LESSON 1: INTRODUCTION TO CONSUMER BEHAVIOUR Introduction As a consumer we are all unique and this uniqueness is reflected in the consumpt

ion pattern and process of purchase. The study of consumer behaviour provides us with reasons why consumers differ from one another in buying using products and services. We receive stimuli from the environment and the specifics of the mark eting strategies of different products and services, and responds to these stimu li in terms of either buying or not buying product. In between the stage of rece iving the stimuli and responding to it, the consumer goes through the process of making his decision. UNIT I INTRODUCTION CHAPTER 1: THE STUDY OF CONSUMER BEHAVIOUR Process that aims at satisfying individual and organizational needs by creating, offering and exchanging competitively made products that provide value to the bu yers Today our focus is on customer. Objectives like revenue, profit, market shar e, etc. Re important, but they will flow only by acquiring customer competence. In our country particularly the customer, even as late as in 1980s, was bereft o f alternatives; he would uncomplainingly buy whatever the seller dished out. Not any more. Todays choice empowered customer, supported by a competitive environme nt, global quality, and new economic realities, decides the fate of the marketer . So lets define Marketing once more: It is a total business philosophy aimed at i dentifying the needs of each customer group, then designing and producing produc t / service package so as to serve the groups more effectively than the competit ors. This definition reveals three key dimensions of marketing: CONSUMER BEHAVIOUR Objectives After reading this lesson you should be able to: Understand the development of the marketing concept. Define customer value, sati sfaction, and retention. Exploring the link between marketing and Customer orien tation Definition, role and importance of consumer behavior for a marketer Ident ify the major factors that influence a consumers purchase decision and behavior A simplified model of the consumer decision-making framework Define consumer beha vior. Describe the societal marketing concept. 1. Marketing and Customer Orientation To introduce you to the concept of consumer behaviour, let us first understand a bout the discipline of consumer behaviour in relation to marketing. 1.1 What is Marketing? Marketing on the one hand is a business philosophy and on the other a n action oriented process. The philosophy - also termed as marketing concept - h as its roots in market economy. There are four critical ideas that form the foun dation of such an economy: It seeks to identify customer needs: Many manufacturers would know all there is to know about relevant production technology, but nothing about their customers w ants. They may design products with fancy features without considering the perce ived value of such features to their buyers. Then they wonder why their sales st aff fails to push the product in the market. Marketing attempts to select custom er groups for which it can develop a competitive edge: Companies taking a shotgu n approach - meaning all things to all people - inevitably end up with sackful o f unsold product inventories. Those companies which concentrate their limited re sources on meeting specific needs of the customer have better chances of succeed ing. It designs and produces the right product packages: when a company attempts

to sell a Mercedes while the customer is demanding a Zen sized car, failure wil l greet it with open arms. Individuals pursue their self-interest to seek rewarding experience Their choice s determine as to what would constitute such experience, the choices themselves being shaped by personal (taste) and external (cultural) influences. Consumers e njoy the freedom to choose; they are sovereign. This freedom ensures free and co mpetitive exchange between buyers and sellers. 1.2 Major Concepts in Marketing A course in Consumer Behaviour uses certain term s repeatedly. It would be desirable therefore that you learn their meaning from the beginning itself. Needs and Wants The satisfaction of buyers needs is at the heart of a market economy, and is the core theme of Marketing. To put it more simply, a need is a feeling of being dep rived of something desirable. You may be in a state in which you are not feeling satisfied (say you are feeling hungry). So you visualizea more desirable (but un attained, yet) state, that of having a full stomach. Hence there Marketing in turn is based on these four principles. Thus Marketing can be defin ed as a 11.623.3 Copy Right: Rai University 1

is a gap between your current state (hunger) and desirable state (satiated palat e). This gap leads to a need being felt. To take another example, if you had bee n happy with your already attained qualifications, you would not have enrolled f or this course! Wants are somewhat different. While needs are basic to human bei ngs, (since nobody ever needs to tell us that we need to feel hungry, thirsty, e tc.) wants are not. Later in our life when we become part of various informal an d formal groups (family, friends, school, club, workplace, etc) we develop the c oncepts of friendship social approval, beauty, and so on. These are our acquired needs. The product concept that adequately satisfies our biogenic or acquired n eeds becomes successful. Infact the job of the marketer is to identify unfulfill ed / inadequately fulfilled / partially fulfilled need. But then today a need ca n be met in a number of alternative ways. A variety of products can satisfy the same need. Wants exist for those objects that can potentially satisfy a need. A visually impaired person can either wear spectacles, contact lenses, or now he c an go in for corrective surgery. among the sellers, and consequent excess of supply over existing demand, the buy er rules over the seller. On the other hand, in a sellers market competition is r estricted for any number of reasons. So the buyer is at the mercy of the seller. CONSUMER BEHAVIOUR Pause For Thought # Can you say why people brush their teeth? Answer seems simple. But now check aga inst the following: Those who are hypochondriacs are concerned about germs and a re swayed by a decay prevention appeal. Another group, mostly extroverts, brushes teeth to give them brightness and shine. But a majority just want a tingling, fr esh sensation as a part of their ritual of starting a day fresh. Such research m akes the marketers better prepared to meet the needs of various categories of cu stomers. 1.4. Consumer Focused Marketing Once a marketer identifies an unfulfill ed need, or partially fulfilled one, he has an opportunity to exploit. To this e nd he has to determine the appropriate marketing mix. According to Stanton: Marke ting Mix is the term used to describe the combination of the four inputs that co nstitute the core of a companys marketing system: the product, the price structur e the promotional activities, and the placement system. The marketer has to track the consumer behaviour constantly and adjudge an optimal combination of these m arketing mix PRICE Basic price, discounts, rebates. Payment terms, installmen t facilities Pr ice fixation; free or administer ed price PROMOTION Personal selling; sales forc e characteristics Advertising, media, and message choices Sale promotion, displa ys, contests, etc. Publicity and public relations. PLACEMENT Channels of distrib ution: types of intermediaries. Physical distribution, warehousing, etc. At this point we must also note that a consumers behaviour is conditioned by the perception about a marketers offering. This perception may or may not match reali ty. For example, in India a common perception is that ready to eat food items la ck that home touch; they are cold and clinical. Home made foods in contrast are warm and live unless PRODUCT this perception is changed, acceptance of such Basi c product products is likely to be limited. and its features. Design, quality, P roduct / Service model, style, If we use marketing parlance a product is anythin g appearance, size that can satisfy our needs and wants. That is, it could Packa ging and be a physical object, or a service, or an idea which labeling can be of fered to a potential user for adoption / Branding and practice / consumption. By studying consumer trademark buying behaviour companies can identify needs Servi ce: Pre, that can be met by offering a suitable product. during, post sale. Inci dentally, a customized product is one, which is made according to individual cus tomers specifications. Exchange A marketer makes an offer because he hopes that the buyer will accept it. And in

turn the buyer will give something of value to the marketer. Whether or not an exchange will take place would therefore depend on a match/ mismatch between the gain (the satisfaction receivable) and the sacrifice (the price payable) in cus tomer perception. 1.3. Customer Focus In India marketing as a discipline has evo lved at a leisurely place, dictated of course by circumstantial factors. Most ma rkets being sellers markets (i.e. where seller dominates over the customer) until recently, marketing philosophy was an alien concept for an Indian seller. In a broad sense all the markets can be divided into two categories: sellers market an d buyers market. A buyers market is one where due to prevailing intense competitio n factors so that best sales are generated. Any mistake or delay can cost a market er dear. Figure 1.1: marketing mix variable Product We as customers view a product as a bundle of satisfaction and not merely the phys ical object. We gives importance to both the tangible and intangible attributes of a product. Intangibles provide psychological and social benefits for the buye r. If product attributes dont benefit a customer, they have no significance for h im. That is why during 2000-2001 midsize cars had a better sales growth rate tha n smaller cars; Maruti-800 sales actually declined. 2 Copy Right: Rai University 11.623.3

Branding Placement CONSUMER BEHAVIOUR A firm brands its product to provide it a distinct identity. A brand carries bra nd equity, i.e., reputation. Losing brand equity means losing sales. For example , this happened to Limca at the time of the BVO controversy. Packaging For the customer packaging is both a protective and a promotional device: Packag e is the message, as it is called. Packaging facilitates brand identification an d may even motivate a person to buy a product (like perfume). It serves as a cri tical reminder at that critical moment when the customer is choosing from among several competing brands. Infact whenever a customer visualizes about a product, its packaging is the first thing that he sees in his mental eyes. As a test, ju st think about Pepsi or Coke right now. The first thing you will do is visualizi ng the distinctive shape of the bottle! Product Life Cycle Physical distribution is the third dimension of marketing activity. Place conven ience is needed to make purchase. A marketer has to decide about two things: Kee ping in mind customers requirements, first, what will be the channel of distribut ion; and, second, how will the goods be actually distributed. Physical distribut ion activities are related to the movement of products from the production site to purchase point. While the buyer must get it in right shape and at right time, the sender should be able to ensure availability at minimum cost to him. The ma rketer can either sell directly to the customers or through middlemen. A typical distribution chain could include movement of product from manufacturer to whole saler to retailer to customer. Promotion Like us human beings, products also take birth through introduction, develop (gr ow), age (mature), and eventually decline (die). In the first phase, a newly dev eloped product is introduced in the market, which finds relatively few customers . If it is an innovative product (say a perfumed fabric) then the marketer stimu lates primary demand by educating the customer. In the growth stage, more and mo re customers start buying. But new brands also enter the market. Hence the marke ter has to talk about differentiating features of his brand. In maturity the bra nd competes with other successful brands for selling in a stagnant market. So pr ice cuts, exchange offers or add-ons are used to woo the customers. Communicatio n is image based attempting to perfect and reinforce the brand loyalty. Finally, many products face a phase of obsolescence. Some products may of course have a cyclical demand pattern. They bounce back after a gap. For example, in 2001 larg er frame sunglasses have comeback. The marketer may even reformulate/reposition a product to begin a new life like Dabur Honey or Milkmaid. On the other hand so me products have a stillborn fate or may die an infantile death, like Real Value V acuumizer. Pricing Promotion is also called marketing communication. It aims at informing and persu ading the customer to buy whatever the marketer is offering. Since a customer ca n be reached through a number of channels, companies undertake integrated commun ication, which is a combination of personal selling, advertising, public relatio ns, and sales promotion. 1.5. Emerging Imperatives Customer of today is the arbi ter of corporate destiny. He is unrelenting, demanding, and finicky. He wishes t o fulfil his needs in the most cost effective manner. Consumer spendings are ris ing rapidly, while savings rate in India is falling. Alyque Padamsee says: This i s the land of Karma, where everything is worked out for you, your destiny your k

ismet. But the Generation Now feels The hell with waiting for reincarnation! They are breaking the Karma handcuffs. They are deciding that what they want is a bet ter life now. If they have money they want to spend it now. But they are spendin g, intelligently, not indiscriminately. What are the todays realities? Todays customer is exposed to international quality, thanks to the entry of more players - from within India and abroad - in the market in post liberalized India . So he dictates specifications, quality standards, and even chargeable price. H e wants everything here and now. Both budget shoppers and high spenders are dema nding better return for the money they spend. A marketer has to act like a longterm investor. He has to be prepared to accept wafer thin profit margins. Hence all the planning processes and the people of the organization have to be configu red around the central character, viz., and the customer. Marketing effort has t o be directed at meeting customer needs, and not earning profits, or building ma rkets. The latter will of course be a fall out of the customer focus. In the com petitive world, the marketer has to strategize to deliver customer value greater than that provided by his competitors. 3 Price has to be fixed in such a manner as on one hand it is lower or equal to th e value delivered by the product, and on the other hand it should cover at least all manufacturing and post manufacturing (transportation, warehousing, promotio nal) costs plus the targeted level of profit margin. Actual price fixing of cour se depends on the functional features of the product and the image of the brand. Then there is the degree of competition that dictates the price of a brand vis-vis its competing brands-. That is why you would find Pepsi and Coke priced at s ame level. Price can also act as a communication tool. For example price package may give the message of affordability, exclusiveness, etc. Cartier watches, for example. This in turn has several lessons for the marketers: 11.623.3 Copy Right: Rai University

In brief there has to be a paradigm shift. The corporation has to exist for the customer; the company has to customerize itself. Such an organization will have to establish a link between itself and the customers in the following manner: Customer needs assessment CONSUMER BEHAVIOUR Develop Keep customer needs in focus. Reduce development cycle time Develop cust omeroriented products. Manufacture Redesign the factory to meet customer needs. Reduce manufacturing cy cle time Produce at the lowest cost, but no quality compromise. Market Identify and target the customers. Process the demand in double quick tim e. Market customized products. Deliver Deliver to the targeted customers. Reduce delivery cycle time. Deliver mo re value for same money products VALUE ADDED PRODUCT Fig 1.2 essence of customer orientation. Changes in Consumer Behaviour 1980s Conspicuous consumer Image-driven Trusting Brand loyal Emotional buyer Dre amers Overindulgent 1990s Frugal consumer, becoming more well-off Value- and qua lity-driven Skeptical and cynical Does not exhibit loyalty Informed buyer Escapi sts Health- and wellnessconscious 2003 Suspicious but generally well-of consumer Highly eclectic A prove it attitude Believe that there is always something better Highly informed and specialized buyer Focused on personal needs Health, wellnes s, and some overindulgence, without expectation of costs or consequences Reliant on technology and telecommunications to save time in making purchasing decision s Unconvinced generation Xer 2. Diversity in Market Place We as consumers differ in age, gender, education, occupation, marital status, ac tivities & interests, preferences, opinions, foods they eat and products we buy. There is diversity among marketers; not only among producers but also sellers. Traditional retailers, mass merchandisers, discount stores, and off-price stores . But there has been a shift from mass marketing to niche marketing to direct ma rketing, from custom catalogs to television shopping to cyber shopping. There is a great diversity in advertising media. In addition to the traditional broadcas t and print media, we have ethnic media within a great variety of alternative me dia. Recognizing the high degree of diversity among us, consumer research seeks to identify the constants that exist among the people of the world. Figure 1.3 b elow shows us how consumers have changed over three decades. In fact, you can se e in your own family, if you take your parents as buyers and yourself as a buyer and then see the difference in your behaviour. Overworked Industrious baby boomers Burned out, stressed out, and placing tremendous values on convenience and time Responsible baby boomer Fig 1.3 Changes in consumer Behaviour; Source: Adopted from Principles of Market ing, Kotler, Adam, Brown and Armstrong The commonality of need constitute a mark et segment, enabling the marketer to design specific products or promotional app eals to satisfy the needs of that segment

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To match the varying consumer tastes and behaviour, marketers have also adopted strategies like stressing on value pricing i.e., high quality at a reasonable lo wer price and relationship marketing which in simple words would mean servicing to add to customer delight which can in the long run result in brand or store lo yalty). They have also taken steps by moving away from the traditional distribut ion channels, to customized designed channels and now to direct marketing or to selling directly to the customers. Some changes in the major segments of life we can identify are as follows: Public policy concerns Environmental concerns The opening of national markets th roughout the world. CONSUMER BEHAVIOUR Let us now look at the scope of Consumer Behavior. The scope covers: What they buy Why they buy When they buy Where they buy it How often they buy it How do they buy it Primary needs- health, hygiene, basic foods and clothing. Living styles- express ed in products such as jeans, fun foods, CDs. Imitation of the affluent and ego b ased life styles expressed in expensive watches, luxury cars. High technology to match global competitivenessfaxes, e-mail, Internet, photocopying machines alon g with CAD, CAM and imaging. Activity 1 Given the geographical characteristics of Indian consumer market, analyse five i mportant implications that will be faced by an all-India distribution company de aling in consumer durables such as refrigerators, televisions and music systems: The challenge before the marketer is to determine the appropriate marketing chan nels and consumer psychographics to have a better understanding of the behavour aspects of target market. In spite of being surrounded by diverse goods and serv ices, and the freedom to choose the desired product or service, there are also m any similarities found among consumers. Caselet #1 During 1996-1999 Ford Escort sold only 13,000 units since customers perceived in it real and imaginary problems. It earned the ill reputation of being a stogy c ar. Through it was a failed model, and has been withdrawn now, the company used it as a learning experience for developing a car exclusively for the Indian mark et, the IKON. First of all it decided to understand the customer, abandoning the conventional demographic route and decided to focus on psychographics. It asked the all-important question about Indian attitude towards life and role of car i n it. It identified six distinctive customer clusters out of which it decided to address two: the affluent puppy (young upwardly mobile professional Punjabi), and the full of life. The former and the latter perhaps own a popular car already, ar e party animals, and enjoy fast and flashy lifestyle. Further, this company deci ded to focus more on second i.e., full of life segment since this category partly subsumes the first one. The car was named the josh machine. It turned out to be a great success. So we learn the lesson. If we look at consumer Behaviour as a dis cipline, we can say that:

 A well-developed and tested model of buyer behaviour is known as the stimulus-re sponse model, which is summarised in the diagram below: We as consumers did not always act or react as marketing theory suggested they w ould. Accelerated rate of new product development The consumer movement Fig 1.4 The Stimulus response model of Buying behaviour 11.623.3 Copy Right: Rai University 5

In the above model (fig 1.4), marketing and other stimuli enter the customers bla ck box and produce certain responses. We must try to work out what goes on the in the mind of the customer or the black box. The Buyers characteristics influence ho w he or she perceives the stimuli; the decision-making process determines what b uying behaviour is undertaken. For example, today there seems to be a cultural shift towards greater concern ab out health and fitness and that has created opportunities, now even industries, servicing customers who wish to buy products like: CONSUMER BEHAVIOUR Health foods Fitness club memberships Exercise equipment Activity or health-rela ted holidays etc. 2. Factors Influencing Buyer Behaviour Whenever we buy anything our final decision, as a consumer will definitely be af fected by certain factors. Some of these major factors are as given below: 1. 2. 3. Cultural Social Personal Similarly our increased desire for leisure time has resulted in increased demand f or convenience products and services such as microwave ovens, washing machines, ready-to-eat meals and direct marketing service businesses such as telephone ban king and insurance. Each culture contains sub-cultures groups of people, which sha re values. Sub-cultures can include nationalities, religions, racial groups, or groups of people sharing the same geographical location. Sometimes a sub-culture will create a substantial and distinctive market segment of its own. For exampl e, the youth culture or club culture has quite distinct values and buying characteri stics from the much older grey generation Similarly, differences in social class c an create customer groups. In fact, the social classes are widely used to profil e and predict different customer behaviour. Social class is not just determined by income. It is measured as a combination of occupation, income, education, wea lth and other variables. Social Classes are relatively homogeneous and enduring divisions in a society which are hierarchically ordered and whose members have s imilar values, interests and behaviour. Social scientists have identified seven social classes shown in Figure 1.6 Social Class Characteristics Upper-Uppers are the social elite who live on inher ited wealth and have well-known families. They maintain more than one home and s end their children to the best schools. They are in the market for jewelry, anti ques, homes, and foreign vacations. While small as group they serve as a referen ce group to others to the extent that other social classes imitate their consump tion decisions. Lower Uppers are persons who have earned high income or wealth t hrough exceptional ability in their profession or business. They usually come fr om the middle-class. They tend to be active in social and civic affairs and seek to buy the symbols of social status for themselves and their children, such as expensive cars, homes and schooling. Their ambition is to be accepted n the uppe rupper status, a status that is more likely to be achieved by their children tha n themselves. 4. Psychological The first stage of understanding buyer behaviour is to focus on the factors that determine he buyer characteristics in the black box. These can be summarised as follows: Upper- Upper Fig 1.5 Factors affecting Buyer behaviour Each of these factors is discussed in more detail in our other revision notes on buyer behaviour. The marketer must be aware of these factors in order to develop an appropriate marketing mix for its target market. Now lets take a brief look at the various factors that we have m

entioned above. 2.1 Cultural Factors Lower-Uppers Culture is the most fundamental determinant of a persons want and behaviour. The growing child acquires a set of values; perceptions, preferences and behaviour t hrough a process of socialization involving the family and other key institution s. Cultural factors have a significant impact on customer behaviour. Marketing a re always trying to spot cultural shifts which might point to new products that mi ght be wanted by customers or to increased demand. 6 Copy Right: Rai University 11.623.3

Social Class Upper -Middles Middle Class Working Class Upper Lowers Lower Lowers Characteristics Upper Middles possess neither family status nor unusual wealth. The primarily concerned with career. They have attained positions as professionals , independent businesspersons, and corporate managers. They believe in education and want their children to develop professional or administrative skills so tha t they will not drop into the lower stratum. They are civic minded and are a qua lity market for good clothes, homes, furniture and appliances. The middle class is average paid white and blue-collar workers who try to do the proper things. O ften they will buy products to keep up with the trends. The middle class believes in spending more money on worth-while experiences for their children and aiming th em towards professional colleges. Working class consists of average pay blue coll ar workers and those who lead a working class life-style, whatever income, school or job they have. The working class depends heavily on relatives for economic an d emotional support, for tips on job opportunities, advice on purchase, and for assistance in times of trouble. The working class maintains a sharp sex-role div ision and stereotyping. They are found to have larger families than the higher c lasses. Upper Lowers are working, though their living standard is just above the poverty line. They perform unskilled work and are poorly paid. Often they are e ducationally deficient. Although they fall near the poverty line, they manage to maintain some level of cleanliness. Lower Lowers are visibly poverty-stricken a nd usually out of work. Some are not interested in finding permanent jobs and mo st are dependent in charity for income. Their homes and possessions are dirty, ra gged, and broken-down. Buyer CONSUMER BEHAVIOUR The person who concludes the transaction User The one who actually uses the product or service. The family unit is usually con sidered to be the most important buying organisation in society. It has been resea rched extensively. Marketers are particularly interested in the roles and relati ve influence of the husband, wife and children on the purchase of a large variet y of products and services. There is evidence that the traditional husband-wife buying roles are changing. Almost everywhere in the world, the wife is tradition ally the main buyer for the family, especially in the areas of food, household p roducts and clothing. However, with increasing numbers of women in full-time wor k and many men becoming home workers (or telecommuting) the traditional roles are re versing. The challenge for a marketer is to understand how this might affect dem and for products and services and how the promotional mix needs to be changed to attract male rather than female buyers. Consumer wants, learning, motives etc. are influenced by opinion leaders, persons family, reference groups, social class and culture. 2.3 Personal Personal factors are those factors, which are unique to a particular person incl uding demographic factors, Sex, Race, and Age etc. Personal factors also include

who in the family is responsible for the decision-making. 2.4 Psychological Factors Psychological factors include: Fig 1.6: Adapted from Richard P. Coleman The Significance of Social class to Mark eting. Journal of Consumer Research, December 1983, pp 265-80 2.2 Social Factors MotivesA motive is an internal energizing force that orients a persons activities toward satisfying a need or achieving a goal. Actions are effected by a set of m otives, not just one. If marketers can identify motives then they can better dev elop a marketing mix. MASLOW hierarchy of needs is the theory, which explains co ncept of motivation through unfulfilled needs which could be any of the followin g: Physiological Safety Love and Belonging Esteem Self Actualization Need to determ ine what level of the hierarchy the consumers are at to determine what motivates their purchases. A customers buying behaviour is also influenced by social factors, such as the gr oups to which the customer belongs and social status. In a group, several indivi duals may interact to influence the purchase decision. The typical roles in such a group decision can be summarised as follows: Initiator The person who first suggests or thinks of the idea of buying a particular produ ct or service Influencer A person whose view or advice influences the buying decision Decider The individual with the power and/or financial authority to make the ultimate ch oice regarding which product to buy 11.623.3 Copy Right: Rai University 7

Caselet #1 Nutrament Nutrament, a product marketed by Bristol-Myers Squibb origi nally was targeted at consumers that needed to receive additional energy from th eir drinks after exercise etc., a fitness drink. It was therefore targeted at co nsumers whose needs were for either love and Belonging or esteem. The product wa s not selling well, and was almost terminated. Upon extensive research it was de termined that the product did sell well in inner-city convenience stores. It was determined that the consumers for the product were actually drug addicts who co uldnt digest a regular meal. They would purchase Nutrament as a substitute for a meal. Their motivation to purchase was completely different to the motivation th at BMS had originally thought. These consumers were at the Physiological level o f the hierarchy. BM-S therefore had to redesign its marketing mix to better meet the needs of this target market. Motives often operate at a subconscious level therefore are difficult to measure. Perception What do you see?? Learning is the process through which a relatively permanent change in behavior results from the consequences of past behavior. CONSUMER BEHAVIOUR 8 Attitudes we can say that attitudes are knowledge and positive and negative feelings about an object or activity. It maybe tangible or intangible, and living or non- livi ng. Generally it seen that attitudes drive perceptions We learn attitudes throug h experience and interaction with other people. Consumer attitudes toward a firm and its products greatly influence the success or failure of the firms marketing strategy. For instance, Honda says, You meet the nicest people on a Honda, dispel ling the unsavory image of a motorbike rider, in the late 1950s. Changing market of the 1990s, baby boomers aging, and Hondas market returning to hard core. To change this they have a new slogan Come ride with us. Attitudes and attitude chang e are influenced by consumers personality and lifestyle. Again, we tend to screen information that conflicts with their attitudes and distort information to make it consistent and selectively retain information that reinforces our attitudes. But, bear in mind that there is a difference between attitude and intention to buy i.e., ability to buy. Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. This means we chose what info we pay attention to, or ganize it and interpret it. Information inputs are the sensations received throu gh sight, taste, hearing, smell and touch. Selective Exposure- This means we ten d to select inputs to be exposed to our awareness. This is more likely if it is linked to an event, and/or satisfies current needs. Selective Distortion- This h appens when we change or twist current received information, which is inconsiste nt with our beliefs. Selective Retention- In this case we remember only those in puts that support our beliefs, and forget those that dont. For instance, an avera ge supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30 minutes-60% of purchases are unplanned and is also exposed to 1,500 advertis ement per day. Hence they cannot be expected to be aware of all these inputs, an d certainly will not retain many. Interpreting information is based on what is a lready familiar, on knowledge that is stored in the memory. Ability and Knowledge Personality One way of explaining personality is all those internal traits and behaviors tha t make a person unique, keeping in mind the fact that uniqueness arrives from a

persons heredity and personal experience. Examples include: Workaholism Compulsiveness Self confidence Friendliness Adaptability Ambitiousne ss Dogmatism Authoritarianism Introversion Extroversion Aggressiveness Competiti veness. Learning can be said to be changes in a persons behavior caused by information an d experience. Therefore to change consumers behavior about your product, you need to give them new information regarding the product like free sample etc. When m aking buying decisions, buyers must process information. Knowledge is the famili arity with the product and expertise. Inexperience buyers often use prices as an indicator of quality more than those who have knowledge of a product. Non-alcoh olic Beer example: consumers chose the most expensive six-pack, because they ass ume that the greater price indicates greater quality. Traits affect the way people behave. Marketers try to match the store image to t he perceived image of their customers. Lifestyles You may have observed that recently trends in lifestyles are shifting towards pe rsonal independence and individualism and a preference for a healthy, natural li festyle. Lifestyles are the consistent patterns people follow in their lives. Fo r Example you buy healthy foods to maintain a healthy lifestyle. Copy Right: Rai University 11.623.3

 Opinion Leaders Opinion leaders basically play the role of spokesperson etc. Marketers try to at tract opinion leaders...they actually use (pay) spokespeople to market their pro ducts. Say, for example Sachin Tendulkar (Pepsi, Visa , Biscuit, Adidas etc.) Membership groups (belong to) Affinity marketing is focused on the desires of co nsumers that belong to reference groups. Marketers get the groups to approve the product and communicate that approval to its members. Credit Cards etc.!! Aspir ation groups (want to belong to) Disassociate groups (do not want to belong to) Honda, tries to disassociate from the biker group. The degree to which a reference group will affect a purchase decision depends on an individuals susceptibility to reference group influence and the strength of his/her involvement with the gr oup. Social Class CONSUMER BEHAVIOUR Roles and Family Influences Roles are things you should do based on the expectations of on within a group. People have many roles. Husband, father, uals role are continuing to change therefore marketers must nformation. Family is the most basic group a person belongs nderstand: you from your positi employer/ee. Individ continue to update i to. Marketers must u

that many family decisions are made by the family unit consumer behavior starts in the family unit family roles and preferences are the model for childrens futur e family (can reject/alter/etc) family buying decisions are a mixture of family interactions and individual decision making family acts an interpreter of social and cultural values for the individual. An open group of individuals who have similar social rank. US is not a classless society. US criteria; occupation, education, income, wealth, race, ethnic group s and possessions. Social class determines to some extent, the types, quality, q uantity of products that a person buys or uses. Lower class people tend to stay close to home when shopping, do not engage in much prepurchase information gathe ring. Stores project definite class images. Family, reference groups and social classes are all social influences on consumer behavior. All operate within a lar ger culture. Culture and Sub-culture The Family life cycle: families go through stages, each stage creates different consumer demands: bachelor stage newly married, young, no children...me full nest I, youngest chil d under 6 full nest II, youngest child 6 or over full nest III, older married co uples with dependant children empty nest I, older married couples with no childr en living with them, head in labor force empty nest II, older married couples, n o children living at home, head retired solitary survivor, in labor force solita ry survivor, retired Modernized life cycle includes divorced and no children. Two Income Marriages Are Now the Norm Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous group of people and transmitted to the next generation. Culture also

determines what is acceptable with product advertising. Culture determines what people wear, eat, reside and travel. Cultural values in India are good health, education, individualism and freedom. In todays culture time scarcity is a growin g problem. So as a result there is a change in meals. Different society, differe nt levels of needs, different cultural values. Culture can be divided into subcu ltures: Geographic regions Human characteristics such as age and ethnic background. Because 2 income families are becoming more common, the decision maker within th e family unit is changing...also, family has less time for children, and therefo re tends to let them influence purchase decisions in order to alleviate some of the guilt. Children also have more money to spend themselves. Culture effects what people buy, how they buy and when they buy. Case on Customer Behavior Modernizing Sales Outlets Mr. Harish Panjwani was a refugee when he started his small grocery business abo ut 40 years back. Initially, he hawked his good door to door and soon developed a sizeable number of steady customers. This was largely due to his sober tempera ment, reliable dealings and his amiable nature. His extrovert nature helped him develop many friends and well-wishers. Over a period of time, Mr Panjwani became a socially prominent person with good acquaintances from many walks of life. He expanded the range of his business activities and he now own several shops deal ing in consumer durables, dairy products and also has a general store besides a large medical shop. Being Reference Groups Individual identifies with the group to the extent that he takes on many of the values, attitudes or behaviors of the group members. Families, friends, sororiti es, civic and professional organizations. Any group that has a positive or negat ive influence on a persons attitude and behavior. 11.623.3 Copy Right: Rai University 9

of a conservative frame of mind, he feels emotionally attached to his original g rocery business and continues to operate it with enthusiasm. His business place has even come to be associated with a meeting venue for people of his generation to meet. His children are grown up and the eldest one, Rajesh, has just returne d from abroad after completing his management education there. Ambitious by natu re, Rajesh would like to expand his business fast. He feels that he needs to be p rofessional in his approach. In his option, his fathers way of dealing with people is outdated. Many a times, he feels irritated when his fathers old friends drop in at the shops and spend time talking with him. Rajesh feels that this type of casual come together is a waste of time. He would prefer to be more business like. He would to deal with them as customers only, serving them with precision and i n a methodical manner. He expects that his customer should appreciate this modern way of doing business. He has, however, broached his inner feelings only in an i ndirect way to his father, and he found that this father believes in maintaining close personal links with his customers. Some of the customers have, anyhow, st arted noticing the change in the way in which Rajesh deals with them. They feel that the old warmth of their relationship with the senior Panjwani is somehow miss ing and they are now less welcome at the shops. Opinion leaders Lifestyles Personality Attitudes Learning Ability and Knowledge Selective Exposure Selective Distortion Selective Retention Perception Motives D ecider Buyer User Initiator Influencer CONSUMER BEHAVIOUR Points to Ponder Questions 1. 2. What do you think is the contribution of personal relationship in such a b usiness? Do you agree with the approach adopted by Rajesh? Do you have any sugge stion to make? Objectives of One-to-One Marketing n To Taken from the fourth semester examination question paper of Pune University. Ke y Terms Customer needs Customer focus Needs and wants Consumer focused marketing Customer needs assessment Primary needs Stimulus-response model Black box Cultu ral Social Personal Psychological Sub-cultures Social Class Aspiration groups Di sassociate groups Membership groups Reference Groups The Family life cycle attain customers n Sell them more products n Make a profit 10 Copy Right: Rai University 11.623.3

CONSUMER BEHAVIOUR Changes in the Business Environment Personal Consumer n n n n Increased consumer power Access to information More products and services Intera ctive and instant exchanges n n Access to customer patterns and preferences Evolution to other Web connection PD As HDTV Mobile phones The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend. Organizational Consumer Consumer Behavior The behavior that consumers display in searching for, purchasing, using, evaluat ing, and disposing of products and services that they expect will satisfy their needs. A business, government agency, or other institution (profit or nonprofit) that b uys the goods, services, and/or equipment necessary for the organization to func tion. 11.623.3 Copy Right: Rai University 11

CONSUMER BEHAVIOUR 12 Development of the Marketing Concept Production Concept Product Concept Selling Concept Marketing Concept The Marketing Concept n Assumes that to be successful, a company must determine the needs and wants of s pecific target markets and deliver the desired satisfactions better than the com petition n Marketing objectives: Profits through customer satisfaction The Selling Concept n The Marketing Concept A consumer-oriented philosophy that suggests that satisfaction of consumer needs provides the focus for product development and marketing strategy to enable the firm to meet its own organizational goals. Assumes that consumers are unlikely to buy a product unless they are aggressivel y persuaded to do so n Marketing objectives: Sell, sell, sell n Lack of concern for customer needs and satisfaction Copy Right: Rai University 11.623.3

CONSUMER BEHAVIOUR Implementing the Marketing Concept n Successful Relationships Consumer Research n Segmentation n Targeting n Positioning Customer Value Customer Satisfaction Customer Retention The Marketing Mix n Product n Price n Place n Promotion Societal Marketing Concept A revision of the traditional marketing concept that suggests that marketers adh ere to principles of social responsibility in the marketing of their goods and s ervices; that is, they must endeavor to satisfy the needs and wants of their tar get markets in ways that preserve and enhance the well-being of consumers and so ciety as a whole. 11.623.3 Copy Right: Rai University 13

CONSUMER BEHAVIOUR 14 Characteristics that affect customer behaviour The Societal Marketing Concept n All companies prosper when society prospers. n Companies, as well as individuals, wo uld be better off if social responsibility was an integral component of every ma rketing decision. n Requires all marketers adhere to principles of social respon sibility. Notes Copy Right: Rai University 11.623.3

CONSUMER BEHAVIOUR LESSON 2: ORGANISATIONAL BUYING Introduction In this chapter we shall discuss some of the basic issues of consumer behaviour. We shall outline the major influences, which shape an individuals consumer behav our and preferences. The specific process of decision-making involved in consume r behavour is also discussed here. In this chapter we will address the question of business markets and how they differ from consumer markets. Buyer behaviour i s a huge subject and it is only possible in this course to provide a brief intro duction to the key issues. For the purposes of this session, well therefore conce ntrate primarily upon consumer behaviour, and then conclude by highlighting some of the similarities and differences between this and organisational buyer behav iour (or business-tobusiness purchasing). Why does the customer want to buy a particular product or service? How will he o r she decide which option to purchase? What factors may influence this decision? Activity 1 To get a preliminary idea about the study and applications of consumer behaviour complete the following table in terms of your own purchase behaviour. (a) What are your reasons for purchasing the following products and services? (i) Shampoo _______________________________ (ii) Life Insurance ___________________________ _ (iii) Instant Coffe ____________________________ (iv) White Shirt ____________ _________________ (b) Which brand do you normally purchase? (i) Shampoo ________ _______________________ (ii) Life Insurance ____________________________ (iii) I nstant Coffee ___________________________ (iv) White Shirt _____________________ ________ (c) How often/how much do you buy at a time? (i) Shampoo ______________ _________________ (ii) Life Insurance ____________________________ (iii) Instant Coffee ___________________________ (iv) White Shirt ___________________________ __ (d) From where (retail outlet) do you usually purchase? (i) Shampoo _________ ______________________ (ii) Life Insurance ____________________________ (iii) In stant Coffee ___________________________ (iv) White Shirt ______________________ _______ (e) Conduct a similar exercise for one of your close friends and compare his/her purchase behaviour with your own. Are there any differences? Identify t he reasons for these differences. _________________________________________ ____ _____________________________________ _________________________________________ _________________________________________ ______________________________________ ___ _________________________________________ __________________________________ _______ _________________________________________ ______________________________ ___________ _________________________________________ Your Objectives After studying this lesson you should be able to: Identify and explain the different kinds of consuming identities Elaborate the d ifferent customer roles Identify the main issues in organisational buying Differ entiate organisational buying from consumer buying We often use the term Consumer to describe two different kinds of consuming enti ties: the personal consumer and the organisational consumer. The personal consum er is one who buys goods and services for his or her own use, for the use of the household, or as a gift for a friend. The organisational consumers include prof it and not-for-profit business, government agencies, and institutions, all of wh ich must buy products, equipment, and services in order to run their organisatio ns. Before going into the details of organisational buying, let us try to unders tand the basics of buyer behaviour, i.e., why study consumers? And who is our cu stomer (consumer)?

1. Buyer Behaviour 1.1 Why Study Customers? Before actually studying Consumer behaviour, let us ans wer the question of why to study this discipline at all? In other words, we will explore and scope and importance of Consumer behaviour. Effective marketing mus t begin with a thorough understanding of how and why customers behave as they do ( Merenski, 1998). Specifically, in order to tailor solutions to customers particul ar needs and desires, the marketer requires a grounded knowledge of buyer motiva tions and decision-making processes, together with all those environmental facto rs which may exert influence upon them. Put another way, the marketer is seeking to address three basic questions: 11.623.3 Copy Right: Rai University 15

2.2. What is Consumer Behaviour? Let us try to define Consumer behaviour Mental and physical activities undertaken by household and business customers that resu lt in decisions and actions to pay for, purchase and use products and services A n important part of the marketing process is to understand why a customer or buy er makes a purchase. Without such an understanding, businesses find it hard to r espond to the customers needs and wants. For a marketing manager, the challenge i s to understand how customers might respond to the different elements of the mar keting mix that are presented to them. If management can understand these custom er responses better than the competition, then it is a potentially significant s ource of competitive advantage. Consumer Buying Behavior refers to the buying be havior of the ultimate consumer. A firm needs to analyze buying behavior for: The Three Customer Roles Concepts Role specialisation User Users focus on performan ce value evaluation U sers submit a formal requisition and technical specificatio ns. Users accountabl e for correct specificatio ns. User capabilities may lead to in-house productio n . Need identificati on may be an extended process. Users may automate the requ isition for rebuys. Payer Payer focus on budget allocations. Buyer Buyers, often separate from users and payers, specialize in buying task. Buyers follow well-l aid -out policies and processes. CONSUMER BEHAVIOUR Formalised process Payer use sound budgeting practices. Accountability Buyers reactions to a firms marketing strategy has a great impact on the firms suc cess. The marketing concept stresses that a firm should create a marketing mix ( MM) that satisfies (gives utility to) customers, therefore need to analyze the w hat, where, when and how consumers buy. Buyers accountable for professional buying. Strong financial position can gain f avorable terms for suppliers. Buyers with low skills may draw on external advice . Buyers may need to coordinate with multiple suppliers. For new task buys, paye rs may have to juggle money. Payers often are the deciders in the buying centre. Rebuys may be routinised and automated. New task buys would require professiona l talents of buyers. Buyers bring vendors and users together Internal capabilities All this time we have been carrying out our discussion about consumer behaviour without properly defining what or who is a consumer. So who is a consumer? Let u s now define a consumer. A customer is a person in either a household or an orga nisational unit who plays a role in the completion of a transaction with a marke ter or an entity Who then is a Consumer? For example, you as a customer purchasi ng a burger at a restaurant versus the restaurant purchasing the burger meat, bu n and condiments to prepare the hamburger for sale Can you bring out the differe nce between the terms consumer, buyer, and customer? Customer Roles Complexity Buy class Buying center

A customer plays different roles User the person who actually consumes or uses the product and receives the benef its E.g. in the example of burger, the person who actually eats the burger Decision process Buying centre brings all roles together. Payer the person who finances the purchase E.g. the person who provides the money to pay for the burger Buyer - the person who participates in acquiring the product E.g. the person who orders and/or actually hands over the money for the hamburger Users most active at the specificatio n and vendor screening stage. Payers most active at the decision stage. Buyers active throughout the decision process In certain cases one and the same person could play all these three roles or it could be other way around also; i.e., different people could play different role s. 16 Copy Right: Rai University 11.623.3

Concepts Conflict resolution User Three roles often in conflict. Payer Payers often overly concerned with cost minimizatio n. Buyer poorly motivated towards his/her job on one day, for example, may well be far le ss cautious than on other days when all is well in the workplace! The most obvio us difference between consumer and organisational buying is that the underlying motivation is different; i.e. personal consumption versus business usage. There are other contrasts, however. Let us now identify these! Setting for Buying: For consumers, the buying unit is within the household, whereas for the organisatio nal buyer, the setting is within the firm. This means as an industrial marketer targeting the organisational buyer, you must take account of factors such as buy ing procedures, levels of authority, and so on, factors not relevant in consumer marketing. Technical/Commercial Knowledge: You will see that usually, the organ isational purchaser will be a trained professional, more knowledgeable than the average consumer purchaser. This can often necessitate a completely different sa les approach. Contact with Buyers/Distribution Channels: You will find that orga nisational markets are usually more geographically concentrated than consumer ma rkets. Factors such as proximity to available labour, raw materials, and transpo rtation facilities often dictate an industrys location. In addition, compared to consumer markets, there can be far fewer potential customers. Taken together, th ese variables mean that you, as an industrial marketer must normally maintain fa r more direct and personal contact with his or her potential clients. Number of Decision-Makers: Normally in consumer purchasing, the number of people involved in the decisionmaking process can be very small; i.e. an individual, a couple, a family, etc. In organisational buying, however, a great many people can be invo lved in the purchasing process. This can mean differences in both the number of people marketing communications must attempt to convince and that quite differen t decisions might emerge as a result of group dynamics than might initially be a nticipated on the basis of individual discussions. Derived Demand: Organisationa l buyers often continually adjust their buying decisions on the basis of project ed sales figures, buying more units when forecast sales are higher. The result c an be a sort of pendulum effect, with a knock-on effect throughout the buying chai n as each chain member adjusts its buying patterns accordingly. Reciprocal Demand : Sometimes, a buyer can also be a seller at the same time. A software company p roducing a package for an insurance company, for instance, might also purchase i ts insurance services from what is effectively one of its own customers. Both co mpanies want to sell to each other, affecting each others eventual buying decisio ns to a varying degree. As we can see, there are subtle differences between cons umer and organisational forms of buying. CONSUMER BEHAVIOUR Fig 1.3 Business customer decision-making and the three customer roles Pause for Thought # What was the last item you purchased in a store? Did you go shopping specificall y to look for it? Why did you buy it? Who was involved in you purchasing decisio n? Were you happy with the decision you made? Exercise: Make a list of all the t hings you noticed last time you went shopping. Include anything at all that cros ses your mind, from things you actually saw or did to things you felt. Save the list for later! Businesses now spend considerable sums trying to learn about wha t makes customers tick. The questions they try to understand are: Why consumers make the purchases that they make? What factors influence consumer

purchases? The changing factors in our society. The purchase of the same product does not always elicit the same Buying Behavior . Product can shift from one category to the next. For example Going out for din ner for you may be extensive decision making (for someone that does not go out o ften at all), but limited decision making for someone else. The reason for the d inner, whether it is a birthday celebration, or a meal with a couple of friends will also determine the extent of the decision-making. 2. Organizational Buying vs. Consumer Buying Marketing theory traditionally splits analysis of buyer or customer behaviour in to two broad groups for analysis Consumer Buyers and Organisational Buyers Consu mer buyers are those who purchase items for their personal consumption Organisat ional buyers are those who purchase items on behalf of their business or organis ation In contrast to consumers, organisational buyers represent those buying good s and services on behalf of an organisation for the purpose of the furtherance o f organisational objectives (Lancaster, 1999). Before highlighting some of the di fferences between the two, however, it is important to caution you against over stressing the differences. For instance, you may come across some authors who ar gue that buying goods on behalf of ones employers makes buyers more caution and r ational than when purchasing consumer goods privately. However, on closer examin ation of the evidence, we see that the differences are almost exclusively relate d to price and very small anyway. So, please be aware that there can be differen ces, but they are by no means always universal a single employee feeling 11.623.3 Copy Right: Rai University 17

3.1 Purchase Objectives What do organizations purchase for? manufacturer makes buying decisions that are different in nature from those of h ousehold buyers? Extractive Industries 1 Mining and Construction 2 Forestry 3 Agriculture 4 Fishe ries 5 Farming Manufacturing industries Manufacturer selling to other manufactur ers (includes importers middlemen, Government & its enterprises etc) consuming a nd user industries or units households Government Family of business and industr ial users Exporters CONSUMER BEHAVIOUR Organizational consumers purchase for: Further production, Usage in operating the organization, and/or Resale to other consumers Whereas, Final (or ultimate) consumers normally purchase for: Personal, Family, or Household use Fig 1.4 Participants in Industrial Marketing 3.2 Industrial/organizational markets Let us now look at the various participant s and types of players in the Industrial markets: 3.2 Differences In Organizational Markets We know that Organizational markets ar e different in nature from household consumer markets. Let us see how they are d ifferent! Producer Manufacturers Service producers Wholesalers Retailers Federal State County Local Charitable Educational Community Other non-business Reseller Use goods for further production, operations, or resale. Household, or final, co nsumers purchase products for personal consumption. Purchase equipment, raw mate rials, and semi-finished goods. Household purchasers almost always purchase fini shed goods for personal consumption. Demand is derived from that of final consum ers. If you own a machine shop that makes bushings that are used in washing mach ine motors, then the demand for your products (bushings) is derived from final c onsumer demand for washing machines. If the economy is poor, and demand for wash ing machines is down, then so too will be the demand for washing machine motors and for the bearings that are used in them.

 Government Institutional Lets take the example of a telephone; think about the hundreds of components tha t are used in producing it. Each one of those component parts had to be sold to the telephone manufacturer. The part had to be designed such that it met the nee ds of the buyer, it had to be promoted in a way to make the buyer aware that it was available, it had to be distributed at the times and in the quantities that the buyer needed, and all of this had to be done in such a way that the part cou ld be produced and delivered at a competitive price. There are hundreds of parts , wires, screws, glues, paints, and such that are marketed before the telephone is itself finally produced, marketed, and sold to a final household consumer. Th is manufacturer must also purchase supplies that are not part of the product but are used in running the manufacturing operation. It must purchase computers, pr inter and photocopier paper, desks and chairs, services to mow the lawn, etc. Ho w is it that this manufacturer makes buying decisions that are similar in nature to household buyers? How is it that this Multiplier effect / accelerator principle: However, there will probably not be a one to one correspondence between these. If retailers find that demand for wash ing machines is declining, they might be conservative in placing new orders with wholesalers, perhaps ordering slightly less than what they actually believe dem and to be. Wholesalers, in seeing their orders decline, might also be conservati ve in placing orders to manufacturers, ordering slightly less than what they act ually believe demand to be. Manufacturers, seeing their orders decline, might or der slightly fewer motors, and the motor manufacturers might conservatively orde r slightly fewer bushings than they actually expect to need. Demand for your bus hings might experience wider swings, either up or down, than the changes in dema nd at the final consumer end of the supply chain. This makes organizational mark ets, especially if you produce some of the small parts at the beginning of the s upply chain, very volatile. Can make items themselves. Competition in organizati onal markets comes not only from suppliers of similar goods and services, but ca n come from 18 Copy Right: Rai University 11.623.3

buying organization itself. If it is not happy with the suppliers goods, services , or delivery, then it can choose to make those products itself. 3.4 Differences in Organizational Transactions manager, your employer is more likely to require that you accept, say, three bid s for a service or to negotiate various terms and conditions associated with pro duct specifications, delivery, and price. CONSUMER BEHAVIOUR Buying specialists are often used. It is usually seen that organizations often e mploy people who are professional purchasing agents. Just as sales agents are pr ofessional specialists at finding organizations that need the products that thei r employer produces, purchasing agents are specialists are professional speciali sts at finding what their employer needs. Whatever stereotypes you might have fr om experiences with salespeople in consumer sales, any negative stereotypes of s alesperson behavior probably would not be appropriate in dealing with profession al buyers. Often use multiple buying responsibilities. A household purchaser is often the sole decision maker. Making a sale to an organization, however, often requires selling to several entities within the buying center. For example, you might be using a desktop computer at work, but the decision as to what specifica tions were needed might have been set by someone in the computer department, the decision to buy might have been made by your department manager, bids taken by someone in the purchasing department, and the final authorization made by the co mpany president. Often use multiple suppliers. It is often desirable to have a l ong-term relationship with more than one supplier, even if a second supplier has higher prices for otherwise similar terms and conditions. If problems in qualit y or delivery are experienced with a supplier, production can still be maintaine d if the second supplier can be used to replace the first. The ideals of a cozy, trusting relationship that has been promised with strategic alliances in the po pular business literature does not always work if it leaves one party vulnerable as a sole supplier or buyer. More likely to require exact specifications. A hou sehold purchaser might select a particular model of desktop computer for no othe r reason than it has a pleasing color. An organizational purchaser is more likel y to set specifications regarding processor speed, memory, hard drive size, and such before taking bids on price. Often lease equipment and space. As a househol d consumer, you would probably prefer to own your own car, furniture, and home. These are things that represent personal expression, status, and wealth. Your ob jectives as a business manager, however, are very different. You might prefer to lease public warehouse space to provide the flexibility to change locations whe n the market demands, to lease trucks so that you can leave the problems of main tenance and disposition to someone else, etc. More frequently employ competitive bidding and negotiation. Household consumers (especially those of us in urban s ettings) are more likely to accept as final a price that is placed on a product in a retail setting or to accept a price that is given to us by a service provid er. As a business Types of I/O Purchases Straight Rebuy Routine purchase Associated with frequently purchased items Modified Rebuy Routine purchase Frequent purchase, but buyer does review product specifications or supplier New Task

 Not routine Product needs and specifications researched, vendors evaluated Modified rebuy 1. 2. 3. 4. New cars/trucks Electrical components Computer termin al Consultancy services Completely new task with negotiation 1. Complex building s bridges, dams 2. Installation (machinery etc) 3. Custom built office or house Straight/routine rebuy 1. Electricity, water, gas 2. Office Supplies 3. Gum Ciga rettes 4. Bulk Chemicals Fig 1.5 Types of Buying Situations If we have to take an example of a straight r ebuy situation, it could be the purchase of photocopy paper for a large organiza tion. Once a relationship is established with a supplier who appears to be provi ding good products at good terms and prices, there is no need to re-negotiate th e terms and conditions every time more supplies of paper are needed. The purchas e of a large, expensive crane, however, would require more than a good relations hip between a purchasing agent and a salesperson. In a straight rebuy situation, the buyer is likely to periodically apply value analysis and vendor analysis. Value analysis: a periodic review of the qualities of the product for the price Vendor analysis: a periodic review of the services of the vendor (seller) An annual value analysis of the paper in the above example might show that the p roduct performs well, but a vendor analysis might show that the vendor is often late in deliveries and often delivers the wrong assortment of products. In this situation, the purchasing agent might search for a new supplier of the same bran d of paper. Buying Center Recall that there are often multiple decision makers i nvolved in organizational purchases. This requires that the marketer is aware of the needs of the various constituencies involved in making decisions. Additiona lly, there can be constituencies in an 19 11.623.3 Copy Right: Rai University

organization who do not have decision-making authority, but who nonetheless migh t have some influence over the purchase and consumption process. Users: If you are a secretary, you might have had the experience of arriving to work one day to find a new typewriter on your desk, whether or not you even want ed it. A salesperson would not call on you if you had no influence over what pro duct was purchased. However, if you and your co-workers submit numerous complain ts about missing or problematic features of the new replacements, the salesperso n might be faced with a very expensive customer service problem to solve. A user is the end consumer of a product. Influencers: Perhaps in this case, the office manager was consulted with regard to features or specifications to set in the p urchase of new typewriters. Although the office manager might have no decision-m aking authority with regard to the purchase, whatever specifications s/he reques ts could be used without change in making the purchase. A salesperson might need to be aware of these influencers - a special trick is to get the influencer to write a specification list that happens to match the sellers product features! An influencer is someone who has influence over what is purchased. Deciders: In th is case, some middle manager, ignorant of the needs of secretaries, might have m ade the decision as to when and what to purchase. The point of this statement is that the marketer or seller must be aware of how it is that decisions are made and often must focus some or all efforts at whomever it is that makes decisions in the organization. Note, however, that decision-making authority does not nece ssarily mean that this person exerts any influence on what is purchased. The com pany president might be the only person who signs all purchase requisitions, and therefore has ultimate decision authority, but might otherwise merely sign some requisitions without question or involvement. A decider is someone who ultimate ly has authority if or what to purchase. Buyers: The final purchase transaction might be left to a purchasing agent who otherwise has no involvement in decision -making. A sales agent for an office equipment supply house might help an organi zation to decide what brand of typewriters would be best, but that organization could then allow the purchasing agent to find the best deal on that brand, and t he best deal with regard to price might come from a competing office supply hous e. A responsibility of salespeople, then, is often to maintain good, trusting, a nd long-term relationships with the purchasing agents in prospective buying orga nizations, whether or not they have purchased in the past. A buyer is someone wh o arranges the transaction. Gatekeepers: Why do salespeople often give secretari es little gifts of chocolates or flowers or an occasional free lunch? A secretar y can be nice or nasty in passing information in either direction. The prospecti ve buyers secretaries can be helpful in providing names, telephone numbers, and o ffice hours of key members of a buying center in an organization. They can also be helpful in passing messages from the salesperson to members of the organization. A gatekeeper could include anyone i n the organization who can control the flow of information. Some books use the t erm Decision Making Unit to describe the notion of the buying center, and some a dditionally include the entity of initiator. An initiator would be a person who initiates the idea or a purchase. Note that the idea of the Buying Center is con ceptual - there is no such department in any organization! Key Terms CONSUMER BEHAVIOUR Customer roles User Payer Buyer Role specialisation Formalised process Accountab ility Internal capabilities Complexity Buy class Buying center Decision process Conflict resolution Derived Demand Reciprocal Demand Extractive Industries Manuf acturing industries Consuming and user industries Straight Rebuy Modified Rebuy New Task Buying center Users: Influencers: Deciders: Buyers: Gatekeepers:

 Article #1 Read The Consumer Understand what the consumer wants. Its the first step towards building a success ful brand. MANY a student, brand executive and sales/marketing manager have aske d me as to what books on marketing they should read. Many have read my books and others too, but they still ask for the advice on this subject. My strong recomme ndation, advice and guidance is Read the consumer! Understanding consumer behaviou r, reading his or 20 Copy Right: Rai University 11.623.3

her attitude and usage patterns, listening to his or her words and observing the consumers actions and reactions are paramount and of utmost significance. This w ould help create strong connections with the consumers and build profitable bran ds in the minds and hearts of consumers. Many years ago in India, a small entrep reneur with a large vision, R. Mohan, read the consumer closely in terms of the mosquito menace and observed the irritation and loss of sleep that a consumer ha s to endure. Thus was born a very simple but effective concept with the relevant brand name Goodknight. The brand grew substantially and till today is one of the most successful and effective mosquito repellent brands in the country. Not only does reading the consumer help in creating new categories but also helps in kee ping up with the changing needs of consumers. For example, music has been a grow ing category from the time of the kings (when music was in a personalised form w ith court musicians) to the age of the gramophone, records, cassettes, CDs and b eyond. Brands, which have been successful have constantly read the consumer, alm ost on a daily basis, looking for consumer insights, changing needs and new tren ds. If you do not read the consumer regularly, you could be left behind in marke ting. Reading the consumer for a marketing professional has to become his or her habit, his or her second nature. Adhocism does not work; reading the consumer is like breathing, if you do not do it regularly your brand could die. The new grow th areas like mobile phones, spas and fitness centres, family entertainment cent res and malls as well as coffee bars or multiplex complexes have all been a resu lt of reading the consumer regularly. In marketing, many a company make the erro r of focusing only on distribution channels or pricing or advertising. If the co nsumer is not read regularly, there could be a disconnect. Let us look at successf ul examples in India where reading the consumer has helped marketers gain consum er insights and position, reposition and build strong brands. Understanding that consumers were looking for convenience and ease of payment and purchase, car fi nance companies have built large bases and have made the category grow through e asy monthly instalment schemes. Similarly, in home finance and in consumer durab les financing, including computers, both the financing companies and the manufac turers have penetrated deeper into markets as well as made many a consumers dream come true. On the other hand, by reading the consumer and understanding afforda bility, companies like Nestle have exploded the markets with Re 1 Nescafe and Rs 2 Choco-stick packs. Similarly, Hindustan Lever with its Rs 5 offerings for Lux and Ponds has grown the market and itself. Smaller pack sizes have helped attai n bigger sales. Similarly, in areas such as the airlines industry, industrial pr oducts sector and the OTC products sector, reading the consumer has helped compa nies gain sales. This is evident from the performance of brands such as No Marks, which have created a new category. The consumer insights for the brand 11.623.3 building of Ujala and the 100 per cent vegetarian positioning of Anchor are all a result of reading the consumer regularly and intently. Thus, in my opinion, the hierarchy in marketing should flow thus: first comes God, then comes the consume r, then the brand, then the retailer, and thereafter everyone else. Thus, readin g the consumer, is of prime importance and this can be done only by getting up f rom the chair and your air-conditioned cabin and going out in the market and in the field and meeting and interacting with consumers regularly irrespective of w hether it is formally or informally done. Understand who your consumers are, wha t they prefer, why they buy, who is the decision-maker and who is the influencer , where is the purchase or consumption done and how the consumer uses the produc t and service. This is what I call the five wives and one husband way of reading the consumer! The five wives being the five Ws What, Where, Who, Why and When a nd the one husband being the one H How! Build your brand, succeed in marketing y our product or service by reading the consumer. Points To Remember CONSUMER BEHAVIOUR ORGANISATIONA L BUYING organisational buyers represent those buying goods and services on behalf of an o

rganisation for the purpose of the furtherance of organisational objectives (Lanc aster, 1999) Copy Right: Rai University 21

CONSUMER BEHAVIOUR 22 Personal Consumption Vs. Business Usage n Setting Participants in Organizational Markets n Producer n Reseller n Government n Instituional for Buying n Technical/Commercial Knowledge n Contact with Buyers/Distribution C hannels n Number of Decision-Makers n Derived Demand n Reciprocal Demand Purchase Objectives n Further n Usage Organisational Markets n Use Production in Operating the organization, and/or n Resale to other consumers goods for further production, operations, or resale n Purchase equipment, raw ma terial, and semi-finished goods n Demand is derived from that of final consumers Copy Right: Rai University 11.623.3

CONSUMER BEHAVIOUR Differences in Organisational transactions n n n n n n Buying centre n Users n Influencers n Deciders n Buyers n Gatekeepers Buying specialists are often used Often use multiple buying responsibilities Oft en use multiple suppliers More likely to require exact specifications Often leas e equipment and space More frequently employ competitive bidding and negotiation Types of Organisational Purchases n Straight Rebuy Rebuy n Modified n New Task 11.623.3 Copy Right: Rai University 23

CONSUMER BEHAVIOUR LESSON 3: TUTORIAL 1. 2.a. Assume that you have just been hired as a customer relations expert by J ohnson & Johnson to answer a growing number of complaints that JNJ products are over-priced and have lost their sense of value for the consumer. The complainant s cite lower priced private labels and store brands as illustrations of frustrat ions with JNJ. As one consumer states, A band aid is just a band aid after all! Wh at would be your response? b. How could you use the Johnson & Johnson Credo to a id you in your response? 2. Have you ever been selected as a respondent in a mar keting research survey? If yes, how were you contacted? Why do you think you, in particular, were selected? Did you know or could you guess the purpose of the s urvey? Do you know the name of the company or brand involved in the survey? 24 Copy Right: Rai University 11.623.3

LESSON 4: MARKET SEGMENTATION Introduction In this chapter, we discuss how to find attractive target market opportunities. We start by considering four basic types of opportunitiesmarket penetration, mark et development, product development, and diversification with special emphasis on opportunities in international markets. We will also see that carefully definin g generic markets and productmarkets can help find new opportunities. We will al so discuss market segmentationthe process of naming and then segmenting broad pro duct markets to find potentially attractive target markets. Some people try to s egment markets by starting with the mass market and then dividing it into smalle r sub markets based on a few dimensions. But this can lead to poor results. Inst ead, market segmentation should first focus on a broad product-market and then g roup similar customers into homogeneous sub markets. The more similar the potent ial customers are, the larger the sub markets can be. UNIT I INTRODUCTION CHAPTER 2: THE STUDY OF CONSUMER BEHAVIOUR A marketing manager who really understands a target market may see breakthrough opportunities. But a target markets real needsand the breakthrough opportunities t hat can come from serving those needsare not always obvious. Identifying a compan ys market is an important but difficult issue. In general, a market is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and/or servicesthat is, ways of satisf ying those needs. Marketing-oriented managers develop marketing mixes for specif ic target markets. Getting the firm to focus on specific target markets is very vital. What then is a companys market? Breakthrough opportunities from understanding tar get markets CONSUMER BEHAVIOUR Objectives After reading this lesson, you should be able to: Understand the meaning of the term markets Compare and contrast various types of m arketing strategies. Identify that lead to a market segmentation decision. Disti nguish between one variable segmentation and multivariate segmentation. To understand the narrowing down process, its useful to think o t ob s ct p so ma k t .A f w a i y e f r e s generic market is a market with broadly similar need sand sellers offering variousoftendiverseways of satisfying those needs. In contras t, a product-market is a market with very similar needs and sellers offering var ious close substitute ways of satisfying those needs. A generic market descripti on looks at markets broadly and from a customers viewpoint. For example If you ar e seeking entertainment you have several very different ways to satisfy your nee d. You as an entertainment-seeker might buy a new home theatre system, sign up f or a Caribbean tour, or reserve season tickets for a rock show. Any one of these very different products may satisfy this entertainment need. Sellers in this ge neric entertainment-seeker market have to focus on the need(s) the customers wan t satisfiednot on how one sellers product (home theatre system, vacation, live mus ic) is better than that of another producer. It is sometimes hard to understand and define generic markets because quite different product types may compete wit h each other. For example, freelance journalists often need a fast, worry-free w ay to get articles to their editors. Sanyos fax machines, DHLs overnight service, and VSNLs Internet-based e-mail service may all compete to serve our journalists n eeds. If customers see all these products as substitutesas competitors in the sam e generic market then marketers must deal with this complication. Suppose, howeve r, that one of our journalists decides to satisfy this need with a fax machine. Thenin this product-marketRicoh, Hewlett-Packard, Samsung, and many other brands m ay compete with each other for the customers dollars. In this product-market conc

erned with fax machines and needs to reduce worry, consumers compare similar pro ducts to satisfy their communication needs. 1. What is a Market? What do you understand by the term market? To a marketer, t he term marketer means: 1. 2. 3. 4. People as individuals or members of an organ ization. People with desires. People with willingness and ability or buying powe r to satisfy their desires. People who can become customers because they have be en authorized to buy. Thus, in summarization we van say that a market is: An aggregate of people who, as individuals or organizations, have needs for products in a product class and who have the ability, willingness and authority to purchase such products (condi tions needed for an exchange). Types of Markets 1. 2. Consumer Intend to consume or benefit, but not to make a profit. Organizational/ Business For: Resale Direct use in production Or general daily operations. Copy Right: Rai University 11.623.3 25

1.1 From Generic Markets to Product-markets Broaden Market definitions to find Opportunities middlemen as a customer typeunless middlemen actually use the product in their ow n business. The geographic area is where a firm competesor plans to competefor cus tomers. Naming the geographic area may seem trivial, but understanding geographi c boundaries of a market can suggest new opportunities. A firm aiming only at th e domestic market, for example, may want to expand into world markets. A generic market description doesnt include any product-type terms. It consists of only th ree parts of the product-market definitionwithout the product type. This emphasiz es that any product type that satisfies the customers needs can compete in a gene ric market. CONSUMER BEHAVIOUR Broader market definitionsincluding both generic market definitions and product-m arket definitionscan help firms find opportunities. But deciding how broad to go isnt easy. Too narrow a definition limits a firms opportunitiesbut too broad a defi nition makes the companys efforts and resources seem insignificant. Here we try t o match opportunities to a firms resources and objectives. So the relevant market for finding opportunities should be bigger than the firms present product-marketb ut not so big that the firm couldnt expand and be an important competitor. A smal l manufacturer of screwdrivers in Punjab, for example, shouldnt define its market as broadly as the worldwide tool users market or as narrowly as our present screwd river customers. But it may have the production and/or marketing potential to con sider the handymans hand-tool market in North India. Carefully naming your productmarket can help you see possible opportunities. Product-related terms do notby th emselvesadequately describe a market. A complete product-market definition includ es a four-part description. What: 1. Product type (type of good and type of serv ice) To meet what: 2. Customer (user) needs For whom: 3. Customer types Where: 4 . Geographic area We refer to these four-part descriptions as product-market name s because most managers label their markets when they think, write, or talk about them. Such a four-part definition can be clumsy, however, so we often use a nic kname. And the nickname should refer to peoplenot productsbecause, as we emphasize , people make markets! Product type describes the goods and/or services that cus tomers want. Sometimes the product type is strictly a physical good or strictly a service. But marketing managers who ignore the possibility that both are impor tant can miss opportunities. Product type should meet customer needs Naming Prod uct-Markets and Generic Markets Customer (user) needs refer to the needs the pro duct type satisfies for the customer. At a very basic level, product types usual ly provide functional benefits such as nourishing, protecting, warming, cooling, transporting, cleaning, holding, saving time, and so forth. Although we need to identify such basic needs first, in advanced economies, we usually go on to emoti onal needssuch as needs for fun, excitement, pleasing appearance, or status. Corr ectly defining the need(s) relevant to a market is crucial and requires a good u nderstanding of customers. Customer type refers to the final consumer or user of a product type. Here we want to choose a name that describes all present (possi ble) types of customers. To define customer type, marketers should identify the final consumer or user of the product type, rather than the buyerif they are diff erent. For instance, producers should avoid treating Activity 1 Describe how Bajaj Auto Ltd. Has moved from mass marketing to product-variety to target marketing. Select some other examples of companies have moved from mass marketing to segmented marketing 2. Market Segmentation The method of identifying a group of consumers, within a broader market, that ha s similar characteristics and needs. Segments can be identified by examining dem ographic, Psychographic, and behavioral differences. Thus a car manufacturer may

identify different types of consumers preferring different styles of cars, so t hey will segment their car buying markets accordingly. Perhaps identifying that younger car buyers, with high incomes, will be more likely to buy a sports car, while an older population of car buyers may be more apt to purchase a town car. Once these segments are identified, marketers can develop different marketing mi xes that target each segment. Again, the marketer may identify a number of speci alty magazines that the young, affluent market reads, thus they will run their a dvertisements for sports cars in these magazines. Individuals with diverse produ ct needs have heterogeneous needs. Market segmentation is the process of dividin g a total market into market groups consisting of people who have relatively sim ilar product needs, there are clusters of needs. 26 Copy Right: Rai University 11.623.3

The purpose is to design a MARKETING MIX(s) that more precisely matches the need s of individuals in a selected market segment(s). A market segment consists of i ndividuals, groups or organizations with one or more characteristics that cause them to have relatively similar product needs. 2.1 Criteria Needed for Segmentat ion For segmentation to occur: 1. 2. 3. 4. Segments must have enough profit pote ntial to justify developing and maintaining a MARKETING MIX Consumer must have h eterogeneous (different) needs for the product. Segmented consumer needs must be homogeneous (similar) Company must be able to reach a segment with a MARKETING MIX, Behaviouristic Variables - Regular users-potential users-nonusers Heavy/moderate /light users, 80-20 rule Frequent User Incentives It is five x more expensive to attract a new customer, as it is to satisfy your current customers. Benefits se gmentation-focus on benefits rather than on features. CONSUMER BEHAVIOUR Single Variable vs. Multi-Variable Segmentation For example, how do marketers reach children? Cartoons Cereal boxes Sports illus trated for kids Single variableachieved by using only one variable to segment Multi-variable more than one characteristic to divide market. Provides more information about segmen t. Able to satisfy customers more precisely. More variables create more segments reducing the sales potential in each segment. We need to answer one question he re. Will additional variables help improve the firms MARKETING MIX. If not there is little reason to spend more money to gain information from extra variables. Market Segmentation - bases of Segmentation It is widely thought in marketing that segmentation is an art, not a science. Th e key task is to find the variable, or variables that split the market into acti onable segments There are two types of segmentation variables: 1. Needs 2. Profi lers The basic criteria for segmenting a market are customer needs. To find the needs of customers in a market, it is necessary to undertake market research. Pr ofilers are the descriptive, measurable customer characteristics (such as locati on, age, nationality, gender, income) that can be used to inform a segmentation exercise. The most common profilers used in customer segmentation include the fo llowing: Profiler Examples Geographic Look at how media has changed recently due to changing demographics etc. and the refore the need of marketers to reach these groups. Media must respond because t hey are essentially financed by the marketers or at least heavily subsidised 5. Must be able to measure characteristics & needs of consumers to establish groups . 2.2 Variables that Can be Used to Segment Markets Need to determine the variable s that distinguish marketing segments from other segments. Segmentation variables should be related to consumer needs for, and uses of, or behavior toward the product. IE Stereo; age not religion. Segmentation variable must be measurable. No best way to segment the markets. Selecting inappropriate variable limits the chances of success.

 Variables for segmenting Consumer Markets include: Demographic - age, sex, migra tion patterns, and mortality rates, ethnic groups, income, education, occupation , family life cycle, family size, religion and social class. Region of the country Urban or rural Age, sex, family size Income, occupation, e ducation Religion, race, nationality Social class Lifestyle type Personality typ e Product usage - e.g. light, medium, heavy users Brand loyalty: none, medium, h igh Demographic Geographic -Climate, terrain, natural resources, population density, sub cultura l values, different population growths in different areas. Metropolitan Statisti cal Area Primary Statistical Metropolitan Area Consolidated Metropolitan Statist ical Area Psychographic - personality characteristics, motives and lifestyles City Size Psychographic Market density-# of potential customers within a unit of land. Behavioural 11.623.3 Copy Right: Rai University 27

Market Segmentation - Demographic Segmentation Demographic segmentation consists of dividing the market into groups based on va riables such as age, gender, family size, income, occupation, education, religio n, race and nationality. As you might expect, demographic segmentation variables are amongst the most popular bases for segmenting customer groups. This is part ly because customer wants are closely linked to variables such as income and age . Also, for practical reasons, there is often much more data available to help w ith the demographic segmentation process. The main demographic segmentation vari ables are summarized below: a. Age Consumer needs and wants change with age alth ough they may still wish to consumer the same types of product. So marketers des ign, package and promote products differently to meet the wants of different age groups. Good examples include the marketing of toothpaste (contrast the brandin g of toothpaste for children and adults) and toys (with many age-based segments) . b. Life-cycle Stage A consumer stage in the life cycle is an important variabl e particularly in markets such as leisure and tourism. For example, contrast the product and promotional approach of Club 18-30 holidays with the slightly more refined and sedate approach adopted by Saga Holidays. c. Gender Gender segmentat ion is widely used in consumer marketing. The best examples include clothing, ha irdressing, magazines and toiletries and cosmetics. d. Income Many companies tar get affluent consumers with luxury goods and convenience services. Good examples include Louise Phillip shirts, Hush Puppies shoes, mango and American Express. By contrast, many companies focus on marketing products that appeal directly to consumers with relatively low incomes. Examples include Nirma detergents, Lifebu oy soap, and discount clothing retailers such as Megamaart. e. Social Class Many marketers believe that consumers perceived social class influences their preferen ces for cars, clothes, home furnishings, leisure activities and other products & services. There is a clear link here with income-based segmentation. f. Lifesty le Marketers are increasingly interested in the effect of consumer lifestyles on d emand. Unfortunately, there are many different lifestyle categorization systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns. Market Segmentation - Behavioural Segmentation Behavioural segmentation divides customers into groups based on the way they res pond to, use or know of a product. Behavioural segments can group consumers in t erms of: a. Occasions When a product is consumed or purchased. For example, cere als have traditionally been marketed as a breakfast-related product. Kelloggs hav e always encouraged consumers to eat breakfast cereals on the occasion of getting up. More recently, they have tried to extend the consumption of cereals by promo ting the product as an ideal, anytime snack food. b. Usage Some markets can be s egmented into light, medium and heavy user groups c. Loyalty Loyal consumers - t hose who buy one brand all or most of the time - are valuable customers. Many co mpanies try to segment their markets into those where loyal customers can be fou nd and retained compared with segments where customers rarely display any produc t loyalty. The airlines market is a very good example in this case. Most of thes e airlines run very good frequent fliers programme to retail customer loyalty. d . Benefits Sought This is an important form of behavioural segmentation. Benefit segmentation requires marketers to understand and find the main benefits custom ers look for in a product. An excellent example is the toothpaste market where r esearch has found four main benefit segments - economic; medicinal, cosmetic and t aste. CONSUMER BEHAVIOUR Market Segmentation - Geographic Segmentation Geographic segmentation tries to divide markets into different geographical unit s: these units include: Regions: e.g. in India these might be North, South East, Northeast and West. Cou

ntries: perhaps categorised by size, development or membership of geographic reg ion City / Town size: e.g. population within ranges or above a certain level Pop ulation density: e.g. urban, suburban, rural, and semirural Climate: e.g. Northe rn, Southern Geographic segmentation is an important process - particularly for multi-nationa l and global businesses and brands. Many such companies have regional and nation al marketing programmes, which alter their products, advertising and promotion t o meet the individual needs of geographic units. 28 Copy Right: Rai University 11.623.3

Firms need creative strategy planning to survive in our increasingly competitive markets. Once a broad product-market is segmented, marketing managers can use o ne of three approaches to market-oriented strategy planning: 1. 2. 3. the single target market approach, the multiple target market approach, and the combined t arget market approach. Geographic Demographics 2.3 Criteria for segmenting a broad product-market and/or service) Effective mar ket segments generally meet the following criteria: 1. Homogeneous (similar) wit hinthe customers in a market segment should be as similar as possible with respec t to their likely responses to marketing mix variables and their segmenting dime nsions. Heterogeneous (different) betweenthe customers in different segments shou ld be as different as possible with respect to their likely responses to Product marketing mix variables and their related segmenting dimensions. consumer characteristics Amount of Usage Type of usage Brand Loyalty Benefits sought. CONSUMER BEHAVIOUR 2. Psychographic Potential Consumer Segments Nation/Regio n State/region Climate/Terra in Population Density, Market density Age, Sex, Buying Power, expenditure patterns, Occupation, education, Race or Nat ionality, family Life Cycle Social class Personality Life Cycle 3. Substantialthe segment should be big enough to be profitable. 4. Operationalthe segmenting dimensions should be useful for identifying customers and deciding o n marketing mix variables. Fig 1.1 Segmentation variables Market segmentation is a two-step process of: 1. 2. Naming broad product-markets and Segmenting these broad product-markets in or der to select target markets and develop suitable marketing mixes. This two-step process isnt well understood. First-time market segmentation effort s often fail because beginners start with the whole mass market and try to find one or two demographic characteristics to segment this market. Customer behavior is usually too complex to be explained in terms of just one or two demographic it would not be a useful dimension for segmenting It is especially important that segments be operational. This leads marketers to include demographic dimensions such as age, income, location, and family size. In fact, it is difficult to make some Place and Promotion decisions without such information. Avoid segmenting dimensions that have no practical operational use . For example, you may find a personality trait such as moodiness among the trai ts of heavy buyers of a product, but how could you use this fact? Salespeople ca nt give a personality test to each buyer. Similarly, advertising couldnt make much use of this information. So although moodiness might be related in some way to previous purchases. The combined target market approachcombining two or more sub markets into one larger target market as a basis for one strategy. Note that all three approaches involve target marketing. They all aim at specific, clearly de fined target markets. For convenience, we call people who follow the first two a pproaches the segmenters and people who use the third approach the combiners. Custom ers can be described by many specific dimensions. A few are behavioral dimension s, others are geographic and demographic. Regardless of whether customers are fi nal consumers or organizations, segmenting a broad product-market may require us

ing several different dimensions at the same time. To select the important segme nting dimensions, think about two different types of dimensions. Qualifying dime nsions are those relevant to including a customer type in a product-market. Dete rmining dimensions are those that actually affect the customers purchase of a spe cific product or brand in a product-market. By differentiating the marketing mix to do a better job meeting customers needs, the firm builds a competitive advant age. When this happens, target customers view the firms position in the market as uniquely suited to their references and needs. Further, because everyone in the firm is clear about what position it wants to achieve with customers, the Produ ct, Activity 2 Define how you think MacDonalds; Pizza Hut and a local restaurant have segmented the market. 11.623.3 Copy Right: Rai University 29

Promotion, and other marketing mix decisions can be blended better to achieve th e desired objectives. Although the marketing manager may want customers to see t he firms offering as unique, that is not always possible. Metoo imitators may com e along and copy the firms strategy. Further, even if a firms marketing mix is dif ferent, consumers may not know or care. Theyre busy and, simply put, the firms pro duct may not be that important in their lives. Even so, in looking for opportuni ties its important for the marketing manager to know how customers do view the fi rms offering. Its also important for the marketing manager to have a clear idea ab out how he or she would like for customers to view the firms offering. This is wh ere another important concept, positioning, comes in. Chapter 1 The study of Consumer Behaviour CONSUMER BEHAVIOUR Lesson 1.05 Tutorial on Segmentation 1a. Suppose you are the marketing manager for a new Mar uti sports car that is going to be launched. How would you use intermarket segme ntation to develop marketing strategies for Maruti? 3. Positioning Positioning refers to how customers think about proposed and/or present brands i n a market. A marketing manager needs a realistic view of how customers think ab out offerings in the market. Without that, its hard to differentiate. At the same time, the manager should know how he or she wants target customers to think abo ut the firms marketing mix. Positioning issues are especially important when comp etitors in a market appear to be very similar. For example, many people think th at there isnt much difference between one brand of TV and another. But Sony wants TV buyers to see its Trinitron brand screen as offering the very best picture. Once you know what customers think, then you can decide whether to leave the pro duct (and marketing mix) alone or reposition it. This may mean physical changes in the product or simply image changes based on promotion. For example, most col a drinkers cant pick out their favorite brand in a blind testso physical changes m ight not be necessary (and might not even work) to reposition a cola. Yet, ads t hat portray Pepsi drinkers in exciting situations help position it as the choice of a new generation. Conversely, 7-Up reminds us that it is the uncola with no ca ffeine, never had it and never will. Figuring out what customers really think abou t competing products isnt easy, but there are approaches that help. Most of them require some formal marketing research. The results are usually plotted on graph s to help show how consumers view the competing products. Usually, the products p ositions are related to two or three product features that are important to the target customers. Managers make the graphs for positioning decisions by asking c onsumers to make judgments about different brands including their ideal brandand the n use computer programs to summarize the ratings and plot the results. The detai ls of positioning techniquessometimes called perceptual mappingare beyond the scope of this lesson. Remember that positioning maps are based on customers perceptionst he actual characteristics of the products as detected by chemical tests might be quite different. Positioning is based on customers views Differentiation and Pos itioning Take the Customer Point of View Opportunities Can Begin by Understandin g Markets Copy Right: Rai University 30 11.623.3

1b. In reference to the question above, how would you best communicate to the ta rget audience? Describe your promotion campaign for Maruti. 4. Developing a Target Market Strategy Developing a target market strategy has three phases: 1. 2. Analyzing consumer d emand Targeting the market(s) CONSUMER BEHAVIOUR Undifferentiated Concentrated Multisegmented 3. Developing the marketing strategy 4.1 Selecting Target Markets (Analyzing Demand) Need to aggregate consumers with similar needs. Demand patterns: Do all potential customers have similar needs/d esires or are there clusters? Types of demand patterns are: Homogeneous Demand-uniform, everyone demands the product for the same reason(s). Clustered Demand-consumer demand classified in 2 or more identifiable clusters. Diffused Demand-Product differentiation more costly and more difficult to commu nicate IE Cosmetic market, need to offer hundreds of shades of lipstick. Firms t ry to modify consumer demand to develop clusters of at least a moderate size. Or uses one MARKETING MIX. 4.2 Targeting the Market 4.2.1 Undifferentiated Approach (Total Market approach) Single Marketing Mix for the entire market. All consumers have similar needs for a specific kind of product. Homogeneous market, or demand is so diffused it is not worthwhile to differentiate, try to make demand more homogeneous. Single mar keting mix consists of: 1 Pricing strategy 1 Promotional program aimed at everybody 1 Type of product wi th little/no variation 1 Distribution system aimed at entire market The elements of the marketing mix do not change for different consumers; all ele ments are developed for all consumers. Examples include Staple foods-sugar and s alt and farm produce. Henry Ford, Model T, all in black. Popular when large-scal e production began. Not so popular now due to competition, improved marketing re search capabilities, and total production and marketing costs can be reduced by segmentation. Organization must be able to develop and maintain a single marketi ng mix. 11.623.3 Copy Right: Rai University 31

Major Objective is to Maximize Sales Market segmentation - why segment markets? There are several important reasons w hy businesses should attempt to segment their markets carefully. These are summa rized below Better matching of customer needs Customer needs differ. Creating se parate offers for each segment makes sense and provides customers with a better solution Enhanced profits for business Customers have different disposable incom e. They are, therefore, different in how sensitive they are to price. By segment ing markets, businesses can raise average prices and subsequently enhance profit s Better opportunities for growth Market segmentation can build sales. For examp le, customers can be encouraged to trade-up after being introduced to a particular product with an introductory, lower-priced product Retain more customers Custom er circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appea l to customers at different stages of their life (life-cycle), a business can reta in customers who might otherwise switch to competing products and brands Target marketing communications Businesses need to deliver their marketing message to a relevant customer audience. If the target market is too broad, there is a stron g risk that (1) the key customers are missed and (2) the cost of communicating t o customers becomes too high / unprofitable. By segmenting markets, the target c ustomer can be reached more often and at lower cost Gain share of the market seg ment Unless a business has a strong or leading share of a market, it is unlikely to be maximizing its profitability. Minor brands suffer from lack of scale econ omies in production and marketing, pressures from distributors and limited space on the shelves. Through careful segmentation and targeting, businesses can ofte n achieve competitive production and marketing costs and become the preferred ch oice of customers and distributors. In other words, segmentation offers the oppo rtunity for smaller firms to compete with bigger ones 5. Market Segmentation Strategies There are two Market Segmentation Strategies 5.1 Concentration Strategy. This st rategy talks of single market segment with one marketing mix. Market | |A Market Segment | One marketing mix>A Market Segment | |A Market Segment CONSUMER BEHAVIOUR It allows a firm to specialize Can focus all energies on satisfying one groups ne eds A firm with limited resources can compete with larger organizations. CONS include Puts all eggs in one basket. Small shift in the population or consumer tastes can greatly effect the firm. Ma y have trouble expanding into new markets (especially up-market). Haggar having problems finding someone to license their name for womens apparel, even though w omen purchase 70% Haggar clothes for men.

