adequate
protection for their population as consumers.
2. Facilitate production and distribution patterns responsive to
the needs and desires of consumers.
3. Encourage high levels of ethical conduct for those engaged in
the production and distribution of goods and services.
4. Assist countries in curbing abusive business practices by all
enterprises which adversely affect consumers.
5. Facilitate development of independent consumer groups.
6. To further international cooperation in the field of consumer
protection
7. Encourage the development of market conditions which
provide consumers with greater choice at lower levels.
General Principles
Governments should develop, strengthen or maintain a
strong consumer protection policy, taking into account
guidelines set below:
Protect consumers from hazards to their health and
safety.
Promotion and protection of the economic interests of
consumers.
Access of consumers to adequate information to
enable them make informed choices.
Consumer education.
Availability of effective consumer redress.
Freedom to organise consumer groups to present their
views in decision making processes affecting them.
Plight of Indian Consumer
Some of the problems faced by Indian consumers are:
Short supply of items of essential needs.
Lack of effective or workable competition.
Unfamiliarity of product features results in sale of
substandard, inferior or even defective goods
Due to low literacy levels and unsatisfactory
information flows, Indian consumers are not conscious
of their rights.
Consumerism in India is not organised and developed.
Laws to safeguard interests of consumers are not
effectively implemented.
Government Measures
In India, the Government has taken a number of
measures to protect consumer interests:
Statutory Regulation:
Government of India is empowered to regulate the
terms and condition of sale, nature of trade and
commerce etc. Important legislation in this respect
include the Competition Act, Essential Commodities
Act, Prevention of Food Adulteration Act, Prevention of
Black marketing and Maintenance of Supplies of
Essential Commodities Act, Consumer Protection Act
etc.
Growth of Public Sector was designed to enhance
consumer welfare by increasing production and making
available goods and services at fair prices, curbing
private monopolies and reducing market imperfections.
Consumer Protection Act, 1986
The Consumer Protection Act 1986 is a social welfare
legislation which was enacted as a result of widespread
consumer protection movement. The main object of the
legislature in the enactment of this act is to provide for the
better protection of the interests of the consumer and to make
provisions for establishment of consumer councils and other
authorities for settlement of consumer disputes and matter
therewith connected.
In order to promote and protect the rights and interests of
consumers, quasi judicial machinery is sought to be set up at
district, state and central levels.
The main object of these bodies is to provide speedy and

simple redressal to consumer disputes. It is one of the
benevolent pieces of legislation intended to protect the
consumers at large from exploitation.
Consumer Protection Councils
 The Act provides for the establishment of a Central Consumer
Protection Council by the Central Government and a State
Consumer Protection Council in each State by the respective State
Governments.
 Central Council shall consist of the Minister in charge of consumer
affairs in the Central Government who shall be its Chairman .
 Objective of Council:
 Right to be protected against marketing of goods and services which are
hazardous to life and property.
 Right to be informed about the quality, quantity , purity, standard and
price of goods and services so as to protect the consumer against unfair
trade practices.
 Right to be assured access to a variety of goods at competitive prices.
 Right to be heard and assured that consumers interests will receive due
consideration at appropriate forums.
 Right to seek redressal against unfair trade practices
 Right to consumer education.
Consumer Disputes Redressal
Agencies
• A District forum in each and every District of the
State.
• A State Commission in each State.
• A National Commission : Established by the Central
Government in Aug 1988.
A complaint where the value of the goods and services
and compensation is less than Rs 5 lakh is to be dealt
with the District Forum; between 5-20 lakhs by the
State Commission and with more than twenty lakhs
falls within the jurisdiction of the National Comission.
Right to Information Act 2005
• An Act to provide for setting out the
practical regime of right to information
for citizens to secure access to
information under the control of public
authorities, in order to promote
transparency and accountability in the
working of every public authority
Ethical Responsibilities of Business
towards Consumers
• The responsibility of business corporations towards their
consumers are to provide the products at right quality, quantity,
time, place and the right price. Consumer is the foundation of
any business activity. Various unfair practices like hoarding,
adulteration, shoddy merchandise, unfair measurements,
misleading advertising etc. should not be allowed. Businesses
should:
– Produce goods according to the needs of the consumers,