Objective is not to maximize sales; it is efficiency, attracting a large portion of one section while controlling costs. Examples include ROLEX, Anyone wear one . Who are their target markets?? 5.2 Multi-segment Strategy 2 or more segments a re sought with a marketing mix for each segment, different marketing plan for ea ch segment. This approach combines the best attributes of undifferentiated marke ting and concentrated marketing. Market Marketing mix>|a market segment |__________ ______ Marketing mix>|a market segment |_______________________ Marketing mix ____________________ Marketing mix>|A Market Segment | 32 Copy Right: Rai University

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Example: Marriott International: 1. 2. 3. 4. d. Demographics CONSUMER BEHAVIOUR Marriott Suites...Permanent vacationers Fairfield Inn...Economy Lodging Residenc e Inn...Extended Stay Courtyard By Marriott...Business Travelers Shift excess pr oduction capacity. Can achieve same market coverage as with mass marketing. Pric e differentials among different brands can be maintained Contact Lens!! Consumer s in each segment may be willing to pay a premium for the tailor-made product. L ess risk, not relying on one market. Demands a greater number of production proc esses. Costs and resources and increased marketing costs through selling through different channels and promoting more brands, using different packaging etc. Mu st be careful to maintain the product distinctiveness in each consumer group and guard its overall image (Contact lenses) PROS include Case on Segmentation Satish: The Meatwalla Introduction Satish Sehajpal was an officer in the air force. He belonged to the administrati ve and special duties branch and had specialized in catering. He had undergone m any courses and training programmes to prepare himself for the onerous responsib ilities of looking after the dietary needs of airmen located at various bases. S ehajpal had studied hygiene, nourishment, diet planning, quality assurance of fo od products, cooking techniques and so on. He enjoyed his work and his fatherly figure (he looked older than is 42 years) evoked respect from all those whose fo od he looked after. His seniors listened to his advice and his colleagues loved his helpful nature, laughter and hospitality. Life look a turn when Satish Sehaj pal lost his father. Sehajpal was very fond of his parents and realized that the responsibility of looking after his mother had fallen fully on him. His father had left a substantial amount of investments. Satish Sehajpal had to reluctantly leave the air force and settle in Hyderabad. CONS include The core product is the same, use different Packaging, Brand Name, Price to diff erentiate and create a different marketing mix. What will happen if consumers fi nd out?? Objective: Sales maximization, but can remain a specialist. Can get fir mly established in one segment, then pursue another. Activity 3 What major differences do you observe amongst the users of Surf and Nirma in ter ms of various life-style dimensions? Life-style dimension a. Activities Surf Vs. Nirma The Industrialist Satish went in search of a suitable occupation. A number of friends suggested th at he set up a 5-star eating place because of his background in catering. He was examining various alternatives when he came across an advertisement for the sal e of a meat processing plant and an abattoir. The company, M/s Bindu & Gautam, e xported meat to the Middle East in ready to consume packaging for a family. Sati

sh Sehajpal studied the details and conclude that: 1. M/s Bindu & Gautam had set up this industry from the scratch. It had been consistently returning profits f rom the time it started commercial production. 2. The company had a turnover of approximately Rs 8 crore per annum, though the capacity of the processing plant and the abattoir was 12 tonnes of finished product per day. The sale of the plan t could be considered a distress sale to some extent since the owners, Bana and Girish were migrating to Cananda to settle with their children. The owners would be happy to get the total price in their hand at one go. This would enable them to leave the country quickly. Instalment payments were not satisfactory from th em. 4. Satish Sehajpal could afford to buy the plant from the assets left by his father. b. Interests 3. c. Opinions 11.623.3 Copy Right: Rai University 33

The deal went through quickly and smoothly. Satish Sehajpal was happy at having become an industrialist Satish Sehajpal, Industrialist sounded great. However, his friends gave him the title Satish: The Meatwalla. This angered Satish and in prot est, he gave up eating meat. Segmentation Satish Sehajpal showed his inclination to consider the suggestion unanimously pu t up by his senior team. He, however, felt that the local meat market was too wi de to be covered at one stroke. A detailed study was to be conducted by Dastidar , as per the directions of Mr Sehajpal, during the following 4 weeks. After the study, Dastidars findings were presented to the management team consisting of Sat ish, Nikhil, Jyoti, Samir etc. Dastidar proposed that initially M/s Bindu & Gaut um should concentrate on selling their product in the states of Maharashtra and Andhra Pradesh only. The market could be divided as follows: 1. An upper segment of the market where the customers were willing topay additional prices for high quality, hygienically produced and packed meat. This segment would like fat-fre e meat without any spices, since about 1520 per cent of the buyers in this categ ory were liked to be foreigners. This segment could consume all the additional p roduction being planned at M/s Bindu & Gautaum. The products for this segment wo uld have to be the same as those being exported and thus the investment would be low and waste of time to change from one product to another would be avoided. H owever, there was little chance of the Middle East. Selected outlets in high-inc ome group areas would have to be approached to retail the meat. Some advertising would be needed. Institutional sales to hotles, restaurant, hospitals, hostels, etc., could absorb not only the increased output but a substantial (say up to 3 0-40 per cent) portion of the meat being exported. The packaging would have to b e changed to bulk packaging and the institutions would insist on regular and ass ured supplies at lower prices. The product would have to be changed to suit Indi an cuisine. Not much advertising would be needed. Middle level bazaar sales woul d require product change to suit Indian cuisine, though the packing could contin ue to be the same as that used for export consignments. A large number of retail outlets would have to be approached. Considerable advertising would be needed. A rough estimate showed that the market would be price sensitive. Lower prices c ould increase the size of the existing market. A comprehensive market research s tudy would be required to determine the sizes of the market at different prices. At a first approximation, this market could equal the institutional market at s imilar prices. CONSUMER BEHAVIOUR The Problems Slowly, Satish Sehajpal started understanding the problems. The most difficult a rea of working was kickbacks, speed money, tips, etc. His 2 decades in the air for ce had prepared him for many things, but not these facets of working. Second, th ere was the problem of purchasing proper inputs and organizing timely transporta tion. He had a good materials manger named Nikhil, who made all the arrangements economically and efficiently. The third and most important problem was that of quality control. Satish Sehajpal realized that M/s Bindu & Gautum would continue to make good profits as long as there were no rejections of meat consignments a broad. He was quick to understand that though the processing plant and the abatt oir were fairly modern, there were so many reasons for the consignments not bein g accepted. The reasons could be non-conformance with stringent quality requirem ents, rejections due to delayed delivery, temporary cancellation of order for br ief period due to political or religious reasons, labour trouble in various orga nizations, etc. Disposal of non-accepted consignments or those returned from abr oad or not sent there at the last moment was a real problem. This had tobe tackl ed with minimum losses. There was also the problem of exports being reduced or o rders being cancelled altogether. Other Asian and African countries had been vie wing the meat markets of the Middle East M/s Bindu & Gautum were, therefore, ser iously worried about losing their sole market or the market shrinking due to var

ious reasons. Satish Sehajpal was, one day, approached by 3 of his senior manage rs; Jyouti, who headed financ, Samir, who was in charge of production and Dastid ar, the marketing in charge. They had come up with a proposal. Samir suggested t hat with marginal additional investment, the turnover could be increased by 20-2 5 per cent. The previous owners had been keen to wind-up and had thus not accept ed their proposal to increase the utilization factor of the plant and the abatto ir. Jyoti added that the additional investment would be around Rs 60 lakh. This could be spread over 9-10 months and bankers could be persuaded to extend additi onal credit for 5 years, in which time the company would be able to show an incr eased turnover. Jyoti continued that higher levels of production would also redu ce the cost of the meat being produced and thus improve the profits. It was, how ever, Dastidar who sold the idea. He argued that M/s Bindu & Gautum should look at the growing domestic market. The Indian market continued to be serviced by th e conventional butchers/meat sellers. The consumers would respond positively to a quality product. The image of M/s Bindu & Gautum as meat exporters would stand them in good stead in the national market. Sales in the domestic market could a lso provide the much-needed cushion against possible consignment rejections, can cellations or shrinking of orders from abroad. Diversification into the Indian m arket, Dastidar emphasized, was inescapable. 34 2. 3. Conclusion The management team listened to Mr. Dastidars presentation. Samir Verma, the prod uction chief, added that investments for changing the products to suit Indian cu isine would be small and may be ignored. The senior managers could not decide wh ich segment of the market would be more suitable for M/s Bindu & Gautum. The tea m left the decision to you: the management consultant. What will be your recomme ndation and why? Maximum time to solve this case study: 40 minutes. Copy Right: Rai University 11.623.3

Market Segmentation Article 1 Audit Your Marketing Evaluation of all aspects of marketing periodically is important to keep your br and in good shape. audit of target audience selection. This is important because even with the righ t product and communication, a company may not achieve the desired results if it targets the wrong audience. Further, segmentation needs to be clear and defined and its basis chosen well, whether it be usage segmentation, through psychograp hics or benefit segmentation. The next element of marketing audit is related to the main ingredients of a brand the positioning strategy. After segmentation aud it, it is important to evaluate the positioning stance of the brand and its rele vance in the current context as well as versus competition. This is crucial, as consumers change and brands must have a relevant and contemporary positioning to have a long life. After this, it is important to look at each element of the ma rketing mix. First and foremost is product portfolio audit, which is employed to assess the correctness of the product in range, as also decide on modifications to it. It is also vital to do a pricing audit, and regularly monitor its impact on sales, market share and profits and check if you are available at appropriat e price points. Following this, a series of audits needs to be done for existing products, pricing, customer service, distribution sales, marketing research, pe ople, physical appearances, ambience and processes. This detailed analysis is us eful to measure the health of the brand. It is like a quarterly medical check-up of the brand. The next stage involves a detailed audit of the communication str ategy. This is significant as large sums of money will be wasted if the communic ation strategy is not handled well. Following this is the communication-mix audi t, which covers strategies for advertising, personal selling, public relations, sales promotion, perception, relationship, direct marketing and event marketing. After this, it is crucial to summarise the findings and bring about the most va lue-added contribution during the marketing audit process. This is the stage of interpretation of the findings, which helps in correcting the course in terms of structure, systems and awareness at the consumer level, trade, sales force and overall organisation process. Very few companies in India practise the system of marketing audit. It is important to regularly check, assess and evaluate your m arketing and brands process and systems to ensure awareness, trials, repeats, hi gher sales growth, marketing share and profits for your brands. CONSUMER BEHAVIOUR There is wisdom in running a check Has Kelloggs Cornflakes increased its household penetration? Has the awareness of AirTel gone up? Is Intel increasing its perception amongst new computer users? Is Ghari detergent expanding its distribution network from the North to other pa rts of the country? What could be the future growth map of Ujala? How is the rel ationship between Rasna and its target consumers developing after the new campai gn? THESE and many more questions come up during the life of a brand. Would you not like to know the health of your brand through a regular Brand Health check-up? I would recommend that you regularly do a marketing audit of your brand so that t he brand remains healthy and strong. What is marketing audit? And why do I stron gly recommend that it be conducted every quarter as well as annually? Marketing audit involves thorough evaluation of all elements of marketing. The assessment is enabled by a comparison with the objectives and targets, set not only in term s of sales but in parameters such as the ratio of advertising to sales, percenta ge of awareness , percentage of household penetration, performance of the sales force and promotional programmes. Qualitatively too, elements such as brand pers onality and the health of the brand, among others, are audited. Further, there i s a process audit as well as a strategy audit, which establishes whether the mar

keting task is being carried out right. The major components of marketing audit are done in a sequence, starting with consumer behaviour. This helps the company understand its customers, why they buy its products and services, where and how they use its products, and similar behavioural patterns. After the consumer beh aviour audit, it is important to look at specific elements related to customer s egmentation as well as the Marketing Segmentation Article 2 Going Regional Marketers would do well to remember that a single marketing strategy for the var ious markets in the country wont work. LOOK at the traditional segmentation used by marketers and corporate strategists. Most plans, particularly in the FMCG ind ustries, are based on an urban-rural segmentation, or 11.623.3 Copy Right: Rai University 35

segmentation by socio-economic classification (SEC). The implicit assumption is that consumers across the country are largely similar (except for language), and hence these segmentations adequately capture any differentiation. There are two reasons for re-examining this assumption. First, it simply may not be true! Ind ia is a mosaic of very different cultures and regions - are such simplistic assu mptions workable? True, this approach has worked pretty well in the past, but th at is more likely due to the first mover effect. The rural markets in particular w ere so underdeveloped that anyone at all who bothered to reach them got rich div idends. Today, things are different. The growth of television and improvement in roads has led to rural consumers becoming far more aware of products and servic es. Companies in personal care, foods, textiles, consumer appliances and other F MCG products have bombarded these markets with small packs and other rural product s. As a result, new entrants trying to enter the rural markets today face issues such as lack of good stockists, overcrowded retail shelves, intense competition and brand-savvy customers. In fact, the situation is very similar to the urban markets. Which brings us to the second reason. With the rural markets no longer a guaranteed source of sales, where do marketers go? One option is to penetrate even deeper into the countryside, down to villages with population less than 2,0 00. HLL for one is doing this, but the effort remains beyond most other companie s. Another option is to go in for narrower product niches, like toothpastes with three stripes versus those with two stripes. But these lead quickly to consumer confusion and fatigue, as well as the company finding itself saddled with a log istical nightmare. Further, these approaches still assume a great degree of unif ormity across the country. A third approach is for a company to have a uniform p latform for its product, but make it available in different forms in different r egions, as done by some tea brands like Taaza. But for this, the product categor y must both be capable of a uniform promise (easy), and of being delivered in di fferent, yet suitable variants (very difficult except for a few products). A pro mising way out is to re-examine this basic assumption. As mentioned earlier, Ind ia is not a uniform market. Regional differences are enormous. Yes, there will a lways be some common factors, which, after all is what national brands tap into. But it is now time to shift from a one size fits all approach to customised, regi on-specific marketing. This needs a mindset very different from the one that, fo r example, considers a Hindi, essentially northern belt ad translated into Tamil as regionalised. Each region has a strong culture and set of traditions - regiona lised marketing must begin with products that fit this, then carry on to communi cation specifically developed for the region. It is not a coincidence that while the larger, national brandoriented FMCG companies are slowing down, small regiona l players with products and communication fine-tuned to their markets are zippin g ahead. An Arokya ad is quintessentially Tamil, in a way that no translated Nes tle ad, no matter how slickly produced, can ever be. The advantages are several. Regional markets are geographically contiguous, maki ng logistics much easier than for national brands. It is easier to penetrate dee per into markets if the operation is geographically restricted. The burst of reg ional satellite TV means that they can be covered by TV far more cheaply and mor e cost effectively than on national media. Regional print can now be used far mo re efficiently. Economies of scale? Most industries have more than enough excess capacity available for outsourcing. Of course, this is not a panacea. Some indu stries, such as cosmetics, personal care and foods, lend themselves more to this approach. Others either do not, or are so capital-intensive (like cars) that th e approach isnt economically viable. More important, business will effectively mo ve from a portfolio of a few, large brands to an agglomeration of small, regiona l ones. This puts severe stress on the organisation. A regional strategy is usel ess without decentralised control of production and marketing. A mechanism is ne eded to maintain financial and operational control over several, possibly dozens , of operating units. Communication between marketing and front line sales repre sentatives has to be improved to ensure a quick response in local markets. Manag ers have to be convinced that working in a regional, non-metro office is not a c areer dead-end. But all these are manageable issues. In fact, companies such as

Bata in footwear, or even HLL (in its erstwhile Animal Foods Division), have han dled the challenge of delivering localised products from a national system witho ut ending up with inventory logjams or unwanted products. Note that this entire approach involves changing the company so as to meet consumer needs better, rath er than trying to give the consumer what is convenient for the marketer. And isnt that what marketing is supposed to be all about? CONSUMER BEHAVIOUR Article 3 M and M Launches Bolero Variant Mahindra & Mahindra (M&M) has launched an open-top variant of the Bolero called Invader in a bid to create a new segmentation in the highly cluttered Indian car market. The vehicle has been positioned as having the power of a sport utility vehicle as well as the comfort of a car. However, company officials felt that th e Invader would not cannibalise M&Ms existing offerings. M&M decided to launch th e soft-top version on the Bolero platform, instead of Scorpio as the company fel t that this would enable it to keep the vehicle in the price segment. Moreover, the retro-fit appeal of Bolero would be more in tune with the Invader, according to M&M vice president (marketing) Rajesh Jejurikar. M&M would replace its Classi c model with the new Bolero variant. The company currently sells around 1,300 uni ts of softtops per month. The base version has a price tag of Rs 3.78 lakh (ex-s howroom Jaipur). M&M executive director and president (automotive sector) Alan D urante said that the company was looking at the African market for exports apart from neighbouring countries. It could be useful for government agencies like th e police or defence 36 Copy Right: Rai University 11.623.3

establishments, he added. On exports, Mr Durante said that initially the company was planning it on CBU (completely built units) basis for its vehicles unless t here is demand to set it up as a separate facility. Production of Bolero would c ontinue to be in the region of 750-800 units a month. Company officials, however , did not divulge sales target for the new vehicle, preferring to say that the c ompany was fully geared to meet the demand. The petrol version of the Invader with an Isuzu engine would be available in the next three to four months. The vehicl e would initially be available in the four metros, Jaipur and Chandigarh from mi d-April and a phased rollout across the country from May onwards. The vehicle is powered by a 2.5 litre IDI diesel engine offering 72.5 bhp output with a DI die sel version, and 58 Bhp diesel engines. Chennai and in the South, in general. In time, it came to be perceived by people in the North as a South Indian car, and hence the Matiz was preferred! I am not sure how true this is or how extensive the study was. But this gives me the imp ression that while brands can be more enduring, they can be limited by the bound aries of the classification or segmentation made by the market. This segmentatio n can be based on age, geography or any other parameter. What are your thoughts on this? In another piece of literature on branding, I came across yet another i nteresting view that suggests that customers (or the market) do not fall into fi xed segmentation patterns. Rather, they are defined by what the brand communicat es. The writer took pains to explain that despite changes in business, technolog y, social and economic conditions, market perceptions of brands have not changed much. The market reacts to the brand based on what the brand offers. Every bran d offers a set of promises or values that appeal to the targeted segment in a pa rticular way. The trick is to have the product or service meet the values or pro mises for the brand to succeed. Based on all these views, I have the following q uestions: Are brands really eternal? Are they otherwise limited by the way marke ts segment them or are they limited by the values or attributes or promises they offer? YOUR question is all the more pertinent today, given the rapid growth in technology leading to the creation and obsolescence of product categories and r esulting in ever changing consumer needs. This is clearly the best of times and the worst of times for big brands. While brands such as Marlboro, Levis, Campbell , Sunsilk and Lifebuoy continue to enjoy high popularity after many decades and across many continents, iconic brands such as Polaroid, Cadillac and Oldsmobile have either died or are going through very troubled times. What determines the l ife of a brand and why have some brands been successful where others have failed ? The answer lies in many factors that affect the brand. The first to be conside red is the linkage of a brand with a particular product category. If a brand has established itself very strongly in a product category and the category itself becomes obsolete, the brand will die a natural death, unless the company has the foresight and vision to enter related contemporary product categories that enab le it to build on the existing equity of the brand. CONSUMER BEHAVIOUR Nimble Brands Stay Eternal Brand owners need to remember that brands that dont keep up get lost quickly. The y first become irrelevant, then invisible and then theyre gone! Levis is a brand that has stood the test of time. The markets are cluttered with products, technologies and services, and it is branding that has helped successf ul products/ services/ companies stand out from the crowd and avoid the commodit y trap. My study so far indicates that recent years have seen a big surge in the awareness of brand building. Yet, do brands have life cycles or are they eterna l? What puzzles me about this is that there have been innumerable instances wher e a particular product was very popular once, but was rejected later simply beca use it was identified with the older generation. Similarly, I read about an inte resting situation involving the Matiz and the Santro. The sales of the Santro st arted off well in

11.623.3 Take the classic example of Polaroid which had established itself as a strong br and in instant photography and is facing troubled times because the technology i s no longer relevant. A logical extension for the brand would have been to enter digital photography where its promise of instant photography would have been al l the more relevant. A similar example closer home is that of Singer sewing mach ines, a name that was almost synonymous with sewing machines in India for many d ecades, but failed to extend into related categories as the market for sewing ma chines began declining. Usha sewing machines, on the other hand, successfully tr ansferred some of the equity from sewing machines to launch a range of home appl iances under a sub-brand, Usha Lexus. 37 Copy Right: Rai University

The second factor to be considered is the core promise of the brand or the reaso n why consumers prefer the brand to other competing brands. In the case of Cadil lac, the automobile offered consumers luxury. However, over a period of time new b rands such as BMW, Mercedes, Ferrari or Alpha Romeo came into the market and off ered consumers not just luxury but luxury combined with superior performance. In fac t, studies show that luxury for luxurys sake is no longer relevant to those under 60 who are buying luxury cars. Cadillac is today a struggling brand because it did not adapt its promise to meet the changing needs of its consumers. Consumer expectations have risen and Cadillac is today performing below expectations. Sun silk, a Unilever brand launched in 1954, is an example of a brand that has been continuously appealing to different consumer segments in 40 markets across the g lobe, due to its understanding of the requirements of different consumers and be ing able to consistently address these through a range of products. Some recent product innovations include colourants, Afro Hair and Black Hair. The third fact or, as correctly pointed out by you, is the target market and target segments fo r the brand. Many successful power brands have learnt that to extend the life cy cle of a brand, it is not always necessary to either enter new categories or rep osition the brand, but simply to re-define the brands target market and segments. Marlboro, a brand built in the US, realised that the changing lifestyles and ha bits of US citizens were moving them away from the smoking habit and immediately launched the brand in less health-conscious countries. The Marlboro brand today is the preferred brand in Russia. Similarly, a brand such as Starbucks has been extremely successful in dealing with flagging sales in the US by entering new m arkets, such as China. The entry of Ford Motors and Toyota in the Indian market also illustrates this principle. A brands life cycle, unlike the product life cyc le, is thus infinite and depends on the light-footedness, vision and capabilitie s of the team managing the brand. The threat of extinction is heightened dependi ng on the industry or the sector. Product categories such as automobiles, inform ation technology, fashion and so on face a far greater threat of extinction. My advice to all brand owners is to follow the simple rule remember that brands tha t dont keep up get lost quickly. They first become irrelevant, then invisible and then theyre gone! Hybrid segmentation VALS Counter segmentation Differentiated marketing CONSUMER BEHAVIOUR Points To Remember Market Segmentation The process of dividing a potential market into distinct subsets of consumers an d selecting one or more segments as a target market to be reached with a distinc t marketing mix. Key Terms Market segmentation Mass marketing Positioning Repositioning Geographic segmenta tion Micro marketing strategies Demographic segmentation Psychological segmentat ion Sociocultural variables Use-related segmentation Benefit segmentation Copy Right: Rai University 38 11.623.3

CONSUMER BEHAVIOUR Three Phases of Marketing Strategy n Phase Table 3.2 Market Segmentation SEGMENTATION BASE SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic S egmentation Region Southwest, North American, Alaska, Hawaii City Size Major met ropolitan areas, small cities, towns Density of area Urban, suburban, exurban, r ural Climate Temperate, hot, humid, rainy Demographic Segmentation Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Sex Male, female Marital status Single, married, divorced, living together, widowed Income Education Occupation Under Rs25,000, Rs25,000-Rs34,999, Rs35,000-Rs 49,999, Rs50,000-Rs74,999, Rs75,0 00-Rs99,999, Rs100,000 school, high school graduate, some college, Some high and over college graduate, postgraduate Professional, blue-collar, white-collar, ag ricultural, military 1: Market Segmentation n Phase 2: Target Market and Marketing Mix Selection n Ph ase 3: Product/Brand Positioning Bases for Segmentation n n n n n n n n n Table 3.2, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES SEGMENTATION VARIABLES Psychol ogical Segmentation Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressives, low dogmatic s Perception Low-risk, moderate-risk, high-risk Learning -involvement Low-involv ement, high -involvement Attitudes Positive attitude, negative attitude Psychogr aphic (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusia sts, status seekers Sociocultural Segmentation Cultures American, Italian, Chine se, Indian, French, Pakistani Religion Hindu, Moslem, Christian, Sikh, other Sub cultures (Race/ethnic) North-Indian, South -Indian Social class Lower, middle, u pper Family life cycle Bachelors, young married, full nesters, empty nesters Geographic Segmentation Demographic Segmentation Psychological Segmentation Psyc hographic Segmentation Sociocultural Segmentation Use-Related Segmentation Usage -Situation Segmentation Benefit Segmentation Hybrid Segmentation Approaches 11.623.3 Copy Right: Rai University 39

CONSUMER BEHAVIOUR LESSON 5: CONSUMER RESEARCH PROCESS Introduction In order to implement the marketing concept, marketers require information about the characteristic, needs, wants and desires of their target markets. To undert ake marketing effectively, businesses need information. Information about custom er wants, market demand, competitors, distribution channels etc. 4. How to know there is an environmental change? Continuous information collection/search, inte rnal data, managerial experience, or even gut feeling may help. Two fundamental questions that is asked: (1) should we alter our marketing mix in order to perfo rm better? (2) If so, what should we do? Another important question could be: Ca n we predict possible environmental change? This can be done by using historical data and trying to find trend and factors that affect the emergence of such tre nd. 5. Objectives After going through this lesson you should be able: 6. To understand the concept of Consumer research To learn the steps involved in th e marketing research process. To understand the functions and important issues o f each step in the process. Three key questions to answer at the problem/opportunity definition stage 1. 1. Consumer Research Process Before moving into the consumer research process, let us first understand a very key issue in consumer research, i.e., the difference between market research an d marketing research. Marketing Research vs. Market Research You will find that these terms often are used interchangeably, but technically there is a differenc e. Market research deals specifically with the gathering of information about a markets size and trends. Marketing research covers a wider range of activities. W hile it may involve market research, marketing research is a more general system atic process that can be applied to a variety of marketing problems. The eight-S tep Research Process We are depicting the consumer research process in eight ste ps: 1. 2. 3. 4. 5. 6. 7. 8. 1a. Problem/opportunity identification, 1b. Problem/ opportunity formulation Create the research design Choosing a basic method of r esearch Selecting the sampling procedure Data collection Data analysis Preparing and writing the report Follow-up 2. Why is the information being sought? (1) Make sure what conclusions you want to get and you will know what information you will need (backward approach). (2) If I omit this piece of information, what will happen? Does the information alread y exist? Secondary data, internal data are sufficient? Or we have to acquire pri mary, external data? Can the question really be answered? It suggests that you h ave to know your limitations. You may find difficulties in finishing your resear ch if: (1) the problem is too broad, too complicated. (2) Involve tremendous res ource input. (3) The environment is too unstable, (4) The issue is too sensitive etc. Expectancy of Problem Occurrence of problem expected Occurrence of problem unexp ected Immediacy of Solution Immediate Immediate solution solution not requiremen t required Routine Planning Emergency Evolving

3. Figure 1.1 below shows the different types of problems we may face and this info rmation we can use while formulating the problem. Fig 1 Types of problems Step one a: problem/opportunity identification 1. 2. 3. The research process beg ins with the recognition of a business problem or opportunity. Problem/opportuni ty emerges when: Environment change. Examples: Technological breakthrough, new l egal policy, social change, high unemployment rate. Step One b: Problem/Opportunity Formulation 1. 2. Information is needed to clarify your research question. You can use explo ratory research, literature review, personal interview, focus group and other te chniques to obtain information to formulate your research question. Exploratory research: small-scale research undertaken to define the exact nature of the prob lem and to gain a better understanding of the environment within which the probl em has occurred. 11.623.3 3. 40 Copy Right: Rai University

4. Literature review. Obtain secondary from secondary s, magazines, books and professional journals. You and credibility will be different. Interview with oup: Usually a moderator in an in-depth discussion rticular topic or concept. 7. In quantitative research, you may use regression analysis to analyze the associa tion between two (or more) variables. For example, the older the respondent, the more he likes classical music. CONSUMER BEHAVIOUR 5. 6. Now let us now look more in details at each of the three categories of marketing research, viz., Exploratory research Descriptive research Causal research The decision problem faced by management must be translated into a market resear ch problem in the form of questions that define the information that is required to make the decision and how this information can be obtained. For example, a d ecision problem may be whether to launch a new product. The corresponding resear ch problem might be to assess whether the market would accept the new product. T he objective of the research should be defined clearly. To ensure that the true decision problem is addressed, it is useful for the researcher to outline possib le scenarios of the research results and then for the decision maker to formulat e plans of action under each scenario. The use of such scenarios can ensure that the purpose of the research is agreed upon before it commences. Setting up the Research Objectives 1. A statement of research objectives. For example: This rese arch investigates the relationship between demographic background and musical pr eference. More specifically, this study studies how age, sex, income level and e ducational level determine consumer preference on film and classical music. Decla re the precise information needed. It should be specific and unambiguous as poss ible. The entire research efforts should be directed to accomplish the research objectives. Sometimes, theories and models are set up. Sometimes, hypotheses are set up. These classifications are made according to the objective of the research. Explo ratory Research has the goal of formulating problems more precisely, clarifying concepts, gathering explanations, gaining insight, eliminating impractical ideas , and forming hypotheses. Exploratory research can be performed using a literatu re search, surveying certain people about their experiences, focus groups, and c ase studies. When surveying people, exploratory research studies would not try t o acquire a representative sample, but rather, seek to interview those who are k nowledgeable and who might be able to provide insight concerning the relationshi p among variables. Exploratory research may develop hypotheses, but it does not seek to test them. Exploratory research is characterized by its flexibility. 2. 3. 4. 5. 6. Descriptive research is more rigid than exploratory research and seeks to descri be users of a product, determine the proportion of the population that uses a pr oduct, or predict future demand for a product. As opposed to exploratory researc literature, such as newspaper have to know that their usage the related parties. Focus gr leads a small group on one pa

h, descriptive research should define questions, people surveyed, and the method of analysis prior to beginning data collection. In other words, the who, what, where, when, why, and how aspects of the research should be defined. Such prepar ation allows one the opportunity to make any required changes before the costly process of data collection has begun. T e ea et ob s c of descriptive research : h r r w a itypes longitudinal studies and cross-sectional studies. Longitudinal studies are time series analyses that make repeated measurements of the same individuals, thus al lowing one to monitor behavior such as brand switching. However, longitudinal st udies are not necessarily representative since many people may refuse to partici pate because of the commitment required. Cross-sectional studies sample the popu lation to make measurements at a specific point in time. A special type of cross -sectional analysis is a cohort analysis, which tracks an aggregate of individua ls who experience the same event within the same Step Two: Creating the Research Design 1. 2. 3. 4. A plan that researchers follo w to answer the research objectives and/or test the hypotheses. Whether the desi gn will be Descriptive and/or Causal (diagnostic and predictive)? Descriptive de sign: Answer the questions who, what, when, and how. In quantitative research, w e may calculate the mean, median, mode or S.D. of the data collected. For exampl e: 35% of the respondents said they like classical music. Causal design: Examine whether one variable causes or determine the value of another variable (two var iables at least). Independent variable (The cause, example demographic variables ) and dependent variable (the outcome, musical preference). 5. 6. 11.623.3 Copy Right: Rai University 41

Determinan ts Motives Prepurchase search Involvement in the purchase Market environment Situational fa ctors To make better purchase decisions Increased product and market knowledge. Better purchase decision Ongoing search Involvement with the product Market environment Situational facto rs Build a bank of information for future use Increased product and market knowl edge leading to: Future buying efficiencies Personal influence Increased impulse buying Increased satisfaction from search and other outcomes. Intentions - for example, purchase intentions. While useful, intentions are not a reliable indication of actual future behavior. Motivation - a persons motives a re more stable than his/ her behavior, so motive is a better predictor of future behavior than is past behavior. Behavior CONSUMER BEHAVIOUR 1.3.1 Secondary Data Data that previously may have been collected for other purposes but that can be used in the immediate study. Secondary data may be internal to the firm, such as sales invoices and warranty cards, or may be external to the firm such as publi shed data or commercially available data. The government census is a valuable so urce of secondary data. Secondary data has the advantage of saving time and redu cing data gathering costs. The disadvantages are that the data may not fit the p roblem perfectly and that the accuracy may be more difficult to verify for secon dary data than for primary data. Some secondary data is republished by organizat ions other than the original source. Because errors can occur and important expl anations may be missing in republished data, one should obtain secondary data di rectly from its source. One also should consider who the source is and whether t he results may be biased. There are several criteria that one should use to eval uate secondary data. Whether the data is useful in the research study. Outcomes Increased satisfaction with the purchase outcome time interval over time. Cohort analyses are useful for long-term forecasting of product demand. Causal research seeks to find cause and affect relationships be tween variables. It accomplishes this goal through laboratory and field experime nts. How current the data is and whether it applies to time period of interest. Error s and accuracy - whether the data is dependable and can be verified. Presence of bias in the data. Specifications and methodologies used, including data collect ion method, response rate, quality and analysis of the data, sample size and sam pling technique, and questionnaire design. Objective of the original data collec tion.

Fig 2 A framework for consumer research Step three: Choosing a Basic Method of Research 1. 2. 3. 4. Analysis of secondary data. Survey. Obtain factual (e.g., age) and a ttitudinal (e.g., musical preference) data. Observation. Obtain behavioral data, researchers and subjects do not have direct interaction. Experiment. The resear chers deliberately change the independent variable(s) and record the effects of that (those) variable(s) on other dependent variable(s). Experiments are frequen tly used in testing causality. 1.3.1 Primary Data Often, secondary data must be supplemented by primary data originated specifical ly for the study at hand. Some common types of primary data are: Demographic and socioeconomic characteristics Psychological and lifestyle characteristics Attitudes and opinions Awareness and knowledge - for example, brand awareness Nature of the data, including definition of variables, units of measure, categor ies used, and relationships examined. Primary data can be obtained by communicat ion or by observation. Communication involves questioning respondents either ver bally or in writing. This method is versatile, since one needs only to ask for t he information; however, the response may not be accurate. Communication usually is quicker and cheaper than observation. Observation involves the recording of actions and is performed by either a person or some mechanical or electronic dev ice. Observation is less versatile than communication since some attributes of a person may not be readily observable, such as attitudes, awareness, knowledge, intentions, and motivation. Observation also might take longer since observers m ay have to wait for appropriate events to occur, though observation using scanne r data might be quicker and more cost effective. Observation typically is more a ccurate than communication. Personal interviews have an interviewer bias that ma il-in questionnaires do not have. For example, in a personal interview the respo ndents perception of the interviewer may affect the responses. 11.623.3 42 Copy Right: Rai University

Step four: Selecting the Sampling Procedure 1. 2. Sample is a subset of the whole population. Why sampling? May bePopulation is too big, population unknown, insufficient resources to conduct a census. Samp le should be representative should help the researchers to make inference about th e population. 2. It collects data from a sufficient number of sampled units in the population to allow conclusions to be drawn about the prevalence of the characteristic in the entire study population with desired precision (for example, + or 5%) at a state d level of confidence (e.g. 95%). CONSUMER BEHAVIOUR 3. Sampling distribution: the distribution of all possible sample statistics of all possible samples drawn from a population. The number of different samples that can be drawn is large, but finite. The distribution of sample statistics assumed to be distributed normally, but eg, the mean of the sample distributions is not necessarily the population mean. Every statistic in a sample might have a diffe rent sampling distribution. Standard error: the distribution of sample statistic s are based on probability theory. In a simple statement certain proportions of sample statistics will fall within specified increments of the population parame ter. An Example of calculating a standard error 1.5. Sampling Plan The sampling frame is the pool from which the interviewees ar e chosen. The telephone book often is used as a sampling frame, but have some sh ortcomings. Telephone books exclude those households that do not have telephones and those households with unlisted numbers. Since a certain percentage of the n umbers listed in a phone book are out of service, there are many people who have just moved who are not sampled. Such sampling biases can be overcome by using r andom digit dialing. Mall intercepts represent another sampling frame, though th ere are many people who do not shop at malls and those who shop more often will be over-represented unless their answers are weighted in inverse proportion to t heir frequency of mall shopping. In designing the research study, one should con sider the potential errors. Two sources of errors are random sampling error and non-sampling error. Sampling errors are those due to the fact that there is a no n-zero confidence interval of the results because of the sample size being less than the population being studied. Non-sampling errors are those caused by fault y coding, untruthful responses, respondent fatigue, etc. There is a tradeoff bet ween sample size and cost. The larger the samples size the smaller the sampling error, but the higher the cost. After a certain point the smaller sampling error cannot be justified by the additional cost. While a larger sample size may redu ce sampling error, it actually may increase the total error. There are two reaso ns for this effect. First, a larger sample size may reduce the ability to follow up on non-responses. Second, even if there are a sufficient number of interview ers for follow-ups, a larger number of interviewers may result in a less uniform interview process. Two ways of thinking about sampling: Example suppose we want to estimate the standard error of support for all-day ki ndergarten across the country. Suppose 60 percent of the respondents say they su pport it and the sample size is 800. The standard error of the estimate is ((P*Q) /n) or in this case ((.6 * .4)/800) = .017. 68% of sample estimates are likely t o be between 58.3 and 61.7; 95 percent are likely to be between 56.5 and 63.5. D o another example same sample but question is support for requiring SUVs to meet the same emission standards as automobiles. In this case, the support is 50%. W

hat is the sample error? Sampling distribution and confidence levels We know from probability theory that 34% will be within one standard error and 9 5 percent will be within 2 standard errors. We can be x% confident that a given sample mean will be within y units of the sampling distribution mean. The most c ommon value for x is 95% (at least as reported in newspapers, etc). This is not the same as saying one is x% confident that a given sample mean is within y unit s of the population mean, although it is often presented that way. Sampling theo ry is based on simple random sampling but few general population surveys use sim ple random sampling. Definitions A. Sampling for policy makers, or describers. A policymaker is interested in quest ions such as How many people are unemployed? Policy makers typically use cumulativ e statistics and confidence intervals. B. Sampling for academics, or modelers. An academic is interested in questions such as Why are people unemployed? The principal reason for thinking carefully about standard errors, sampling, err ors, etc and the social world is the big difference between sampling red and whi te balls and determining exactly who is being sampled in the real world. Univers e: theoretical and hypothetical aggregation of all elements to which a survey sh ould apply. E.g., Indians Population: a more specified theoretical aggregation. E.g., Adult Indians in spring 2002. Survey Population: the aggregation of elemen ts from which the survey sample is actually drawn. E.g., Adult Indians, in house holds, in 10 states, in March 2002. A Scientific Sample Survey or Poll will have these characteristics: 1. It sample s members of the defined population in a way such that each member has a known n onzero probability of selection. Unless this criterion is adhered to, there exis ts no scientific basis for attempting to generalize results beyond those individ uals who completed the survey. 11.623.3 Copy Right: Rai University 43

Sampling Frame: Actual list of units from which the sample is drawn which might not be totally inclusive of the survey population. Sampling Unit: Elements or se t of elements considered for sampling. E.g., persons, geographical clusters, chu rches. Unit of Analysis: Unit from which the information is collected. E.g., per sons, households, network. Types of Sampling and Area Probability Sampling Probability Samples Simple Random Samples Probability Proportional to Size Sampling and Cluster Sampling These procedures are often used in surveys that require more difficult sampling procedures. PPS a ttempts to ensure that every unit has a non-zero probability of inclusion into t he study but at the same time recognizing that practical considerations preclude forms of random sampling that would actually allow everyone to be included. Clu ster sampling is another technique that allows researchers to minimize field cos ts without sacrificing the non-zero probability of inclusion. Nonprobability Sampling CONSUMER BEHAVIOUR We rarely use them except for some listed samples, e.g., the lists of seniors an d freshman provided by the schools for a survey. We were provided the lists, ass igned the students random numbers, and then selected the sample based on the ran dom numbers. This method can be used where sampling frames are clearly defined, e.g., a list of all students in a college. It is very difficult for household po pulations studies. In SRS, every sample has a greater than 0 probability of sele ction which implies every item in the sample can be selected. Systematic Samples There are many types (quota, convenience etc.) of nonprobability sampling proced ures. They are generally used for smaller projects or when there is no effective method of probability sampling, e.g., surveys of persons with rare characterist ics. Area Probability Sampling Begins with a random start within a list. Then, based on the sampling fraction, a certain proportion is chosen. E.g., Rai University has approximately 6000 stud ents in total. We wanted to sample 500. The sampling fraction is 500/6000 or one of twelve. We could have used a random number between one and twelve to indicat e the first student chosen and then choose every twelfth student. E.g., if the r andom number were 5, we would have chosen the 5th, 17th, 29th, etc through the l ist. These samples are generally used with fairly large and wellorganized lists. In many studies, there are some drawbacks to their practical application, e.g. if there are problems with the lists.. Stratified Samples Area probability sampling is the method used by major survey organizations to se lect samples for field (in person household) interviews. It is essentially a for m of stratified multi-stage cluster sampling. The development of this technique and the statistical techniques associated with it allowed good national sampling to be accomplished in this country. These samples can cost-effectively represen t the entire country. Its virtually impossible to do any form of simple random, s tratified, or systematic sampling of large numbers of people spread over a wide geographical area, so area probability samples are much preferred. Area probabil ity sampling is designed to minimize field costs and provide a sample that is ba sed on random sampling procedures. The development of statistical techniques to measure the impact on statistics based on all sampling decisions allows this form of sampling to work. Some problems that we generally face with area sampling are :

 The target population is divided into strata (groups) based on characteristics t hat the researcher thinks are important. Many surveys of college students strati fy by race, ethnicity, gender, onoff campus, etc. Stratification generally reduc es sampling error because they can ensure that all relevant portions of the popu lation are included in the sample. Strata can also be used to compensate for non response of various forms. Proportional Stratified Sampling Area probability sampling models are designed for an optimal sample size and oft en a researcher will not have sufficient funds to use all of the sampling areas. It is more difficult to sample from only part of the areas and maintain represe ntativeness. Sampling decisions are based on census data and the characteristics of the PSUs, and the strata can change over time. There might be new housing ar eas not included. Accuracy in listing the housing units is often very difficult to achieve, eg, in low-income areas, rural areas, and rapidly developing areas. Usually the focus of surveys is on households. For most surveys, institutionaliz ed populations (e.g., persons in the military, jails, nursing homes, residence h alls) are not included. Many survey organizations interview only in English. The re is no complete list of housing units for in-person surveys, even the Census B ureau hires listers to count every housing unit. The number in each strata are chosen to ensure that each strata is represented p roportionally. E.g., we would stratify the classes in some schools to ensure tha t a proportional numbers of students living off-campus are included. Nonproportional The number in each strata are chosen to ensure there are enough in each strata t o make reasonable estimates. Eg, in our University students survey, we increased the sampling rate of day scholars so that we could be sure there would be enough to analyze them as a group. 44 Copy Right: Rai University 11.623.3

Step Five: Data Collection 1. 2. Under a natural or controlled environment? Espe cially important for experimental designs. Survey: Mall intercept, telephone, ma il, Interneteach method has different advantages and disadvantages. For example, response time, response rate, structure of questions, costs, etc. Face-to-face Telephone Speed of Moderate fast Fast data collection Cost Highest Moderate high Mail Slow Internet Fast errors by not understanding the question, guessing, not paying close attention, and being fatigued or distracted. Such non-sampling errors can be reduced throug h quality control techniques. CONSUMER BEHAVIOUR 1.4. Data Collection Forms 1.4.1 Questionnaire Design The questionnaire is an important tool for gathering primary data. Poorly constructed questions can result in large errors and invali date the research data, so significant effort should be put into the questionnai re design. The questionnaire should be tested thoroughly prior to conducting the survey. 1.4.2 Steps to Developing a Questionnaire The following are steps to de veloping a questionnaire - the exact order may vary somewhat. In addition I woul d also like to mention that we are doing all this things in much greater detail in the next lesson. Comparing Different Survey Methodologies Low Can be long (depend s on incentiv e) No Lowest Can be long (depends on incentive) No Possible Moderate to Moderate questionn short aire length Flexibility High in interviewi ng Interviewe High r influence bias Moderate high Determine which information is being sought. Choose a question type (structure a nd amount of disguise) and method of administration (for example, written form, email or web form, telephone interview, verbal interview). Determine the general question content needed to obtain the desired information. Determine the form o f response. Choose the exact question wording. Arrange the questions into an eff ective sequence Specify the physical characteristics of the questionnaire (paper type, number of questions per page, etc.) Test the questionnaire and revise it as needed. Moderate None None Sample Moderate to Highest randomne high ss Low Depend on incidence venue rate s election Ability to Yes expose responden t to various physical stimuli Response High rate Not fit Low Difficult to control

 Fit Not fit No Possible Possible (photo) (animated images) 1.4.3 Question Type and Administration Method Some question types include fixed alternative, open ended, and projective: Moderate high Low Moderate low Fixed-alternative questions provide multiple-choice answers. These types of ques tions are good when the possible replies are few and clear-cut, such as age, car ownership, etc. Open-ended questions allow the respondent to better express his /her answer, but are more difficult to administer and analyze. Often, open-ended questions are administered in a depth interview. This technique is most appropr iate for exploratory research. Projective methods use a vague question or stimul us and attempt to project a persons attitudes from the response. The questionnair e could use techniques such as word associations and fill-in-the-blank sentences . Projective methods are difficult to analyze and are better suited for explorat ory research than for descriptive or causal research. In addition to the intrinsic sampling error, the actual data collection process will introduce additional errors. These errors are called non-sampling errors. S ome non-sampling errors may be intentional on the part of the interviewer, who m ay introduce a bias by leading the respondent to provide a certain response. The interviewer also may introduce unintentional errors, for example, due to not ha ving a clear understanding of the interview process or due to fatigue. Responden ts also may introduce errors. A respondent may introduce intentional errors by l ying or simply by not responding to a question. A respondent may introduce unint entional There are three commonly used rating scales: graphic, itemized, and comparative. Graphic - simply a line on which one marks an X anywhere between the extremes wi th an infinite number of places where the X can be placed. 11.623.3 Copy Right: Rai University 45

 Itemized - similar to graphic except there are a limited number of categories th at can be marked. Comparative - the respondent compares one attribute to others. Examples include the Q-sort technique and the constant sum method, which requir es one to divide a fixed number of points among the alternatives. struct validity is the extent to which a measuring instrument measures what it i ntends to measure. Reliability is the extent to which a measurement is repeatabl e with the same results. A measurement may be reliable and not valid. However, i f a measurement is valid, then it also is reliable and if it is not reliable, th en it cannot be valid. One way to show reliability is to show stability by repea ting the test with the same results. 1.4.7 Attitude Measurement Many of the ques tions in a marketing research survey are designed to measure attitudes. Attitude s are a persons general evaluation of something. Customer attitude is an importan t factor for the following reasons: CONSUMER BEHAVIOUR 1.4.4 Form of Question Response Questions can be designed for open-ended, dichot omous, or multichotomous responses. Open-ended responses are difficult to evaluate, but are useful early in the rese arch process for determining the possible range of responses. Dichotomous questi ons have two possible opposing responses, for example, Yes and No. Multichotomous qu estions have a range of responses as in a multiple-choice test. Attitude helps to explain how ready one is to do something. Attitudes do not cha nge much over time. Attitudes produce consistency in behavior. Attitudes can be related to preferences. Self-reporting - subjects are asked directly about their attitudes. Self-reporting is the most common technique used to measure attitude . Observation of behavior - assuming that ones behavior is a result of ones attitu des, attitudes can be inferred by observing behavior. For example, ones attitude about an issue can be inferred by whether he/she signs a petition related to it. Indirect techniques - use unstructured stimuli such as word association tests. Performance of objective tasks - assumes that ones performance depends on attitud e. For example, the subject can be asked to memorize the arguments of both sides of an issue. He/she is more likely to do a better job on the arguments that fav or his/her stance. Physiological reactions - subjects response to stimuli is meas ured using electronic or mechanical means. While the intensity can be measured, it is difficult to know if the attitude is positive or negative. Multiple measur es - a mixture of techniques can be used to validate the findings; especially wo rthwhile when selfreporting is used. Equal-appearing interval scaling - a set of statements are assembled. These statements are selected according to their posi tion on an interval scale of favorableness. Statements are chosen that has a sma ll degree of dispersion. Respondents then are asked to indicate with which state ments they agree. Likert method of summated ratings - a statement is made and th e respondents indicate their degree of agreement or disagreement on a five-point scale (Strongly Disagree, Disagree, Neither Agree Nor Disagree, Agree, Strongly Agree). The questionnaire designer should consider that respondents might not be able to answer some questions accurately. Two types of error are telescoping error and recall loss.

Attitudes can be measured using the following procedures: Telescoping error is an error resulting from the tendency of people to remember events as occurring more recently than they actually did. Recall loss occurs whe n people forget that an event even occurred. For recent events, telescoping erro r dominates; for events that happened in the distant past, recall loss dominates . 1.4.5 Measurement Scales Attributes can be measured on nominal, ordinal, interva l, and ratio scales: Nominal numbers are simply identifiers, with the only permissible mathematical u se being for counting. Example: social security numbers. Ordinal scales are used for ranking. The interval between the numbers conveys no meaning. Median and mo de calculations can be performed on ordinal numbers. Example: class ranking Inte rval scales maintain an equal interval between numbers. These scales can be used for ranking and for measuring the interval between two numbers. Since the zero point is arbitrary, ratios cannot be taken between numbers on an interval scale; however, mean, median, and mode are all valid. Example: temperature scale Ratio scales are referenced to an absolute zero value, so ratios between numbers on t he scale are meaningful. In addition to mean, median, and mode, geometric averag es also are valid. Example: weight There are several types of attitude rating scales: 1.4.6 Validity and Reliability The validity of a test is the extent to which dif ferences in scores reflect differences in the measured characteristic. Predictiv e validity is a measure of the usefulness of a measuring instrument as a predict or. Proof of predictive validity is determined by the correlation between result s and actual behavior. Con 46 Copy Right: Rai University 11.623.3

 Semantic differential scale - a scale is constructed using phrases describing at tributes of the product to anchor each end. For example, the left end may state, Hours are inconvenient and the right end may state, Hours are convenient. The respo ndent then marks one of the seven blanks between the statements to indicate his/ her opinion about the attribute. Stapel Scale - similar to the semantic differen tial scale except that 1) points on the scale are identified by numbers, 2) only one statement is used and if the respondent disagrees a negative number should marked, and 3) there are 10 positions instead of seven. This scale does not requ ire that bipolar adjectives be developed and it can be administered by telephone . Remarks Q-sort technique - the respondent if forced to construct a normal distribution b y placing a specified number of cards in one of 11 stacks according to how desir able he/she finds the characteristics written on the cards. CONSUMER BEHAVIOUR Qualitative Research vs. Quantitative Research Qualitative Research is about investigating the features of a market through indepth research that explores the background and context for decision-making. In qualitative research there are 3 main methods of collecting primary data: i. ii. Depth interviews Focus/discussion groups iii. Projective techniques Dimension Qualitative Quantitative Types of questions Probing Limited probing Re spondents have more freedom to structure the answers. Depends Depth Interviewing Depth interviews are the main form of qualitative research in most business markets. Here an interviewer spends time in a one-on-one intervie w finding out about the customers particular circumstances and their individual o pinions. The majority of business depth interviews take place in person, which h as the added benefit that the researcher visits the respondents place of work and gains a sense of the culture of the business. However, for multi-national studi es, telephone depth interviews, or even on-line depth interviews may be more app ropriate. Feedback is through a presentation that draws together findings across a number of depth interviews. In some circumstances, such as segmentation studi es, identifying differences between respondents may be as important as the views that customers share. The main alternative to depth interviews - focus group di scussions - is typically too difficult or expensive to arrange with busy executi ves. However, on-line techniques increasing get over this problem. Group Discuss ions Focus groups are the mainstay of consumer research. Here several customers are brought together to take part in a discussion led by a researcher (or moderat or). These groups are a good way of exploring a topic in some depth or to encoura ge creative ideas from participants. Group discussions are rare in business mark ets, unless the customers are small businesses. In technology markets where the end user may be a consumer, or part of a team evaluating technology, group discu ssions can be an effective way of understanding what customers are looking for, particularly at more creative stages of research. Projective Techniques Used in Consumer research to understand consumers knowledge in association with a particu lar product or brand. Used by clinical psychologists to understand a consumers hi dden attitudes, motivation and feelings. These techniques could be: Information Large and per in-depth respondent

Administrat Demand Less skillful is ion skilled acceptable administrato rs Abili ty to replicate Low High Quantitative researches usually have clearer guidelines. Sample size Usually Can be large small (<30) Analysis Subjective, Statistical in tersubjective, interpretive. More suitable for exploratory research Tape and/or video recorder, probing questions, pictures More suitable for descriptive or cau sal research Questionnaires, computer with statistical software Qualitative anal ysis will be more timeconsuming Type of research Special hardware Training of More on the social researchers science More on information processing 11.623.3 Copy Right: Rai University 47

i. Word association: Respondents are presented with a series of words or phrases an d asked to say the first word, which comes to your mind. This method is helpful to check whether the proposed product names have undesirable associations. Step Six: Data Analysis 1. 2. Its a process that interprets the observed data int o meaningful information. In this module, I will teach you how to use t-test, an alysis of variance (ANOVA) and bivariate regression analysis to analyze the data . Pop Preference CONSUMER BEHAVIOUR

ii. Sentence completion: The beginning of a sentence is read out to the responde nt and he/she is asked to complete it with the first word that comes to the mind . E.g., people who dont prefer to eat from fast food joints are iii. Third party tech ues: Respondents are asked to describe a third person about whom they have littl e information. Useful in determining attitudes of the respondents. iv. Thematic ap preciation test: Respondents are shown an ambiguous picture or drawing or fill i n a blank speech bubble associated with a particular character in an ambitious sit uation and then asked to interpret the same. Helps in understanding the percepti on of the respondents towards the various aspects of the product. v. Repertory g rid: Respondents are presented with a grid and asked to title the columns with b rand names or various types of a particular product (tastes of soft drinks). The n they are asked to select any three of these products and think of a phrase, wh ich will describe the way, in which any two are different from the third. This d escription is used as the title of a row and each of the other products are rate d accordingly. By repeatedly selecting and describing the items, the researcher will be able to find the way in which the respondent perceives the market. Age 24 32 66 38 42 16 57 29 3 1 3 3 5 2 4 33 49 4 2 1.7. Data Analysis Before analysis can be performed, raw data must be transforme d into the right format. First, it must be edited so that errors can be correcte d or omitted. The data must then be coded; this procedure converts the edited ra w data into numbers or symbols. A codebook is created to document how the data w as coded. Finally, the data is tabulated to count the number of samples falling into various categories. Simple tabulations count the occurrences of each variab le independently of the other variables. Cross tabulations, also known as contin gency tables or cross tabs, treats two or more variables simultaneously. However , since the variables are in a twodimensional table, cross tabbing more than two variables is difficult to visualize since more than two dimensions would be req uired. Cross tabulation can be performed for nominal and ordinal variables. Cros s tabulation is the most commonly utilized data analysis method in marketing res earch. Many studies take the analysis no further than cross tabulation. This tec hnique divides the sample into sub-groups to show how the dependent variable var ies from one subgroup to another. A third variable can be introduced to uncover a relationship that initially was not evident. 1.7.1 Conjoint Analysis Pop 4 Music 6 4 2 0 0 20 40 Age 60 80 The Conjoint Analysis is a powerful technique for determining consumer preferenc es for product attributes. In a conjoint analysis, the respondent may be asked t o arrange a list of combinations of product attributes in decreasing order of pr eference. Once this ranking is obtained, a computer is used to find the utilitie s of different values of each attribute that would result in the respondents orde

r of preference. This method is efficient in the sense that the survey does not need to be conducted using every possible combination of attributes. The utiliti es can be determined using a subset of possible attribute combinations. From the se results one can predict the desirability of the combinations that were not te sted Steps in Developing a Conjoint Analysis Developing a conjoint analysis involves the following steps: 1. 2. Choose produc t attributes, for example, appearance, size, or price. Choose the values or opti ons for each attribute. For example, for the attribute of size, one may choose t he levels of 5", 10", or 20". The higher the number of options used for each att ribute, the more burden that is placed on the respondents. Define products as a combination of attribute options. The set of combinations of attributes that wil l be used will be a subset of the possible universe of products. vi. Role-playing: respondents are asked to visualize that they are a product or a person and asked to enact or perform their role describing their feelings, tho ughts and actions. 3. 48 Copy Right: Rai University 11.623.3

4. Choose the form in which the combinations of attributes are to be presented to t he respondents. Options include verbal presentation, paragraph description, and pictorial presentation. Decide how responses will be aggregated. There are three choices - use individual responses, pool all responses into a single utility fu nction, or define segments of respondents who have similar preferences. Select t he technique to be used to analyze the collected data. The part-worth model is o ne of the simpler models used to express the utilities of the various attributes . There al Based on the comparison, reject or do not reject the null hypothesis. Make the m arketing research conclusion. CONSUMER BEHAVIOUR 5. In order to analyze whether research results are statistically significant or si mply by chance, a test of statistical significance can be run. 1.7.3 Tests of Statistical Significance 6. 1.7.2 Hypothesis Testing A basic fact about testing hypotheses is that a hypothe sis may be rejected but that the hypothesis never can be unconditionally accepte d until all possible evidence is evaluated. In the case of sampled data, the inf ormation set cannot be complete. So if a test using such data does not reject a hypothesis, the conclusion is not necessarily that the hypothesis should be acce pted. The null hypothesis in an experiment is the hypothesis that the independen t variable has no effect on the dependent variable. The null hypothesis is expre ssed as H0. This hypothesis is assumed to be true unless proven otherwise. The a lternative to the null hypothesis is the hypothesis that the independent variabl e does have an effect on the dependent variable. This hypothesis is known as the alternative, research, or experimental hypothesis and is expressed as H1. This alternative hypothesis states that the relationship observed between the variabl es cannot be explained by chance alone. There are two types of errors in evaluat ing hypotheses: The chi-square (2 ) goodness-of-fit test is used to determine whether a set of pr oportions have spe ified numeri al values. It often is used to analyze bivariate ross-tabulated data. Some examples of situations that are well suited for this test are: A manufa turer of pa kaged produ ts test markets a new produ t and wa nts to know if sales of the new produ t will be in the same relative proportion of pa kage sizes as sales of existing produ ts. A ompanys sales revenue omes from Produ t A (50%), Produ t B (30%), and Produ t C (20%). The firm wants to know whether re ent flu tuations in these proportion s are random or whether they represent a real shift in sales. The hi-square test is performed by defining k ategories and observing the numb er of ases falling into ea h ategory. Knowing the expe ted number of ases fal ling in ea h ategory, one an define hi-squared as: 2 = ( Oi - E i )2 / E i whe re Oi = the number of observed ases in ategory i, E i = the number of observed ases in ategory i, k = the number of ategories, the summation runs from i = 1 to i = k. Before al ulating the hi-square value, one needs to determine the

expe ted frequen y for ea h ell. This is done by dividing the number of samples by the number of ells in the table. To use the output of the hi-square fun ti on, one uses a hisquare table. To do so, one needs to know the number of degree s of freedom (df). For hi-square applied to rosstabulated data, the number of degrees of freedom is equal to (Number of olumns - 1) (Number of rows - 1) This is equal to the number of ategories minus one. The onventional riti al level of 0.05 normally is used. If the al ulated output value from the fun tion is g reater than the hisquare look-up table value, the null hypothesis is reje ted. ANOVA Another test of signifi an e is the Analysis of Varian e (ANOVA) test. The primary purpose of ANOVA is to test for differen es between multiple means. Whe reas the t-test an be used to ompare two means, ANOVA is needed to ompare thr ee or more means. If multiple t-tests were applied, the probability of a TYPE I error (reje ting a true null hypothesis) in reases as the number of omparisons in reases. One-way ANOVA examines whether multiple means differ. The test is al led an F-test. ANOVA al ulates the ratio of the variation between groups to the variation within groups (the F ratio). While ANOVA was designed for omparing s everal Type I error: o urs when one reje ts the null hypothesis and a epts the altern ative, when in fa t the null hypothesis is true. Type II error: o urs when one a epts the null hypothesis when in fa t the null hypothesis is false. Be ause their names are not very des riptive, these types of errors sometimes ar e onfused. Some people jokingly define a Type III error to o ur when one onfu ses Type I and Type II. To illustrate the differen e, it is useful to onsider a trial by jury in whi h the null hypothesis is that the defendant is inno ent. I f the jury onvi ts a truly inno ent defendant, a Type I error has o urred. If, on the other hand, the jury de lares a truly guilty defendant to be inno ent, a Type II error has o urred. Hypothesis testing involves the following steps: Formulate the null and alternative hypotheses. Choose the appropriate test. Choo se a level of signifi an e (alpha) - determine the reje tion region. Gather the data and al ulate the test statisti . Determine the probability of the observed value of the test statisti under the null hypothesis given the sampling distri bution that applies to the hosen test. Compare the value of the test statisti to the reje tion threshold. 11.623.3 Copy Right: Rai University 49

means, it also an be used to ompare two means. Two-way ANOVA allows for a se o nd independent variable and addresses intera tion. To run a one-way ANOVA, use t he following steps: 1. 2. Identify the independent and dependent variables. Des ribe the variation by breaking it into three parts - the total variation, the po rtion that is within groups, and the portion that is between groups (or among gr oups for more than two groups). The total variation (SStotal) is the sum of the squares of the differen es between ea h value and the grand mean of all the valu es in all the groups. The in-group variation (SSwithin) is the sum of the square s of the differen es in ea h elements value and the group mean. The variation bet ween group means (SSbetween) is the total variation minus the in-group variation (SStotal SSwithin). Measure the differen e between ea h groups mean and the gran d mean. Perform a signifi an e test on the differen es. Interpret the results. 4. 5. Interpret the results. Determine the validity of the analysis. CONSUMER BEHAVIOUR Dis riminant analysis analyzes the dependen y relationship, whereas fa tor analy sis and luster analysis address the interdependen y among variables. Fa tor Ana lysis Fa tor analysis is a very popular te hnique to analyze interdependen e. Fa tor analysis studies the entire set of interrelationships without defining vari ables to be dependent or independent. Fa tor analysis ombines variables to rea te a smaller set of fa tors. Mathemati ally, a fa tor is a linear ombination of variables. A fa tor is not dire tly observable; it is inferred from the variabl es. The te hnique identifies underlying stru ture among the variables, redu ing the number of variables to a more manageable set. Fa tor analysis groups variabl es a ording to their orrelation. The fa tor loading an be defined as the orr elations between the fa tors and their underlying variables. A fa tor-loading ma trix is a key output of the fa tor analysis. An example matrix is shown below. F a tor 1 Fa tor 2 Fa tor 3 Variable 1 Variable 2 Variable 3 Column s Sum of Squar es: Ea h ell in the matrix represents orrelation between the variable and the fa tor asso iated with that ell. The square of this orrelation represents the proportion of the variation in the variable explained by the fa tor. The sum of the squares of the fa tor loadings in ea h olumn is alled an eigenvalue. An ei genvalue represents the amount of varian e in the original variables that is ass o iated with that fa tor. The ommunality is the amount of the variable varian e explained by ommon fa tors. A rule of thumb for de iding on the number of fa t ors is that ea h in luded fa tor must explain at least as mu h varian e as does an average variable. In other words, only fa tors for whi h the eigenvalue is gr eater than one are used. Other riteria for determining the number of fa tors in lude the S reen plot riteria and the per entage of varian e riteria. To fa il itate interpretation, the axis an be rotated. Rotation of the axis is equivalen t to forming linear ombinations of the fa tors. A ommonly used rotation strate gy is the varimax rotation. Varimax attempts to for e the olumn entries to be e ither lose to zero or one. Cluster Analysis Market segmentation usually is base d not on one fa tor but on multiple fa tors. Initially, ea h variable represents its own luster. The hallenge is to find a way to ombine variables so that re latively homogenous lusters an be formed. Su h lusters should be internally h omogenous and externally heterogeneous. Cluster analysis is one way to a omplis h this goal. Rather than being a statisti al test, it is more of a olle tion of algorithms for grouping obje ts, or in the ase of marketing 11.623.3 3. 4. 5. This F-test assumes that the group varian es are approximately equal and that th e observations are independent. It also assumes normally distributed data; howev er, sin e this is a test on means the Central Limit Theorem holds as long as the

sample size is not too small. ANOVA is effi ient for analyzing data using relat ively few observations and an be used with ategori al variables. Note that reg ression an perform a similar analysis to that of ANOVA. Dis riminant Analysis A nalysis of the differen e in means between groups provides information about ind ividual variables, it is not useful for determine their individual impa ts when the variables are used in ombination. Sin e some variables will not be independ ent from one another, one needs a test that an onsider them simultaneously in order to take into a ount their interrelationship. One su h test is to onstru t a linear ombination, essentially a weighted sum of the variables. To determin e whi h variables dis riminate between two or more naturally o urring groups, d is riminant analysis is used. Dis riminant analysis an determine whi h variable s are the best predi tors of group membership. It determines whi h groups differ with respe t to the mean of a variable, and then uses that variable to predi t new ases of group membership. Essentially, the dis riminant fun tion problem is a one-way ANOVA problem in that one an determine whether multiple groups are s ignifi antly different from one another with respe t to the mean of a parti ular variable. A dis riminant analysis onsists of the following steps: 1. 2. Formul ate the problem. Determine the dis riminant fun tion oeffi ients that result in the highest ratio of between-group variation to withingroup variation. Test the signifi an e of the dis riminant fun tion. 3. 50 Copy Right: Rai University

resear h, grouping people. Cluster analysis is useful in the exploratory phase o f resear h when there are no a-priori hypotheses. Cluster analysis steps 1. Form ulate the problem, olle ting data and hoosing the variables to analyze. 2. Cho ose a distan e measure. The most ommon is the Eu lidean distan e. Other possibi lities in lude the squared Eu lidean distan e, ity-blo k (Manhattan) distan e, Cheby hev distan e, power distan e, and per ent disagreement. 3. Choose a luste ring pro edure (linkage, nodal, or fa tor pro edures). 4. Determine the number o f lusters. They should be well separated and ideally they should be distin t en ough to give them des riptive names su h as professionals, buffs, et . 5. Profil e the lusters. Assess the validity of the lustering. CONSUMER BEHAVIOUR

Step Seven: Preparing and Writing the Report 1. Resear her should ommuni ate their findings to the managers, if possible, or al presentation and written report should both be made. 2. Pra ti al re ommendat ions should be suggested to the managers. For example: If our shop will target o n younger onsumers, we should sell more pop musi , and the interior design shou ld be more fashionable to fit their lifestyles. 3. How you present the results m ay affe t how the managers use your information. The format of the marketing res ear h report varies with the needs of the organization. You should make sure tha t the report ontains the following se tions: Authorization letter for the resea r h Table of Contents List of illustrations Exe utive summary Resear h Design Exploratory Resear h: goal of formulating problems more pre isely, larifying o n epts Des riptive Resear h: seeks to des ribe users of a produ t, predi t futur e demand of a produ t Causal Resear h: ause and effe t relationships between va riables. Resear h obje tives Methodology Results Limitations Con lusions and re ommendati ons Appendi es ontaining opies of the questionnaires, et . Step eight: Follow up 1 . You have spent resour es in ondu ting the resear h; you should make sure the managers would use your findings. 2. Well organized and presented, be pra ti al, avoid managerial onfli t, and remind the managers to read your report. 3. Some times, addition resear h should be ondu ted to supplement your resear h finding s. Copy Right: Rai University 11.623.3 51

Consumer Resear h Pro 1. Define the problem ur es 4. Design data n and size 6. Colle t resear h report

ess 2. Determine resear h design 3. Identify data types and so olle tion forms and questionnaires 5. Determine sample pla the data 7. Analyze and interpret the data 8. Prepare the

Case 1 CONSUMER BEHAVIOUR 52 Attitude Measurement Self-reporting Observation of Behaviour Indire t Te hnique Performan e of Obje t ive tasks Physiologi al rea tions Multiple measures Data Gathering for Marketing Resear h After-sales-An Investment for Customer Satisfa tion Tala Automobiles, a Nashik-b ased heavy vehi le manufa turing ompany, designed, developed and produ ed a del uxe ar alled, Satisfa tion. This vehi le was meant for th zars of the Indian o rporate world and other high in ome group ustomers. Satisfa tion was a bold ventu re for an Indian ompany. They had proposed to take-on the imported, high pri ed ars. The market response was very positive be ause of the high esteem in whi h T ala Automobiles were held by the national transporters. A waiting list of 5 year s was estimated at the end of first round of booking. These bookings had enri he d the ompany offers by Rs 50 rore. Problems started as soon as the first Satis fa tion hit the road. There was a steady flow of omplaints. The workshops, that were authorized to undertake after sales servi ing on behalf of the ompany were unable to meet the ustomers expe tations of after-sales servi ing. The buyers h ad expe ted a produ t, whi h in line with the reputation of Tala as an internati onal player in its field. Very soon, angry ustomers started writing to Talas CEO , Mr. Vasgaonkar. A meeting of the heads of the different departments of Tala Au tomobiles brought out the following points: 1. 2. The R&D and manufa turing depa rtments had introdu ed Satisfa tion without adequate users trails. The problem area s had been identified and their orre tive measures worked out. These were beyon d the apabilities of the authorized workshops. The problems were therefore pers isting in spite of after-sales warranty repairs. The produ tion department was f a ing serious problems be ause workmen with skills required to repair the defe t s were only on the produ tion lines. The ustomers/ authorized workshops were pr essurizing Tala to make the servi es of these experts available for repairing th e ars. They had to be taken off from the produ tion line. This was affe ting th e produ tion s hedules. The sales department had restri ted the initial sales to a large extent to Maharashtra state. The marketing and produ tion departments e mphasized that the ompany should set up its own workshops. These should initial ly be for defe t re tifi ation, but should progressively take over routine servi ing work also. This would make the operation of these workshops ommer ially vi able and take the load of the produ tion staff. 3.

4. 5. You are a deputy general managers (marketing) with the ompany. You are a gradua te in automobiles engineering and have a quired the reputation of being a troubl eshooter in the ompany. You were dire ted to prepare a paper for presentation t o the board of dire tors outlining a solution to the problem. The solution shoul d over ustomers in Nashik. After trying this solution at Nasik for sometime, t he same ould be extended to other ities, espe ially in Maharashtra. Copy Right: Rai University 11.623.3

Attitude Rating s ales Equal-Appearing Interval s ale Likert Method of Summated Ratings Semanti ential S ale Stapel S ale Q-Sort Te hnique

Differ

List the information you would require for preparing the presentation. Dis uss v arious methods/sour es for obtaining the required information. Suggest the best method for data gathering. Maximum time to solve this ase study: 25 minutes. CONSUMER BEHAVIOUR Notes 11.623.3 Copy Right: Rai University 53

CONSUMER BEHAVIOUR LESSON 6: CONDUCTING RESEARCH STUDY Introdu tion As we have already studied the details in the earlier lesson, we shall now in th is lesson a tually do the resear h study. 3. d. Dire t omputer interviewing: Te lephone interview by using intera tive voi e response (IVR) te hnology. Mail: a. Ad ho mail survey: questionnaires sent to sele ted respondents with no prior onta t. b. Ma lp n l nb s tu f longitudinal study. i ae a e e p o r . The resp onse rate is usually low. How to improve? (1) Advan ed notifi ation; (2) formal and institutional over letter; (3) provide in entives; (4) follow up by telepho ne alls; (5) re-send questionnaires; (6) remind the respondent has helped in pr evious studies (if appli able). d. Variation: E-mail survey (Advantages: faster than traditional mail survey and international rea h. Disadvantage: Not all peop le have e-mail a ount). 4. Variations a. Self-administrated survey. Interviewer is absent when the respondent is doing the questionnaire. b. Dire t omputer in terview. Computers a put in a mall and visitors are invited to finish the questi onnaire. Obje tives To learn about the measurement pro ess and how to develop a good measurement. To learn about the various types of s ales. To understand the importan e of reliab ility and validity in the measurement pro ess. To gain insight into the types of probability and nonprobability sampling methods. To understand the on epts of Nonsampling errors. To start off let us understand what is a survey.

1. What is Survey? Survey is a method of primary data olle tion in whi h information is gathered b y ommuni ating with a representative sample of people; the data gathered are us ually fa ts (e.g., age), opinions (e.g., should Ma Donalds open more restaurants) and attitudes (e.g., do you like football?). (M Daniel, Carl, Roger Gates, 1999 , p.g-9; Zikmund, William, 1994, p.210) It is possible to obtain the what, who, how, w ere, why, and when questions. However, most of the answers obtained are attitudinal, they are not always onsistent with the respondents behaviors. Types of Surveys T hree major ategories: Fa e-to-fa e, telephone, and mail. Internet is a newly em erged survey medium. 1. Fa e-to-fa e: a. Door-to-door interview: ondu ted in in terviewees home. b. Exe utive interviewing: interviewing business exe utives in t heir offi es. . 2. Mall inter ept: ondu ted in publi area. Telephone: a. Tele phone interview. b. Central lo ation Telephone interviewing: Make alls from a entrally lo ated fa ility to rea h and interview respondents. . Computer assist ed telephone interviewing (CATI): The interviewers dire tly input the answer int o omputer software. Internet Survey Online questionnaire is posted in a homepage, visitor are invited to finish it. Advantages a. Low ost b. . d. e. f. Fast data olle tion time International re a h Computerized analysis pro edure Hypertext makes s reening questions easier t o be operated. Less disturbing. Respondents an finish a short questionnaire and then pro eed to other se tions. Disadvantages a. b. Only omputer users are sampled (Usually younger, better edu ated, have above average in ome, male) Parti ipants annot be s reened. Nontarg eted samples may also answer the questionnaire. (a possible solution is to use s reening questions) Se urity. Doubled entries. (Possible solution would be if pe rsonal information is asked). The representativeness of voluntary response sampl e.

. d. e.

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1.1 Colle ting Se ondary Data Se ondary data is useful to resear hers to identify problem/ opportunity and to on eptualize resear h questions. Sometimes, se ondary data are suffi ient to a omplish the resear h obje tives. Se ondary vs. Primary Data 1. 2. Se ondary dat a, previously gathered data, not for your parti ular resear h. Primary data, new data gathered parti ularly to help you to solve the resear h problem at hand. 3. You an find most of them in Marketing Department. CONSUMER BEHAVIOUR

TV and Radio Programs 1. 2. 3. Not popularly used as referen e, but good for ide a generation. Avoid emotional omments. If you really have to use them as major arguments in your resear h, you should provide a opy of the program to your le turer. Let us now have a look at se ondary data in details. Se ondary data an be obtai ned internally (within the ompany) and externally. 1. Internal se ondary data: annual reports, newsletters, sales re ords, information that stored in the datab ase, omplaint letters External se ondary data: Governmental publi ations, mass m edia, annual report of other ompanies, other ompanies homepages Professional Journals 1. (1) Higher redibility (easier to assess). (2) May be t oo theoreti al. (3) Not as up-to-date as newspaper and magazines. 2. 3. Findings from good journals an be used as major referen es. Examples may in lude Journa l of Marketing, Journal of Consumer Resear h, Journal of International Business Studies, Journal of Management, Asia Pa ifi Business Review, Journal of Cross-C ultural Psy hology et . Plenty of them are kept in the serial se tion in the lib rary; you an only read or photo opy them in the library. 2. Usages/Advantages of Se ondary Data 1. 2. 3. 4. 5. 6. 7. Relatively easier to ob tain, and with less ost (time and money). Can help larifying your resear h que stions. Can be ba kground information. Provide guideline to ondu t exploratory resear hes. Theory building, hypothesis setting Can a t as eviden es to support (or reje t) the data obtained by primary sour es. Sometimes, the resear h obje t ives an be a hieved by using merely se ondary data. 4. Using Internet to olle t Se ondary Data World Wide Web (WWW) 1. 2. 3. 4. 5. 6. Not a matured data sour e at this moment, many homepages even do not inform the information sour es and when the information was olle ted. Diffi ult to assess redibility. Change too frequently. Better keep a hard opy and in orporate in t he resear h as appendix. Corporate homepages or distinguished homepages Use as s upplementary referen e rather than a major referen e. Sear h engine: Google, Yah oo. URL (homepage address): http://www.yahoo. om or http://www.google. om Disadvantages of Se ondary Data 1. Information overload. A possible solution to this is to make a ut-off time. 2. 3. 4. 5. Diffi ult to assess redibility. Dat ed. La k of availability. La k of relevan e: format unmat hed.

Newsgroups (the un harted water) 1. 2. Example: Star forum (http://www.starzine. om/ starforum/list.html) Plenty of produ t related groups (e.g., movie, omi s, musi , omputer produ ts, automobiles, books, fashion). A pool of unstru tured o pinions, an intera tive environment. A natural environment.

Various Se ondary Data Sour es Internal reports, newsletters, annual reports. 1. 2. Develop ba kground understandings of the resear h question. Get the fa ts. 3. 4. Newspaper and Magazine arti les. 1. (1) Credibility varied. (2) Obtain fa tual r ather than judgmental data. (3) Use as ba kground. (4) Use as supporting materia ls but not major arguments. 2. Business Today, Business World, India Today, The E onomists, TIME. Assessing the A ura y of Se ondary Data 1. 2. 3. 4. What is the purpose of that study? What information was olle ted? Who olle ted the data? When were the da ta being olle ted? 55 11.623.3 Copy Right: Rai University

5. 6. Where were the data being olle ted? Is the information onsistent with other in formation? If no, why? omes to your mind. This method is helpful to he k whether the proposed produ t names have undesirable asso iations. ii. Senten e ompletion: The beginning of a senten e is read out to the respondent and he/she is asked to omplete it with the first word that omes to the mind. E.g., people who prefer to eat from fast food joints are iii. Third party te hniques: Respondents are asked to des ribe a third person about whom they have little information. Useful in determining attitudes o f the respondents. iv. Themati appre iation test: Respondents are shown an ambi guous pi ture or drawing or fill in a blank spee h bubble asso iated with a parti ular hara ter in an ambitious situation and then asked to interpret the same. H elps in understanding the per eption of the respondents towards the various aspe ts of the produ t. v. Repertory grid: Respondents are presented with a grid and asked to title the olumns with brand names or various types of a parti ular pr odu t (tastes of soft drinks). Then they are asked to sele t any three of these produ ts and think of a phrase, whi h will des ribe the way, in whi h any two ar e different from the third. This des ription is used as the title of a row and e a h of the other produ ts is rated a ordingly. By repeatedly sele ting and des ribing the items, the resear her will be able to find the way in whi h the respo ndent per eives the market. vi. Role-playing: respondents are asked to visualize that they are a produ t or a person and asked to ena t or perform their role de s ribing their feelings, thoughts and a tions. C. Fo us Group CONSUMER BEHAVIOUR What is Qualitative Resear h? Based on what we have studied in the earlier lesso n we an say that qualitative resear h has the following hara teristi s: 1. 2. 3. 4. 5. 6. The resear h findings are not subje t to quantifi ation or quantitat ive analysis. Suitable to examine attitudes, feelings and motivations in depth. Non-behavioral elements of human a tivities. Usually, but not always, heaper. C an improve the effi ien y of quantitative resear h. Almost every quantitative re sear h has its qualitative aspe ts. Usage: a. Problem formulation (model develop ment); b. justifi ation ( olle t empiri al data to support or reje t the model). Limitations of Qualitative Resear h But there are of ourse some disadvantages w ith qualitative data, whi h we must not forget: 1. Diffi ult to distinguish smal l differen es. In quantitative resear h, we an find the rating onsumers gave t o a produ t is 6.5 marks on average. However, in qualitative, the resear hers a n only say the onsumers held a positive or negative attitude toward a produ t. Diffi ult to obtain generalized results. Samples are usually small. Diffi ult to assess the obje tivity of resear hers interpretations. 2. 3. Some Qualitative Resear h Methodologies A. In-depth Interview 1. 2. 3. Usually ondu ted on a one-to-one basis. A highly intera tive, in-depth investig ation of resear h issues. The interviewee an dire t the flow of the interview, as long as he is not going too far away from your resear h questions. Other inte rviewees would not affe t personal opinions. Individual opinions an be onfiden tially re orded. If possible, the whole interview session should be re orded, an d a summary (trans ript) should be written as soon as possible.

Fo us groups are the mainstay of onsumer resear h. Here several ustomers are b rought together to take part in a dis ussion led by a resear her (or moderator). T hese groups are a good way of exploring a topi in some depth or to en ourage r eative ideas from parti ipants. Group dis ussions are rare in business markets, unless the ustomers are small businesses. In te hnology markets where the end u ser may be a onsumer, or part of a team evaluating te hnology, group dis ussion s an be an effe tive way of understanding what ustomers are looking for, parti ularly at more reative stages of resear h. So we an say that in a fo us group : 1. 2. 3. 4. 5. A small group of parti ipants led by a moderator in an indepth dis ussion on one parti ular topi or on ept. Know how parti ipants feel about a topi / on ept, and why. Listen to their stories, espe ially the emotions they express. Sometimes, a series of fo us groups are needed. It be omes more and mor e popular in onsumer resear h. 4. 5. 6. B. Proje tive Te hniques

Used in Consumer resear h to understand onsumers knowledge in asso iation with a parti ular produ t or brand. Used by lini al psy hologists to understand a on sumers hidden attitudes, motivation and feelings. These te hniques ould be: i. Word a so iation: Respondents are presented with a series of words or phrases and asked to say the first word, whi h 56 Copy Right: Rai University 11.623.3

Steps in ondu ting a fo us group 1. 2. 3. 4. Preparation: Sele t fa ility, re ruit parti ipant. Moderator sele ti on, prepare dis ussion guide (probing questions). Condu t the group. Report the results. 8. 9. A debriefing is required. Remember to thank your parti ipants after the session. CONSUMER BEHAVIOUR Step Four: report the results 1. 2. 3. 4. 5. Instant analysis is benefi ial, as long as the administrative party be aware of the possible biases. A summary shou ld be written ASAP. Whether a trans ript (totally des riptive) is needed? It dep ends Sometimes the lients will require an interpretive report. The report should extra t useful information to formulate resear h design or to answer the resear h question.

Step One: Preparation 1. Formal setting: large, undisturbed onferen e room with one-way mirror in one wall. Behind the mirror will be a viewing room for lient s, observers and note-takers. An important question of operation interest is sho uld you let the parti ipant know? Parti ipant sele tion: representativeness is s till a major on ern. Mall inter ept invitation and random telephone s reening a re ommon methods used. Sometimes, in entives are given. Resear hers usually avo id repeat (for at least several months), professional respondents. Sometimes, resp ondents from the media are also avoided. How big the group is optimal? Five to e ight, a ording to my investigation and experien e. Duration: 30 min to not more than 2 hours. 2. 3. Advantages and Disadvantages of Fo us Group Advantages 1. 2. 3. 4. Can be exe uted more qui kly than other resear h approa h es. Parti ipants are for ed to think in a more realisti way. Groups an jam new ideas out. Observe behind the mirror is possible. 4. 5. 6. Disadvantages 1. Psy hologi ally: the immedia y and apparent understandability o f fo us group findings an mislead instead of inform. Other literature is defini tely required. Small sample may not be representative enough. The findings requi re ommonsense and literature to support. Moderators style affe ts how parti ipan ts answer the questions. Group pressure, some parti ipants are for ed to onform , group polarization. Moderator should read the fa ial expression of ea h parti ip ant. Step Two: Moderator Sele tion and Guideline Preparation 1. A good moderator shou ld: (1) Have good so ial skills. (2) Possess suffi ient knowledge in business st udies. (3) Possess suffi ient information about the resear h topi . Dis ussion gui de: (1) Fo us group rules (example in textbook) (2) Outline the topi s to be ov ered. (3) Some guidan e questions. You an allow a little bit off-tra k if the r espondents give really insightful answers. The judgment of moderator is very imp ortant. Sometimes, using two moderators may be benefi ial, but responsibilities should be learly defined. 2. 3. 4. 2.

3. 4. 3. Measurement of Data Now that we have olle ted the data for our use, we need to understand the measu rement aspe t for this data olle ted. But, what is measurement? Step three: ondu t the fo us group 1. 2. 3. 4. 5. 6. Introdu e yourself (yourse lves), explain the fo us group rules and break the i e. Briefly introdu e your t opi , but do not tell everything to your parti ipants. Various methods an be us ed. Q&A, experien e sharing, metaphor probing et . Give every parti ipants han e to speak. Allow freewheeling, as long as not going too far away from your topi . Moderator should ontrol. Moderator an larify what the parti ipant has said , but do not insert judgmental omments. Do not make the parti ipant feels you a re hallenging him/her. The whole dis ussion should be tape-re orded. If possibl e, it should also be video re orded. Measurement is rules for assigning numbers or labels to things in su h a way as to represent quantities of attributes. 3.1 Importan e of Measurement 1. It sugge sts that, we are not measuring obje ts (e.g., men) themselves, but their propert ies (e.g., in ome, so ial lass, edu ation level, height, weight or whatever). T heoreti ally, all physi al obje ts and abstra t on epts an be measured, though pre ision may differ. Several dimensions an measure an obje t, but the summati on of these dimensions does not equal to that obje t. Example: Four dimensions an measure Culture, but the summation of un ertainty avoidan e, individualism/ olle tivism, power distan e and mas ulinity/ 2. 3. 4. 7. 11.623.3 Copy Right: Rai University 57

femininity does not equal to ulture. Culture ontains more things that have not been measured by Hofstede (1981). 5. Resear hers usually measure some useful ( an answer a parti ular resear h question) dimensions of an obje t (or a on ept). Step Five: Develop a Measurement S ale S ale: a set of symbols or numbers so on stru ted that the symbols or numbers an be assigned by a rule to the individual s (or their behavior or attitudes) to whom the s ale is applied. Unidimensional s aling vs. multidimensional s aling The fundamentals: Data level a. Nominal data CONSUMER BEHAVIOUR 3.2 The Measurement Pro ess 1. 2. 3. 4. 5. 6. 7. 8. Identify the on ept of inte rest. Use the on ept to develop a onstru t. The onstru t is used to reate a onstitutive definition. The definition enables a resear her to develop an opera tional definition. Operation definition enables a resear her to reate a measure ment s ale. The resear her then has to evaluate the reliability and validity of the s ale. The resear her an utilize the s ale if the evaluation is satisfa tor y. The resear her obtains resear h findings. i. ii. Numbers are simply assignment to obje ts or lasses of obje ts solely for the pu rpose of identifi ation. Typi al usage: lassifi ation iii. Example: Enter 1 if the respondent is male, 2 if the respondent is female. b. Ordinal Data i. ii. Numbers are assigned to data on the basis of some order of the obje ts. Typi al usage: Ranking and rating iii. Example: Your examination grades (A, B, C, D, E). . Interval data

i. Step One: Identify the Con ept of Interest A on ept is an abstra t idea gene ralized from parti ular fa ts. It is used daily 1. 2. Examples: Dog, ar, happin ess, justi e, ulture Example: Sam is an outgoing boy; he likes to meet new frie nds and parti ipates in outdoor a tivities. i. ii. iv. Numbers legitimately allow the omparison of the size of the differen e among an d between members. Typi al usage: measuring omplex on epts or onstru ts. Many s ales, su h as Likert s ale, are in fa t ordinal s ales. However, for analysis onvenien e we treat them as interval s ales. Data that have a natural or absol ute zero and that therefore allows the omparison of absolute magnitudes of the numbers. Typi al usage: When pre ision measurements are available. iii. Example: Temperatures (Celsius and Fahrenheit). Step Two: Develop a Constru t 1. Invented for theoreti al purpose. 2. Examples i n marketing and business studies: Globalization, so ialization, onsumer satisfa tion, advertising effe tiveness, brand loyalty, ulture et .

d. Ratio Data ii. iii. Example: Age, in ome, population, GNP et . Some Commonly Used S ales: a. b. Graphi rating s ales: Present respondent with a graphi ontinuum typi al an h

ored by two extremes. Itemized rating s ales: Itemized rating s ales are very si milar to graphi rating s ales, ex ept that respondents must sele t from a limit ed number of ordered ategories rather that pla ing a he k mark on a ontinuous s ale. Rank-order s ales: Itemized and graphi s ales are non omparative be aus e the respondent makes a judgment without referen e to another obje t, on ept, or person. Rank-order s ales, on the other hand, are omparative be ause the res pondent is asked to judge one item against another. Q-sorting s ales: Basi ally a sophisti ated form of rank ordering. A set of obje ts verbal statements, sloga ns, produ t features, potential ustomers servi es, and so forth is given to an individual to sort into piles a ording to spe ifi rating ategories. Step Three: Develop a Constitute Definition 1. 2. Constitute definition = theore ti al definition = on eptual definition. Define the onstru t; distinguish it f rom other on epts and onstru ts. Step Four: Develop an Operational Definition 1. 2. 3. 4. 5. Define whi h observa ble hara teristi s will be measured. Define the pro ess for assigning a value t o the on ept. A bridge between a theoreti al on ept and real-world events of f a tors. Different resear hers may reate different operationalizations for the s ame onstru t. The problem of onstru t equivalen e. Will other people interpret the onstru t in the same way as the resear her who designed it? d. . 58 Copy Right: Rai University 11.623.3

e. f. Paired omparison s ales: respondent pi ks one of two obje ts from a set based u pon some stated riteria. Constant sum s ales: Respondent is requested to divide a given number of points among two or more attributes based on per eived import an e. Semanti differential s ales: The resear her sele ts di hotomous pairs of words or phrases that ould be used to des ribe the on ept. Respondents then ra te the on ept on a s ale. The mean of these responses for ea h pair of adje tiv es is omputed and plotted as a profile or image. Stapel s ales: Modified semanti differential. Can measure both the dire tion and intensity of attitudes simulta neously. Likert s ales: A series of statements that express either a favorable o r an unfavorable attitude toward the on ept under study. Pur hase intent s ales : Measure the likelihood that a potential ustomer will pur hase a produ t of se rvi e. Survey administrative method: simpler s ales used in telephone interview; more omplex texts and graphi s an be sued in other administrative methods. Ea se of development: Ordinal s ales an more qui kly be reated than semanti diff erentials. Respondents usually prefer nominal and ordinal s ales; they feel thes e questions are easier to answer. Can the de ision be made by using nominal and ordinal data? Or interval and ratio data must be obtained to solve the resear h problem. It is ommon to use several types of s ales in one resear h study. b. g. Content validity: The degree to whi h the instrument items represent the univers e of the on ept under study. Quite subje tive. Extensive data olle tion pro es s is required to identify all the fa ets of a onstru t. In many times, a onstr u t is too abstra t or ompli ated to be fully de omposed. Criterion-related val idity: The degree to whi h a measurement instrument an predi t a variable that is designated a riterion. i. Predi tive validity: The extent to whi h a future level of a riterion variable an be predi ted by a urrent measurement on a s a le. Question: Is S hool-level examination performan e a valid predi tor of a stu dents performan e in the university? CONSUMER BEHAVIOUR .

h. i. j.

d. ii. Con urrent validity: The extent to whi h a riterion variable measured at th e same point in time as the variable of interest an be predi ted by the measure ment instrument. Constru t validity: The degree to whi h a measurement instrumen t represents and logi ally onne ts, via the underlying theory, the observed phe nomenon to the onstru t. i. Convergent validity: High degree of asso iation sho uld be lo ated among other s ales that measure the same on ept. b. . d. ii. Dis riminant validity: Low degree of asso iation should be found among onst ru ts that are supposed to be different. Attitude Measurement Let us first try t

Some basi

onsiderations when sele ting a s ale a.

o define attitude. An attitude is an enduring organization of motivation, emotio n, per eptual, and ognitive pro ess with respe t to aspe t of the environment. In short: A favorable or unfavorable evaluation of and rea tion to an obje t, pe rson, event, or idea (Atkinson, Rita L., Ri hard C. Atkinson, Edward E. Smith, a nd Daryl J. Bem [1993], Introdu tion to Psy hology, 11th ed. Forth Worth: Har ou rt Bra e College Publishers.) It is important to remind you here that attitude w ill be dealt in greater details in later hapters. Here we are just on entratin g on the measurement aspe t of it. Thus below I am mentioning ertain important aspe ts of attitude, whi h is quite essential in measuring attitude. 1. The Tri omponent view of attitude: a. Cognitive omponent: The knowledge, ideas and beli efs held toward attitude obje t. b. Affe tive omponent: The feeling and emotion held toward attitude obje t. . 2. Conative (or behavioral) omponent: The beha vioral tenden y and rea tion toward the attitude obje t. e. Step six: evaluate the reliability and validity of the measurement Random error vs. systemati error. 1. Reliability The data obtained should be free from random error, should be onsistent. a. Tes t-retest reliability: Consistent results should be obtained when using the same instrument a se ond time under nearly the same onditions as possible. Equivalen t form reliability: Consistent results should be obtained when using two instrum ents as similar as possible to measure the same obje t. Internal onsisten y: Co nsistent results should be re orded when applied the same instrument on differen t samples. b. .

2. Validity Whether what the instrument tried to measure was a tually measured. a. Fa e vali dity: Resear hers subje tively judge the degree to whi h a measurement instrumen t seems to measure what it is supposed to.

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The more favorable the attitude of du t usage and vi e versa.

onsumers, the higher is the in iden e of pro

3. 4. The more unfavorable peoples attitudes are toward a produ t, the more likely they are to stop using it. The attitudes of people who have never tried a produ t te nd to be distributed around the mean in the shape of a normal distribution. Atti tudes predi t behavior quite well if the attitudes are based on a tual trying an d experien ing a produ t. When attitudes are based on advertising, attitude beha vior onsisten y is signifi ant redu ed. The predi tion of future behavior for a group of onsumers tends to be higher than the predi tion of behavior for a sin gle onsumer. Respondents attitudes an be identified by dire t questioning, indi re t questioning (proje tive te hniques) and observation. Attitude-behavior ons isten y is affe ted by: a. Attitude behavior onsisten y is more stable in spe i fi attitude rather than in general attitude. b. Attitude strength. . Attitudes are likely to predi t pur hase behavior only under onditions of high involveme nt. 8. 9.

CONSUMER BEHAVIOUR 10. Implementation 11. Editing Step one: determine survey obje tives The survey obje tives should be pre isely stated, the information needed should be learly understood by the resear her. If this step is ompleted in a thorough fashion, t he rest of the pro ess will follow more smoothly and effi iently. Step two: dete rmine data olle tion method(s) This may in lude the question of hoosing Mall i nter ept, telephone, mailing or Online? Step three: determine the question respo nse format 1. Open-ended questions a. Major advantage here is that respondents h ave more freedom in giving answers and thus more information an be obtained. b. Major disadvantage is that it is diffi ult to analyze. 2. Closed-ended question s a. Di hotomous questions (well, in many times, the world is not just bla k and white) b. Multiple- hoi e questions . 3. S aled-response questions The rule of thumb: Obtain the ne essary data to generate findings. 5. 6. 7. 8. d. So ial influen e affe ts the stability of attitude behavior onsisten y. e. S ituational variables may, on the one hand, affe t the reliability of measured at titudes; they may, on the other hand, modify a onsumers attitude toward a produ t at a spe ifi moment. f. Competitors.

Step four: de ide the question wording Four riteria: a. Clear. b. Avoid bias. . The respondent has the ability to answer. Example: Asking a teenagers father, do you know your sons favorite pop singers? Questionnaire Design Can we define a questionnaire? A. Questionnaire ontains a set of questions that assist the resear her to olle t data and generate useful findings in order to a omplish the resear h obje tives. A good questionnaire should 1. 2. 3. 4. Coll e t data to answer the resear h questions. Can be easily understood by the respo ndent. Easy to be administered by the interviewer or respondent. Easy to edit, ode, entry and analyzed.

Revise, pretest and revise Prepare final

opy

d. The respondent is willing to answer. Example: Have you ever shoplifted? Some ommon mistakes: Jargons or diffi ult words. Example: Do you like playing pr anks on others? Ambiguous words and questions. Example: How often do you re ord pr ograms for later viewing with your VCR? (1) Never, (2) O asionally, (3) Sometim es, (4) Often. Are you a frequent pur haser of VCD? Leading questions. Example: Do y ou think that Shoppers Stop is a good pla e for shopping? Impli it alternatives. Ex ample: Would you like to have a job, if this were possible? Would you prefer to hav e a job, or to ontinue your study? a. b. Let us now take a look at the questionnaire development pro ess. Below we have i dentified the steps involved in the questionnaire development pro ess. Questionn aire development pro ess 1. Determine survey obje tives 2. 3. 4. 5. 6. 7. Determ ine data olle tion method(s). Determine question response format De ide questio n wording Establish questionnaire flow and layout Evaluate the questionnaire and layout Obtain approval from all relevant parties . d. 60 Copy Right: Rai University 11.623.3

e. Generalizations and estimates. Example: How many emails did you send last week? ( Answer: How an I remember?) Double-barreled questions. Example: What is your eva luation of the pri e and onvenien e offered by IFB dishwashers? Not mutually ex lu sive. Example: Please indi ate your age: (1) 10 or below; (2) 10 20, (3) 20 30, ( 4) 30 40, (5) 40 or above. Not olle tively exhausted. Example: Please indi ate yo ur edu ation level: (1) Se ondary s hool, (2) University or equivalent, (3) Mast er or do toral degree. 2. Request too late: If the authorities reje t your ideas, all the efforts are wast ed. You should make sure that the questionnaire gives the respondent lear, unde rstandable questions that will evoke lear, understandable response. The sample for pretest should be drawn from your resear h sample. They should not be survey ed in the a tual administration, be ause the pretest may have biased their per e ptions toward the resear h problems. Make ne essary hange after the pretest, ap proval should be re-obtained from the authority. CONSUMER BEHAVIOUR Step eight: revise, pretest and revise 1. f. g. 2. h. 3. Step five: establish questionnaire flow and layout 1. Rule of thumb: From easy t o diffi ult. 2. S reening questions: May sure that only the target respondents w ill answer the questionnaire. Avoid professional respondents. Warm-up questions: M ake the respondents feel the survey is simple. Body I: Some general questions re lated to your resear h obje tives. Body II: More diffi ult questions, more ompl i ated s aledresponse questions an be seen. The respondents should have develop ed suffi ient interest before answering these questions. Body III: Sensitive que stions. The respondents have answered more than half of the questionnaire; some of them will hesitate to quit. If the interviewers sense the unwillingness of th e respondents, he/she an insert prompters to en ourage the respondents. Classifi ation and demographi data. One of the major purposes of obtaining these data is to he k the representativeness of the sample. Step nine: prepare final questionnaire opy The resear her should make sure no m istake has been made in the final opy. Step ten: implementing the survey 1. Ne essary visual aids. Graphs, harts, or transparen y presentations et . 2. Superv isors instru tions. Should learly state the: a. Nature of the study b. Start and ompletion dates . e. f. g. 3. Quotas Equipment and fa ility requirements Samp ling instru tions Number of interviewers required d. Reporting times 3. 4. 5. 6. h. Validation pro edures. Interviewers instru tions. It overs many of the same p oints as supervisors instru tions but is feared to the a tual interview. Call re

ord sheets. a. For telephone survey, it lists all the numbers and results of a onta t. b. It an measure the effi ien y of the interviewers. . Can follow-up w hen ne essary. d. Some resear hers sound re orded all interview sessions. Step e leven: editing 1. 2. 3. 4. 1. 2. 3. Make sure the answered questionnaires have overed a representative sample. Che k the open-ended questions, pre ode if possibl e (in fa t, it is ne essary). Assess the skip pattern of the questionnaires. Col le ting primary data: observation The information must be observable. The behavi or must be repetitive, frequent or predi table. The behavior being observed shou ld be relatively short in duration. 7. 4. Step six: evaluate the questionnaire Always ask yourselves these questions when evaluating your questionnaire; I arrange them a ording my per eived importan e: a. b. . d. e. f. g. h. Will the questions provide the desired information to a omplish the resear h obje tives? Provided suffi ient spa e for open-ended ques tions? Can it be olor- oded to avoid onfusion? Is the questionnaire too long? Does the appearan e of mail or self-administered questionnaire look professional ? Does the questionnaire have a luttered look? Is the question ne essary? For f a e-to-fa e interview: Instru tions printed within the questionnaire should be i n apital letters (or even olored). Three onditions for using observation Step seven: obtain approval of all relevant parties 1. Request too early: The au thority may not know the exa t ontent and outlook of your questionnaire to make a fair de ision. 11.623.3 Copy Right: Rai University 61

The five approa hes of observation resear h 1. Natural vs. ontrolled ( ontrived ) situations. a. In natural situations, observers do not manipulate the observat ional settings. Parti ipants do not know they are being observed; their behavior will be more natural. b. In ontrolled situations, extraneous variables an be better ontrolled. Similar to experimental designs. Open vs. disguised observati on. a. Parti ipants know they are being observed in open observation, usually us ed in ethnographi observation. b. In disguised observation, parti ipants do not know they are being observed. 3. a. b. Stru tured vs. unstru tured observation The observers may have a he klist to re ord the behavior observed. In unstru tu red observation, observer writes notes about the behavior observed. Probably be used in exploratory resear h. Human vs. ma hine observation Ma hine observation suitable for long-term observation settings, or under adverse onditions. Video re order, ele troni ounter and ele troni s anner are popular ma hine observat ion devi es. Ma hines are more a urate, but less flexible. Dire t vs. indire t observation Indire t observation: Suitable for observing past behavior, resear h ers sear h for eviden es to support their hypotheses. Indire t observation: Can be viewed as an anthropologi al approa h. 6. b. Shopper behavior resear h. Observing and/or filming the behavior of onsumers in variety of shopping settings. . 4. Is it ethi al to do so? Content analysis a. Used to analyze printed materials into meaningful units using arefully appl ied rules. b. Indire t observation. . Assumption: Any manifest message is purpo sive and expressive of deeper values and beliefs (Marshall, Catherine, and Greth hen B. Rossman [1989], Designing Qualitative Resear h. Newbury Park: SAGE, p.79 ) CONSUMER BEHAVIOUR 2. d. Very popular in advertising resear h. Example: Tse, David K., Russell W. Belk , and Nan Zhou (1989), Be oming a Consumer So iety: A Longitudinal and Cross-Cult ural Content Analysis of Print Ads from Hong Kong, the Peoples Republi of China, and Taiwan, Journal of Consumer Resear h, 15 (Mar h), 457-472. 5. Humanisti inq uiry: a. Parti ipative observation. Ethnographi observation. b. Can be open or disguised. Win the trust from the villagers is essential. . Usually unstru tured. d. The observers usually keep large logbooks to re ord their observations, find ings and feelings. e. Frequently used by anthropologists, usually require more t han one resear her to triangulate the results in order to obtain an a eptable l evel of intersubje tivity. Audits a. Retail and wholesale audits. Examination an d verifi ation of the sale of a produ t. b. Be ome less popular after ele troni s anner emerges. Advantages and disadvantages of observation resear h Advantages

b. Types of Human Observation 1. Mystery shoppers: People (or the resear hers thems elves) employed to pose as onsumers and shop at the ompetitors shops or their o wn stores. a. Disguised observations in natural settings. b. The observers somet imes intera t with the salespeople. . Observe the ways the ompetitors operate their stores (spy?). 1. 2. 1. 2. More reliable than attitude measurement. Avoid interviewer-indu ed bias. Only th e behavior an be observed, but not motives, attitudes, intentions or feelings. Passive, time onsuming and expensive; espe ially if the observed behavior o ur

4. a. b.

. 5. a.

s rather infrequently. 1. Define the population of interest 2. Choose data olle tion method 3. Choose sampling frame 4. Sele t a sampling method 5. Determine s ample size 6. Develop spe ify operational plan for sele ting sample elements Disadvantages

d. Observe the ways our own salespeople serve the ustomers. e. 2. It an be a g ood way to improve servi e quality. One-way mirror observation: A ontrolled set ting, observers are unseen. a. Usually in ontrolled, disguised settings. b. Com monly used in fo us group dis ussions. 3. Observing shopper patterns and behavio r. a. Shopper patterns: re ords of footsteps of a shopper through a store. Can a nswer: Whi h departments have they visited? How long have they stayed in the sto re? 5. Developing a sampling plan 62 Copy Right: Rai University 11.623.3

7. Exe ute operational sampling plan Step One: Define the Population It is usual ly your target market Some possible bases: a. b. . d. 3. Geography. Example: Pu njabi people Demographi s. Example: Age, edu ation level, sex, in ome level et . Use. Example: moviegoers, frequent flyers, smokers et . Awareness. Example: Tho se who aware of the ompany name or its advertisements et . Non-samples should b e s reened by s reening questions (e.g., are you a smoker?). b. i. random sample of subsets is ele ted. If the resear her then uses all of the popu lation elements in the population elements in the sele ted subsets for the sampl e, the pro edure is one-stage luster sampling; if a sample of elements is sele ted probabilisti ally from the subsets, the pro edure is two-stage luster sampl ing. Nonprobability samples Convenien e sampling: Sometimes alled a idental sa mpling be ause those in luded in the sample enter by a ident, in that they just happen to be where the study is being ondu ted when it is being ondu ted. One of the variations is voluntary response sampling. CONSUMER BEHAVIOUR Step two: hoose data olle tion method Data olle tion method affe ts the sele tion of sampling frame, sampling method, sample size and exe ution. Step three hoosing a sampling frame 1. 2. 3. 4. 1. List of population elements from whi h w e sele t units to be sampled. For example, telephone dire tory or sear h engine (e.g., yahoo) in the Internet. They may not ontain all the members in your popu lation, but it assists you to operationalize your sampling plan. Sometimes, this list does not exist for your study. Probability samples a. Samples in whi h eve ry element of the population has a known, nonzero probability of sele tion. b. P robability is known probability is equal . Advantages: i. Representativeness. i i. Sampling error an be omputed. iii. Results are proje table to the populatio n. ii. Judgment sampling: Sometimes alled purposive sampling, sample elements are handpi ked be ause they are expe ted to serve the resear h purpose. For example, if your study is about extremely heavy produ t usage behavior, the sample may b e sele ted by your judgment, but not by han e. iii. Quota sampling: Sample hos en in su h a way that the proportion of sample elements possessing a ertain ha ra teristi is approximately the same as the proportion of the elements with the hara teristi in the population; ea h field worker is assigned a quota that sp e ifies the hara teristi s of the people he or she is to onta t. iv. Snowball sampling: Resear her lo ates an initial set of respondents with the desired har a teristi s; these individuals are then used as informants to identify still oth ers with the desired hara teristi s. Step five: determine sample size Now here we have to determine the orre t sample size. So how to determine the right samp le size? Before determining the sample size we should keep these points in mind: 1. The purpose of ondu ting a survey base on a sample is to make inferen es ab out the population, but not to des ribe the sample. The size of a sample should be big enough to make reliable inferen es about the sample with smallest resour e in put. In probability sampling, the larger the sample, the smaller the sampling er ror. The resear her should determine his a eptable level of sampling error in o rder to determine the appropriate sample size. The resear her should determine t he a eptable onfiden e level and pre ision. The more heterogeneous the populat ion is, the larger the sample size is required in order to obtain the a epted s ampling error level. Population size does not affe t sample size determination ( when sample size <= 5% population). Resour e available: Time, money, staff avail able et . Number of subgroups to be analyzed. Convention, past experien e and gut feeling. Statisti al al ulations. Step four: sele t a sampling method d. Disadvantages: i. More time onsuming to develop sampling plan. ii. More expa nsive. iii. More professional skills are required. iv. Slower exe ution. 2. Nonp

2. 3. a. i. ii. Probability samples Simple random sampling: Ea h population elements has a known and equal han e of being in luded in the sample. Systemati sampling: The enti re population should be numbered; samples are drawn a ording to a skip interval . 4. 5. 6. 7. 8. 9. iii. Stratified sampling: (1) The parent population is divided into mutually ex lusive and exhaustive subsets (usually a ording to some important variables), a nd (2) a simple random sample of elements is hosen independently from ea h grou p of subset. iv. Cluster sampling: (1) The parent population is divided into mut ually ex lusive and exhaustive subsets (usually a ording to some unimportant va riables), and (2) a 11.623.3 Copy Right: Rai University 63

robability samples a. In lude the sele tion of spe ifi tion in a nonrandom manner. Types of sampling plans

elements from the popula

Making inferen es about the population In reality, it is not quite possible to take many samples and al ulate the x.. W e usually take and make inferen es from ONE sample. The question is: What is the probability that one random sample will produ e an estimated population mean th at is equal (or lose) to the true population mean? b. For a normally distributed variable, the range of the variable is approximatel y equal to plus or minus three standard deviations. Thus if one an estimate the range of variation, one an estimate the standard deviation by dividing by six ( Chur hill, 1995, p.633). . The onsequen e of wrong estimation: The onfiden e interval be omes more or less pre ise than desired. CONSUMER BEHAVIOUR Point estimates: Use sample mean to estimate the true population mean. However, a ording to normal distribution, a small per entage of these sample means are f ar away from the true population mean. Interval estimates: Inferen es regarding the probability ( onfiden e oeffi ient or onfiden e level) that a population v alue will fall within a ertain range. 68.26% probability that any one sample fr om a parti ular population will produ e an estimate of the population mean that is within 1 standard error of the true population mean. Confiden e interval is th e sampling error). Step six: Developing operational pro edures for sele ting sample elements 1. 2. Reevaluate and sele t the sampling method. Develop a detail operational sampling plan. It should learly instru t how the interviewers pi k the samples. a. Step seven: Exe ute the sampling plan We have to do adequate he king to ensure the proper sample is surveyed. Nonsampling and sampling errors 1. Sampling error : The differen e between the observed values of a variable and the long-run aver age of the observed values in repetitions of the measurement. Can be redu ed by sample size, an be al ulated by statisti al methods. 2. Nonsampling errors: O ur be ause of errors in on eption, logi , misinterpretation of replies, statis ti s, and arithmeti ; errors in tabulating or oding; or errors in reporting the results. Nonobservation errors b. 95.44% probability that any one sample from a parti ular population will produ e an estimate of the population mean that is within 2 standard error of the true p opulation mean. Confiden e interval is the sampling error). 99.74% probability t hat any one sample from a parti ular population will produ e an estimate of the population mean that is within 3 standard error of the true population mean. Conf iden e interval is the sampling error). The higher the onfiden e level, the wid er the onfiden e interval (the lower the pre ision). .

a. i. d.

Non overage errors. Failure to in lude some units or entire se tions of the defi ned survey population in the sampling frame. Possible ountermeasures in lude (1 ) improving basi sampling frame by using other sour es. (2) Weighting the resul ts by statisti al pro edures. Cal ulating the sample size The resear her has to determine: a. b. 1. The desire d onfiden e level The desired pre ision (a eptable sampling error) The formula : n = (Z22)/E2 a. n = ample ize b. Z = Acceptable confidence level, determined by re earcher. Common level include: 95% (Z = 1.96), 99% (Z = 2.575) and 90% (Z = 1.645). c. = Population tandard deviation. d. E = acceptable or allowable le vel of ampling error, determined by re earcher. 2. i the problem. In typical c a e we do not know the population tandard deviation, thu can only be e tima ted. a. Po ible e timation : prior urvey, pilot tudy, econdary data, and jud gment. b. ii. Not-at-home ca e (nonre pon e error). De ignated re pondent i not home whe n the interviewer call . Po ible countermea ure include (1) making advance app ointment . (2) Calling back later, preferably at a different time of day. (3) Co ntacting the de ignated re pondent by u ing another approach. iii. Refu al ca e (nonre pon e error). Re pondent refu e to cooperate in the urvey. Po ible co untermea ure include (1) Per ua ion. (2) Providing incentive. (3) U ing followup contact at more convenient time (4) weight the re ult by tati tical procedu re . Ob ervation error i. Data collection error (or called field error ). Re pondent refu e to an wer p ecific que tion or provide incorrect an wer to them. Po ible countermea ure include (1) matching the background characteri tic of the interviewer and re p ondent a clo ely a po ible. (2) Providing ufficient interviewer training. (3 ) Verifying a ample of each interviewer interview .

64 11.623.3

ii. Office proce error . Error ng the data. Po ible Copy Right: Rai Univer ity

that ari e when coding, tabulating, or analyzi

countermea ure include (1) U ing a econd edit in the office to decide how data collection in trument containing incomplete an wer , obviou ly wrong an wer , and an wer that reflect a lack of intere t are to be handled. (2) Having each c oder code a ample of the other work to en ure a con i tent et of coding criter ia i being employed. (3) Preparing a codebook that li t the code for each var iable and the categorie included in each code. 6. Telephone ampling procedure Coverage Many exchange have low den ity - in many part of the country, e pecially rural area , exchange are lightly filled. Exchange numbering CONSUMER BEHAVIOUR There are 10,000 po ible number per exchange. The number tend to be a igned in working block of 100. Thi i not nece ary any longer but the e procedure continue in mo t office . Among all po ible telephone number ba ed on area cod e and exchange approximately 20 percent are hou ehold telephone number . Howev er, ome can be very full (many urban exchange ) and many can be almo t empty (n ew exchange ). Working block are u ually a igned with ome contiguity. That i , if 2500 - 2599 i working then it likely that 2400- 2499 and 2600 - 2699 are w orking. NC example (book) How doe a telephone urvey repre ent a target population? For practical rea on , a telephone number ample can repre ent a population better than area probabil ity ample . Telephone ample make almo t every hou ehold in the US acce ible to urvey re earcher . For practical rea on , only limited area can be availabl e in area probability ample . The principal difference between APS procedure a nd telephone ampling procedure i that very good ampling frame are available for telephone urvey . Variation in Sampling Technique The book demon trate a technique of li ting, counting, and mea uring that can b e u ed if i certain that the target population i covered by the telephone book . Their technique ub tituted la t two digit with random number . Sudman ugge t replacing three digit to en ure the ample ha more coverage. To prevent the ame telephone number from coming into the ample multiple time , the program h a an undupe procedure. Compari on of procedure There are many po ible ampling method that might be u ed depending on the org anization and the intended outcome . Re earcher often de ign variation of the ba ic procedure to meet local or urvey need . While ampling i con idered cie ntific a it ba i , in many ca e , it become more engineering in what i actually carried out. That i , ampling recognize limitation ba ed on li t , per onnel, equipment, etc. For the mo t part, telephone ampling i fairly robu t in pract ice. That i , violating the pure ampling requirement can be done without ub t antially damaging a urvey. Telephone book ample Coverage - MW might be a little better but there i no evidence that it would ha ve an impact on the final re ult . Ea e - gene y and other li t-a i ted ample are the mo t efficient and ea y to u e. National ampling procedure - MW requ ire a proce imilar to area probability ampling, li t-a i ted can be genera ted without doing multiple tage . Sample tratification - li t-a i ted amplin g procedure often contain information on maller area , e.g., the compo ition o f the exchange, that can be u ed to tratify the ample.

There are many, many variation on the e method . Telephone book are not a cle ar about their content a might be expected, e pecially in regard to geography. There i overlap among book and many telephone number are not li ted. The boo k go out of date quickly and do not contain people who moved to the area. The r apid increa e in new area code and exchange cau e additional problem . Howeve r, there are ome ituation where the telephone book might be valuable. Eg, a ample of IU tudent telephone number could be generated from the IU telephone b ook without too much error. Explanation of how telephone number are a igned

7. Within hou ehold Sampling Often, hou ehold member are li ted at the beginnin g of the interview. Thi proce ha ome error in it. For example, the informan t not being certain who hould be li ted. Eligibility differ acro urvey . Th o e with URE, temporarily ab ent in the ho pital, etc , college tudent , etc ar e ometime mi ed when they hould be included. Within hou ehold , mo t urvey randomly choo e a re pondent. Ki h - ro ter the hou ehold, u e a grid; it very complex and con idered intru ive. In ome ca e , the hou ehold i ro tered a part of the interview, o the i mpact i minimized. Trohdal-Carter-Bryant - imilar to Ki h but ha a different election routine that a little impler (no ro tering) and adju t for demograph ic characteri tic of a population.

The traditional numbering y tem of area code and exchange ha changed over th e pa t few year becau e of the need for more exchange . (Here, a hort explanat ion of the growth in the u e of ten digit telephone number .) 11.623.3 Copy Right: Rai Univer ity 65

There are approximate 40,000 area code/exchange with hou ehold telephone in the US. Thi number i growing rapidly with the addition of new area and exchange . Many hou ehold have multiple line both for voice and for mmunication . Cell phone and other device often have their own exchange Growth of area code

number code teleco .

 Hagen-Collier - election order grid; ea y to admini ter but certain per on cant be included. La t birthday and variation - ea y to admini ter but there are i gnificant error in election. Random number to ba e election what the CSR u e . ize . The e countie are known a the Primary Sampling Unit (PSU ). A imilar proce i u ed to choo e block (or other maller area ) to ample again within each primary ampling area. That i , con ideration i given to the demographic characteri tic of the next level of area ampling. In many ca e , the e area w ill be cho en to repre ent minority population , newly built hou ing unit , and other characteri tic determined to be important. Both the fir t and econd tag e are form of nonproportional tratified ampling. In many ca e , maller unit {perhap block in urban area and geographic area in rural area ) will be ra ndomly cho en. The e may be cho en u ing probability proportional to ize ampli ng. The hou ing unit in the block will be li ted by interviewer and a ample of unit will be cho en. U ually a clu ter of hou ing unit will be interviewed in each block. Within each hou ing unit, an adult (in mo t ca e ) will be randomly c ho en to be interviewed. Depending on the po t urvey weighting procedure and t he detail of the ampling, the repre entativene of the ample can be at the v ariou level of geography. For the Cen u Bureau becau e they have a large numb er of PSU , they can feel comfortable at producing e timate for relatively mal l geographical area ; for the other re earch organization with fewer PSU , they will be repre entative at larger (e.g., cen u region) area . CONSUMER BEHAVIOUR (An abbreviated compari on of re pondent election procedure ) Developing I ue Growth of telephone line into hou ehold ; ome voice but not all. Growth of cel l phone and other non-hou ehold ba ed telephone . Many telephone companie are aiming toward per onal phone and telephone number for all. Local competition and even more multiple number .

There are no good ampling frame for random ample of general population that can be u ed for mail urvey . There are ome approximation telephone book whit e page , community directorie , etc but none ha a complete li t and the geograp hy i often difficult to determine. It i po ible to u e area probability ampl ing to leave que tionnaire and a k them to be mailed back. Sometime RDD can be u ed to elect a ample that i later ent a que tionnaire. Mo t mail urvey a re of li ted group , e.g., NSSE, a urvey of police chief . Sampling for web ur vey , fax urvey , email urvey Each of the e urvey mode ha problem imila r to mail urvey a good ampling frame doe not exi t for population urvey bu t pecific group can be ampled rea onably well. For the e type of urvey , th e admini tration mode i more complex, o there are additional problem not foun d in u ing the typical urvey mode . Mixed ampling procedure Ju t a there can be mixed and multiple mail mode urvey , mixed ampling can be u ed to generate population coverage. In mo t ca e , it take both creativity and making ome a

Mail Survey Sampling Procedure

Example: Te ing Con umer Attitude Toward a New ad. The new ad: A pretty lady drank a can of oft drink and winked at the TV watcher , aid, I love Thanda exily. Thanda wa the name of the oft drink. The re earch pro blem: Will thi adverti ement timulate the purcha e intention of the con umer ? After literature review and ome mall focu group di cu ion , the re earcher believed that: (1) pretty ladie attract more male than female . (2) Attitude include the affective, cognitive and behavioral component . (3) If the audience like the ad, it i more likely that they will purcha e the product. A number of ampling area (u ually countie ) are elected from the country a a whole; the e area are cho en o that, together, they provide a good demographi c repre entation of the total population. The countie are fir t tratified to c ontain imilar group of countie . Generally, there are ome trata elected in each region of the country. There i an expectation that they are omewhat homog enou and at thi level of ampling, trata can be elected ubjectively without much lo of repre entativene . Re earcher often find it difficult to determi ne number of trata needed becau e of variou urvey need When devi ing the e a rea , it i generally con idered important to have relatively proportional repre entation of region , urban and rural area , and county population Methodology Sixty-four (32 male and 32 female ) ubject are invited to watch the ad, and t hen fill in a que tionnaire to indicate their attitude . Que tion included: att itude toward the ad. and demographic background A. Attitude (five point Likert cale. 5 = trongly agree; 1 = trongly di agree): a. Thi i a good ad. b. I like t hi ad. c. I will purcha e Thanda B. Demographic background 66 Copy Right: Rai Univer ity 11.623.3

umption about coverage and effectivene . It ffect from mixed ampling procedure How area probability ampling i done:

difficult to compute the de ign e

a. Re pondent ex b. Their occupational tatu (working or tudying) c. The educ ational background (art or cience) d. Their age e. Their nationality Hypothe i Development

Data entry: Variable Name, Type, Label , Mi ing Value and Column Format. De cr tic : frequency table, mean, tandard deviation and hi togram. I there any data entry error? Two-Sample T-Te t CONSUMER BEHAVIOUR Hypothe i : A umption, theory or gue that a re earcher or manager make about ome characteri tic of the population under tudy. H0: The attitude between m ale and female toward the adverti ement are the ame. Ha: The attitude between male and female toward the adverti ement are different. 1. In marketing re ear ch, we u ually tate only the hypothe e that we want to te t. More commonly, th ey are the alternative hypothe e . Stati tic Compare Mean Independent-Sample TTe t Example: Comparing cognitive at titude between male and female ample Sex Male N 32 Mean 3.5313 2.6875 SD 1.163 5 1.2297 Female 32 Check equality of variance; check Sig. (p value) F Sign. (p) t df Sign. (p) 0.006 H1: The purcha e intention i higher among male re pondent than that among fema le re pondent . H2: The more po itive the re pondent how hi /her attitude towa rd the adverti ement, the more likely that he/ he will purcha e the product. 2. After we have formulated the re earch que tion, developed hypothe e and de ign ed the que tionnaire, we can collect the data. Select the appropriate te t tati tic:

2.819 62 2.819 61.811 0.006 3. Te ting difference between two ample mean by t-te t (you do not need to how calculation during the examination, but have to interpret the data.) Hypothe i For H1: Te t of difference , ample ize = 64, dependent variable (purcha e inte ntion) i interval, independent variable ( ex) i nominal. The appropriate techn ique i z-te t (t-te t in SPSS). For H2: Te t of a ociation, ample ize = 64, dependent variable (purcha e intention) i interval, independent variable (cogn itive and affective attitude) are interval. The appropriate technique i regre ion. 4. 5. Develop a deci ion rule; elect a ignificance level (refer to Type I and Type II error). Calculate the value of the te t tati tic (refer to T-Te t and C hi- quare Te t). H0: Variance in male ample = Variance in female ample Ha: Variance in male am ple Variance in female ample We et = 0.05, thus the decision rules re: Accept H0 Reject H0 if if p > 0.05 p < or = 0.05 Since 0.619 is bigger th n 0.05, we c nnot reject H0; the v ri nces between m le

Variance 0.250 0.619 equal Variance

not equal

Type I nd type II Error Type I error ( error): Reject the null hypothesis (H0) when, in f ct, it is tru e. Common used : 0.05, 0.01 or 0.10 respectively. An = 0.05 me ns there is 5% ch nce th t you reject the null hypothesis but in f ct it is true. Type II er ror (b error): Accept the null hypothesis when, in f ct, it is not true. + 1 (wh en 0 or 0) Descriptive St tistic Fem le 32 Hypothesis H0: me n of the m le s mple = me n of the fem le s mple H : me n of the m le s m ple me n of the fem le s mple We set = 0.05, thus the decision rules re: Acce pt H0 Reject H0 if if p > 0.05 p < or = 0.05 Since 0.006 is sm ller th n 0.05, we reject H0; the me ns between m le nd fem l es s mples re not equ l. Exercise: So how bout this H1: The purch se intention is higher mong m le respondents th n th t mong fem le respondents. Do it by y ourself. 11.623.3 Copy Right: R i University 67

nd fem les s mples re ssumed equ l. Comp ring the me n of m le mples Sex M le N 32 Me n 3.5313 2.6875 SD 1.1635 1.2297

nd fem le s

One-S mple t-Test Hypothesis: CONSUMER BEHAVIOUR Ex mple: Is the ver ge purch se intention signific ntly different from 3? St tist ics Comp re Me ns One-S mple T-Test N Beh 64 T

Me n SD Std Error 0.1606 Me n diff. 0.03125 3.0313 1.2844 df Sign. (p) 0.846 Beh 0.195 63 Hypothesis

An lysis of the strength of the line r rel tionship between two or more v ri ble s when one is considered the dependent v ri ble nd other(s) the independent v r i ble(s). If we present the biv ri te rel tionship by sc tter di gr m, we usu lly put the independent v ri ble t the x- xis nd the dependent v ri ble t the y- xis. Types of rel tionship between independent nd dependent v ri ble: No re l tionship, positive line r rel tionship, neg tive line r rel tionship, curvilin e r rel tionship, nd P r bolic rel tionship. The line r equ tion: y = + bx (p ositive line r); y = bx (neg tive line r). Where is the y-intercept (the v lue of y when x = 0) nd b is the slope of the regression line. The le st-squ res met hod Two simple regression models (you do not need to show these c lcul tions in the ex m, but to interpret the d t ) 1. Hypotheses H2 : The more positive the re spondent shows his/her COGNITIVE ttitude tow rds the dvertisement, the more li kely th t he/she will purch se the product. H2b: The more positive the responden t shows his/her AFFECTIVE ttitude tow rds the dvertisement, the more likely th t he/she will purch se the product. 2. 3. Line r equ tions: beh = + b (cog) Model summ ry Since 0.846 is bigger th n 0.05, we c nnot reject H0; the s mple me n is not sig nific ntly different from 3. Chi-Squ re (2) Test Chi-squ re test: Test of the goodness of fit etween the o served distri ution nd the expe ted distri ution of v ri le. Chi-squ re test of single v ri le : St tisti s Nonp r metri Tests Chi-Squ re Ex mple: Testing the n tion lity of th e respondents. Test: the frequen ies of different tegories within v ri le

H0: S mple me n = 3 H : S mple me n 3 We set = 0.05, thus the decision rules re: Accept H0 Reject H0 if if p > 0.05 p < or = 0.05

Since 0.035 is sm ller th n 0.05, we reject H0; there is hip between sex nd educ tion b ckground. Regression An lysis

signific nt rel tions

H0: There is no rel tionship between sex nd educ tion b ckground H : There is signific nt rel tionship between sex nd educ tion b ckground We set = 0.05, thus the decision rules re: Accept H0 Reject H0 if if p > 0.05 p < or = 0.05

re equ l (or ording to ert in expe ted proportion). Hypothesis: H0: N tion l ities of respondents re equ lly distri uted H : N tion lities of respondents r e not equ lity distri uted We set = 0.05, thus the de ision rules re: A ept H0 Reje t H0 if if p > 0.05 p < or = 0.05 Sin e 0.025 is sm ller th n 0.05, we reje t H0; the n tion lities of respondents re not equ lly distri uted. Chi-squ re test of two v ri les . . . d.

For more on l ul tion: Text ook p. 526-8 St tisti s Summ rize Crosst . Ex mple: Testing whether respondents sex nd o up tion l kground re independent. Rem em er to he k Chi-squ re ox. Otherwise the output wont displ y the hi-squ re st tisti . Arts S ien e 25 (21) 17 (21) 42 Tot l 32 32 64 Interpret tion: This model provides R2 of 0.723, whi h suggests 72.3% of the s mple v ri tion in eh is expl ined y the equ tion. 4. ANOVA Sum of Squ res 75.134 28.804 103.937 df 1 62 63 Me n squ re 75.134 0.465 F 161.7 25 Sig. 0.000 Model SSR SSE SST M le Fem le Tot l 7 (11) 15 (11) 22

68 Copy Right: R i University 11.623.3

Testing the signifi n e of the equ tion The F st tisti s tests the pro th t th t is igger th n zero

ility

Hypothesis: H0: = 0 H : 0 If H 0 is ccepted, which suggests the slope of t he regression line is not st tistic lly different from zero; no line r rel tions hip exists between beh (dependent v ri ble) nd cog (independent v ri ble). Inform t ion bout the independent v ri ble would not help in expl ining the v ri tion in the dependent v ri ble, the equ tion is not more powerful th n using the me n o f beh to predict ny individu l beh observ tion. If H0 is rejected, which suggests t he independent v ri ble is import nt in predicting v ri tion in beh. As SPSS h s p rovided the F v lue nd p v lue (i.e. the sig.), you do not need to c lcul te by y ourself (if you would like to know the c lcul tion, come to see me in person). W e set = 0.05, thus the decision rules re: Accept H0 Reject H0 if if p > 0.05 p < or = 0.05 4. ANOVA Sum of Squ res 83.904 20.033 103.937 df 2 61 63 Me n squ re 41.952 0.328 F 127.7 43 Sig. 0.00 0 CONSUMER BEHAVIOUR Model SSR SSE SST Testing the signific nce of the equ tion The F st tistics tests the prob bility th t th t b 1 or b 2 is bigger th n zero. Hypothesis: H0: b 1 = b 2 = 0 H : b 1 or b 2 0 If H 0 is ccepted, which suggests the slope of the regression line is not st tistic lly different from zero; no line r rel tionship exists between beh ( dependent v ri ble) nd independent v ri bles. Inform tion bout the independent v ri bles would not help in expl ining the v ri tion in the dependent v ri ble, the equ tion is not more powerful th n using the me n of beh to predict ny indiv idu l beh observ tion. If H0 is rejected, which suggests t le st one independent v ri ble is import nt in predicting v ri tion in beh. We set = 0.05, thus the de cision rule re: Accept H0 if if p > 0.05 p < or = 0.05 Reject H0 Since 0.000 is sm ller th n 0.05, we reject H0; b is signific ntly different fro m zero. In other words, the independent v ri ble is import nt in expl ining the v ri tion in beh. 5. Coefficients Model Const nt Cog B Std. Error Bet t Sig. 0.339 0.228 0.866 0.068 0.85 1.487 0.142 12.717 0.000 The estim ted equ tion of this model is: Beh = 0.339 + 0.866 cog One multiple regres sion model (you do not need to show these c lcul tions in the ex m, but to inter pret the d t ) 1. Hypotheses H2: The more positive the respondent shows his/her COGNITIVE nd AFFECTIVE ttitude tow rds the dvertisement, the more likely th t he/she will purch se the product. 2. 3. Line r equ tions: beh = + b 1 (cog) + b 2 ( ff) Model summ ry Model R R2 Adjusted R2 St nd rd Error 0.801 0.5731 Since 0.000 is sm ller th n 0.05, we reject H0; t le st one b is signific ntly different from zero. In other words, t le st one independent v ri ble is import nt in expl ining the v ri tion in beh. 5. Coefficients Model Const nt cog ff B Std. Bet Error T 0.311 6.321 5.168 Sig. (p) 0.142 0.000 0. 000 0.0619 0.199 0.539 0.418 0.085 0.529 0.081 0.433 1

0.89 0.807 Assessing the import nce of individu l independent v ri bles The signific nce of individu l independent v ri bles should be ssessed. E ch of the coefficients w ill be tested by the following hypothesis H0: b x = 0 H : b x 0 The signific nce of individu l independent v ri ble is ssessed by its t-r tio. We set = 0.05, t hus the decision rules re: Accept H0 if p > 0.05 Interpret tion: This model provides R2 of 0.807, which suggests 80.7% of the s mple v ri tion in beh is expl ined by the equ tion. 11.623.3 Copy Right: R i University 69

Reject H0 if p < or = 0.05 CONSUMER BEHAVIOUR According to the p v lues, both independent v ri bles re import nt in the equ t ion. The estim ted equ tion of this model is: beh = 0.0619 + 0.539 (cog) + 0.418 ( ff) Concluding Thoughts Consumer rese rch by itself does not rrive t m rketing de cisions, nor does it gu r ntee th t the org niz tion will be successful in m rke ting its products. However, when conducted in system tic, n lytic l, nd obje ctive m nner, m rketing rese rch c n reduce the uncert inty in the decision-m ki ng process nd incre se the prob bility nd m gnitude of success. C se on Consumer nd Competition Sw n Textile Mills Ltd Mr. Adv ni is young s les m n ger in popul r textile mill of Mumb i-Sw n Textile Mills Ltd. The comp ny sells directly to ret ilers ll over Indi . Recently, Adv ni f ced tough s les objections from southern ret i lers. The objection is, we c n get the s me p tterns nd f brics che per from Sw rn Textile Mills Ltd, Mumb i. Adv ni found th t the truth in their st tement. Sw rn Comp ny copied system tic lly nd even printed tr de m rk Roshini (simil r to the tr de m rk Rohini of Sw rn Comp ny t the edge of e ch y rd of the f bric. They supplied their cloth t one-third the price. As s les st rted slipping, he thought of str tegy to prove the qu lity of Sw n products. Adv ni devised s imple demonstr tion to prove the qu lit tive difference between the two products . He took f bric s mples from both f brics nd, demonstr ted the differences nd expl ined the re sons. He sked the ret ilers to find out the customers views f ter 2-3 w shings of Roshini Br nd. Within month fter this demonstr tion, the ir te housewives in the south flooded ret il shops with compl ints th t the che p Roshini f bric, lost its luster nd st rted f lling p rt fter 2 or 3 w shing s. They st rted dem nding Rohini nd no Roshini br nd f brics. S les of Rohini shot up in few weeks. Questions 1. 2. 3. If you h d been in Adv nis pl ce, would you welcome or fe r this objecti on? Why? Could Adv ni h ve prevented the initi l drop in s les of Rohini through better pl nning? Would this ppro ch be possible in other m rkets? T ken from B ng lore Universitys second semester MBA ex min tion, September-Octob er 1999. Notes 70 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 7: TUTORIAL 1. Develop questionn ire to me sure students ttitudes tow rd the instructor in this course. . b. Prep re five st tements to be me sured on Likert sc le. Pr ep re five sem ntic differenti l sc les to me sure these ttitudes. C n the s me dimensions be me sured by using either sc ling technique? Expl in your nswer. 2. Neutrogen is m nuf cturer of person l c re products for young dults. The comp ny would like to extend its f ci l cle nsers product line. Design ( ) qu lit tive nd (b) qu ntit tive rese rch design for the comp ny focused on this ob jective. 11.623.3 Copy Right: R i University 71

LESSON 8: CONSUMER NEEDS, TYPES AND SYSTEMS OF NEED Introduction We hum n beings h ve unlimited needs nd our needs which we study s consumer ne eds re the b sis of ll modern m rketing. We c n s y th t needs re the essence of m rketing concept. In f ct, the key to firms surviv l, profit bility, nd g rowth in highly competitive m rketing environment is its bility to identify nd s tisfy unfulfilled consumer needs better nd sooner th n the competitor. In this ch pter we b sic lly will be discussing the b sic needs th t oper te in mos t people to motiv te beh viour. We lso go further to explore the influence such needs h ve on consumption beh viour. CONSUMER BEHAVIOUR UNIT II CONSUMER AS AN INDIVIDUAL CHAPTER 3: CONSUMER NEEDS AND MOTIVATION Types nd Systems of Need These needs th t we discussed so f r could f ll into three bro d c tegories: . Physiologic l (or prim ry) needs: Those needs, which re inn te, or biogenics ne eds nd sust in life. E.g., food nd ir Psychologic l needs: person l competenc e Le rned (second ry or cultur l) needs: cquired needs b. c. 2. Needs Arous l Needs c n be roused by four distinct stimuli: Objectives After studying this lesson you should be ble to Define the terms needs nd go l s in the context of consumer beh vior. Expl in need systems, specific lly, ident ify the components of M slows need theory, nd offer critique of needs theory. Underst nd other m jor theories of needs nd pply them in consumer beh viour si tu tions Physiologic l Cognitive Environment l Emotion l To underst nd the stimuli better let us look t ex mples for e ch kind of stimul i: Type of Stimulus Physiologic l Cognitive Mech nism Dryness in the tongue Seeing n d which reminds you to wish your friend h ppy birthd y Remembering son who i s st ying f r w y Finding the right house to convey prestige nd m tch your bud get Elderly couple st ying lone h ve fe r of being burgled Need roused Thirs t (Prim ry) Soci l 1. Wh t is Need? So now let us see wh t is need. We c n s y there is c use for ll the ctiviti es of hum n being nd e ch ctivity is b cked by p rticul r need or motive. Ne eds, we c n s y, is feeling or desire for something, which is l cking nd thro ugh performing v rious ctivities to get the feeling of l cking remov l nd thus become s tisfied. Thus ny hum n beh viour is c used by motives or needs. Hence to m ke it more cle r, motiv tion is concerned with: Needs-the most b sic hum n requirement Drives-tell show these needs tr nsl te into beh viour Go ls-wh t th ese beh viour im to chieve Affection Environment l Prestige Success

P use for Thought #1 Nutr ment Debunked... Nutr ment,

product m rketed by Bristol-Myers Squibb orig

Emotion l Security

3. Go ls Go ls re known s the sought fter result of motiv tion l beh viour. Go ls m y be generic or specific. Selection of Go ls For given need choice of the go l t o s tisfy the need will depend on number of things:

Copy Right: R i University

Person l experience Soci l nd cultur l norms es 11.623.3

nd v lues Person l norms nd v lu

Fig 3.3 Interrel tionship between stimulus & need

rous l

in lly w s t rgeted t consumers th t needed to receive ddition l energy from t heir drinks fter exercise etc., fitness drink. It w s therefore t rgeted t c onsumers whose needs were for either love nd Belonging or esteem. The product w s not selling well, nd w s lmost termin ted. Upon extensive rese rch it w s d etermined th t the product did sell well in inner-city convenience stores. It w s determined th t the consumers for the product were ctu lly drug ddicts who c ouldnt digest regul r me l. They would purch se Nutr ment s substitute for me l. Their motiv tion to purch se w s completely different to the motiv tion t h t B-MS h d origin lly thought. These consumers were t the Physiologic l level of the hier rchy. BM-S therefore h d to redesign its MM to better meet the need s of this t rget m rket. Motives often oper te t subconscious level therefore re difficult to me sure. 72

 Physic l nd or intellectu l c p city Accessibility of go l Self im ge CONSUMER BEHAVIOUR 3.1 Hulls Drives reduction Theory Let me mention here, very popul r theory whi ch links needs nd drives with go ls. This theory is known s Hulls drive Reducti on theory. Let us look t n illustr tion of this theory. Need Drive Go lDirected beh viour Drive reduction Drive Reduction Re-enforces drive Reducing beh viour Fig 3.4 A simple view of Hulls drive reduction theory As we c n see bove in figu re 3.4, need will give rise to drive nd the resulting beh viour will be im ed t reducing the drive nd thereby the need. According to Hull, the drive redu ction ct or the ct of reducing the drive, will re-enforce the drive reducing b eh viour whereby it is likely the beh viour be repe ted g in in c se of recurre nce of the need in the future. We c n lso expl in this concept s shown below i n figure 3.5. Stimul ted Needs Aroused tensions Go l -directed Beh vior L ck of something Necess ry for the Well-being of the Individu l Uncontroll ble feeling ctiv ted by intern l or extern l stimulus

Fig 3.5 reduction of roused tensions 11.623.3 Copy Right: R i University 73

ctions t ken by Individu l to reduce roused tensions

nd s tisfy stimul ted

Let us t ke n ex mple to underst nd this well. Suppose you re out in the Sun nd feeling thirsty. Your beh viour will be to seek nd find out the ne rest sour ce of refreshment, sm ll rest ur nt perh ps. Going by Hulls theory it is most l ikely th t you will prefer to drink cool drink, which h s s tisfied your thirs t in the p st, Pepsi for inst nce. You m y lso go for something simil r like Coc Col or try something new. If this new option is found to be s tisf ctory, then i t is likely to be selected next time you re thirsty. E.g. mount in bikes in cert in terr in CONSUMER BEHAVIOUR Ecology, including qu lity of ir, ozone l yer nd food ch in E.g. sun protectio n nd llergy medic tions. Wh t determines customer w nts? 1. The individu l context: 4. Needs nd W nts Now th t we h ve f ir ide of wh t is need, let us look t the difference be tween need nd w nt lthough we use the two terms interch nge ble t times. So w h t is the difference between need nd w nt? Person l worth or the fin nci l resources v il ble to the individu l E.g. luxur y versus budget c rs Institution l context the groups nd org nis tions th t p erson belongs E.g. teen clothing styles Cultur l context the influence of cust omers culture nd cultur l v lues E.g. ethnic foods

2. The Environment l Context: Economy Technology Public Policy Let us now see wh t ex ctly determines needs nd w nts. So, Wh t determines cust omer needs nd w nts? C n you try nd give ex mples for the environment l context s mentioned bove? W e c n summ rise ll these determin tors of needs nd w nts in the following t bl e given in figure 3.1 s the imp ct of need nd w nt determin nts Imp ct of Need nd W nt Determin nts Environment Ch r cteristics Person l Physic l Contextu l Ch r cteristics Physic 1. Needs3. Person l l driven needs nd m rkets environment l (e.g., w nts (e.g. , medicine microw v ble for cold foods) nd cough) Contex 2. Person l 4. W nts d riven tu l w nts nd m rkets (e.g., environme The tre nt l needs ttend nce) (e. g., P shmin Sh wl) Fig 3.1 M trix of person nd environment ch r cteristics Fig 3.6 A comp rison of the determin tion of the needs nd w nts Wh t determines customer needs? 1

A n t e

need is n uns tisf ctory condition of the customer th t le ds him or her to ction to m ke the condition better e.g. the need for food due to hunger. A w n is desire to obt in more s tisf ction th n is bsolutely necess ry to improv n uns tisf ctory condition E.g. the desire for th t food to be chocol te!

 Person l ch r cteristics of the individu l: Genetics the br nch of science de li ng with heredity nd chemic l/biologic l ch r cteristics E.g. food llergies Bio genics ch r cteristics th t individu ls possess t birth E.g. gender nd r ce Ps ychogenics individu l st tes nd tr its induced by persons br in functioning E. g. moods nd emotions. Physic l ch r cteristics of environment: Clim te, includi ng temper ture, ttitude nd r inf ll E.g. winter versus summer clothing Topogr phy refers to the physic l condition of the loc tion We c n t ke few more ex mples to expl in this further: 1. 2. 3. 4. Needs-drive n m rkets E.g. summer clothing Person l w nts nd environment l needs E.g. n me-br nd summer clothing Person l needs nd environment l w nts E.g. re dy to e t me l s W nts-driven m rkets E.g. designer clothing 11.623.3 2 74 Copy Right: R i University

Arous l seeking Optim l level of stimul tion: not bored/overwhelmed Level of d pt tion: level perceived s norm l Arous l seeking motive: stimul tion t optimum l evel

CONSUMER BEHAVIOUR Curiosity: need for cognition Need for knowledge/inform tion/underst nding Toler n ce of mbiguity: degree to which l ck of inform tion c uses nxiety M rket m vens : h ve inform tion bout m ny products nd provide m rket inform tion to custome rs Need for ttributions Inferences bout c uses of events nd beh viour of self nd others Intern l ttributions Ascribing to person lity dispositions, tr its, bilities, m otiv tions or feelings e.g. he/she did it bec use they were bored Extern l ttribu tionsAscribing to situ tion l dem nds or environment l constr ints beyond the con trol of the individu l E.g. he/she did it bec use of the we ther You m y use this theory s conceptu l guide; it is intuitively ppe ling. However, t times it is difficult to support it. E.g., why would person like Dr. Verm spend few ye rs in doctor l progr m, ttempting to r ise f mily of four on Rs.12, 000 per month, if self ctu liz tion shouldnt occur without first meeting lower order n eeds? Nonetheless, one point th t c n be m de from looking t M slows theory nd from others is th t we c n expect different people in different situ tions to be motiv ted in different w ys nd tow rd different go ls depending on wh t needs h ve been met. Th t is, while the specific f ctors of M slows ide re not v lid in ll situ tions, the ide th t motiv tion c n work in hier rchic l f shion i s v lid concept. However, to expl in this further we end the discussion on thi s model by t king the ex mple of household Customers nd their different levels of needs. M slows hier rchy of needs for household customers 5. Motive A construct representing n unobserv ble force th t stimul tes nd compels beh vior l response nd provides specific direction to th t response Needs occur wh en perceived discrep ncy exists between n ctu l nd desired st te of being Note th t there re m ny theories of motiv tion:

Multiple Motives Consumers usu lly h ve multiple motives for p rticul r beh viors. These c n be combin tion of: M nifest known to the person nd freely dmitted L tent unknown

Dont look t these s right or wrong; they re just theories. None seem intuitively logic l.

re v lid ted, but

5.1 M slows Hier rchy of Needs Abr h m M slow hypothesized th t within every hum n being there exists hier rchy of five needs: 1. 2. 3. 4. 5. Physiologic l S f ety Soci l Esteem Self ctu liz tion

Need for

rous l, cognition nd

ttribution

to the person or the person is very reluct nt to dmit Note: different motives c n le d to the s me beh vior; observing beh vior is not sufficient to determine motives. Physiologic l needs Food, clothing nd shelter S fety needs Insur nce, c r s fety fe tures Soci l needs Greeting c rds, designer clothing Esteem needs Choice of sto res, self-gifting Self- ctu lis tion needs Self-improvement ctivities Uns tisfied need===> . . . . . . . . . .tension===> . . . . . . . . . . . . . . drives===> . . . . . . . . . . . . se rch beh vior===> . . . . . . . . . . . . . . . . . s tisfied need===> . . . . . . . . . . . . . . . . . . .. Reduction of tension A model of motiv tion might look like: As we h ve lre dy studied bout most of the models of motiv tion in e rlier semesters, we will only t ke cursory gl nc e t some of the m jor models. 11.623.3 Copy Right: R i University 75

5.2 Sheths Five Needs Sheth h d identified five levels of needs, which we re men tioning below, with some ex mples:

Soci l needs Needs th t Allow identific tion with desired group, e.g. logos Emoti on l needs Those needs which, cre te ppropri te emotions, e.g. joy on getting gi ft McClell nds ide suggests why it is th t different people beh ve in different w y s. We ll h ve more or less of need on some of these f ctors, m king e ch of u s motiv ted tow rd different person l go ls. People who h ve higher nACH would prob bly m ke better entrepreneurs or s lespeople nd be lousy te m pl yers. Pe ople who h ve higher nPOW would prob bly m ke better le ders but could be obno xious rm twisters s s lespeople. People who h ve higher nAFF would prob bly m ke the best te m pl yers but would l ck the self drive to be s lespeople running t heir own territory. The point of this is to note th t different people h ve diff erent person lities. CONSUMER BEHAVIOUR 6. Customer Emotions Emotions We c n s y th t emotions re Consciousness of the occurrence of some ph ysiologic l rous l followed by beh viour l response long with ppr ised me n ing of both Epistemic needs The Need for knowledge/inform tion, e.g. newsp per Situ tion l ne eds The needs, which re ccontingent on time/pl ce, e.g. emergency rep irs 5.3 McCLELLANDS Three Needs Theory As we know, h ving studied this before McClell nd h d identified three types of needs: Need for chievement, Need for Power, nd Need for ffili tion Sch chters two-f ctor theory Experience of emotion depends on utom tic rous l n d its cognitive interpret tion. M rketers respond by designing the stimulus to fi t ppropri te consumption emotions nd iding in mess ge ppr is l E.g. symbolis m in dvertising.

6.1 Types of Emotions Plutchik proposed eight prim ry emotions: Fe r: from timidity to terror Anger: fro m nnoy nce to r ge Joy: from serenity to ecst sy S dness: from pensiveness to gri

nACH: need for t of st nd rds; ers beh ve in ffili tion: the

chievement: drive to excel: drive to chieve in to strive to succeed. nPOW: need for power: the w y th t they would not h ve beh ved otherwise. desire for friendly nd close interperson l rel

rel tion to se need to m ke oth nAFF: need for tionships.

Function l needs Those needs which ss tisfy o p

physic l/function l purpose, e.g. s

ef Accept nce: from toler nce to dor tion Disgust: from boredom to lo thing Antici p tion: from mindfulness to vigil nce Surprise: from uncert inty to m zement High nACH Some people like go ls, some do not. These people re high chieves. they re not g mblers they void very e sy or very difficult t sks low odds of l osing present no ch llenge to their skills high odds of losing offer no rew rds from h ppenst nce success get most s tisf ction from 50-50 odds

High nPOW these people like being in ch rge more interested in the prestige of power th n in effective perform nce High nAFF these people strive for friendship prefer cooper tive r ther th n competitive si tu tions desire rel tionships with high degree of mutu l underst nding Copy Right: R i University 76 11.623.3

Article #1 Needs, Self-expression

nd Consumer Beh viour

Other emotions re combin tions, e.g. joy nd t nd s dness combine s remorse.

ccept nce combine s love; disgus

Multiplicity of Needs CONSUMER BEHAVIOUR Norm lly consumers h ve more th n one need nd n lysing the multiplicity of nee ds (with their import nce) could provide insights for m rketers. A buyer of no-f rill M ruti m y be interested in the br nd bec use of its low price, fuel econom y nd dequ te comfort. But low price could be the pre-potent need, which could t ke the br nd into the consider tion set of consumers. Types of Go ls Go ls c n be positive or neg tive. A positive go l is one tow rds which beh viou r is directed nd neg tive go l is one from which beh viour is directed w y. This concept is useful when USP (unique selling proposition) is rese rched. For ex mple: would consumers w nt white teeth or would they like to prevent tooth de c y, could be decision which needs to be t ken by the m rketer nd the concept of go ls re likely to be useful in this situ tion. Extrinsic nd Intrinsic Needs

Consumers m y not consciously know their second ry needs nd it is in this situ tion th t the symbolism ssoci ted with br nds could ppe l to consumers. Louis Philippe, P rk Avenue in pp rel, Mercedes in utomobiles nd F str ck in w tche s re some ex mples, which reflect the symbolism in br nds. Consumers, by ssoci

Needs from the viewpoint of pplic tion to pr ctic l context could be cl ssifi ed s extrinsic nd intrinsic needs. Extrinsic needs re those, which motiv te n individu l to chieve n end result. Buying st tus symbol (designer w tches or furniture) to impress others could be ssoci ted with extrinsic needs. If the individu l buys c r for his own comfort nd enjoyment, it gets ssoci ted wit h intrinsic needs. It m y be worthwhile to g uge the link ges between intrinsic nd extrinsic needs before communic tion p ck ge is formul ted for br nd. Th e ex mple would expl in the concept of ex mining the link ges between intrinsic nd extrinsic needs. The list of needs provided in the TV ex mple, illustr te th e concept. In-depth rese rch is required to g uge the degree nd import nce of t hese needs. This would lso be useful to select the im gery, which needs to be ssoci ted with the chosen USP. For ex mple, Cielo c rried im gery in which the p roud owner of the br nd reflected his h ppiness t procuring the br nd fter he h d chieved success. This typic lly involves both intrinsic nd extrinsic motiv es. Tr de-off motiv tors

NEEDS, motiv tion nd person lity re rel ted concepts nd it would be ppropri te to consider them together in pr ctic l context. Need is st te of depriv t ion. Motiv tion is the drive, which propels person tow rds chieving his go ls , nd person lity is set of inner ch r cteristics, which en ble person to de cide how he or she should respond to the environment. Motiv tion nd person lity could be linked person with high degree of confidence m y be ssertive. T here re number of theories on person lity. Freudi n theory ssumes th t the b eh viour of individu ls would be b sed on unconscious needs nd drives. Accordin g to this theory, the hum n person lity consists of three p rts - id, ego nd su per ego. The id is the component, which consists of impulses nd primitive insti ncts, which urge the individu l to move tow rds immedi te gr tific tion. A numbe r of product c tegories which m y not h ve well defined function l ttributes n d which re oriented tow rds sensu l ple sure formul te communic tion, which m y ppe l to the id p rt of the person lity. Perfumes, cig rettes nd liquor re s ome c tegories, which m ke use of the ppro ch. Bl ck Knight nd B c rdi br nds re ex mples, which h ve dopted this route to communic tion. There re two kind s of needs - prim ry nd second ry. Prim ry needs re ssoci ted with physiologi c l needs such s thirst, hunger nd sex. Second ry needs re cquired needs lik e sense of belonging, st tus nd self-esteem.

ting themselves with these symbolic br nds, re ble to gr tify their psycholog ic l needs. Rese rch methods re required to probe into such needs of consumers. Liril so p w s l unched in the seventies fter rese rch gency rese rched nd found th t housewives h d distinctive need for f nt sizing. This w s c ptured in the dvertisement for Liril w terf ll, freshness (denoted by green) nd the indulgence of the model in the dvertisement. This communic tion is still being used (with v ri tions brought in) fter more th n two dec des. Rese rch h s shown th t the m nner in which consumers perceive m rketing communi c tion h s import nt implic tions for m rketers. This is especi lly in the re of FMCG products such s f st foods. He lthy nd f st (me ning convenience) m y be perceived s t sting b d nd oriented tow rds l ziness. This mbiguity could be referred to s tr de-off motiv tors nd m rketing rese rchers could probe suc h propositions with view to une rth such tr de-off motiv tors. Self-concepts nd their implic tions In lmost ny c tegory in consumer products, symbolism m kes use of self-concept . Self- concept is the im ge n individu l holds bout himself. There re v ri ety of selfconcepts, which could be useful to m rketing communic tion. They re: ( ) Actu l self-concept - how the individu l perceives himself. A group of consu mers m y perceive themselves s rebellious, non-conformists who seek individu li ty nd freedom in their lifestyles. Ch rms br nd of cig rettes, 77 11.623.3 Copy Right: R i University

Individu l differences s reflected through self-perception, sensitivity to othe rs perception nd r tion l nd irr tion l needs form the b sis on which br nds c rry their psychologic l w rf re in the minds of consumers. Points to Ponder CONSUMER BEHAVIOUR 78 (b) Ide l self-concept - this is concerned with how n individu l would like to ide lly perceive himself. There is thin line of difference in th t ide l self concept h s n overtone of futuristic spir tion in it (more deeper th n n cti ve self-im ge) - the individu l perceives the ide l im ge of himself/herself b s ed on his spir tion l needs nd this would depend on the individu ls st tus - f in nci l nd educ tion l, childhood upbringing, environment l exposure nd perso n lity tr its. An upcoming businessm n m y buy the L coste br nd of pp rel, whi ch is ssoci ted with the profile of globetrotter, club membership, some, kind of exclusivity nd perh ps cert in up m rket sports. There could lso be v ri nt of this kind of self-concept in the form of others ide l selfconcept (how ot hers should ide lly perceive the individu l). The individu l m y use st tus symb ol to impress others (others ide l self-concept) but m y resist from using them whenever there is situ tion where the individu l feels others do not m tter (p erson l discretion ry time/leisure etc. vis--vis profession l work). M rketers co uld use such psychogr phic inform tion with timestyles (how individu ls spend th eir time) to come out with ppropri te ppe ls for products nd services (v c ti on nd week-end c rs re ex mples of c tegories where these kinds of orient tion re likely to be useful). (c) Expected self-im ge - this kind of im ge is betwe en ctu l nd ide l self-im ges. It is likely to be useful to m rketers bec use ch nging the self-im ge r dic lly tow rds the ide l im ge would be difficult nd expected self-im ge is one which consumers could identify with. A typic l ex mp le is the dvertisements of computer educ tion institutes, which ttempt to dr w prospective consumers for their courses gener lly r nging from few weeks to t wo ye rs. Though there is n element of spir tion, consumers feel it le ds to situ tion which is stepping stone (completion of the course to get job) r t her th n the re lis tion of their dre ms (the ultim te ide l self- im ge). Needs is feeling or desire for something, which is l cking nd through perform ing v rious ctivities to get the feeling of l cking remov l nd thus become s t isfied. Types of Need Physiologic l (or prim ry) needs Psychologic l needs Le rned (second ry or cultu r l) needs For given t rget segment, the short term spir tions m y reflect ctu l self-c oncepts nd the long term ones the ide l selfconcepts. Copy Right: R i University 11.623.3

during the e rly eighties, w s perh ps one of the e rly br nds in the Indi n con text to cre te br nd person lity using the power of self- concept. The Spirit of Freedom nd Ch rms is the w y you re were some of the punch lines in the dv ertisement of the br nd, which fe tured young models. In order to dd to the cl ims bout freedom they h d p ck ged the br nd in the p ck, which c rried denim t ype of design. This w s the time when denim, which h s its origin in the US, w s getting ccepted in the Indi n context for its function l nd symbolic ppe ls. The lifestyle type of dvertising nd the ssoci tion (norm lly ssoci ted in t he West with c su lness nd freedom) m de the br nd n inherent p rt of the yout h culture during its time. The br nd h d used either ctu l self-concept or othe rs ctu l self-concept (how n individu l likes others to perceive him).

CONSUMER BEHAVIOUR Needs Arous l Physiologic l Cognitive Environment l Emotion l Sheths five needs Function l needs Soci l needs Emotion l needs Epistemic needs Situ tion l needs McCLELLANDS three needs theory nACH: nPOW nAFF 11.623.3 Copy Right: R i University 79

CONSUMER BEHAVIOUR LESSON 9: CONSUMER MOTIVATION CONCEPT Introduction It is import nt to underst nd fully why people might w nt to buy your product or use your service in order to better design the product nd communic te relev nt benefits. For th t m tter you c n t ke your own ex mple, nd see why you buy wh t you buy? Note th t for existing products, different people m y seek different benefits from the s me product or though seeking the s me benefits m y reg rd t hem with differing degrees of import nce. For inst nce, much computer dvertisin g h s been criticised s pl cing excessive emph sis on st tements bout h rdw re specific tions r ther th n telling people wh t the computer ctu lly c n do for them. For some knowledge ble people st tement of specific tions m y be e sily interpreted in terms of benefits while for others, perh ps new to computers, su ch inform tion m y be me ningless. Note lso th t if new product is f r remove d from peoples r nge of experience, it m y be difficult for them to rticul te th e benefits they perceive such product providing. Other techniques th n simply sking them m y need to be used in such c ses. The benefits consumer m y seek from product m y v ry depending on the situ tion in which the product is to be used. For inst nce consumer m y ppro ch the purch se of bottle of wine in quite different w y when the bottle is for own use r ther th n to be given s gift to host t p rty. In the second inst nce the benefit sought from the bottle m y well be to ct s symbol of the strength of friendship between host nd guest, r ther th n for its t ste. In this lesson we will be looking t the difference between motives nd motiv tion, nd the process of motiv tion. In the next sections we will be looking t Customer Involvement nd V lues nd how the y ffect the motiv tion st tus of consumers. ctiv tes, or moves nd directs or ch nnels beh viour tow rds the go l. Motiv ti ng: This implies n ctivity eng ged into by n individu l, by which he or she w ill ch nnelise the strong motives in direction th t is s tisf ctory. Motiv tio n: Motiv ting c n be described s the driving force within individu ls th t impe ls them into ction. For inst nce, t the b sic level, our body h s need (s y hunger), which will tr nsl te into drive (here the drive will be to obt in foo d) nd the go l will be to s tisfy the need (in this ex mple to fee full in the stom ch). This c n be illustr ted s under in figure 3.1 Need Action S tisf ction Fig 3.1 Need, ction nd s tisf ction 1.1 Emotion l Versus R tion l Motives Tr d ition lly, the term r tion lity is ssoci ted with persons who re c refully wei gh the pros nd cons of ll the ltern tives nd then choose the one th t gives them the gre test utility. We c n s y th t consumers who re r tion l gener lly select the go ls fter scert ining the v rious objective criteri such s size, weight price etc. As opposed to this, emotion l motives re those go ls, which re selected on the b sis of emotions involvement. Most of the time, we select s uch go ls purely on the b sis of emotions involvement. 1.2 Positive or neg tive M otiv tion Motiv tion c n be either positive or neg tive. A positive motiv tion h ppens when n individu l experiences driving force tow rds n object or perso n or situ tion. This is lso c lled person motiv tion. On the other h nd, driv ing force compelling the person to move w y from someone or something will be k nown s neg tive motiv tion. We c n expl in the difference between positive nd neg tive motiv tion better if we t ke n ex mple. Lets s y one of our students R jesh, joins n org nis tion s n executive. After some time he gets promoted, nd tr nsferred to new pl ce. He then join the loc l club ( positive go l) so s to g in soci l recognition nd m ke new friends. His wife m y join the kitty p rties held by other executives wives to void neg tive go l (ridiculed by ot hers s n unsoci l person). So we see in the bove ex mple how both positive n

Objectives After studying this lesson you should be ble to: Expl in motiv tion. Underst nd positive nd neg tive motiv tion. Expl in the mot iv tion process Discuss consumer involvement Apply consumer v lues 1. Motives nd Motiv tion Now th t we know bout needs nd w nts in det ils from the l st lesson, we need to now move on the motiv tion. But before going into n in-depth discussion on t hese, we will first underst nd the distinct me nings of the three interrel ted t erms motives, motiv ting, nd motiv tion.

80 11.623.3

Motives: Motives give direction to hum n beh viour. We c n s y th t n inner st te th t energizes, Copy Right: R i University

motive is

d neg tive go ls c n motiv te

persons beh viour.

2. Consumer Motiv tion The study of consumer motiv tion essenti lly ddresses the question: Why do peopl e shop? The nswer, re lly, is th t people shop for v riety of re sons nd it i s very difficult to m ke gener liz tions. Shopping for food c n, on one level, i s seen s s tisfying some b sic surviv l need. The problem with th t, however, i s th t most of us buy f r more food th n we would ctu lly need for b sic subsis tence nd m ny of the items we purch se in superm rket re luxuries (rel tively spe king). One of the most influenti l studies of consumer motiv tion is th t co nducted by T uber (1972). According to T uber, there re two m in c tegories of motiv tion for shopping: Person l Motives Role Pl ying some shopping ctivities re ssoci ted with p rticul r role in society (housewife, mother, student, et c). shopping c n be form or recre tion, or n esc pe from d ily routine. shopp ing c n be mood-rel ted, for inst nce where people eng ge in ret il ther py to che er themselves up or llevi te depression. shopping is n ide l w y to le rn bou t new f shions nd trends. for some people, stroll round the m ll c n be thei r m in form of exercise. shoppers often report th t they enjoy h ndling merch nd ise, the sounds of b ckground music, the scents of perfume counters, etc, nd vi sit stores or m lls to indulge in this. people enjoy the opportunities for soci l inter ction with friends, str ngers, s les st ff, etc. cert in shops llow cus tomers mix with key reference groups; e.g. people with sh red interests, members of soci l c tegory they either belong to or spire to, etc. shopping experien ces re sometimes seen s w ys of comm nding respect nd ttention; e.g. during encounters with s les st ff. The bove c tegories re by no me ns mutu lly exclusive. Some 70% of the popul t ion visits shopping m ll t le st once per week nd they re li ble to do so f or v riety of re sons t ny one time. Shopping is cert inly f r more th n mer ely going to store to buy product one needs or w nts people often go to the m ll with no intentions of spending ny money t ll! Activity 1 Wh t w s the l st item you purch sed in store? Did you go shopping specific lly to look for i t? Why did you buy it? Who w s involved in you purch sing decision? Were you h p py with the decision you m de? Exercise: M ke list of ll the things you notic ed l st time you went shopping. Include nything t ll th t crosses your mind, from things you ctu lly s w or did to things you felt. S ve the list for l ter! Motiv tionThe driving force of ll hum n beh viour CONSUMER BEHAVIOUR Diversion DriveAn intern l st te of tension th t produces ctions purported to reduce th t tension Go l-objectSomething in the extern l world whose cquisition will reduce the tension Self-Gr tific tion A very popul r definition of motiv tion is: Motiv tion is process th t st rts with physiologic l or psychologic l deficiency or need th t ctiv tes beh viou r or drive th t is imed t go l or incentive. (Fred Luth ns) Le rning Physic l Activity 3. The process of Motiv tion

 Appro ch motiv tionDesire to tt in go l object Avoid nce motiv tionDesire to pr otect oneself from n object Wh tever the direction, motiv tion m nifests in thr ee f cets: needs, emotions nd psychogr phics. Stimulus Sensory Stimul tion Soci l Motives Soci l Inter ction Drive/ rous l Cognitive Autonomic (physiologic l) Emotive Feedb ck Peer Affili tion Outcome Experience of new st te S tisf ction St tus & Authority Identific tion of go ldirecte beh viour

Beh viour Appro ch or void nce Fig 3.2 A model of the motiv tion process 11.623.3 Copy Right: R i University 81

Ple sure of B rg ining some shoppers love to h ggle, w y of obt ining goods t better price or of priding oneself on the bility to m ke wise purch ses.

CONSUMER BEHAVIOUR Substitute go ls Frustr tion 1 Needs 2 W nts 3 tension M rketing stimuli c n induce positive or neg tive moods: Ambience of store or se rvice delivery f cility Deme nour of s lesperson Sensory fe tures of the product Tone nd m nner of dvertising Content of mess ge from s lesperson or d. 4 Action or Beh viour 5 S tisf ction 6 Go l Hedonic Consumption The use of products/services for intrinsic enjoyment r ther th n to solve prob lem in the physic l environment Hedonic consumption cre tes ple sure through the senses: Sensory ple sure from bubble b th Aesthetic ple sure from n origin l work of rt Emotion l experience from sc ry movie Fun nd enjoyment from pl y ing sport. P use for Thought # 1 How involved with the product re most prospect ive buyers in the t rget m rket segment? Involvement is used here in more prec ise w y th n in everyd y l ngu ge nd refers to the degree to which people reg r d the product s import nt nd person lly relev nt. As indic ted in the cl ss, t he more involved person is with product, the more likely they re to eng ge ll the st ges of the PDP nd expend time nd effort on m king choice. Convers ely the less involved they re, the more likely it is th t they will do less se rching nd less ev lu tion of ltern tives. The implic tions of this re signifi c nt. If people will do only sm ll mount of se rching for inform tion you wil l h ve n dv nt ge if you provide them with relev nt inform tion nd m ke it v il ble to them in n ppropri te w y nd your competitors do not. For inst nce, it m y be highly benefici l to offer inducements to s lespeople in ret il outle ts to provide inform tion bout your br nd if th t inform tion lone is l rgely ll th t is going to be used to decide which to purch se. Altern tively one migh t try to influence the degree of involvement people h ve with product. For ins t nce the link ge between toothp ste nd c vity prevention cre ted through dverti sing nd the dvice of dentists is n ttempt to incre se the import nce people tt ch to using toothp ste. 5b Frustr tion 6b Substitute Go l 7 Defense Mech nism Aggression R tion liz tion Regression Withdr w l Projection Identific tion Identific tion Repression Fig 3.3 Needs S tisf ction ch in Defense mech nisms ( ggression, r tion liz tion, regression, withdr w l, Projecti on. Autism, Identific tion 4. Involvement Next we move on to the concept of Involvement nd how it helps motiv te consumer s to t ke ny decision. But, wh t ex ctly is Involvement?

Success

nd f ilure influence go ls

Customer Moods Moods

re emotions felt less intensely nd re short-lived.

 A persons perceived relev nce of n object b sed on inherent needs, v lues, nd i nterests. The motiv tion to process inform tion, or The degree of person l relev nce of n object, product or service to n individu l. Enduring: the degree of i nterest on n ongoing b sis Situ tion l: the interest in specific situ tion/occ sion Deep Involvement

4.1 Types of Involvement Product involvement: When we re involved more with the product or service. Adve rtising involvement: When we re involved with the promotion mess ge or specific lly the dvertisement of the product or service. Purch se situ tion involvement : IN this c se we re involved mostly with the situ tion of the purch se r ther th n the product or service itself, or dvertisement for th t m tter

82 Copy Right: R i University 11.623.3

Needs nd go ls re const ntly ch nging Needs emerge s old needs re s tisfied

re never fully s tisfied New needs

4. The Dyn mic N ture WE c n s y th t motiv ch nging in re ction ner we s y th t motiv :

of Motiv tion tion is highly dyn mic concept, bec use it is const ntly to life experiences. To put it in more comprehensive m n tion h s dyn mic n ture bec use of the following re sons

Deep involvement is ng b sis.

customers extreme interest in

product/service on n ongoi

Activity 1 Dr w out five ex mples for e ch of the three types of involvement from your d il y life. When you choose w tch, it is not big de l if you m ke mist ke. It is re ll y nnoying to purch se w tches th t re not suit ble. If, fter I bought w tch , my choice proves to be poor, I would be re lly upset. Whenever one buys w tc h, one never re lly knows whether they re the ones th t should h ve been bought . When I f ce shelf of w tches, I lw ys feel bit t loss to m ke choice . CONSUMER BEHAVIOUR Ag in, to qu ntify the me sure we c n use the v rious types of sc le th t we h v e studied before in ch pter 2. For ex mple, in me suring involvement for buying bre d: Me suring Involvement To Me Sliced Bre d Is: 1. 2. 4.2 Conceptu lizing Involvement Import nt___:___:___:___:___ unimport nt Boring___:___:___:___:___:___:___ inter esting Relev nt___:___:___:___:___:___:___ irrelev nt Exciting:___:___:___:___:_ __:___ unexciting Me ns nothing :___:___:___:___:me ns lot to me Appe ling__:_ __:___:___:___ un ppe ling F scin ting___:___:___:___:___:___ Worthless:___:___: ___:___:___:___ mund ne v lu ble 3. 4. 5. 6. 7. 8. 9. Person f ctors Antecedents needs, import nce, interest, nd v lues Involvement with ds, produc ts Results With ds counter rguments, effectiveness of ds With products import nce of pro duct cl ss, perceived differences in ttributes, preference for p rticul r br nd . Involving:___:___:___:___:___uninvolving 10 not needed___:___:___:___:___needed Str tegies to Incre se Involvement At the end, we c n identify the following str tegies to incre se consumer involvement with your product/service; dvertisements or purch se situ tion: Object or Stimulus f ctors Antecedents differenti tion of ltern tives, source of communic tion, content of communic tion Involvement with ds, products Results With ds counter rguments, effectiveness of ds With products import nce of pro duct cl ss, Appe l to consumers hedonic need Use novel stimuli Use prominent stimuli Include

celebrity endorsers Build ongoing rel tionship with consumers perceived differences in ttributes, preference for p rticul r br nd. Situ tion l f ctors Antecedents purch se/use, occ sion Involvement with ds, purch se deci sions Results

With ds counter rguments, effectiveness of ds With purch se decision influenc e of price on br nd choice, mount of inform tion se rch, time spent deliber tin g ltern tives, type of decision rule used in choice.

4.3 Me suring Involvement Let us t ke some ex mples from re l life to underst nd how to m ke Involvement me sur ble. For inst nce, If you t ke the situ tion of buying w tch, how involved do you get? C n we me sure it? Let us look t the f ollowing st tements: 11.623.3

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Instrument l v lues. Go ls endorsed bec use they re needed to v lues (e.g., Beh ving honestly, ccepting responsibility).

chieve termin l

End st tes desired by members of

culture (e.g., H ppiness, wisdom)

5. V lues Wh t re v lues? V lues re b sic lly ide ls bout wh t is desir ble. V lues g in of two b sic types: Termin l v lues nd instrument l v lues. Termin l V lues.

re

 CONSUMER BEHAVIOUR List of V lues (LOV). Nine termin l v lues or go ls for which we strive Termin l v lues I. Self-respect Instrument l v lues II. Excitement III. Being well respected IV. Self-fulfillment V. Sense of ccomp lishment VI. W rm rel tionships with others VII. Security VIII. Fun nd enjoymen t with others IX. Sense of belonging 5.1 V lues nd ttributes L ddering Process Technique th t tr ces link ges between consumers v lues nd the product ttrib utes WE will underst nd the l ddering process with the help of the following: Concrete ttributes Psychologic l Consequences Abstr ct ttributes Function l consequences Fig 3.5 the exp nded model Self respect Termin l v lues He lthy, better ppe r nce Instrument l v lues B sic model Exp nded model Ex mple Attributes Psychologic l Consequences Dont get f t (Un ttr ctive) Consequences V lues Fl vored chip Concrete ttribute strong t ste Abstr ct ttributes E t less Function l consequen ces Fig 3.4 the b sic model The b sic model bove shows how ttributes in product le d to consequences nd then fin lly to the v lues. Let us now underst nd the me ns end ch in model in d et il with the help of n ex mple s shown in the PowerPoint slide. Me ns - End Ch in Model If we t ke n ex mple of sn cks n med, He lthy Choice. Lets s y th e m in ttributes re Low f t, m ny fl vors, nd high qu lity. As direct conse quence of these ttributes, we c n s y th t low f t would le d to he lthy; m ny fl vours would me n v riety of choices; nd high qu lity would me n gre t t st ing. Now the question is to link these consequences to the end v lues. S y for i

nst nce, the consequence of he lth could le d to v lue of self-respect nd Wis dom; gre t t sting could le d to h ppiness or ple sure. Now th t we underst nd t he me ns end ch in model let us look t the exp nded version of the b sic model. Fig 3.5 the exp nded model Now, wh t we will do is look t the ex mple of fl voi red chips s sn cks nd try to put in the expn ded model. It m y look somethin g like this. Self respect Termin l v lues He lthy, better ppe r nce Instrument l v lues Psychologic l Consequences Dont get f t (Un ttr ctive) Fl vored chip Concrete ttribute strong t ste Abstr ct ttributes E t less Function l consequen ces Fig 3.5 the exp nded model 84 Copy Right: R i University 11.623.3

Thus we see how product ttributes c n be linked fin lly to instrument l nd ter min l v lues. Attribution Applic tions Advertisement. You see n d m king strong product cl ims. You ttribute it to t he f ct th t the product is re lly good. It is only n d nd th t the firm is e x gger ting. Purch se situ tion. You re buying product with lots of dd-on fe tures. The s lesperson recommends higher price model with dded fe tures. You ttribute it to the f ct th t the s lesperson w nts you to h ve the best model. More commission for the s lesperson. Tod y, when we look t the glob l m rket, we need to re lise th t t the most b sic level ll hum n beings sh re common physiologic l nd s fety needs s expl i ned by Abr h m M slow in his hier rchy of needs. Wh t sep r tes one customer in on e p rt of the world from nother somewhere else re the complex soci l, cultur l nd esteem needs e ch of them h s, depending upon the st ge t which the civili s tion/ n tion is in the process of development. And despite centuries of techno logic l development, these needs h ve rem ined s cruci l s ever. At best they h ve undergone ch nges or modific tions due to cultur l nd soci l processes. Th e re l ch llenges for br nd m n ger come when he h s to m ke the consumer w r e bout the product/service offered using distinctive p ttern, perh ps with n me, logo or colour, so th t the str tegy en bles the customer to correctly ide ntify nd choose the br nd from cluttered b sket. The br nds strength is not co nfined to the degree of recognis bility nd the qu lity of the product offering. Strong glob l br nds c ter to strong emotion l needs. A br nd such s Nike t lk s bout believing in ones limitlessness, while one such s Rin spe ks bout destr oying dirt, which is presented s thre t th t disrupts the ne t orderly world th t we live in. A strong glob l br nd while ddressing fund ment l hum n moti v tion c ters to this motiv tion in distinctive w y. It is driven by distinc tive br nd ide , with the product being seen in the m rketpl ce merely s n exp ression of the br nd ide . The product merely tr nsl tes the br nd ide into t ngible form, with fe tures nd styles, which is delivered to the consumer. For ex mple, the br nd ide ssoci ted with Dettol is the complete protection it pro vides users from dirt nd infection. The comp ny h s dopted this ide cross th e globe irrespective of the cultur l dom in it t rgets. Consumers in ll these c ountries experience the br nd ide only through the str tegic ctions of the br nd in the m rketpl ce. These br nds send m rket sign ls consistent with the ide they st nd for. St rting from the t ngible ttribution of the br nd through the product to the integr ted m rketing communic tion, the br nd consistently sends the s me sign l in every m rket. The more consistent this m rketing sign l, the cle rer the br nd im ge cross the country for glob l br nds. Rese rch suggests th t strong br nds re built over time. Trust in br nd gets built over l rg e number of inter ctions cross r nge of situ tions. So strong glob l br nd is like network of complex psychologic l nd m rket structur l issues th t inc lude situ tions, ssoci tions, beh viours, feelings nd symbols held together by strong nd powerful centr l ide . CONSUMER BEHAVIOUR M n geri l Applic tions of Attribution Theory At the end we summ rise with the i mport nt m n geri l pplic tions of the ttribution theory. The m jor pplic tio ns re to: Develop believ ble ds. esolve product problems. Assess s les promotions

Article #1 T king Br nd Glob l For

br nd to be truly glob l, it h s to

ddress

fund m

DEVELOPING glob l br nd l rgely depends on the br nds bility to explore fresh venues nd sust in its competitive dv nt ges in terms of economies of sc le n d productivity. A glob l br nd is one th t is perceived to reflect the s me set of v lues round the world nd removes n tion l b rriers nd linguistic blocks w hile being m rketed intern tion lly. The b sics of br nd building pply to glob l br nding str tegy lso. For br nd to become successful, genuine dem nd or psychologic l need must exist in the t rget m rket. A successful m rketing str tegy h s two options in cre ting m rket presence. I t c n kill competition by const nt communic tion nd dvertising or use communic tion to m ke customers experience the br nd nd discrimin te in its f vour. A s trong glob l br nd cre tes ssoci tions in the consumers mind to m ke them see di fferently by guiding consumers to tt ch distinct function l nd emotion l benef its nd ppropri te me nings nd beliefs to the br nd. As response to this eff ort, the consumer is willing to p y premium for these br nds only if they repr esent dded v lue whether s superior qu lity or cle r emotion l benefit. 11.623.3 Copy Right: R i University 85

ent l consumer need, while consistently reflecting the s me set of v lues the world.

cross

CONSUMER BEHAVIOUR Brit nni s connection to he lth is known the world over. Br nd communic tion shou ld lso communic te nd connect to people. The links between Brit nni nd he lt h re felt ll over the world. This connectivity is the r tion l justific tion f or people to overcome the extr spending required to cquire the br nd. Successf ul br nds live beyond gener tions due to this bility to connect. It is lso not just question of s tisfying customers of different countries with v ried cult ur l b ckgrounds, but lso one of connecting with new gener tions of consumers w ith new sets of v lues, hopes nd mbitions. For br nd to be successful glob l ly, it h s to click cross the vertic l cl ss of gener tions nd horizont l m ss of glob l m rkets. In glob l economy, org nis tions must re ch customers in m rkets f r from their home b se. Strong br nds ct s mb ss dors when comp nies enter new m rkets or offer new products. They lso help in rectifying the corpo r te str tegy to define which initi tives fit within the br nd concept. Professi on l services comp nies such s Andersen Consulting re-br nded s Accenture h ve re lised th t conveying sense of trust nd sh red mission is s import nt s technic l competence in winning multi-million doll r contr cts cross the globe. Inform tion nd the medi h ve m de us ll glob l citizens. This presents n or g nis tion with the opportunity to bro den m rket scope by intern tion lising pr oduct nd service m rketing in order to re p the benefits of economies of sc le. Issues in Developing Glob l Br nd There re v rious issues t the org nis tio n l level th t influence the glob l br nding str tegy. There re two str tegic p r meters ffecting decisions on glob l br nding. They re the rel tive strength of glob lis tion pressure in th t p rticul r industry nd the degree to which t he comp ny h s intern tion lly tr nsfer ble ssets.