their purchasing power etc.
– Offer quality goods at a reasonable price.
– Aim to improve the standard of living by producing goods
and services of high quality.
– Treat customers fairly in all aspects of business transactions
Ethical Responsibilities of Business
towards Consumers
 Ensure that after sales services is available.
• Ensure the health and safety of customers
• Inform and educate customers on the arrival and use of
products.
• Be truthful in the matter of advertising and warranty.
• Offer improved and new products through technical and
marketing research.
• Avoid monopolistic and restrictive trade practices.
• Ensure that product promotion and advertising are not
misleading.
• Trust forms the basis of successful marketplace
transactions and is the most important ethical issue.
Ethical issues relating to Product
• Quality
• Safety: Business should give safety the priority warranted by the
product. Safety of a product can be ensured by monitoring the
manufacturing process and periodic reviewing of the working
conditions and competence of personnel
• Packaging and Branding Issues: It is the ethical responsibility of
the manufacturer to provide clear, accurate and adequate
information regarding the labeling and packaging of products.
There should not be any misleading information regarding the
quantity and quality of products.
• Product Warranties: Warranties are obligations to purchasers
that sellers assume. Express warranties are the claims that
sellers explicitly state for eg: a product is waterproof etc. Implied
warranties include the claim, implicit in any sale, that a product
is fit for its ordinary, intended use.
Ethical issues Relating to Promotion
• Companies make use of advertising and promotional
strategies to lure more customers. Advertising is
considered unethical when:
• It degrades the rival’s product or substitute product.
• The company provides misguiding and false
information.
• It conceals information that vitally affects human life (eg:
side effects of drugs etc).
• It is obscene or immoral.
Consumer Behaviour to Profit
and Non Profit Marketing
Nonprofit Organization
Marketing
Nonprofit
Nonprofit An organization that exists
Organization
Organization to achieve some goal other
Marketing
Marketing than the usual business
goals of profit, market share,
or return on investment.
Uses of Nonprofit Direct Marketing
• Gaining awareness & supporters
• Driving memberships
• Securing volunteers
• Raising funds
• Etc.
Non-Profit Organizations are
America’s Largest Employer!
• Do you work for a
non-profit
organization?
• 80 million people in
America do!
• Are you a volunteer?
• 44% of all adults
volunteer (3.6 hours
per week average)
Nonprofit Direct Marketing
Users
• Health concerned organizations
• Environmental organizations
• Educational institutions
• Religious institutions
• Political organizations
• The government
• Etc.
Customer Relationship
Building
• For nonprofit organizations, customer
relationship management (CRM) simply means
developing a relationship with donors, thus
ensuring their future support.
• Most nonprofit organizations do NOT use the
word “customers”
• Donors, volunteers, clients, board members, etc.
Customer Relationship
Maintenance
• Nonprofit organizations can effectively
maintain and strengthen relationships with
their customers by adding a feedback
element to each form of communication
Direct Marketing for Nonprofit
Organizations
• The single most important way to enhance
customer relationships is to listen to the
customers
• Beyond customer retention, cultivating
partnerships with businesses is another
way to support a nonprofit organization’s
cause
Corporate Partnerships
• Cause-related marketing is defined as a
commercial activity by which businesses
and charities or causes form a partnership
with each other to market an image,
product, or service for mutual benefit
Marketing
 Government
 Museums
 Theaters
 Schools
 Churches
Marketing
Market
Market intangible
intangible products
products
Shared
Shared Production
Production requires
requires
Characteristics
Characteristics customer’s
customer’s presence
presence
with
with
Service
Service Services
Services vary
vary greatly
greatly
Organizations
Organizations
Services
Services cannot
cannot be
be stored
stored
Marketing
Identify
Identify desired
desired customers
customers
Specify
Specify objectives
objectives
Develop,
Develop, manage,
manage, eliminate
eliminate programs
programs and
and services
services
Decide
Decide on
on prices
prices
Schedule
Schedule events
events or
or programs
programs
Communicate
Communicate their
their availability
availability
Unique Aspects of Nonprofit
Organization Marketing Strategies
 Setting of marketing objectives
 Selection of target markets
 Development of marketing mixes

Objectives
Provide services that respond to the wants of :
 Users  Appointed officials

 Payers  Media
 Donors  General Public
 Politicians
Target Markets
Apathetic Unique Issues

Apathetic or
or of Nonprofit
strongly
strongly opposed
opposed Organizations
targets
targets
Pressure
Pressure to
to adopt
adopt
undifferentiated
undifferentiated
segmentation
segmentation
Complementary
Complementary
positioning
positioning
Product Decisions
Distinctions between
Business and Nonprofit Organizations
 Benefit complexity
 Weak or indirect benefit strength
 Low involvement
Promotion Decisions
Professional volunteers
Sales promotion activities
Public service advertising