86 Copy Right: R i University

If glob lis tion pressures re we k nd the comp nys ssets including the br nd re not tr nsfer ble, then the comp ny need not go in for glob l br nd. It shou ld concentr te on cre ting higher br nd v lue in the domestic m rket. If glob lis tion pressures re we k nd the comp ny h s tr nsfer ble ssets, then it sho uld look t extending these to simil r m rket using glob l br nd. The home dv nt ge due to strong br nd proposition c n be used s pl tform for buildin g br nds in selective m rkets. By this the comp ny c n re p dded revenue nd sc le economies with v lu ble intern tion l m rketing experience. This c tegory of glob l br nd extension goes in for looking t n logous intern tion l m rkets t h t re simil r to the home m rket in terms of consumer preference, geogr phic p roximity, cultur l simil rity or even government regul tion. B j j Autos extensio n to the South Asi n m rket for its three-wheelers is n ex mple of br nd succes s in n n logous m rket. The success of Indi n films with typic l emotion l b r nding is nother ex mple of br nd success. Comp nies c n look for countries wi th common cultur l nd linguistic herit ge. The success of R m n nd S g rs seri l R m y n in the Asi n m rket is nother ex mple. The story of Asi n P ints in the Indi n m rket h s m de it to go in for glob l br nding in countries such s Nep l, Fiji nd Kore with its typic l low cost formul tions nd service deliver y propositions to support the br nd n me Asi n P ints. Comp nies from emerging m r kets c n lso go glob l nd l unch glob l br nds. However, for h ving glob l b r nd one h s to t ke into consider tion different set of opportunities nd con str ints. The low cost of w ges nd proximity to r w m teri ls lso gives domest ic comp nies competitive dv nt ge to go glob l. If these pl yers c n overcome the deficiencies in skills nd fin nci l resources, then l unching glob l br nd will be difficult proposition. The success of Infosys nd Wipro s br nds i n the glob l m rket re ex mples of glob l br nding successes in the hi-tech ind ustry. However, there re m ny complex f ctors th t c n ffect glob l m rketin g str tegy. These include the n ture of the product (for ex mple, consumer dur b le products being

11.623.3

more suited to st nd rdis tion th n non-dur bles), fe tures of p rticul r m rk et nd even org nis tion l history. Common Appro ches to Glob l Br nding The dev elopment of st nd rdised m rketing str tegies c n v ry dr m tic lly. For ex mple , should the str tegy be b sed on the common fe tures of tr nsn tion l m ss m rket or upon the identific tion of common clusters in different countries? The p roblem for multin tion l org nis tion is th t it oper tes in number of count ries nd djusts its products nd pr ctises in e ch t subst nti l cost. So, by st nd rdising elements of the m rketing mix through n intern tion l str tegy, t he rgument is th t efficiency c n be gre tly improved. But question m rks hover over the extent to which uniform m rketing str tegy c n be implemented. A gre t de l of diversity exists in geogr phic l m rkets in terms of physic l conditi ons nd m rketing infr structure, not to mention politic l nd cultur l issues w hich m y h ve n imp ct t the br nd nd dvertising level. Cultur l disp rities c n be m jor stumbling block for the gener tion of tr nsn tion l br nd n mes. Initi tives such s the World Tr de Org nis tion re obvious ttempts to comb t some of these problems by the remov l of n tion l differences nd the cre tion of borderless world. The ide is th t this will en ble the r tion lis tion of product mixes to elimin te br nds ge red tow rds p rticul r loc l requirements. Technology - A C t lyst to Product St nd rdis tion The development of the Intern et nd s tellite television h s p ved the w y for cross-bound ry dvertising nd promotion. But m n gement experts h ve lso recognised th t b sic simil rity in t stes between countries is n import nt f ctor. Signific nt common lities ex ist in J p nese, Americ n nd Europe n lifestyle p tterns nd consumer dem nds. It is often rgued th t incre sing tr vel nd electronic communic tions will le d to the h rmonis tion of such t stes nd preferences. V rious f ctors ffect th e extent to which comp nies dopt uniform glob l br nding ppro ch. There re sever l types of tr nsn tion l ppro ches th t c n be dopted. The geocentric ppr o ch is of interest here s it m y be viewed s being synonymous with the term gl ob l br nding whereby comp ny ttempts to identify simil rities mong m rkets nd implement str tegies with st nd rd components. However, st nd rdis tion nd g lob lis tion re not necess rily synonymous, s comp nies m y dopt glob l br nd ing str tegies th t c n cont in within them v rying degrees of d pt tion to loc l conditions. The st nd rdis tion of glob l br nding will t ke ccount of two b ro d dimensions the m rketing process nd the m rketing mix. In terms of the m r keting mix, the m nner in which br nd is positioned c n ffect cross-border tr nsfer bility. Price is lso key issue s it c n reinforce the position nd pe rception of br nd. Price c n v ry dr m tic lly in different countries due to t he competitive structure of the m rket nd t x tion. Therefore, subst nti l pric ing differences c n le d to different br nd str tegies being pursued. But br nd identity nd cle r, consistent mess ge cross countries c n be sserted throug h st nd rdised p ck ging. Liter ture surveys c rried out for this rticle ex mined the glob l f st-food in dustry. It w s found th t there w s v ri tion in the br nding str tegies of th e comp nies involved, despite the f ct th t m ny were striving to develop some d egree of st nd rdis tion. This seems to indic te th t the cre tion of glob l s tr tegy will meet consider ble loc l obst cles. The tr nsition of the M r thon b r nd to Snickers nd Op l Fruits to St rburst m y indic te th t glob l br nding tends to be developed increment lly. As we c n see this le ds to long est blishe d br nds in one country being s crificed in order to chieve h rmonis tion. Poin ts to Ponder CONSUMER BEHAVIOUR Dyn mic n ture of motiv tion Needs nd go ls re const ntly ch nging Substitute go ls Frustr tion 11.623.3 Copy Right: R i University

87

CONSUMER BEHAVIOUR 88 Me ns - End Ch in Model Attributes Consequences V lues Attributes Consequences V lues

Low f t f t M ny fl vors fl vors High qu lity He lthy V riety of choices choices Gre t T sting Self-respect Self-respect Wisdom Wisdom Freedom Freedom (of choice) (of H ppines s, H ppiness, Ple sure L ck of self- control Types of Involvement Product involvement Advertising involvement Purch se situ tion involvement Copy Right: R i University 11.623.3

Involvement A persons perceived relev nce of n object b sed on inherent needs, v lues, terests. He lthy Choice

nd in

CONSUMER BEHAVIOUR

Notes 11.623.3 Copy Right: R i University 89

LESSON 10: TUTORIAL You re member of n dvertising te m ssembled to develop promotion l c mp ign for new digit l c mer . Develop three he dlines for this c mp ign, e ch b sed on one of the levels in M slows need hier rchy.

LESSON 11: CONSUMER PERCEPTION UNIT II CONSUMER AS AN INDIVIDUAL CHAPTER 4: PERCEPTION We c n s y th t it is the process by which n individu l selects, org nises nd interprets inform tion received from the environment Introduction We ll know th t motiv ted person is re dy to ct. How th t person cts is inf luenced by his or her perception of the situ tion. In the s me situ tion, two pe ople with the s me motiv tion m y ct quite differently b sed on how they percei ve conditions. You m y perceive the w iters t M cDon lds s c su l nd unsophist ic ted, while your friend m y view them s spont neous with cheerful person liti es. M cDon lds is t rgeting those in the second group. Why do people h ve differe nt perceptions of the s me situ tion? All of us experience stimulus by the flo w of inform tion through our five senses: sight, he ring, smell, touch, nd t st e. However, e ch of us receives, org nizes nd interprets this sensory inform ti on in n individu l w y. CONSUMER BEHAVIOUR Sens tionAttending to n object/event with one of five senses Org nis tionC tegori sing by m tching sensed stimulus with simil r object in memory, e.g. colour Inte rpret tionAtt ching me ning to stimulus, m king judgements s to v lue nd liking , e.g. bitter t ste

One person might perceive f st-t lking s lesperson s ggressive nd insincere ; nother, s intelligent nd helpful. People c n emerge with different percepti ons of the s me object bec use of three perceptu l processes: selective ttentio n, selective distortion nd selective retention. Define perception nd its key elements. Identify the v rious elements in percept ion Expl in the perceptu l process Underst nd nd expl in sublimin l perception Differenti te between bsolute threshold nd differenti l threshold. Expl in the m rketing pplic tions of just notice ble difference (j.n.d.). Review the conce pt of sublimin l perception nd the re lity of its use. Selective Attention. People re exposed to tremendous mount of d ily stimuli: the ver ge person m y be exposed to over 1500 ds d y. A person c nnot possi bly ttend to ll of these; most stimuli will be screened out. Selective ttenti on me ns th t m rketers h ve to work h rd to ttr ct consumers notice. Select inp uts to be exposed to our w reness. More likely if it is linked to n event, s t isfies current needs, intensity of input ch nges (sh rp price drop). Selective D istortion. Even notice stimuli do not lw ys come cross in the w y the senders intended. Selective distortion is the tendency to twist inform tion into person l me nings nd interpret inform tion in w y th t will fit our preconceptions. Unfortun tely, there is not much th t m rketers c n do bout selective distortio n. Advertisers th t use comp r tive dvertisements (pitching one product g inst nother), h ve to be very c reful th t consumers do not distort the f cts nd p erceive th t the dvertisement w s for the competitor. A current ex mple... Sele ctive retention. People will forget much th t they le rn but will tend to ret in inform tion th t supports their ttitudes nd beliefs. Bec use of selective ret ention, we re likely to remember good points mentioned bout competing products . Selective retention expl ins why m rketers use dr m nd repetition in sending

Objectives After studying this lesson you should be

ble to:

mess ges to their t rget m rket. Remember inputs th t support beliefs, forgets those th t dont. Aver ge superm rket shopper is exposed to 17,000 products in s hopping visit l sting 30 minutes-60% of purch ses re unpl nned. Exposed to 1,50 0 dvertisements per d y. C nt be expected to be w re of ll these inputs, nd c ert inly will not ret in m ny. 1. Perception Wh t do you see?? Perception is the process of selecting, org nizing nd interpr eting inform tion inputs to produce me ning. This me ns we chose wh t info we p y ttention to, org nize it nd interpret it. Inform tion inputs re the sens ti ons received through sight, t ste, he ring, smell nd touch. Thus we c n s y th t the bove definition of perception of perception l ys emph sis on cert in fe t ures: Perception is ment l process, whereby n individu l selects d t or inform tio n from the environment, org nizes it nd then dr ws signific nce or me ning from it. Perception is b sic lly cognitive or thinking process nd individu l cti vities; emotions, feelings etc. re b sed on his or her perceptions of their sur roundings or environment. Perception being n intellectu l nd cognitive process will be subjective in n ture. 3. Elements of Perception WE c n describe perception s lso how we see the world round us. S y for inst nc e, you nd your friend Smit m y be The key word in the definition of perception is individu l. 90 Copy Right: R i University 11.623.3

exposed to the s me stimuli under the pp rent conditions, but how both of you r ecognize, select, org nize nd interpret them is highly individu lized process b sed on e ch of your needs, v lues, nd expect tions. The influence th t e ch of these v ri bles h ve on the perceptu l process nd its relev nce to m rketing , will be explored in some det il. First, however, we will ex moine some of the b sic concepts th t underlie the perception process. Ad pt tion refers specific lly to getting used to cert in sens tions, becoming cc ustomed to cert in level of stimul tion. . Sensory d pt tion is problem th t c uses m ny dvertisers to ch nge their dvertising c mp igns regul rly. CONSUMER BEHAVIOUR Elements of Perception Sens tion Sens tion is the immedi te nd direct response of the sensory org ns t o stimuli ( n dvertisement, p ck ge, nd br nd n me). A stimulus is ny uni t of input to ny of the senses. Sensory receptors re the hum n org ns (i.e., t he eyes, e rs, nose, mouth, nd skin) th t receive sensory inputs, sight, sound, smell, t ste, or touch. Hum n sensitivity refers to the experience of sens tion . Sensitivity to stimuli v ries with the qu lity of n individu ls sensory recept ors nd the mount or intensity of the stimuli to which he/she is exposed. Sens tion itself depends on energy ch nge, the difference of input. Thus, const nt environment, whether very busy nd noisy or rel tively quiet, would provide litt le sens tion bec use of the l ck of ch nge, the consistent level of stimul tion. As sensory input decre ses, the bility to detect ch nges incre ses. This bili ty of the hum n org nism to ccommod te itself to v rying levels of sensitivity s extern l conditions v ry not only protects us from d m ging, disruptive, or i rrelev nt bomb rdment when the input level is high but h s import nt implic tion s for m rketers. M rketers try to incre se sensory input in order to cut through the d ily clutte r consumers experience in the consumption of dvertising. Some incre se sensory input in n effort to cut through the dvertising clutter. Other dvertisers try t o ttr ct ttention by decre sing sensory input. b. c. d. Some dvertisers use s ilence (the bsence of music or other udio effects) to gener te ttention. Some m rketers seek unusu l medi in which to pl ce their dvertisements in n effor t to g in ttention. Some use scent rese rchers to enh nce their products with unique smell. P ck ge designers try to determine consumers bsolute thresholds to m ke sure th t their new product designs will st nd out from competitors p ck ges on ret ilers shelves. Under conditions of const nt stimul tion. i.e., when n individu l is g etting continuous exposure to cert in objects or events, then in spite of the b solute threshold incre sing, due to the doption process, the stimuli will ce se to m ke positive impression. It is due to this sensory doption problem th t m ny television dvertisers ch nge their dvertising c mp igns fter some time. For ex mple, the dvertisement showing the evil cr ckle of the h r e s o e p r o S t n( v l Onid T.V h s been o n d p k s e s n De i )o f ch nged to more humorous nd synthetic nnouncement by n irhostess, by Ogilvy & M ther (O&M), the dvertising gency h ndling this ccount. The Absolute Threshold The lowest level t which n individu l c n experience sens tion is c lled the bsolute threshold. The point t which person c n detect the difference betwe en something nd nothing is th t persons bsolute threshold for the stimulus. For ex mple, you re going with your friend R vi on long drive nd you re hungry. Wh en both of you first spot rest ur nt, it is s id to be your bsolute threshold . If both of you spot the rest ur nt t different times, you re s id to h ve di fferent bsolute thresholds. Under conditions of const nt stimul tion, such s d riving through corridor of ho rdings bsolute threshold incre ses (th t is, the

senses tend to become incre singly dulled). The Differenti l Threshold The minim l difference th t c n be detected between two stimuli is c lled the di fference threshold or the j.n.d. (just notice ble difference). A 19th century Ge rm n scientist n med Ernst Weber discovered th t the j.n.d. between two stimuli w s not n bsolute mount, but n mount rel tive to the intensity of the first stimulus. Webers l w st tes th t the stronger the initi l stimulus, the gre ter the ddition l intensity needed for the second stimulus to be perceived s diffe rent. Also, n ddition l level of stimulus, equiv lent to the j.n.d., must be dded for the m jority of people to perceive difference between the resulting s timulus nd the initi l stimulus. Webers l w holds for ll senses nd lmost ll levels of intensity. 11.623.3 Copy Right: R i University 91

Ret ilers use the principle in reducing prices. M rkdowns must mount to t le s t twenty percent to be noticed by shoppers. Why would we future m rketers need t o study the concept of JND? M rketing Applic tions of the J.N.D. Let us look t the import nt pplic tions of JND for m rketers: 1. M nuf cturers nd m rketers ende vor to determine the relev nt j.n.d. for their products so th t: . Neg tiv e ch ngesreductions or incre ses in product size, or reduced qu lity re not re dil y discernible to the public. b. So th t product improvements re re dily discern ible to the consumer without being w stefully extr v g nt. M rketers use the j.n .d. to determine the mount of ch nge or upd ting they should m ke in their prod ucts to void losing the re dily recognized spects of their products To better compete in glob l m rketpl ce th t h s been r dic lly ltered by computer tech nology, m ny comp nies re upd ting their corpor te logos to convey the notion t h t they re timely nd f st-p ced nd t the top of their respective product cl ss. . M ny fe ture some element th t conveys motion stre king, sl shing, nd or biting. 4. Although some comp nies m ke minor ch nges (below the j.n.d.) to prom ote continuity, others h ve deliber tely ch nged their tr dition l block letteri ng nd d rk colors in f vor of script typef ces, bright colors, nd hints of ni m tiont king their cues from pop icons like MTV. M rketers w nt to meet or exceed the consumers differenti l threshold so th t they re dily perceive the improveme nts m de in the origin l product. When might m rketer w nt us to notice ch n ge or difference (w nt the ch nge to be bove JND)? 2.

CONSUMER BEHAVIOUR 2. 3. Sublimin l Perception People re lso stimul ted below their level of conscious w renessthey c n perce ive stimuli without being consciously w re of it. The threshold for conscious w reness ppe rs to be higher th n the bsolute threshold for effective percepti on. Stimuli below the limen of conscious w reness, too we k or brief to be consci ously seen or he rd, m y be strong enough to be perceived by one or more recepto r cells. This is sublimin l perception. In the l te 1950s there w s stir when consumers were being exposed to sublimin l dvertising mess ges they were not w re of receiving. Mess ges were supposedly persu ding people to buy goods nd se rvices without their being w re of it. The effectiveness of the concept w s tes ted t drive-in the ter by fl shing the words e t popcorn nd drink coke on the sc reen during the movie, so quickly th t the udience w s not w re of it. In si x-week test, popcorn s les incre sed 58 percent nd coke s les 18 percent. No sc ientific controls were used, nd results were never replic ted. 5. Activity 1 1. 92 Copy Right: R i University 11.623.3

When might m rketer w nt us NOT to notice nge to be just below JND)?

ch nge or difference (w nt the ch

CONSUMER BEHAVIOUR There is some indic tion th t sublimin l dvertising m y help modify ntisoci l beh vior by c lling for gener lized beh vior ch nge. In summ ry, we c n s y th t some evidence th t sublimin l stimuli m y influence ffective re ctions, there is no evidence th t sublimin l stimul tion c n influence consumption motives or ctions. A recent review of the evidence on sublimin l persu sion indic tes th t the only w y for sublimin l techniques to h ve signific nt persu sive effect would be through long-term repe ted exposure under limited set of circumst nce s, which would not be economic lly fe sible or pr ctic l within n dvertising c ontext. 2. The N ture nd Process of Perception 2.1 N ture of Perception Inform tion processing is series of ctivities by whi ch stimuli re perceived, tr nsformed into inform tion nd stored. P R ndom E R C LowInvolvement E P T LowInvolvement I O N Short-term Active probl em solving feelings Exposure ----------Deliber te Attention ----------------High involvement Interpret tion -----------------High involvement Memory long term stored experience v lues, decisions rules Purch se nd consumption decision Fig 4.1 Inform tion processing 11.623.3 Copy Right: R i University 93

Ev lu ting the Effectiveness of Sublimin l Persu sion To study the effectiveness of sublimin l perception, the following key issues r e import nt: There is no evidence th t sublimin l dvertising works! Current res e rch is b sed on two ppro ches. . b. The first theory is th t const nt repeti tion of very we k stimuli will h ve increment l effects. A second ppro ch is b sed on sexu l stimul tion through sexu l embeds.

As we see in figure 4.1 bove, there re four m jor st ges in this inform tion-p rocessing model, viz., exposure, ttention, interpret tion nd memory. It is the first three, which constitute the perception process. Exposure occurs when st imulus such s n dvertisement comes within r nge of persons sensory receptor nerves-vision for ex mple. T rget customer is in proximity of mess ge when deliv ered e.g. w tching Friends when d ired. Attention occurs when the receptor nerv es p ss the sens tion on to the br in for processing. T rget customer lloc tes cognitive processing c p city i.e. p ys ttention to d. Interpret tion is the s signment of me ning to the received sens tions. T rget customer interprets the m ess ge i.e. mess ge sent = mess ge received Thus, we see th t consumer perception n be ppro ched from three v nt ge points A. Sensory mod lities: The effects of the five senses on the w y in which produ cts re perceived. B. Gest lt psychology: Gest lt psychology looks t how consum ers perceive inform tion within nd s p rt of the context in which it is presen ted. Gest lt theory is p rticul rly useful in m king decisions rel ted to dvert ising nd p ck ging. C. Consumer interpret tion The perceptu l process consists of m ny sub processes. We c n underst nd this by t king note of the input-thro ughput output ppro ch. This ppro ch is b sed on the f ct th t there is n inpu t, which when processed gives outputs. Th t is, the perceptu l inputs will compr ise of stimuli in the environment. Perceptu ll mech nism Pe tu ec is O rg nis tion Receiiv ed sellecttiion ece v e c o O Intterpret tion In er pr io n CONSUMER BEHAVIOUR Memory is the short-term use of the me ning for the immedi te decision-m king n d the longer-term retention of the me ning. T rget customer stores the dvertisem ent nd Perceptu ll inputs Pe tu ts mess ge in memory so c n be ccessed when n eeded. S timu li S 2.2 Process of Perception There is norm lly line r flow fro m exposure to memory.

Action cti Interpret tion Attention Perceptu l Inputs: The first process in the perceptu l process is the presence o f stimuli like people, objects, events, inform tion etc. Perceptu l mech nism: W e will discuss the mech nism of perception in the next lesson. Exposure Perceptu l outputs: The perceptu l outputs will be the beh viour or ctions of t he individu ls, i.e., the result nt opinions, feelings ttitudes etc. Bi ses in the Perceptu l Process Selective exposure Stimuli Fig 4.2 Perceptu l process As we c n see in the perceptu l process in fi gure 4.2 there is line r flow from exposure to memory. But, these processes oc cur virtu lly simult neously nd re cle rly inter ctive. It implies th t our me mory influences the inform tion we re exposed to, ttend to, nd the interpret tion we ssign. At the s me time, memory itself is being sh ped by the inform ti on it is receiving. Much of the interpreted inform tion will not be v il ble to

Memory F ig 4 .3 the perceptu

l process F 4 h p u pro s

Perceptu l erce

Outputs ut ut Beh viour or vi r r

Customers only llow exposure to sm ll number of the 3000 d ily m rketing comm unic tions e.g. zipping nd z pping TV commerci ls. Customers ignore ds th t do not rel te to their interests Selective ttention e.g. flipping p st m g zine ds. Selective interpret tion Customers use perceptu l distortion to m ke inform tion more congruent with existing beliefs e.g. smok er versus non-smoker interpret tions of w rnings on cig rette p cks. 94 Copy Right: R i University 11.623.3

ctive memory when the individu l needs to m ke

purch se decision.

CONSUMER BEHAVIOUR Just notice ble difference (JND)

Fig 4.4 The perceptu l le rning process mong the customer roles M n geri l uses of perceptu l processes Exposure Attention Memory Perceptu l Inputs Perceptu l mech nism Perceptu l outp uts Zipping Z pping Flipping Absolute threshold Differenti l threshold Webers L w JND Sublimin l perception Price perceptions Reference price Extern l reference price Odd-Even pricing Country-of-origin effects Perceived corpor te im ge The psychophysics of price perceptions Reference price: the price customers expe ct to p y Extern l reference price: price used by m rketers to nchor price d v nt ge E.g. comp re to Rs X Assimil tion nd contr st: customers h ve l titude of ccept nce nd rejection w hen it comes to prices Price often used s surrog te for qu lity, especi lly w hen qu lity c nnot be ssessed pre-purch se. E.g. odd pricing: Rs.9.99 is less th n Rs.10. Country-of-origin effects Bi s in customer perceptions of products nd services due to the country in which product/ service is m de

Perceived corpor te im ge Key Terms

C n be positive or neg tive Public perception of comp ny s ive or neg tive

whole C n be posit

New nd improved products must cross the JND b rrier. Assimil tion Dist nce to contr st destin tions, w it in service settings, etc. re ssimil ted or contr sted.

nd

The three Customer Roles Perception Process Gener l process User Us ge experience bi sed by prior expect tions b sed on br nd n me, price etc. P yer The pricev lue perception depends on br nd n me nd store contexts. Price v ri tions below JND re not noticed. Pric e discrep ncies from expected levels m y be ssimil ted ( ccept ble) or contr st ed (not ccept ble). Buyer Perceptions of ltern tive br nds bi sed by price, br nd n me, store, etc. Store dist nce perceptions re often bi sed. P ck ge size reductions below JND re not noticed. Store dist nces nd customer service v ri tions m y be ssimil ted or contr sted.

11.623.3 Copy Right: R i University 95

Sens tion Org nis tion Interpret tion Selective elective retention

ttention Selective distortion S

Article 1 The Power of M n ging V lue The m nner in which the consumer perceives v lue, th e ssoci tion between the benefits nd the price p id, m kes it high or low. s crifice m de by the consumer in terms of p ying price. V lue, therefore, rep resents the over ll ssoci tion between the set of benefits received by the cons umer nd the price p id by him/ her. The m nner in which it is perceived determi nes if the v lue is high or low. The point is th t different segments would require different combin tion of v lue. A consumer buying PC from the ret iler is di fferent from consumer buying PC s repl cement directly online from Dell. The v lue s perceived by lower-end consumer when he buys w tch from the uno rg nised sector ( ssembled) is different from consumer w nting to buy the Nebu l jewellery w tch from Tit n. The former would norm lly look t the function l utility, price nd to some extent the esthetic design of the w tch. The l tter t the ret il store experience, the degree to which the br nd serves his self-ex pression needs, the credibility of the ret il outlet nd the fter s les service which would be v il ble fter the s le is over when he perceives v lue. A differ ent kind of psychologic l benefit in the form of v lue could be perceived when p erceived risk is involved. A consumer shopping for re dy-m de home m y perh ps find psychologic l security in choosing br nd with gre t reput tion for bei ng trusted. This consumer h s p id more for obt ining the v lue of security nd r isk void nce. Choosing V lue Proposition C tegory ssessment needs to be done before m rketer c n choose v lue proposition. This is not only bec use of th e difference in c tegories but lso bec use s competition evolves, the v lue pr oposition could lso undergo ch nge. The choice of v lue depends on the c tego ry s well s whether it is highinvolvement or low-involvement or commodity type of product. There could be low-involvement products which m y sell bec use of i m gery ssoci tions such s col or so ps (de lt with l ter in this rticle). Co mmodity type of products re tyres, components, ntiseptic cle ning lotions, not ebooks or products where consumers buy more out of inerti th n ny involved pur ch se. Technologic l dv nces c n provide v lue to such products nd cre te pr eference for them mong consumers. B nd g is retre ding comp ny in the West wh ich uses n electronic chip in the tyre to inform the consumer bout the we r n d te r which would en ble him to get prep red for the next retre d. A technologi c lly dv nced p ck ging of frozen veget bles dds v lue to the commodity type o f offering. Choosing v lue depends on two b sic f ctors: . b. Perception of v lue in the mind of the consumer Evolving m rket structure with reg rd to the c tegory CONSUMER BEHAVIOUR Nirm , Br nd strongly ssoci ted with v lue perceptions IN tod ys competitive c ontext, it m y be worthwhile to n lyse the v rious implic tions of v lue to bot h the m rketer nd the consumer. Tod y Acur nd Lexus m y be luxury-oriented J p nese br nds but historic l n lysis shows th t the J p nese, with their invent ive imit tion, h ve been very sensitive to the v lue offered by the br nds, whet her it w s Sony, Ak i, N tion l or S nyo cross r nge of product c tegories electronic goods to cosmetics. W l-M rt, South West Airlines in the US nd Aldi, the ret iler ch in in Europe re ex mples of how br nds could succeed in n env ironment which uses v lue blended with psychologic l techniques nd tools. Nirm , T-Series nd B j j re n mes which evoke the v lue im gery in the respective p roduct c tegory. There re cert in b sic spects which should be cle r to m rket ers bout the concept of v lue. In f ct, the power of this concept lies in the f ct th t it could throw open number of segments. M rketers could t rget the ri ght segment/s depending on wh t the org nis tion is c p ble of in term of produc t/service offerings. Wh t is v lue? Contr ry to the popul r perception th t v lu e me ns low price, v lue includes set of fe tures, product benefits, services nd psychologic l benefits offered by m rketer in response to the 96

Perception of v lue: In ny c tegory consumer is f mili r with, consider tion should be given to wh t the consumer perceives s v lue ( s st ted e rlier). Thi s m y even extend beyond the ttributes of the br nd - for ex mple, s chets boug ht over period of time m y even be expensive th n l rge p ck ging of tube of f irness cre m but the consumer m y perh ps perceive v lue with reg rd to the control it gives him/her over the us ge of the product given the fford bility levels. Simil rly, sheer fford bility of p rticul r SKU (stock keeping unit) m y 11.623.3 Copy Right: R i University

provide v lue to segment of consumers - br nds such s H m m re v il ble in sm ll p cks in rur l re s. Price lso sends sign l tow rds v lue perception ( v lue me ning qu lity in this context). An exclusive showroom in the pp rel c t egory like the upm rket P rk Avenue or Levis provides the perception of high qu l ity. In cert in c ses, this m y even discour ge consumers from visiting the show room s they feel th t the offering is expensive. This segment, while perceiving high qu lity with the ssoci ted offering, is un ble to perceive v lue bec use of the price. One more ppro ch is to highlight the price in the dvertisements so th t the consumer does not think th t the price is not s high s he h d perc eived it to be. This brings the consumer closer to the ccept nce of v lue (even if cross-section of the consumers get convinced bec use of this ppro ch, the se dvertisements re benefici l). Levis nd T nishq h ve dopted this ppro ch. A prec ution the m rketer should t ke is th t this would be counter-productive i f the m jor p rt of the segment is t the higher end of the m rket. At times con sumers m y perceive v lue with reg rd to component or p rt used in the product . Puf used in Godrej br nd of refriger tors bec me m jor selling point in the p st (though it w s not the first br nd to use it). Herb l offerings m y be perc eived s products which re very s fe (which m y not be the c se in sever l c te gories). A br nd of sh mpoo cont ining chemic l m y h ve to convince consumers bout the s fety of the br nd s consumers m y perceive d m ge to h ir bec use of chemic ls involved. Sometimes offerings m y cre te confusion if the br nd doe s not cle rly communic te the offering nd its benefits. Ice-cre ms nd yoghurt h ve h d this problem in the Indi n context. Br nd n mes could cre te neg tive imp ct on the perception of consumers fter being successful. Tit n w s ssoci ted with elitist orient tion nd the comp ny h d to come out with Son t for the lower end of the m rket, which contributes signific ntly to the volume of the c omp ny). Price-benefit link ges should be cle r in the mind of the consumer, esp eci lly when new concept product is introduced. Rev w s n electric c r intro duced l st ye r nd reports indic te th t m jor p rt of the s le w s tow rds t he second c r c tegory. Peter Engl nd, the shirt br nd which n honest proposition to lifestyleone The fir st fr me of reference for the consumer is the perception of the offers pricing of the offering. If this is priced on p r or slightly lower th n the entry-level c r in the Indi n context (the no frill M ruti), it would prob bly t ke w y the of fering from the consider tion set of the first-time c r buyer simply bec use of tw o re sons - it is not tried nd tested offering, nd besides, it does not offe r the sp ce of the regul r c r without the perceived risks ssoci ted with the p urch se. Running costs ( ssuming trouble-free running b sed on technic l progres s) or the much hyped environment-friendly n ture of the product re unlikely to in fluence the perception of the buyer. This is bec use of the context in which the offering is introduced - buying green products is societ l v lue nd this conte xt h s long w y to go before it c n be criteri for m king it prerequisite to buying dur ble. Procter nd G mble h d to ch nge over to environment-frien dly p ck ging in Germ ny bec use of consumer resist nce to nything th t is not environment-friendly. Perception is l rgely dependent on the context in which pr oducts or services re introduced. Besides the core spects mentioned for n ele ctric c r, there re lso second ry perceptions which re involved in the purch se situ tion - would n electric c r be s dur ble s the convention l one? Wh t if the m nuf cturer, especi lly the pioneer, discontinues the offering (this is less likely to h ppen to tr dition l br nd of p ssenger c r nd even if this h ppens, it h ppens over period of time). Then there re int ngibles like whet her n electric c r would gener te s much reference group ppe l s th t of t r dition l one which is n ccepted st tus symbol. Imp ct of evolving m rket str ucture: The perception of v lue in the mind of the consumer evolves over perio d of time with competition. This is one of the strong re sons for m rketers to i ntroduce br nd person lity whenever possible. The ide is to bring in differenti tion through the inclusion of emotion l v lue which would ppe l to consumers f ced with choice of sever l br nds which re equ lly ccept ble. In the c tego ry of motorcycles, it w s initi lly the speed, pick-up nd style th t m ttered.

L ter, the preference shifted to the br nds person lity. This h ppened despite th e f ct th t Hero Hond liter lly cre ted revolution by introducing its bikes w hich g ve double the mile ge of ny competing br nd t the time of introduction. The success of C liber h s its underpinnings on such ch nge of perception on wh t m tters to consumers t specific point in time in n environment which is d riven by ch nge. Peter Engl nd, with the honest proposition of delivering v lue t re son ble price, went on to cre te niche for itself in the history of re d ym de we r. The timing of the br nd with the proposition, nd more import ntly, the l tters delivery, w s most ppropri te if one considers the m rket structure which existed t the time when the br nd w s l unched. There were higher-end br nds firmly entrenched, there were few br nds which were in the middle price se gment nd there were region l offerings. Peter Engl nd dvertised the core ttri butes with reg rd to v lue nd b cked it up with the right price (enh ncing pric e-benefit link ge in the mind of the consumer in given CONSUMER BEHAVIOUR 11.623.3 Copy Right: R i University 97

m rket structure. After being successful the br nd is ttempting to provide life style v lue through its present TV spots. Customer v lue is complex term nd m rketers would do well to rese rch, probe, underst nd nd interrupt it b sed on the c tegory, context nd ch nges which occur in consumer beh viour nd competit ive offerings. lre dy se soned veter n of dvertising shout nd br nd cl im. The words dont m tter to the consumer s much ny more. In ny c se, the written word th t ccom p nies br nd is mistrusted enough to be p rt of selling copy-lore. Stuff th t is dished out to sound nice, but stuff th t is not necess rily bright in its off ering of the credible. Advertising with the cl im nd br nding ccomp nied by th e overt shout of the written word is pretty much getting into the terr in of con sumer distrust. We h ve gone just bit overbo rd on this. In the beginning w s the word. The credible word. The written word. And then there were too m ny prop ositions competing for the s me sp ce. Competing options kept pushing t the lim its of the credible. Credible propositions nd cl ims led to the cre tive ones t h t were more cre tive nd less credible. Very few br nds m n ged to bridge the g p. As the word got he vy nd less credible, the consumer decided to switch off . Or t ke it with pinch of s lt, t times with shovel of s lt s well! As th e written word becomes p rt of fine print, which sm ll percent ge of consumers still re d, br nd m n gers nd their cre tive cousins in the re lm of dvertisi ng need to go scurrying to find other pegs to h ng their br nd stories on. The v isu l, the ur l nd the experienti l re efficient co t-h ngers to explore. The dvertising of the d y h s discovered the ppe l of the visu l. The visu l is s o uncomplic ted. It h s been there ll the while, but cluttered with copy. Copy of every percent ge fighting with visu l ppe l of signific nt percent ge s w ell. The br nd m n ger of the d y h s rbitr ted well. The duo of Br nd M n ger nd Cre tive Chief like h ve st rted using the ppe l of the domin nt visu l we ll enough. He r the bre king news from C nnes s well! The O&M nti-smoking c mp ign which shows M rlboro m n with de d M rlboro horse (remember, the horse is s br nded s the m n) is s striking visu l s ny c n get. A visu l th t c nt be repl ced with the crispest of copy. Wh ts more, visu l ppe l of this kind or ny c n be understood by consumers who spe k ny l ngu ge. Lets remember, vis u l ppe l is the most secul r of them ll l ngu ges. And theres more! Visu l pp e l is understood by the consumer nd processed ll on his own. As this processi ng goes on in those n noseconds of the consumer perception process, there is the joy of self-processing here, which copy-rich br nding doesnt help provide! Theres more on this ... but let me le ve th t for you to process on your own. There is gre ter joy in th t, th n re ding stuff th t is lre dy distilled! Touch! CONSUMER BEHAVIOUR Article 2 Br nding, The Visu l Appe l W y The consumer h s very little time to re d the te xt of dvertisements, which h ve ce sed to seem credible. This h s led to tren d where the visu l emerges s glorious ltern tive. THE br nd is in the visu l ! Note the trend th t is new. Note the trend th t is re-inventing itself once g in. L rge form t visu ls th t st re b ck t you from the full p ge d in the ne wsp per to the full-bleed solusloc le ho rding. To the full flush visu l th t st res t you from the double-decker bus th t is trying h rd to est blish itself s medium of signific nce. The visu l is b ck with venge nce. Full-bleed, ful l flush nd full-imp ct! W tch th t c mp ign from the cellphone m jor, Or nge, i n Mumb i. Two numbers on one phone! The c mp ign is sm ck in your f ce with visu ls of twins of ll kinds. Young, old nd somewhere in between those ge poles s well! Highly rresting visu ls th t look into you s you drive by. Visu ls th t strike you for their simplicity, but visu ls th t st y with you s mess ging nd content th t tr nscend the written word nd its limit tions! Look round in t he m rket nd w tch Indi re-discover the power of the visu l once g in in its br nding exercise. Br nding is the mother science. The br nd is n me, n ident ity, sound, visu l, n experience, nd indeed n int ngible th t imp cts you

r every sense to cre te cr ving nd rec ll. Br nding is ll bout visu l pp e l, ur l ppe l, sensu l ppe l, t ste ppe l nd indeed bout the umbrell exp erience ppe l s well! The br nd is therefore sub-set of these individu l ppe ls th t h rd-swe ting br nd m n gers cre te for their offering of p n m s l o r p nty hose like. At different points of time, in t ndem with wh t technology h s to offer, br nds use the power of the specific sub-set ppe l th t will m ke their offerings g llop into the he rts nd minds of consumers. The br nd m n ge r of tod y with gre t dollop of help from his cre tive gency of choice h s di scovered the power of the visu l. The visu l th t shouts. The visu l th t spe ks . The visu l th t c n l unch thous nd for ys into the home nd he rth nd w ll et of the consumer in the gre t Indi n m rketpl ce. The times re tough. There i s very little time left in the life of the consumer to st nd nd st re. Very lit tle time to go through the fine print of body copy. Very little time nd very li ttle inclin tion s well! The consumer in the Indi n m rketpl ce is 98 Copy Right: R i University 11.623.3

Points To Remember CONSUMER BEHAVIOUR Perception The process by which n individu l selects, org nizes, nd interprets stimuli int o me ningful nd coherent picture of the world How we see the world round us The immedi te nd direct response of the sensory org ns to stimuli. Sens tion A perfectly unch nging environment provides little to no sens tion t ll! Elements of Perception n Sens tion n Absolute threshold n Differenti l threshold n Sublimin l perception 11.623.3 Copy Right: R i University 99

CONSUMER BEHAVIOUR LESSON 12: DYNAMICS OF PERCEPTION Introduction In the e rlier lesson we h ve le rnt how we s individu ls receive sens tions fr om stimuli in the outside environment nd how the hum n org nism d pts to the l evel nd intensity of sensory input. In this lesson we come to one of the m jor principles of perception, i., the interpret tion nd org nis tion of inputs. Per ceptu l Selection We s consumers subconsciously exercise selectivity s to the stimuli they perceive. Which stimuli get selected depends on two m jor f ctors i n ddition to the n ture of the stimulus itself: . b. Consumers previous experie nce s it ffects their expect tions. Their motives t the time (their needs, de sires, interests, nd so on).

Discuss the dyn mics of perception in terms of its three m in spectsselection, o rg niz tion, nd interpret tion. Discuss the v rious forms of selective percepti on. Expl in the concept of Gest lt psychology. Discuss the v rious forms of perc eptu l distortion. Underst nd the implic tions of consumer im gery by positionin g nd repositioning products. Underst nd the positioning of services. Expl in th e imp ct of price on consumer perception of products, service, nd qu lity. Disc uss the terms ret il store im ge nd m nuf cturers im ge. Describe consumers perce ption of risk nd key risk reduction str tegies. E ch of these f ctors c n serve to incre se or decre se the prob bility th t s timulus will be perceived. The N ture of the Stimulus M rketing stimulus cont in s n enormous number of v ri bles. Ex mples include: . b. c. d. e. f. g. N ture of the product. Its physic l ttributes. The p ck ge design. The br nd n me. Th e dvertisements nd commerci ls. The position of print d or commerci l. The editori l environment. Dyn mics of Perception We re const ntly bomb rded with stimuli during every minute nd every hour of o ur life. Perception is not function of sensory input lone, r ther, perception is the result of two different kinds of inputs th t inter ct to form the person l picturesthe perceptionsth t e ch individu l experiences. . Physic l stimuli fr om the outside environment, nd intern l stimuli b sed on expect tions, motives, nd le rning re b sed on previous experiences. Contr st is one of the most ttention-compelling ttributes of stimulus. h. Ad vertisers use extreme ttention-getting devices to get m ximum contr st nd pene tr te the consumers perceptu l screen. Advertisers use color contr sts, size, etc ., to cre te stopping power nd g in ttention. i.

P ck ging is lso differenti ted sufficiently to ensure r pid consumer perceptio n. Sometimes dvertisers c pit lize on the l ck of contr st. A technique th t h s been used effectively in TV commerci ls is to position the commerci l so close to the storyline of progr m th t viewers re un w re they re w tching n d until they re well into it. Advertisers re lso running print ds (c lled dve rtori ls) th t closely resemble editori l m teri l, m king it incre singly diffi cult for re ders to tell them p rt. Advertisers re producing 30-minute commerc i ls (c lled infomerci ls) th t ppe r to the ver ge viewer s document ries. E xpect tions People see wh t they expect to see. Wh t they expect to see is usu l ly b sed on f mili rity, previous experience, or preconditioned set expect tions .

Objectives After studying this lesson you should be

ble to

Bec use e ch person is unique individu l, with unique experiences, needs, w nt s, desires, nd expect tions, it follows th t e ch individu ls perceptions re l so unique. T e e et r e p c st p r e t oselection, org niz tion, hr r he set o ecpin nd interpret tion of stimuli. b. c. d. Individu ls re very selective s to whi ch stimuli they recognize. They subconsciously org nize the stimuli they do recogn ize ccording to widely held psychologic l principles. And they interpret such s timuli (i.e., they give me ning to them) subjectively in ccord nce with their n eeds, expect tions, nd experiences. 100 Copy Right: R i University 11.623.3

Stimuli th t conflict sh rply with expect tions often receive more ttention th n those th t conform to expect tions. For ye rs, cert in dvertisers h ve used b l t nt sexu lity in dvertisements for products to which sex w s not relev nt in the belief th t such dvertisements would ttr ct high degree of ttention. A ds with irrelev nt sexu lity often defe t the m rketers objectives, bec use re de rs tend to remember the sexu l spects of the d, not the product or br nd dver tised. Motives People tend to perceive things they need or w nt. . The stronger the need, the gre ter the tendency to ignore unrel ted stimuli in the environme nt. The simplest ex mple is the contr st between figure nd the ground on which it is pl ced. The figure is usu lly perceived cle rly. The ground is usu lly perce ived s indefinite, h zy, nd continuous. The figure is more cle rly perceived b ec use it ppe rs to be domin ntthe ground ppe rs to be subordin te nd less imp ort nt. Advertisers h ve to pl n their dvertisements c refully to m ke sure th t the stimulus they w nt noted is seen s figure nd not s ground. M rketers so metimes run dvertisements th t confuse the consumer bec use there is no cle r i ndic tion of which is figure nd which is ground. Grouping Individu ls tend to g roup stimuli in chunks r ther th n s discrete bits of inform tion. Grouping c n b e used dv nt geously by m rketers to imply cert in desired me nings in connecti on with their products. Closure Individu ls h ve need for closure. . b. As result, people org nize perception so they see complete picture. If the p tt ern of stimuli to which they re exposed is incomplete, they tend to perceive it s completethey fill in the missing pieces. CONSUMER BEHAVIOUR An individu ls perceptu l process ttunes itself more closely to those elements o f the environment th t re import nt to th t person. M rketing m n gers recogniz e the efficiency of t rgeting their products to the perceived needs of consumers . Selective Perception The consumers selection of stimuli (selective perception) fr om the environment is b sed on the inter ction of expect tions nd motives with the stimulus itself. Selective exposureconsumers ctively seek out mess ges they find ple s nt or with which they re symp thetic. . Consumers ctively void p inful or thre tening mess ges. Selective ttentionconsumers h ve heightened w reness of the stimuli th t meet their needs or interests. Consumers h ve lower w reness of stimuli irrelev nt to their needs. People v ry in terms of the kin d of inform tion in which they re interested nd the form of mess ge nd type o f medium they prefer. The very ct of completion serves to involve the consumer more deeply in the mes s ge. Perceptu l Interpret tion The interpret tion of stimuli is uniquely indivi du l bec use it is b sed on wh t individu ls expect to see in light of their pre vious experience. Stimuli re often highly mbiguous. . When stimuli re highly mbiguous, individu ls usu lly interpret them in such w y th t they serve to fulfill person l needs, wishes, nd interests. b. c. Perceptu l defensethre tening or otherwise d m ging stimuli re less likely to be perceived th n re neutr l stimuli. Individu ls unconsciously m y distort infor m tion th t is not consistent with their needs, v lues, nd beliefs. Perceptu l blockingconsumers screen out enormous mounts of dvertising by simply tuning out.

Perceptu l Org niz tion People do not experience the numerous stimuli they select from the environment s sep r te nd discrete sens tions. People tend to org nize stimuli into groups nd perceive them s unified wholes. Gest lt psychology (Gest lt, in Germ n, me ns p ttern or configur tion) is the n me of the school of psychology th t first developed the b sic principles of perceptu l org niz tion. Three of the most b s

ic principles of perceptu l org niz tion re figure nd ground, grouping, nd cl osure. Figure nd Ground Stimuli th t contr st with their environment re more l ikely to be noticed. How close persons interpret tions re to re lity depends on the cl rity of the stimulus, the p st experiences of the perceiver, nd his or her motives nd inte rests t the time of perception. Perceptu l Distortion With respect to perceptu l distortion, individu ls re subject to number of influences th t tend to dis tort their perceptions. Physic l Appe r ncespeople tend to ttribute the qu litie s they ssoci te with cert in people to others who m y resemble them. . Attr ct ive models re more persu sive nd h ve more positive influence on consumer t titudes nd beh vior th n do ver ge-looking models. Stereotypesindividu ls tend to c rry pictures in their minds of the me ning of v rious kinds of stimuli. 11.623.3 Copy Right: R i University 101

First Impressionsthese tend to be l sting but formed while the perceiver does not know which stimuli re relev nt, import nt, or predictive. Jumping to Conclusio nsm ny people tend to jump to conclusions before ex mining ll the relev nt evide ncehe ring the beginning of n d nd dr wing the incorrect conclusion. H lo Effe ctdescribes situ tions where the ev lu tion of single object or person on mul titude of dimensions is b sed on the ev lu tion of just one or few dimensions. b. c. Consumers often ev lu te n entire product line on the b sis of the one p roduct within the product line. Licensing lso is b sed on the h lo effect ssoci ting products with well-known celebrity or designer n me. Consumer Im gery Consumers ttempt to preserve or enh nce their self-im ges by buying products th ey believe gree with th t self-im ge nd voiding products th t do not gree. T his is c lled consumer im gery. Consumers tend to shop in stores th t h ve im ge s th t gree with their own self-im ges. Product Positioning Positioning str teg y (product positioning) is the essence of the m rketing mix. . Positioning conv eys the concept or me ning of the product or service, in terms of how it fulfill s consumer need. The m rketer must cre te distinctive product im ge in the m ind of the consumer. CONSUMER BEHAVIOUR Activity 1 Select rest ur nt where you h ve recently e ten. An lyze the tmosphere nd ph ysic l environment of this service est blishment. Wh t im ge does the environmen t convey? Should the owner ch nge nything to m ke the environment more ppe lin g to customers? Expl in. b. How product is positioned in the mind of the consumer is more import nt to the products success th n re the products ctu l ch r cteristics. M rketers try to d ifferenti te their products by stressing ttributes they cl im will fulfill the consumers needs better th n competing br nds. The result of successful position ing str tegy is distinctive br nd im ge on which consumers rely to m ke choice s. A positive br nd im ge is ssoci ted with consumer loy lty, consumer beliefs bout positive br nd v lue, nd willingness to se rch for the br nd. A positiv e br nd im ge lso serves to promote consumer interest in future br nd promotion s, nd inocul tes g inst competitors m rketing ctivities. M jor positioning str tegies include: Umbrell positioningcre ting n over ll im ge of the comp ny ro und which lot of products c n be fe tured individu lly. Positioning g inst th e competition. Positioning b sed on specific benefiteffective depictions of c ore product benefit often include memor ble im gery. Finding n unowned positionfin ding niche unfilled by other comp nies. Filling sever l positionsbec use unfill ed g ps or unowned perceptu l positions present opportunities for competitors, sop histic ted m rketers cre te sever l distinct offerings, often in the form of dif ferent br nds, to fill sever l identified niches. Product Repositioning Reg rdle ss of how well positioned product ppe rs to be the m rketer m y be forced to reposition (product repositioning) it in response to m rket events, such s co mpetitor cutting into the br nds m rket sh re. R ther th n trying to meet the low er prices of high-qu lity priv te l bel competition, some premium br nd m rketer s h ve repositioned their br nds to justify their higher prices, pl ying up br n d ttributes th t h d previously been ignored. 102 Copy Right: R i University 11.623.3

Another re son to reposition product or service is to s tisfy ch nging consume r preferences. Perceptu l M pping Perceptu l m pping llows m rketers to determi ne how their products ppe r to consumers in rel tion to competitive br nds on o ne or more relev nt ch r cteristics. Perceptu l m pping en bles the m rketer to see g ps in the positioning of ll br nds in the product cl ss nd to identify re s in which consumer needs re not being dequ tely met. Positioning of Servic es Comp red with m nuf cturing firms, service m rketers f ce sever l unique prob lems in positioning nd promoting their offerings. Services re int ngible, im g e becomes key f ctor in differenti ting service from its competition. The m rketing objective is to en ble the consumer to link specific im ge with spec ific br nd n me. M ny service m rketers h ve developed str tegies to provide cus tomers with visu l im ges nd t ngible reminders of their service offerings. Ex mples would include p inted delivery vehicles, rest ur nt m tchbooks, p ck ged h otel so ps nd sh mpoos, nd v riety of other speci lty items. Sometimes comp nies m rket sever l versions of their service to different m rket segments by us ing differenti ted positioning str tegy. The design of the service environment is n import nt spect of service positioning str tegy nd sh rply influences c onsumer impressions nd consumer nd employee beh vior. The physic l environment is p rticul rly import nt in cre ting f vor ble impression for such services s b nks, ret il stores, nd profession l offices, bec use there re so few obje ctive criteri by which consumers c n judge the qu lity of the services they rec eive. The service environment conveys the im ge of the service provider with who m the service is so closely linked. One study of service environments identified five environment l v ri bles most import nt to b nk customers. . b. c. d. Priv cyboth visu lly nd verb lly, with enclosed offices, tr ns ction priv cy, etc. E fficiency/conveniencetr ns ction re s th t re e sy to find, direction l signs, etc. Ambient b ckground conditionstemper ture, lighting, noise, nd music. Soci l conditionsthe physic l ppe r nce of other people in the b nk environment, such s b nk customers nd b nk personnel. Aestheticse.g., color, style, use of m teri ls, nd rtwork. Perception of price f irnesscustomers p y ttention to the prices p id by other c ustomers (e.g., senior citizens, frequent fliers, ffinity club members). ) Cus tomers perceive differenti l pricing str tegies used by some m rketers s unf ir to those not eligible for the speci l prices. Perceptions of price unf irness ffect consumers perceptions of product v lue, nd ultim tely, their willingness t o p tronize store or service. CONSUMER BEHAVIOUR b) Reference Prices Wh t is reference price? A reference price is ny price th t consumer uses s b sis for comp rison in judging nother price. Reference pr ices c n be extern l or intern l. An dvertiser gener lly uses higher extern l reference price (sold elsewhere t...) in n d in which lower s les price is b eing offered, to persu de the consumer th t the product dvertised is re lly g ood buy. Intern l reference prices re those prices (or price r nges) retrieved by the consumer from memory. Intern l reference points re thought to pl y m j or role in consumers ev lu tions nd perceptions of v lue of n dvertised (i.e., extern l) price de l, s well s in the believ bility of ny dvertised referen ce price. Acquisition-tr ns ction utility theory cquisition utility represents th e perceived economic g in or loss ssoci ted with purch se, nd is function of product utility nd purch se price. ) Tr ns ction utility concerns the perce ived ple sure or disple sure ssoci ted with the fin nci l spect of the purch s e nd is determined by the difference between the intern l reference price nd t he purch se price. Sever l studies h ve investig ted the effects on consumer pri ce perceptions of three types of dvertised reference prices: pl usible low, pl usible high, nd impl usible high.

b) Pl usible low prices re well within the r nge of ccept ble m rket prices. c ) Pl usible high is ne r the outer limits of the r nge but not beyond the re lm of believ bility. d) Impl usible high is well bove the consumers perceived r nge of ccept ble m r ket prices. As long s n dvertised reference price is within given consumers ccept ble price r nge, it is considered pl usible nd is ssimil ted. e) If the dvertised reference point is outside the r nge of ccept ble prices (i.e., imp l usible), it will be contr sted nd thus will not be perceived s v lid refer ence point.

Tensile nd Objective Price Cl ims The sem ntic cues (i.e., specific wording) of the phr se used to communic te the price-rel ted inform tion m y ffect consumers price perceptions. Acquisition-tr ns ction utility (e.g., s ve 10 to 40 percent, s ve up to 60 percent, s ve 20 percen t or more) re used to e. Perceived Price How consumer perceives price (perceived price) s high, s low , s f irh s strong influence on both purch se intentions nd purch se s tisf c tion. 11.623.3 Copy Right: R i University 103

promote r nge of price discounts for product line, n entire dep rtment, or sometimes n entire store. Objective price cl ims provide single discount leve l (e.g., s ve 25 percent). Tensile nd objective price cl ims h ve potenti lly g re ter effect on consumer shopping nd on store tr ffic th n reference price dvertisement th t promotes single product bec use of the bro der r nge of merc h ndise covered by them. ) Consumer ev lu tions nd shopping intentions re le st f vor ble for dvertisements st ting the minimum discount level (s ve 10 perce nt or more). Ads th t st te m ximum discount level (s ve up to 40 percent) either equ l or exceed the effectiveness of ds st ting discount r nge (s ve 10 to 40 percent). Consumer re ctions to tensile price cl ims re ffected by the width o f the discount r nge. Studies found th t, for bro der discount r nges, tensile c l ims st ting the m ximum level of s vings h ve more positive effects th n those st ting the minimum level or the entire s vings r nge. For more n rrow discount r nges, tensile cl ims st ting the m ximum level of s vings ppe r to be no mor e effective th n cl ims st ting the minimum level or the entire s vings r nges. Consumers re less sensitive to price when using credit c rds th n when they use c sh. e) In simil r vein, recent study reported th t consumers tend to be l ess sensitive to price when they shop online r ther th n when they shop in store s. Consumers re un ble to comp re services side-by-side s they do products, so co nsumers rely on surrog te or extrinsic cues when purch sing services. M rketers try to st nd rdize their services in order to provide consistency of qu lity. Se rvice is consumed s it is being produced. As result, defective services re d ifficult to correct. Rese rchers h ve concluded th t the service qu lity th t customer perceives is function of the m gnitude nd direction of the g p betwe en expected service nd the customers ssessment of the service ctu lly delivere d. SERVQUAL, me sures the g p between customers expect tions of services nd thei r perceptions of the ctu l service. ) These perceptions re b sed on the dimen sions of; t ngibles, reli bility, responsiveness, ssur nce, nd emp thy. Two di mensions used to me sure service qu lity re outcome dimensionsthe reli ble deliv ery of the core service nd process dimensionshow the core service is delivered. CONSUMER BEHAVIOUR b) c) b) d) Tr ns ction s tisf ction index is one tool rese rchers h ve used to try to integ r te the concepts of product qu lity nd service qu lity. Conceptu l Model of Tr ns ction S tisf ctionthe model suggests th t the consumers over ll s tisf ction w ith the tr ns ction is b sed on ev lu tion of service qu lity, product qu lity, nd price. Price/Qu lity Rel tionship Perceived product v lue h s been described s tr de-off between the products perceived benefits (or qu lity) nd perceive d s crifice required to cquire it. A number of rese rch studies support the vie w th t consumers rely on price s n indic tor of product qu lity. ) Other stud ies suggest consumers re ctu lly relying on well-known br nd n me s qu li ty indic tor. Bec use price is so often considered to be n indic tor of qu lity , some products deliber tely emph size high price to underscore their cl ims o f qu lity. M rketers h ve used the price/qu lity rel tionship to position their products s the top-qu lity offering in their product c tegory. b) c) There is positive price/qu lity rel tionship. Consumers use price s surrog te indic t or of qu lity if they h ve little inform tion or little confidence in their bil ity to m ke choice.

Perceived Qu lity Consumers often judge the qu lity of product (perceived qu l ity) on the b sis of v riety of inform tion l cues. ) Intrinsic cues re phys ic l ch r cteristics of the product itself, such s size, color, fl vor, or rom . b) Extrinsic cues re such things s price, store im ge, service environment, br nd im ge, nd promotion l mess ge. Perceived Qu lity of Products Intrinsic cues re concerned with physic l ch r cteristics of the product itself , size, color, fl vor, etc. ) Consumers like to think they b se qu lity ev lu t ions on intrinsic cues, but in re lity, they re often un ble to identify th t p roduct in t ste test. In the bsence of ctu l experience with product, cons umers often ev lu te qu lity on the b sis of extrinsic cues, price, br nd im ge, store im ge, etc. b) M ny consumers use country-of-origin stereotypes to ev lu te products. Perceived Qu lity of Services Ret il Store Im ge Ret il stores h ve their own im ges th t influence the percep tion of the qu lity of the products they c rry. Studies show consumers perceive stores with sm ll discounts on l rge number of products s h ving lower-priced items th n stores th t offer l rge discounts on sm ll number of products. The width of product ssortment lso ffects ret il store im ge. 11.623.3 It is more difficult for consumers to ev lu te the qu lity of services th n the qu lity of products. Service ch r cteristics includeint ngibility, v ri bility, p erish bility, simult neously produced, nd consumed. 104 Copy Right: R i University

The type of product the consumer wishes to buy influences his or her selection o f ret il outlet, conversely, the consumers ev lu tion of product often is influ enced by the knowledge of where it w s bought. Most studies of the effects of ex trinsic cues on perceived product qu lity h ve focused on just one v ri bleeither price or store im ge. ) When second extrinsic cue is v il ble (e.g., price nd store im ge), however, perceived qu lity is sometimes function of the inte r ction of both cues on the consumer. Perception of Risk V ries The mount of risk perceived depends on the specific c onsumer. High-risk perceivers re n rrow c tegorizers bec use they limit their c hoices. Low-risk perceivers re bro d c tegorizers bec use they m ke their choic e from wide r nge of ltern tives. Individu l perception of risk v ries by pro duct c tegory. ) Consumers re likely to perceive higher degree of risk in th e purch se of high definition television set (e.g., function l risk, fin nci l risk, time risk) th n in the purch se of n utomobile. One study found th t co nsumers perceive service decisions to be riskier th n product decisions, p rticu l rly in terms of soci l risk, physic l risk, nd psychologic l risks. CONSUMER BEHAVIOUR M nuf cturers Im ge Consumer im gery extends beyond perceived price nd store im ge to the producers themselves. M nuf cturers who enjoy f vor ble im ge gener lly find th t their new products re ccepted more re dily th n those of m nuf c turers who h ve less f vor ble or even neutr l im ge. Rese rchers h ve found t h t consumers gener lly h ve f vor ble perceptions of pioneer br nds (the first in product c tegory), even fter follower br nds become v il ble. ) They ls o found positive correl tion between pioneer br nd im ge nd n individu ls ide l self-im ge, which suggests th t positive perceptions tow rd pioneer br nds le d to positive purch se. Some m jor m rketers introduce new products under the g uise of supposedly sm ller, pioneering ( nd presum bly more forw rd-thinking) co mp nies. The go l of this so-c lled ste lth (or f ux) p rent ge is to persu de c onsumers (p rticul rly young consumers) th t the new br nds re produced by inde pendent, nonconformist free spirits, r ther th n by gi nt corpor te entities suc h s their p rents might p tronize. Rese rchers h ve identified product-specific perceived risk. b) Perception of the degree of risk is lso ffected by the shopping situ tion. How Consumers H ndle Risk 1. Consumers seek inform tion bout products nd product c tegories by word-of-mouth. ) They spend more time considering their decision the higher the perceived risk. Consumers re br nd loy l. ) Consumers void ris k by st ying with br nd they know nd re s tisfied with. b) High-risk perceiv ers re the most br nd loy l. 3. Consumers select by br nd im ge. ) When consum ers l ck experience with product, they trust well-known br nd. b) Consumers believe well-known br nds re better nd re worth buying for ssured qu lity. 4 . Consumers rely on store im ge. ) If consumers h ve no other inform tion bout product, they judge it b sed on the store. b) Store im ge imp rts the implic tion of product testing nd ssur nce of service. 5. 6. Consumers buy the most e xpensive model. ) When in doubt, consumers equ te price with qu lity. Consumers seek re ssur nce. ) Consumers, uncert in bout product choice, seek re ssur nce through gu r ntees, tryouts, money-b ck offers, etc. The concept of perceive d risk h s m jor implic tions for the introduction of new products. b) Bec use h igh-risk perceivers re less likely to purch se new or innov tive products th n low-risk perceivers, it is import nt for m rketers to provide such consumers wit h persu sive risk-reduction str tegies. 2. b)

Comp nies sometimes use ste lth p rent ge when they enter product c tegory tot lly unrel ted to the one with which their corpor te n me h s become synonymous. Tod y, comp nies re using dvertising, exhibits, nd sponsorship of community events to enh nce their im ges. Perceived Risk Perceived risk is the uncert inty th t consumers f ce when they c nnot foresee the consequences of their purch se decision. The degree of risk th t consumers perceive nd their own toler nce fo r risk t king re f ctors th t influence their purch se str tegies. Consumers r e influenced by risks th t they perceive, whether or not such risks ctu lly exi st. ) Risk th t is not perceived will not influence consumer beh vior. Types of risk include: function l risk, physic l risk, fin nci l risk, soci l ri sk, psychologic l risk, nd time risk. 11.623.3 Copy Right: R i University 105

Activity 2 Tick the correct choice 1. M ny times new product is success bec use it is n extension of successful nd trusted br nd. This is bec use people: . cre te first impressions. b. tend to stereotype. c. re ffected by the h lo effect. d . jump to conclusions. 2. Positioning str tegy is the essence of the m rketing m ix; it compliments the comp nys definition of the comp nys: . competition. b. seg ment tion str tegy. c. selection of t rget m rkets. d. ll of the bove 3. Avis uses cle r comp r tive str tegy by st ting, We re number 2, we try h rder. This is n ex mple of: . positioning. b. stereotyping. c. how it uses symp thy to ttr ct customers. d. deception. 4. Gillettes For oily h ir only sh mpoo w s produ ct f ilure bec use: . most people do not h ve oily h ir. b. most people were tu rned off by the slog n. c. most people do not cknowledge th t they h ve oily h ir. d. m ny customers h ve neg tive feelings tow rd Gillette comp ny. 5. One com p ny m y re lize there re sever l m rket opportunities for one product. A comp ny like AnheuserBusch introduced three br nds of beer, nd positioned them ccor ding to different criteri . Which positioning str tegy would th t f ll under? . umbrell positioning b. filling sever l positions c. positioning b sed on spe cific benefit d. repositioning 6. When Kentucky Fried Chicken ch nged its n me t o KFC, it w s to omit the dre ded word fried from its dvertising. KFC h d to go through / n _____ process to justify the n me ch nge. . umbrell positioning b. repositioning c. reorg niz tion d. fin nci l udit 106 7. The technique of _____ helps m rketers to determine how their products nd servi ces ppe r to consumers in rel tion to competitive br nds on one or more relev n t ch r cteristics. . umbrell br nding b. repositioning c. perceptu l m pping d . perceptu l org niz tion CONSUMER BEHAVIOUR 8. It is difficult for service comp nies to position their products without t ngibl es, so they must work on other f ctors to ttr ct customers. Which of the follow ing is not n import nt environment l v ri ble import nt to b nk customers? . p riv cy b. esthetics c. physic l ppe r nce of the people in the b nk, both cust omers nd personnel d. ll of the bove re import nt to b nk customers 9. The service industry f ce s ch llenge of pricing int ngible products. Three str tegies b sed on customer perception of the v lue provided help service comp nies to price their products . Which of the following is not one of the str tegies? . s tisf ction-b sed pri cing b. rel tionship pricing c. reference pricing d. efficiency pricing 10. A __ ___ is ny price th t consumer uses s b sis for comp rison in judging noth er price. . tensile b. objective c. reference d. discount 11. S ve 10 to 40% nd s ve up to 60% re ex mples of: . tensile price cl ims. b. objective price cl ims . c. reference price cl ims. d. pl usible low prices. 12. Consumer Reports found th t consumers often c nnot differenti te mong v rious col bever ges nd th t they b se their preferences on _____ cues such s p ck ging, pricing, dvertisi ng nd peer pressure. . extrinsic b. intrinsic c. positive d. neg tive Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR

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Exposure Attention Selective Exposure Foc l ttention Non Foc l Attention H bitu tion Perceptu l Defense Sublimin l perception Gest lt Psychology Closure Simil rity Figure-Ground

19. How do consumers h ndle risk? . They seek inform tion. b. They select by br nd im ge. c. They buy the most expensive model. d. ll of the bove 20. Some co nsumers will buy the most expensive model of new product. This h ppens most of the time bec use: . they re concerned with im ge. b. they h ve little inform tion, nd this would reduce the risk. c. most consumers h ve lots of money. d. t he lower priced models re lw ys sold out. Key Terms

13. Some distinctive ch r cteristics of services m ke it h rder on consumers to judge qu lity. Which of the following is not ch r cteristic of services? . v ri ble b. perish ble c. t ngible d. simult neously produced nd consumed 14. If you go to the s me rest ur nt every d y, but re w ited on by different servers, the qu lity of your me l m y fluctu te. This is bec use of the service ch r cte ristic of _____. . v ri bility b. perish bility c. int ngibility d. being simul t neously produced nd consumed 15. Studies h ve shown th t consumers th t use price/qu lity rel tionship re ctu lly relying on well-known br nd n me s n indic tor of qu lity. Also, these consumers use price nd br nd to ev lu te th e prestige of the product but do not gener lly use these cues to ev lu te produc t _____. . price b. v lue c. perform nce d. fe tures 16. A study of ret il stor e im ge b sed on competitive pricing str tegies found th t consumers tend to per ceive stores th t offer sm ll discount on l rge number of items s h ving __ ___ prices over ll in comp rison to stores th t offer l rger discounts on sm ller number of products. . higher b. lower c. extremely higher d. the s me 17. Which of the following is n import nt consumer perception f ctor th t ffects c ustomer decisions? . qu lity b. price/qu lity rel tionship c. store im ge d. l l of the bove re consumer perception f ctors th t ffect decisions 18. _____ i s the uncert inty th t consumers f ce when they c nnot foresee the consequences of their purch se decision. . Post-purch se disson nce b. Cognitive disson nce c. Perceived risk d. none of the bove

Article 1 Perception Its Perception M n gement! Br nd is function of the mind. It is perceptions whi ch sh pe its person lity nd evolution over time so br nd m n gement is, in esse nce, m n gement of perceptions. (remember, the he rt is bit too over-hyped! Time for the g ll bl dder to get s ome limelight s well!) of consumers. Perception is specific. Perception is pers on l. Perception is individu listic. Yes, it cert inly is ll of this! The br nd m n ger is clever guy s well! He knows how to cre te, nurture nd m ss-repli c te perception itself! And th t indeed is the new science of perception m n gem ent I m t lking bout. A new science th t depends on im ge m trices th t c n le ver ge ttitude nd subsequent beh viour. The roots of much of which c n be foun d in the e rly processes dopted by P vlov. P vlov is live nd kicking in the s cience of perception m n gement tod y. As live s Fido Dido himself! It is inde ed ll bout stimulus nd response. A p rticul r nd specific consumer response is pretty possible with specific delivery of stimulus. The delivery vehicle needs to be right. The choice of stimulus must be one th t h s been vetted by n rdent nd intensive process of m ss nd specific consumer rese rch, covering t he qu ntit tive, the qu lit tive nd the holistic! Look round t br nds th t h ve succeeded in bre ching the threshold perception levels of contempor ry consum er mindsets. These re br nds th t h ve got the stimulus just right for the soci ety the br nds swim in tod y. Wh ts more, the p r digm of positive stimulus cre t ing positive response is being broken up by the dem nds of contempor ry society th t believes less nd less in rules. A neg tive stimulus is pretty much c p ble of producing positive response s well! Nestles Yorkie chocol te b r touts its elf boldly s Not for girls! Girls re even derided - Does not come in Pink! Girls l ove picking up the chocol te off the shelves! Remember, this is rebel society we live in! Perception m n gement in these times is d unting t sk th t defies th e dos nd donts m ny of us h ve picked up in m n gement schools th t t ught st ti c-st te societ l theory. Perception m n gement it is then! Br nd m n gers re se eking out the help of those who underst nd the psychology of individu ls nd the psychology of the m ss th t constitutes contempor ry society tod y. Br nd m n g ers will soon run to seers who c n look into the future of society s it morphs itself s well! Remember, the br nd th t c n offer perception cues of wh t consu mers will w nt in the future is going to be one step he d in this m ss percepti on g me. The good thing bout perception is th t once it tt ins critic l m ss t hrough the h rd work put in by h rd-working br nd m n gers, it is pretty vir l i n its spre d nd stretch. It is indeed good thing for positive perception nd terrible thing when it comes to neg tive perception! I h ve just returned from quick, nxious nd hurried trip into Hong Kong. There is dre dful fe r ll round in this territory. My two-d y trip into Hong Kong nd M c o h s been full of sights th t spe k of both met phoric l nd liter l vir l fe r. There is p r noi in the ir. F ce-m sks th t protect, gloves th t re ubiquitous, r bid st res t people who re ill-m nnered enough not to cough or sneeze into tissues h eld on their nostrils nd mouths, nd fe r of de th lurking t the corner CONSUMER BEHAVIOUR SARS tod y is br nd br nd with neg tive perception. IN the Eighties we c lle d it Product M n gement. In the Nineties we gl morised it s Br nd M n gement. I n the opening ye rs of the 2000 series, we might s well get re dy to rechristen it once g in. If given the right to f ther this new science, rt nd philosoph y s we know it tod y, I would choose the bl t ntly open terminology of them ll th t best describes the m n gement of br nds tod y. Perception M n gement! Br n d m n gement is tod y in essence the m n gement of perception. The complex proce ss of m n gement of perception in bid to lever ge ttitude. Critic l ttitude th t le ds to purch se decisions, nd more import ntly n ttitude th t fosters the br nd in positive mindset for ye rs to come in the he rts, minds nd g ll bl dders (who knows where the se t of thinking nd emotion re lly is?) of consum ers. Perception m n gement it is! The br nd itself, for st rt, is perception

. Its v lue is bigger perception still. Its delivery expect tions, its qu lity st nd rds, nd its s tisf ction cues re ll perception-triggers th t cre te th t ll big P! Br nd perception! Br nd m n gers re therefore perception m n gers f or their offerings of commerce. The br nd m n ger does wh t he does in bid to cre te th t positive perception for the w res he touts. In this process he swims within n environment, fights with it, nd eventu lly domin tes it ... s in th e c se of the most successful br nds th t occupy the he rts or g ll bl dders 108 Copy Right: R i University 11.623.3

of every individu ls sleeve is re lity in this otherwise open m rket. The perce ption of SARS is bl t nt re lity tod y. Even s I return from Hong Kong, frien ds who know I h ve been there, dont w nt to p rty with me for while. There re some who re bsolutely open, telling me to be c reful nd void visiting the re gion. Others re polite nd spe k on the phone nd m ke those excuses of how the y w nt to postpone their meetings for next week s something speci l h s come up ! SARS is br nd tod y. A br nd th t h s perception th t is de dly. A percept ion th t is neg tive to the point of de th. Neg tive to the point of being shunn ed. The spre d is vir l. Word-of-mouth spre d th t is s potent in its re ch nd de dly effect s the virus t prey itself! Remember, SARS is perception s we ll! A perception th t h s found its w y in quick nd efficient m nner th t riv ls Mr Bushs shock nd we t m sh in Ir q! SARS tod y thre tens businesses of ever y ilk in the region! It thre tens the very f bric of the economy of South E st A si . For long time to come, tourists will void the region. Tr vel dvisories will be out. And for long time to come, I will not visit Hong Kong s well! C der, who w s in Indi recently on mission for SriL nk n Airlines nd lso to look t the possibility of working with some Indi n consult nts, spoke to C t l yst on m rketing pr ctices in West Asi , Indi n br nds in the Gulf nd lso on the work of his comp ny. Edited excerpts from his interview: How high is the level of w reness of m rketing in West Asi ? CONSUMER BEHAVIOUR The whole w reness of m rketing is slowly beginning to incre se. There re lots of multin tion l comp nies setting up b se there. So with ll the MNCs coming i n, the m rket is getting very competitive. Also, other support services round t he core m rketing re s re lso being set up - things such s rese rch, fe sibi lity studies, dvertising, medi buying nd outdoor. This is good sign, which me ns th t m rketers h ve ccess to ll those services. Wh t this lso me ns is th t m ny of the loc l comp nies, some of which h ve h d very high degree of p rotection, h ve been ch llenged. Of course, some re finding it very difficult t o cope, but there re some good loc l br nds th t re fighting it out nd coming out on top. If you look t S udi Ar bi , there is br nd c lled Al M r i, whic h is d iry br nd (S udi is one of the driest countries nd this br nd h s one of the l rgest d iry f rms ne r Riy dh) nd is one of the strongest br nds, whic h even the MNCs h ve not been ble to fight. Unilever nd Nestle pulled out of i ce-cre ms l st ye r in West Asi bec use they couldnt fight the loc l competition . In m rket such s Om n we h ve br nd of detergent c lled B h r, which h s ctu lly t ken Ariel he d on nd h s done f irly well. So we re beginning to se e some of these loc l br nds coming up. Is there conscious effort to build br nds in the West Asi n region? Cert inly. I dont think its yet t st ge like in I ndi or the West. But it is ch nging r pidly. The people of West Asi re re lis ing th t br nd is not just putting n me on something, but th t theyve got to invest in it. Theyve got to look t dvertising nd promotion s n investment r ther th n s expenditure. So th t w reness is incre sing. And for us in the con sulting business we see tremendous opportunity, bec use there re lot of sm ll nd medium groups who h ve typic lly been tr ders. They h ve br nd, but the ppro ch h s been more one of tr ding. They re now s ying we need to build br nd nd strengthen it. Wh t sort of promotion l nd dvertising str tegies do com p nies in the region look t? Is there lot of dvertising on television? Wh t we re incre singly seeing is incre sing spends on - I wouldnt c ll it below-theline - but promotions th t re more rel ted to the point of s le. This is bec us e the popul tion is rel tively sm ll nd lots of shopping m lls nd rest ur nts re Article 2 Indi n Br nds Abro d H ve To Work On Perception The people of West Asi re re lising th t br nd is not just putting n me on product, but th t theyve got to invest in it. Theyve got to look t dvertising nd promotion s n investment r ther th n s expenditure. Th t w reness is inc

re sing. And for us in the consulting business, there lies tremendous opportunit y. S y West Asi , or to use more popul r term, Gulf, nd the immedi te picture th t comes to mind is oil, deserts nd perh ps lots of Indi ns, but not m rketing consult ncy firm. So, its bit of surprise to he r of MTI Consulting, glob l m rketing consulting nd tr ining firm b sed in B hr in. Wh ts more interesting bout MTI nd Hilmy C der, its founder nd M n ging Director, is th t in just few ye rs they developed str tegic m rketing tool th ts won them words of pr is e from none less th n Philip Kotler, the guru of ll m rketing gurus. C der s ys he would like to t ke m rketing consulting to the next level, to something we c ll venture m rketing - which is to s y, ok, we believe in our m rketing consulti ng solutions, so forget bout the fixed fees, lets work on perform nce. MTIs client s come from 20 countries round the world, nd include the likes of Agribr nds I ntern tion l, subsidi ries of DuPont nd SriL nk n Airlines. The comp nys 8S str te gic m rketing tool t kes businesses through n eight-st ge sequenti l process th t comprises steps such s scope, sc n, sights, str tegy, structure, st ff, syst ems nd soci l responsibility. The focus is, s C der puts it, directly on perfor m nce improvement, b sic lly improving the bottomline. 11.623.3 Copy Right: R i University 109

coming up. All of them re p cked in the evening nd you find th t is wh t the T V st tions c ll prime time. If you look t the number of c rs t the m ll there is mism tch between the people there nd the people likely to be w tching TV. So the whole concept of experience m rketing, in terms of c tching the person clos er to the point of purch se h s relev nce. There re lots of comp nies th t re s ying its not worth going on the medi bec use they need, s y, $100,000 to st nd up nd do wh t they c n do with $10,000 in m rket of two million people. In w hich c se they h ve to go to l rger m rket, they wont need the loc l medi , but the region l or glob l medi to do th t. So lot of it is shifting to the poin t of purch se. Could you expl in how the 8S system developed by your comp ny works ? It is b sic lly str tegic pl nning model th t we developed to t ke n org ni s tion through the entire pl nning process. So we st rt off with looking t the s cope of the org nis tion. Here we try to en ble the client to define spects such s wh t business re we re lly in nd why re we in business? Then we sc n the enviro nment. Once the sc nning is done we look t where the client w nts to be - in th e long term nd in the short term. We c ll this sights. This is not just the cerem oni l stuff you w nt to h ve on the w ll, but involves ctu lly getting commit ment from people on where they re lly w nt to be nd c n they re listic lly be t here, nd in th t entire m rket wh t p rticul r segments re you going to get in to, which consumers re you going to t rget nd so on. And we find th t this is not ddressed in m ny m rketing pl ns. Then we look t the str tegy on how to chi eve the sights in terms of customers, CRM, communic tion, ch nnel str tegy nd suc h det ils. Then we look t structure, which we dont look t in tr dition l m rketin g ( nd is left to the HR dep rtment). This you c nt do in n integr ted highly co mpetitive m rket, bec use you need to look t your own structure s your impleme nt tion of the str tegy depends lot on structure. S y, for inst nce, you offer se mless tot l solution to the customer. T ke computer comp ny with structu re where one person h ndles printers nd nother h ndles sc nners, nd they dont t lk to e ch other. If Im customer, you c n tell me you re giving me tot l sol utions. But if you h ve people in two different loc tions nd they dont t lk to e ch other, nd you tell me there is no problem with my printer nd there is no p roblem with my sc nner, nd the problem is in the connection, you re right. But I dont get solution. So structure is very import nt. Then we look t st ff in te rms of wh t competencies re required. And n import nt p rt there is the org ni s tions structure nd perform nce-b sed p y. More nd more comp nies re moving t ow rds perform nce-b sed p y. Then we look t systems in terms of control, reporting nd processes. One re we find lot of m rketing org nis tions re we k in is process. The IT processes re there, but t ke s lesperson going into shop. You know he just goes in nd goes on. But the processes you follow when you go into shop, those re s re not cle r.The l st p rt of our model is soci l responsibility. We believe there r e two things n org nis tion must do: The first is compli nce, not just to the n rrow l w, but lso more in spirit. Bec use incre singly you find th t the corpo r te world is p ying very little respect to this, nd this is going to b ckfire. The other is how c n you m ke the world better pl ce. Im not t lking of ch rit y, but of how soci l responsibility c n be integr ted into your communic tion, l ike wh t Body Shoppe h s done. So, how is the 8S ppro ch different? One, it t kes more holistic view. It doesnt focus just on the four Ps or the str tegy. It is i ncre singly difficult to focus nd s y this is core m rketing nd you need core m rketing people. Wh t is the future of m rketing in West Asi ? Which re the more vibr nt m rkets? Use of m rketing is cert inly going to incre se. The need for th t is there. Theres more competition coming in nd you c nnot continue to rely on gut feel. In terms of sophistic tion you re t lking bout Dub i nd Leb non. But in terms of m ss m rketing, you re looking t S udi Ar bi , Morocco nd Eg ypt where the opportunities re lly re from n FMCG point of view. From more c orpor te services point of view, its Dub i. How widely used is m rketing rese rch in West Asi ? Also, is it very relev nt? It is in f ct more import nt for the s imple re son th t you h ve high number of exp tri tes in m rketing positions. So, you re t lking bout n exp tri te trying to underst nd different culture

, different l ngu ge nd so on. Ar bic is very descriptive l ngu ge nd we h ve enormous problems bec use br nd m n ger will do the focus group brief in E nglish, goes to the rese rch gency which thinks of it in English nd goes to so mebody else who does the tr nsl tion in Ar bic nd they m y just do check with someone who writes in Ar bic, but thinks in English. And by the time the whole process is complete, you c n lose the subtle nu nces, especi lly in qu lit tive rese rch. So MR is very import nt. Also, there is high degree of courtesy bi s, like in J p n. So people m y not necess rily tell you ll the time this is b d, wh ich doesnt help you if you re in m rketing bec use you h ve to cut through ll t h t nd find out wh t is the ch nce of someone buying your detergent powder or w h tever. Wh t kind of equity do Indi n br nds h ve in West Asi ? I think most of the Indi n br nds, whether it is Amul or Onid , re there. But I still think th ey re positioned lower to CONSUMER BEHAVIOUR 110 Copy Right: R i University 11.623.3

middle. I feel th t in terms of intrinsic qu lity, the Indi n br nds re still ble to deliver. But wh t they h ve to work on is the perception. So is perceptio n m n gement the m in t sk for Indi n br nds looking t entering th t m rket? Ye s, perception nd positioning. The good news is th t you h ve product th t c n live up to much higher expect tions. There is scope for Indi n br nds in the pr oduct re . There is lso scope for Indi n br nds in the service re . Look t dvertising, for inst nce. You still dont get ny Indi n d gencies going ll out in the Gulf or nywhere in the world for th t m tter. Where s I feel th t you h ve one of the best nd most competitive dvertising industries in the world her e in Indi . And I feel th t Indi ns re mong the best d people in the world. B ut th t h s been confined to Indi nd h snt been t ken out to the world. So I fe el there is lot th t c n be done in the service re . There re lots of Indi n service br nds th t h vent gone out nd h ve lot of scope. Points To Remember CONSUMER BEHAVIOUR M rketing Applic tions of the JND n Need to determine the relev nt j.n.d. for their products so th t neg tive ch nges re not re dily discernible to the public so th t produ ct improvements re very pp rent to consumers Webers L w A theory concerning the perceived differenti tion between simil r stimuli of v r ying intensities (i.e., the stronger the initi l stimulus, the gre ter the ddit ion l intensity needed for the second stimulus to be perceived s different). Figure 6.3 Gr du l Ch nges in Br nd N me F ll Below the J.N.D. 11.623.3 Copy Right: R i University 111

CONSUMER BEHAVIOUR 112

Sublimin l Perception Gest lt Psychology Exposure n Selective Attention n Perceptu l Defense n Perceptu l Blocking Aspects of Perception Selection Org niz tion Interpret tion Principles of Perceptu l Org niz tion n n

Copy Right: R i University 11.623.3

Figure

nd ground Grouping n Closure

Concepts Concerning Selective Perception Perception of very we k or r pid stimuli received below the level of conscious w reness. n Selective

Notes CONSUMER BEHAVIOUR Influences of Perceptu l Distortion Physic l Appe r nces n Stereotypes n First Impressions n Jumping to Conclusions n H lo Effect n Issues In Consumer Im gery n Product Positioning nd Repositioning n Positioning of Services n Perceived Pric e n Perceived Qu lity n Ret il Store Im ge n M nuf cturer Im ge n Perceived Risk 11.623.3 Copy Right: R i University 113

LESSON 13: CONSUMER LEARNING UNIT II CONSUMER AS AN INDIVIDUAL CHAPTER 5: LEARNING 1. Wh t is Le rning? Summ ry Consumer le rning is the process by which individu ls cquire the purch se nd consumption knowledge nd experience they pply to future rel ted beh vio r. Some le rning is intention l; much le rning is incident l. B sic elements th t contribute to n underst nding of le rning re motiv tion, cues, response, nd reinforcement. There re two schools of thought s to how individu ls le rn beh vior l theories nd cognitive theories. Beh vior l theorists view le rning s ob serv ble responses to stimuli; where s cognitive theorists believe th t le rning is function of ment l processing. Three types of beh vior l le rning theories re cl ssic l conditioning, instrument l conditioning, nd observ tion l (vic r ious) le rning. The principles of cl ssic l conditioning th t provide theoretic l underpinnings for m ny m rketing pplic tions include repetition, stimulus gen er liz tion, nd stimulus discrimin tion. Neo-P vlovi n theories view tr dition l cl ssic l conditioning s cognitive ssoci tive le rning r ther th n s reflex ive ction. Instrument l le rning theorists believe th t le rning occurs through tri l- nd-error process in which positive outcomes (i.e., rew rds) result in repe t beh vior. Both positive nd neg tive reinforcement c n be used to encour ge the desired beh vior. Reinforcement schedules c n be tot l (consistent) or p rti l (fixed r tio or r ndom). The timing of repetitions influences how long the le rned m teri l is ret ined. M ssed repetitions produce more initi l le rning th n distributed repetitions; however, le rning usu lly persists longer with dis tributed (i.e., spre d out) reinforcement schedules. Cognitive le rning theory h olds th t the kind of le rning most ch r cteristic of hum ns is problem solving. Cognitive theorists re concerned with how inform tion is processed by the hum n mind: how is it stored, ret ined, nd retrieved. A simple model of the structu re nd oper tion of memory suggests the existence of three sep r te stor ge unit s: the sensory store, short-term store (or working memory), nd long-term store. The processes of memory include rehe rs l, encoding, stor ge, nd retriev l. In volvement theory proposes th t people eng ge in limited inform tion processing i n situ tions of low import nce or relev nce to them nd in extensive inform tion processing in situ tions of high relev nce. Hemispher l l ter liz tion theory g ve rise to the theory th t television is low-involvement medium th t results in p ssive le rning nd th t print nd inter ctive medi encour ge more cognitiv e inform tion processing.

Introduction Need to underst nd individu ls c p city to le rn. Le rning, ch nges in persons b eh vior c used by inform tion nd experience. Therefore to ch nge consumers beh v ior bout your product, need to give them new inform tion re: product...free s m ple etc. When m king buying decisions, buyers must process inform tion. Knowledg e is the f mili rity with the product nd expertise. Inexperience buyers often u se prices s n indic tor of qu lity more th n those who h ve knowledge of pro duct. Non- lcoholic Beer ex mple: consumers chose the most expensive six-p ck, b ec use they ssume th t the gre ter price indic tes gre ter qu lity. Le rning is the process through which rel tively perm nent ch nge in beh vior results fro m the consequences of p st beh vior. This ch pter t kes brief look t the two m jor c tegories of le rning theories (beh viorism nd constructivism), the m jo r theorists within those c tegories, nd the implic tions of those theories for the use of multimedi nd communic tions nd inform tion technology for le rning purposes. CONSUMER BEHAVIOUR Objectives After le rning this lesson you should be ble to: 1. 2. 3. 4. 5. 6. 7. 8. 9. Exp l in consumer le rning theory nd identify the necess ry elements. Discuss the e lements of Cl ssic l Conditioning theory. Identify the three str tegic pplic ti

ons of Cl ssic l Conditioning. Review the elements of Instrument l Conditioning. Discuss the str tegic pplic tions of Instrument l Conditioning. Describe model ing (observ tion l le rning). Expl in nd pply cognitive le rning theory in m rketing situ tion. Describe three w ys inform tion m y be stored in memory. Rel te involvement theory to consumer beh vior. 10. Describe the El bor tion Likelihood Model. 11. Outline me sures of involveme nt. 12. Underst nd how consumer le rning c n be me sured. 13. Discuss the concep ts of br nd loy lty nd br nd equity. 114 Copy Right: R i University 11.623.3

Me sures of consumer le rning include rec ll nd recognition tests, cognitive re sponses to dvertising, nd ttitudin l nd beh vior l me sures of br nd loy lty in terms of the consumers beh vior or the consumers ttitude tow rd the br nd. Br nd equity refers to the inherent v lue br nd n me h s in the m rketpl ce. For m rketers, the m jor re sons for underst nding how consumers le rn re to te ch them th t their br nd is best nd to develop br nd loy lty. Motiv tion Motiv tion is b sed on needs nd go ls. ) The degree of relev nce, o r involvement, with the go l, is critic l to how motiv ted the consumer is to se rch for inform tion bout product. CONSUMER BEHAVIOUR Uncovering consumer motives is one of the prime t sks of m rketers, who try to t e ch consumer segments why their product will best fulfill their needs. Cues If motives serve to stimul te le rning, cues re the stimuli th t give direction to the motives. ) In the m rketpl ce, price, styling, p ck ging, dvertising, nd store displ ys ll serve s cues to help consumers fulfill their needs. Introduction M rketers re concerned with how individu ls le rn bec use they w nt to te ch th em, in their roles s consumers, bout products, product ttributes, nd potenti l consumer benefits; bout where to buy their products, how to use them, how to m int in them, even how to dispose of them. M rketing str tegies re b sed on c ommunic ting with the consumer. ) b) M rketers w nt their communic tions to be noted, believed, remembered, nd rec lled. For these re sons, they re intereste d in every spect of the le rning process. Cues serve to direct consumer drives when they re consistent with their expect tions. Response How individu ls re ct to cuehow they beh veconstitutes their res ponse. A response is not tied to need in one-to-one f shion. A need or motiv e m y evoke whole v riety of responses. The response consumer m kes depends he vily on previous le rning; th t, in turn, depends on how rel ted responses we re reinforced previously. Reinforcement Reinforcement incre ses the likelihood t h t specific response will occur in the future s the result of p rticul r cue s or stimuli. There is no single, univers l theory of how people le rn. There re two m jor sc hools of thought concerning the le rning p o e s o ec n i t o r c s : n o s s s beh vior l le rning theories, the f other of cognitive le rning theories. Cognit ive theorists view le rning s function of purely ment l processes, lthough b eh vior l theorists focus lmost exclusively on observ ble beh viors (responses) th t occur s the result of exposure to stimuli. Consumer Le rning Consumer le rning c n be thought of s the process by which individu ls cquire the purch se nd consumption knowledge nd experience th t they pply to future rel ted beh vior. Sever l points in this definition re worth noting. ) First, consumer le rning is process; th t is, it continu lly evolves nd ch nges s result of newly cquired knowledge or from ctu l experience. Both newly cquir ed knowledge nd person l experience serve s feedb ck to the individu l nd pro vide the b sis for future beh vior in simil r situ tions. Beh vior l Le rning Theories Beh vior l le rning theories re sometimes c lled stimulusresponse theories. ) When person responds in predict ble w y to known stimulus, he or she is s id to h ve le rned.

Beh vior l theories re most concerned with the inputs nd outcomes of le rning, not the process. Two theories relev nt to m rketing re cl ssic l conditioning

b) The role of experience in le rning does not me n th t ll le rning is deliber te ly sought. A gre t de l of le rning is lso incident l, cquired by ccident or without much effort. The term le rning encomp sses the tot l r nge of le rning, from simple, lmost reflexive responses to the le rning of bstr ct concepts nd complex problem solving. c) Most le rning theorists recognize the existence of different types of le rning nd expl in the differences through the use of disti nctive models of le rning. Despite their different viewpoints, le rning theorists in gener l gree th t in order for le rning to occur, cert in b sic elements must be presentmotiv tion, cu es, response, nd reinforcement. c) d) 11.623.3 Copy Right: R i University 115

nd instrument l (or oper nt) conditioning. Cl ssic l Conditioning E rly cl ssic l conditioning theorists reg rded ll org nisms s p ssive recipients. ) Condi tioning involved building utom tic responses to stimuli. Iv n P vlov w s the fi rst to describe conditioning nd to propose it s gener l model of how le rnin g occurs. b) For P vlov, conditioned le rning results when stimulus th t is p ired with nother stimulus elicits known response nd serves to produce the s me response when used lone. He used dogs to demonstr te his theories. The dogs were hungry nd highly motiv ted to e t.

e) f) P vlov sounded bell nd then immedi tely pplied me t p ste to the dogs tongu es, which c used them to s liv te. After sufficient number of repetitions of t he bell sound, followed lmost immedi tely by the food, the bell lone c used th e dogs to s liv te. The effectiveness of repetition is somewh t dependent upon the mount of competi tive dvertising to which the consumer is exposed. e) As exposure incre ses, the potenti l for interference incre ses. CONSUMER BEHAVIOUR In consumer beh vior context, n unconditioned stimulus might consist of wel l-known br nd symbol (e.g., the Microsoft windows icon) th t implies technologic l superiority nd trouble-free oper tion (the unconditioned response). Conditione d stimuli might consist of new products be ring well-known symbols. Cognitive As soci tive Le rning Recent conditioning theory views cl ssic l conditioning s th e le rning of ssoci tions mong events th t llows the org nism to nticip te nd represent its environment. The rel tionship (i.e., contiguity) between the cond itioned stimulus nd the unconditioned stimulus (the bell nd the me t p ste) in fluenced the dogs expect tions, which in turn influenced their beh vior (s liv ti on). Cl ssic l conditioning is seen s cognitive ssoci tive le rning not the c quisition of new reflexes, but the cquisition of new knowledge bout the world. Optim l conditioningth t is, the cre tion of strong ssoci tion between the co nditioned stimulus (CS) nd the unconditioned stimulus (US)requires forw rd condi tioning; th t is, the CS should precede the US, repe ted p irings of the CS nd the US, CS nd US th t logic lly belong together, CS th t is novel nd unf m ili r, nd US th t is biologic lly or symbolic lly s lient. Under neo-P vlovi n conditioning, the consumer c n be viewed s n inform tion seeker who uses log ic l nd perceptu l rel tions mong events, long with his or her own preconcept ions, to form sophistic ted represent tion of the world. Str tegic Applic tion s of Cl ssic l Conditioning Three b sic concepts derive from cl ssic l condition ing: repetition, stimulus gener liz tion, nd stimulus discrimin tion. 1. Repeti tion works by incre sing the strength of the ssoci tion nd by slowing the proc ess of forgetting. ) After cert in number of repetitions retention declines. b) This effect is known s dvertising we rout nd c n be decre sed by v rying t he dvertising mess ges. c) We rout m y be voided by v rying the mess ge throug h cosmetic v ri tion or subst ntive v ri tion. According to cl ssic l conditioning theorists, le rning depends not only on repe tition, but lso on the bility of individu ls to gener lize. 2. Stimulus gener liz tion expl ins why imit tive me too products succeed in the m rketpl ce: consum ers confuse them with the origin l product they h ve seen dvertised. It lso ex pl ins why m nuf cturers of priv te l bel br nds try to m ke their p ck ging clo sely resemble the n tion l br nd le ders. )

M rketers offer product form extensions th t include different sizes, different colors, nd even different fl vors. Product c tegory extensions gener lly t rget new m rket segments. i) The success of this str tegy depends on number of f c tors.

The principle of stimulus gener liz tion is pplied by m rketers to product line , form, nd c tegory extensions. b) In product line extensions, the m rketer dd s rel ted products to n lre dy est blished br nd, knowing th t the new product is more likely to be dopted when it is ssoci ted with known nd trusted br nd n me. i) c) d) Conversely, it is much more difficult to develop tot lly new br nd.

ii) For ex mple, if the im ge of the p rent br nd is one of qu lity, consumers re more likely to bring positive ssoci tions to the new c tegory extensions. F mily br ndingthe pr ctice of m rketing whole line of comp ny products under the s me br nd n meis nother str tegy th t c pit lizes on the consumers bility to g ener lize f vor ble br nd ssoci tions from one product to the next. Ret il priv te br nding often chieves the s me effect s f mily br nding. e) For ex mple, W l-M rt used to dvertise th t its stores c rried only br nds you trust. Now, the n me W l-M rt itself h s become br nd th t consumers h ve confidence in, nd th e n me confers br nd v lue on W lM rts store br nds. Licensing llowing well-known br nd n me to be ffixed to products of nother m nuf ctureris m rketing str tegy th t oper tes on the principle of stimulus gene r liz tion. Corpor tions lso license their n mes nd tr dem rks, usu lly for so me form of br nd extension, where the n me of the corpor tion is licensed to the m ker of rel ted product nd thereby enters new product c tegory. Municip l nd st te governments h ve begun licensing their n mes to chieve new sources o f revenue. The V tic n Libr ry licenses its n me for v riety of products from lugg ge to bed linens. Some dont gree bout how much repetition is needed. d) The three-hit theory st t es th t the optimum number of exposures to n d is three. i) One to m ke the co nsumer w re of the product. ii) A second to show consumers the relev nce of the product. iii) A third to remind them of its benefits. 116 Copy Right: R i University 11.623.3

The incre se in licensing h s m de counterfeiting booming business, s counter feiters dd well-known licensor n mes to v riety, of products without benefit of control or qu lity control. 3. Stimulus discrimin tion is the opposite of sti mulus gener liz tion nd results in the selection of specific stimulus from mon g simil r stimuli. ) The consumers bility to discrimin te mong simil r stimuli is the b sis of positioning str tegy, which seeks to est blish unique im ge f or br nd in the consumers mind. The key to stimulus discrimin tion is effective positioning, m jor competitive dv nt ge. b) The im ge, or position, th t p roduct or service h s in the mind of the consumer is critic l to its success. c) Unlike the imit tor who hopes consumers will gener lize their perceptions nd ttribute speci l ch r cteristics of the m rket le ders products to their own prod ucts, m rket le ders w nt the consumer to discrimin te mong simil r stimuli. Mo st product differenti tion str tegies re designed to distinguish product or b r nd from th t of competitors on the b sis of n ttribute th t is relev nt, me ningful, nd v lu ble to consumers. It often is quite difficult to unse t br n d le der once stimulus discrimin tion h s occurred. d) In gener l, the longer th e period of le rningof ssoci ting br nd n me with specific productthe more li kely the consumer is to discrimin te, nd the less likely to gener lize the stim ulus. c) In consumer beh vior terms, instrument l conditioning suggests th t consumers le rn by me ns of tri l- nderror process in which some purch se beh viors result in more f vor ble outcomes (i.e., rew rds) th n other purch se beh viors. A f v or ble experience is instrument l in te ching the individu l to repe t specifi c beh vior. CONSUMER BEHAVIOUR d)

Reinforcement of Beh vior Skinner distinguished two types of reinforcement (or rew rd) influence , which p rovided th t the likelihood for response would be repe ted. ) The first type, positive reinforcement, consists of events th t strengthen the likelihood of specific response. b) Neg tive reinforcement is n unple s nt or neg tive outcome th t lso serves to encour ge specific beh vior. i) c) Fe r ppe ls in d mess ges re ex mples of neg tive reinforcement. Either positive or neg tive reinforcement c n be use d to elicit desired response. d) Neg tive reinforcement should not be confused with punishment, which is desig ned to discour ge beh vior. Forgetting nd extinctionwhen le rned response is n o longer reinforced, it diminishes to the point of extinction; th t is, to the p oint t which the link between the stimulus nd the expected rew rd is elimin te d. ) b) Forgetting is often rel ted to the p ss ge of time; this is known s th e process of dec y. M rketers c n overcome forgetting through repetition nd c n comb t extinction through the deliber te enh ncement of consumer s tisf ction. The principles of cl ssic l conditioning provide the theoretic l underpinnings f or m ny m rketing pplic tions. e) Repetition, stimulus gener liz tion, nd stim ulus discrimin tion re ll m jor pplied concepts th t help expl in consumer be

Like P vlov, Skinner developed his model of le rning by working with nim ls. e) In m rketing context, the consumer who tries sever l br nds nd styles of je ns before finding style th t fits her figure (positive reinforcement) h s eng ged in instrument l le rning.

h vior. Instrument l Conditioning Like cl ssic l conditioning, instrument l conditioning requires link between stimulus nd response. ) However, in instrument l conditioning, the stimulus th t results in the most s tisf ctory response is the one th t is le rned. Str tegic Applic tions of Instrument l Conditioning 1. 2. The objective of ll m rketing efforts should be to m ximize customer s tisf ction. Aside from the exp erience of using the product itself, consumers c n receive reinforcement from ot her elements in the purch se situ tion, such s the environment in which the tr ns ction or service t kes pl ce, the ttention nd service provided by employees , nd the menities provided. ) Some hotels provide reinforcement to guests in the form of sm ll menities. b) Most frequent shopper progr ms re b sed on enh ncing positive reinforcement nd encour ging continued p tron ge. 3. Rel tionshi p m rketingdeveloping close person lized rel tionship with customersis nother f orm of nonproduct reinforcement. 117

According to Americ n psychologist B. F. Skinner, most individu l le rning occur s in controlled environment in which individu ls re rew rded for choosing n p propri te beh vior. 11.623.3 Copy Right: R i University

Instrument l le -error process, esponses or beh g how consumers is more helpful

rning theorists believe th t le rning occurs through tri l- nd with h bits formed s result of rew rds received for cert in r viors. b) Although cl ssic l conditioning is useful in expl inin le rn very simple kinds of beh viors, instrument l conditioning in expl ining complex, go l-directed ctivities.

Reinforcement schedulesm rketers h ve found th t product qu lity must be consiste ntly high nd provide customer s tisf ction with e ch use for desired consumer b eh vior to continue. M rketers h ve identified three types of reinforcement sche dules: tot l (or continuous) reinforcement, system tic (fixed r tio) reinforceme nt, nd r ndom (v ri ble r tio) reinforcement. V ri ble r tios tend to engender high r tes of desired beh vior nd re somewh t resist nt to extinctionperh ps be c use, for m ny consumers, hope springs etern l. Sh pingthe reinforcement of beh viors th t must be performed by consumers before the desired beh vior c n be per formed is c lled sh ping. ) Sh ping incre ses the prob bilities th t cert in de sired consumer beh vior will occur. Sometimes ds depict neg tive consequences for cert in types of beh vior. d) Thi s is p rticul rly true of public policy ds, which m y show the neg tive consequ ences of smoking, of driving too f st, or t king drugs. CONSUMER BEHAVIOUR Cognitive Le ring Theory Not ll le rning is the result of repe ted tri ls. ) Le rning lso t kes pl ce s the result of consumer thinking nd problem solving. Cognitive le rning is b sed on ment l ctivity. Cognitive le rning theory holds th t the kind of le rnin g most ch r cteristic of hum n beings is problem solving, nd it gives some cont rol over their environment. Inform tion Processing The hum n mind processes the inform tion it receives s input much s computer does. ) Inform tion process ing is rel ted to both the consumers cognitive bility nd the complexity of the inform tion to be processed. M ssed versus distributed le rningtiming h s n import nt influence on consumer l e rning. b) Questionshould le rning schedule be spre d out over period of tim e (distributed le rning), or should it be bunched up ll t once (m ssed le rning) ? The question is n import nt one for dvertisers pl nning medi schedule bec u se m ssed dvertising produces more initi l le rning, lthough distributed sch edule usu lly results in le rning th t persists longer. When dvertisers w nt n immedi te imp ct (e.g., to introduce new product or to counter competitors blitz c mp ign), they gener lly use m ssed schedule to h sten consumer le rnin g. When the go l is long-term repe t buying on regul r b sis, however, distr ibuted schedule is prefer ble. A distributed scheduler with ds repe ted on re gul r b sis, usu lly results in more long-term le rning nd is rel tively immune to extinction. Modeling or Observ tion l Le rning Le rning theorists h ve noted th t consider ble mount of le rning t kes pl ce in the bsence of direct rei nforcement, either positive or neg tive, through process psychologists c ll mo deling or observ tion l le rning ( lso c lled vic rious le rning). They observe how others beh ve in response to cert in situ tions (stimuli), the ensuing resul ts (reinforcement) th t occur, nd they imit te (model) the positively-reinforce d beh vior when f ced with simil r situ tions. ) Modeling is the process throug h which individu ls le rn beh vior by observing the beh vior of others nd the c onsequences of such beh vior. Their role models re usu lly people they dmire b ec use of such tr its s ppe r nce, ccomplishment, skill, nd even soci l cl s s. Children le rn much of their soci l beh vior nd consumer beh vior by observi ng their older siblings or their p rents. Individu ls differ in terms of their bility to form ment l im ges nd in their bility to rec ll inform tion. The more experience consumer h s with product c tegory, the gre ter his or her bility to m ke use of product inform tion. How Consumers Store, Ret in, nd Retrieve Inform tion The structure of memorybec use inform tion processing occurs in st ges, it is bel ieved th t content is stored in the memory in sep r te storehouses for further p

rocessing; sensory store, short-term store, nd long-term store. Sensory s tore ll d t comes to us through our senses, however, our senses do not tr nsmit inform tion s whole im ges. ) b) c) The sep r te pieces of inform tion re syn chronized s single im ge. This sensory store holds the im ge of sensory inp ut for just second or two. This suggests th t its e sy for m rketers to get inf orm tion into the consumers sensory store, but h rd to m ke l sting impression. Short-term storeif the d t survives the sensory store, it is moved to the shortterm store. d) This is our working memory. e) If rehe rs lthe silent, ment l repe tition of m teri l t kes pl ce, then the d t is tr nsferred to the long-term sto re. If d t is not rehe rsed nd tr nsferred, it is lost in few seconds. b) f) c) Long-term storeonce d t is tr nsferred to the long-term store it c n l st for d ys, weeks, or even ye rs. Rehe rs l nd encodingthe mount of inform tion v il b le for delivery from the short-term store to the long-term Advertisers recognize the import nce of observ tion l le rning in their selectio n of models, whether celebrities or unknowns. 118 Copy Right: R i University 11.623.3

y) Motiv ted consumers re likely to spend time interpreting nd el bor ting on inf orm tion they find relev nt to their needs; nd re likely to ctiv te such rele v nt knowledge from long-term memory. Rese rch findings suggest th t incongruent (e.g. unexpected) elements pierce consumers perceptu l screens nd improve the m emor bility of n d when these elements re relev nt to the dvertising mess ge . CONSUMER BEHAVIOUR z)

) Incongruent elements th t re not relev nt to n d lso pierce the consumers perceptu l screen but provide no memor bility for the product. Interference eff ects re c used by confusion with competing ds nd result in f ilure to retri eve. bb) Advertisements for competing br nds or for other products m de by the s me m nuf cturer c n lower the consumers bility to remember dvertised br nd inf orm tion. cc) There re ctu lly two kinds of interference. i) ii) New le rning c n interfere with the retriev l of previously stored m teri l. Old le rning c n interfere with the rec ll of recently le rned m teri l. Retentioninform tion is const ntly org nized nd reorg nized s new links between chunks of inform tion re forged. m) In f ct, m ny inform tion-processing theor ists view the long-term store s network consisting of nodes (i.e., concepts) with links mong them. n) As individu ls g in more knowledge they exp nd their n etwork of rel tionships, nd sometimes their se rch for ddition l inform tion. This process is known s ctiv tion, which involves rel ting new d t to old to m ke the m teri l more me ningful. The tot l p ck ge of ssoci tions brought to mind when cue is ctiv ted is c lled schem . Rese rch h s found th t older dults ppe r to be more reli nt on schem -b sed inform tion processing str tegie s th n younger dults. Consumers inform tion se rch is often dependent upon how s imil r or dissimil r (discrep nt) presented products re to product c tegories lre dy stored in memory. Consumers recode wh t they h ve lre dy encoded to incl ude l rger mounts of inform tion (chunking). The degree of prior knowledge is n import nt consider tion. Knowledge ble consumers c n t ke in more complex chun ks of inform tion th n those who re less knowledge ble in the product c tegory. Inform tion is stored in long-term memory in two w ys: episodic lly (i.e., by t he order in which it is cquired) nd sem ntic lly ( ccording to signific nt con cepts). M ny le rning theorists believe th t memories stored sem ntic lly re or g nized into fr meworks by which we integr te new d t with previous experience. Limited nd Extensive Inform tion Processing o) p) q) For long time, consumer rese rchers believed th t ll consumers p ssed through complex series of ment l nd beh vior l st ges in rriving t purch se deci sion (extensive inform tion processing). ) These st ges r nged from w reness (

Inform tion overlo d t kes pl ce form tion. j) It ppe rs to be fr me of th t inform tion. k) l) utes overlo d. The difficulty is

when the consumer is presented with too much in function of the mount of inform tion nd time There re contr dictory studies on wh t constit determining the point of overlo d.

store depends on the mount of rehe rs l n individu l gives to it. g) Encoding is the process by which we select nd ssign word or visu l im ge to represent perceived object. h) i) Le rning visu lly t kes less time th n le rning verb l inform tion. How much consumers encode depends on their cognitive commitment t o the int ke of the inform tion nd their gender.

exposure to inform tion), to ev lu tion (preference, ttitude form tion), to beh vior (purch se), to fin l ev lu tion ( doption or rejection). This s me series of st ges is often presented s the consumer doption process. r) i) s) t) Some theorists beg n to re lize th t there were some purch se situ tions th t si mply did not c ll for extensive inform tion processing nd ev lu tion; th t some times consumers simply went from w reness of need to routine purch se, with out gre t de l of inform tion se rch nd ment l ev lu tion (limited inform tio n processing). Purch ses of minim l person l import nce were c lled lowinvolveme nt purch ses, nd complex, se rch-oriented purch ses were considered high-involv ement purch ses. Involvement Theory u) Involvement theory developed from rese rch into hemispheric l l ter liz tion or split-br in theory. ) b) The premise is th t the right nd left hemispheres of the br in speci lize in the kinds of inform tion they process. The left hemisphe re is responsible for cognitive ctivities such s re ding, spe king, nd ttrib ution inform tion processing. The right hemisphere of the br in is concerned wit h nonverb l, timeless, pictori l, nd holistic inform tion. v) Retriev l is the process by which we recover inform tion from long-term stor ge. w) A gre t de l of rese rch is focused on how individu ls retrieve inform tion from memory. x) Studies show th t consumers tend to remember the products benefit s, r ther th n its ttributes. 11.623.3 c) Copy Right: R i University 119

) b)

Individu ls p ssively process nd store right-br in inform tion. ) Bec use it i s l rgely pictori l, TV viewing is considered right hemisphere ctivity. Use of the centr l route to persu sion is more effective in m rketing for high-i nvolvement purch ses. The peripher l route to persu sion is more effective for l ow-involvement purch ses. CONSUMER BEHAVIOUR b) P ssive le rning w s thought to occur through repe ted exposures to low-invol vement inform tion. i) TV commerci ls were thought to produce ch nge in consumer beh vior before it ch nged consumer ttitudes. The left hemisphere is ssoci te d with high-involvement inform tion. Print medi (newsp pers nd m g zines) re considered left hemisphere or high-involvement ctivity. The el bor tion likelihood model (ELM) suggests th t persons level of involveme nt during mess ge processing is the critic l f ctor in determining the most effe ctive route of persu sion. c) Thus, when involvement is high, consumers follow t he centr l route nd b se their ttitudes or choices on the mess ge rguments. W hen involvement is low, they follow the peripher l route nd rely more he vily o n other mess ge elements to form ttitudes or m ke product choices. c) i) d)

e) The m rketing implic tions of the el bor tion likelihood model re cle r: e) For high-involvement purch ses, m rketers should use rguments stressing the strong , solid, high-qu lity ttributes of their productsthus using the centr l (i.e., h ighly cognitive) route. f) For low-involvement purch ses, m rketers should use t he peripher l route to persu sion, focusing on the method of present tion r ther th n on the content of the mess ge (e.g., through the use of celebrity spokespe rsons or highly visu l nd symbolic dvertisements). f) Me sures of Involvement There re limit tions to split-br in theory. Rese rch suggests the spheres of th e br in do not lw ys oper te independently of e ch other, but work together to process inform tion. There is evidence th t both sides of the br in re c p ble of low- nd high-involvement. It does seem the right side is more cognitively or iented nd the left side more ffectively oriented. Involvement Theory nd Consumer Relev nce

Right-br in theory is consistent with cl ssic l conditioning nd stresses the im port nce of the visu l component of dvertising. d) Recent rese rch suggests th t pictori l cues help rec ll nd f mili rity, lthough verb l cues trigger cogni tive functions, encour ging ev lu tion. The right-br in processing theory stress es the import nce of the visu l component of dvertising, including the cre tive use of symbols. Pictori l cues re more effective t gener ting rec ll nd f mi li rity with the product, lthough verb l cues (which trigger left-br in process ing) gener te cognitive ctivity th t encour ges consumers to ev lu te the dv n t ges nd dis dv nt ges of the product.

Involvement Theory

nd Medi Str tegy

Rese rchers h ve defined nd conceptu lized involvement in v riety of w ys inc luding ego involvement, commitment, communic tion involvement, purch se import n ce, extent of inform tion se rch, persons, products situ tions, nd purch se dec isions. ) b) Some studies h ve tried to differenti te between br nd involvement nd product involvement. Others differenti te between situ tion l, enduring, n d response involvement. A consumers level of involvement depends on the degree of person l relev nce th t the product holds for the consumer. ) High-involvement purch ses re those th t re very import nt to the consumer in terms of perceived risk. b) Low-involvem ent purch ses re purch ses th t re not very import nt to the consumer, hold li ttle relev nce, nd little perceived risk. Highly involved consumers find fewer br nds ccept ble (they re c lled n rrow c tegorizers); uninvolved consumers r e likely to be receptive to gre ter number of dvertising mess ges reg rding t he purch se nd will consider more br nds (they re bro d c tegorizers). Centr l nd Peripher l Routes to Persu sion The l ck of cle r definition bout the essenti l components of involvement pos es some me surement problems. c) Rese rchers who reg rd involvement s cogniti ve st te re concerned with the me surement of ego involvement, risk perception, nd purch se import nce. Rese rchers who focus on the beh vior l spects of inv olvement me sure such f ctors s the se rch for nd ev lu tion of product inform tion. Others rgue th t involvement should be me sured by the degree of import nce the product h s to the buyer. d) e) Centr l nd peripher l routes to persu sionthe centr l premise is th t consumers re more likely to weigh inform tion c refully bout product nd to devote con sider ble cognitive effort to ev lu ting it when they re highly involved with t he product c tegory nd vice vers .

Bec use of the m ny different dimensions nd conceptu liz tions of involvement, it m kes sense to develop n involvement profile, r ther th n to me sure singl e involvement level. M rketing Applic tions of Involvement Involvement theory h s number of str tegic pplic tions for the m rketer. f) T he left-br in (cognitive processing)/right-br in (p ssive processing) p r digm s eems to h ve strong implic tions 11.623.3 120 Copy Right: R i University

for the content, length, nd present tion of both print nd television dvertise ments. g) By underst nding the n ture of low-involvement inform tion processing, m rketers c n t ke steps to incre se consumer involvement with their ds. A b sic issue mong rese rchers is whether to define br nd loy lty in terms of c onsumer beh vior or consumer ttitudes. b) Beh vior l scientists who f vor the t heory of instrument l conditioning believe th t br nd loy lty results from n in iti l product tri l th t is reinforced through s tisf ction, le ding to repe t p urch se. Cognitive rese rchers, on the other h nd, emph size the role of ment l processes in building br nd loy lty. CONSUMER BEHAVIOUR Me sures of Consumer Le rning M rket sh re nd the number of br nd-loy l consumers re the du l go ls of consu mer le rning. ) Br nd-loy l customers provide the b sis for st ble nd growin g m rket sh re. b) Br nds with l rger m rket sh res h ve proportion tely l rger groups of loy l buyers. c) They believe th t consumers eng ge in extensive problemsolving beh vior involvin g br nd nd ttribute comp risons, le ding to strong br nd preference nd repe t purch se beh vior. To cognitive le rning theorists, beh vior l definitions (e .g., frequency of purch se or proportion of tot l purch ses) l ck precision, bec use they do not distinguish the re l br nd-loy l buyer. Often consumers buy from mix of br nds within their ccept ble r nge (i.e., their evoked set). An integ r ted conceptu l fr mework views consumer loy lty s the rel tionship between n individu ls rel tive ttitude tow rd n entity (br nd, service, store, or vendor ) nd p tron ge beh vior. The consumers rel tive ttitude consists of two dimensi ons: d) e) The strength of the ttitude. The degree of ttitudin l differenti ti on mong competing br nds. Recognition nd Rec ll Me sures Recognition nd rec ll tests re conducted to de termine whether consumers remember seeing n d, the extent to which they h ve r e d it or seen it nd c n rec ll its content, their resulting ttitudes tow rd t he product nd the br nd, nd their purch se intentions. ) b) Recognition tests re b sed on ided rec ll, lthough rec ll tests use un ided rec ll. In recogni tion tests, the consumer is shown n d nd sked whether he or she remembers se eing it nd c n remember ny of its s lient points. In rec ll tests, the consume r is sked whether he or she h s re d specific m g zine or w tched specific television show, nd if so, c n rec ll ny ds or commerci ls seen, the product dvertised, the br nd, nd ny s lient points bout the product. c) Some theorists suggest th t br nd loy lty is correl ted with the consumers degree of involvement: f) g) High involvement le ds to extensive inform tion se rch n d, ultim tely, to br nd loy lty. Low involvement le ds to exposure nd br nd w reness, nd then possibly to br nd h bits. Cognitive Responses to Advertising Comprehension is function of the mess ge ch r cteristics, the consumers opportu nity nd bility to process the inform tion, nd the consumers motiv tion (or lev el of involvement). To ensure high level of comprehension, m ny m rketers cond uct copy testing either before the dvertising is ctu lly run in medi (c lled pre-testing) or fter it ppe rs (post-testing). Pre-tests re used to determine which, if ny, elements of n dvertising mess ge should be revised before m jo r medi expenses re incurred. Post-tests re used to ev lu te the effectiveness

of n d th t h s lre dy run, nd to identify which elements, if ny, should b e ch nged to improve the imp ct nd memor bility of future ds. Attitudin l nd Beh vior l Me sures of Br nd Loy lty

Br nd equity refers to the v lue inherent in well-known br nd n me. From con sumers perspective, br nd equity is the dded v lue bestowed on the product by th e br nd n me. Br nd equity f cilit tes the ccept nce of new products nd the l loc tion of preferred shelf sp ce, nd enh nces perceived v lue, perceived qu li ty, nd premium pricing options. For m ny comp nies, their most v lu ble ssets re their br nd n mes. Well known br nd n mes re known s meg br nds. Bec use br nd th t h s been promoted he vily in the p st ret ins cumul tive level of n me recognition, comp nies buy, sell, nd rent (i.e., license) their br nd n me s, knowing th t it is e sier to buy th n to cre te br nd n me with enduring st rength. Br nd loy lty is the ultim te desired outcome of consumer le rning. ) There is no single definition of this concept. Attitudin l me sures re concerned with co nsumers over ll feelings (i.e., ev lu tion) bout the product nd the br nd, nd their purch se intentions. Beh vior l me sures re b sed on observ ble responses to promotion l stimulipurch se beh vior, r ther th n ttitude tow rd the product or br nd. 11.623.3 Copy Right: R i University 121

As customers s tisf ction with the se rch for inform tion bout Br nd Equity

product incre ses long with repe t purch ses, ltern tive br nds decre ses.

Br nd equity en bles comp nies to ch rge price premium n ddition l mount over nd bove the price of n identic l store br nd. A rel tively new str tegy mon g some m rketers is co-br nding ( lso c lled double br nding). In co-br nding, t wo br nd n mes re fe tured on single product. It uses nother products br nd e quity to enh nce the prim ry br nds equity. Some experts believe th t using sec ond br nds equity m y imply th t the host br nd c n no longer st nd on its own. O thers question whether co-br nded product c uses consumer confusion s to who ctu lly m kes the product, nd whether the host br nd c n survive if the second br nd endorsement is t ken w y. Br nd equity is import nt to m rketers bec use it le ds to br nd loy lty, which in turn le ds to incre sed m rket sh re nd gr e ter profits. To m rketers, the m jor function of le rning theory is to te ch c onsumers th t their product is best, to encour ge repe t purch se, nd, to devel op loy lty to the br nd n me. 4. Which theory of le rning (i.e., cl ssic l conditioning, instrument l conditionin g, observ tion l le rning, or cognitive le rning) best expl ins the following co nsumption beh viors: ( ) buying six-p ck of Bisleri w ter, (b) preferring to p urch se clothes t the Benetton store, (c) buying digit l c mer for the first time, (d) buying new c r, nd (e) switching from one cellul r phone service t o nother? Expl in your choices. CONSUMER BEHAVIOUR

2.

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Describe in le rning terms the conditions under which f mily br nding is policy nd those under which it is not.

good

Discussion Questions 1. How c n the principles of ) cl ssic l conditioning theory nd b) instrument l conditioning theory be pplied to the development of m rketing str tegies?

CONSUMER BEHAVIOUR Le rning Process Cognitive le rning

P yer P yer le rns bout usedc r prices from the usedc r price book Perceived f irness of price levels is cl ssic lly conditioned. P yers buy che p t first, then experience shoddy perform nce nd le rn to invest more. Budgeting decisions mirro r those of dmired comp nies. P yers le rn norms for tipping by observing others . P yers dopt fin ncing innov tions like credit c rds, le sing etc. Cl ssic l conditioning Instrument l conditioning Modelling Buyer Buyers le rn bout new stores by word of mouth nd bout br nd r tings fro m choice etc. Buyers re conditioned through p tron ge of the s me vendors. Buye rs le rn they c n get better terms by ch nging vendors. Buyers m y switch prefer ences to stores nd vendors th t re trendy. Buyers dopt purch se procedure inn ov tions like buying through the internet. Adoption of innov tion The Three Customer roles Fig 5.1 The le rning processes mong the customer roles Figure 5.1 bove shows h ow the different le rning processes v ry for the different roles th t customer t h t pl ys. Definition of le rning Conditions th t influence le rning Le rning process Centr l rgument BEHAVIORIST Ch nge in beh viour b sed on experience Environment Cond itioning in sm ll steps. Reinforcement We c n t know students h ve le rned unles s we c n me sure ch nges in observed beh vior. COGNITIVIST Process of g ining or ch nging insights, outlooks, or through p tterns Needs, interests, feelings, et c. of le rner. S-R Discovery. S-O-R Something must go on inside the le rner th t c n t be me sured, but must be inferred from observed beh vior. There is more t o le rning th n just observed beh vior 4.3 Comp rison of Le rning Theories Key Terms Beh viorist Theory Le rning Process Tr nsfer of le rning Cognitive Le rning Cl ssic l Conditioning Instrument l conditioning Modeling Beh viorism Constructivism Soci l Le rning Locus of Control Soci l Reinforcement Se lf Reinforcement Vic rious Emotion l Arous l Vic rious Reinforcement Sem ntic Ge ner liz tion Rule-b sed le rning Observ tion l le rning Le rning Article # 1 The Writing on the M ll Evolution, not revolution. The Indi n ret iler is brimmi ng with ide s, but is still on the le rning curve. Heres re lity check on where ret il is he ded. WELL then, is the ret il boom h ppening or not? The p st two ye rs h ve thrown up s m ny nswers s questions. The numbers h ve boggled mind s, estim tes h ve v ried, existing big-time ret ilers h ve bled, nd projections h ve f llen short. Most import ntly, the lessons h ve been le rnt. While the Bi g D ddies re doing rethink on str tegy, nd tri l, error, experiment tion nd c ution re the new buzzwords, the p th h s been p ved - ret il in Indi is und oubtedly on its w y Copy Right: R i University 123

User User le rns bout the use of products nd od preferences re cquired in e rly childhood ices if they find them benefici l. Users model er people they dmire. Users dopt product nd

services by re ding bout them Fo Users dopt new products nd serv their clothing nd c r choice ft service fe ture innov tions

11.623.3

to slicker evolution. Slower th n expected, perh ps, but on tr ck ll right. The implic tions for ret ilers, outlines Arvind Singh l, Ch irm n, KSA Technop k, re to rethink v lue propositions, rec st business pl ns, t ke cle r focus on specif ic consumer segments nd unmet consumer dem nds nd exp nd c refully, confidentl y nd mbitiously. Org nised ret il is moving in concentric circles, observes R. Su br m ni n, Director, nd Subhiksh Tr ding Services, of the Chenn i-b sed superm rket nd ph rm cy ch in, which h s cre ted copybook success for itself in T m il N du. The shining ex mples set by South-b sed ch ins such s Nilgiris, Subhik sh , FoodWorld, Viveks, M rgin Free nd the RPG groups other ret il ventures such s the Gi nt hyperm rket nd He lth & Glow re being replic ted by the rest of I ndi , but gr du lly. In f ct, slow nd ste dy is the rule even for successful So uthern ch ins w nting to move up North. M rgin Free, the Ker l -b sed ret il ch in which h s scripted re son ble success story in Ker l nd T mil N du, would h ve liked to come up North e rlier if it w snt for steep re l est te costs, s y s Im m S lih, Chief Executive, M rgin Free M rket. The B ng lore-b sed Nilgiris Fr nchise h s begun to look for fr nchisees in Delhi, Mumb i nd Kolk t , but the right loc tion nd right p rtners re bsolutely essenti l, s ys C. Gop l krishn n, M n ging Director, Nilgiris. Of the 26 stores th t the ch in oper tes, six re comp ny-owned nd 20 re fr nchised. Expl ins R.S. Roy, M n ging Editor, Im g es, f shion, m rketing nd ret il m g zine, Exp nsion pl ns re now more re list ic. The figures for Indi n ret il re sm ll, but they re ttr ctive enough to i nvite the investors ttention. And while foreign direct investment in ret il h s b een ruled out in the Union Budget 2002, its doesnt re lly come in the w y of exp n sion, feel industry observers. The mood will turn positive in 2002, but the imp ct will be felt in 2003, predicts KSA Technop ks recently-rele sed 4th Consumer O utlook 2002 report. According to R j n Chibb , M n ging Director, KSA Technop k, while consumerism continued to grow l st ye r (indic ted by the number of consu mers entering the m rket for ny c tegory), per c pit spend for e ch c tegory f ell cross the bo rd m inly due to competitive pressures. The study shows 33 p er cent incre se in the number of new consumers entering c tegory in ye r 2001 g inst l st ye r. t nt, with positive nd neg tive sub-segments of consumers g ining signific nce. The growth cceler tor l st ye r, for ex mple, h s decidedly been the working w om n with the ver ge money spent by her ver ging 1.3 times th t of housewife . El bor ting on the c tegory p ttern th t seems to h ve emerged over the p st o ne ye r, KSAs Singh l points out th t it is the tr dition l ch nnels th t continu e to domin te the ret il industry. Therefore, while grocery, home ppli nces, co nsumer electronics nd e ting out continue to be the s fest bet for ret iler, heres the big surprise - ret iling of person l c re products, clothing, nd books nd music isnt re lly hot property ny more. Also, priv te l bels by ret ilers re not only coming of ge, they re giving convention l pl yers bre thless run for their money, especi lly in foods nd clothing. Expl ins Subhiksh s Subr m ni n, Stocking priv te l bel is n tur l incentive for ret iler, especi lly in gri-commodities like rice, d l, <147,1,0>whe t nd spices. The ch in is now con sidering introducing its own line of in-store br nds. And it is v lue ret iling th t prim rily seems to be enh ncing the lifetime v lue of the product. A one-sto p shop is n e sy route to success. However, this kind of shop will only succeed if it c ters to the right kind of products, c utions Chibb . According to the ju st-rele sed Im ges Ret il study, the food nd f shion-rel ted industry will toge ther ccount for 85 per cent of org nised ret iling - which is projected to touc h Rs 14,250 crore in 2002 (within the priv te sector). The Im ges study predicts th t the next two ye rs will witness n investment of Rs 1,000 crore for ret il exp nsions. Also, expect some 15 hyperm rkets, 20 l rge form t dep rtment store s, 10 l rge superm rkets, nd 1,500 br nd ch ins of which 80 per cent will be in 40 key cities. Existing hyperm rkets include Gi nt, Big B z r nd Metro S bk B z r. The best ex mples in the food sector rem in FoodWorld of RPG, Nilgiris, Subhiksh , nd S bk B z r from the Home Stores group. B rist , Qwikys, Milkfoods C fe 100, McDon lds, B skin Robbins, Nirul s, Movenpick, Subw y & Comp ny re exp ected to contribute in decent numbers to food ret iling. Clothing ret il gi nts

such s Shoppers Stop, P nt loon, Ebony, Westside nd Globus continue to exp nd, but very c utiously owing to the huge investment nd the huge risk f ctor involv ed. As Srir m Sriniv s n, M n ging Director, Indus Le gue Clothing Ltd, s ys, hi s comp ny will look t ll kinds of ret il form ts for its two br nds - Indigo N t ion nd Scullers - before investing the big bucks. The optimism exists, but so d oes c ution. T ke the Body Shop, which sells product every 0.4 seconds worldwi de. It is doing its bit of soul se rching before going the whole hog in Indi . S ys Peter Tyson, He d of ret il nd fr nchising, Asi P cific, The Body Shop Int ern tion l Plc., It is quite ch llenge to enter this m rket. Quite few ret ile rs here h ve overestim ted the buying power of the emerging middle cl ss. As Sing h l surmises, the need is to invest more in processes nd systems development, l ogistics, supply ch in m n gement 11.623.3 CONSUMER BEHAVIOUR The Lessons Le rnt While one key le rning h s been th t its c tegory-specific ret iling th t impress es the consumer, nother h s been th t c tchment re s re shrinking. So while f ood nd f shion ret iling h ve succeeded, consumers now seek convenient loc tion s to shop (with the exception of pp rel shopping). Therefore, Bomb y Store is n ow t str tegic irport loc tion in Mumb i. S ys Asim D l l, M n ging Director , Bomb y Store, We m y go intern tion l in the long run, but the p ce of ctivity here is s tisf ctory. Yet nother le rning h s been th t consumer niches re beg inning to drive the m rket nd re becoming more impor124 Copy Right: R i University

nd customer rel tionships. Its the usu l m n gement j rgon, but unfortun tely not lw ys understood nd pr cticed, he s ys. The writing on the m ll is cle r - the consumer will shop, but she w nts r nge, efficiency, displ ys nd price de ls i n her shopping b sket first. Points To Remember CONSUMER BEHAVIOUR Consumer Le rning Import nce of Le rning n M rketers

must te ch consumers: where to buy how to use how to m int in how to dispose of products Le rning Processes n Intention l: n Incident l: Le rning Theories n Beh vior l Theories: Theories b sed on the premise th t le rning t kes pl ce s the result of observ ble responses to extern l stimuli. Also known s stimulus r esponse theory. n Cognitive Theories: A theory of le rning b sed on ment l inform tion processing, often in response to problem solving.

11.623.3 Copy Right: R i University 125

le rning cquired by

ccident or without much effort

le rning cquired s

result of

c reful se rch for inform tion

A process by which individu ls cquire the purch se nd consumption knowledge d experience th t they pply to future rel ted beh vior.

CONSUMER BEHAVIOUR 126 Elements of Le rning Theories n Motiv tion n Cues Response n Reinforcement n Beh vior l Le rning Theories n Cl ssic l Conditioning n Instrument l Conditioning n Modeling or Observ tion l Le rning Reinforcement A positive or neg tive outcome th t influences the likelihood th t specific be h vior will be repe ted in the future in response to p rticul r cue or stimulu s. Cl ssic l Conditioning A beh vior l le rning theory ccording to which stimulus is p ired with nothe r stimulus th t elicits known response th t serves to produce the s me respons e when used lone. Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Instrument l (Oper nt) Conditioning A beh vior l theory of le rning b sed on tri l- nd-error process, with h bits forced s the result of positive experiences (reinforcement) resulting from cert in responses or beh viors. Figure 7.2A P vlovi n Model of Cl ssic l Conditioning Unconditioned Stimulus Me t p ste Unconditioned Response S liv tion Conditioned Stimulus Bell AFTER REPEATED PAIRINGS Conditioned Stimulus Bell Conditioned Response S liv tion Cognitive Associ tive Le rning n Cl ssic l Neo-P vlovi n Conditioning n Forw rd conditioning is viewed s the le rning of ssoci tions mong events th t llows the org nism to nticip te nd represent its environment. n From this viewpoint, cl ssic l conditioning is not reflexive ction, but r ther the cquisition of n ew knowledge

11.623.3 Copy Right: R i University 127

Conditioning (CS Precedes US) n Repe ted P irings of CS nd US n A CS nd US th t Logic lly Belong to E ch Other n A CS th t is Novel nd Unf mili r n A US th t is Biologic lly or Symbolic lly S lient

CONSUMER BEHAVIOUR 128 Str tegic Applic tions of Cl ssic l Conditioning n Repetition n Stimulus Three-Hit Theory n Gener liz tion n Stimulus Discrimin tion Repetition is the b sis for the ide th t three exposures to n d re necess ry for the d to be effective n The number of ctu l repetitions to equ l three ex posures is in question. Repetition n n Repetition incre ses strength of ssoci tions nd slows forgetting but over time m y result in dvertising we rout. Cosmetic v ri tions reduce s ti tion. Figure 7.3 Cosmetic V ri tions in Ads Stimulus Gener liz tion The in bility to perceive differences between slightly dissimil r stimuli. Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Stimulus Gener liz tion nd M rketing n Figure 7.10 A Model of Instrument l Conditioning Try Br nd A Try Br nd B Stimulus Situ tion (Need goodlooking je ns)

Product Line, Form nd C tegory Extensions n F mily Br nding n Licensing n Gener lizing Us ge Situ tions

Try Br nd C Try Br nd D Stimulus Discrimin tion The bility to select specific stimulus from mong simil r stimuli bec use of perceived differences. Positioning Instrument l Conditioning n Consumers Differenti tion

11.623.3 Copy Right: R i University 129

le rn by me ns of tri l nd error process in which some purch se beh viors resul t in more f vor ble outcomes (rew rds) th n other purch se beh viors. n A f vor ble experience is instrument l in te ching the individu l to repe t specific b eh vior.

Unrew rded Legs too tight Unrew rded Tight in se t Unrew rded B ggy in se t Rew rd Perfect fit Repe t Beh vior

CONSUMER BEHAVIOUR 130

Reinforcement n S tisf ction (Reinforcement) n Reinforcement Schedules Sh ping n M ssed versus Distributed Le rning n

n n Neg tive Reinforcement: Unple s nt or neg tive outcomes th t serve to encour ge specific beh vior Ex mple: Ad showing wrinkled skin s reinforcement to buy sk in cre m Other Concepts in Reinforcement n Punishment Choose reinforcement r ther th n punishment n Extinction Observ tion l Le rning Comb t with consumer s tisf ction n Forgetting Comb t with repetition A process by which individu ls observe the beh vior of others, nd consequences of such beh vior. Also known s modeling or vic rious le rning. Copy Right: R i University 11.623.3

Positive Reinforcement: Positive outcomes th t strengthen the likelihood of sp ecific response Ex mple: Ad showing be utiful h ir s reinforcement to buy sh mpoo

Instrument l Conditioning n Customer

nd M rketing

CONSUMER BEHAVIOUR Cognitive Le rning Theory Holds th t the kind of le rning most ch r cteristic of hum n beings is problem s olving, which en bles individu ls to g in some control over their environment. Figure 7.13 Inform tion Processing nd Memory Stores Working Working Memory LongMemory Long(Short- term (Short term Encoding Store Re triev l term term Store Store) Store) Sensory Input Sensory Sensory Store Store Rehe rs l Forgotten; lost Forgotten; lost Forgotten; un v il ble Inform tion Processing A cognitive theory of hum n le rning p tterned fter computer inform tion proces sing th t focuses on how inform tion is stored in hum n memory nd how it is ret rieved. Retention n

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Inform tion is stored in long-term memory Episodic lly: by the order in which it is gnific nt concepts

cquired Sem ntic lly:

ccording to si

CONSUMER BEHAVIOUR 132 T ble 7.1 Models of Cognitive Le rning Promotion l Tricompetent Model Model Sequenti l St ges of Processing DecisionM king Model Innov tion Adoption Model Innov tion Decision Process Attention Interest Desire Action Cognitive Affective Con tive Aw reness Knowledge Ev lu tion Purch se Postpurch se Ev lu tion Aw reness Knowledge Interest Ev lu tion Tri l Adoption Persu sion Decision Confi rm tion Involvement Theory A theory of consumer le rning which postul tes th t consumers eng ge in r nge of inform tion processing ctivity from extensive to limited problem solving, de pending on the relev nce of the purch se. Issues in Involvement Theory n Involvement n Involvement n Centr l Theory nd Medi Str tegy Theory nd Consumer Relev nce nd Peripher l Routes to Persu sion n Me sures of Involvement Centr l nd Peripher l Routes to Persu sion

Copy Right: R i University 11.623.3

A theory th t proposes th t highly involved consumers re best re ched through ds th t focus on the specific ttributes of the product (the centr l route) whil e uninvolved consumers c n be ttr cted through peripher l dvertising cues such s the model or the setting (the peripher l route).

CONSUMER BEHAVIOUR Me sures of Consumer Le rning El bor tion Likelihood Model (ELM) A theory th t suggests th t persons level of involvement during mess ge process ing is critic l f ctor in determining which route to persu sion is likely to b e effective. n n n Recognition nd Rec ll Me sures Aided nd Un ided Rec ll Cognitive Responses to Advertising Copytesting Me sures n Attitudin l nd Beh vi or l Me sures of Br nd Loy lty The El bor tion Likelihood Model Involvement HIGH Centr l Route LOW Peripher l Route Ph ses of Br nd Loy lty n n Cognitive Affective n Con tive n Action Mess ge Arguments Influence Attitudes Peripher l Cues Influence Attitudes 11.623.3 Copy Right: R i University 133

CONSUMER BEHAVIOUR Figure 7.19 Br nd Loy lty As A Function of Rel tive Attitude nd P tron ge Beh v ior Repe t P tron ge High High Low High Rel tive Attitude Low Loy lty Spurious Loy l ty L tent Loy lty No Loy lty Notes 134 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 14: TUTORIAL I. Discuss recent product purch se you reg rd s high involvement nd nother one you view s low involvement with three cl ssm tes. Do they gree with your s elections? Describe how their points of view m y be rel ted to . Br nd loy lty b. Frequency of use c. Price p id d. Perceived risk ssoci ted with the purch se 5. . Define the following memory structures: sensory store, short-term store (w orking memory), nd longterm store. Discuss how e ch of these concepts c n be us ed in the development of n dvertising str tegy. 11.623.3 Copy Right: R i University 135

LESSON 15: CONSUMER ATTITUDES UNIT II CONSUMER AS AN INDIVIDUAL CHAPTER 6: CONSUMER ATTITUDES Introduction We s individu ls le rn ttitudes through experience nd inter ction with other people. Our ttitudes tow rd firm nd its products s consumers gre tly influe nce the success or f ilure of the firms m rketing str tegy. Attitudes nd ttitud e ch nge re influenced by consumers person lity nd lifestyle. Consumers screen inform tion th t conflicts with their ttitudes. We distort inform tion to m ke it consistent nd selectively ret in inform tion th t reinforces our ttitudes, in other words, br nd loy lty. But, there is difference between ttitude nd i ntention to buy ( bility to buy). For inst nce, Hond , dispelled the uns vory im ge of motorbike rider, in the l te 1950s with the slog n You meet the nicest p eople on Hond . But with the ch nging m rket of the 1990s, nd b by boomers gi ng, Hond s m rket w s returning to h rd core. To ch nge this they h ve new slo g n Come ride with us. Through cting nd le rning, people cquire beliefs nd tt itudes, which in turn, influence their buying beh viour. A BELIEF is descripti ve thought th t person holds bout something. A customer m y believe th t T j group of Hotels h ve the best f cilities nd most profession l st ff of ny hote l in the price r nge. These beliefs m y be b sed on re l knowledge, opinion, or f ith. They m y or m y not c rry n emotion l ch rge. M rketers re interested i n the beliefs th t people h ve bout specific products nd services. Beliefs rei nforce product nd br nd im ges. People ct on beliefs. If unfounded customer be liefs deter purch ses m rketers will w nt to do c mp ign to ch nge them. Unfou nded consumer beliefs c n severely ffect the revenue nd even the life of hospi t lity nd tr vel comp nies. Among these beliefs might be the following: Describe the tricomponents of the tricomponent ttitude model. Comp re the trico mponent ttitude model nd the multi ttribute ttitude models. CONSUMER BEHAVIOUR 1. Attitudes An ttitude describes persons rel tively consistent ev lu tions, feelings, nd tendencies tow rd n object or n ide . Attitudes put people into fr me of min d for liking or disliking things nd moving tow rd or w y from them. For ex mpl e, m ny people who h ve developed the ttitude th t e ting he lthy food is impor t nt perceive veget bles s he lthy ltern tive to me t nd chicken. As resu lt, the per c pit consumption of veget bles h s incre sed during recent ye rs, le ding the ne t nd chicken Producers Council to try to ch nge consumer ttitud es th t chicken nd me t re unhe lthy. Comp nies c n benefit by rese rching tt itudes tow rd their products. Underst nding ttitudes nd beliefs is the first s tep tow rd ch nging or reinforcing them. Attitudes re very difficult to ch nge. A persons ttitudes fit into p ttern, nd ch nging one ttitude m y require m king m ny difficult djustments. It is e sier for comp ny to cre te products t h t re comp tible with existing ttitudes th n to ch nge the ttitudes tow rd t heir products. There re exceptions, of course, where the high cost of trying to ch nge ttitudes m y p y off. There is s ying mong rest ur teurs th t rest ur nt is only s good s the l st me l served. Attitudes expl in in p rt why th is is true. A customer who h s returned to rest ur nt sever l times nd on one visit receives b d me l m y begin to believe th t it is impossible to count o n h ving good me l t th t rest ur nt. The customers ttitudes tow rd the rest ur nt begin to ch nge. If this customer g in receives b d me l, neg tive tti tudes m y be perm nently fixed nd prevent future return. Serving poor me l to first-time customers c n be dis strous. Customers develop n immedi te neg ti ve ttitude th t prevents them from returning. Attitudes developed s children o ften influence purch ses s dults. Children m y ret in neg tive ttitudes tow r

d cert in veget bles, people, nd pl ces. Ch nces re equ lly good th t they m y ret in very positive im ges tow rd McDon lds nd Disneyl nd. Disney nd McDon lds both view children s lifelong customers. They w nt children to return s teen gers, p rents, nd gr ndp rents nd tre t them in m nner to ensure future busi ness. M ny hospit lity nd tr vel comp nies h ve still not le rned from those tw o ex mples. However, once neg tive ttitudes re developed, they re h rd to ch nge. New rest ur nt owners often w nt quick c sh flow nd sometimes st rt withou t excellent qu lity. A new rest ur teur compl ined th t customers re fickle. A few months l ter fter 11.623.3 A p rticul r h mburger ch in served ground k ng roo me t. A p rticul r hotel ser ved s M fi he dqu rters. A p rticul r irline h s poor m inten nce. A p rticul r country h s unhe lthy food-h ndling st nd rds.

Describe ttitude in terms of its four elements. Discuss the structur l models o f ttitude: tricomponent, multi- ttribute, trying-to-consume, nd ttitude-tow r dthe- d. 136 Copy Right: R i University

Objectives After going through this lesson, you should be

People h ve ttitudes bout c nd food.

lmost everything: religion, politics, clothes, musi

ble to

the rest ur nt w s opened, the owner h d plenty of empty se ts every night. Obvi ously, he h d not s tisfied his first guests. Even though he m y h ve subsequent ly corrected his e rly mist kes, his origin l customers who h d been dis ppointe d, were not returning. We c n now ppreci te the m ny individu l ch r cteristics nd forces influencing consumer beh viour. Consumer choice is the result of c omplex interpl y of cultur l, soci l, person l, nd psychologic l f ctors. We s m rketers c nnot influence m ny of these; however, they help the m rketer to be tter underst nd customers re ctions nd beh viour. Attitudes re defined s men t l predisposition to ct th t is expressed by ev lu ting p rticul r entity wi th some degree of f vor or disf vor. The v lue of ttitude in m rketing c n be e xpl ined in terms of its import nce in prediction, di gnostic v lue nd lso s rel tively inexpensive inform tion th t is e sily obt ined. 2.1 Tricomponent Attitude Model According to the tricomponent ttitude model, t titude consists of three m jor components, viz., cognitive component, n ffec tive component, nd con tive component. CONSUMER BEHAVIOUR 1. Models of Attitude We will now look t the v rious models of ttitudes. But before looking t these models, we h ve to underst nd the f ct th t m ny times our ttitudes depend o n the situ tions. For ex mple, in figure 6.2 we identify cert in products nd se e how the specific situ tion sh ve m de us form the s id ttitude. Product Mon co Biscuits Situ tion P rty going on nd ordered sn cks h vent rrive d. Suffering from blocked nose And he d che

Vicks Action-500 M xim W tches W tch slipped from h nd nd Fell into w ter. Compl n Ariel micro shine proof wrist w tch. Mothers worried bout children not t king b l nced food. There is the need for giving children complete pl nned food. Husb nd h s to w sh pi le of You need to use n e sy to use, very effective detergent powder. dirty cloth es, when his wife is w y from home Fig 6.2 Situ tions influencing ttitudes Structur l models of ttitudes: To unde rst nd the rel tionships between ttitudes nd beh viour, psychologists h ve tri ed to develop models th t c pture the underlying dimensions of ttitude. To serv e this purpose, the focus h s been on specifying the composition of n ttitude to better expl in or predict beh viour. The following section describes some imp ort nt ttitude models like tricomponent ttitude model, the multi ttribute mode ls, the trying to consume model, nd the ttitude-tow rd-the- d model. All the bove-mentioned models present different perspectives on the number of component p rts of n ttitude nd how these p rts re rr nged or interrel ted. 11.623.3

. ) The cognitive component: The cognitive component consists itions, i.e., knowledge nd perceptions ( bout n object). This sulting perceptions commonly t ke the form of beliefs, im ges, ories. A utility function representing the weighted product of

of persons cogn knowledge nd re nd long-term mem ttributes nd cr

Fig 6.3 Tricomponent ttitude model Attitude I need to serve n inst nt substitute for sn cks. You need to t ke le ction t blet to get immedi te relief. There is nothing to worry since its conomic l w ter

doub n e

iteri would be used to develop the fin l r nking nd thus choice. This model re presents the process used by individu ls with strong Thinking Cognitive Style. Copy Right: R i University 137

b. b) The ffective component: The ffective component of n ttitude comprises of the consumers emotions or feelings (tow rd n object). These emotions or feeling s re frequently tre ted by consumer rese rchers s prim rily ev lu tive in n tu re; i.e., they c pture n individu ls direct or glob l ssessment of the ttitude -object, which might be positive, neg tive, or mixed re ction consisting of our feelings bout n object. Buying of ny product or service would be ccomplished on the b sis of how e ch product/ service m kes the decision m ker feel. The pr oduct th t evokes the gre test positive (ple sur ble) ffective response would t hus be r nked first. The ffective response m y be derived through ssoci tion ( i.e, c tegory ttributes) or directly ttributed to the inter ction between the product or service nd the decision m ker. It is believed th t the m nner in whi ch the product/service ffirms or dis ffirms the self concept of the decision m ker h s strong imp ct to the decision m kers ffect response to the c ndid te. This model represents the process used by individu ls with strong Feeling Cogn itive Style. Ordering of the three job c ndid tes would be ccomplished on the b sis of how e ch c ndid te m kes the decision m ker feel. The c ndid te th t evo kes the gre test positive (ple sur ble) ffective response would thus be r nked first. The ffective response m y be derived through ssoci tion (i.e, c tegory ttributes) or directly ttributed to the inter ction between the c ndid te nd the decision m ker. It is believed th t the m nner in which the c ndid te ffirm s or dis ffirms the self concept of the decision m ker h s strong imp ct to th e decision m kers ffect response to the c ndid te. The con tive component: The c on tive component is concerned with the likelihood or tendency of cert in beh vi or with reg rd to the ttitude object. It would lso me n the predisposition or tendency to ct in cert in m nner tow rd n object 2) Attitude tow rd beh vior model: This model is the individu ls ttitude tow rd the object itself. The crux of the ttitude-tow rds-beh viour model is th t it seem s to correspond somewh t more closely to ctu l beh viour th n does the ttitude -tow rd-object model. So t king on from liking BMW, we m y s y you re not re dy to buy/drive one bec use you believe th t you re too young/old to do so CONSUMER BEHAVIOUR 3) c) Theory of re soned- ction-model: This model represents comprehensive integr ti on of ttitude components into structure th t is designed to le d to both bett er expl n tions nd better predictions of beh viour. Simil r to the b sic tricom ponent ttitude model, the theory-of-re soned- ction model incorpor tes cognit ive component, n ffective component, nd con tive component; however these re rr nged in p ttern different from th t of the tricomponent model.

2.2 Multi ttribute Attitude Models Multi ttribute ttitude models portr y consum ers ttitudes with reg rd to n ttitude object s function of consumers perceptio ns nd ssessment of the key ttributes or beliefs held with reg rd to the p rti cul r ttitude object. The three models, which re very popul r, re: the ttitude -tow rd-object model, the ttitude-tow rd-beh viour model, nd the theoryof-re s oned- ction model. 1) Attitude tow rd object model. The ttitude-tow rdobject mo del is suit ble for me suring ttitudes tow rds product or service c tegory or specific br nds. This model s ys th t the consumers ttitude tow rd product or specific br nds of product is function of the presence or bsence nd ev lu tion of cert in product-specific beliefs or ttributes. In other words, consume rs gener lly h ve f vor ble ttitudes tow rd those br nds th t they believe h ve

n dequ te level of ttributes th t they ev lu te s positive, nd they h ve u nf vor ble ttitudes tow rds those br nds they feel do not h ve n dequ te leve l of desired ttributes or h ve too m ny neg tive or undesired ttributes. For i nst nce, you m y like BMWs Copy Right: R i University 138 11.623.3

CONSUMER BEHAVIOUR Beliefs th t the Beh vior le ds Cert in outcome Attitude tow rd The beh vior Ev lu tion of The outcomes Intention Beh vior Beliefs th t specific Referents think I Should or should Not perform the beh vio r Subjective norm Motiv tion to Comply with The specific referents Fig 6.5 the theory Re soned ction Source: Ad pted from Icek Ajzen M rtin Fishbe in, Underst nding Attitudes nd Predicting Soci l Beh vior To underst nd intenti on, in ccord nce with this model, we lso need to me sure the subjective norms th t influence n individu ls intention to ct. A subjective norm c n be me sured directly by ssessing consumers feelings s to wh t relev nt others would thin k of the ction being contempl ted; i.e., would they look f vor bly or unf vor b ly on the nticip ted ction? All this m y sound very difficult, but we will ill ustr te this with n worked out ex mple! To the concept in better f shion, we wi ll look t the Fishbeins Multi ttribute Model of Attitudes with n ex mple MODEL: Ao = S biei ; i = 1 to n

To illustr te let us look t n ex mple. The ex mple is th t of me suring ttitu de tow rds Athletic Shoes. Thus we will try to me sure ttitude using the Fishbe ins model. Lets s y, we identified 5 ttributes (through depth interview): 1. 2. 3 . 4. 5. Shock- bsorb nce; Dur bility; Styling; Price; Number of sizes v il ble Me sure ll ei S mple ei question for price Ple se st te your opinion on the foll owing sc les: For thletic shoes: price is: 2 3 4 5 6 7 Import nt Ao = Attitude tow rds the object o (over ll ev lu tion) bi = extent of belief th t o possesses ttribute i ei = ev lu tion of ttribute i So, get relev nt ttri butes for product, (depth interview) me sure bs nd es nd get Ao Unimport nt 1 11.623.3 Copy Right: R i University 139

S mple ei question for price (correct version) CONSUMER BEHAVIOUR Ple se st te your opinion on the following sc les: high price is:

-2 -1 0 1 2 3 Desir ble Me sure ll ei (-3 to 3) Ple se st te your opinion on the following sc les: For thletic shoes: High price is: Undesir ble Undesir ble -3 -3 -2 -1 0 1 2 3 -2 -1 0 1 2 3 Desir ble High dur bility is: Desir ble

Me sure bi v lues for the br nd (-3 to 3) Ple se tell us wh t you think bout br nd A on these fe tures: Br nd A shoes is high in price Unlikely -3 -3 -2 -2 -1 -1 0 0 1 1 2 2 3 3 Likely Likely Br nd A shoes is high in dur bility Unlikely

Aver ge EI for high price: -3 -1 -2 -2 Consumer 1 Consumer 2 Consumer 3 Consumer 4 Aver ge EI for price = ???? Aver ge Bi for price of Br nd A: 3 3 3 Consumer 1 Consumer 2 Consumer 3 Consumer 4 3 Aver ge BI for Br nd A price = ???? Attitude Me surement: Br nd A High Shock-Absorbence High Dur bility F shion ble Styling

Compute Aver ge Scores for BI

nd EI

For

thletic shoes: Undesir ble -3

+3 +3 +1 +3 +2 +2 +2 +3 -2 -1 +6 +6 +3 -6 -2 High Price L rge Number of Sizes Over ll Attitude = +7 140 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Attitude Br nd Me surement B S lient beliefs Brlief strenghth(bi) Ev Score (ei) biei High Shock-Absorbence High Dur bility F shion ble Styling High Price L rge Numbe r of Sizes +2 +3 -1 2 -2 +2 +2 +3 -2 -1 +4 +6 -3 -4 +2 Note: C lcul ting Attitudes Right W y Consumer A: Consumer B: Over ll ttitude = +5 bi = 2 ei = -1 bi = 4 ei = -3 Aver ge bi = ?? ei = ?? So: ttitude for this segme nt = ?? Wrong W y Consumer A: bi = 2 ei = -1 Attitude for Consumer A = ?? Consumer B: bi = 4 ei = -3 Attitude for Consumer B = ?? So: ver ge ttitude for this segment = ??

Need to Me sure Attitude Tow rds Beh vior (AB); not just Attitude tow rds Object (Ao) Need to include the Influence of Other Peoples Opinions (Subjective Norms) F ishbeins Theory of Re soned Action Does Both vehicle such s c t log on consumer ttitude tow rds p rticul r products or br n ds. KEY TERMS 2.3 Theory of Trying to Consume The theory of trying to consume h s been designe d to ccount for the m ny c ses where the ction or outcome is not cert in, but inste d reflects the consumers ttempts to consume or purch se. In such c ses the re re often person l impediments nd/or environment l impediments th t might pr event the desired ction or outcome from occurring. Here g in, the key point is th t in these c ses of trying, the outcome is not, nd c nnot be ssumed to be cert in. The focus here is the trying or seeking p rt, r ther th n the outcome (co nsumption) 2.4. Attitude-tow rd-the- d models The gist of this model c n be expl ined by the following: 1) Norm lly, if you like n d, you re more likely to p urch se the dvertised br nd. 2) For new product/br nd, n d h s stronger i mp ct on br nd ttitude nd purch se intention. Fig 6.4 the rel tionship mong e lements in n ttitude tow rds the Ad model (Re- d pted from Consumer Beh vior L.G . Schiffm n, L.L. K nuk) The ttitude-tow rd-the- d model w s developed to under st nd the imp ct of dvertising or some other promotion l 11.623.3 Cognitive Affective Con tive Structur l Model Tricomponent Attitude model Multi ttribute ttitude model Attitude tow rds Object Model Theory of re soned ction model Fishbeins multi ttribute model Theory of trying-to-consume Attitude-tow rds -the- d model Copy Right: R i University 141

Model Problem: Attitude Not Alw ys Predictive of Beh vior!!

Article #1 Consumer Attitude: Let Consumer Psyche Work For You Consumers im ges bout themse lves nd how they desire to ppe r to others, s well s their spir tion l need s, provide fodder for dvertising nd br nd positioning. upcoming businessm n who is driven by spir tion m y buy L coste T-shirt, whic h is ssoci ted with the profile of globetrotter, club membership, some kind o f exclusivity nd perh ps cert in up m rket sports. There could lso be v ri n t of this kind of self-concept in the form of others ide l self-concept (how others should ide lly perceive the individu l). The individu l m y use st tus symbols to impress others (others ide l self-concept) but m y resist using them whenever there is situ tion where the individu l feels others do not m tter (person l d iscretion ry time/leisure vis--vis profession l work). M rketers could use such p sychogr phic inform tion with time styles (how individu ls spend their time) to come out with the ppropri te ppe l for products nd services (v c tion nd wee kend c rs re ex mples of c tegories where these orient tions re likely to be u seful). Expected self-im ge This kind of im ge is between ctu l nd ide l selfim ges. It is likely to be useful to m rketers bec use ch nging the self-im ge r dic lly tow rds the ide l im ge would be difficult nd the expected self-im ge is one th t consumers could identify with. A typic l ex mple is the dvertisemen ts of computer educ tion l institutes th t ttempt to dr w prospective consumers for their courses gener lly r nging from few weeks to two ye rs. Though there is n element of spir tion, consumers feel it le ds to situ tion, which is m ore, stepping stone (completion of the course to get job) r ther th n the re lis tion of their dre ms (the ultim te ide l self-im ge). For given t rget se gment, the short-term spir tions m y reflect ctu l selfconcepts nd the long-t erm ones the ide l self-concepts. Inner-directedness nd other-directedness Ther e m y be bro dly two kinds of consumers - inner-directed ones nd other-directed ones. Inner-directed consumers look to themselves for following specific life style, forming ttitudes tow rds product c tegories nd br nds nd in gener l fo r purch se decisions. Other-directed consumers re influenced by their peers, ne ighbors nd by groups with which they inter ct on regul r b sis or by spir ti on l groups. The soft drink br nd, Sprite, which positioned itself s non-pseud o drink, is prob bly br nd t rgeted tow rds inner-directed consumers. Other-dir ected br nds re those, which strongly emph sise the group or symbolize others se lf-concept (Gold Fl ke nd B c rdi re ex mples). Person lity Tr its nd their A pplic tions Tr its re enduring nd distinguishing. Ch r cteristics th t differe nti te one individu l from the other re helpful to m rketers in v riety of w ys. Consumer Innov tiveness This spect of person lity m y be useful to both FMC G products nd dur bles. It en bles m rketers to identify nd t rget consumers w ho would be receptive to new product c tegories. A number of new product c tegor ies re being introduced nd specific lly these c tegories will benefit from ide ntifying the innov tors. (Mobile phones, electronic toys, pl sm TVs, WorldSp ce music systems, speci l types of 11.623.3 CONSUMER BEHAVIOUR CONSUMER beh viour is n inter-disciplin ry science th t h s its roots in sever l disciplines. It m y be worthwhile to consider the pr ctic l m rketing pplic t ions th t could be developed using self-concepts nd beh viour l tr its. In lmo st ny c tegory of consumer products, symbolism m kes use of selfconcept. It is the im ge n individu l holds of himself. There re v riety of self-concepts, which could be useful to m rketing communic tion. Actu l self-concept It is bou t how n individu l perceives himself. A group of consumers m y perceive themsel ves s rebellious non-conformists who seek individu lity nd freedom in their li festyles. The Ch rms br nd of cig rettes during the e rly eighties w s perh ps o ne of the e rly br nds in the Indi n context to cre te br nd person lity using the power of self-concepts - The spirit of freedom nd Ch rms is the w y you re we re some of the copy st tements in the dvertisements of the br nd which fe tured

young models. In order to dd to the cl im on freedom, they h d p ck ged the br nd in p ck th t h d denim type of design. This w s the time when denim, whi ch h s its origin in the US, w s getting ccepted in the Indi n context for its function l nd symbolic ppe l. The lifestyle type of dvertising nd the ssoci tions (with c su lness nd freedom) m de the br nd n inherent p rt of the yout h culture during its time. The br nd h d used either ctu l self-concept or the concept of how n individu l likes others to perceive him. Ide l self-concept Th is is concerned with how n individu l would like to ide lly perceive himself. T here is thin line of difference. Ide l selfconcept h s overtones of spir tion in it (more deeper th n n ctive self-im ge) - the individu l perceives the id e l im ge of himself/herself b sed on his spir tion l needs. This would depend on his st tus - fin nci l nd educ tion l, childhood upbringing, environment l e xposure nd person lity tr its. An 142 Copy Right: R i University

w tches such s Ecodrive from Citizen nd electric c rs re some c tegories, which m y benefit from the identific tion of innov tor profile). Innov tors would ls o form good b se of consumers who would spre d the word bout the c tegory or br nd. There is need to ensure th t innov tors re not only s tisfied with the product but lso with the service th t is p ck ged with the product. It m y be worthwhile for m rketers to find out if these types of consumers perceive the be nefits offered by new c tegory of products. For inst nce, products such s t hree-in-one (which comprised tr nsistor, t perecorder nd record pl yer) intro duced in the e rly seventies did not c tch on even though few innov tors bough t this product. With n rrow pl ne of differenti tion existing in the col m rk et, br nd could come out with col fortified with vit mins nd the success o f such product would depend on the perception of innov tors. Ethnocentrism Eth nocentrism is the tendency of consumer to prefer products m de in his/her coun try (vis--vis products m de in foreign country). The Ruf nd Tuf je ns br nd is good ex mple of br nd ttempting ethnocentrism. Je ns s c tegory re of foreign origin nd consumers h ve been used to number of foreign br nds. Arvin d Mills (which l unched Ruf nd Tuf) found th t spir tion l levels of consumer groups in semi-urb n towns with reg rd to the product c tegory were high but the ir fford bility only permitted them to buy je ns, which were clones/duplic tes of well-known br nds nd of inferior qu lity. There w s need for good qu lit y je ns br nd t fford ble prices. Ruf nd Tuf w s l unched with celebrity n d the br nd followed this up with c mp ign, which emph sised the ethnicity of the br nd. The c mp ign w s effective in removing the perception th t only forei gn br nds were ssoci ted with the c tegory. B j j l unched the H m r B j j c mp ign in the nineties when it found th t competitive br nds were m king dent in its sh re. The c mp ign m de use of the popul rity of the br nd throughout the c ountry (not only in urb n re s in which the presence of competitive br nds w s felt). The problem of grey m rkets in c tegories such s cig rettes, perfumes n d consumer electronics could be effectively t ckled by using ethnocentrism (v ri tions of the concept). A grey m rket is one in which smuggled br nds (though or igin l) re m de v il ble through illeg l ch nnels of distribution. If foreig n comp ny h s m nuf cturing or coll bor tive rr ngement in the country, it could highlight this spect in the br nd communic tion nd thus develop f vour ble ttitude for the br nd. Optimum Stimul tion Level The intensity of physic l or ment l or sensory ctivity in individu l experiences could be referred to s stimul tion level. Due to the differences in person lity f ctors nd lifestyles , individu ls v ry in the stimul tion levels they experience. Individu ls with high level of stimul tion re likely to find w ys to reduce the stimul tion lev els nd individu ls with low level re likely to m ke ttempts to incre se the ir level of stimul tion. The m rketing implic tion could be expl ined 11.623.3 through typic l ex mple involving the selection of v c tion th t could r nge from dventure-filled ones to those, which offer tr nquility nd pe ce. Another pplic tion of stimul tion levels could be th t ssoci ted with the m n gement of product lines in FMCG c tegories such s biscuits, chocol tes, toothp stes n d even cig rettes. One of the objectives of l unching v ri nts (in the form of f l vours nd t stes) is to ensure th t consumers do not ch nge the br nd. It m y be worthwhile for br nd to find out through rese rch if loy l consumers need v riety to gr tify their stimul tion levels. Revenue from v ri nts would h ve to be c refully m n ged for product line profits nd stimul tion levels of consumer s m y be useful point to be t ken into consider tion. Dogm tism This refers to tr it which is responsible for the individu ls resist nce whenever the inform tion provided to the individu l is not in tune with his/her beliefs (degree of r igidity tow rds beliefs not in tune with this beliefs). Consumers who h ve low level of dogm tism re likely to be more open to m rketing communic tion th n t hose who h ve high level of dogm tism. Exploring the cognitive spects of tti tude mong the t rget segment could be very useful to m rketers, especi lly befo re they formul te the communic tion for br nd. The usefulness will be more pro nounced for new concept product. For inst nce, mong the t rget segment for w te

r purifiers, there m y be set of consumers who strongly believe th t the proce ss of purific tion is likely to be h z rdous to he lth nd th t the end benefit of purified w ter could be obt ined through br nd of w ter filter. This kind o f belief h s to be c refully de lt with using combin tion of promotion l metho ds ( dvertisements, person l selling nd perh ps demonstr tion with sophistic te d methods nd rese rch d t ). Permission m rketing which involves cre ting n in volvement from the consumers end is likely to be effective in providing found t ion to communic te with the consumer nd slowly reduce the intensity of dogm tis m. From mong the t rget segment for the product (w ter filter), it m y be usefu l to g ther d t on how m ny would be interested in obt ining inform tion on the br nd (which would lso include the kind of inform tion which will ddress wron g beliefs). If the br nd is ble to communic te effectively with this cross-sect ion of consumers, there re ch nces th t word of mouth could t ke over nd spre d to other consumers in the t rget segment. This ppro ch is likely to be more eff ective th n high visibility c mp ign, which directly tt cks the set beliefs h eld by crosssection of consumers. A sp te of dvertisements, if used, m y beco me counter-productive if they gener te counter- rguments in the psyche of dogm t ic consumers. Consumers m y feel th t the br nd is ttempting to force itself on them by the sponsorship of blitzkrieg. The qu lit tive spects of person lity -oriented concepts offer sever l cre tive venues for m rketers. CONSUMER BEHAVIOUR Copy Right: R i University 143

Points To Remember CONSUMER BEHAVIOUR Models of Attitude Consumer Attitudes An ttitude describes persons rel tively consistent ev lu tions, feelings, nd tendencies tow rd n object or n ide . Tricomponent Attitude Model Multi ttribu te Attitude models

Multi ttribute Attitude models Properties of ttitudes Cognitive Affective Beh vior l Intentions Ev lu tion Attitude tow rd object l Attitude tow rd beh vior model Theory of re soned- ction-model Theory of tryin g to consume Attitude-tow rd-the- d models 144 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 16: ATTITUDE FORMATION AND CHANGE Introduction How do people, especi lly young students like you, form your initi l gener l tt itudes tow rd things? Consider your ttitude tow rd clothing you we r such s c su l we r, nd form l we r. On more specific level, how do you form ttitudes to w rd Woodl nds, or Will life style, or Lee c su l we r, or Allen Solly form l cl othing? Also, wh t bout where such clothing is purch sed? Would you buy your c su l we r, nd form l clothing t Shoppers Stop, Lifestyle, or The Metropolit n? How do f mily members nd friends, celebrities dmired by you, dvertisements, i nfluence the form tion of you ttitudes concerning consuming or not consuming e ch of these types of pp rel items? Why do some ttitudes seem to persist indefi nitely, while others ch nge very often? The nswer to ll these questions re of gre t import nce to m rketers, since without knowing how ttitudes re formed, they re un ble to underst nd or to influence consumer ttitudes or beh viour. T he bove is lso true of ttitude ch nge, i.e., ttitude ch nges re le rned; th ey re influenced by person l experience nd other sources of inform tion, nd p erson lity ffects both the receptivity nd the speed with which ttitudes re l ikely to be ltered. 1.1 Le rning of Attitudes By form tion of ttitude, we me n situ tion, where there is shift from h ving no ttitude tow rds given obj ect to h ving some ttitude tow rd it. This shift from no ttitude to n ttitud e or the form tion of ttitude is result of le rning. Attitudes re gener lly formed through: Repe ted exposure to novel soci l objects, Cl ssic l conditioning, Oper nt condi tioning nd Exposure to live nd symbolic models.

1. How re ttitudes formed? We ex mine ttitude form tion by dividing into three re s: how ttitudes re le rned, the sources of influence on ttitude form tion, nd the imp ct of person lity on ttitude form tion. 1. How ttitudes re le rned: 1) The shift from h vi ng no ttitude tow rd given object to h ving n ttitude is le rned. The le rn ing m y come from inform tion exposure, consumers own cognition (knowledge or bel ief), or experience. 2) Consumers m y form n ttitude before or fter purch s e. Sources of influence on ttitude form tion: person l experience, friends nd f mily, direct m rketing, or m ss medi . Person lity f ctors: such s high/low n eed for cognition (inform tion seeking), nd soci l st tus consciousness Consumers gener lly purch se new products th t re ssoci ted with f vor bly v iewed br nd n me. Their f vor ble ttitude tow rd the br nd n me is frequently t he result of repe ted s tisf ction with other products produced by the s me comp ny. In terms of cl ssic l conditioning, n est blished br nd n me is n uncondi tioned stimulus th t h s resulted in f vor ble br nd ttitude through p st pos itive reinforcement. A new product, which is yet to be linked to the est blished br nd, would be the conditioned impulse. For ex mple, by giving new nti-wrin kle lotion the benefit of its well-known nd respected f mily n me, Johnson & Jo hnson m y be counting on n extension of the f vor ble ttitude lre dy ssoci t ed with the br nd n me to the new product. They re counting on stimulus gener l iz tion from the br nd n me to the new product. It h s been shown by rese rch th t the fit between p rent br nd like in the c se of J&J nd br nd extension, f or inst nce, J&Js nti-wrinkle, is function of two f ctors: (1) the simil rity

Underst nd the concept of form tion of ttitudes Identify the circumst nces re sons for ttitude ch nges Formul te str tegies for ch nging ttitudes

Objectives After completing this lesson you should be

ble to: nd

between the pre-existing product c tegories lre dy ssoci ted with the p rent b r nd nd the new extension, nd (2) the fit or m tch between the im ges of the p r ent br nd nd the new extension. At times, ttitudes follow the purch se nd con sumption of product. For ex mple, consumer m y purch se br nd-n me product without h ving prior ttitude tow rds it, bec use it is the only product v i l ble like the l st bottle of sh mpoo in hotel store). Consumers sometimes m k e tri l purch ses of new br nds from product c tegories in which they h ve littl e person l involvement. If they find the purch sed br nd to be s tisf ctory, the n they re likely to develop f vor ble ttitude tow rd it. Life is too complic ted to predict wh t ttitudes will persist nd which will ch nge but e rly soci liz tion experiences do sh pe ttitudes. 1.2 Sources of Influence on Attitude F orm tion The form tion of consumer ttitudes is strongly influenced by person l experience, the influence of f mily nd friends, direct m rketing, nd m ss medi . Attitudes tow rds goods nd services re prim rily formed through the consume rs direct experience 145 2. 3. 11.623.3 Copy Right: R i University

Activity 1 1. Wh t sources influenced you ttitude bout this course before cl sses st rted ? 2. H s your initi l ttitude ch nged since the course st rted? If so, how? CONSUMER BEHAVIOUR 146 Copy Right: R i University 11.623.3

1.3 Person lity F ctors We know th t the person lity of e ch individu l is diffe rent nd it pl ys very cruci l role in form tion of ttitude. S y for ex mple, if you h ve high need for cognition, i.e., you cr ve for inform tion nd enjo y thinking. Then you re likely to form positive ttitude in response to ds o r direct m il th t re rich in product rel ted inform tion. On the other h nd, y our friend R vi, who is rel tively low in need for cognition, is more likely to form positive ttitudes in response to ds th t fe ture n ttr ctive model or w ell-known celebrity. 2. Attitude Ch nge nd Persu sion Activity 3 A. Using the Internet, find two dvertisements th t re trying to per su de you. Try to find n dvertisement th t is trying to persu de you to buy so mething nd one th t is trying to persu de you to do something (e.g., vote for s omeone, don te money to something). CONSUMER BEHAVIOUR Activity 2 Describe situ tion in which you cquired n ttitude tow rd new product thro ugh exposure to n dvertisement for th t product. Describe situ tion where yo u formed n ttitude tow rd product or br nd on the b sis of person l influenc e. B. Determine wh t processing route the ds re trying to use nd how effective i t might be. Also try to gener te some ide s bout how consumer could resist th e dvertisements persu sive t ctics. 11.623.3 Copy Right: R i University 147

C. You will be sked to sh re your ds, your n lysis of the processing route th e d is trying to use, nd your ide s bout how consumer could resist the ds p ersu sive t ctics with the rest of the cl ss. 3. Str tegies of Attitude Ch nge Bringing bout ch nge in the consumer ttitudes is very import nt str tegic consider tion for us m rketing people. When the product or br nd is the m rket l e der, the m rketers will work t ensuring th t their customers continue to p tr onize their product with the existing positive ttitude. Such firms lso h ve to ensure th t their existing loy l customers do not succumb to their competitors ttitude ch nge ploys. But it is the firm whose is not the br nd le der, which tr ies to dopt m rketing str tegies so s to ch nge the ttitudes of the m rket le ders, customers nd win them over. Among the ttitude ch nge str tegies th t r e v il ble to them re: 1. 2. 3. 4. 5. Ch nging the consumers b sic motiv tion l function Associ ting the product with n dmired group or event Resolving two c onflicting ttitudes Altering components of the Multi ttribute model, nd Ch ngi ng consumer beliefs bout competitors br nds. CONSUMER BEHAVIOUR Now let us look t e ch of these str tegies in gre ter det ils. 1. Ch nging the b sic motiv tion l function: This str tegy c lls for ch nging consumer ttitudes tow rds product or br nd by m king new need prominent. One such method ch n ging motiv tion is c lled the function l ppro ch. As per this ppro ch, ttitud es c n be cl ssified in terms of four functions, viz: 1. 2. 3. 4. The utilit ri n function The ego defensive function The v lue - expressive function The Knowle dge function.