Pricing Decisions
Pricing
Pricing objectives
objectives
Nonfinancial
Nonfinancial prices
prices
Characteristics
Characteristics
Distinguishing
Distinguishing
Pricing
Pricing Decisions
Decisions Indirect
Indirect payment
payment
of
of Nonprofit
Nonprofit
Organizations
Organizations Separation
Separation between
between
payers
payers and
and users
users
Below-cost
Below-cost pricing
pricing
Nonprofit Organization Marketing
Benefit
PRODUCT complexity PLACE
Special
Benefit
facilities
strength
TARGET
• Apathetic or
Involvement
strongly opposed
• Undifferentiated
segmentation Nonfinancial
Professional • Complementary
positioning Indirect
volunteers payment
Sales Separation
PROMOTION PRICE
Public Service Below cost
Advertising pricing
Political Campaign Direct
Marketing Objectives
• Raising money
• Gaining support for their cause
• Securing new members
• Obtaining votes
Political Campaign
• The ultimate question is “just how
successful are political direct marketing
efforts?”
– Unlike most nonprofit organizations, political
parties don’t measure their success by
response rates or dollars.
– They measure it by votes.
Marketing allows us to bring in
socially desirable behaviours
When we do that we contribute to

Social marketing
Social Change Campaigns often
fail because
• People are uninformed and this makes them harder to
reach through conventional media
• Response to new information increases with audience
involvement or interest; if few people are interested, few
will respond
• Response to new information increases with
information’s compatibility with audience attitudes.
People tend to avoid disagreeable information
• People read different things in information, depending on
their beliefs and attitudes
Why does this happen?
Researchers have cited several factors that dilute
mass media effect
• Audience factors - apathy, defensiveness,
cognitive disability
• Message factors – attention, comprehension,
perception
• Media factors – appropriateness of media
• Response- mechanism factors – making it easy
for the audience to respond
In order to bring about change in
customer/prospect behaviour, the
marketer has to first understand
the barriers against change by
positioning himself/herself in the
shoes of the prospect/customer
Conditions that favour Social
Change Campaigns
• Monopolization - Could you be the only message
or only use that medium exclusively?
• Canalization - Favourable public attitude base
helps to channel existing attitudes and
behaviour
• Supplementation – mass media communication
supplemented by face-to-face communication
So for any Social Change program, the
marketing challenge is to identify
• Cause – social objective to provide a desirable answer
to a social problem
• Change agent – whoever attempts to bring about the
social change
• Target adopters – individuals/groups/entire population
• Channels - communication and distribution pathways
which help exchange influence and response between
change agents and target adopters
• Change strategy – program adopted to effect change in
target adopters’ attitudes and behaviours
Any social program attempts
to market a social product
What is a Social Product?
It could be an
• idea
• practice
• tangible object
Social marketing requires knowledge of
each target –adopter group
• Sociodemographic characteristics
• Psychological profile
• Behavioural characteristics
These help make accurate
predictions
Predictions are prerequisites to
the ability to influence outcomes
Social marketing would have
to identify ‘influentials’
The aim is to neutralize, the
opposition and gain support of
‘influentials’
Influentials could be
• Permission granting groups
• Support groups
• Opposition groups
• Evaluation groups
Social Change – Management Technology
The social product must fit the target adopter.

• Defining the fit – what are the TA looking for?
• Designing the fit – what makes a good fit?
• Delivering the fit – How to bring it to TA?
• Defending the fit – How do I sustain it?

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PIMG

M.B.A.-III Semester (Spl.-Marketing)

Consumer Processes a consumer uses to

Identify and understand the cultural

Set of values, norms,

Subculture A homogeneous group

A group of people in a society

• Helps determine the

Identify and understand the

A group in society that

 They serve as information sources and

 They affect an individual’s aspiration

 Their norms either constrain

Purchase Process Roles in the Family

Identify and understand the individual

Identify and understand the psychological

Process by which people select,

 Change beliefs about the brand’s attributes

Learning Experiential Conceptual

Purchase Process Roles in the Family

Identify and understand the individual

Identify and understand the psychological

Static model…opinion leader absorbs and retransmits

Most product related

OPINION LEADERSHIP SAMPLE

SELF-DESIGNATING Each respondent is asked a “Do you influence

SOCIOMETRIC Members of a social system “Whom do you

OBJECTIVE Artificially places individuals in a “Have you tried

Every year around 5000 new

It is any idea or product perceived

An innovation is an idea, practice, or product perceived to be

The manner by which a new

 Marketing Strategies and the Diffusion Process

Awareness - the individual is exposed to the

Interest - the individual becomes interested in the

Evaluation - individual mentally applies the

Trial - the individual makes full use of the

Adoption - the individual decides to continue the

Evaluation: Consumer considers

Adoption: Consumer decides

Trialability Marketing Effort

Communicability Relative Advantage

Yo Bike Diet Coke

“ Diffusion is the process in which an innovation is

• “innovation”: Friendship Quiz – a Facebook application

Copyright © 2006 Pearson 13-115

• This group is the bulwark of the mainstream

• Want to maintain status quo

Result of an imbalance between

Any unit of input affecting

 When a current product

 Recall information in memory

External Information search

 Seek information in outside

Less Risk More Risk

Conjunctive rule “I selected the computer that had no bad features.”

Disjunctive rule “I picked the computer that excelled in at least one

 Seeking information that reinforces positive