The utilit ri n function: A consumer develops br nd ttitude bec use of its ut ility. In other words; we develop f vor ble ltitude tow rds product bec use of its utility function. So m rketers try to ch nge consumer ttitudes in f vor of their products or br nd by highlighting its utilit ri n purpose, which they (the competitors consumers;) m y not h ve considered. For ex mple, Jyothi L bor tories h ve positioned Uj l s Neel jo Neel n hi (Neel which is not blue) nd lso the cost benefit (only Rs 7) is given s the utilit ri n benefit; Ego defensive function: Most individu ls w nt to protect their self-im ge. They w nt re- ssur nce bout their self-im ge from inner feelings or doubts. Firms m rketing person l c re nd cosmetics try to ppe l to this need nd develop f vor ble ttitud e ch nge tow rds their products or br nds by communic ting re- ssur nce to the consumers self concept. S y For inst nce, Dove so p spe ks bout the skins drynes s which is t ken c re by the moisturizing content in the Dove So p or Life buoy Gold so p t lks of the teen gers concern bout pimples, nd the mother st tes th t there is nothing you c n .do bout it nd re ssures by st ting you c n t ke c re by using Life buoy Gold so p. Such dvertisements show underst nding nd re ssur nce to the potenti l customers. The v lue expressive function: A. consumer devel ops n ttitude b sed on his gener l v lue, life style nd outlook. If Copy Right: R i University 148 11.623.3

the t rget consumers hold positive ttitude tow rds being f shion ble, then th ey will h ve positive ttitude tow rds high f shion clothes e.g. V n Hussen, L ouis Phillip etc., The dvertisement for Y m h RXG motorcycle is t rgeted t yo ung people who re outgoing nd prefer powerful bike. The d cl ims M n, m chi ne nd n ture in perfect h rmony. Bre tht king power, unbe t ble perform nce. The knowledge function: Hum n n ture is such th t individu ls prefer to know nd un derst nd the people nd things they re in cont ct. While product positioning, m rketers try to do this nd improve the consumers ttitude tow rds their product or br nd by highlighting its benefits over competing br nds. For inst nce, in highly competitive m rket, Or 1-B toothbrush emph sizes on its indic tor which wi ll tell the users the time when they re required to ch nge the toothbrush. Comb ining sever l functions: Since different consumers m y h ve developed positive o r neg tive ttitude tow rds the s me product or service, firms could use funct ion l fr me work for ex mining the consumer ttitudes. For inst nce, Asi n p int s h ve highlighted the us ge of their p ints to h rmonise the home coming of the son on the festiv l d y, when the house h s been colorfully re-p inted with Asi n p ints. This d t lks of m ny functions - it highlights th t -the product wor ks well (h s m ny colour combin tions) (the utilit ri n functions), the second i s the inner joy nd confidence (bec use proper welcome c n be ccorded to the son coming home with the v rious colourp ints giving the house new look) (v lu e expression function) 2. Associ ting the product with n dmired group or event At times ttitudes come to be tt ched to cert in groups, soci l events or c us es. So m rketers could try str tegies whereby their product or service comes to be ssoci ted with cert in events, soci l groups or c uses. For ex mple, Tit n Cu p is ssoci ted with cricket. Through sponsorship of the deep purple nd Bon Jovi concerts, BPL h s est blished positive ttitude in consumer mind. Nobody enter t ins you like BPL or Godrej positions itself with positive be uty p ge nts. CRY greetings c rds is ssoci ted with c use, ll contributions go to the UNESEF. 3. Resolving two conflicting ttitudes M rketers lso try to t ke dv nt ge of ctu l or potenti l conflict between ttitudes. At times firms m ke consumers see th t their ttitudes tow rds br nd is in conflict with nother ttitude, nd then they m ybe inclined to ch nge their ev lu tion of the br nd. For ex mple, y our mother m y be choosing cooking medium, which dds to the t ste. And this ttitude exists right from the D ld d ys. However, M rico industries cre ted he rt stopping commerci l for its S ffol cooking oil to resolve the conflicting tti tude th t S ffol oil though he lthy oil is not p rticul rly t sty one. The dvert isements of S ffol w s shown in series of shots, depicting middle ged m n be ing rushed to hospit l nd wheeled into the oper tion room nd he suffers he r t tt ck, while his p nic stricken wife w its fe rfully, drove the mess ge. And there w s voice over referring to S ffol s product benefit-There re m ny things in your husb nds life t h t you c nnot control. S ffol : its your life insur nce- struck up n immedi te ssoci tion with s fety nd relief. 4. Altering components of the Multi ttribute model In the e rlier lesson we discussed number of Multi ttribute models, whic h h ve implic tion for ttitude ch nge str tegies. To be more precise, these mod els provide us with ddition l insights s to how to bring bout ttitudin l ch nge: (1). Ch nging the rel tive ev lu tion of ttributes (2) Ch nging br nd beli efs (3) Adding n ttribute, nd (4) Ch nging the over ll br nd r ting (1) Ch nging the rel tive ev lu tion of ttributes CONSUMER BEHAVIOUR Consumer m rkets c n be segmented in the s me product c tegory ccording to br n ds th t offer different fe tures or beliefs. For ex mple, Moov, b lm to reliev e p in in the b ck nd Iodex to relive p in due to ny infl mm tion or swelling like spr in etc. nother ex mple we could t ke in this c se is when m rketers pe rsu de consumers who prefer one version of the product s y profession l 35mm c mer Y shik to shift their ttitudes to nother version of the product s y n u tom tic re dy to point nd shoot c mer -Konik .

(2) Ch nging br nd beliefs This c lls for ch nging ttitudes of consumers by ch nging beliefs or perception s bout the br nd itself. For ex mple, P & Gs Ariel Microshine detergent cl ims t h t this detergent is tough cle ner, powerful st in remover, e sy to use, unli ke the other detergents, which only whiten the clothes. (3) Adding n ttribute This me ns either dding n ttitude th t previously h s been ignored or one th t represents n improvement or technologic l innov tion. For inst nce, Initi lly Bournvit w s positioned s superior product to milk i.e., he lth builder. Now Bournvit s dvertisement cl ims it s necess ry product or he lth builder con t ining vit l c lcium, vit mins nd c rbohydr tes th t is must for growing chi ldren. (4) Ch nging the over ll br nd r ting Altering the consumers over ll ssessment of the br nd directly without ttempti ng to improve or ch nge their ev lu tion of single br nd ttribute. Usu lly th is str tegy is used by using some form of glob l st tement like this is the l rg est selling br nd. For ex mple, the dvertisement of west r du l time w tches, from West r) the world on your w tch). (5)Ch nging consumer beliefs bout competitors br nds Usu lly it is seen th t the ttitude ch nge gent is wellrespected ge nt uthority or peer group. Bec use the mount of ttitude ch nge is rel ted to the credibility of the source of the mess ge. The m jor purpose of ch nging tti tudes is to eventu lly ch nge consumer beh vior. Thus n underst nding of consum er ttitudes tow rds their product will en ble the m rketer to dopt suit ble st r tegies nd cre te positive im ge or ttitude for th t m tter of their produc ts in the minds of the consumer. 149 11.623.3 Copy Right: R i University

Beh vior C n Precede or Follow Attitude Form tion Cognitive Disson nce Theory According to cognitive disson nce theory, discomfort or disson nce occurs when consumer holds confusing thoughts bout belief or n ttitude object (either before or fter the purch se). Postpurch se disson n ce occurs fter the purch se. The consumer is not h ppy with the purch seso they djust their ttitudes to conform to their beh vior. Postpurch se disson nce is quite norm l. Attitude ch nge is frequently n outcome of n ction or beh vior. Disson nce propels consumers to reduce the unple s nt feelings cre ted by the r iv l thoughts. T ctics th t consumers c n use to reduce disson nce include reduc tion: By r tion lizing the decision s being wise. By seeking out dvertisements th t support the origin l re son for choosing the product. By trying to sell frie nds on the positive fe tures of the br nd. By looking to known s tisfied owners for re ssur nce. M rketers c n help reduce postpurch se uncert inty by iming sp ecific mess ges t reinforcing consumer decisions. Beyond these disson nce-reduc ing t ctics, m rketers incre singly re developing ffinity or rel tionship prog r ms designed to rew rd good customers nd to build customer loy lty nd s tisf ction. Attribution Theory Wh t does ttribution theory s y bout ttitude? Attri bution theory ttempts to expl in how people ssign c us lity to events on the b sis of either their own beh vior or the beh vior of others. Self-Perception Theory For this re son, it is cruci l th t m rketers offer uniformly highqu lity produc ts th t llow consumers to perceive themselves s the re son for the success; th t is, I m competent. Foot-in-the-door techniquethe foot-in-the-door technique, is b sed on the premise th t individu ls look t their prior beh vior (e.g., compl i nce with minor request) nd conclude th t they re the kind of person who s ys Yes to such requests (i.e., n intern l ttribution). Such self- ttribution ser ves to incre se the likelihood th t they will gree to simil r, more subst nti l request. It ppe rs th t different size incentives cre te different degrees o f intern l ttribution th t, in turn, le d to different mounts of ttitude ch n ge. It is not the biggest incentive th t is most likely to le d to positive tti tude ch nge. Wh t seems most effective is moder te incentive, one th t is just big enough to stimul te initi l purch se of the br nd but still sm ll enough to encour ge consumers to intern lise their positive us ge experience nd llow positive ttitude ch nge to occur. Attributions Tow rd Others CONSUMER BEHAVIOUR Every time you sk Why? bout st tement or ction of nother or others f mily memb er, friend, s lesperson, direct m rketer, shipping comp ny ttribution to w rd others theory is relev nt. Attributions Tow rd Things It is in the re of judging product perform nce th t consumers re most likely to form product ttributions tow rd things. Specific lly, they w nt to find out why product meets or does not meet their expect tions. In this reg rd, they co uld ttribute the products successful perform nce (or f ilure) to the product its elf, to themselves, to other people or situ tions, or to some combin tion of the se f ctors. How We Test Our Attributions Self-perception theory ddresses individu ls inferences or judgments s to the c use of their own beh vior. In terms of consumer beh vior, self-perception theory suggests th t ttitudes develop s consumers look t nd m ke judgments bout t heir own beh vior. Intern l nd extern l ttributions ttitudes develop s consume rs look t nd m ke judgments bout their own beh vior. These judgments c n be d ivided into intern l, extern l, nd defensive ttributions. Intern l ttributiong iving yourself credit for the outcomes your bility, your skill, or your effort. Extern l ttributionthe purch se w s good bec use of f ctors beyond your controllu

ck, etc. Defensive ttributionconsumers re likely to ccept credit person lly fo r success, nd to credit f ilure to others or to outside events. We s Individu ls cquire conviction bout p rticul r observ tions by cting lik e n ive scientists, th t is, by collecting ddition l inform tion in n ttempt to confirm (or disconfirm) prior inferences. In collecting such inform tion, we of ten use the following: DistinctivenessThe consumer ttributes n ction to p rt icul r product or person if the ction occurs when the product (or person) is pr esent nd does not occur in its bsence. Consistency over timeWhenever the person or product is present, the consumers inference or re ction must be the s me, or ne rly so. Consistency over mod lityThe inference or re ction must be the s me, e ven when the situ tion in which it occurs v ries. ConsensusThe ction is perceive d in the s me w y by other consumers. 150 Copy Right: R i University 11.623.3

Activity 4 Tick on the correct choice 1. Attitudes re formed by le rning. In terms of cl s sic l conditioning, Oil of Ol y, the well est blished br nd, w s using the br nd strength s the unconditioned stimulus to introduce Oil of Ol y body w sh. The unconditioned stimulus w s used to link the new br nd to the est blished n me, r esulting in f vor ble ttitude. The comp ny is hoping for _____ from the br nd n me to the new product. . stimulus recognition b. stimulus gener liz tion c. ttitude exp nsion d. ttitude st bility 2. Attitudes re formed: . before usin g the product. b. fter using the product. c. when he ring bout the product. d. ll of the bove 3. The form tion of ttitudes is strongly influenced by ll th e following except: . person l experience. b. influence of f mily nd friends. c. m ss medi . d. how long the product h s been on the m rket. 4. The prim ry me ns by which consumers form their ttitudes is through _____. . consumer report s b. f mily influences c. person l experience d. direct m rketing 5. Direct m rk eting efforts h ve n excellent ch nce of f vor bly influencing t rget consumers ttitudes bec use: . direct m rketing is f vor bly looked upon. b. the m ss sc le of direct m rketing m kes it domin nt pl yer. c. bec use the products nd s ervices offered re highly t rgeted to the individu ls needs nd concerns. 7. Consumers who h ve high need for cognition re those who: . re p ssive. b. c r ve inform tion nd enjoy thinking. c. desire the best qu lity in the products they choose. d. look for the best v lue for the money. CONSUMER BEHAVIOUR 8. The following type of comp ny is most likely to go fter n ttitude ch nge m rk et str tegy: . the industry le der b. m jor competitor of the le der c. sm ll s t rt-up business d. ll of the bove 9. Which of the following is one of the ttitude ch nge str tegies th t m rketers f ollow? . ssoci ting the product with n dmired group or event b. resolving tw o conflicting ttitudes c. ch nging consumer beliefs bout competitor br nds d. ll of the bove 10. An effective ttitude ch nge str tegy is ch nging the b sic motiv tion l fun ction. According to this ppro ch, ttitudes c n be formed into four functions; which of the following is not one of them? . utilit ri n b. ego-defensive c. kn owledge d. person l experience 11. One of the str tegies for ch nging consumer ttitudes is ch nging the b sic motiv tion l function using four different functi ons. Ads for cosmetics nd person l c re products cknowledge the f ct th t peop le w nt to protect their self-im ges from inner feelings of doubt. This is consi stent with which b sic motiv tion l functions? . ego-defensive b. knowledge c. utilit ri n d. v lue-expressive d. Internet dvertising is too cluttered. 6. The closest thing to direct experie nce influencing ttitude form tion is: . m g zines nd newsp per ds. b. TV com merci ls. c. the Internet. d. direct m rketing. 11.623.3 Copy Right: R i University 151

12. One of the str tegies for ch nging consumer ttitudes is ch nging the b sic motiv tion l function using four different functions. An ex mple of the _____ fu nction is for Crest to point out how its new toothbrush is superior to ll other toothbrushes in controlling gum dise se by removing more pl que. . ego-defensi ve b. knowledge c. utilit ri n d. v lue-expressive 13. One of the str tegies for ch nging consumer ttitudes is ch nging the b sic motiv tion l function using f our different functions. An ex mple of the _____ function is for Celesti l Se so ns to point out th t Green Te is lo ded with ntioxid nts, which re good for y ou. . ego-defensive b. knowledge c. utilit ri n d. v lue-expressive 14. When m rketers try to persu de regul r te drinkers to cross over to becoming herb l te drinkers, the comp ny must utilize str tegy th t: . ch nges the rel tive ev l u tion of ttributes. b. ch nges br nd beliefs. c. informs consumers th t it h s dded n ttribute. d. ch nges the over ll r ting of br nd. 15. When HP ch ll enges the notion th t computers do not h ve to be difficult to use by st ting th t their product is s simple s duh, it is ltering component of the multi ttri bute model to ch nge ttitudes; which str tegy is it using? . ch nging the rel tive ev lu tion of ttributes b. ch nging br nd beliefs c. dding n ttribute d . ch nging the over ll br nd r ting 16. The l rgest selling br nd nd the one ll o thers try to imit te re cl ims used by comp nies trying to ch nge ttitudes by u sing the following str tegy: . ch nging the rel tive ev lu tion of ttributes b . ch nging br nd beliefs c. dding n ttribute d. ch nging the over ll br nd r ting Key Terms CONSUMER BEHAVIOUR The Utilit ri n Function The ego defensive function The v lue expressive functio n The knowledge function Br nd beliefs Article # 1 Horlicks In A New Av t r From boring nutrition l drink, GSK is trying to position Horlicks s ple sur bl e nourishment, by l unching it in v nill , chocol te nd honey v ri nts. Suchet Govil, Gener l M n ger, M rketing, Nutrition l He lthc re nd Anindy D sgupt , M rketing M n ger, GSK. Child: Horlicks is n old persons drink nd I drink it only bec use m m forces me to do so. Mother: My kids drink wh tever they feel like, nd I wish they would s k for Horlicks. GLAXO SMITHKLINES (GSK) consumer rese rch findings cle rly pointed out th t the Horlicks users w nted ch nge. They w nted more spirited nd h ppening drink in interesting fl vours, inste d of dr b nourishment drink. The 130-ye rold Horlicks w s beginning to lose its sheen nd with its growth being f l t in the l st one ye r, GSK felt th t it w s time to give its Rs 800-crore br nd f celift. The comp ny recently re-l unched Horlicks in three new v ri nts v nill , honey nd chocol te p rt from the regul r m lt. 152 Copy Right: R i University 11.623.3

The new Horlicks formul tion is lso ccomp nied by contempor ry p ck ging in hu es of bright blue nd or nge. We w nted to contempor rise Horlicks nd m ke it mo re relev nt. The br nd h d begun to look d ted nd w s losing its signific nce, s ys Suchet Govil, Gener l M n ger, M rketing, Nutrition l He lthc re, nd GSK C onsumer He lthc re. We ourselves p rticip ted in the rese rch exercise nd liter lly peeped into the kitchen shelves to find out wh t the consumers were looking for, s the expected growth w s not h ppening for Horlicks. Govil s ys th t the n ew Horlicks, whose focus is on fl vours, with its nutrition l constituents rem i ning the s me, is the t stiest ever Horlicks. In f ct, Chocol te Horlicks h s bee n r ted s the best chocol te drink in milk in the blind consumer rese rch. While T t Elxsi h s designed the product p ck ging, J. W lter Thomson h s done the p ck designing. We h d 12 design concepts from JWT Indi nd B dge Consulting, UK, nd fin lly decided on JWT design, s ys Govil. She cl ims th t the consumer re se rch findings show the new v t r of Horlicks h s the highest shelf ppe l nd m ximum visibility. the product. He s ys th t 70 per cent of the medi spend on the br nd would be in the second h lf of the ye r. Ap rt from the new TVC, D spupt el bor tes th t t he comp ny w s lso going to l unch school cont ct progr mme, which would re c h round three l kh school students. Also on the c rds is Activity 2003, t len t hunt progr mme, t rgeting 1.5 million students, cross 3,000 schools in eight cities. The fin ls of Activity 2003 will be conducted in B ng lore. Expressing h is views on Horlicks new str tegy of ddressing kids inste d of mothers, J gdeep K poor, M n ging Director, S msik M rketing Consult ncy, s ys, Horlicks h s lw ys h s been mother nd child br nd nd the re son why it h s lw ys worked so well is bec use the child relished the t ste, nd the mother liked the nutrition l v lues of the product. Therefore, the comp ny should never ignore the mother nd only focus on the child. The mother is like g tekeeper, who llows the ent ry of the product into the house bec use of its nutrition v lues. The child is o nly the user. K poor s ys th t the new p ck ging nd the new fl vours re no doub t exciting, but the comp ny t no point of time should let the credibility of th e br nd suffer by positioning it s kids br nd. They should inste d contempor ri se the br nd by getting contempor ry mother to endorse the br nd, he s ys. Conc urs n n lyst with le ding broker ge, Horlicks h s lw ys been considered co nv lescent br nd nd br nd prim rily for the elders. By focusing just on child ren, the br nd is t risk of losing its existing t rget udience. The Horlicks re -l unch follows the re-l unch of Boost, which comes under the brown m lted drink c tegory. It w s rel unched by GSK l te l st ye r with power boosters, which incl ude copper nd Biotin. The new formul tion w s lso ccomp nied with br nd new p ck ging. D sgupt s ys th t post the re-l unch, Boost h s grown by 11 per cen t in the m lted brown drink c tegory nd is the le der of the c tegory with 14 .2 per cent m rket sh re. The white m lted c tegory comprises 60 per cent of the over ll Rs 1,200-crore HFD m rket, nd Horlicks, long with Junior Horlicks, is the m rket le der with 57 per cent m rket sh re. While 45 per cent of the br nds s les come from the South, especi lly T mil N du, 49 per cent of its s les is from the E st, while the rest is from the North nd West put together. With thi s re-l unch, Govil hopes th t the br nd would grow this ye r in the r nge of 10 to12 percent, nd position the br nd s ple sur ble nutrition experience espec i lly for the children. Therefore no more pestering by mums nd the kids c n h v e n option between chocol te, v nill nd honey! CONSUMER BEHAVIOUR Ap rt from the new fl vours nd ttr ctive p ck ging, the br nd h s lso m de complete turn round s f r s its positioning is concerned. The br nd, which use d to previously ddress mothers, will now ddress the kids. S ys Govil, Our consu mer rese rch exercise pointed out th t pester power pl yed m jor role in buyin g decisions. From HFD product like ours to white-goods such s computer or TV, the children pl y m jor role t the entry level of ny product. Ap rt from this, the ttitude of the mothers, s ys Govil, h s lso ch nged. The mothers tod

y re no longer epitomes of p tience who would do nything to get their childre n to h ve he lthy nd nutritious food. Tod ys mothers prefer to give their childr en wh t they like inste d of w sting time nd energy to force their children to h ve he lth drink or he lth food. The comp nys communic tion str tegy, therefo re, focuses on children who h ve n ttitude - n ttitude, which is positive, l ivewire nd spirited. This h s been projected in its TVC, which will be ired c ross ll ch nnels nd would lso be b cked by n extensive print nd outdoor c m p ign. S ys Anindy D sgupt , M rketing M n ger, GSK, While the first ph se of th e c mp ign would t lk bout the re-l unch of Horlicks, the second ph se will t l k bout the new fe tures of 11.623.3 Copy Right: R i University 153

Points To Remember CONSUMER BEHAVIOUR Four B sic Attitude Functions Issues in Attitude Form tion n The n How

Utilit ri n Function Ego-defensive Function n The V lue-expressive Function n Th e Knowledge Function n The Str tegies of Attitude Ch nge n n n n n Ch nging the B sic Motiv tion l Function Associ ting the Product With n Admired Group or Event Resolving Two Conflicting Attitudes Altering Components of the M ulti ttribute Model Ch nging Beliefs About Competitors Br nds El bor tion Likelihood Model (ELM) (ELM) A theory th t suggests th t persons level of involvement during mess ge process ing is critic l f ctor in determining which route to persu sion is likely to b e effective. 154 Copy Right: R i University 11.623.3

ttitudes re le rned n Sources of influence on f ctors

ttitude form tion n Person lity

CONSUMER BEHAVIOUR Why Might Beh vior Precede Attitude Form tion? n Cognitive Disson nce Theory n Attribution Theory Beh ve (Purch se) Beh ve Postpurch se Disson nce Form Attitude Form Attitude Form Attitude Cognitive disson nce th t occurs fter consumer h s m de purch se commitment . Consumers resolve this disson nce through v riety of str tegies designed to confirm the wisdom of their choice. Cognitive Disson nce Theory

Attribution Theory A theory concerned with how people ssign c su lty to events nd form or lter t heir ttitudes s n outcome of ssessing their own or other peoples beh vior. 11.623.3 Copy Right: R i University 155

Holds th t discomfort or disson nce occurs when ughts bout belief or n ttitude object.

consumer holds conflicting tho

CONSUMER BEHAVIOUR 156 Issues in Attribution Theory n Self-perception n Attributions Theory Defensive Attribution Foot-In-The-Door Technique Tow rd Others n Attributions Tow rd Things n How We Test Our Attributions A theory th t suggests consumers re likely to ccept credit for successful outc omes (intern l ttribution) nd to bl me other persons or products for f ilure ( extern l ttribution). Criteri for C us l Attributions A theory th t suggests th t consumers develop ttitudes by reflecting on their o wn beh vior. n Distinctiveness n Consistency SelfPerception Theory Theory Over Time n Consistency Over Mod lity n Consensus Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 17: TUTORIAL Consider the following results for T.V set, b sed on Fishbeins multi ttribute m odel: Attribute Cle r Picture Low Price Dur ble Attr ctive c binet Ev lu tion +3 +2 +3 +1 Br nd belief +2 -1 +1 +3 1. First c lcul te the over ll ttitude score. Second, c lcul te the m ximum over l l score br nd could receive given the current set of ttribute ev lu tions. Th ird, describe the products strengths nd we knesses s perceived by consumers. Us ing the multi ttribute results presented in the question bove, identify ll pos sible ch nges th t would enh nce br nd ttitude. Which ch nge would le d to the gre test improvement in ttitude? 2. Notes 11.623.3 Copy Right: R i University 157

LESSON 18: PERSONALITY

UNIT II CONSUMER AS AN INDIVIDUAL CHAPTER 7: CONSUMER PERSONALITY She h s her mothers person lity. Hes re l person lity. Person lity comes from the Gr eek word person , me ning m sk The word person lity derives from the L tin word person which me ns m sk. The study of person lity c n be understood s the study of m sks t h t people we r. These re the person s th t people not only project nd displ y , but lso include the inner p rts of psychologic l experience, which we collect ively c ll our self. I is for person lity According to Ad ms (1954, cited in Schultz & Schultz, 1994) person lity is I. Ad ms suggested th t we get good ide of wh t person lity is by listening to wh t we s y when we use I. When you s y I, you r e, in effect, summing up everything bout yourself - your likes nd dislikes, fe rs nd virtues, strengths nd we knesses. The word I is wh t defined you s n individu l, s person sep r te from ll others. (Schultz & Schultz, 1994, p.8) I m exercise Write 10 honest endings to I m... Sh re them with someone Does this s um up your person lity? Why or why not? Let us look t v rious definitions of pe rson lity Introduction Person lity is the supreme re liz tion of the inn te idiosyncr sy of living bei ng. It is n ct of high cour ge flung in the f ce of life, the bsolute ffirm tion of ll th t constitutes the individu l, the most successful d pt tion to t he univers l condition of existence coupled with the gre test possible freedom f or self-determin tion. - C rl Gust v Jung, 1934 We c nnot define Person lity very e sily. B sic lly, person lity refers to our ttempts to c pture or summ rize n individu ls essence. Person lity is person- lity, the science of describing nd und erst nding persons. Cle rly, person lity is core re of study for psychology, if not the core. No two people re ex ctly the s me - not even identic l twins. Some people re nxious, some re risk-t king; some re phlegm tic, some highly -strung; some re confident, some shy; nd some re quiet nd some re loqu ciou s. This issue of differences is fund ment l to the study of person lity. Note l so th t in studying these differences we will lso ex mine where the differences come from: s with intelligence we will find th t there is mixture of n ture nd nurture involved. CONSUMER BEHAVIOUR Objectives After completion of this lesson you should be ble to: Define person lity. Describe the n ture nd development of person lity. Outline Freudi n person lity theory nd the corresponding st ges of development. Discuss neo-Freudi n person lity theory nd tr it theory. Discuss the rel tionship of p erson lity nd consumer diversity. Enumer te cognitive person lity f ctors, cons umption, nd possession tr its. Tr ce the shift from consumer m teri lism to com pulsive consumption. Describe the elements of br nd person lity. Discuss the con cepts of self nd self-im ge. Identify the four forms of self-im ge plus two oth er versions of self-im ge. Describe virtu l person lity or self. Deceptive m squer de or mimicry. The entire org niz tion of hum n being t ny st ge of development. Levels or l yers of dispositions, usu lly with unifying or i ntegr tive principle t the top. The integr tion of those systems or h bits th t r epresent n individu ls ch r cteristic djustments to the environment. The w y in w hich the person does such things s remembering, thinking or loving. Those ch r ct eristics th t ccount for consistent p tterns of beh viour Person lity is not n e xisting subst ntive entity to be se rched for but complex construct to be deve loped nd defined by the observer. (Smith & Vetter, 1982, p.5) A contempor ry def inition for person lity is offered by C rver nd Scheier (2000, p.5): Person lity

is dyn mic org nis tion, inside the person, of psychophysic l systems th t cr e te persons ch r cteristic p tterns of beh viour, thoughts, nd feelings. C rve r & Scheier (2000, p.5) 1. Wh t is person lity? We use the term person lity frequently but wh t does it ctu lly me n? She h s wonderful person lity. He h s no person lity. He h s person lity plus. We seem to h ve person lity conflict. Its just her person lity. 158 Copy Right: R i University 11.623.3

 Dyn mic Org nis tion: suggests ongoing re djustments, d pt tion to experience, continu l upgr ding nd m int ining Person lity doesnt just lie there. It h s pro cess nd its org nised. Inside the Person: suggests intern l stor ge of p tterns, supporting the notion th t person lity influences beh viour, etc. Psychophysic l systems: suggests th t the physic l is lso involved in who we re Ch r cteristi c P tterns: implies th t consistency/ continuity which re uniquely identifying of n individu l 2. An individu ls person lity lso ch nges s p rt of gr du l m turing process. ) Person lity stereotypes m y lso ch nge over time. b) There is prediction, fo r ex mple, th t person lity convergence is occurring between men nd women. CONSUMER BEHAVIOUR Person lity Perspectives The different ppro ches or perspectives to person lity re: Biologic l Psycho n lytic Disposition l Le rning Hum nistic Cognitive Beh viour, Thoughts, nd Feelings: indic tes th t person lity includes wide r nge of psychologic l experience/m nifest tion: th t person lity is displ yed in MANY w ys. C rver & Sheier (2000, p.5) suggest th t the word person lity conveys sense of consistency, intern l c us lity, nd person l distinctiveness. This is sue of person l distinctiveness is very import nt. There re cert in univers l ch r cteristics of the hum n r ce nd p rticul r fe tures of individu ls. We ll f or ex mple experience stress nd the elev ted cortisol th t goes with it, nd we ll suffer the immune suppressive effects thereof. BUT e ch of us is unique too . The N ture of Person lity In our study of person lity, three distinct properties re of centr l import nce : ) b) c) Person lity reflects individu l differences. Person lity is consisten t nd enduring. Person lity c n ch nge. Let us m ke comp rison of the strength s nd we knesses of the strengths nd we knesses of the different prev lent pers pectives on person lity. Overview of person lity perspectives strengths & we knesses

Perspective Biologic l Strength Test ble theories with incre sing v lidity & effic cy Attention to unco nscious We kness Doesnt gr pple with personhood & sense of person l self Unverifi ble? Sexi

Person lity Reflects Individu l Differences 1. 2. An individu ls person lity is unique combin tion of f ctors; no two individu ls re ex ctly like. Person lit y is useful concept bec use it en bles us to c tegorize consumers into differe nt groups on the b sis of single tr it or few tr its.

st? M y l bel people on b sis of scores; Overlyreli nt on self-report instrument s Overlooks IDs present from birth Person lity is Consistent nd Enduring 1. M rketers le rn which person lity ch r cteristics influence specific consumer responses nd ttempt to ppe l to relev nt tr its inherent in their t rget group of consumers. Even though n individu ls person lity m y be consistent, consumption beh vior often v ries consider bly bec use of psychologic l, sociocultur l, nd environment l f ctors th t ffect b eh vior. Psycho n lytic Disposition l 2. Good individu l ssessments techniques; Tr it vs. Type ppro ch Scientific n ly sis & pr ctic l pplic tion Le rning Person lity c n Ch nge 1. An individu ls person lity m y be ltered by m jor life events, such s the birth of child, the de th of loved one, divorce, or m jor c reer ch nge. Hum nistic Optimistic, growthoriented Ignores scientific method Cognitive C ptures ctive n ture of hum n thought Ignores unconscious 11.623.3 Copy Right: R i University 159

Theories of Person lity There re three m jor theories of person lity we need to discuss in this lesson. They re: ) c) Freudi n theory. Tr it theory. b) Neo-Freudi n person lity theo ry. When psychology emerged s n independent scientific discipline in Germ ny durin g the middle of the 19th century it defined its t sk s the n lysis of consciou sness in the norm l, dult hum n being. Sigmund Freud however tt cked the then tr dition l psychology. He likened the mind to n iceberg in which the sm ller p rt showing bove the surf ce of the w ter represents the region of consciousnes s while the much l rger m ss below the w ter represents the region of unconsciou sness. In this huge dom in - the unconscious - Freud believed were the urges, p ssions, the repressed ide s nd feelings - the gre t unseen forces which exercis e n control over the conscious thoughts nd deeds of the individu l. Freuds im in life w s to git te the sleep of m nkind. In other words, Freud w s interested in stirring the hornets nest of hum n unconscious, which he succeeded in doing bo th c demic lly nd on person l level with m ny p tients nd colle gues. Freud w s born in Mor vi in 1856, ttended the medic l school of the University of V ienn for 8 ye rs until 1881. His interest neurology c used him to speci lise in the tre tment of nervous disorders. He studied under the French psychi trist Je n-M rtin Ch rcot for ye r, p rticul rly in the re of hypnosis. He tried hyp nosis with his p tients but w s not impressed by its effic cy so he tried new method of tre tment devised by Viennese physici n - Joseph Breuer. This method w s one in which the p tient w s cured of his or her symptoms simply be t lking bout them. L ter he turned to the use of free ssoci tion (instructing p tient s to s y wh tever c me into their minds). One of his p tients dubbed this ther p y the t lking cure. For over 40 ye rs Freud explored the unconscious by the method of free ssoci tion nd developed the first comprehensive theory of person lity . He bec me both extremely influenti l nd extremely controversi l in his d y. T he s me is true now! Rel ted link: Sigmund Freud Biogr phy Structure of Mind: Fr euds Id, Ego, nd Superego As mentioned bove Freud c me to see person lity s h ving three spects, which work together to produce ll of our complex beh viours : the id, the ego nd the superego. As you c n see below, the Ego nd Superego p l y roles in e ch of the conscious, preconscious, nd unconscious, but th t the CONSUMER BEHAVIOUR Freudi n Theory Sigmund Freuds psycho n lytic theory of person lity is the corner stone of modern psychology. This theory w s built on the premise th t unconsciou s needs or drives, especi lly biologic l nd sexu l drives, re t the he rt of hum n motiv tion nd person lity. Id, Superego, nd Ego The Id is the w rehouse of primitive nd impulsive drives, such s: thirst, hunger, nd sex, for which the individu l seeks immedi te s tisf ction without concern for the specific me ns of th t s tisf ction. Superego is the individu ls intern l expression of societys mor l nd ethic l codes of conduct. ) The superegos role is to see th t the indi vidu l s tisfies needs in soci lly ccept ble f shion. b) The superego is ki nd of br ke th t restr ins or inhibits the impulsive forces of the id. Ego is the individu ls conscious control which functions s n intern l monitor t h t ttempts to b l nce the impulsive dem nds of the id nd the sociocultur l co nstr ints of the superego. Freud emph sized th t n individu ls person lity is fo rmed s he or she p sses through number of distinct st ges of inf nt nd child hood development. These distinct st ges of inf nt nd childhood development re: or l, n l, ph llic, l tent, nd genit l st ges. An dults person lity is determ ined by how well he or she de ls with the crises th t re experienced while p ss ing through e ch of these st ges. Who w s Sigmund Freud? Sigmund Freud (1856-193 9) 160

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unconscious is the dom in of the Id nd l rge proportion of the Superego. THE ID (It): functions entirely in unconscious. It is the irr tion l nd emotion l p r t of the mind. At birth b bys mind is ll id - w nt w nt w nt. The Id is the pr imitive mind. It cont ins ll the b sic needs nd feelings. And it h s only one rule > the ple sure principle: I w nt it nd I w nt it ll now. THE EGO: (I): function t ll 3 levels of consciousness nd might be c lled the r tion l p rt of the m ind. It develops s result of w reness th t you c nt lw ys get wh t you w nt. The ego de ls with the re l world nd oper tes vi the re lity principle. It re l ises the need for compromise. M ny modern ego psychologists believe compromise f orm tion is one of the most import nt functions of the ego. The ego t kes some l ibidin l energy w y from id > for pl nning, thinking, nd controlling the id. It s job is to get the ple sures the Id w nts but to be more re son ble, nd less s elf-defe ting bout it. The ego both opposes (denies inst nt gr tific tion) but lso helps the Id to get wh t it w nts (Ego cts s n gent for the Id in negot i ting with Superego, to help it get the ple sure it w nts, but m ybe with bit of del y or compromise). THE SUPEREGO (Over-I): functions t ll 3 levels. This m ight be c lled the mor l p rt of the mind. The child begins the process of ident ific tion, usu lly with his or her p rents, In other words someone he/she loves or dmires (occ sion lly but r rely with someone he/she fe rs/lo thes). The Supe rego becomes n embodiment of p rent l nd societ l v lues. It stores nd enforc es rules. Its power to enforce rules comes from its bility to cre te nxiety. I t const ntly strives for perfection. The superego h s two subsystems: ego ide l nd conscience. The ego ide l provides rules for good beh viour, nd st nd rds o f excellence tow rds which the ego must strive. So the ego ide l is b sic lly wh t the childs p rents would pprove or v lue. The conscience is the rules bout w h t constitutes b d beh viour. All those things th t the child feels mum or d d will dis pprove or punish re in here. The Superego: Tries to completely inhibit ny Id impulse which it thinks is wrong Superego too strong = feels guilty ll the time, m y even h ve n insuffer bly s intly person lity Ego too strong = extremely r tion l nd efficient, but cold, boring nd dist nt CONSUMER BEHAVIOUR All 3 components need to be well b l nced in order to h ve good mount of psychi c energy v il ble nd to h ve re son ble ment l he lth. Freudi n Theory nd Product Person lity Those stressing Freuds theories see th t hum n drives re l rgely unconscious, n d th t consumers re prim rily un w re of their true re sons for buying wh t the y buy. These rese rchers focus on consumer purch ses nd/or consumption situ tio ns, tre ting them s n extension of the consumers person lity. Neo-Freudi n Pers on lity Theory Sever l of Freuds colle gues dis greed with his contention th t pe rson lity is prim rily instinctu l nd sexu l in n ture. They rgued th t soci l rel tions re fund ment l to person lity development. Alfred Adler viewed hum n beings s seeking to tt in v rious r tion l go ls, which he c lled style of li fe, pl cing emph sis on the individu ls efforts to overcome feelings of inferiori ty. H rry St ck Sulliv n stressed th t people continuously ttempt to est blish signific nt nd rew rding rel tionships with others, pl cing emph sis on efforts to reduce tensions. K ren Horney focused on the imp ct of child-p rent rel tion ships, especi lly the individu ls desire to conquer feelings of nxiety. She prop osed three person lity groups: compli nt, ggressive, nd det ched. Compli nt in dividu ls re those who move tow rd othersthey desire to be loved, w nted, nd p preci ted. Aggressive individu ls move g inst othersthey desire to excel nd win dmir tion. Det ched individu ls move w y from othersthey desire independence, self-sufficiency, nd freedom from oblig tions. A person lity test b sed on the

bove (the CAD) h s been developed nd tested. It reve ls number of tent tive rel tionships between scores nd product nd br nd us ge p tterns. It is likely th t m ny m rketers h ve used some of these neoFreudi n theories intuitively. Tr it Theory Tries to get the Ego to ct mor lly r ther then just r tion lly (which is wh t t he ego tries to do) Tries to m ke the person beh ve in perfect f shion (its pe rfectionism however, is quite removed from re lity!). Once the Superego develops, the Ego must simult neously de l with the Id nd its needs, the constr ints of re lity nd the mor l dict tes of the Superego. This is very difficult t sk nd it is likely th t the there will often be conflicts mong these forces. According to the psycho n lytic view, such conflicts re n intrinsic p rt of the hum n experience. The term ego-strength is the term used to refer to how well the ego copes with these conflicting forces,. Freud believe d there needed to be b l nce mong the forces: Tr it theory is signific nt dep rture from the e rlier qu lit tive me sures th t re typic l of Freudi n nd neo-Freudi n theory. It is prim rily qu ntit tive or empiric l, focusing on the me surement of person lity in terms of specific p sychologic l ch r cteristics c lled tr its. A tr it is defined s ny distinguis hing, rel tively enduring w y in which one individu l differs from nother. Sele cted single-tr it person lity tests incre singly re being developed specific ll y for use in consumer beh vior studies. Types of tr its me sured include:

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Id too strong = bound up in self-gr tific tion

nd unc ring to others

Consumer innov tivenesshow receptive person is to new experiences. Consumer m t eri lismthe degree of the consumers tt chment to worldly possessions. Consumer ethn ocentrismthe consumers likelihood to ccept or reject foreign-m de products. Rese rchers h ve le rned to expect person lity to be linked to howconsumes their choi ces, nd to the purch se or rm ke consumption of bro d product c tegory r ther th n specific br nd.

CONSUMER BEHAVIOUR Person lity nd Underst nding Consumer Diversity M rketers re interested in underst nding how person lity influences consumption beh vior bec use such knowledge en bles them to better underst nd consumers nd to segment nd t rget those consumers who re likely to respond positively to t heir product or service communic tions. Consumer Innov tiveness nd Rel ted Pers on lity Tr its M rketing pr ctitioners must le rn ll they c n bout consumer in nov torsthose who re likely to try new products. Those innov tors re often cruc i l to the success of new products. Person lity tr its h ve proved useful in dif ferenti ting between consumer innov tors nd noninnov tors. Person lity tr its t o be discussed include: Consumer innov tiveness. Dogm tism. Soci l ch r cter. Ne ed for uniqueness. Optimum stimul tion level. V riety-novelty seeking. Consumer Innov tiveness How receptive re consumers to new products, new services, or new pr ctices? Recent consumer rese rch indic tes positive rel tionship between i nnov tive use of the Internet nd buying online. Dogm tism Dogm tism is person lity tr it th t me sures the degree of rigidity n individu l displ ys tow rd t he unf mili r nd tow rd inform tion th t is contr ry to their est blished belie fs. Consumers low in dogm tism re more likely to prefer innov tive products to est blished ones. Consumers high in dogm tism re more ccepting of uthority-b sed ds for new products. Soci l Ch r cter Soci l ch r cter is person lity tr it th t r nges on continuum from inner-directed to other-directed. Inner-direc ted consumers tend to rely on their own inner v lues or st nd rds in ev lu ting ne w products nd re innov tors. They lso prefer ds stressing product fe tures nd person l benefits. Some people prefer simple, uncluttered, nd c lm existence, lthough others se em to prefer n environment cr mmed with novel, complex, nd unusu l experiences . Persons with optimum stimul tion levels (OSLs) re willing to t ke risks, to t ry new products, to be innov tive, to seek purch se-rel ted inform tion, nd to ccept new ret il f cilities. The correspondence between n individu ls OSL nd t heir ctu l circumst nces h s direct rel tionship to the mount of stimul tion individu ls desire. If the two re equiv lent, they tend to be s tisfied. If bor ed, they re understimul ted, nd vice vers . V riety-Novelty Seeking This is si mil r to OSL. Prim ry types re v riety or novelty seeking. There ppe r to be m ny different types of v riety seeking: explor tory purch se beh vior (e.g., swi tching br nds to experience new nd possibly better ltern tives), vic rious exp lor tion (e.g., where the consumer secures inform tion bout new or different ltern tive nd then contempl tes or even d ydre ms bout the option), nd use i nnov tiveness (e.g., where the consumer uses n lre dy dopted product in new or novel w y). The third form of v riety or novelty seekinguse innov tivenessis p rticul rly relev nt to technologic l. Consumers with high v riety seeking score s might lso be ttr cted to br nds th t cl im to h ve novel or multiple uses or pplic tions. M rketers, up to point, benefit from thinking in terms of offer ing ddition l options to consumers seeking more product v riety. Ultim tely, m rketers must w lk the fine line between offering consumers too little nd too mu ch choice. The stre m of rese rch ex mined here indic tes th t the consumer inno

Other-directed consumers tend to look to others for direction nd re not innov tors. They prefer ds th t fe ture soci l environment nd soci l ccept nce. Nee d for Uniqueness These people void conformity re the ones who seek to be uniqu e! Optimum Stimul tion Level

v tor differs from the non-innov tor in terms of person lity orient tion. Cognit ive Person lity F ctors M rket rese rchers w nt to underst nd how cognitive pers on lity influences consumer beh vior. Two cognitive person lity tr its h ve been useful in underst nding selected spects of consumer beh vior. They re: ) Nee d for cognition. b) Visu lizers versus verb lizers. 162 Copy Right: R i University 11.623.3

Need for Cognition This is the me surement of persons cr ving for or enjoyment of thinking. Consumers who re high in NC (need for cognition) re more likely t o be responsive to the p rt of n dvertisement th t is rich in product-rel ted inform tion of description. They re lso more responsive to cool colors. Consum ers who re rel tively low in NC re more likely to be ttr cted to the b ckgrou nd or peripher l spects of n d. They spend more time on print content nd h v e much stronger br nd rec ll. Need for cognition seems to pl y role in n indi vidu ls use of the Internet. Visu lizers versus Verb lizers Visu lizers re consu mers who prefer visu l inform tion nd products th t stress the visu l. Verb liz ers re consumers who prefer written or verb l inform tion nd products th t str ess the verb l. This distinction helps m rketers know whether to stress visu l o r written elements in their ds. Br nd Person lity It ppe rs th t consumers tend to scribe v rious descriptive person lity-like tr its or ch r cteristicsthe ingredients of br nd person litiesto different br nds in wide v riety of product c tegories. A br nds person lity c n either be functio n l (provides s fety) or symbolic (the thlete in ll of us). Br nd Personific tion A br nd personific tion rec sts consumers perception of the ttributes of produ ct or service into the form of hum nlike ch r cter. It seems th t consumers c n express their inner feelings bout products or br nds in terms of ssoci tion wi th known person lity. Identifying consumers current br nd-person lity link or c re ting one for new products re import nt m rketing t sks. There re five defin ing dimensions of br nds person lity (sincerity, excitement, competence, sophistic n, nd ruggedness), nd fifteen f cets of person lity th t flow out of the five dim ensions (e.g., down-to-e rth, d ring, reli ble, upper cl ss, nd outdoors). Person d Color Consumers lso tend to ssoci te person lity f ctors with specific color s. In some c ses, v rious products, even br nds, ssoci te specific color with person lity-like connot tions. It ppe rs th t blue ppe ls p rticul rly to m l e consumers. Yellow is ssoci ted with novelty, nd bl ck frequently connotes sophi stic tion. M ny f st-food rest ur nts use combin tions of bright colors, like red , yellow, nd blue, for their ro dside signs nd interior designs. These colors h ve come to be ssoci ted with f st service nd food being inexpensive. In cont r st, fine dining rest ur nts tend to use sophistic ted colors like gr y, white, sh des of t n, or other soft, p le, or muted colors to reflect fine leisurely s ervice. Consumers like or dislike for v rious colors c n differ between countries . Self nd Self-im ge Self-im ges, or perceptions of self, re very closely ssoci ted with person lity in th t individu ls tend to buy products nd services nd p tronize ret ilers with im ges or person lities th t closely correspond to their own self-im ges. Such concepts s one or multiple selves, self-im ge, nd the no tion of the extended self is explored by consumer beh vior rese rchers. CONSUMER BEHAVIOUR From Consumer M teri lism to Compulsive Consumption Consumer M teri lism M teri lism is tr it of people who feel their possessions re essenti l to their identity. They v lue cquiring nd showing off possessio ns, they re selfcentered nd selfish, they seek lifestyles full of possessions, nd their possessions do not give them gre ter h ppiness. Fix ted Consumption B eh vior Somewhere between being m teri listic nd being compulsive is being fix ted with reg rd to consuming or possessing. Like m teri lism, fix ted consumptio n beh vior is in the re lm of norm l nd soci lly ccept ble beh vior. Fix ted c onsumers ch r cteristics: A deep (possibly: p ssion te) interest in p rticul r ob ject or product c tegory. A willingness to go to consider ble lengths to secure ddition l ex mples of the object or product c tegory of interest. ) The dedic tion of consider ble mount of discretion ry time nd money to se rching out t he object or product. This profile of the fix ted consumer describes m ny collectors or hobbyists (e.g ., coin, st mp, ntique collectors, vint ge wristw tch, or fount in pen collecto

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rs). Compulsive Consumption Beh vior Compulsive consumption is in the re lm of bnorm l beh vior. Consumers who re compulsive h ve n ddiction; in some respec ts, they re out of control, nd their ctions m y h ve d m ging consequences to them nd those round them.

The M keup of the Self-Im ge A person h s self-im ge of him/herself s cert in kind of person. The individu ls self-im ge is unique, the outgrowth of th t pe rsons b ckground nd experience. Products nd br nds h ve symbolic v lue for indi vidu ls, who ev lu te them on the b sis of their consistency with their person l pictures or im ges of themselves. Products seem to m tch one or more of individ u ls self im ges; other products seem tot lly lien. Four spects of self-im ge re: Actu l self-im gehow consumers see themselves. Ide l self-im gehow consumers w ould like to see themselves. Soci l self-im gehow consumers feel others see them. Ide l soci l self-im gehow consumers would like others to see them. Some m rkete rs h ve identified fifth nd sixth self-im ge. Expected self-im gehow consumers expect to see themselves t some specified future time. Ought-to selftr its or ch r cteristics th t n individu l believes it is his or her duty or oblig tion to possess. In different contexts consumers might select different selfim ges to gu ide beh vior. The concept of self-im ge h s str tegic implic tions for m rketers . M rketers c n segment their m rkets on the b sis of relev nt consumer self-im ges nd then position their products or stores s symbols for such self-im ges. The Extended Self Consumers possessions c n be seen to confirm or extend their self-i m ges. The bove suggests th t much of hum n emotion c n be connected to v lued possessions. Possessions c n extend the self in number of w ys: Actu lly , by llowing the person to do things th t otherwise would be very difficult or impos sible to ccomplish (e.g., problem-solving by using computer). Symbolic lly, b y m king the person feel better or bigger (e.g., receiving n employee w rd for e xcellence). By conferring st tus or r nk (e.g., st tus mong collectors of r re works of rt bec use of the ownership of p rticul r m sterpiece). By bestowing feelings of immort lity, by le ving v lued possessions to young f mily members (this lso h s the potenti l of extending the recipients selves). By endowing with m gic l powers (e.g., c meo pin inherited from ones unt might be perceived s m gic mulet bestowing good luck when it is worn). Activity 1 A m rketer of he lth foods is ttempting to segment his or her m rket on the b s is of consumer self-im ge. Describe the four types of consumer self-im ge nd di scuss which one(s) would be most effective for the st ted purpose. CONSUMER BEHAVIOUR 164 Copy Right: R i University 11.623.3

Articles on Person lity Br nd Person lity Its ll bout Person lity When product differences re not perceived, the br nds p erson lity becomes the m jor differenti tor nd often drives the emotion l re so n for purch se. I m fr id not. Bec use, we should never m ke the mist ke of considering the co l m jors to be people who do not know how dvertising works, nor novices in the re of business m n gement. The nswer to this question m y lie in underst ndi ng how dvertising works nd the role of the br nd person lity. Advertising work s through the underst nding of consumer insights (th t is, uns tisfied consumer needs) nd by s tisfying these needs by communic ting unique, relev nt nd motiv ting re sons to buy. Wh t re re sons to buy? There could be function l, emotion l nd r tion l re sons to buy. Function l re sons to buy re wh t you do better th n others, emotion l re sons to buy re br nd v lues which could be either inner directive or outer directive. Fin lly, r tion l re sons to buy re usu lly br n d subst nti tors which subst nti te function l nd emotion l re sons for purch se. In ddition to function l, emotion l nd r tion l re sons to buy, n import nt re son to purch se br nd in preference to others in th t c tegory could be the br nds person lity. The br nd person lity is simply defined s hum n person lity tr its tt ched to the br nd nd is, in essence, the personific tion of the br nd . When product differences, p rticul rly function l nd r tion l differences re not perceived, the br nds person lity could nd is m jor differenti tor nd of ten drives the emotion l re son for purch se. It is in building the br nd person lity, key differenti tor in col nd soft drink dvertising, th t we see much of the pp rent jousting in the m rketpl ce. There should be no doubt in nyones mind th t Coke nd Pepsi re two of the strongest br nds in the m rket worldwid e. In lmost ny list of strong br nds, these two br nds fe ture right on top. T he re sons they do so is bec use both br nds h ve strong br nd person lity whi ch drives consumer purch se nd m rket sh res. Some of the dvertising which we see on r tion l level, mist ke for public one-upm nship, is p rt well-conc eived p rt of the br nd building exercise. The ggressiveness of Pepsi, the ch r cter of Coke or the streetsm rt ttitude of Thums-Up s displ yed in its dvert ising is p rt of the br nd building exercise, in my view. H ving s id th t, I do believe th t some of the individu l dvertisement h s, perh ps, gone over the top nd h s not dded to br nd building but h s been pl ced s p rt of the on going fight between the two br nds. Th t is not good but much of col dvertisin g is indeed top cl ss. CONSUMER BEHAVIOUR The col m jors const ntly t ke pot shots t e ch other through their dvertisin g on television. Clever lines, quips, oneupm nship nd dvertising victories p rt, does this not become dr g on the udience fter while? How import nt re these fights to the consumer in your opinion? Does this kind of confront tion l d vertising m ke difference to consumer? Most seem to p ss this off s good l ugh, but both br nds re spending serious big bucks on cre ting nd televising such ds. THE role or objective of dvertising is to cre te br nd preference for the dvertised br nd. Advertising is n expenditure for the purpose of business nd should be s c refully ev lu ted s c pit l expenditure or l bour costs. So , if I m y nswer the question s posed by T nushree, I should s y in my most se rious tone th t there is no role for clever lines, quips nd one-upm nship in d vertising. After ll, which consumer of soft drink is interested in the colleg e-level humour which ch r cterises t le st some of the col dvertising c mp ig ns. Confront tion l dvertising h s never sold br nd in the p st, nd will prob bly never do so in the future. C n we, then, consider this question nswered? 11.623.3 Copy Right: R i University

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Giving Br nds n Identity .

CONSUMER BEHAVIOUR Zen nd the Art of Br nd M inten nce St tic p tterns of qu lity c n never survive forever in society bec use once t hey do, society turns rigid nd rusts. Pirsig singles out dyn mic qu lity which is const ntly ch nging. Which is why we find newer f shions, newer products nd revolution ry ide s which keep society moving. The recent series of TV ds for the Toyot Qu lis re extremely w tch ble. But o ne c nnot help but wonder wh t the connection is between the dvertisement nd t he Toyot Qu lis. Wh t purpose do ds such s these serve? Are they imed merely t cre ting interest in the product or is there some deeper objective? R m Kum r, Chenn i A successful dvertisement is one th t helps to build strong br nd by giving the br nd specific identity nd by providing re son or r tion le f or purch sing the br nd, be it product or service, in preference to simil r products in the s me c tegory. In order to do so, it is true th t the dvertisem ent must be noticed nd projects the br nd s being perceived to be the right ch oice by the t rget customer. Indeed, there is some evidence to suggest th t dve rtisements th t re well liked re inv ri bly superior to dvertisements th t r e less ppreci ted. Wh t is ll this to do with the Toyot Qu lis dvertisement? The c mp ign th t is currently on ir nd in print is prim rily me nt to m ke t he point th t the Qu lis is very roomy nd there is sufficient sp ce for the ext ended f mily or, in the print dvertisement, sp ce for ll the be utiful girls i n the world. This point hs been m de in n interesting, emotion l nd musing m nner. However, the dvertisement is not just bout fishing nd emotion bec use i t lso highlights the sp ciousness nd the c rrying c p city of the Qu lis. The objective of this dvertisement s, indeed of ll dvertising, is to strengthen the br nd equity by highlighting the br nd identity (Who m I? Wh t do I do? And how m I different from others?) while communic ting the br nd proposition (or, wh t some c ll the br nd position) which simply me ns the nswer to the questio n Why buy me in preference to others? Does the Qu lis d do this successfully? I think the dvertisement is ttempting to do so through n interesting nd musi ng piece of communic tion th t single-mindedly concentr tes on the f ct th t the Qu lis is roomy vehicle, which is why it is the preferred choice of those who w nt to purch se multi-utility vehicle.

QUALITY is n event nd c nt be defined. Qu lity cre tes the subject nd the obje ct. Qu lity or the event therefore cre tes the consumer nd the br nd. Unless th e subject in interf ce with the object does not find qu lity in the object (here , the br nd), the subject, the consumer, will not buy the br nd. I pl n to use P irsigs MoQ (Met physics of Qu lity - Robert Pirsig is uthor of Zen nd the Art o f Motorcycle M inten nce) model to underst nd br nds from the subject-object met physics deb te. This model is ppreci tive in n ture, somewh t simil r to M slo ws hier rchy of needs model. Consumption requires both the subject nd the object . Therefore, in m rketing, the subject nd the object re insep r ble. They form n event which is level higher, which is Qu lity. I sh ll st rt first with id entifying the subject, i.e., the consumers v lue system or v lues, thereby indire

However, is th t enough to m ke Qu lis the choice of nyone who is looking for vehicle in th t price r nge? In my view, m ybe not. The Qu lis is vehicle in c tegory th t competes with the T t Sumo nd the M hindr Arm d . These re v ery powerful c rs, m rketed in the US s off-ro ders, which me ns th t they h ve 4x4 wheel drive, excellent suspension nd powerful yet sexy exterior. Qu lis does not even ttempt to be ny of these nd in terms of its person lity, is not quite wh t is expected of vehicle in this c tegory. Hence, in my view, though Qu lis h s built itself unique nd specific im ge s roomy vehicle, it h s perh ps not been ble to combine this with other necess ry benefits in this c te gory of four-wheelers.

166 Copy Right: R i University 11.623.3

ctly hinting

t the object, i.e., the product or br nd.

Now we ll know th t m n is not inorg nic, i.e., subst nce, which is in nim te. On the higher level, the biologic l side, m ns needs re prim rily biologic l or ph ysiologic l, which implies th t m n needs food, shelter nd clothing for his b s ic susten nce. In which c se, products will h ve to be b sic nd function l in n ture. Commodities nd unbr nded goods will gener lly be bought t this level. O n the soci l side, the consumer buys goods to tt in membership with his cl ss. There is need for ffili tion with his peer group or his soci l cl ss. M rkete rs frequently ssoci te their goods with p rticul r soci l str t in order to ppe l to the consumer. Therefore, the consumer now finds qu lity in the br nd d uring purch se. The highest level of the st tic qu lity side is the intellectu l level where consumers ct s individu ls in order to differenti te themselves f rom the rest. The consumer finds need to displ y his unique person . St tic p tterns of qu lity c n never survive forever in society bec use once they do, s ociety turns rigid nd rusts. There is no progress, no evolution. Which is why P irsig singles out dyn mic qu lity which is const ntly ch nging. Which is why we find newer f shions, newer products nd revolution ry ide s which keep society m oving. The most import nt role pl yed by m rketers is on the dyn mic qu lity sid e. True to their n ture s mythm kers, they prop g te new symbols nd new produc ts which disrupt the current st tic soci l p tterns. In short, they rock the bo t. The new-found product then percol tes from the top to the bottom gr du lly. T he new product diffusion models work this w y. Now, we m y sk wh t is the lesso n m rketers c n le rn? How does one experience qu lity in the object? Qu lity is experienced b sed on ones v lue systems, which re le rnt through numerous influ ences - soci l groups, f mily, medi nd so on. E ch persons v lue systems re un ique nd norm lly follow the bove p ttern s indic ted. An unbr nded tt or low priced tt consumer finds biologic l v lue in the experience nd therefore, derives positive qu lity from the event. As indic ted bove, the model is n t tempt to underst nd br nd-building from both the subject nd the objects point of view - m rketing ttempts to develop products from underst nding the consumer i n terms of his needs, motiv tions nd so on. Therefore the model implies th t un derst nding the consumers v lue systems or his pl ce in the st tic qu lity side c n help develop the right product so th t the consumer experiences qu lity in th e br nd. Now how c n this model be used in pr ctic l terms? In order to do th t m rketers must first determine the consumers v lue-systems or v lues which drive his consumption beh viour in the m rket. This c n be done by using existing meth ods such s Roke chs V lue Survey/List of V lues (LOV) method/Me ns-Ends n lysis , wherein the fund ment l ide is to me sure the termin l v lues of the consumer in interf ce with the product. A products ttributes le ds to suit ble benefits for the consumer, which is instrument l in chieving his termin l v lue in life. This termin l v lue is the consumers v lue system. This termin l v lue drives hi s consumption in the m rket. Now, termin l v lue, i.e., n end st te, could be soci l recognition for consumer. In which 11.623.3 c se, this consumer v lues or derives qu lity from his experience from such pr oduct which c n offer him such termin l v lue. For consumer whose termin l v lue is self-fulfilment will derive qu lity from product which helps him to di fferenti te his unique person lity from others. Once the v lue systems of the co nsumers re isol ted, clusters c n be m de so th t the size of e ch segment c n be determined, b sed on which the product c n be developed. All br nd mess ges i n the form of communic tion, p ck ging, nd so on c n be designed round the ben efits instrument l in chieving the termin l v lue of the t rget consumer. M rke ters c n use the MoQ model to identify the b sis for qu lity or finding v lue in their offering. Br nd loy lty me surements c n lso be m de through this model. Br nd loy lty is not direct function of s tisf ction. Br nd loy lty, i.e., wh erein the consumer continues to find qu lity in the br nd, derives from v lues w hich is function of s tisf ction with the br nd. V lues drive loy lty, i.e., qu lity. S tisf ction from the consumption experience, which helps the consumer in chieving his end st te, will le d to the consumer deriving qu lity from the exp erience. The consumer, therefore, v lues the br nd nd will keep buying the br n

CONSUMER BEHAVIOUR B2B nd Br nding B2B m n gers c n t ke le f from the books of consumer m rketers who go to gre t lengths to nurture br nd. IF I m ke st tement th t br nding is still mys tery to m ny business-to-business m rketers, I m sure m ny of my re ders will gree. Why do business-to-business m rketing nd dvertising m n gers h ve such h rd time with the concept of br nd im ge? Their consumer counterp rts surely d ont h ve this problem. Consumer m rketers recognise th t br nd im ge is one of th eir most v lued ssets, something to be lovingly nurtured nd 167 Copy Right: R i University

d till the time he sees qu lity in the event/ experience. Now, how c n the loy l ty process be me sured? Termin l v lues re gener lly enduring in n ture. Termin l v lues re few in n ture. It is only the n ture of the product benefits desir ed to chieve the end st te which will keep ch nging, s newer v lue dditions en ter the m rket. The benefits, i.e., r tion l/emotion l/symbolic offered therefor e, will h ve to rem in relev nt in the minds of the consumer for the br nd to be v lued const ntly. Br nd loy lty me surements c n be done by const ntly monitor ing the benefits being offered/desired in the m rket to the v lue segments nd t he subsequent correl tions with purch se beh viour ch nges. When const nt monito ring of the segment (where the m rketer is present) in terms of benefits offered nd subsequent purch se beh viour ch nges re determined, one c n underst nd th e ch nges or developments in th t p rticul r segment. When benefits re no longe r desired, this will le d to loss in the m rket sh re. I sh ll end with n int eresting question to ponder. Does the v lue system rem in st ble cross ll prod uct c tegories, wherein the consumer exhibits the s me p tterns in different qu lity events? If no, why not?

w tched over with the gre test of c re. They will do wh tever it t kes to protec t th t br nd equity, including such dr stic me sures s rec lling every product when reports of t inted or defective products re received. M ny consumer produc t m rketers even h ve developed person lity for their br nds consistent with str tegic selling points th t customers reg rd s import nt (e.g. Lifebuoy nd he l th, Lux nd movie st r be uty). Most B2B m n gers, on the other h nd, still thin k their customers buy fe tures nd benefits nd re not influenced by br nd im g e. It is time for us to come out of the d rk ges, dont you think? Especi lly whe n most of the sm ll nd medium businesses re in the B2B ren . Experts h ve giv en v rious opinions on surviving in world of p rity products. For inst nce, th ere is five-step p rity l dder in which revolution ry new products re cre ted, followed by copyc t competitors, then some with worthwhile new fe tures better t h n the origin l. Eventu lly, however, it becomes h rder nd h rder for customer s to differenti te between suppliers. At the fifth level, ll products nd servi ces re essenti lly viewed s equ l, which, by the w y, is where the person l co mputer industry now finds itself fter less th n two dec des. This experts recomm end tion w s to build the im ge of the comp ny behind ll those products nd ser vices. And with good re son, too. He t lked bout cre ting person lity for the comp ny, one customer wouldnt mind de ling with. In his excellent book, Integr ted M rketing Communic tions, Don Schultz conveys simil r thoughts bout br nd im ge. He s ys, In p rity m rketpl ce, the only re l differenti ting fe ture th t m rketer c n bring to consumers is wh t those consumers believe bout the c omp ny, product, or service nd their rel tionship with th t br nd. Schultz nd c o- uthors St nley T nnenb um nd Robert L uterborn devote signific nt portion of their book to such f ctors s br nd networks, br nd cont ct p ths, br nd pers on lity nd building br nd focused structure. I guess you c n br nd them s be ing solidly behind the concept. So, why ll the confusion mong business-to-busi ness pr ctitioners? One re son might be th t m ny business nd industri l comp n ies do not view the dvertising function s str tegic. They push it down org nis tion lly to the level of doing brochures nd ssign it to w tchgu rd m n gers who h ve other, more import nt, responsibilities. The closest th t m rcom (m rketin g communic tion) people in situ tions like this get to br nding is t the produc t level, nd even then, it is not c refully thought through. Most cert inly it i s not coordin ted from one product group to the next. Another problem frequently encountered is ccount bility metrics. D vid A ker, uthor of M n ging Br nd Eq uity, s ys, Inste d of focusing upon n sset such s br nd, too often f st-tr ck m n gers get c ught up in d y-to-d y perform nce me sures th t re e sily v il ble. This includes qu rterly s les quot s, m rket sh re figures or stock price s, for ex mple. As we ll know, building im ges t kes while. If you re preocc upied with showing results this qu rter or even this ye r, it is doubtful you wi ll put much effort into br nd im ge building. M ybe we h ve been conned by s lespeople who think they c n sell refriger tors t o Eskimos without reg rd for the br nd im ge of the p rticul r refriger tor they h ve v il ble. Despite mount ins of rese rch showing the correl tion between qu lity im ge nd such things s m rket sh re, higher pricing, ROI nd profit b ility, m ny m n gers rem in mbiv lent on the need to invest in br nd im ge deve lopment. Even if they give it lip service, there never seems to be enough money to go round t budget-crunching time. We end up e rm rking funds for more press ing things like product liter ture nd tr de show displ ys. I m not s ying th t product liter ture nd tr de show displ ys re not import nt. Those ctivities h ve been big p rt of my life, to be sure. I would just like to r ise our sigh ts to include im ge development progr mmes th t will ffect how the product broc hures nd tr de show promotions likely will be perceived in the minds of our cus tomers nd prospects. I do h ve f vourite book on the subject of br nd im ge d evelopment: Rom ncing The Br nd by D vid M rtin, founder nd former ch irm n of Virgini -b sed M rtin Agency. The fourth ch pter of M rtins book is c lled The H t Trick. It referred to the pr ctice of getting up off your ch ir, putting on you r h t nd going outdoors to find out wh t the prospect w nts. M rtins first job in dvertising w s to do this kind of inperson rese rch for copywriter t n d

gency. He went to h rdw re stores for Bl ck & Decker to t lk to s lesmen bout power tools. Why did they recommend p rticul r br nd? Wh t did they like bout Bl ck & Decker? Wh t bout the competition? He then took the who, wh t, where, w hen nd why b ck to the copywriter who would use th t inform tion s the found ti on for his d. I think this is the missing link for B2B dvertisers tod y, bec u se most of us never get to t lk to re l customers or, in some c ses, people who even know re l customers. If we did, we would be more cutely w re of br nding opportunities, s well s potenti l br nding problems. And we would put more eff ort into m king sure our br nd im ge w s consistent with the needs nd prioritie s of our customers. The solution m y be s simple s getting B2B m rcom people o ut of our ch irs, f ceto-f ce with re l customers who h ve re l ttitudes nd pr eferences bout the comp nies we represent. CONSUMER BEHAVIOUR 168 Copy Right: R i University 11.623.3

When Br nding Gets Lyric l Br nding in menswe r h s become very descriptive with n mes like F rm Fresh, Amb rosi nd Herb ceous being b ndied bout. Is it ll poetry nd pr ise or do br n ds re lly h ve story to tell? C t lyst looks t how br nds preen. w nts inform tion on f shion nd colour trends nd communic tes to him the diffe rent segments th t the r nge ddresses. For inst nce, Zodi cs Americ n University Pl ids nd Ch nge nt belong to the semi-form l segment, while its recent Struct ured collection is form l. According to Sheik Abdul T her, p rtner in Chenn i-b sed d gency R dic l, Br nding is the only differenti tor. Most spects of menswe r, be they styling, f bric, design, w sh or colours, re not propriet ry nd th is is where br nding comes in to give one br nd n edge over the other. His p rt ner, R j K. J cob, mentions, however, th t for B sics, the menswe r ccount they h ndle, theyve stuck to generics such s chinos nd kh kis. A new n me is difficu lt to sell s its needs th t much more exposure, he s ys. R dic l s ys the opport unities for br nding multiplied from 1993, when technology for finishing, w shin g nd dyeing c me into Indi on l rge sc le. Surplus c p city with the exporte rs w s ch nnelled into the domestic m rket. P rity in terms of style, f bric nd design w s cre ted very f st nd br nd owners h d to invent something to ensure their product stood out from the rest. Another interesting spect of menswe r t od y is the colours it comes in. Indi n Terr ins Suri swe rs th t the white shirt with pist green nd or nge stripes lying on his t ble is workwe r nd is doing gre t business in the North. In f ct, l vender nd lil c re the colours for th is se son, cross the world. Purple in its v rious hues, bright uburns, electri c blue, citrus, turquoise - ll these spe k for the new m le, his chutzp h, his ttitude. Not pure testosterone, more ndrogynous. Hey, we h ve right to be pe cocks too, its not just women who c n look be utiful, cries T her in mock indign t ion. P rmit Ch dh , CEO, P r digm M n gement Knowhow Pvt Ltd, Chenn i-b sed re se rch gency, believes this is p rt of the l rger trend th t h s men getting f ci ls, m nicures nd colouring their h ir. Even c rs re v il ble in colours the y werent few ye rs go, points out Ch dh . Zodi cs Noor ni is quite c tegoric l w hen he s ys colours like lil c, when they re in f shion for men, re most m scul ine, nd th t is when one sees them from Zodi c. Colours such s or nge nd brigh t green, t point of time, h ve been f shion ble for c su lwe r, he vers. Ind us Le gues Director (M rketing), F zle N qvi, grees th t the new colours were no t tr dition lly ssoci ted with men but Indi n men h ve come to re lise they re ble to c rry off lighter sh des well. He cites Indigo N tions Ambrosi collection , complete r nge of shirts in p stels, s c se in point. It is necess ry to u se br nd n mes which depict the type of f shion being promoted, he s ys. Allen So lly, the M dur G rments br nd th ts credited with st rting the form l but rel xe d Frid y Dressing concept in the country, c lls its l test collection of blended or nges, yellows, greens nd blues the H w ii n Conference. According to Ch dh , M en re slowly but surely p ying ttention to looking good. However, R dic ls T her nd R j re quick to point out th t ll this doesnt me n the consumer is running w y from cl ssics. Pinstripes, tweeds, terriwool trousers nd button-down shir ts re still in, nd rem in the choice when it comes to ttending 169 CONSUMER BEHAVIOUR THESE re ex mples of more nd more picturesque speech. Phr ses evoc tive nd el oquent, conveying ll th t they w nt you to underst nd. Your English te chers del ight; copywriters triumph. Virtu lly m sterpiece e ch, they m ke you wonder: re they ll they cl im to be, or is it some rtful dressing-up th t the custome r is witnessing? Will rose by ny other n me smell s sweet? Will shirt with pl in v nill n me sell s much? Obviously not, if the m nuf cturers m rketing moves re nything to go by. Menswe r is delicious hunting ground not only fo r the forms the l ngu ge seems to m nifest itself in, but for the myri d choices it seems to offer. C lling shirt shirt is bl sphemy; why, its not even the t ruth. Bottomwe r isnt di pers, but its more th n trousers nd shorts. M sculine is

no longer brooding browns nd greys or n emic p stels - this se son, its n iri descent lil c, glittering blue, glorious t ngerine, bright mint green, s plendid cre m, sunshine nd twilight... And for v lue ddition, there re trouse rs which will ccommod te ll the modern gizmos th t tod ys m n needs nd not bre the word bout it through unsightly lumps, theres odour-free to let others bel ieve youre sque ky cle n, f bric which promises to keep you five degrees cooler i n summers sweltering he t... the list c n go on nd on. S mple these: F rm Fresh Colours of Monet, Sign tures in Silk, Ambrosi , Gods & Kings, Perm Press, Ice T ouch, Uncrush bles, Frid y Dressing, S rtori l Collection, Citrus Collection, Ho nest Trousers, Spy P nts, Mobile P nts, Legw re, Stretch, Ch nge nt, H w ii n Co nference, nd yes, Herb ceous. However, how much of this is re l? And how does i t work beyond being lo d of hype nd hoopl ? According to Mr V s nt Kum r, Vic e-President (M rketing), M dur G rments, which owns n rr y of br nds nd coll ections, To n outsider, the w y br nd is being promoted m y look incongruous, but to the br nd loy list, br nding provides n immedi te connect when he w lks into the showroom. According to Amit bh Suri, Product M n ger t Indi n Terr in, the br nd promoted by the Chenn i-b sed Celebrity group, The br nd needs sex ppe l to sell. All these re ploys to m ke pp rel more interesting. Anees Noor ni, M n ging Director of Zodi c, s ys det iled br nding gives inform tion to the end consumer who 11.623.3 Copy Right: R i University

wedding or form l event. As T her puts it, Form l clothes re not seen nd he r d much but c su l re. Its 50-50 situ tion. According to him, Genesis, form lw e r br nd, sells s much s B sics does, but its not s visible s B sics. Incide nt lly, he dds th t the colours perceived s very now nd with it were v il bl e even e rlier but f ded f st s the technology to bind those dyes w s not v il ble. The pl in nd solid will ste dily nd const ntly sell but men in the 35-45 ge group re willing to experiment, s ys Indi n Terr ins Suri, pointing out th t m ny men now d ys even we r jewellery. D ddies who w nt to rem in young re lso buying clothes which re experiments with colours, style nd cut. However, mid st ll this, he s ys, the product ends up being the hero, not the customer. Its th e customer who should feel hes this mucho m cho, individu listic hunk nd th t wh t he we rs is ccessory to his person lity, he rem rks. F shion lures people int o buying the core products, it cre tes w reness nd pl ys on the psychology of the consumer. Bl ck, which once m de for neg tive perception, is in vogue s n ti-f shion, he st tes. Ap rt from ll this, there re the l test technology innov tions th t m ke for more br nding nd blitz. While wrinkle-free nd st ingu rd re innov tions th t h ve been round for while, now you h ve trousers for you r mobile phone, p lmtop, keys nd other p r phern li , odour-free shirts nd s n itised socks to ensure you come out smelling of roses, f bric which promises it will keep your cool in summer... While most br nd m n gers interviewed for this rticle greed th t these were definite v lue dditions, some, like Indi n Terr ins Suri, lso s id th t to keep the excitement up, trousers for cell-phones were being br nded s such bec use ll the other virtues - the f bric, f shion, cut, cloth, w sh - h d ll been t lked bout. Zodi cs Noor ni sees these fe tures yie lding long-term incre se in s les if they truly dd v lue; otherwise, only sho rt-term spike. Indus Le gue s ys it c me out with its Digit l Trousers bec use i t believes people re lw ys looking for excitement nd innov tion. However, R d ic l s ys its client didnt l unch cellphone trousers bec use they were not sure t heyd live up to their promise. Moreover, they lso h d some doubts bout whether there ctu lly w s need for those. Also, R j questions, Who would w nt to h ve pockets ll over their trousers? T her cknowledges, nevertheless, th t they re seen s innov tive nd h ve s lut ry effect on other products in the br nd. Th ere is lso some scepticism th t unless you h ve bsolutely slim mobile phones, such trousers wont work. P r digms Ch dh s ys hes not sure how sust in ble br ndin g nd premium pricing b sed on the technic l or design spects of the clothes is these elements dd v lue to every m rket pl yers product nd do not offer comp etitive dv nt ge. So how exclusive would they continue to be? As Indus Le gues N qvi puts it, We re living in the ge of individu lity where people like to st nd o ut even mongst their own cliques. The wheel h s come full circle. Pe cocks re m le nd men re re lising th t its more th n ok y to primp nd preen. If being m odern, complete m n brings out the wom n in you, so be it. The br nd m n gers r e ever re dy to p nder to your v nity nd c ter to your v ried t stes. Its m te ri l world, fter ll. Points to Remember CONSUMER BEHAVIOUR Wh t is Person lity?

The N ture of Person lity n

170

Person lity reflects individu l differences n Person lity is consistent ring n Person lity c n ch nge

nd endu

The inner psychologic l ch r cteristics th t both determine rson responds to his or her environment.

nd reflect how

pe

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CONSUMER BEHAVIOUR Theories of Person lity n Figure 5.2 A Represent tion of the Interrel tionships mong the Id, Ego, nd Sup erego Freudi n theory Unconscious needs or drives re t the he rt of hum n motiv tion Gr tific tion ID ID System 1 System 1 EGO EGO System 33 System n

SUPEREGO SUPEREGO System 22 System Freudi n Theory n

Id W rehouse of primitive or instinctu l needs for which individu l seeks immedi te s tisf ction n Superego Individu ls intern l expression of societys mor l nd ethic l codes of conduct

n Ego Individu ls conscious control th t b l nces the dem nds of the id nd superego 11.623.3 Copy Right: R i University 171

Consumer rese rchers using Freuds person lity theory see consumer purch ses s reflection nd extension of the consumers own person lity

Freudi n Theory n

nd Product Person lity

Tr it theory Qu ntit tive

ppro ch to person lity

set of psychologic l tr its

Neo-Freudi n person lity theory Soci l rel tionships re fund ment l to the form tion lity

nd development of person

CONSUMER BEHAVIOUR 172 Compli nt Person lity

Det ched Person lity One who moves w y from others (e.g., who desires independence, selfsufficiency, nd freedom from oblig tions). Tr it Theory One who moves g inst others (e.g., competes with others, desires to excel nd w in dmir tion). n Person lity Aggressive Person lity theory with focus on psychologic l ch r cteristics n Tr it - ny distinguishin g, rel tively enduring w y in which one individu l differs from nother n Person lity is linked to how consumers m ke their choices or to consumption of bro d product c tegory - not specific br nd

Copy Right: R i University 11.623.3

One who desires to be loved, w nted, nd

ppreci ted by others.

CONSUMER BEHAVIOUR Person lity Tr its nd Consumer Innov tors n T ble 5.2 A Consumer Innov tiveness Sc le 1. In gener l, I m mong the l st in my circle of friends to buy new (rock l bum ) when it ppe rsb . 2. If I he rd th t (new rock lbum) w s v il ble in the store, I would be interested enough to buy it. 3. Comp red to my friends, I own few (rock lbums). b 4. In gener l, I m the l st in my circle of friends to know the (titles of the l test rock lbums). b 5. I will buy new (rock lbum) , even if I h vent he rd it yet. 6. I know the n mes of (new rock cts) before ot her people do.

Consumer Innov tiveness

Dogm tism A person lity tr it th t reflects the degree of rigidity person displ ys tow r d the unf mili r nd tow rd inform tion th t is contr ry to his or her own est b lished beliefs. 11.623.3 Copy Right: R i University 173

The degree to which consumers pr ctices.

re receptive to new products, new services or new

Innov tiveness n Optimum stimul tion level n Dogm tism n V riety-novelty n Soci l Ch r cter seeking n Need for uniqueness

CONSUMER BEHAVIOUR 174 Dogm tism n Consumers low in dogm tism (openminded) re more likely to prefer innov tive pro ducts to est blished or tr dition l ltern tives n Highly dogm tic consumers ten d to be more receptive to ds for new products or services th t cont in n ppe l from n uthorit tive figure Need for Uniqueness

Soci l Ch r cter Inner-Directed n Consumers who tend to rely on their own inner v lues n More lik ely to be innov tors n Tend to prefer ds th t stress product fe tures nd benef its Other-Directed n Consumers who tend to look to others for direction n Less l ikely to be innov tors n Tend to prefer ds th t fe ture soci l ccept nce Optimum Stimul tion Levels (OSL)

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A person lity tr it th t me sures the level or mount of novelty or complexity t h t individu ls seek in their person l experiences. High OSL consumers tend to ccept risky nd novel products more re dily th n low OSL consumers.

Consumers who

void

ppe ring to conform to expect tions or st nd rds of others.

CONSUMER BEHAVIOUR V rietyV rietyNovelty Seeking A person lity tr it simil r to OSL, which me sures consumers degree to v riety seeking Ex mples: Explor tory Purch se Beh vior Use Innov tiveness Vic rious Explor tion

Need for Cognition (NC) n Consumers high in NC re more likely to respond to ds rich in product-rel ted i nform tion n Consumers low in NC re more likely to be ttr cted to b ckground o r peripher l spects of n d Cognitive Person lity F ctors n From Consumer M teri lism to Compulsive Consumption n Need for cognition A persons cr ving for enjoyment of thinking

n Visu lizers versus verb lizers A persons preference for inform tion presented visu lly or verb lly n Fixed consumption beh vior Consumers fix ted on cert in products or c tegories of products n Compulsive consumption beh vior Addicted or out-of-control consumers 11.623.3 Copy Right: R i University 175

Consumer m teri lism The extent to which

person is considered m teri listic

CONSUMER BEHAVIOUR 176 M teri listic People n V lue cquiring nd showing-off possessions n Are p rticul rly self-centered nd selfish n Seek lifestyles full of possessions n H ve m ny possessions th t do n ot le d to gre ter h ppiness Compulsive Consumption Beh vior Consumers who re compulsive buyers h ve n ddiction; in some respects, they r e out of control nd their ctions m y h ve d m ging consequences to them nd to those round them. Fix ted Consumption Beh vior n Consumers Br nd Person lity n Person lity-like h ve deep interest in p rticul r object or product c tegory willingness to go t o consider ble lengths to secure items in the c tegory of interest the dedic tio n of consider ble mount of discretion ry time nd money to se rching out the product n Ex mples: collectors, hobbyists tr its ssoci ted with br nds n Volvo - s fety n Nike - the thlete n BMW - perf orm nce n Levis 501 - depend ble nd rugged Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Figure 5.7 A Br nd Person lity Fr mework Br nd Person lity Sincerity Excitement Competence Sophistic tion Ruggedness Down-toe rth Honest Wholesome Cheerful D ring Spirited Im gin tive Up-to-d te Reli ble Intelligent Successful Upper cl ss Ch rming Outdoorsy Tough Notes 11.623.3 Copy Right: R i University 177

LESSON 19: COMPONENTS OF COMMUNICATION UNIT II CONSUMER AS AN INDIVIDUAL CHAPTER 8: COMMUNICATION 2. Elements of M ss Communic tion Most m rketers would gree th t communic tion is the tr nsmission of mess ge f rom sender to receiver vi medium (or ch nnel) of tr nsmission. An essenti l component of communic tion is feedb ck, which Introduction As we c n s y without doubt, th t communic tion function is the me ns by which o rg nized ctivity is unified. In this lesson we described how the consumer recei ves nd is influenced by m rketing communic tions. There re five b sic componen ts of communic tion: the sender, the receiver, the medium, the mess ge, nd some form of feedb ck (the receivers response). In the communic tions process, the se nder encodes the mess ge using words, pictures, symbols, or spokespersons, nd s ends it through selected ch nnel (or medium). The receiver decodes (interprets ) the mess ge b sed on person l ch r cteristics nd experiences nd responds (or does not respond) b sed on such f ctors s selective exposure, selective percep tion, comprehension, nd psychologic l noise. CONSUMER BEHAVIOUR et t es n e t w e h rt ei t n e me s g w s i lr h e d r s o h t e h n e d d s e , n s f c ,r c i e . t eevd Thi i w b s cmodelo c mmuni i woul l o l k ! ss ht i fo cton d ok ie ble to:

Let us now t ke deeper look t ll the elements in this b sic model of communi c tion. The Sender The sender is the initi tor of the communic tion nd c n be form l or inform l source. A form l communic tions source might be the org niz tion communic ting the mess ge. An inform l communic tions source might be p r ent or friend who gives product inform tion or dvice. Inform l word-of-mouth communic tion tends to be highly persu sive. The Receiver The receiver is the t rgeted prospect or customer. There re lso intermedi ry udiences for mess ge, such s wholes lers, distributors, nd ret ilers who receive tr de. There r e lso unintended udiences, which include everyone who is exposed to the mess g e, whether or not they re specific lly t rgeted by the source. The Medium The m edium is the ch nnel or w y the mess ge is communic ted. It c n be n imperson l communic tions ch nnel, such s m ss medium like newsp per or television pr ogr m. It c n be n interperson l communic tions ch nnel n inform l convers tion between two friendsor form l convers tion between s lesperson nd customer. M ss medi re gener lly cl ssified s print (e.g., newsp pers, m g zines, bill bo rds), bro dc st (r dio, television), or electronic (prim rily the Internet). Most m rketers encour ge consumers to visit their Web site to find out more bout the product or service being dvertised. Copy Right: R i University Define communic tion by enumer ting the five elements of the communic tion proce ss. El bor te the b ses of credibility for communic tion source. Outline the f ctors ffecting the t rget udiences reception of communic tion. Describe the feedb ck process in communic tion. 1. Communic tion If we put it simply, communic tion is the tr nsfer of me nings, feelings nd ton es from one person to nother person. T b e e s mplr o e v n i e, Communic tion is the tr nsfer of inform tion

Objectives After studying this lesson you should be

from the sender to the receiver with the inform tion being understood by the rec eiver. Communic tion is the unique tool th t m rketers use to persu de consumers to ct in desired w y. Communic tion t kes m ny forms: it c n be verb l (eith er written or spoken), visu l ( n illustr tion, picture, product demonstr ti on, frown), or combin tion of the two. It c n lso be symbolicrepresented, s y, by high price, premium p ck ging, or memor ble logo nd convey speci l me n ing th t the m rketer w nts to imp rt. Communic tion c n evoke emotions th t put consumers in more receptive fr me of mind, nd it c n encour ge purch ses th t help consumers solve problems or void neg tive outcomes. In short, we c n s y th t communic tion is the bridge between m rketers nd consumers, nd between c onsumers nd their socio-cultur l environments. 178 11.623.3

New modes of inter ctive communic tion th t permit the udiences of m ss medi t o provide direct feedb ck re beginning to blur the distinction between interper son l nd imperson l communic tion. Direct m rketers, using type of inter ctiv e m rketing, use d t b ses to seek individu l responses from print, electronic, nd direct m il. The Mess ge The mess ge c n be verb l mess ge, spoken or writ ten, nd usu lly c n cont in more specific product inform tion th n nonverb l mess ge. Or, it c n be nonverb l mess ge in the form of symbolic communic tion . Nonverb l communic tion t kes pl ce in interperson l ch nnels s well s in im person l ch nnels. The Feedb ck Feedb ck is n essenti l component of both inter person l nd imperson l communic tions. Prompt feedb ck permits the sender to re inforce, to ch nge, or to modify the mess ge to ensure th t it is understood in the intended w y. Gener lly, it is e sier to obt in feedb ck (both verb l nd no nverb l) from interperson l communic tions th n imperson l communic tions. AS we re lize by now th t s consumers we re ll entities th t re processing inform tion nd m king decision, we h ve to consider how much inform tion re ches us. Also, we h ve to consider how this inform tion re ches us. Essenti lly the proce ss of communic tion h s three elements . b. c. A source A mess ge A destin tion or receiver Activity 1 1 . Wh t f ctors influence the perceived credibility of n inform l communic tio ns source? List nd discuss f ctors th t determine f ctors th t determine the cr edibility of form l communic tions sources of product inform tion. CONSUMER BEHAVIOUR When we re t lking bout person l communic tion nd the source is n individu l , the mess ge m y be speech or gesture or some other sign or sign l. Also, the receiver m y be either nother either nother individu l or group like you st udents. But, in the c se, if we t ke the c se of m ss communic tion, the source is not in direct cont ct with the receiver, nd the receiver will be group or n ggreg tion. IN the figure, 8.1 below we show how communic tion c n be sent d irectly from the sender to the receiver. Senders field SENDER Of experience MESSAGE experience Receivers field of RECEIVER

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Fig 8.1 Effectiveness of Communic tion n, or indirect communic tion, for th t h s to be used to deliver the mess ge eter in such c se c n choose from medi etc.

However, in the c se of m ss communic tio m tter, fourth element, i.e., medium t the s me timer to m ny people. The m rk options like print, outdoor, electronic

2. The Communic tion Process In gener l, comp nys m rketing communic tions re designed to m ke the consumer w re of the product, induce purch se or commitment, cre te positive ttitude tow rd the product, give the product symbolic me ning, or show how it c n sol ve the consumers problem better th n competitive product (or service) c n. If w e exp nd the b sic model of communic tion it would look something like this! The Mess ge Initi tor (Source) The source (initi tor) must encode the mess ge in such w y th t its me ning is interpreted by the t rgeted udience in precisel y the intended w y. Encoding c n be done through words, pictures, symbols, spoke spersons, nd speci l ch nnels. Publicity is usu lly the result of public rel ti ons efforts nd tends to be more believ ble bec use its commerci l origins nd i ntent re not re dily pp rent. Wh t re the m in issues rel ted to the Source? Credibility How would credibility ffect the source? CONSUMER BEHAVIOUR The credibility of the source ffects the decoding of the mess ge. You will gre e th t the perceived honesty nd objectivity of the source contributes to his/he r credibility. If the source is well respected nd highly thought of by the inte nded udience, the mess ge is much more likely to be believed, nd vise-vers . C redibility is built on sever l f ctors, foremost of which re the intentions of the source. If the receiver perceives ny type of person l g in for the mess ge sponsor s result of the proposed ction or dvice, the mess ge itself becomes suspect. If we try to el bor te the communic tion process in simple words, we c n s y th t the communic tion process involves sender who tr nsmits mess ge through selected medium to receiver. Let us look t simplistic depiction o f this communic tion process through n equ lly simple model. Figure 8.2 below s hows this communic tion process model long with the steps involved. Feedb ck Credibility of inform l sources is built on the perception th t they h ve nothin g to g in from their recommend tion. An opinion le der is n ex mple of credib le inform l source. Sometimes when we experience post purch se disson nce we oft en try to llevi te their uncert inty by convincing others to m ke simil r purch ses. Credibility of form l sources is built on intention, reput tion, expertise , nd knowledge. Such form l sources s neutr l r ting services or editori l sou rces h ve gre ter credibility th n commerci l sources. We gener lly judge commer ci l sources b sed on their p st perform nce, the kind nd qu lity of service, t he qu lity nd im ge of products offered, nd their position in the community. Y ou would h ve observed th t Firms with well-est blished reput tions gener lly h ve n e sier time selling their products th n do firms with lesser reput tions. Furthermore, you will lso see th t qu lity im ge permits comp ny to experim ent more freely in m ny more re s of m rketing th n would otherwise be consider ed prudent, such s self-st nding ret il outlets, new price levels, nd innov ti ve promotion l techniques. 11.623.3 Thought Sender Encoding Ch nnel to Tr nsmit the mess ge Reception Decoding Underst nding Receiver

Noise Fig 8.2 A simple Communic tion model Let us now look t e ch of the components of this communic tion process model 180 Copy Right: R i University

Institution l dvertising is designed to promote f vor ble comp ny im ge r the r th n to promote specific products. In f ct m ny comp nies sponsor speci l ente rt inment nd sports events to enh nce their im ge nd credibility with their t rget udiences. For ex mple Hero Hond nd Pepsi with Cricket. Credibility of sp okespersons nd endorsersthe spokesperson th t gives the product mess ge is often perceived s the source. Therefore, his/her reput tion is extremely import nt. An import nt spect for you to note is th t when consumer comprehension is low, receivers rely on the spokespersons credibility in forming ttitudes tow rd the p roduct. Also, when comprehension ( nd thus system tic inform tion processing) is high, the expertise of the source h s f r less imp ct on receivers ttitudes i n interperson l communic tions. The synergy between the endorser nd the type of product or service dvertised is n import nt f ctor. Endorsers who h ve demogr phic ch r cteristics th t re simil r to those of the t rget udience re viewe d s more credible nd persu sive th n those th t do not. But, remember th t the endorsers credibility is not substitute for corpor te credibility! M rketers w ho use celebrities to give testimoni ls or endorse products must be sure th t th e specific wording of the endorsement lies within the recognized competence of t he spokesperson. Consumer confidence in s lesperson is cre ted in diverse w ys . The reput tion of the ret iler who sells the product h s m jor influence on mess ge credibility. Mess ge credibilitythe reput tion of the ret iler who sells the product h s m jor influence of mess ge credibility. The reput tion of the medium th t c rries the dvertisement lso enh nces the credibility of the dver tiser. You will see th t there is no single nswer s to which medium h s the mo st credibility, especi lly t time when new forms of medi nd tr dition l med i in new forms re emerging. The consumers previous experience with the product or the ret iler h s m jor imp ct on the credibility of the mess ge. Now let us see study the Effects of time on source credibility the sleeper effect. This wou ld me n th t the persu sive effects of high-credibility sources do not c rry on over time. Although high-credibility source is initi lly more influenti l th n low-credibility source, rese rch suggests th t both positive nd neg tive cre dibility effects tend to dis ppe r fter six weeks or so. This phenomenon h s be en termed the sleeper effect consumers simply forget the source of the mess ge f ster th n they forget the mess ge itself. Reintroduction of simil r mess ge by the source, however, serves to jog the udiences memory, nd the origin l effect rem nifests itself. The T rget Audience (Receivers) Receivers decode the mess ges they receive on th e b sis of their person l experience nd person l ch r cteristics. Person l Ch r cteristics nd Comprehension CONSUMER BEHAVIOUR The mount of me ning derived from the mess ge is the result of the mess ge ch r cteristics, the receivers opportunity nd bility to process the mess ge, nd th e receivers motiv tion. Ones person l ch r cteristics, demogr phics, socio-cultur l memberships, nd lifestyle re key determin nts of mess ge interpret tion. Per ception is b sed on expect tions, motiv tion, nd p st experience. Involvement nd Congruency

A consumers mood (e.g., cheerfulness, unh ppiness) ffects the w y in which n d vertisement is perceived, rec lled, nd cted upon. The consumers mood often is i nfluenced by the context in which the dvertising mess ge ppe rs (e.g., the dj cent TV progr m or newsp per story) nd the content of the d itself; these in turn ffect the consumers ev lu tion nd rec ll of the mess ge. B rriers to Communic tion

A persons level of involvement determines how much ttention is p id to the mess ge nd how c refully it is decoded. Mood

Consumers selectively perceive dvertising mess ges. They tend to ignore dverti sements th t h ve no speci l interest or relev nce to them. TV remote controls o ffer viewers the bility to w nder mong progr m offerings with e se (often referr ed to s gr zing). Some m rketers try to overcome ch nnel surfing during commerc i ls by ro dblocking, i.e., pl ying the s me commerci l simult neously on compet ing ch nnels. The VCR cre ted problems for television dvertisers by en bling vi ewers to f st-forw rd, or zip through commerci ls on prerecorded progr ms. Psych ologic l Noise Wh t is psychologic l noise? Things th t imp ir reception of mess ge, such s competing dvertising mess ge s or distr cting thoughts re c lled psychologic l noise. The best w y for sen der to overcome psychologic l noise is to:

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Repe t exposure to the mess ge. Use contr st. Use te sers. Pl ce zed medi

ds in speci li

Feedb ckThe Receivers Response The ultim te test of m rketing communic tions is th e receivers response. Only through feedb ck c n the sender determine if nd how w ell the mess ge h s been received. An dv nt ge of interperson l communic tion i s the bility to obt in immedi te feedb ck. It permits r pid djustment of the m ess ge. This d pt bility is wh t m kes person l selling so effective. Feedb ck is lso import nt for imperson l or m ss communic tion bec use of its expense. T he org niz tion th t initi tes the mess ge needs some method for determining whe ther its m ss communic tion is being received by the intended udience, understo od in the intended w y, nd successful in chieving the intended objectives. Unl ike interperson l communic tions, m ss communic tions feedb ck is r rely direct; inste d, it is usu lly inferred. Receivers buy (or do not buy) the dvertised p roduct; they renew (or do not renew) their m g zine subscriptions, etc. Another type of feedb ck th t comp nies seek from m ss udiences is the degree of custom er s tisf ction or diss tisf ction with product purch se. Advertising Effectiveness Rese rch CONSUMER BEHAVIOUR Advertisers often try to g uge the effectiveness of their mess ges by conducting udience rese rch. When feedb ck indic tes th t the udience does not note or m iscomprehends the d, n lert sponsor modifies or revises the mess ge. M ss com munic tions feedb ck does not h ve the timeliness of interperson l feedb ck. An import nt feedb ck mech nism for food nd other p ck ged goods is b sed on the U nivers l Product Code (UPC) th t is tied to computerized c sh registers. Gener l ly, persu sion effects re me sured through exposure, ttention, interpret tion, nd rec ll. Activity 2 1. W tch one hour of TV on single ch nnel during prime time nd record the bro dc st. List ll the commerci ls you c n rec ll seeing. For e ch commerci l, ide ntify . The mess ge fr ming ppro ch used, nd b. Whether the mess ge w s one-s ided or two-sided. Comp re your list with the ctu l t ped bro dc st. Expl in n y discrep ncies between your recollections nd the ctu l bro dc st on the b sic of concepts discussed in this lesson. 182 Copy Right: R i University 11.623.3

2.

Activity 3 Tick the correct choice 1. Communic tion is tool m rketers use to persu de con sumers to ct in desired w y. Communic tion t kes m ny forms; it c n be ll th e following except: . verb l. b. visu l. c. system tic. d. symbolic. 2. M rkete rs use symbolic communic tion mess ges, represented by ll the following except: . high prices. b. premium p ck ging. c. memor ble logos. d. in-store product d emonstr tions. 3. The definition of _____ is the tr nsmission of mess ge from sender to receiver vi medium of tr nsmission. . stimuli b. communic tion c. feedb ck d. the sender 4. Which of the following is not one of the m jor com ponents of communic tion? . sender b. receiver c. mess ge d. price 5. Which of the following is n ex mple of form l communic tion source? . p rent b. f riend c. not for profit org niz tion d. none of the bove Key Terms CONSUMER BEHAVIOUR Form l communic tions source Inform l communic tions source Word-of-mouth commun ic tion Imperson l Interperson l communic tions ch nnel Direct m rketers Direct m il Verb l Nonverb l communic tion 183 11.623.3 Copy Right: R i University

For three of the commerci ls you w tched in the bove exercise, identify whether the m rketer used the centr l or peripher l route to persu sion. Expl in your nswer nd specul te on why e ch m rketer chose the ppro ch it used to dvertise the product or service.

 Encoding Publicity Decoding Opinion le der Institution l dvertising Sleeper eff ect Psychologic l noise Feedb ck Almost every consumer electronics br nd spends on dvertising nd offers promoti ons nd price offs, therefore wh t is cruci l is the communic tion th t h ppens t the ret il outlet. The POP displ ys nd visu l merch ndising m y be the clincher , s ys Mr R u. Despite the f ct the th t comp nies re ggressive bout belowtheline communic tion, Philips Mr K rw l, predicts th t there will ctu lly be dec re se in below-the-line spends. There is lot of w st ge on t ctic l below-the-l ine spends, he s ys. He believes th t s consolid tion h ppens, br nds will focus on integr ted m rketing communic tions, which includes both bove nd below the line. A typic l communic tion progr mme would be n integr ted p ck ge, which i ncludes promotions, price-offs, POP displ ys nd would thereby reduce w st ge. B ut Mr R u rgues th t w st ge in below-the-line spend is the s me s in ny othe r medi . Point out one medium where there is no w st ge. The story continues in i ts gener lity - b d below-the-line, b d timing, b d implement tion results in po or response nd w st ge, he dds. CONSUMER BEHAVIOUR Article 1 Consumer Communic tion Consumer Electronics COS Spend More Below-theline WITH d spends by corpor tes dec lining is below-the-line spend lso f lling? Not quite. If you t ke look t th e consumer electronics industry where below-the-line communic tion h s pl yed cruci l role in driving volumes. Mr R jeev K rw l, Senior VicePresident, Philips Indi , s ys th t lmost 65 per cent of the nnu l dvertising expenditure of r ound Rs 500 crore (200001) w s spent on below-the-line communic tion. This inclu des host of ctivities such s rel tionship m rketing, promotions, visu l merc h ndising, point of s le, events, m ilers nd exhibitions mong others. Accordin g to the l test d t put out by the Centre for Monitoring Indi n Economy (CMIE), in the consumer electronics industry, the ver ge dvertising cost s percent ge of s les for the ye r 2000-01 h s gone up by 42 per cent over the previous y e r. Though this m y not me n th t there h s been direct incre se in medi spe nd, it is definite indic tion th t comp nies re e rm rking l rger portions of their turnovers tow rds promotion l ctivities. In f ct, this lloc tion of fun ds is being cited s one of the re sons for the reduction in incomes for gencie s. According to estim tes, the tot l dvertising spend cross industries is rou nd Rs 9,000 crore. The l test CMIE report reve ls th t the tot l medi spend in 2000-01 w s to the tune of Rs 6,500 crore. It lso reve ls th t below-the-line s pend h s incre sed to bout 50 per cent of the over ll spend. There h s lso been m rked shift in spends - th t is the budgets lloc ted to spend on medi (pri nt, TV, r dio, outdoor, internet) vis- -vis the money spent on below-the-line co mmunic tion, points out medi pl nner. For inst nce, Philips Indi , the 70-ye r -old pl yer in the m rket spent round 4 per cent of its turnover on dvertising in the ye r 2000-01. Of this, round 30 per cent w s spent on belowthe-line ct ivities such s contests, promotions nd events. S ys Mr U. J yr j R u, Vice-Pre sident nd Client Services Director, HTA, In the consumer electronics c tegory, w here the product qu lity h s become p rity, below-the-line mess ges t the ret i l outlet m ke huge difference. Therefore, he s ys th t there is lso frequent br nd switching p tterns th t one sees in this c tegory. 184 Article 2 The Ethnic W y of Communic tion Wh tever the product, lever ging ethnicity to cre te dvertisements th t the m r ket c n e sily identify with will go long w y. WHILE there m y be number of positioning str tegies in the urb n co ntext th t reflect the growing influence of Westernis tion, there h ve been number of co

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mmunic tion c mp igns which h ve been conveying the desired imp ct with n ethni c touch. There re m ny dv nt ges to using the ethnic route (subject to the pp ropri te selection of t rget segments). Ethnic ppe ls norm lly re dr wn from t he culture of the specific m rket which reflects the pr ctices, ritu ls, t boos nd beh viour l orient tion of v lues which h ve been p ssed on from one gener t ion to nother. These m y lso be useful to en ble consumers to connect with situ tions with which they re f mili r. While dr m tis tion of Westernised situ tions could be effective through spir tion l f nt sy, specific situ tions dr wn from the consumers cultur l settings will be useful bec use of higher degree of iden tific tion through the sense of belonging

experienced by the consumer when he/she emotion lly connects with the situ tion. This could be best illustr ted with the comp rison between Tit ns dvertisement nd Godrejs Storwel dvertisements. The former h s n element of dr m tis tion wo ven round the w rmth expressed by the gifting beh viour. The spir tion l f nt sy e lement of gifting brought the br nd into the consider tion set of consumers who shopped for gifts (not just w tches). The w tch s gift nd the picturis tion of the TV spots cle rly reflect Western orient tion. The ch nging lifestyles, especi lly in urb n m rkets, were conducive to such positioning str tegy. In t he c se of Storwel (cupbo rd), the emotion l connect (though portr yed s gift) is chieved by the b ckdrop of m rri ge context in which the bride receives the br nd s gift. This c mp ign w s l unched fter consumers were f mili r with the br nd nd the emotion l ppe l enh nced the br nds equity. The ethnic route Ther e re v rious w ys in which br nd could be positioned using the ethnic ppro c h: typic l beh viour which the m sses c n ssoci te with. The commerci l for the to othp ste c ptures this ( nd the tr dition l beh viour of the mother scolding the child). This gets the ttention of viewers before the br nd benefit of protectio n is conveyed effectively. Kellogg positioned itself s bre kf st cere l in c ountry where food preferences re very region l in n ture. Food is strong cult ur l dimension nd ny br nd in the c tegory would do well to t ke into consider tion the cultur l dimensions ssoci ted with food. Bre d h s been in the m rket for sever l ye rs but it is still not p rt of the st ple food. It m y be rec lled th t even Chinese food like noodles (M ggi br nd) w s positioned s 2-minu te convenience sn ck for children m king use of the cultur l pr ctice of providin g home-m de food for children which is prev lent cross different soci l cl sses . CONSUMER BEHAVIOUR By identifying specific beh viour or pr ctice which would be connected with the br nd/product c tegory By identifying specific v lues in cultur l context whic h would be inputs to m rketing communic tion By identifying cert in beliefs whic h need to be t ken into consider tion before n dvertising c mp ign is formul t ed By combining elements of specific culture with ch nging cultur l trends (We sternis tion) By c pturing sense of nost lgi ssoci ted with specific cultu re By using stereotypes which h ve been connected with specific culture By ident ifying specific cultur l tr its, which could be used for product c tegories/br n ds. Simil rly, n tur l ingredients h ve been used for skin c re in Indi for ge s. Nih r, Medimix nd Vrind in so ps nd Meer in the sh mpoo c tegory re ex m ples of br nds which h ve been effectively using this pr ctice. Also, the focus on whiteness in clothes led to the cre tion of the whitener c tegory for clothes - i niti lly Robin Blue, nd Uj l during the 90s. It is pr ctice th ts been followe d for sever l ye rs. The h bit of pplying so ps for w shing clothes is so stron g th t br nd like Ariel, which pioneered the c tegory of comp ct detergents t the higher end h d to introduce so p for the lower end of the m rket. It is f urther interesting to note th t the br nd h d initi lly dvertised th t so p is not required if the comp ct detergent is used for w shing clothes. Another c se: S msung h s introduced w shing m chine exclusively for ethnic we r such s s rees to ensure th t they did not get ent ngled. A m jor m rket which would h ve lot of potenti l in the Indi n context is the toy m rket. M ttel, Fisher nd F unskool re Western br nds. While there re number of offerings in the unorg n ised sector, toy br nd b sed on rich nd ethnic cultur l herit ge c n be built . Import nce of Cultur l V lues

A combin tion of sever l kinds of cultur l dimensions m kes it worthwhile for m rketers to consider positioning str tegies oriented tow rds culture. Cultur l Beh viour

There re different kinds of beh viour which could be ssoci ted with specific culture. Some of these m y h ve their origin in cert in kinds of beliefs. These could be ssoci ted with product c tegories like, for ex mple, the bindi worn b y women in most p rts of the country. It is essenti l th t br nd n me selected for such product c tegory should h ve n ethnic sounding n me. A Western n me i s likely to be counter-productive. T ng, the or nge juice, w s initi lly introdu ced s bre kf st juice in country where even in the upper str t of society such pr ctices might be unusu l. An interesting ex mple which effectively m kes use of cultur l beh viour is the Pepsodent commerci l. Consuming sn cks on the w y to school ( nd b ck) is cultur l h bit p ssed on from one gener tion to noth er for the l st sever l dec des. It is Cultur l v lues m tter to number of product c tegories nd positioning str teg ies. Ch rms, the cig rette for the youth l unched in the 80s, bec me the r ge mo ng young smokers bec use the positioning w s in conson nce with the ch nging v l ues - The spirit of freedom. Ch rms is the w y you re 185 11.623.3 Copy Right: R i University

symbolising dventure, independence nd non-conformist ttitude. The je ns-lik e p ck ging dded to this ppe l. However, cultur l v lues h ve not ch nged enou gh for m rketers to l unch cig rette for women (Ms w s the br nd l unched duri ng the 80s). V lues re import nt bec use they reflect cultur lly ccept ble beh viour. A dec de go, V lentines D y c rds m y h ve been t boo but tod y in urb n m rkets they h ve c ught on. B c rdi, the br nd of liquor which w s positioned on the spirit of enjoyment pl tform, chieved success mong its t rget udience b ec use of ch nging v lues. The l unch of Close-Up toothp ste during the 80s w s p erh ps he d of the v lues which prev iled during those times. The Close-Up smile w s dvertised through cinem h lls nd w s positioned tow rds teen gers. L ter on, the permissiveness w s diluted with the group th t w s brought into Close-Up commerci ls. There m y lso be cert in beliefs which could h ve n imp ct on m rketing communic tion. Vicco Turmeric Ayurvedic Cre m positioned itself s cre m which would be useful for would-be bride to enh nce her complexion. Applying turmeric for skin c re is p rt of the Indi n tr dition. Vicks V porub c ptured the emotion l bond between the mother nd son to convey the br nds benefit. Clin ic Speci l lso c ptures the tr dition l c re mother t kes of the d ughter. Th e f mily togetherness is cultur l spect which could be used by m rketers. Lifeb uoy h s rel unched itself s New Lifebuoy tow rds the f mily. While f mily so ps like Protex nd All C re do not seem to h ve met with gre t success, the togethe rness pl tform for the 107-ye r old Lifebuoy m y be very ppropri te given the ru r l presence of the br nd. C ring for the f mily is nother ppe l woven round the present d y housewifes role. Trupti tt used this nd currently Bh r t G s i s using it s cooking food nd serving love. While Ponds w s lmost household n m e till the Eighties in the c tegory of t lcum powder, signific nt cross-sectio n of t lcum powder users m y h ve switched over to cre ms/lotions bec use of the belief th t self-enh ncing powers re better with substitute products. A br nd wh ich h s been ccepted by m sses on cultur l belief should l unch sever l v ri nts of the product/better ltern tives of the product to the s me segment to ens ure th t the segment st ys with the br nd. The cultur l belief bout be uty c re would differ from one region to nother nd m rketers in this product c tegory h ve to be sensitive to the region-specific t stes of the people. Even in the rur l m rkets, those in T mil N du nd those in Bih r nd Oriss exhibit different t stes nd preferences more bec use of the cultur l interpret tion of be uty c re nd the beliefs nd t boos ssoci ted with how consumer should resort to be u ty c re. Asi n P ints presents good ex mple of comp nys ttempts to ssoci te its br nds with sever l festivities round the country. For ex mple, sever l ho useholds, especi lly in semiurb n nd rur l re s of T mil N du, m y believe in rep inting the house during Pong l to symbolic lly m rk the beginning of new y e r. Asi n P ints cre ted specific br nds which were ssoci ted with such festiv ities. Mixing Culture with Ch nging Trends CONSUMER BEHAVIOUR A type of effective cultur l ppe l consists of mixing cert in cultur l beliefs with trendy products or dvertising. Promise, the toothp ste which h d success ful run, highlighted the tr dition l clove oil used to control tooth p in. C dbu rys recent television c mp ign (for moulded chocol te) shows people of sever l g e groups (tr dition l ones included) enjoying the chocol te. Tr dition lly, choc ol te sn cking w s more ssoci ted with children in the Indi n context; 5-St r t rgeted itself tow rds teen gers nd in the p st few ye rs, C dburys moulded choc ol te h s been t rgeting dults belonging to v rious f cets of life. Sn cking is p rt of the culture (children nd dults) nd positioning chocol te for du lts involves mix of the tr dition nd overtones of Westernis tion where chocol te is f vourite sn ck for dults s well. Cricket h s been p rt of the cult ure in most p rts of Indi nd Pepsi m de it contempor ry with its for the younge r gener tion proposition reflecting fun nd frolic nd strong ssoci tion with cricket. R g collection from Tit n is nother ex mple of contempor ry position

ing with ethnic overtones. Cultur l Tr its nd their Import nce Indi nness is tr it which few br nds h ve used to m ke n imp ct on the t rget segment. Believe in the best, highlighting the superiority of Indi n-m de BPL pro ducts fe turing Amit bh B chch n, is n ex mple of specific cultur l tr it bei ng used to strengthen the br nd which h d lre dy built up n im ge over the ye rs. The H m r B j j c mp ign (the origin l nd the new one) h s blend of mode rn lifestyle nd ethnic beliefs nd reflects the positioning th t most extern ll y Western-oriented youngsters re still Indi n t he rt. Ruf nd Tuf produced n exc ellent commerci l in which modern youth reflects the cultur l tr it of respect for elders through We know English. We lso know how to respect elders bringing i n n ppropri te theme to reflect the cultur l v lue. Other Kinds of Cultur l Appe ls A sense of nost lgi concerning specific culture could be good ppro ch, esp eci lly for br nd which h s been in the m rket for number of ye rs. M rgo so p dopted this ppro ch, showing young wom n being nost lgic for her childhoo d d ys. There w s strong cultur l fl vour to the nost lgi experienced. Gr ndm s re ssoci ted with tr dition l medicine nd remedies. Ayurvedic Concepts (no w the Him l y br nd) m de use of such stereotype to promote its offerings m d e from the tr dition l Ayurvedic prep r tions. Such stereotypes offer credibilit y to the br nd. Bru lso initi lly used cultur l stereotype of ssoci ting its elf with the t ste of filter coffee which is p rt of South Indi n culture. Cul tur l dimensions could m tter to r nge of products nd such inputs could be v lu ble to m rketers - for both Indi n nd multin tion l br nds. 186 Copy Right: R i University 11.623.3

Points To Remember CONSUMER BEHAVIOUR Figure 9.1 B sic Communic tion Model Issues in Credibility n Credibility Sender (Source) Mess ge Ch nnel (Medium) Receiver (Consumer) of Inform l Sources n Credibility of Form l Sources n Credibility of Spokesperso ns nd Endorsers n Mess ge Credibility Feedb ck Elements of the Communic tions Process n The Endorser Credibility n n n Mess ge Initi tor (the Source) n The Sender n The Receiver n The Medium n The Me ss ge n The T rget Audience (the Receivers) n Feedb ck - the Receivers Response n Endorser credibility is import nt when mess ge comprehension is low M tch must e xist between product ttributes nd endorser ttributes Credibility is higher wh en endorsers demogr phic ch r cteristics re simil r to those of t rget udience Endorser credibility is not substitute for corpor te credibility 11.623.3 Copy Right: R i University 187

CONSUMER BEHAVIOUR 188 Figure 9.3 Comprehensive Communic tion Model Commerci l Verb l vs. Nonverb l Non-Profit 1-sided vs. 2 -sided Individu l F ctu l vs. Emotion l Form l vs. Inform l Selective Exposure Individu ls T rget Audie nce Intermedi ry Audience Unintended Audiences Sleeper Effect

Encodes Sender (Source) Mess ge Ch nnel (Medium) Receiver (Consumer) Decodes Medi ted by: Involvement Mood Experience Person l Ch r c. Symbols Pictures Words Im ges P id vs. Unp id Print, Bro dc st, Electronic Person l vs. Imperson l Responds Appropri tely? No Miscomprehends? Yes Yes Pretests to Ensure Mess ge Will be Received Posttests to Ensure Mess ge W s Rece ived No Feedb ck B rriers to Communic tion n Selective Perception W ndering, Z pping, Zipping, nd Ch nnel Surfing Comb t with Ro dblocking n Psychologic l Noise Comb t with repe ted exposures, contr st in the copy, nd te sers Copy Right: R i University 11.623.3

The ide th t both positive nd neg tive credibility effects tend to dis ppe r fter period of time.

CONSUMER BEHAVIOUR LESSON 20: DESIGNING PERSUASIVE COMMUNICATIONS Introduction We h ve understood by now, the import nce of communic tion in knowing the consum er better. In this lesson, we de l specific lly with how to design persu sive co mmunic tions,. An import nt point here is th t this p rticul r topic is de lt in gre ter det il in the dvertising Course book. Here, we will confine ourselves to study bout the points to be kept in mind while designing persu sive communic tions, so th t we re effective in communic ting to our consumer. Objectives After studying this lesson you should be ble to: Expl in the elements of persu sive communic tions str tegy. Define nd discuss the elements of mess ge str tegy. Discuss involvement theory. Discuss the cen tr l elements of mess ge present tion nd their implic tions for m rketers. Argu e for or g inst the use of dvertising ppe ls outlined in the text T rget Audience Selection of the ppropri te udience is key. It is essenti l th t the sponsor s egment the udience into groups th t re homogeneous in terms of some relev nt c h r cteristic. This en bles the m rketer to cre te specific mess ges for e ch t rget group nd run them in specific medi th t re seen or he rd by e ch t rget group. There is need for n umbrell mess ge for ll udiences from which they spin off specific mess ges for t rgeted segments. M ny org niz tions use public rel tions profession ls to help them m int in positive corpor te im ge.

Let us study e ch of these issues in gre ter det ils. Communic tions Str tegy The sponsor must first est blish the prim ry communic tions objectives, which mi ght be w reness, promoting s les, encour ging cert in pr ctices, etc. For lon g time, the cognitive models were used to describe the communic tions process. T od y, other models re g ining popul rity. One ex mple is model b sed on the k ey f ctors of perception, experience, nd memory. 11.623.3

Medi Str tegy First, the sponsor should develop consumer profile of the t rget m rket. Next, medium with n ppropri te udience profile needs to be selected. Before sele cting specific medium, the dvertiser needs to select gener l medi c tegory th t will enh nce the mess ge. Once m rketers h ve identified the ppropri te m edi c tegory, they c n then choose the specific medium (or medi ) in th t c teg ory th t re ches their intended udiences. How would you ev lu te medium/medi before m king the fin l choice? Some of the more import nt criteri for ev lu t ing medi pl n re: 1) 2) 3) Cost of sp ce/time- the price for one-p ge d o r 30 second TV spot Re ch- The size of the udience re ched (ex. Times of Indi circul tion of 1,432,000) Audience composition- description of the udience in terms of v rious demogr phic ch r cteristics such s ge, income, or educ tion.

Designing Persu sive Communic tions Now th t we h ve f ir ide bout the b sic elements of communic tion nd the p rocess of communic tion, we will try to underst nd how to be persu sive in our c ommunic tions or how to design persu sive communic tions. Wh t re the key issue s in designing persu sive communic tions? They re: 1. 2. 3. Communic tions str tegy Medi str tegy, nd Mess ge str tegy

 Copy Right: R i University 189

4) Imp ct- is one medi type more forceful t comm nding ttention th n nother 5) Exposure v lue- ev lu tion of given medi vehicle m y be undert ken on the b s is of cost per thous nd (CPM) exposures. 2. Wholes lers, distributors nd ret ilers re ex mples of _____ udiences. . unin tended b. t rget c. intermedi ry d. consumer CONSUMER BEHAVIOUR Mess ge Str tegies Wh t is mess ge? It is the thought, ide , ttitude, im ge, or other inform tio n th t the sender wishes to convey to the intended udience. Senders must recogn ize wh t they re trying to s y nd their udiences ch r cteristics so they c n e ncode the mess ge ppropri tely. Nonverb l stimuli, such s photogr phs or illus tr tions, re commonly used to dd me ning or to reinforce mess ge rguments. Me ss ge str tegies will include 3.1 Advertising Rhetoric nd Persu sion: Rese rche rs need to study both sem ntics nd the synt x of the d mess ge. Sem ntics incl ude the me nings of the words used nd Synt x me ns the structure of the sentenc e used. 3.2 Mess ge Present tion: Present tion of the mess ge is very import n t spect of communic tion. In this c se you need to t ke c re of the following t hings: . Mess ge fr ming b. One-sided versus two-sided mess ges c. Order effect s d. Repetition 3.3 Advertising Appe ls As we ll know, the ppe ls th t we use in dvertising is very import nt. Some of the popul r ppe ls th t we use in dv ertising re: . Fe r b. Humor c. e. Abr sive Advertising Audience p rticip tion d. Sex in Advertising Advertising ppe ls re t ught in the dvertising course in det ils. So we c n refer to th t course book for further knowledge. 6. 5. 4. 3. Sh reholders, creditors, suppliers, b nkers nd employees re ex mples of _____ udiences. . unintended b. t rget c. intermedi ry d. consumer The medium or com munic tion ch nnel c n be imperson l, like _____, or interperson l, like _____. . telephone convers tions with s lesperson; m ss medi b. f ce to f ce conv ers tion with s lesperson; print medi c. billbo rds; n online ch t with s lesperson d. m ss medi ; newsp per d Photogr phs, illustr tions nd symbols re ex mples of _____ mess ges. . verb l b. nonverb l c. imperson l d. interperson l A smile, frown, finger t pping nd he d nodding re ll ex mples of _____. . verb l feedb ck b. nonverb l mess ges c. nonverb l feedb ck d. interperson l mess ges

Activity 1 Tick on the correct choice 1. Which of the following sources is considered the m ost persu sive form of communic tion? . form l sources b. not for profit org ni z tions c. d. p rent word of mouth 7. One re son inform l sources re considered credible is bec use: . they usu lly know most bout products. b. they spe k out of person l experience. c. they h ve no direct g in from recommending product. d. ll of the bove 190 Copy Right: R i University 11.623.3

8. _____ re considered expert inform l sources of inform tion. . S lespeople b. C onsumer reports c. Opinion le ders d. Spokespeople 14. W h c o t ef l o i gi w y in which comp nies i h f h o l w n not s enh nce their im ge nd credibility with t rget udiences? . sponsorship of rt exhibi ts b. supporting c ncer rese rch c. h nding out free s mples d. holding concerts t loc l p rks 15. Which of the following st tements is true bout spokespeople ? . When mess ge comprehension is low, the expertise of the spokesperson h s li ttle imp ct on the receivers ttitude. b. A physic lly ttr ctive model lw ys en h nces mess ge credibility. c. Consumers with strong ethnic identities re more likely to be persu ded by endorsers with simil r ethnicity th n individu ls with we ker ethnic identities. CONSUMER BEHAVIOUR 9. Individu ls who experience _____ often try to llevi te their uncert inty by con vincing others to m ke simil r purch se to re ssure themselves of their produc t choice. . gr tific tion b. s tisf ction c. postpurch se disson nce d. positiv e reinforcement 10. A mention of the product _____ yields gre t confidence in the mess ge. . by tr ined s lesperson b. by p rent c. in the m ss medi d. in n editori l co ntext 11. Opinion le ders disperse inform tion bout the product or service c te gory they re experts in: . while g ining nothing t ll. b. knowing they will receive some m teri l g in from the comp nies. c. to s tisfy psychologic l nee d. d. b nd c 12. Firms with est blished reput tions gener lly h ve n e sier ti me selling their products th n do firms with lesser reput tions. The bility of qu lity im ge to invoke credibility is one of the re sons for the growth of __ ___. . l rge corpor tions b. non-profit org niz tions c. f mily br nds d. produ ct licensing 13. _____ is form of dvertising which is designed to promote f vor ble comp ny im ge r ther th n promote specific products. . Publicity b. In stitution l dvertising c. Endorsement d. Umbrell br nding d. the endorsers credibility substitutes for corpor te credibility, therefore, co mp nies re sure to hire highly credible spokespeople to overcome the l cking cr edibility of the comp ny itself. 16. Which of the following is not one of the t ctics th t m y be used by s lespeople to enh nce their credibility? . looking c ustomers in the eye b. dressing well c. dressing in the role of n expert in the c tegory they re in

Involvement Theory Involvement theory suggests th t individu ls re more likely to devote ctive co gnitive effort to ev lu ting the pros nd cons of product in high-involvemen t purch se situ tion, nd more likely to focus on peripher l mess ge cues in l ow-involvement situ tion.

Thi l dt t e s e o hEl bor tion Likelihood Model (ELM) th t proposes th t, for high-involvement products, m rketers should follow the centr l route to persu sion; th t is, they should present dvertisements with strong, well-documented, issue-relev nt rguments th t encour ge cognitive processing. W hen involvement is low, m rketers should follow the peripher l route to persu si on by emph sizing noncontent visu l or symbolic fe tures m teri l th t provide t he consumer with ple s nt, indirect ssoci tions with the product nd provoke f vor ble inferences bout its merits.

d. driving

n inexpensive modest vehicle

Mess ge Structure nd Present tion Some of the decisions th t m rketers must m ke in designing the mess ge include the use of reson nce, positive or neg tive mess ge fr ming, one-sided or two-sid ed mess ges, comp r tive dvertising, nd the order of present tion. Advertising reson nce is defined s wordpl y, often used to cre te double me ning, used i n combin tion with relev nt picture. 11.623.3 Copy Right: R i University 191

Using insights provided by semiotics, rese rchers h ve found th t by m nipul tin g the reson nce in n d, they c n improve consumer ttitudes tow rd the d nd the br nd, nd un ided rec ll of dvertising he dlines. Should m rketer stress the benefits to be g ined by using specific product (positive mess ge fr ming ), or the benefits to be lost by not using the product (neg tive mess ge fr ming )? Rese rch suggests th t the ppropri te mess ge-fr ming decision depends on th e t rget udiences level of involvement with the product c tegory. One-sided mess ges tell consumers only the good points (benefits). This is most effectively us ed when the t rget udience h s previously used the dvertisers products. Two-sid ed mess ges tell consumers both good (benefits) nd b d (dis dv nt ges) points o f the product. These re most effectively used when the t rget udience uses c ompetitors products. Comp r tive dvertising cl ims product superiority over one or more explicitly n med or identified competitors. Comp r tive dvertising is u seful in product positioning, t rget m rket selection, nd br nd positioning str tegies th t stress the differenti l dv nt ge of the underdog product over le din g br nds. A downside to comp r tive ds m y be th t they ssist rec ll of the co mpetitors br nd t the expense of the dvertised br nd. Positively comp r tive d s were found to elicit higher levels of processing ctivity (high-involvement), h d better rec ll th n noncomp r tive ds, nd were perceived s more relev nt. Order effectscommunic tions rese rchers h ve found th t the order in which mess ge is presented ffects udience receptivity. On television, the position of commerci l in commerci l pod c n be critic l. The commerci ls shown first re rec lled best, those in the middle the le st. ! There is lso evidence to sugges t th t television commerci ls th t interrupt n exciting or suspenseful p rt of progr m tend to h ve lower rec ll th n those presented during less gripping moment. When just two competing mess ges re presented, one fter the other, the evidence s to which position is more effective is somewh t conflicting. M g zi ne publishers recognize the imp ct of order effects by ch rging more for ds on the front, b ck, nd inside covers of m g zines th n for the inside m g zine p g es, bec use of their gre ter visibility nd rec ll. Order is lso import nt in l isting product benefits within n d. If udience interest is low, the most impo rt nt point should be m de first to ttr ct ttention. If interest is high, howe ver, it is not necess ry to pique curiosity, nd so product benefits c n be rr nged in scending order, with the most import nt point mentioned l st. When both f vor ble inform tion nd unf vor ble inform tion re to be presented (e.g., in n nnu l stockholders report), pl cing the f vor ble m teri l first of ten produces gre ter toler nce for the unf vor ble news. It lso produces gre te r ccept nce nd better underst nding of the tot l mess ge. Repetitionis n impor t nt f ctor in le rning. It is not surprising th t repetition, or frequency of t he d, ffects persu sion, d rec ll, br nd n me rec ll, nd br nd preferences. It lso incre ses the likelihood th t the br nd will be included in the consumers consider tion set. One study found th t multiple mess ge exposures g ve consume rs more opportunity to intern lize product ttributes, to develop more or strong er cue ssoci tions, more positive ttitudes, nd incre sed willingness to resis t competitive counterpersu sion efforts. Advertising Appe ls F ctu l nd emotion l ppe l effectiveness v ries with the circumst nce nd the udience. Re son-wh y ppe ls re more effective in persu ding educ ted udiences. Emotion l ppe ls re more effective in persu ding less educ ted udiences. Fe r Appe lssome rese rchers h ve found neg tive rel tionship between the intensity of fe r ppe ls nd their bility to persu de. The mention of possible h rmful effects of prod uct c tegory or us ge situ tion c uses neg tive ttitudes tow rd the product. So me rese rchers h ve found positive rel tionship between fe r nd persu sivenes s. When the udience focuses on controlling the d nger r ther th n the fe r, the re is n ccept nce of the mess ge. There is some indic tion th t the mention of possible h rmful effects of using product c tegory lthough procl iming the b enefits of the dvertised product results in neg tive ttitudes tow rd the produ ct itself. Humor signific nt portion of ds use humor bec use m rketers believe it incre ses d effectiveness. Humor should be used selectively bec use there r e so m ny qu lifying conditions to its effectiveness. Audience ch r cteristics h

ve signific nt imp ct. Abr sive dvertisingthey work bec use of the sleeper ef fect s only the br nd n me nd the persu sive mess ge re ret ined over time. A ll of us h ve t one time or nother been repelled by so-c lled gony commerci l s, which depict in di gr mm tic det il the intern l nd intestin l effects of he rtburn, indigestion, clogged sinus c vities, h mmer-induced he d ches, nd the like. Nevertheless, ph rm ceutic l comp nies often run such commerci ls with gre t success bec use they ppe l to cert in segment of the popul tion th t suffe rs from ilments th t re CONSUMER BEHAVIOUR 192 Copy Right: R i University 11.623.3

not visible, nd which therefore elicit little symp thy from f mily nd friends. Sex in dvertisingthere is more d ring sexu l im gery, extending f r beyond the tr dition l product c tegories of f shion nd fr gr nce, into such c tegories s sh mpoo, beer, c rs, nd resorts. The dvertiser must be sure th t the product, the d, the t rget udience, nd the use of sexu l themes nd elements ll work together. Audience p rticip tionthe provision of feedb ck ch nges the communic t ions process from one-w y to two-w y communic tion. This is import nt to senders , bec use it en bles them to determine whether nd how well communic tion h s t ken pl ce. It lso is import nt to receivers, bec use it en bles them to p rtici p te, to be involved, to experience in some w y the mess ge itself. Although p r ticip tion is e sily ccomplished in interperson l situ tions nd drives the int er ctivity of cyber communic tions, it t kes gre t de l of ingenuity to chiev e in imperson l communic tions. To design persu sive communic tions, the sponsor s must first est blish the objectives of the communic tion, nd then select the ppropri te udiences for the mess ge nd the ppropri te medi through which to re ch them, nd then design or encode the mess ge in m nner th t is ppropri te to e ch medium nd to e ch udience. Are there ny tools or techniques th t we c n use to m ke our communic tion more effective? CONSUMER BEHAVIOUR 2. . Should m rketers use more body copy th n rtwork in print ds? Expl in your nswer. To communic te more effectively, we need to use some tools like: Advertising Person l Selling S les Promotion Publicity nd Public Rel tion Wh t is comp r tive dvertising, nd wh t results do m rketers g in from using it? Activity 2 1. 11.623.3 Copy Right: R i University 193

Key Terms

re sons to choose br nd in preference to others. This implies th t the br nd p ositioning st tement should ctu lly be written in the consumers l ngu ge, on how the consumer would describe his or her re sons for choosing p rticul r br nd over others. To get more system tic ppro ch to the rt nd science of br nd p ositioning, the re sons re specific lly distinguished s function l, emotion l nd r tion l. While function l nd emotion l re sons would be cle r to most re d ers, the r tion l re sons re often referred to s subst nti tors nd provide su pport for the delivery of both the function l s well s emotion l benefits of br nd. I m fr id th t I c nnot comment on ny of the specific dvertisements mentioned in your question, s I h ve not been privy to their str tegy nd the m rket nd consumer insights specific to the c tegory nd the br nds in question. However, I must expl in to you how it h s been observed s phenomenon in extr emely m ture m rkets, th t s more nd more c tegories h ve product p rity cros s competition, it is very difficult to split h irs nd ctu lly find me ningfu l function l differenti tor b sed on consumer needs. Indeed, this is forcing m r keters to dopt the route of differenti ting through emotion l benefits or cre t e very strong br nd person lity. Virgin h s done this with l n nd this lso l lows the br nd to extend itself cross c tegories nd continents. Strong br nd p erson lity cre ted through communic tion for s y br nds such s Virgin or Benett on h ve definitely worked to their dv nt ge. It h s llowed them to be position ed in territory which c nnot be e sily ch llenged by ny competitor nd defini tely gener te very loy l b se of consumers who identify with the br nd. Indeed , function l differenti tors need to be me ningful nd should be communic ted ef fectively to ttr ct its t rget consumers. Often m rketers or the dvertising co mmunity is un ble to distinguish between the br nd person lity nd the emotion l re sons for preferring br nd. For inst nce, the two strong col br nds h ve s trong br nd person lities, where s Thums Up is ctu lly ttempting to communic t e function l differenti tor with its riv l, on specific dimension (sweetness ) of the t ste ttribute. Wh t m kes consumers buy br nd is combin tion of ll inter ctions of the consumer with the br nd t v rious points of cont ct nd its v lue positioning. It is imper tive th t the product perform nce is in line with the br nd promise or it will not m n ge to ttr ct consumers on sust ined b sis. In f ct, lot h s been invested in rese rching the effectiveness of dv ertising communic tion. John Philip Jones, who w s recently in Indi , h s writte n some of the best books nd rticles in this field where he subst nti tes his p oints on m king dvertising ccount ble for s les with rese rched evidence. Mill w rd Brown, rese rch gency which h s the best tools for pre-testing ny dver tising communic tion h s lso invested in developing strong tools which c n help m rketers nd their gency p rtners in developing communic tion which is on str tegy nd which is persu sive enough to gener te s les response. It is critic l to ev lu te your dvertising communic tion to see if it is communic ting the i ntended str tegy. It should ev lu te if 11.623.3 CONSUMER BEHAVIOUR Articles on Communic tion Pl ying on Emotions As more nd more c tegories h ve product p rity cross compe tition, it is difficult to ctu lly find me ningful function l differenti tor b sed on consumer needs. This is forcing m rketers to dopt the route of differe nti ting through emotion l benefits or cre ting very strong br nd person lity.

Consumer profile Audience profile Centr l route to persu sion Peripher l route t o persu sion Advertising reson nce Positive mess ge fr ming Neg tive mess ge fr ming One-sided Two-sided mess ges Comp r tive dvertising Order Repetition Re ch Audience composition Imp ct Exposure V lue Precision T rgeting Mess ge Present tion Advertising ppe ls

 Copy Right: R i University

A number of comp nies such s Prudenti l ICICI Life Insur nce, B j j nd Servo h ve tried to use the emotion l route in their dvertisements. How effective do y ou think will such str tegy be to help sell product? Will this str tegy work for product such s Servo, which m rkets lubes? Do ds on n emotion l pl nk m ke gre t imp ct? Do people buy seeing these ds? - Ajit Sh shik nt, Chenn i TO expl in how consumers respond to specific type of dvertising, it is pertin ent to first underst nd how consumers choose br nds. Br nd positioning is the t rget consumers 194

the consumer c n cle rly underst nd the proposition - whether the proposition is b sed on function l or emotion l benefits, how credible re these cl ims, is it memor ble in re l life, is the br nding cle r nd of course, how will it imp ct s les. Without doubt dvertisements which use strong br nding elements, communi c te the str tegy nd lso lever ge consistent cl im t ll points of cont ct, h ve the potenti l to gener te continued s les. To counter competition To exp nd into new m rkets/new income segments CONSUMER BEHAVIOUR

When Medi Br nds Advertise Medi comp nies re re lising the virtues of br nd building like never before. C t lyst ex mines the trend. Mrin lini Gupt w s worried l dy. As the Vice-Pres ident, M rketing, of Hindust n Times (HT), the C pit ls l rgest selling newsp per , she f ced peculi r situ tion. The 70-ye r-old m rket le der w s not p rticul rly deterred when competitor thre tened its position. The issue here w s th t chunk of its young re ders perceived HT to be n old f shioned p per. As it h pp ens with lot of herit ge br nds, somewhere consumers st rt to feel th t it is n old f shioned br nd. This is the problem HT f ced too, she s ys. So, HT decide d to go in for n im ge m keover. In c me the d gency. The brief given to them w s simple: Position HT s contempor ry, dyn mic, youthful nd sm rt br nd. In September 2001, the newsp per spl shed the Live Sm rt c mp ign cross different medi . The c mp ign helped us to build the br nd im ge in the right direction, she s ys. NRS 2002 figures re w ited to see the results. ADVERTISING by medi com p nies (newsp per, m g zine or TV ch nnel) is n ge-old phenomenon. E rlier, every pl yer oper ted in specific m rket nd h rdly h d ny competition to wor ry bout. B ck then, dvertising by medi br nd w s merely communic ting the p roducts ttributes, in its own medium. However, incre se in competition h s now f orced medi br nds to look beyond product p r meters (such s content nd design ) nd offer consumers those int ngibles th t contribute to br nd building. This me nt medi owners h d to keep tr ck of whether the br nds person lity w s in syn c with the profile of the consumer. For inst nce, HT cre ted sync with its sm rt positioning. Mrin lini s ys, Every one w nts be ssoci ted with being sm rt. A s p per we re providing sm rt new ide s, thoughts nd insights. Hence, the t gline Live Sm rt. They lso needed to communic te to l rger udience nd dvert ising cross medi , therefore bec me necess ry. For inst nce: Indi n Express h s TV spot to communic te its M king it point mess ge, BBC promotes its progr mm es on r dio nd in newsp pers. Society, lifestyle m g zine, dvertises on TV. T rgeting the consumer nd the dvertiser The communic tion objective of medi comp ny is to build its br nd mong non-users (non-re ders/non-viewers) nd con solid te its position mong users. There re specific situ tions when medi co mp ny chooses to dvertise: When Aj y Vidy s g r took over the reins of the St r Vij y TV, he w s w re of t he enormous br nd loy lty th t the m rket le der, Sun TV, enjoyed. He lso knew th t St r Vij y h d to scre m out loud for the viewer to even recognise th t n ew ch nnel h d rrived, r ther, th t n existing ch nnel h d rev mped itself. As p rt of its str tegy, St r Vij y p inted the citys skyline with ho rdings nno uncing the l unch of its prime time progr mmes. This set off trend. When Sun N etwork responded with the l unch of nother ch nnel, KTV, it lso used ho rdings cross the city. Tod y ny new progr mme is b cked by dvertising nd promotion, s ys n offici l of le ding dvertising gency. Ads t rgeted t consumers (re ders/viewers) m y lso t lk to prospective dvertisers. There is spin-off effec t. A viewer m y like progr mme on your ch nnel nd m y decide to pl ce his pro

T ke

look t the first situ tion

ducts d, s ys Vidy s g r. Medi comp nies lso resort to specific ds t rgeted t dvertisers nd medi pl nners. The communic tion objective is cle r: To help i n selling more sp ce/time. For inst nce, M l y l M nor m , the le ding M l y l m d ily, runs n d with the t g line Ker l s No.1 ch nnel. It subst nti tes this w ith comp rison of re dership figures. The Hyder b d-b sed Decc n Chronicle run s simil r c mp ign with the provoc tive t g line C tch me if you c n. S ys A. Vi j y Kum r, Gener l <147,1,0>M n ger (Advertising), Decc n Chronicle. A cl ssic ex mple is the Decc n Her ld versus The Times of Indi (TOI) b ttle, DH h d higher re dership but lower circul tion. TOI h d lower re dership but higher circul ti on. Therefore, he s ys, this type of communic tion becomes necess ry to counter c ompetition. However, such ds m y not be of ny relev nce to re der, points ou t R.Krishn Moh n, Vice-President , Ogilvy & M ther. Ads t lking to dvertisers s eldom m ke ny sense to the re der, he s ys. Medi comp nies lso use direct m il ers extensively for this purpose. Direct m rketing is used specific lly to t rget medi pl nners. This is done in bursts to coincide with the beginning of the fi n nci l ye r or the l unch of new fe ture, s ys J yr j R u, Vice-President nd Client services director, HTA. Television ch nnels lso use direct m ilers to co mmunic te to the distributor. We use direct m ilers to t lk to our c ble oper tor s, s ys St r Vij ys Vidy s g r. The need to t lk to dvertisers is compounded by t he f ct th t while re dership figures (or TV r tings) m y qu ntify the re ch of medi vehicle, it l cks qu lit tive ssessment. There is no tool to ssess the qu lit tive spect of re ch or br nd fit, s ys n gency offici l. Sometimes, med i houses lso b rter time/sp ce between e ch other to promote their respective content. An gency offici l expl ins th t such de ls h ppen only if there is s ynergy between the comp nies. However, co-br nded promos h ppen quite bit, he d ds. Contest nd sponsoring events h ve lso become p rt of medi comp nys br nd building exercise. Region l l ngu ge 195

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To nnounce the l unch of r prop up d revenues

new product To bolster circul tion (or viewership) o

d ilies, in p rticul r, re using this s specific str tegy to incre se circul tion. For inst nce, Am r Uj l , le ding Hindi d ily, sked its re ders to ns wer simple question nd g ve w y exciting prizes: c r, motorbike nd so o n. The writing on the w ll is cle r: When times re tough nd competition is kno cking on your door, medi comp nies c nnot ignore to invest in br nding initi ti ves. As n dvertising m n ger of le ding English d ily puts it, A medium which helps in building sever l br nds c nnot fford to be poorly br nded itself. BBCs G mepl n YOU c nnot promote news, s ys J ne Gor rd, Director of M rketing, BBC Wo rld, while expl ining th t viewership for news is dependent on h ppenings nd ev ents in the world. Therefore, the ch nnel is focusing on loc lised content th t would interest the viewer. It recently l unched Comm ndo!, re lity progr mme f or its Indi n udience. Gor rd s ys th t the ch nnel used number of medi to p romote the progr mme. We did r dio spots on FM t rgeting the listener who is driv ing to work in the mornings, she s ys. BBC World lso uses print medi to promote its Indi -specific progr mmes such s Question Time Indi nd M stermind Indi . Gor rd expl ins th t BBC defines its t rget udience s IBDM Intern tion l Busin ess Decision M ker - who m y lso be the ch nnels potenti l dvertiser. The ide i s to re ch out to this segment nd therefore ll our communic tion is directed t ow rds them, she s ys. Points To Remember CONSUMER BEHAVIOUR Communic tions Str tegy Perceptions Experience Memory Issues in Designing Persu sive Communic tions n Figure 9.4 Perception/ Experience/ Memory Model of Advertising Pre-experience Exposure Post-experience Exposure Communic tions str tegy n Medi str tegy n Mess ge str tegy Fr ming Perception Expect tion Anticip tion Interpret tion Enh ncing Experience Sensory Enh ncement Soci l Enh ncement Org nizing Memory Cueing Br nding Interpret tion 196 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Medi Str tegy n Consumer

profiles n Audience profiles A cost-effective medi choice is one th t closely m tches the dvertisers consumer profile with the mediums udience pr ofile. Highly selective n Long le d time Selective binding n High clutter possible n De l yed nd indirect High qu lity production feedb ck High credibility n R tes v r y b sed on circul tion nd Long mess ge life High p ss long r te selectivity

Access to l rge n Not selective udiences n Short mess ge life Effective for loc l re chClutter n Flexible n Cost v ries b sed F st on d size nd vehicle circu l tion Feedb ck possible through coupon redemption, etc. L rge udiences n Long le d time possible n High clutter Appe ls to m ny n Short mess ge life senses n Emotion nd ttention Viewers c n void exposure with pos sible Demonstr tion possiblez pping, etc. n Very high costs over ll D y- fter re c ll tests Low costs per cont ct for feedb ck 11.623.3 Copy Right: R i University 197

Excerpts from T ble 9.2 Persu sive C p bilities Television) n n n n n n

nd Limit tions of M jor Medi (

Excerpts from T ble 9.2 Persu sive C p bilities Newsp per) n n n n n

nd Limit tions of M jor Medi (

Excerpts from T ble 9.2 Persu sive C p bilities M g zines) n n n n n n

nd Limit tions of M jor Medi (

CONSUMER BEHAVIOUR 198

High udience selectivity Person liz tion possible Novel, interesting stimuli po ssible Low clutter n n n Perception of junk m il Feedb ck possible through response High cost per cont ct

n n n Priv cy concerns Me sur ble responses Cost per inquiry, cost per s le, revenue p er d c n be c lcul ted Copy Right: R i University 11.623.3

Development of d t b ses High

udience selectivity Rel tively free of clutter

Potenti l for udience Demogr phic skew n selectivity to udience Customized tr cking n Very high clutter possible nd other n Z pping possible feedb ck tools p ossible Gre t v ri tion in n Useful for br nding ndpricing reinforcement of n P riv cy concerns mess ges

Excerpts from T ble 9.2 Persu sive C p bilities Direct M rketing) n n n

nd Limit tions of M jor Medi (

Excerpts from T ble 9.2 Persu sive C p bilities Internet) n n

nd Limit tions of M jor Medi (

High geogr phic nd n Short exposure time demogr phic selectivityAudio only n Sh ort le d time n High clutter Rel tively inexpensive Z pping possible n Good loc l cover ge n Del yed feedb ck through d y- fter rec ll tests

Excerpts from T ble 9.2 Persu sive C p bilities Direct M il) n n n n

nd Limit tions of M jor Medi (

Excerpts from T ble 9.2 Persu sive C p bilities R dio) n n n n

nd Limit tions of M jor Medi (

CONSUMER BEHAVIOUR T ble 9.3 Buyer Person lities nd Advertising Str tegies Issues in Mess ge Present tion n Reson nce n Mess ge Righteous Soci l Pr gm tic Fr ming Versus Two-sided Mess ges n Comp r tive Advertising n Order Effects n Re petition n One-sided How might dvertising be designed for these three distinct buyer types? Involvement Theory nd Persu sion The El bor tion Likelihood Model (ELM) proposes th t m rketers use the centr l ro ute to persu sion for high involvement products nd the peripher l route to persu sion for low involvement products Emotion l Advertising Appe ls Fe r Humor Abr sive dvertising Sex in dvertising Audience p rticip tion 11.623.3 Copy Right: R i University 199

CONSUMER BEHAVIOUR 200 T ble 9.4 Imp ct of Humor on Advertising Humor ttr cts ttention. Humor does not h rm comprehension. Humor is not more effe ctive t incre sing persu sion. Humor does not enh nce source credibility. Humor e nh nces liking. Humor th t is relev nt to the product is superior to humor th t i s unrel ted to the product. Audience demogr phic f ctors ffect the response to h umorous dvertising ppe ls. The n ture of the product ffects the ppropri tenes s of humorous tre tment. Humor is more effective with existing products th n wi th new products. Humor is more ppropri te for low-involvement products nd feeli ngoriented products th n for high-involvement products. Notes Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 21: TUTORIAL An lyze the following c se nd discuss the questions give t the end. 1998 340,00 0 1999 880,000 2000 1,900,000 forec st The Development However, in mid-summer 2000 , Mike nd Bernie French were suddenly ppro ched by venture c pit list group c lled Horizons Unlimited, oper ted by Phil Deevers nd Bruno M ckensen p ir of highly successful fin nciers who h d just m de l rge profit selling out coffee house ch in to Whitbre ds. Horizons were intent on exp nding into the boo ming Internet business, which seemed to h ve enormous growth potenti l, t th t point. The b ttingscoresheet.com site seemed to them speci list, niche site bu t with gre t possibilities. It fitted perfectly into their pl ns. After discussi on they offered Mike French huge fin nci l p ck ge nd cquired 51% of the com p ny. The go l w s f ster exp nsion. The Pl n Horizons Unlimited specified re l unch of the site in J nu ry 2001. Their t rget income t rget w s 2001 income: 4 m 2002 income: 7.5m D ily hits should grow to 600,000 to chieve this. There were two key requirements: ) b) Growth in dvertising, sponsorship nd merch ndise s les corresponding growth in us ge of the site. C se Study Rel unching A Web Site The Project Mike French w s born in Guildford, Surrey, into cricket-loving f mily. He pl y ed cricket intensively t school, nd w s selected for speci l ttention by Surr ey Colts. But his other p ssion w s for computers nd he went on to C mbridge wh ere he obt ined BSc Engineering in the Computer Science field. After th t, Mike French joined the IT dep rtment of the London br nch of le ding J p nese b nk. Sever l ye rs l ter they moved him to their Toronto br nch. Mike missed cricket , nd in p rticul r the cricket results. Out of interest, he opened his own Web site on the Internet, to spre d the test m tch scores mongst his friends. This m teur venture developed r pidly, s his hobby grew, nd he soon dded worldwid e results not just for test m tches, but lso from loc l g mes. In 1996 he h d b uilt up network of fellow Internet enthusi sts who would send him cricket resu lts d ily - nd lmost hourly, into Toronto. In 1997 he w s moved b ck to London but continued his cricket ctivity, to the point where he resigned in 1998 to g o full time s Web site cricket speci list, with profession l business. His site dom in n me w s: b ttingscoresheet.com The site, he observed, h d been runn ing 50,000 hits d y in Toronto, but now w s running 200,000 hits d y b ck in London. A big success. L te in 1995, Mike French formed n ssoci tion with n intern tion l c ble comp ny, C ble size, which ensured bro der supply of crick et d t . Now not just m tch scores, but much other cricket inform tion. Two coun try clubs lso volunteered sponsorship funds. He beg n to t ke dvertising reven ue, nd t the turn of the ye r st rted merch ndise venture, offering direct s les of r nge of cricket -rel ted ge r. This included books nd memor bili . T he comp ny worked from offices in Dorking, with sm ll but growing technic l st ff. Mike French concentr ted on the Web site, while his wife Bernie (they were m rried in Toronto) looked fter the dvertising nd merch ndise s les. It seeme d th t there w s n enormous l tent interest ll over the Web. From udiences in Brit in _ From British ex-p ts, p rticul rly in Europe _ From cricket lovers in the cricket pl ying countries _ From people elsewhere, especi lly Western Europ e nd the SA, who were becoming interested. In 1999, the site w s chieving 280, 000 hits d y. By mid-2000 there were 350,000 hits d y. The service w s now p roviding scores, n lyses, profiles, historic l scores s well s the growing r nge of merch ndise nd the dvertising sites (p ges, b nners nd buttons), spons orship, etc. Their income grew correspondingly: Horizons noted th t currently only 25% of users c me from Brit in. For commerci l re sons they Needed t le st 50% - to ssure dvertisers nd sponsors, sell me rch ndise etc. Th t is to build 300,000 hits per d y from Brit in. This w s the priority. The Promotion Deevers nd M ckensen suggested they dr ft in promotio n l speci list to help chieve the us ge of the site nd recruited Chris Jenkins , Commerci l M n ger from nother Internet comp ny. Bernie French would contin

ue to sell dvertising nd run the merch ndise side. In order to chieve the t r get of consumer visits, Horizons s id th t for the New Ye r they were prep red t o invest in strong promotion nd communic tions budget - th t is, re l unch level of 20% Of the 2001 income i.e. 800,000. The technic l development of the si te would come from elsewhere. The 800,000 would cover promotion outside the site itself. Jenkins h d lengthy t lk with Bernie French the moment he joined nd t hey re ched number of conclusions: 11.623.3 Copy Right: R i University 201

 Hits come pretty evenly cross the UK Although there w s some se son l fluctu ti on, the us ge of the site w s comp r tively ste dy cross the ye r bec use of cr icket ctivities worldwide The users of the site were by definition people with ccess to the Web, nd seemed to h ve 4:1 m le: fem le bi s, but spre d cross ge groups. It w s not site just for the young Users were vid cricket f ns T here were sever l other sports sites on the Web which covered cricket. So there w s something of competitive position CONSUMER BEHAVIOUR How best could the site be communic ted? Th t w s the problem nd, Jenkins lso sked, did they need ny profession l ssist nce? With big c mp ign like this, they could do with some help. Notes 202 Copy Right: R i University 11.623.3

LESSON 22: GROUP DYNAMICS AND CONSUMER REFERENCE GROUPS Introduction Hum ns re inherently soci l nim ls, nd individu ls gre tly influence e ch oth er.Group dyn mics exist in every form l nd inform l type of org nis tions. We n eed to study group dyn mics to help us know nd underst nd the imp ct of v rious types of groups on the individu ls buying beh viour. In this lesson we will unde rst nd the concept of Group dyn mics nd lso the different types of groups th t exist. UNIT III CONSUMERS IN THEIR SOCIAL AND CULTURAL SETTINGS CHAPTER 9: CONSUMER BEH AVIOUR IN SOCIAL SETTINGS Let us now see why group is formed t ll! Re sons for form tion of Group It h s been seen th t the re sons why group gets formed re: 1. 2. 3. 4. 5. Interp erson l Inter ctions: The group cts s vehicle of soci liz tion Group serves s me ns of need s tisf ction A ch nge from usu l work environment Helps in gr oup decision m king nd getting the job done CONSUMER BEHAVIOUR Objectives After studying this lesson you should be ble to: Define group. Underst nd the power of reference groups on consumer beh vior. I dentify six consumer-relev nt groups. List nd expl in the f ctors th t determin e reference group influence. Describe the five types of reference groups. Expl i n the m jor forms of reference group ppe ls. Adv nt ges of Groups Wh t do we g in if we form groups? There re lot of dv n t ges. Some of them re: 1. 2. 3. 4. 5. Gre ter sum tot l of knowledge nd infor m tion Gre ter number of ppro ches to the problem P rticip tion incre ses ccep t nce Better comprehension of the problems nd the solution Group cts s moti v tor 1. Wh t is Group Dyn mics? Let us first cl rify wh t ex ctly is group dyn mics. Group dyn mics is rel ted t o determining the inter ctions nd forces between group members in soci l situ tion. Wh t then is group? A group will comprise of ( ) Two or more people who re interdependent on e ch other, with group members nd (b) The group sh res set of beliefs, v lues nd norms, which regul tes their mutu l conduct. Thus we c n define group in the following m nner: Group A group m y be defined s the ggreg tion of sm ll number of persons who work for common go ls, develop sh red ttitude nd re w re th t they re p rt of group nd perceive themselves s such. WE c n lso s y th t the identifi ble fe tures of group re: 1. 2. T wo or more persons: At le st two people h ve to be present to form group. Coll ective identity: E ch member of the group must believe th t he is member of th e group nd lso be w re of his p rticip tion in the group ctivity. Inter ctio n: The members of the group will inter ct with e ch other, sh re their ide s nd communic te with e ch other. Sh red go l interest: Members of the group will l so concur to the tt inment of objectives. E ch member of the group must t le s t sh re one of the group concerns. Dis dv nt ges of Groups But, there re dis dv nt ges in group lso! Some dis d v nt ges re: 1. 2. 3. 4. 5. 6. 7. 8. 9. Solution mindedness Compromised results Untimely decisions Conflicts Diffusion of responsibility Free riding or soci l lo fing High coordin tion cost in time nd money Domin nce Pressures to conformi ty Types of groups Let us now identify the v rious types of groups th t exist nd o per te in our d ily life.

Prim ry versus second ry Depends on mount of inter ction Membership versus symb olic 3. Depends on whether group members recognise individu l s member Depends on degre e of form lity of conduct Depends on whether membership is utom tic or by choic e 203 Form l versus inform l 4. Ascribed versus choice 11.623.3 Copy Right: R i University

Activity 1 Prep re list of form l nd inform l groups to which you belong nd give five e x mples of purch ses fro which e ch served s reference group. IN which of the groups you listed is the pressure to conform the gre test? Why? But in th t c se, re reference groups nd institutions s me? No! So, wh t re i nstitutions? Let us look t the differenti ting points between the two Institutions nd groups CONSUMER BEHAVIOUR Groups re two or more persons sh ring common purpose Where s Institutions re more perm nent groups with perv sive nd univers l presence And then wh t re r eference groups? Reference groups A useful fr mework of n lysis of group influence on the individu l is the so c lled reference groupthe term comes bout bec use n individu l uses relev nt gr oup s st nd rd of reference g inst which oneself is comp red. Reference grou ps come in sever l different forms. The spir tion l reference group refers to t hose others g inst whom one would like to comp re oneself. For ex mple, m ny fi rms use thletes s spokespeople, nd these represent wh t m ny people would ide lly like to be. Associ tive reference groups include people who more re listic lly represent the individu ls current equ ls or ne r-equ lse.g., coworkers, neighb ors, or members of churches, clubs, nd org niz tions. Fin lly, the dissoci tive reference group includes people th t the individu l would not like to be like. For ex mple, the store liter lly n med The G p c me bout bec use m ny younger p eople w nted to ctively dissoci te from p rents nd other older nd uncool people . The Qu lity P perb ck Book specific lly suggests in its dvertising th t its m embers re breed p rt from convention l re ders of popul r books. Reference gro ups come with v rious degrees of influence. Prim ry reference groups come with gre t de l of influence e.g., members of fr ternity/sorority. Second ry refere nce groups tend to h ve somewh t less influencee.g., members of bo ting club th t one encounters only during week-ends re likely to h ve their influence limit ed to consumption during th t time period. Another typology divides reference gr oups into the inform tion l kind (influence is b sed lmost entirely on members k nowledge), norm tive (members influence wh t is perceived to be right, proper, respon sible, or cool), or identific tion. The difference between the l tter two c tegorie s involves the individu ls motiv tion for compli nce. In c se of the norm tive re ference group, the individu l tends to comply l rgely for utilit ri n re sonsdres sing ccording to comp ny st nd rds is likely to help your c reer, but there is no re l motiv tion to dress th t w y outside the job. In contr st, people comply with identific tion groups st nd rds for the s ke of belongingfor ex mple, memb er of religious group m y we r symbol even outside the house of worship bec use the religion is p rt of the persons identity Persons, groups or institutions looked to for guid nce for beh viour nd v lues nd whose opinions re v lued Wh t re the conditions for reference group influe nce? 204 Copy Right: R i University 11.623.3

Source: Ad pted from Robert E. Burnkr nt nd Al in Cousine , Inform tion l nd no rm tive soci l influence in buyer beh viour, Journ l of Consumer rese rch 2, Dece mber 1975, pp. 206-15. Let us now t ke cursory gl nce t reference group influ ence for business customers. Reference group influence for business customers CONSUMER BEHAVIOUR Product Br nd Strong influence Group influence (+) Necessity We k reference Grou p influence (-) We k reference Group influence (-) Strong reference Group influence (+) Public necessities Public luxuries Priv te necessities Priv te luxuries Type of influence Inform tion l Luxury B sis Expertise Exempl rs Leg l nd technic l consult nts Politic l dvisers Government Most dm ired comp nies, or best in cl ss Products Business contr cts Equipment purch sing C mp ign resource lloc tions D oing business with minorities Emul ting best business pr ctices Adopting recommend ed sourcing pr ctices Priv te Fig 9.1 Conditions for reference group influence Source: Willi m O. Be rden nd Mich el J. Etzel, Reference group influence on product nd br nd purch se decisio ns, Journ l of Consumer Rese rch 9, 1982, 99. 183-9 Priv te-public, luxury-necess ity, product-br nd influences Types of reference group influence Wh t re the di fferent types of reference group influences th t exist? B sic lly there re thre e types of reference group influences, viz., Inform tion l, Norm tive, nd Ident ific tion l. Norm tive Identific tion l M teri l rew rds nd s nctions Self-concept en ctment Inform tion l

Fig 9.3 Reference group influence for business customers Source: Ad pted from Ro bert E. Burnkr nt nd Al in Cousine , Inform tion l nd norm tive soci l influenc e in buyer beh viour, Journ l of Consumer rese rch 2, December 1975, pp. 206-15.

Here cconsumers seek tise.

nd ccept dvice from

n individu l bec use of their exper

Let us underst nd this with the help of the illustr tion given below in figure 9 .1. We re looking t it with the help of two p r meters, viz, Public /Priv te nd Necessity/Luxury. Conditions for reference group influence Public

Norm tive In this kind of reference influence, cconsumers llow their desire to conform with the expect tions of others to influence their decisions. Identific tion l Activity 2 As m rketing Consult nt, you h ve been sked to ev lu te new promotion l c m p ign for l rge ret il ch in. The c mp ign str tegy is imed t incre sing gro up shopping. Wh t recommend tions would you m ke? In this c se, cconsumers purch se products to be like someone else, th t is, ide ntify with some other person., e.g. celebrity.

Type of influence Inform tion l B sis Expertise Exempl rs Profession l dvisers Product enthusi sts Experienced consumers Work g roups F mily Cultur l heroes (e.g., sports thletic celebrity) Products Medic tion Computers Tr vel destin tions Norm tive Identific tion l M teri l rew rds S nctions Selfconcept Work clothes Alcohol Shoe br nd Fig 9.2 Reference group influence for household customers Copy Right: R i University 11.623.3 205

Now, b sed on the types of influences, let us t ke influence for household customers. Reference group influence for household customers

look t the reference group

Key Terms CONSUMER BEHAVIOUR Groups Group dyn mics Collective identity Sh red go l interest Reference groups Norm tive groups Associ tive groups Identific tion groups Fe tures of group Two or more persons Collective identity Inter ction Sh red go l interest: Points To Remember A group m y be defined s the ggreg tion of sm ll number of persons who work fo r common go ls, develop sh red ttitude nd re w re th t they re p rt of group nd perceive themselves s such. Re sons for form tion of Group 1. 2. 3. 4. 5. Interperson l Inter ctions: The group cts s vehicle of soci l iz tion Group serves s me ns of need s tisf ction A ch nge from usu l work en vironment Helps in group decision m king nd getting the job done 206 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Adv nt ges of Groups 1. 2. 3. 4. 5. Gre ter sum tot l of knowledge nd inform tion Gre ter number of ppro ches to the problem P rticip tion incre ses ccept nce Better comprehensio n of the problems nd the solution Group cts s motiv tor Dis dv nt ges of groups 1. 2. 3. 4. 5. 6. 7. 8. 9. Solution mindedness Compromised results Untimely deci sions Conflicts Diffusion of responsibility Free riding or soci l lo fing High c oordin tion cost in time nd money Domin nce Pressures to conformity 11.623.3 Copy Right: R i University 207

CONSUMER BEHAVIOUR LESSON 23: ROLE OF FAMILY Introduction The f mily is m jor influence on the consumer beh viour of its members. There re m ny ex mples of how the f mily influences the consumption beh viour of its members. A child le rns how to enjoy c ndy by observing n older brother or sist er; le rns the use nd v lue of money by listening to nd w tching his or her p rents. Decisions bout new c r, v c tion trip, or whether to go to loc l o r n out-of-town college re consumption decisions usu lly m de within the conte xt of f mily setting. The f mily commonly provides the opportunity for product exposure nd tri l, nd imp rts consumption v lues to its members. As m jor c onsumption unit, the f mily is lso prime t rget for the m rketing of m ny pro ducts nd services. m lls often involve multiple f mily members buying clothing nd ccessories, something with he vy dose of influence by f mily members-chil dren m y buy clothing p id for nd pproved of by p rents, where s teen gers m y influence the clothing purch se of p rent. Reg rdless of how m ny f mily memb ers re present when items re being purch sed, the other f mily members pl y n import nt role in the purch se. Just bec use Ling, wife nd mother of two young children, is responsible for buying food for the f mily nd ct s n individu l in the m rket does not me n th t her decisions re not influenced by the prefe rences nd power of other f mily members. Even when people live single, they m y prefer the s me (or perh ps the opposite) style of furniture or br nd of pe nut butter s the f mily in which they were r ised. Although m rketing communic tio ns re usu lly directed to individu ls, m rketers should consider the consumptio n circumst nces nd the f mily structure before deciding on specific communic ti on or dvertising methods to ttr ct their segment.2 Let us now try to define f mily. Wh t is F mily? A f mily is group of two or more persons rel ted by blood, m rri ge, or doption who reside together. The nucle r f mily is the imme di te group of f ther, mother, nd child(ren) living together. The extended f mi ly is the nucle r f mily, plus other rel tives, such s gr ndp rents, uncles nd unts, cousins, nd p rents-in-l w. The f mily into which one is born is c lled the f mily of orient tion, where s the one est blished by m rri ge is the f mil y of procre tion. As mentioned in the opening scen rio, some consumers re stret ching the definition of f mily to include f mily pets, s recognized in the t gl ine of the PETsMART logo nd br nd, shown in Figure 12.1 Wh t is Household? Th e term household is used to describe ll person, both rel ted nd unrel ted, who occupy housing unit. There re signific nt differences between the terms hous ehold nd f mily even though they re sometimes used interch nge bly. It is impo rt nt to distinguish between these terms when ex mining d t . The term household is becoming more import nt unit of n lysis for m rketers bec use of the r pi d growth in nontr dition l f milies nd nonf mily households. Among nonf mily ho useholds, the gre t m jority consist of people living lone. The rem ining nonf mily households include those consisting of elderly people living with nonf mily members, Persons of Opposite Sex Sh ring Living Qu rters (POSSLQs), friends livin g together, nd s me sex couples. Any of these households m y or m y not include children. F milies re the l rgest c tegory of households m y or m y not includ e children. F milies re the l rgest c tegory of households, but nonf mily 11.623.3

1. The F mily If you re in ch rge of m rketing bre kf st cere l in the United St tes, Indi , J p n, or Br zil, to whom should you ge r your m rketing progr m nd dvertising

Define nd expl in the concept of n the role f mily pl ys in buying

tr dition l nd nontr dition l f mily Expl i

Le rning Objectives After studying this lesson you should be

ble to:

c mp ign? After determining whether the cere l, muesli (in Europe), or me lies (in Afric ) would be e ten hot or cold, you would sk who determines which br nd of cere l will be purch sed? Is it mothers, f thers, teens, children, or some c ombin tion of these? Kix cere l in the United St tes ppe ls to both children (t stes good) nd mothers (is nutritious) with its t gline Kid tested, mother ppro ved. The import nce of the f mily or household unit in consumer beh vior rises f or two re sons: 1. 2. M ny products re purch sed by f mily unit. Individu ls b uying decisions m y be he vily influenced by other f mily members. How f milies or households m ke purch se decisions depends on the roles of the v rious f mily members in the purch se, consumption, nd influence of products. H ousehold products like food nd sh mpoo m y be purch sed by on person but consum ed by m ny, where s person l c re items, such s cosmetics or sh ving cre m, mig ht be purch se by n individu l f mily member for his or her own consumption. Ho mes nd c rs, on the other h nd, re often purch sed by both spouses, perh ps wi th involvement from children or other member of the extended f mily. As D vis1 e xpl ins, A husb nd m y buy st tion w gon, given the re lity of h ving to tr nsp ort four children, despite his strong preference for sports c rs, nd f ther m y choose to sk him d ughter nd son bout color nd style before he nd his wif e purch se c r. Visits to shopping 208 Copy Right: R i University

households re growing f ster. One w y to void the problem of whether to study f milies or households is to simply use the term consumer unit (CU) or minim l h ousehold unit (MHU). It is e sier nd sometimes just s useful to void the dist inctions between e ch group nd refer to CU or MHU buying 3 bhvo. e ir Sociologic l V ri bles Affecting F milies nd Households M rketers c n underst n d f mily nd household decisions better by ex mining the sociologic l dimensions of how fmiism ec n u rd c s o s T r e le k o s me e i i n . hsociologic l e v ri bles th t help expl in how f milys function include cohesion, d pt bility, nd communic tion. P use for Thought!! CONSUMER BEHAVIOUR

J p nese Sm rt Homes H ve you ever woken up in the morning to wonder, Wh ts my blood sug r level tod y? or gone to the store only to wonder whether you need milk or not. In J p n, homeowners will soon be ble to run their homes, monitor their f milies, nd me sure the needs of the household with the touch of button. By th e ye r 2003, the M tsushit Electric l Industry Group hopes to m rket HII-Home I nform tion Infr structure-to f milies nd households throughout J p n. HII is system th t connects homes through fiber-optic c bles to the v st world outside, including the Internet, c ble TV, hospit ls, nd tr vel gents. The system revo lves round n HII st tion-the centr l nervous system th t serves s depositor y for re ms of inform tion. Through screens in every room, occup nts c n monitor ppli nces throughout the house, check security c mer s, nd contr ct cybersp c e. The bedroom, for ex mple, cont ins medic l consult tion kit through which c onsumers c n type in their ilments nd c ll the doctor, who then m kes di gno sis b sed on the inform tion submitted nd electronic ccess to medic l history from the household system. At the he rt of the system is wireless termin l th t permits remote ccess to the house. Consumers, therefore, c n monitor househol d needs, such s wh t is in the refriger tor or in the p ntry. These homes lso fe ture sm rt toilets, which weigh individu ls, monitor body f ct, nd me sure s ug r in the urine. And speci l high-tech perks inside the house c use lights to turn on when someone enters room nd llow f mily members to monitor e ch othe rs movements, ctivities, blood pressure, weight, nd schedules inside the home. For U.S. consumers, the ne rest equiv lent m y be home m n gement system desig ned by IBM th t llows people to oper te ll electronic devices using univers l remote control Source : J p nese Sm rt Homes Know All, The Columbus Disp tch (Apri l 28, 1999). 2F. Activity 1 As m rketing consult nt, you were ret ined by W lt Disney Comp ny to design study investig ting how f milies m ke v c tion decisions. Whom within the f mily , would you interview? Wh t kind of questions would you sk? How would you sses s the rel tive power of e ch f mily member in m king v c tions-rel ted decisions?

Structur l V ri bles Affecting F milies nd Households F mily or household v ri bles ffect consumer purch sing, Structur l v ri bles include the ge of the he d of household or f mily, m rit l st tus, presence of children, nd employment s t tus. For ex mple, consumer n lysts h ve enormous interest in whether f milies h ve children nd how m ny they h ve. Children incre se f mily dem nd for cloth ing, food, furniture, homes, medic l c re, nd educ tion, while they decre se de m nd for m ny discretion ry items, including tr vel, higher-priced rest ur nts, nd dult clothing. Other structur l ch nges ffect the types of products th t re m nuf ctured. For ex mple, in J p n, high-tech comp nies h ve formed consor tium to st nd rdize technology th t h s been developed to monitor nd m n ge hou seholds. Consumer in Focus 12.1 focuses on how households in J p n m y be run in the future.

 Cohesion is the emotion l bonding between f mily members. It me sures how close to e ch other f mily members feel on n emotion l level. Cohesion reflects sen se of connectedness to or sep r teness from other f mily members. Ad pt bility m e sures the bility of f mily to ch nge its power structure, role rel tionship s, nd rel tionship rules in response to situ tion l nd development l stress. T he degree of d pt bility shows how well f mily c n meet the ch llenges presen ted by ch nging situ tions. Communic tion is f cilit ting dimension, critic l to movement on the other two dimensions. Positive 11.623.3 Copy Right: R i University 209

communic tion skills (such s emp thy, reflective listening, supportive comments ) en ble f mily members to sh re their ch nging needs s they rel te to cohesion nd d pt bility. Neg tive communic tion skills (such s double mess ges, doubl e binds, criticism) minimize the bility to sh re feelings, thereby restricting movement in the dimensions of cohesion nd d pt bility. Underst nding whether f mily members re s tisfied with f mily purch se requires communic tion within t he f mily. 4 Tr dition lly, f mily is defined s two or more persons rel ted by blood, m rri ge, or doption who reside together. In more dyn mic sense, the individu ls wh o constitute f mily might be described s members of the most b sic soci l gro up who live together nd inter ct to s tisfy their person l nd mutu l needs. Th ough f milies sometimes re referred to s household, not ll households re f m ilies. For ex mple, household might include individu ls who re not rel ted by blood, m rri ge, or doption, such s unm rried couples, f mily friends, roomm tes, or bo rders. However, within the context of consumer beh viour, households nd f milies usu lly re tre ted s synonymous, nd we will follow this conventi on. In Indi three types of f milies domin te: (1) the m rried couple, (2) the n ucle r f mily nd C3) the extended f mily. The simplest type o f f mily, in term s o f member, is the m rried couple- husb nd nd wife. As household unit, t he m rried couple gener lly IS represent tive of new m rrieds who h ve not yet s t rted f mily, nd older couples who h ve lre dy r ised their children. A hus b nd nd wife nd one or more children constitute nucle r f mily. This type of f mily is still the cornerstone of f mily life. The nucle r f mily, together wi th t le st one gr ndp rent living within the household, is c lled n extended f mily. The three-gener tion f mily, which t one time w s most represent tive of the Indi n f mily, h s been declining bec use of v riety of f mily lifestyles . In p rticul r, the incidence of the extended f mily h s suffered bec use of th e geogr phic mobility th t h s become commonpl ce mong young people. Not surpri singly, which type of f mily is most typic l c n v ry consider bly from culture to culture. For inst nce, in n individu listic society such s the United S tes, the nucle r f mily is most common. In kinship culture (with extended f milies) such s Indi , f mily would commonly include he d of household, m rried du lt children, nd gr ndchildren. CONSUMER BEHAVIOUR F mily Celebr tions nd Gift Giving M rketers h ve used sociologic l rese rch on resilient f miliesthose th t re bett er ble to negoti te their w y through tr nsitions nd tr gedies-bec use they f fect consumer dem nd for m ny products. F milies th t pl ce more import nce on f mily celebr tions, f mily time nd routines, nd f mily tr ditions re more lik ely to develop resilient f milies.5 Though f mily celebr tions help f milies sur vive crises, they lso fuel ret il s les. H nukk h nd Christm s gener te bout 50 percent or more of nnu l ret il s les ( nd n even higher percent ge of prof its) for m ny ret ilers, m king gift giving nd f mily holid ys n import nt re of study. 6 In recent ye rs, H lloween h s become the second most popul r holi d y in the United St tes in terms of ret il s les of gifts nd home decor tionst wo consumer beh vior ctivities th t convey f milys holid y spirit.7 Other holi d ys th t re being celebr ted more frequently outside their countries of origin include Cinco de M yo (Mexico), Kw nz (Afric ), nd Chinese New Ye r. Some co nsumer n lysts h ve been w rning ret ilers bout the d ngers of relying too he vily on ye r-end holid y s les to meet their s les nd profit forec sts. Tr diti on lly, some ret ilers rely on Christm s, Kw nz , nd H nukk h to provide s mu ch s h lf of their ye rly s les.8 But ch nges in f mily nd household structure s c n be bl med in p rt for the decline in over ll holid y spending. An incre se in the number of divorced p rents forces children to split holid ys between two households, t king some of the joy out of the celebr tions nd m king the physi c l movement of l rge gifts more difficult. With households in m ny industri liz ed countries h ving fewer children, fewer gifts need to be purch se. And f milie

s tend to buy the items they need when they w nt them r ther th n w it to receiv e them s gifts. This lso m kes it difficult for f mily members to buy gifts fo r me one nother bec use m ny consumers (especi lly 45-to 60-ye r-olds) lre dy h ve wh t they w nt.9 There h s been shift mong some consumers w y from the commerci liz tion of the holid ys nd tow rd the religious nd f mili l me ning of tr ditions nd celebr tions. Advertisements ttempt to rel te f milys holid y celebr tions to consumption s do in-store nd shopping m ll decor tions. Figu re 12.2 shows how Dur cell rel tes to the holid ys in n d, where s egift rel t es to consumers need to buy gifts throughout the ye r in Figure 12.3. To determin e how the f mily m kes its purch se decisions nd how the f mily ffects the fut ure purch se beh viour of its members, it is useful to underst nd the functions provided nd the roles pl yed by f mily members to fulfill their consumption nee ds. 2. Functions of the F mily Four b sic functions provided by the f mily re p rticul rly relev nt to discu ssion of consumer beh viour. These include (1) economic well-being, (2) emotion l support, (3) suit ble f mily lifestyles, nd (4) f mily-member soci liz tion. 2.1 Economic Well-Being Providing fin nci l me ns to its dependents is unquestio n bly b sic f mily function. How the f mily divides its responsibilities for p roviding economic well-being h s ch nged consider bly during the p st 25 ye rs. The tr dition l roles of husb nd s economic provider nd wife s homem ker nd child re rer re still v lid. The m jority of wives in our country re not emplo yed outside the home nd their husb nds dont sh re household responsibilities. Th e economic role of children h s ch nged. Tod y, even if some teen ge children wo rk, they r rely ssist the f mily fin nci lly. Their p rents re still expected to provide for their needs. But some of them get enough pocketmoney to decide th eir consumption of discretion ry items. 210 Copy Right: R i University 11.623.3

2.2 Emotion l Support The provision of emotion l nourishment (including love, f fection, nd intim cy) to its members is n import nt b sic function of the cont empor ry f mily. In fulfilling this function, the f mily provides support nd en cour gement nd ssists its members in coping with person l or soci l problems. To m ke it e sier for working p rents to show their love ffection nd support f or their children, greeting-c rd comp nies h ve been m rketing c rds especi lly for p rent to give to their children. If the f mily c nnot provide dequ te ssi st nce when it is needed, it m y turn to profession l counselor or psychologis t s n ltern tive. For inst nce, in most communities, m ny educ tion l nd psy chologic l centers re v il ble th t re designed to ssist p rents who w nt to help their children improve their le rning nd communic tion skills, or gener l ly, better djust to their environments. Likewise in urb n re s tutors re eng ged since working couples m y not h ve enough time to te ch their children t ho me. Suit ble F mily Lifestyles Another import nt f mily function in terms of con sumer beh viour is the est blishment of suit ble lifestyle for the f mily. Upb ringing, experience, nd the person l nd jointlyheld go ls of the spouses deter mine the import nce pl ced on educ tion or c reer, on re ding, on television vie wing, on the frequency nd qu lity of dining out, nd on the selection of other entert inment nd recre tion l ctivities. F mily lifestyle commitments, includi ng the lloc tion of time, gre tly influence consumption p tterns. For ex mple, the incre se in the number of m rried women working outside the home h s reduced the time they h ve v il ble for household chores, nd h s cre ted m rket for convenience products nd f st-food rest ur nts. Also, with both p rents working , n incre sed emph sis is pl ced on the notion of qu lity time, r ther th n the qu ntity of time spent with children nd other f mily members. Re lizing the sc rci ty of qu lity f mily time, M rriott hotels fe ture v riety of weekend p ck ges t rgeted to couples nd their children. Soci liz tion of Children nd Other F m ily Members The soci liz tion of f mily members, especi lly young children, is centr l f mily function. In l rge p rt, this process consists of imp rting to c hildren the b sic v lue nd modes of beh viour consistent with the culture. Thes e gener lly include mor l nd religious principles, interperson l skills, dress nd grooming st nd rd, ppropri te m nners nd speech, nd the selection of suit ble educ tion l nd occup tion l or c reer go ls. Soci liz tion skills (m nners , go ls, v lues, nd other qu lities) re imp rted to child directly through i nstruction nd indirectly through observ tion of the beh viour of p rents nd ol der siblings. M rketers often t rget p rents looking for ssist nce in the t sk of soci lizing pre dolescent children. It is import nt to recognize th t the soc i liz tion of young children provides found tion on which l ter experiences co ntinue to build throughout life. These experiences re reinforced nd/or modifie d s the child grows into dolescence, the teen ge ye rs, nd eventu lly into d ulthood. 3. Consumer Soci liz tion The spect of childhood soci liz tion th t is most relev nt to the study of cons umer beh viour is consumer soci liz tion, which is defined s the process by whi ch children cquire the skills, knowledge, nd ttitudes necess ry to function s consumers. A v riety of studies h ve focused on how children develop consumpti on skills. M ny children cquire their consumer beh viour norms through observ t ion of their p rents, who function s role models. While pre dolescent children tend to rely on their p rents nd older siblings s the m jor sources of cues fo r b sic consumption le rning, dolescents nd teen gers re likely to look to th eir friends for models of ccept ble beh viour. Sh red shopping experiences (i.e ., coshopping-when mother nd child shop together) lso give children the opport unity to cquire in-store skills. Possibly bec use of their more hurried lifesty les, working mothers re more likely. to undert ke co shopping with their childr en th n re non-working mothers. Coshopping is w y of spending time with ones c hildren while t the s me time ccomplishing necess ry t sk. Consumer soci liz tion lso serves s tool by which p rents influence other spects to the soci liz tion process. For inst nce, p rents frequently use the promise or rew rd of m teri l goods s device to modify or control childs beh viour. A mother m y

rew rd her child with gift if the child does something to ple se her, or she m y withhold or remove it if the child disobeys. Rese rch conducted by one of th e uthors supports this beh viour-controlling function. Specific lly, dolescent s reported th t their p rent s frequently used the promise of chocol te c ndy s me ns of controlling their beh viour (e.g., getting them to complete homework or to cle n their rooms). Consumer soci liz tion h s two distinct components: ( 1) Soci liz tion directly rel ted to consumption, such s the cquisition of ski lls nd knowledge concerned with budgeting, pricing, nd br nd ttitudes; nd (2) Soci liz tion indirectly rel ted to consumption, such s the underlying motiv t ions th t spur young m n to purch se his first r zor or young girl to w nt h er first br . Both types of soci liz tion re signific nt. The indirect componen t of consumer soci liz tion is often of most interest to m rketers, who w nt to underst nd why people buy their products. The direct component of consumer soci liz tion is often of gre test interest to c demic consumer rese rchers, who h v e bro der go ls of underst nding ll spects of consumer beh viour. Adult Consum er Soci liz tion The soci liz tion process is not confined to childhood; r ther, it is n ongoing process. It is now ccepted th t soci liz tion begins in e rly childhood nd extends throughout persons entire life. For ex mple, when newl y m rried couple est blishes sep r te household, their djustment to living n d consuming together is p rt of this continuing process. Simil rly, the djustme nt of retired couple who decide to move to their n tive pl ce is lso p rt of the ongoing soci liz tion process. Figure shown below presents simple model of the soci liz tion process th t focuses on the soci liz tion of young children, 211 CONSUMER BEHAVIOUR 11.623.3 Copy Right: R i University

but th t c n be extended to f mily members of ll ges. Note th t the rrows run both w ys between the young person nd other f mily members, nd between the yo ung person nd his or her friends. This two-direction l rrow signifies th t soc i liz tion is re lly two-w y street, in which the young person is both soci li zed nd influences those who re doing the soci lizing. Supporting this view is rese rch indic ting th t children of ll ges often influence the opinions nd b eh viour of their p rents. 5. F mily Life Cycle STAGES IN FAMILY LIFE CYCLE B chelorhood (Young, single st ying lone) P renthoo d (young m rried just tt ined p renthood) Post p renthood (growing children or grown up children) ECONOMIC CIRCUMSTANCES E rning re son ble good s l ry, no fin nci l burdens Better off fin nci lly, though home purch ses t pe k, less liqui d ssets, not ble to s ve more. Fin nci l position improved with wife working, prob bility of home ownership on the higher side). Income though good, not inter ested in spending. At times dr stic cut in income is likely. LIKELY BUYING BEHAV IOUR Buy, b sic kitchen equipment b sic furniture, two wheeler, v c tion with fr iends Buys b by food, toys, di pers, chest & cough medicines Concentr tes on hom e improvements. Buy more t steful furniture, c r, home ppli nces, nd m g zines . Interested in v c tion p ck ges. Buy more medicin l products nt other product s like the retired people. Seeks more of ttention, ffection nd security consc ious. CONSUMER BEHAVIOUR Dissolution (retired & lone surviving spouse) Fig. 25.2 St ges in f mily life Cycle F mily Life Cycles F milies p ss through series of st ges th t ch nge them over time. This process historic lly h s been c lled the f mily life cycle (FLC). The concept m y need to be ch nged to house hold life cycle (HLC) or consumer life cycle (CLC) in the future to reflect ch n ges in society. However, we will use the term FLC22 to show how the life cycle ffects consumer beh vior.23 F mily Life Cycle Ch r cteristics The tr dition l FL C describes f mily p tterns s consumers m rry, h ve children, le ve home, lose spouse, nd retire. These st ges re described in Figure 12.6, long with cons umer beh viors ssoci ted with e ch st ge. But consumers dont necess rily h ve to p ss through ll these st ges-thy c n skip multiple st ges Figure 12.6 Consumer Activities Occurring in V rious Life Cycles Figure 25.1 : model of consumer soci liz tion Activity 2 Select three product c tegories nd comp re the br nds you prefer to those your p rents prefer. To wh t extent re the preferences simil r? Discuss the simil ri ties in the context of consumer soci liz tion. Young Singles Young singles m y live lone, with their nucle r f milies, or with friends, or they m y co-h bit te with p rtners-tr nsl ting into wide r nge of how much dispos ble income is spent on furniture, rent, food, nd other living expenses in this st ge. Although e rnings tend to be rel tively low, these consu mers usu lly dont h ve m ny fin nci l oblig tions nd dont feel the need to s ve f or their futures or retirement. M ny of them find themselves spending s much s they m ke on c rs, furnishings for first residences w y from home, f shions, r ecre tion, lcoholic bever ges, food w y from home, v c tions, nd other produc ts nd services involved in the d ting g me. Some of these singles m y h ve youn g children, forcing them to give up 212 Copy Right: R i University

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some discretion ry spending for necessities such s d y c re nd b by products. Newly M rried Couples Newly m rried couples without children re usu lly better off fin nci lly th n they were when they were single, since they often h ve two incomes v il ble to spend on one household. These f milies tent to spend subs t nti l mount of their incomes on c rs, clothing, v c tions, nd other leisure ctivities. They lso h ve the highest purch se r te nd highest ver ge purch s es of dur ble good (p rticul rly furniture nd ppli nces) nd ppe r to be more susceptible to dvertising. Full Nest I With the rriv l of the first child, p rents being to ch nge their roles in the f mily, nd decide if one p rent will s t y to c re for the child or if they will both work nd buy d yc re services. Ei ther route usu lly le ds to decline in f mily dispos ble income nd ch nge i n how the f mily spends its income. In this st ge, f milies re likely to move i nto their first home; purch ses furniture nd furnishings for the child; buy w sher nd dryer nd home m inten nce items; nd purch se new items such s b by food, cough medicine, vit mins, toys, sleds, nd sk tes. These requirements redu ce f milies bility to s ve, nd the husb nd nd wife re often diss tisfied with their fin nci l position. Full Nest II In this st ge, the youngest child h s re ched school ge, the employed spouses income h s improved, nd the other spouse often returns to p rt-or full-time work outside the home. Consequently, the f mi lys fin nci l position usu lly improves, but the f mily finds itself consuming mo re nd in l rger qu ntities. Consumption p tterns continue to be he vily influen ced by the children, since the f mily tends to buy l rgesized p ck ges of food nd cle ning suppliers, bicycles, music lessons, clothing, sports equipment, nd computer. Discount dep rtment stores (such s Costco nd S ms Club) re popul r with consumers in this st ge. Full Nest III As the f mily grows older nd p ren ts enter their min-40s, their fin nci l position usu lly continues to improve be c use the prim ry w ge e rners income rises, the second w ge e rner is receiving higher s l ry, nd the children e rn spending n educ tion money from occ sion l nd p rt-time employment. The f mily typic lly repl ces some worn pieces of f urniture, purch ses nother utomobiles, buys some luxury ppli nces, nd spends money on dent l services (br ces) nd educ tion. F milies lso spend more on co mputers in this st ge, buying ddition l PCs fro their older children. Depending on where children go to college nd how m ny re seeking higher educ tion, the fin nci l position of the f mily m y be tighter th n other inst nces. M rried, N o Kids Couples who m rry nd do not h ve children re likely to h ve more dispos ble income to spend on ch rities, tr vel, nd

entert inment th n either couples with children or singles in their ge r nge. N ot only do they h ve fewer expenses, these couples re more likely to be du l-w ge e rners, m king it e sier for them to retire e rlier if they s v ppropri tel y. Older Singles Single, go 40 or older, m y be Single Ag in (ending m rried st tus bec use of divorce or de th of spouse) or Never M rried (bec use they pre fer to live independently or bec use they co-h bit te with p rtners), either gro up of which m y or m y not h ve children living in the household. Single Ag in f milies often find themselves struggling fin nci lly due to the high cost of div orce nd the expense of h ving to r ise f mily on one income. They often h ve to set up new household (usu lly not s big s their previous home); buy furni shings ccordingly; p y limony nd/or child support; nd sometimes incre se tr vel expenditures if the children live in nother city, st te, or country. They lso p y for clothing nd leisure ctivities conducive to meeting future m te. On the other h nd, m ny Never M rried Single households re well-off fin nci lly since they never h d to p y child-rel ted costs nd often live in sm ller homes th n l rge f milies require. This group now h s more v il ble income to spend on tr vel nd leisure but feels the pressure to s ve for the future, since there is no second income on which to rely s they get older. Empty Nest I At this st ge, the f mily is most s tisfied with its fin nci l position. The children h ve left home nd re fin nci lly independent llowing the f mily to s ve more. In this st ge discretion ry income is spent on wh t the couple w nts r ther th n on wh t the children need. Therefore, they spend on home improvements, luxury item s, v c tions, sports utility vehicles, food w y from home, tr vel, second homes

CONSUMER BEHAVIOUR 11.623.3 Copy Right: R i University 213

(or sm ller but nicer homes th n were needed to house l rge f milies), nd prod uct for their gr nd children. This group is lso more educ ted th n gener tions in the p st nd re looking for un educ tion opportunities, including eco-touris m nd computerrel ted skills. Empty Nest II But this time, the income e rners h ve retire, usu lly resulting in reduction in income nd dispos ble income. Exp enditures become he lth oriented, centering on such items s medic l ppli nces nd he lth, sleep nd digestion medicines. They m y lso move to clim tes more s uit ble to their medic l requirements. But m ny of these f milies continue to be ctive nd in good he lth, llowing them to spend time tr veling, exercising, nd volunteering. M ny continue working p rt time to supplement their retirement nd keep them soci lly involved. Solit ry Survivor Solit ry survivors be either employed or not employed. If the surviving spouse h s worked outside the home in the p st, he or she usu lly continues employment or goes b ck to work to live o n e rned income (r ther th n s ving) nd rem in soci lly ctive. Expenditures fo r clothing nd food usu lly decline in this st ge, with income spent on he lth c re, sickness c re, tr vel

f ther sometimes le ving them p ying for one childs wedding while p ying for not her childs d yc re. The FLC helps expl in how f milies ch nge over time; wh ts mor e, modified with m rket d t , including individu ls life st ge, it is useful in i dentifying core m rket t rgets. CONSUMER BEHAVIOUR Activity 3 Which of the five st ges of the tr dition l f mily the cycle constitute the most lucr tive segment(s) for the following products nd services: ( ) telephone p r ty lines, (b) club Med v c tion, (c) Dominos Pizz , (d) comp ct disc pl yers, nd (e) mutu l funds. Expl in your nswer. Copy Right: R i University 11.623.3

entert inment, nd services, such s l wn c re nd house cle ning. Those who re not employed re often on fixed incomes nd m y move in with friends to sh re h ousing expenses nd comp nionship, nd some m y choose to rem rry. Retired Solit ry Survivor Retired solit ry survivors follow the s me gener l consumption p tt erns s solit ry survivors; however, their income m y not be s high. Depending on how much they h ve been ble to s ve throughout their lifetimes, they c n ff ord to buy wide r nge of products. But for m ny, spending declines dr stic lly due to l ck of need for m ny new products nd higher medic l expenses. These in dividu ls h ve speci l needs for ttention, ffection, nd security. b sed on th eir lifestyle choices. When reviewing this inform tion, think bout how contempo r ry developments such s divorce, sm ller f mily size, nd del yed ge of m rri ge ffect the consumption ctivities of these st ges.24 The f mily lifecycle c n be depicted gr phic lly by using curve simil r to th t of the product lifecy cle. Figure 12.7 show shows how income, on ver ge, ch nges during life nd how s ving beh vior ffects income in l tter st ges. As household le ders enter thei r 30s nd 40s, often their income levels incre se (bec use they begin to re ch h igher e rning positions nd two dults re working), but so do their spending le vels (especi lly if they h ve children). This decre ses their dispos ble income during these life st ges, m king it more difficult for them to s ve money or spl urge on luxury items. It is projected th t between 1997 nd 2002 the number of U .S. households he ded by people between the ges of 25 nd 44 will decline by 1. 7 million, to 43 million, while householders between the ge of 45 nd 64 will i ncre se 5.5 million, to 37 million.25 Ch nges in life st ge nd f mily life cycl e will ffect the dem nd for products from home furnishings to tr vel. M rketers use the descriptions of these FLC st ges when n lyzing m rketing nd communic tion str tegies for products nd services, but they often dd ddition l inform tion bout consumer m rkets to n lyze their needs, identify niches, nd develop consumer-specific m rketing str tegies. M rketers c n dd socioeconomic d t (s uch s income, employment st tus, fin nci l well-being, nd ctivities) to f mil y life st ges to improve predictions bout product choices nd help expl in furt her consumer ctivities.26 Figure 12.8 shows how m rketers might ccomplish this t sk with m trix of specific demogr phic or lifestyle f ctors, such s del yi ng h ving children or not h ving them t ll.27 The d t resulting from this typ e of n lysis permit qu ntit tive n lysis of m rket sizes. Addition l d t c n be collected concerning preferences, expenditures, nd shopping beh viors of e ch segment to identify nd help ttr ct core customers in the life st ge most p rofit ble to the firm. Keep in mind th t life st ge c n be different for differe nt consumers. For ex mple, ccording to feder l st tistics, the number of older, secondgener tion f thers (men who rem rry nd h ve second f milies l ter in lif e) is growing. 28 Though these men m y be in their50s, their life st ge is simil r in m ny w ys to th t of 30-ye r-old 214

Figure 12.8 F mily M rket Segment tion An lysis M trix A ge Empl oyme nt St tus Fin nci l WellBeing Activi ties Intere sts Where Live H ow Active Other F mily In Househo ld? CONSUMER BEHAVIOUR FLC St ge Young Singles Newly M rried Couples Full Nest I Full Nest II Full Nest III M rried, No Kids Older Singles Empty Nest I Empty Nest II Solit ry Survivor Retired Solit ry Survivor Income F mily nd Household Spending F mily life cycle st ge is the most import nt predictor of f mily or household s pending. The l tter ye rs of the 1990s brought with them economic growth nd pro sperity to m ny industri lized n tions, including North Americ . At first gl nce , one might think th t consumer spending must h ve sky-rocketed during this time -especi lly since the number of households grew nd b by boomers h d entered the ir pe k spending ye rs. But when ex mined from household st ndpoint, the n ly sis reve led th t the ver ge Americ n household spent c utiously during this ti me even though unemployment levels were down nd w ge r tes were up. In f ct, it w snt until the l st few ye rs of the dec de th t spending by individu l househo lds w s restored to the levels of 1987. The ver ge household spend 13 percent l ess of food w y from home, 25 percent less on m jor ppli nces, nd 15 percent less on clothing in 1997 th n in 1987.29 Figure 12.9 shows how household spendin g ch nged for 12 m jor c tegories during the l st dec de of the 20th century. Wh en ex mining these numbers, n lyze why you think spending ch nged by thinking bout demogr phic, lifestyle, nd f mily issues. 3. _____ is defined s the proce ss by which children cquire the skills, knowledge, ttitudes nd experiences ne cess ry to function s consumers. . Soci liz tion of f mily members b. Consumer soci liz tion c. Consumer beh vior d. Household consumption 4. Children develop consumption skills in different w ys. Pre dolescent children cquire their cons umer beh vior norms m inly through: . observ tion of their p rents nd older si blings. b. looking to their friends for models of ccept ble consumption beh vio r. c. seeking celebrity spokespersons endorsement of product. d. tri l nd error. 5. Which of the following products is not likely to be br nd th t is tr nsferred intergener tion lly? . m yonn ise b. coffee c. pe nut bu tter d. running shoes 6. I still buy the br nds th t my gr ndmother nd mother us ed to buy. I m sc red to try nything else, for it will not meet the st nd rds. This shows the import nce of _____. . dult consumer soci liz tion b. child con sumer soci liz tion c. intergener tion l soci liz tion d. consumer beh vior Activity 4 Tick the correct choice 1. A f mily th t h s t le st one of the gr ndp rents living within the household i s c lled / n _____ f mily. . nucle r b. in-l w household c. extended d. exp nd ed 2.

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The _____ is centr l to f mily function. The process includes imp rting to child ren the b sic v lues nd modes of beh vior consistent with the culture. . soci liz tion of f mily members b. consumer soci liz tion process c. technic l le rni ng d. rew rd process

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7. According to our text, which of the following is not one of the three m in funct ions of the f mily? . to provide economic well-being b. to provide venue for consumer soci liz tion c. to provide emotion l support d. to provide suit ble lifestyle Points To Remeber CONSUMER BEHAVIOUR 8. Which of the following is n indic tion th t the economic role of children in th e f mily h s ch nged in tod ys society in comp rison to the previous gener tion? . Children re expected to t ke p rt in household chores. b. Children re expec ted to h ve jobs fter high school. c. Children re expected to p y for their ow n entert inment, nd to contribute to the cost of their educ tion. FAMILY A f mily is group of two or more persons rel ted by blood, m rri ge, or dopti on who reside together. d. Children re burdened with m king br nd decisions in ll different c tegories of products. 9. A f milys upbringing, experience, import nce of educ tion, TV vi ewing, le rning of computer skills, nd frequency nd qu lity of dining out, re ll spects of _____ th t f mily instills in its members. . culture b. v lue s c. lifestyle d. norms Key Terms F mily F mily Life Cycle Consumer Soci liz tion Adult Consumer Soci liz tion Sin gle-P rent F mily Soci liz tion of F mily members Tr dition l f mily life cycle F milies versus Households Types of F milies The nucle r f mily is the immedi te group of f ther, mother, nd child(ren) livi ng together The extended f mily is the nucle r f mily, plus other rel tives, suc h s gr ndp rents, uncles nd unts, cousins, nd p rents-inl w 216 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Types of F milies (contd) F mily of orient tion is the f mily into which one is born is c lled the f mily of procre tion is the one est blished by m rri ge Structur l V ri bles Affecting F milies nd Households ge of the he d of household or f mily m rit l st tus presence of children, nd employment st tus

HOUSEHOLD The term household is used to describe ll person, both rel ted nd unrel ted, w ho occupy housing unit

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Cohesion

d pt bility, nd communic tion.

Sociologic l V ri bles Affecting F milies

nd Households

CONSUMER BEHAVIOUR 218

St ges in f mily life Cycle (contd) Older Singles Empty Nest I Empty Nest II Solit ry Survivor Retired Solit ry Surv ivor St ges in f mily life Cycle Young Singles Newly M rried Couples Full Nest I Full Nest II Full Nest III M rri ed, No Kids Copy Right: R i University 11.623.3

Functions of the f mily economic well-being emotion l support suit ble f mily lifestyles, ber soci liz tion.

nd f mily-mem

CONSUMER BEHAVIOUR LESSON 24: FAMILY DECISION-MAKING Introduction Consumer beh viour is process nd purch se is only one st ge in th t process. In this lesson you will be le rning bout the f mily decision m king process. WE will do this with the help of model nd expl in how e ch member of the f mily inter ct with e ch other nd come to decision bout buying. This model expl i ns the decision m king process of group, viz., the f mily.

Underst nd the f mily decision m king concept Apply the f mily decision m king m odel. Who Determines Wh t the F mily Buys? F milies use products even though individu ls usu lly buy them. Determining wh t products should be bought, which ret il outlet to use, how nd when products r e used, nd who should buy them is complic ted process involving v riety or roles nd ctors. Role Beh vior

Objectives After going through this lesson, you should be

ble to:

6. F mily Roles For f mily to function s cohesive unit, roles or t sks-such s doing the l undry, prep ring me ls, setting the dinner t ble, t king out the g rb ge, w lkin g the dog must be c rried out by one or more f mily members. In our dyn mic soci ety, etc. f mily-rel ted roles re const ntly ch nging. For inst nce, given the subst nti l number of m rried women working outside the home, nd the gre ter s sumption of household t sks by men m rketers must be p rticul rly sensitive to h ow shifting f mily roles m y ffect the composition of their t rget m rkets. In ddition, they must be c reful to phr se their ds in w ys th t re ppropri te nd ccept ble to their t rget m rkets. 6.1 Key F mily Consumption Roles Before describing the model of f mily decision-m king, it is import nt to underst nd to underst nd how the v rious f mily members inter ct with e ch other in the conte xt of their consumer decision-m king. These inter ctions re determined by the d ifferent consumption rel ted roles pl yed by members in f mily. These roles r e: The roles pl yed by the different f mily members will v ry from product to pr oduct. While shopping in the m rket, housewife comes cross new v riety of j uice th t she buys for the f mily. Her decision to purch se does not directly in volve the influence of other f mily members. She is the decider, buyer; she m y or m y not be the prep rer nd is not the only user. In c se of products such s television, c r, music systems, furniture or ny other product which is likely to be used by some or ll the f mily members, the purch se decision is likely to be joint or group decision with p rticip tion of some or ll f mily members. Fi g 14.2 shows model of f mily decisionm king. There re eight distinct roles in the f mily decision-m king process. A look t these roles provides further insi ght into how f mily members ct in their v rious consumption-rel ted roles: 1. I nfluencers: Those f mily members who provide inform tion nd dvice nd thus inf luence the purch se. The housewife tells her f mily bout the new e tery th t h s opened in the neighborhood nd her f vor ble description bout it influences h er husb nd nd teen ged children to lso p tronize the rest ur nt. F mily member (s) who provide inform tion to other members bout product or service. G tekee pers: Those f mily members who control the flow of inform tion bout product/s ervice thus influencing the decisions of other f mily members. The teen ged son who w nts r cing bicycle, m y withhold from his f ther much of the relev nt in form tion on ll br nds except the one th t he f ncies, thereby influencing his f thers decision in f vour of his preferred br nd. F mily member(s) who

F milies nd other groups exhibit wh t sociologist T lcott P rsons c lled instru ment l nd expressive role beh viors. Instrument l roles, lso known s function l or economic roles, involve fin nci l, perform nce, nd other functions perfor med by group members. Expressive roles involve supporting other f mily members i n the decision-m king process nd expressing the f milys esthetic or emotion l n eeds, including upholding f mily norms. How individu l f mily members perform e ch of these roles m y influence how they lloc te f mily income to different typ es of products or ret ilers. Individu l Roles is F mily Purch ses F mily consump tion decisions involve t le st five defin ble roles, which m y be ssumed by sp ouses, children, or other members of household. Both multiple roles nd multip le ctors re norm l. M rketers need to communic te with consumers ssuming e ch of these roles, remembering th t different f mily members will ssume different roles depending on the situ tion nd product. Children, for ex mple, re users of cere ls, toys, clothing, nd m ny other products but m y not be the buyers. O ne or both of the p rents m y be the decider nd the buyer, lthough the childre n m y be import nt s influencers nd users. P rents m y ct s g tekeepers by p reventing children from w tching some TV progr ms or ttempting to neg te their influence. And those with the most expertise in n re m y t ke on influencer r oles. 2. 11.623.3 Copy Right: R i University 219

 Expert: At ttempt by spouse to use his or her superior inform tion bout deci sion ltern tives to influence the other spouse. Legitim cy: An ttempt by spo use to influence the other spouse on the b sis of position in the household. B r g ining: An ttempt by spouse to secure influence now th t will be exch nged w ith the other spouse t some future d te. Rew rd: An ttempt by spouse to infl uence the beh viour of the other spouse by offering rew rd. Emotion l: An tte mpt by spouse to use n emotionl den re ction to influence the other spouses beh viour. Impression: Any persu sive ttempts by one spouse to influence the beh vi our of the other. CONSUMER BEHAVIOUR 4. 5. 6. These influence str tegies tend to be used by either husb nds or wives when they find themselves in dis greement or in conflict with the other spouse reg rding specific consumer decision. For inst nce, we ll h ve experienced occ sions on w hich different rest ur nts to visit, see different movies, or go on different type of f mily v c tion. These re only few ex mples of the lmost endless pos sibilities of potenti l f mily consumption conflicts th t might need to be resol ved. In consumer beh viour context, dvertising or n in-store shopping experi ence (e.g., point-of-purch se displ y or h ndling product) might provide eno ugh ddition l inform tion to en ble husb nd or wife to effectively ch nge the other spouses views. 6.3 Dyn mics of Husb nd/Wife Decision M king M rketers re interested in the rel tive mount of influence th t husb nd nd wife h ve wh en it comes to f mily consumption choices. Most husb nd/wife influence studies c l ssify f mily consumption decisions s husb nd-domin ted, wifedomin ted, joint (i.e., equ l or syncr tic), nd utonomic (i.e., unil ter l). Studies th t h ve ex mined both the extent nd n ture of husb nd/wife influence in f mily decision

control the flow of inform tion bout product or service into the f mily. 3. D eciders: F mily members who h ve the power to unil ter lly or jointly decide whe ther or not to buy product or service. The husb nd nd wife m y jointly decide bout the purch se of new refriger tor.F mily member(s) with the power to det ermine unil ter lly or jointly whether to shop for, purch se, use, consume, or d ispose of specific product or service. Buyers: Those f mily members who ctu l ly buy p rticul r product or service. A housewife m y be the person who ctu l ly buys ll the foodstuffs, r tions nd toiletries, which re consumed by ll th e f mily members.F mily member(s) who m ke the ctu l purch se of p rticul r p roduct or service. Prep rers: Those f mily members who tr nsform or prep re the product into the form in which it is ctu lly consumed. The housewife m y prep r e the f mily me l using r w veget bles, lentils, spices, oil nd other ingredien ts. F mily member(s) who tr nsform the product into form suit ble for consumpt ion by other f mily members. Users: Those f mily members who use or consume p rticul r product or service. All f mily members m y use the c r, w tch the telev ision, nd listen to the stereo music system F mily member(s) who use or consume p rticul r product or service. M int iners: F mily member(s) who service or r ep ir the product so th t it will provide continued s tisf ction. Disposers: F m ily member(s) who initi te or c rry out the dispos l or discontinu tion of p r ticul r product or service.

s h ve found th t such influence is fluid nd likely to shift, depending on the specific product or service, the f mily role structure orient tion, nd the spec ific st ge in the decision-m king process. These f ctors lso re medi ted by ch nging lifestyles, p rticul rly the ch nges in f mily lifestyle. Options ssoci ted with women working outside of the home, nd so on. 6.4 V ri tions by F mily Role Structure Orient tion A f milys orient tion reg rding sex roles is key f c tor when it comes to consumption decisions. In f milies with modem sex-role or ient tion (i.e., commitment to husb nd/wife equ lity), consumption decisions re likely to be evenly distributed between the two spouses, nd there is less di s greement between husb nd nd wife s to the purch se decision. Role structure nd decision m king within the f mily ppe r to be rel ted to culture nd subcul ture. A cross-cultur l study reported th t husb nds in less developed n tions, m de signific ntly more unil ter l decision th n husb nds in developed n tions n d th t signific ntly more joint decisions took 11.623.3 7. 8. The number nd identity of the f mily members who fill these roles v ry from f m ily to f mily nd from product to product. In some c ses, single f mily member will independently ssume number of roles; in other c ses, single role will be performed jointly by two more f mily members. In still other c ses, one or m ore of these b sic roles m y not be required. For ex mple, teen ge son browsin g through video rent l store m y pick out newly rele sed movie. His selectio n does not directly involve the influence of other f mily members. He is the dec ider, the buyer (i.e., renter), nd in sense, the g tekeeper; however, he m yo r m y not be the sole user (i.e., viewer). Products m y be consumed by single f mily member (beer, lipstick), consumed or used directly by two or more f mily members (frozen veget bles, sh mpoo), or consumed indirectly by the entire f mil y (furniture, curt ins, p intings). 6.2 Influencing Spouses nd Resolving Consum er Conflicts When m king consumer decisions, husb nds nd wives commonly ttempt to influence e ch other to rrive t wh t they feel to be the best outcome. Six influence str tegies for resolving husb nd/wife consumption-rel ted conflicts h ve been identified: 220 Copy Right: R i University

CONSUMER BEHAVIOUR As ny p rent knows, young children ttempt to influence f mily decisions s soo n s they possess the b sic communic tion skills needed to inter ct with other f mily members (Buy me cookie, I w nt B rbie doll, Lets e t t McDon lds.). Older ldren re likely to p rticip te more directly in f mily consumption ctivities. In study of children ged 6 to 14, more th n h lf indic ted th t they influenc ed f mily purch se decisions, such s choice of v c tions, stereo equipment, nd home computers. Other rese rch indic tes th t children pl y rel tively import n t roles when it comes to initi ting interest in new computer nd in the ctu l purch se decision. The p rent-child rel tionship, s it rel tes to consumer beh viour, c n be viewed s n influence versus yield situ tion. Specific lly, chil dren ttempt to influence their p rents to m ke purch se (to yield). In observ ing shoppers in superm rket, it is quite evident th t children ttempt to infl uence their p rents to m ke purch ses of speci l interest (e.g., l undry deterge nts) for which they see ds on TV. 2. Vers tile P rticip nt 3. P ssive Introverts 4. Sports Oriented Prim rily m les: outgoing, ctive, nd gre tly interested in p rticip ting in n d w tching sports. Sports influence their selfim ge nd wh t they buy. Figure. 25.3: lifestyle segment tion of the teen m rket F mily m rketing focuses

6.7 Teen gers nd Post teens A signific nt number of teen gers h ve discretion r y spending in terms of spending p tterns. High school students (those in gr des 7 through 12) re most interested in sports nd fitness. Boys between the ges o f 16 nd 19 spend most of their money on movies, d ting, entert inment, vehicle expenses, nd clothing, while girls of th t ge spend most of their money on clo thing, cosmetics, nd fr gr nces. The teen m rket c n be segmented in terms of l ifestyle groups. Figure below presents four-c tegory segment tion schem of th e teen ge m rket. Such segment tion fr mework h s v lue for m rketers who wish t o focus their m rketing efforts on p rticul r subgroup of teens. SEGMENT NAME 1. Soci lly driven. KEY CHARACTERISTICS Prim rily fem le; ctive n d extroverted. They re optimistic nd pl n to ttend College. Slightly more fem les th n m les: responsible teens, but less optimistic nd less likely to pl n to ttend college th n the Soci l Driven. They re comfort ble in soci l nd sol it ry situ tions. Slightly more m les th n fem les: withdr wn, self-conscious, nd the le st comfort ble in soci l situ tions. They re less optimistic bout, t he future, nd spend the le st.

pl ce in developed n tions th t in less developed n tions. Dutch wives were foun d to m ke fewer decisions th n their Americ n counterp rts. The sub cultur l f c tor of religion, nd the rel ted dimension of religious orient tion, lso h ve b een found to be ssoci ted with f mily decision m king. 6.5 V ri tion by St te i n the Decision-M king Process The roles of husb nds nd wives m y differ t v ri ous points throughout the decision-m king process. A simple, three-st ge f mily decision-m king model includes problem recognition, se rch for inform tion, nd fin l decision. The initi l decisionm king role p ttern est blished in st ge one (problem recognition) usu lly continues during the two rem ining st ges (se rch for inform tion nd fin l decision). However, for some decisions, there re st ge-to-st ge shifts. For inst nce, recognition of the need for new w shing m ch ine m y be wife domin nt, the se rch for inform tion concerning the potenti l pu rch se might be l rgely utonomic (usu lly by the wife), nd the fin lly decisio n might be m de jointly by both spouses. 6.6 Children

Activity 1 How does the f mily influence the consumer soci liz tion of children? Wh t role does television dvertising pl y in consumer soci liz tion? 11.623.3 Copy Right: R i University 221

on the rel tionships between f mily members b sed on the roles they ssume, inc luding the rel tionship between purch ser nd f mily consumer nd between purch ser nd purch se decision m ker. F mily m rketing identifies scen rios where som e purch se might h ve more th n one decision m ker, where s some h ve more th n one consumer. Sometimes the purch ser nd consumer re the s me person; sometime s they re different people. The f mily m rketing model, s see in Figure 12.4, represents nine cells describing v rious purch ser-consumer rel tionships. Depen ding on where in the m trix v rious products f ll, m rketers c n dvertise nd p osition products differently ccording to their purch ser-consumer rel tionships .

Figure 12.4 The F mily M rketing Model F mily purch se f ll into 9 c tegories, depending on who m kes the purch se decision nd who users the item purch sed. A Consumer One Member Some Members All Members 4 7 Sug r Pops One Member 1 A Pur ch se Decision M ker Some Members All Members 2 3 Tennis R cket 5 6 8 9 Refriger tor CONSUMER BEHAVIOUR For Ex mple: 1. Mom nd D d go to buy new tennis r cket for Mom. D d dvises M on on her purch se. 2. Mom goes to the grocery store to buy Sug r Pops cere l fo r her children. Shell never e t the stuff. 3. Mom, D d, nd the kids go to the de p rtment store to buy refriger tor. All members re decision-m kers nd ll r e consumers; cell 9. Source: Robert Boutilier, Pulling the F milys Strings, Americ n Demogr phics (Augus t 1993), 46. The f mily purch se decision-m king process c n be complex, but ns wering the following questions helps identify different purch ser-consumer rel t ionships. 1. 2. 3. 4. 5. Whos buying for whom? Who re the princip l ch r cters? Wh ts the plot for the purch se? Who w nts wh t when? Wh t c n we ssume? 10 Admittedly, the ppe l to f milies rose from the rest ur nt industrys desire to grow s les nd profits. At Burger King, the f mily m rket represents bout one-t hird of its business. Children th t come in nd buy $1.99 Kids Club me ls bring the entire f mily nd boost the ver ge check to pproxim tely $ 9.00. Rest ur n ts re monitoring closely the ch nges occurring in the modern f mily. Kroger ( n tion l grocery ch in), E tzies ( ch in of m instre m he lthy food stores) h v e m de gre t strides in the home me l repl cement (HMR) ren . HMR provides so lution to time-rushed f milies th t dont h ve time to prep re v riety of m in c ourses nd numerous side dishes from which to choose, nd they m ke it e sy for either the m le or fem le householder or teen ger to ssemble well-b l nced me l for the f mily. Spous l Roles in Buying Decisions Which spouse is more import n t in f mily buying decisions? How does this v ry by product c tegory, st te of d ecision-m king process, nd individu l household? Gener lly, the following role structure c tegories re used to n lyze these questions: 1. Autonomic: n equ l number of decisions is m de by e ch spouse, but e ch decision is Individu lly m de by one spouse or the other Husb nd domin nt: the husb nd or m le he d-ofhous ehold m kes m jority of the decisions. Wife domin nt: the wife or fem le he dof-household m kes m jority of the decisions. Joint (syncr tic): most decision s re m de by the both husb nd nd wife Although these nswers m y not identify ll essenti l rel tionships m rketers sh ould consider, they do identify f mily m rketing pl n, which cre tes rel tio nship between individu ls nd products b sed on the role e ch individu l h s in the influence or purch se of products. In the rest ur nt industry, the trend h s been to focus on m rketing to the f mily s single unit.11 Although sever l d ec des go, going out for dinner described speci l night out for d ting or m rri ed couples, tod y it describes typic l evenings solution for m king nd e ting dinner for m ny Americ n f milies. Though Boston M rket led the p ck of rest ur nts c tering to home-style me ls, other rest ur nt comp nies re cre ting fully integr ted f mily m rketing progr ms th t include speci l dvertising, menus, p ck ging, couponing, videos, nd movies tie-ins. For ex mple, KFC dopted new m ntr few ye r go-t ke b ck the f mily. It focused on ddressing f mily needs ( such s convenience, quickness of service, fford bility, nd v riety) from the mothers, f thers, nd childrens perspectives. In ddition to dding ro sted chicken , nd chicken strips, nd pot pies to its menu (much to the delight of its dult customers), KFC lso developed promotion l progr m fe turing Timon nd Pumb ch r cters from the Disney move The Lion King (much to the delight of children) . 2. 3. 4.

These c tegories re sometimes simplified to husb nd more th n wife, wife more th n husb nd, both husb nd nd wife, or simply husb nd only, wife only, or children only. type of product, st ge in the decision process, nd n ture of the situ tion sur rounding the decision influences which situ tion exists. And, keep in mind, th t the terminology husb nd nd wife pply to roles performed by members of the hou sehold nd re used even though the f mily members might not be m rried or m y b e s me-sex couples. H rry D vis nd Benny Rig ux conducted l ndm rk study inve stig ting husb nd-wife influences.12 Their findings re 222 Copy Right: R i University 11.623.3

usu lly presented in the f mili r tri ngul r configur tion shown in Figure 12.5 nd h ve gre tly influenced thinking bout the rel tive influence of husb nds r e wives on decision m king nd the extent of role speci liz tion. Are there some roles in f mily decision m king th t one spouse typic lly performs? The study s eems to indic te yes, but you c n pply some of the inform tion ex mined through out this text to identify how the roles of household members re ch nging. wives m y drop the f mily c r t the service st tion for n oil ch nge. However, contempor ry couples-m y from the b by boomer segment- re not inclined to shift tr dition l joint buying responsibilities to only one spouse, but they re will ing to shop jointly for m jor items th t might h ve been the responsibility of o ne spouse in tr dition l f milies. Influence of Gender As the gender g p n rrows , husb nd nd wife decisions re incre singly m de jointly (syncr tic lly). Qu l ls14 studied f mily decisions concerning v c tions, utomobiles, childrens educ t ion, housing, insur nce, nd s vings. Prior studies showed th t decisions reg rd ing these products were usu lly reported s wife or husb nd domin nt. Qu lls fou nd overwhelmingly th t joint decisions re now the norm for these products, with 80 percent of childrens educ tion nd housing decisions m de jointly. Incre sing resources of women nd shift tow rd eg lit ri nism re producing more joint dec ision-m king in product nd service c tegories of perceived high risk. In contr st, however, time pressures, brought bout by l rge numbers of du l-worker f mil ies, m y produce more utonomic decisions in c tegories of perceived low risk. B ec use of declining gender differences nd the w ning of gender identific tion o f products, m y m rketers re rese rching how to tr nsition gender dep rtment pro ducts to du lgender positioning. 15 E sy-to-prep re foods, once t rgeted to wo men, re now m rketed tow rd men nd women, e ch of whom re tired when they get home from work nd re looking for w y to decre se their time prep ring the f mily me l. Yet consumer rese rchers must recognize th t gender differences, des pite movement w y from sex role domin nce, still exist for some products nd in some situ tions,16 such s person l c re products. Liter ture reviews of these re s re v il ble in Jenkins17; Bums nd Gr nbois18; Gupt , H gerty, nd Myers 19; nd Roberts.20 Although gender-rel ted consumer beh vior still exists, the roles re not determined by biologic l sex so much s the soci liz tion experien ces th t te ch men nd women different consumer ctivities.21 CONSUMER BEHAVIOUR Influences on the Decision Process How do husb nds nd wives perceive their rel tive influence on decision m king cross the decision st ges? And wh t does this me n for m rketers? Figure 12.5 sh ows how some productservice c tegories re tr dition lly wife domin nt. They inc lude womens clothing, childrens clothing, nd groceries. Tow c tegories th t re h usb nd domin nt include l wn mowers nd h rdw re. Joint decisions tend to be m d e bout v c tions, televisions, refriger tors, nd upholstered living room furni ture. Autonomic decision- m king tends to be present in decisions bout c tegori es th t include womens jewelry, mens leisure clothing, mens business clothing, spor ting equipment, l mps, toys nd g mes, indoor p int nd w llp per, nd lugg ge. By underst nding where on this m p the decisions to buy p rticul r products f ll, m rketers c n being to determine which spects of specific product to dvertise to different household members nd which medi will re ch the influenti l f mily member. Influence by Decision St ge Spouses exert different degrees if influenc e when p ssing through the different st ges of the decision-m king process. This is indic ted in Figure 12.5 by the direction of the rrow, which shows movement from inform tion se rch to fin l decision. This movement m y be minim l in the c se of m ny low-involvement goods but more pronounced for goods th t re risky or h ve high involvement for the f mily. The decision process tends to more tow rd joint p rticip tion nd w y from utom tic beh vior s fin l decision ne r s. Movement is most pronounced for refriger tors, f mily utos, upholstered livi ng room furniture, nd c rpets or rugs. V c tions re perh ps the most democr ti c of f milys purch se decisions. The inform tion se rch st ge is more utonomic

 Copy Right: R i University 223

th n joint when comp red with fin l decisions. M rketing pl ns thus require spe ci lized use of medi , such s m g zines or other medi h ving strong ppe l t o husb nds or wives r ther th n both. Product or store design must reflect the e v lu tive criteri of both since consensus on these must be chieved in the fin l decision. Sep r te c mp igns m y be timed to coincide with speci lized interes ts, especi lly for products with long pl nning cycle. Influence of employment In the p st, m rketers were ble to refer to the tr dition l role structure c te gories to determine which f mily member w s most likely to purch se specific p roduct. The high number of women working outside the home in recent ye rs couple d with ch nging coupled with ch nging spous l roles h s ffected how couples div ide their buying responsibilities.13 Although tr dition l buying roles still pp ly, husb nds in du l-income m rri ges m y be willing to stop t the grocery stor e to pick up few items, nd working 11.623.3

CONSUMER BEHAVIOUR The left side of the model di gr m shows the sep r te psychologic l predispositi ons of the f ther, mother nd other f mily members which le d to f mily buying de cision which m y be either individu lly or jointly m de. Whether decision will be m de individu lly or jointly is ffected by (i) soci l cl ss, (ii) life-style , (iii) role orient tion, (iv) f mily life cycle (v) Perceived risk, (vi) produc t import nce, nd (vii) time pressure. Decisions re more likely to be m de join tly in middle cl ss, closely knit f milies or in c se of newly m rried couples. Also, when the product under consider tion is thought to be import nt to the f m ily, when the perceived risk is ssoci ted with it is high nd there is mple ti me to m ke the decision. b. Identify few socio-economic segments, m ke ppropri te ssumptions bout their soci l beh viour nd devise pl n for m rketing Debit c rds concept. Activity 2 . Describe how the knowledge of the buying beh viour models c n be used for pop ul rizing the concept of Debit c rds in your region. 224 Copy Right: R i University 11.623.3

Key Terms CONSUMER BEHAVIOUR Influencers G tekeepers Deciders Buyers Prep rers Users M int iners Disposers So ci lly driven Vers tile P rticip nt P ssive Introverts Sports Oriented Husb nd Influencing Spouses nd Resolving Consumer Conflicts Expert Legitim cy B rg ining Rew rd Emotion l Impression Key F mily Consumption Roles Influencers G tekeepers Deciders Buyers Prep rers Users M int iners Disposers Teen m rket segments Soci lly driven. Vers tile P rticip nt P ssive Introverts Sports Oriented 11.623.3 Copy Right: R i University 225

CONSUMER BEHAVIOUR 226 Spous l Roles in Buying Decisions Autonomic Husb nd domin nt Wife domin nt Joint (syncr tic): Influences on the Decision Process Influence of employment Influence of Gender Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 25: SOCIAL CLASS Introduction As m rketing students we re required to look beyond the economic expl n tion of consumer choice beh viour. This is bec use income nd price though import nt r e not sufficient enough in expl ining the differences in choice. As society is b ecoming more nd more ffluent, there is gre t disp rity, which is rising. Thu s society is getting str tified into cl sses. In this ch pter we re going to di scuss more in depth bout how soci l str tific tion influences Consumer beh viou r.

Underst nd the concept of Soci l str tific tion Identify the v rious soci l cl s ses exiting Me sure the imp ct of Soci l cl ssific tion on Consumer Beh viour 1. Soci l Cl ss Wh t do we underst nd by Soci l cl ss?

This me ns: We c n s y th t Soci l cl ss is more of continuum, i.e., r nge o f soci l positions, on which e ch member of society c n be pl ce. But, soci l re se rchers h ve divided this continuum into sm ll number of specific cl sses. T hus, we go by this fr mework, soci l cl ss is used to ssign individu ls or f mi lies to soci l-cl ss c tegory. We c n now define soci l cl ss s The division of members of society into hier rchy of distinct st tus cl sses, so th t mem bers of e ch cl ss h ve rel tively the s me st tus nd the members of ll other cl sses h ve either more or less st tus. Activity 1 Under wh t circumst nces would you expect income to be better predictor of con sumer beh viour th n composite me sure of soci l cl ss (for ex mple, b sed on income, educ tion, nd occup tion)? When would you expect the composite soci l-c l ss me sure to be superior? 11.623.3 Copy Right: R i University 227

The rel tive st nding of members of tus

society. Higher positions imply higher st

Objectives After studying this lesson you should be

ble to:

F ctors responsible for Soci l Str tific tion CONSUMER BEHAVIOUR V ri bles Age group 18-34 ye rs 18-34 ye rs 18-34 ye rs 18-34 ye rs Beyond 35 ye rs Beyond 35 ye rs Age Group 20-23 ye rs 40-45 ye rs Beyond 50 ye rs Age group 19-30 ye rs 23-30 ye rs 31-39 ye rs

S. N o 1 St tus, V lue & Prestige enjoyed Low Soci l Cl ss Lower Cl ss F ctors ffecting Soci l cl ss Lower level occup tion with no uthority, less in come, nd no educ tion or minimum educ tion, For ex mple, l bour cl ss or clerks etc. Gr du tes, or postgr du tes, executives m n gers of comp nies with uthorit y, dr wing h ndsome s l ry of which cert in mount c n be s ved nd invested. Fo r ex mple, executives or middle level m ngers of comp nies. Authorit tive person , dr wing h ndsome s l ry, very often profession lly qu lified, working in ver y senior position or person born into rich f mily, with good b ckground of educ tion. Product C tegory Automobiles Motorcycles Scooters Mopeds C rs Scooters C rs Views or comments on Penetr tion Second f vorite (m le domin ted) First f vorite (equ lly preferred by both sexes) 10%penetr tion (owned more by women 20% penet r tion F vorite in this ge group 30% penetr tion 35% possess television Around 35% possess television Penetr tion is lesser s comp red to bove ge groups Asp iring to h ve credit c rds Penetr tion in this ge group below over ll ver ge H igh ownership of credit c rds 2 Medium Middle Cl ss Television Television Television Credit C rds Credit C rds Credit C rds 3 High Higher Cl ss Fig 9.2 Emerging needs of Indi n Consumers in v rious Product c tegories ( Sourc e: Str tegic M n gement, Br nd equity, Zero in on the Indi n Consumer, pg 159) Activity 2 Select two households fe tured in two different TV series. Cl ssify e ch househo ld into one of the soci l cl sses discussed in the text bove nd n lyze its li festyle nd consumption beh viour Fig 9.1 F ctors showing soci l cl ss differences 1. 2. 3. 4. Authority Income Oc cup tion nd Achievement Educ tion 228

 Copy Right: R i University 11.623.3

Ch r cteristics of Soci l Cl sses: Let us try to underst nd the m in ch r cteris tics of Soci l cl ss 1. 2. 3. Persons within given soci l cl ss tend to beh ve more like Soci l cl ss is hier rchic l Soci l cl ss is not me sured by singl e v ri ble but is me sured s weighted function of ones occup tion, income, we lth, educ tion, st tus, prestige, etc. Soci l cl ss is continuous r ther th n co ncrete, with individu ls ble to move into higher soci l cl ss or drop into lower cl ss. Soci l Cl ss Ch r cteristics Upper-Uppers re the soci l elite who live on inher ited we lth nd h ve wellknown f milies. They m int in more th n one home nd se nd their children to the best schools. They re in the m rket for jewelry, ntiq ues, homes, nd foreign v c tions. While sm ll s group they serve s referenc e group to others to the extent th t other soci l cl sses imit te their consumpt ion decisions. Lower Uppers re persons who h ve e rned high income or we lth th rough exception l bility in their profession or business. They usu lly come fro m the middle-cl ss. They tend to be ctive in soci l nd civic ff irs nd seek to buy the symbols of soci l st tus for themselves nd their children, such s e xpensive c rs, homes nd schooling. Their mbition is to be ccepted n the upper -upper st tus, st tus th t is more likely to be chieved by their children th n themselves. Upper Middles possess neither f mily st tus nor unusu l we lth. Th e prim rily concerned with c reer. They h ve tt ined positions s profession ls, independent businesspersons, nd corpor te m n gers. They believe in educ tion nd w nt their children to develop profession l or dministr tive skills so th t they will not drop into the lower str tum. They re civic minded nd re qu li ty m rket for good clothes, homes, furniture nd ppli nces. The middle cl ss is ver ge p id white nd blue-coll r workers who try to do the proper things. Oft en they will buy products to keep up with the trends. The middle cl ss believes in spending more money on worth-while experiences for their children nd iming them tow rds profession l colleges. Working cl ss consists of ver ge p y Working Cl ss 4. Upper Lowers Upper- Upper Lower Lowers colleges. Working cl ss consists of ver ge p y blue coll r workers nd those who le d working cl ss life-style, wh tever income, school or job they h ve. The wo rking cl ss depends he vily on rel tives for economic nd emotion l support, for tips on job opportunities, dvice on purch se, nd for ssist nce in times of t rouble. The working cl ss m int ins sh rp sex-role division nd stereotyping. They re found to h ve l rger f milies th n the higher cl sses. Upper Lowers re working, though their Upper Lowers re working, though their living st nd rd is just bove the poverty line. They perform unskilled work nd re poorly p id. O ften they re educ tion lly deficient. Although they f ll ne r the poverty line, they m n ge to m int in some level of cle nliness. Lower Lowers re visibly pov ertystricken nd usu lly out of work. Some re not interested in finding perm ne nt jobs nd most re dependent in ch rity for income. Their homes nd possession s re dirty, r gged, nd broken-down. CONSUMER BEHAVIOUR Activity 3 You re the owner of two furniture stores, one c tering to upper-middle-cl ss co nsumers nd the other to lower-cl ss consumers. How do soci l cl ss differences i nfluence e ch stores: . b. c. d. Product lines nd styles Advertising medi sele ction The copy nd communic tions style used in the ds, nd P yment policies?

LowerUppers Upper Middles Middle Cl ss 11.623.3 Copy Right: R i University 229

Imp ct of soci l cl ss CONSUMER BEHAVIOUR Provides sense of identity Imposes set of norm tive beh viours Cl sses sh re v lues, possessions, customs nd ctivities Soci l Cl ss Upper-Upper Lower-Uppers Upper-Middles Middle Cl ss Working Cl ss Upper Lowers ower Lowers M rketing response to customers of different economic me ns M rketing to the low -income consumer

Key Terms Soci l Cl ss Soci l str tific tion Imp ct of Soci l Cl ss Points to Remember

Imp ct of Soci l Cl ss Provides sense of identity Imposes set of norm tive beh viours Cl sses sh re v lues, possessions, customs nd ctivities 230 Copy Right: R i University 11.623.3

Soci l Cl ss The rel tive st nding of members os

society

some m rketers mbiv lent s not perceived s longterm customers constitutes ubst nti l group t rget with v lue-oriented str tegies

CONSUMER BEHAVIOUR LESSON 26: TUTORIAL As m rketing consult nt, you were ret ined by the W lt Disney Comp ny to desig n study investig ting how f milies m ke v c tion decisions. Whom, within the f mily, would you interview? Wh t kind of questions would you sk? How would you ssess the rel tive power of e ch f mily member in m king v c tion-rel ted decisio ns? The Nestle Comp ny is considering introducing either hot or cold coffee pro duct in Th il nd. M rket rese rch h s reve led the following inform tion bout T h i society nd culture: People in the tr ffic congested urb n re s of Th il nd tend to experience high levels of stress. Temper tures in the country re often bove 80 degrees. Given this inform tion, should Nestle use tr dition l dvertis ing to promote the coffees t ste, rom , nd stimul tive properties, or should it choose other f ctors? 11.623.3 Copy Right: R i University 231

LESSON 27: INTRODUCTION TO CULTURE UNIT III CONSUMERS IN THEIR SOCIAL AND CULTURAL SETTINGS CHAPTER 10: CULTURE AND CONSUMER BEHAVIOUR Culture refers to the set of v lues, ide s, nd ttitudes th t re ccepted by homogenous group of people nd tr nsmitted to the next gener tion. Or the sum t ot l of w ys of living built up by group of hum n beings Two terms th t re s soci ted with culture re:

Introduction One thing th t we h ve in common is th t we re ll consumers. In f ct, everybod y in this world is consumer. Everyd y of our life we re buying nd consuming n incredible v riety of goods nd services. However, we ll h ve different t st es, likes nd dislikes nd dopt different beh viour p tterns while m king purch se decisions. M ny f ctors ffect how we, s individu ls nd s societies, live , buy, nd consume. Extern l influences such s culture, ethnicity, nd soci l c l ss influence how individu l consumers buy nd use products, nd help expl in h ow groups of consumers beh ve. The study of culture encomp sses l spects of society such s its religion, knowledge, l ngu ge, l ws, customs, tr ditions, mu sic, rt, technology, work p tterns, products, etc. All these f ctors m ke up th e unique, distinct person lity of e ch society. Culture is n extremely critic l nd ll perv sive influence in our life. It is mould in which we re ll c st, nd it controls our d ily lives in m ny unsuspected w ys. (Edw rd T. H ll The Sil ent L ngu ge). The imp ct of culture on society is so n tur l nd so ingr ined t h t its influence on beh viour is r rely noted. IN this introductory lesson on C ulture, we re going to le rn bout the me ning nd n ture of culture. We re l so going to de l on how to me sure culture. CONSUMER BEHAVIOUR

Culture is le rned through the following three w ys: 1. Form l le rning: p rents nd elders te ch children the proper w y to beh ve. For inst nce, you h ve been t ught th t you need to study to be successful nd h ppy in life. This le rning m y influence your response both s student nd individu l tow rds educ tion. Inform l le rning: we le rn by imit ting the beh viour of our p rents, friends, or by w tching TV nd film ctors in ction Technic l le rning: instructions r e given bout the specific method by which cert in things to done such s p inti ng, d ncing, singing etc. 2. 3. Objectives After studying this lesson, you should be ble to: Define culture Identify the v rious influences on culture Expl in the v rious me thods used for me suring Culture.

1. Me ning of Culture For the purpose of studying consumer beh viour, culture c n be defined s the sum tot l of le rned beliefs, v lues nd customs th t serve to guide nd direct the consumer beh viour of ll members of th t society. How r

E.g. gift giving

t Christm s nd Chinese New Ye r.

Encultur tionLe rning bout ones own culture Accultur tionLe rning bout ure Individu ls le rn v lues, norms, ritu ls nd myths

new cult

d nd Sheth h ve defined culture s A selective, m nm de w y of responding to exp erience, set of beh vior l p ttern. Thus, culture consists of tr dition l ide s nd in p rticul r the v lues, which re tt ched to these ide s. It includes kn owledge, belief, rt, mor le, l w, customs nd ll other h bits cquired by m n s member of society. An ccepted concept bout culture is th t includes set of le rned beliefs, v lues, ttitudes, h bits nd forms of beh viour th t re s h red by society nd re tr nsmitted from gener tion to gener tion within th t society. We c n lso put s 232 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR (Institutions nd elements of society) Religion Politics Educ tion Arte f cts L ngu ge V lues Beliefs Soci l org nis tion L w Technology

Appe r nce Dress Work nd Leisure ctivities Time consciousness Role of gender Food h bits Soci l roles Rel tionships Le rnin g

Fig 10.1 Influences on Culture From figure 10.1 bove, we see th t culture c n b e gr phic lly represented, influenced. Influences from v rious institutions nd elements of society, such s Educ tion, politics, religion etc. combine in compl ex w ys, which will give rise to the result nt culture nd customs nd this in t urn c n be seen in our ttitudes nd beh viour 1. Convenience: s more nd more women re joining the work force there is n incre sing dem nd for products th t help lighten nd relieve the d ily household chores, nd m ke life more conveni ent. This is reflected in the so ring s le of W shing m chines, microw ves, Pres sure cookers, Mixer-grinders, food processors, frozen food etc. Educ tion: Peopl e in our society tod y wish to cquire relev nt educ tion nd skills th t would help improve their c reer prospects. This is evident from the f ct th t so m ny profession l, c reer oriented educ tion l centers re coming up, nd still they c nnot seem to meet the dem nd. As specific inst nce count the number of insti tutions offering courses nd tr ining in computers th t h ve opened in your city . Physic l ppe r nce: Tod y, physic l fitness, good he lth nd sm rt ppe r nce re on premium tod y. Slimming centers nd be uty p rlours re mushrooming in ll m jor cities of the country. Cosmetics for both women nd men re being sold in incre sing numbers. Even exclusive shops re ret iling designer clothes. M te ri lism: There is very definite shift in the peoples cultur l v lue from spirit u lism tow rds m teri lism. We 2. Ch r cteristics of Culture 2.

All members follow s me norms. 3. Culture is d ptive. Culture is environment l. Multiple cultures re nested hier rchic lly. Culture lso determines wh t is ccept ble with product dvertising. Culture det ermines wh t people we r, e t, reside nd tr vel. Cultur l v lues in Indi re g ood he lth, educ tion, respect for ge nd seniority. But in our culture tod y, time sc rcity is growing problem, which implies ch nge in me ls. Some ch nge

Culture is le rned. Culture regul tes society Norms, st nd rds of beh viour, rew rds nd punishments. Culture m kes life more efficient

(Attitudes

nd beh viour)

Culture, Customs

Medi

nd ritu ls

s in our culture: 11.623.3 4. Copy Right: R i University 233

re spending more money th n ever before on cquiring products such s ir-condi tioners, c rs CD pl yers etc, which dds to our physic l comfort s well s st t us. Types of Culture 2 Power dist nce Soci l inequ lity nd submission to uthority Power dist nce refl ects the degree to which society ccepts inequ lity in power t different leve ls in org nis tions nd institutions. It c n ffect preferences for centr liz ti on of uthority, ccept nce of differenti l rew rds, nd the w ys people of uneq u l st tus work together. CONSUMER BEHAVIOUR N tion l culture

Popul r culture The culture of the m sses with norms of m ss ppe l Subculture Uncert inty void nce Toler nce/ void nce of mbiguity Uncert inty void nce con cerns the different w ys in which societies re ct to the uncert inties nd mbig uities inherent in life. Some societies need well-defined rules or ritu ls to gu ide beh viour, where s others re toler nt of devi nt ide s nd beh viour.

Corpor te culture M sculinity/femininity

This f ctor determines the extent to which societies hold v lues tr dition lly r eg rded s predomin ntly m sculine or feminine. For inst nce, ssertiveness, res pect for chievement, nd the cquisition of money nd m teri l possessions re identified with m sculinity; nd nurturing, concern for the environment, nd ch mpioning the underdog re ssoci ted with cultures femineity 5 Abstr ct versus

Hofstedes Five Dimensions of Culture Culture h s profound imp ct on the w y consumers perceive themselves, products they buy nd use, purch sing processes, nd the org nis tions from which they p urch se. M rketers, however, re giving more ttention, to underst nding m cro c ultures nd how they ffect consumer beh viour. Hofstede found five dimensions o f culture th t re common mong 66 countries. These dimensions serve s found tion for ch r cterizing, comp ring nd contr sting specific n tion l cultures, nd they re helpful in identifying environment lly sensitive segments of the m r ket. 1 Individu lism versus collectivism

Segreg tion

nd superiority of m le

nd fem le roles in society

The culture of group within the l rger society Group identific tion b sed on n tion lity of origin, r ce, region, ge, religion, gender, etc. 4 The comp nys v lues, ritu ls, customs, myths nd heroes

The culture prev lent in

n tion, common to everyone 3

ssoci tive thinking

Cre tion of v lue in products b sed on c use/effect logic or ssoci tion mong e vents without logic l link Activity 2 Select one of the dimensions of Culture Hofstede, nd describe how it might be u sed in m rket segment tion Pursuit of self- or group interest Individu lism describes the rel tionship between n individu l nd fellow indivi du ls, or the collectivity th t prev ils in society. Figure 10.1 below depicts t he ttitudin l nd beh viour l differences ssoci ted with individu lism nd col lectivism. INDIVIDUALISM (e.g., United st tes, Austr li , C n d etc) Defined by intern l ttributes, person l tr its Self-ev lu tion e.g., st nd rds of soci l comp rison, sources of ppr is l reg rding self. Emph sis on sep r teness, individu lity Fo cus differenti tion, rel tively gre ter need to unique Reflective of person l pr eferences nd needs COLLECTIVISM (e.g., Hong Kong, J p n, Indi ) Defined by impo rt nt others, f mily nd friends Self-definition e.g., rel tionships with others define self nd ffect person l preferences. Emph sis on connectedness, rel tio nships Focus on simil rity, rel tively gre ter need to blend in Influenced by pr eferences, needs of close others Self constru l Role of others V lues Motiv tion l drives Beh viour Fig 10.1 Individu lism versus Collectivism 234 Copy Right: R i University 11.623.3

The how spect of cultur l influences Activity 3 The Citrus growers of Kullu Ltd. is pl nning promotion l c mp ign to encour ge the drinking of or nge nd gr pefruit juice in situ tions in m ny consumers nor m lly consume soft drinks. Using the relev nt instrument, identify relev nt cult ur l, consumption-specific, nd product-specific v lues for n dvertising c mp ign designed to incre se the consumption of citrus juices? CONSUMER BEHAVIOUR How cultures norms nd v lues re m nifested in its business pr ctices: Agreements b sed on negoti tions/l w or customs Role of friendship E.g. m tes r te s How rel tionships formed E.g. over round of golf Timeliness nd emph sis on pr omptness/de dlines Person l sp ce Physic l dist nce between people St tus consci ousnessThe right person to negoti te Accept nce of women s executives Dress code E. g. suit nd tie Influence of religious beliefs AstrologyThe influence of the st r s on business

Loc l resist nce to glob lis tion Loc lism: dopting foreign goods with ltered loc l me nings Ethno genesis: the reviv l of ethnic identity Neon tion lism: renewed pride in n tion l identity Hyper re lity in glob lis tio n A s nitised version of re lity Ad pting glob l, homogenised products to own indi vidu lity Individu lis tion of the glob l 4. Me surement of Culture Since we h ve re lized by now th t culture is multif ceted, we lso need to me s ure it. Cert in techniques, which re popul rly used to me sure culture, re giv en below. Here I would like to mention th t we h ve lre dy studied most of thes e techniques in det il in Ch pter 2 e rlier in this course. 1. Projective techni ques: These tests s we h ve studied e rlier re helpful in ssessing individu l motiv tion nd person lity. Attitude me surement tests: These tests re useful in determining beliefs nd ttitudes. Depth interviews nd group discussions: Th ese methods c n be used to discover the emerging cultur l ch r cteristics. Obser v tion: Through this method it is possible to g in v lu ble insights into the mo re obscure spects of culture, which m y not be men ble to direct questioning. Content n lysis: Content n lysis focuses on the content of verb l, written, n d pictori l communic tions like the copy or rt composition of the d itself. Th is technique uses n n lysis of p st nd present medi to know the culture ch n ges. This n lysis c n be c rried out on crosscultur l b sis lso. Copy Right: R i University 235

Culture effects wh t people buy, how they buy The myth of homogenised glob l culture

nd when they buy.

2. 3. 4. 5. 11.623.3

Key Terms Culture Form l Le rning Inform l Le rning Technic l le rning Ad ptive M teri lis m Individu lism Vs. Collectivism Power Dist nce Uncert inty Avoid nce M sculinit y/Feminity Abstr ct/Associ tive thinking Homogenized glob l culture Me surement of Culture Projective Techniques Attitude me surement tests Depth Interviews Gro up discussions Observ tion Content n lysis Qu ker O ts on their bre kf st t bles nd Qu ker O ts in every p rt of their cul ture. These re folks who h ve been exposed to the intrusive influence of br nds in every step of their lives. These re folks who miss br nds de rly when they re not round. The influence of br nds on sets of consumers v ries cross n tio ns. V ries quite differently, l rgely s function of time nd the presence of the br nd in the popul r culture of the d y. The longer the br nd presence, nd very surely deeper, is the influence of the br nd on society t l rge. The br nd , therefore, st rts s thought th t struggles to est blish its prime notion. K leenex is not tissue. Kleenex helps you not to c rry cold in your pocket. It i s hygiene repl cement for h ndkerchief. Dispos ble! Cle n! He lthy! Once the prime notion h s been est blished, the br nd strives to become p rt of popul r culture. You c nt step out without Kleenex... or your cosmetic swipe, for your cold, for the dust round you in your d ily life... nd indeed for just bout n ything! The br nd th t est blishes its need nd utility then strives to est blis h itself s the security bl nket of society th t finds lots miss in life with out br nd to le n on. Kleenex becomes n emotion l pill r to le n on. Kleenex becomes p rt of your te rs. Kleenex becomes te rwiper. Somebody ( nd not someth ing) th t is round you during your most emotion l moments. Kleenex is friend! Br nd influence, therefore, tr verses tr jectory th t le ds right into the he rt nd he rth of the consumer. L rge tr cts of the developed world re lre dy i n the grip of this influence. Remember, when this wom n on lonesome rocket to the moon w s sked wh t she missed most, she didnt mention her dog, her home or h er husb nd in th t order. All she sked for w s b r of M rs! And M rs is br nd of chocol te! The br nd is friend. A comp nion. Someone, nd not something, who doesnt let you down! How f r c n this go? Where does it stop? And is this str ight line th t goes on nd on endlessly? Or is it cyclic l issue th t will t ke society nd its br nd-besotted sets of consumers b ck to the ge of the co mmodity? My view: Id pitch my h rd-e rned bucks on the cyclic l form t. W tch out for br nd exh ustion. A society th t h s grown up on br nds, gener tion fter g ener tion, is going to tire very soon. Tire of the hype, the hoopl nd the llperv sive influence of the in nim te. A society th t h s h d he vy doses of the br nd movement will rise nd w nt to s y No to it somewhere down the line. With ve hemence! Americ n society is lre dy showing these signs. There is this n scent N o-br nd movement out there. And this is not just Greenpe ce with its nti- geneti c lly-modified c mp ign. There re lots more. The br nded product is seen to p c k less v lue th n the unbr nded. Br nding nd p ck ging re seen s two movement s th t c use unnecess ry w ste of resources. Resource le k ge th t CONSUMER BEHAVIOUR Culture The Br nd God Br nds re so ll-perv sive in our lives th t they c n engender we riness nd h tred tow rds br nding. Temper br nd building with soci l consciousness. THINK of n ll-perv sive influence in our modern d y lives. Think of n influence th t is there ll round us, ll the time. Omnipresent! Think of n influence th t is very strong in its ppe l nd seduction. Omnipotent! Think of n influence th t goes well beyond the physic l nd right into our contempor ry commerci l psyche . Omniscient! Wonder Wh t it is? Wh t it is? s the now omnipresent buzzword of M sk Ch sk goes? Very simply nd pointedly, ll ro ds le d to the br nd. The b

r nd in contempor ry modern life is ll of it. Omnipresent, omnipotent nd indee d, omniscient! The l st time I c me cross these three big Os w s when I l st sp oke of God. How then is the br nd different from God? The cheeky nswer: God doe snt think he is br nd! The br nd therefore ppropri tes for itself in our moder n d y lives very signific nt role. A role th t inv des our lives both on the p hysic l nd the non-physic l pl nes. A role th t ppropri tes for itself the sig nific nt influence of friend, philosopher nd guide s well! The br nd nd its influence on pop culture of the d y is well known nd well documented in the d v nced n tions of the world such s the US, Germ ny nd m ny p rts of continent l Europe. These re n tions where the br nd h s been round for sever l gener ti ons. Successive gener tions of Americ ns h ve grown up from first toddle to fin l tipple on st ple diet of 236 Copy Right: R i University 11.623.3

could get ch nnelled into cre tive nd purposeful ctivity inste d! Germ ny h s its own sets of the No-br nd stores! L rge p rts of the consumer world h ve bought into the pop movement of Adbusters! The one community of like-minded folks who def ce ds, celebr te n intern tion l No buy d y nd indulge in br nd b shing of every kind. The br nd movement of the world h s n nti-br nd movement s foil . A movement th t seeks to prop g te restr int. A movement th t seeks to ring th e bell of c ution on how f r to go in the br nding g me, nd when to stop! Br nd ing is therefore tool nd movement to use with restr int nd c ution. W nton enthusi sm of young br nd m n gers out to c pit lise on consumer society nd its consuming trends must therefore be governed by c reful injection of soci l need nd indeed soci l responsibility. The re lm of corpor te soci l responsibi lity therefore must include the pl ns you build for your br nd of dispos ble di per nd dog coll r like! CONSUMER BEHAVIOUR Notes 11.623.3 Copy Right: R i University 237

CONSUMER BEHAVIOUR LESSON 28: SUBCULTURES AND CONSUMER BEHAVIOUR Introduction We re brought up to follow the beliefs, v lues, nd customs of our society nd to void beh viour th t is judged un ccept ble or considered to be t boo. In ddit ion to segmenting in terms of cultur l f ctors, m rketers lso segment over ll s ocieties into sm ller subgroups or subcultures th t consist of people who re si mil r in terms of their ethnic origin, their customs, nd the w ys they beh ve. These subcultures provide import nt m rketing opportunities for stute m rketing st tegists. So, now our discussion in this lesson on subcultures will be more f ocussed comp red to the l st lesson. Inste d of ex mining the domin nt beliefs, v lues, nd customs th t exist within n entire society, we will explore the m r keting opportunities cre ted by the existence of cert in beliefs, v lues, nd cu stoms sh red by members of specific sub cultur l groups within society. These sub cultur l divisions re b sed on v riety of sociocultur l nd demogr phic v ri bles such s n tion lity, religion, geogr phic loc lity, r ce, ge, sex, nd even working st tus. B. Regions Across the World II. Ethnic Influences A. Ethni c Groups Within the Country B. Multicultur l M rketing C. Ethnic Groups Around t he World III. Religious Influences The three m jor spects of culture th t h ve import nt effects on consumer beh vior re region l, ethnic, nd religious diffe rences. Firstly, consumption p tterns m y differ in v rious regions of Indi nd the world, nd m rketing str tegy c n sometimes be t ilored specific lly to the se regions. Secondly, our country h s number of different ethnic groups, nd p opul tion trends will dr m tic lly lter the demogr phic profile of the country in the next 50 ye rs. Ethnicity Ethnic origin refers to the genetic herit ge gro up person is born in M rketpl ce beh viour nd m rketer response V ry m instre m m rketing for ethnic m rkets P y ttention to customs Product d pt tion Use of multicultur l models in dvertising Objectives After studying this lesson you should be ble: Underst nd the concept of subcultures Identify the v rious types of subcultures nd me sure their imp ct on consumer beh viour

1. Subcultures Culture c n be divided into subcultures: A sub-culture is n identifi ble distin ct, cultur l group, which, while following the domin nt cultur l v lues of the o ver ll society lso h s its own belief, v lues nd customs th t set them p rt f rom other members of the s me society. Sub-culture c tegories re: This diverse popul tion is described in terms of its distinct identity nd l ngu ge, strong f mily nd religious orient tion, solid work ethic, nd youthfulness . The bro d ch r cteristics c n influence consumption (e.g., br nd loy lty nd t he desire for prestige products) nd h ve import nt implic tions for product dev elopment, dvertising, medi t rgeting, promotions, nd distribution. S y for in st nce, in the United St tes, the Afric n Americ n popul tion is described s ur b n, young, soci l, nd religious. Bl ck consumers v lue prestigious br nds nd re sm rt investig tive shoppers. These p tterns le d to import nt m rketing imp lic tions. The very diverse Asi n Americ n subculture is described s young nd h ving higher socioeconomic st tus, pl cing strong v lue on the f mily nd the g roup, nd being strongly br nd loy l. In spite of its diversity, m rketing str t

egies c n be developed for this group. M ny m rketers re now becoming multicult ur l in their m rketing ctivities by trying to ppe l to v riety of cultures t the s me time. Although the diversity of the Indi n melting pot m y be unique , there re m ny import nt ethnic groups in other re s of the world. Fin lly, r eligious beliefs nd v lues c n influence consumer N tion lity: Indi n, Sri-l nk , P kist n Religion: Hinduism, Isl m R ce: Asi n, bl ck, white Age: young, middle ged, elderly Sex: M le, Fem le Occup tion: F rm er, te cher, business Soci l cl ss: upper, middle, lower Geogr phic regions: Sou th Indi , North-e stern Indi Let us now look t some of these spects of subculture in gre ter det ils. 2. Re gion l, Ethnic, nd Religious Influences on Consumer Beh vior I. Region l Influe nces A. Regions within the Country 238 Copy Right: R i University 11.623.3

Activity 1 Collect multilingu l product liter ture of t le st five products. Wh t re the most commonly used l ngu ges in these? 3. Person l Ch r cteristics All the f ctors th t we studied were non-person l. Now let us look t few person l f ctors. But wh t re person l f ctors? Those ch r cteristics customers posse ss s individu ls, which could include: CONSUMER BEHAVIOUR

Group versus individu l tr its Genes: the c rds we re de lt t birth Genetics The biochemic l heredity of n or g nism, specific lly DNA Biologic l Determinism Belief th t biology determines beh viour e.g. DNA Physiologic l differences e.g. height, weight Dise ses nd ment l disorders e.g. di betes Circ di n rhythms: t he d ily cycle of ctivity Emotions nd beh viour Imp ct of genetic f ctors on customers E.g. emotion l disorders N ture versus nurture Those f vouring nurture rgue th t beh viour is determined by persons upbringin g, f mily life, p rent l v lues, peer group influences, school nd church. Those f vouring n ture credit genetic m keup for much of hum n beh viour. Does birth order determine temper ment nd beh viour? Age, Gender, nd Household Influences on Consumer Beh vior How Age Affects Consumer Beh vior A. Teens. B. Gener tion X C. B by Boomers 3. I. D. Fifty nd Older II. How Gender Affects Consumer Beh vior A. Sex Roles H ve Ch nged B. Differences in Acquisition nd Consumption Beh viors III. How the House hold Influences Consumer Beh vior A. Types of Households B. Ch nging Trends in H ousehold Structure 11.623.3 Copy Right: R i University 239

Biologic l nd physiologic l fe tures t birth Fe tures th t develop s person grows which derive from biologic l heredity Group tr its include r ce, gender nd ge nd re not unique to n individu l but sh red. Individu l tr its such s person lity re unique to n individu l.

IV. Roles Th t Household Members Pl y A. Roles of Spouses B. The Roles of Childr en C. Household Decision M king Versus Household Consumption Beh vior Age h s m jor influence on customer beh viour Chronologic l versus psychologic l ge. 4. Psychogr phics: V lues, Person lity, nd Lifestyles CONSUMER BEHAVIOUR We need to nswer these questions reg rding the role of psychogr phics in ffect ing consumer beh viour. I. V lues A. How C n V lues Be Described? B. Which V lue s Ch r cterize Western Culture? C. Why Do V lues Ch nge? D. Wh t Affects Our V l ues? E. How C n V lues Be Me sured? II. Person lity A. How H s Person lity Been Studied? B. Do Person lity Ch r cteristics Affect Consumer Beh vior? III. Lifest yles IV. Psychogr phics: Combining V lues, Person lity, nd Lifestyles A. V lues nd Lifestyle Survey B. Other Applied Psychogr phic Rese rch V lues re endurin g beliefs bout things th t re import nt. They re le rned through the processe s of soci liz tion nd ccultur tion. Our v lues exist in n org nized v lue sys tem, with some v lues being viewed s more import nt th n others. Some re reg r ded s termin l v lues nd reflect desired end st tes th t guide beh vior cross m ny different situ tions. Instrument l v lues re those needed to chieve thes e desired end st tes. Dom in-specific v lues re those th t re relev nt within given sphere of ctivity. Western cultures tend to pl ce rel tively high v l ue on m teri l goods, youth, the home, f mily nd children, work nd pl y, he lt h, hedonism, nd technology. M rketers use tools like v lue segment tion to iden tify consumer groups with common v lues. Three methods for identifying v lue-b s ed segments re discussed: inferring v lues b sed on the cultur l milieu of the group, the me ns-end ch in n lysis, nd questionn ires like the Roke ch V lue S urvey nd List of V lues. Person lity consists of the distinctive p tterns of be h viors, tendencies, qu lities, nd person l dispositions th t m ke people diffe rent from one nother. Appro ches to the study of person lity include (1) The ps ycho n lytic ppro ch, which sees person lity rising from unconscious intern l struggles within the mind t key st ges of development; (2) Tr it theories, whic h ttempt to identify set of person lity ch r cteristics th t describe nd dif ferenti te individu ls, such s introversion, extroversion, nd st bility; (3) P henomenologic l ppro ches, which propose th t person lity is sh ped by n indiv idu ls interpret tion of life events (4) Soci l-psychologic l theories, which foc us on how individu ls ct in soci l situ tions (e.g., compli nt, det ched, or g gressive); nd (5) Beh vior l ppro ches, which view n individu ls person lity i n terms of p st rew rds nd punishments.

Popul tion ge ch nges imply m jor shifts in m rkets nd v lues/dem nd E.g. geing b by boomers. Lets look t the four m jor ge groups. Teens, who need to est blish n identity , re the consumers of tomorrow nd h ve n incre sing influence on f mily decis ions. The somewh t disillusioned Gener tion X consists of sm rt nd cynic l cons umers who c n e sily see through obvious m rketing ttempts. B by boomers grew u p in very dyn mic nd f stch nging world, nd this h s ffected their v lues f or individu lism nd freedom. The 50 nd older segment c n be divided into two g roups-the young g in nd the gr y m rket. Neither group likes to be thought of

Lifetime revenue: estim ted revenue over

Needs

nd w nts v ry with ge customers lifetime.

s old. The ffect of gender differences on consumer beh vior is ex mined next. Sex roles re ch nging. Women re becoming more profession l nd independent, n d men re becoming more sensitive nd c ring. Also, men nd women c n differ in terms of tr its, inform tion processing, decision styles, nd consumption p tter ns. Gender Consistent throughout lifetime, influencing customer v lues nd preferences Diff erent consumption p tterns nd perceptions of consumption situ tions E.g. the wed ding ceremony Differences for business-to-business products nd services Also c r eer p ths, benefits nd support services

240 Copy Right: R i University 11.623.3

Let us now focus on how households pl y key role in consumer beh vior. The pro portion of nontr dition l households h s incre sed due to f ctors such s (1) l ter m rri ges, (2) Coh bit tion, (3) Du l-c reer f milies, (4) Incre sed divorce , nd (5) Fewer children. Households lso exert n import nt influence on cquis ition nd consumption p tterns. First, household members c n pl y different role s in the decision process (g tekeeper, influencer, decider, buyer, nd user). Se cond, husb nds nd wives v ry in their influence in the decision process, depend ing on the situ tion-husb nd-domin nt, wife-domin nt, utonomic, or syncr tic

M rketers lso me sure lifestyles, which re p tterns of beh vior (or ctivities , interests, nd opinions). These lifestyles c n provide some ddition l insight into consumers consumption p tterns. Fin lly, some m rketing rese rchers use Psy chogr phic techniques th t involve ll of these f ctors to predict consumer beh vior. One of the most well known Psychogr phic tools is the V lues nd Lifestyle Survey (VALS). The newer VALS2 identifies eight segments of consumers who re s imil r in their resources nd self-orient tions. Key Terms CONSUMER BEHAVIOUR

R sn , strong br nd th t w s rel unched recently IT SEEMS to be th t time of t he ye r when comp nies re iming to position, or reposition, br nds. Re ders wo uld h ve seen reports in newsp pers nd business m g zines bout one comp ny or nother pl nning such n exercise. Much h s been written bout how conducting qu lit tive rese rch with t rget consumers, getting their input on current br nd ssoci tions, potenti l for br nd differenti tion, the level of br nd reson nce nd so on re import nt for this delic tely b l nced process of br nd development . However, little h s been written bout the v lue of g ining the s me inputs n d perspectives from intern l st keholders especi lly the m n gement nd employee s of the org niz tion who should be integr l to, if not the most t ngible m nife st tions of, holistic br nd experience. In f ct, for number of re sons, obt ining qu lit tive inputs from intern l udiences c n be critic l to inventing or reinventing the br nd, whether it is done vi one-on-one interviews, focus grou ps or some other rese rch vehicle. 11.623.3 Copy Right: R i University 241

Article #1 Cre ting A Holistic Br Involving comp nys intern l st br nd repositioning c n help cre reson tes better with the t rget

nd Experience keholders in the process of br nd development or te more holistic br nd experience - one th t m rket.

Activity 2 1 . How should m rketers promote products nd services to working women? Wh t pe ls should they use? Expl in.

Subcultures Region l Influences Ethnic Influences Religious Influences Group Tr its Individu l tr its Psychogr phics Lifestyles

Perh ps one of the more obvious re sons is to g in 360degree picture of the br nd; th t is, to underst nd more of the dimensions of the current br nd, whether they re positive, neg tive or neutr l. For ex mple, n tion lly r nked m n ge ment institute th t offers n MBA progr m, interested in improving its r nking, recently beg n t king steps to reposition its br nd. The process included conduc ting focus groups nd one-on-one interviews with six groups of intern l nd exte rn l st keholders. A key re son why the org niz tion chose to include intern l udiences in the qu lit tive rese rch process w s to llow for thoroughness nd to underst nd the br nd from v riety of ngles. We needed to h ve full opinions nd he r the good with the b d, s ys the director of the institute. A br nds herit ge those ttributes ssoci ted with its history, philosophy nd the re son for its existence is one of its key dimensions, most likely instilled by the br nds f ounders. Intern l udiences c n h ve inv lu ble insights into the br nds history nd prob bly underst nd th t historys import nce better th n most st keholder ud iences. If they c n sh re their underst nding of br nds herit ge, it m y help r e-est blish br nd continuity, connecting the br nds future positioning to its roo ts nd the f cets th t m de it successful nd enduring in the first pl ce. B l n cing th t herit ge g inst new br nd positioning opportunities gle ned from exte rn l udiences or other st keholders is tricky, yet essenti l. Doing qu lit tive rese rch mong intern l udiences lso helps determine where p tterns nd diver ging opinions exist between intern l nd extern l udiences, which c n help the m rketing te m formul te the br nd hypothesis nd identify subsequent rese rch re s. And when individu ls from v riety of function re s or product lines th t h ve br nd cont ct re included in the qu lit tive rese rch, the employee udi ences diversity helps ensure th t m rketers h ve t pped gre ter number of br nd perspectives. Their feedb ck c n be p rticul rly helpful to m rketers trying to scert in whether the org nis tions (or intern l) truth bout the br nd m tches th e m rkets (or extern l) truth bout the br nd, why these truths m y differ, nd how they re sh ped within the org nis tion. For the m n gement institute mentioned bove, the most enlightening re s of the rese rch were the differences between the (intern l udiences) opinions of the br nd nd wh t the students s id, the ins titute director s ys. There is bro d disp rity between wh t n MBA (from this s chool) me ns to these two udiences, he dds. In f ct, different truths bout the br nd c n exist even within intern l udiences. For the MBA progr m, with the st ff, theres difference in opinion in how they ll ffect delivery of the br nd to the student udience, s ys the institutes director. Underst nding current br nd perceptions nd how they developed c n help m rketing te ms ch nge future br nd perceptions by ensuring th t more cohesive view of the br nd emerges. In inst nces where m rketers re developing completely new br nd, intern l udiences c n provide v lu ble input to the corpor te vision, br nd vision, nd the v lues with which the new br nd should be ligned. Furthermore, if the br nd is to rem in true to its v lues nd become me ningfu l experience for the customer or user, it should be ligned with the comp nys org niz tion l culture. If employees re going to be ble to ct s br nd mb ss do rs if they re to believe in wh t the br nd st nds for enough to communic te the br nd experience nd help cre te the br nd culture then it m kes sense to get i nput from these intern l st keholders. In f ct, employees c n be n import nt so urce of new ide s for initi tives th t c n strengthen the over ll br nd experien ce, especi lly if the effort to t p those ide s involves ll re s of the comp n y, whether org nized by function, product line or long some other lines. So, th e s me groups of intern l st keholders who c n provide input to help drive br nd positioning c n lso help identify key initi tives nd efforts ge red tow rd st rengthening the br nd from the inside out. Of course, nother import nt re son f or c nv ssing intern l opinion is perh ps more politic l, but still psychologic lly import nt: Doing so llows intern l udiences to h ve s y in br nd develop ment nd feel they h ve ownership in the resulting br nd position. Not only does getting input from m n gers nd other employees m ke br nd buy-in e sier, but m rketers c n more quickly identify intern l br nd ch mpions who c n help g in co nsensus on the br nd position. Employees might feel th t p rticip ting in br nd

rese rch is time-consuming, but once they underst nd th t their input will influ ence the br nd experience nd ultim tely their own experience, they will better ppreci te its v lue. With input from intern l udiences, m rketers c n be confi dent th t the br nds ttributes reson te better with its t rget m rket nd with t he org niz tion behind the br nd. Points To Remember CONSUMER BEHAVIOUR Subcultures A sub-culture is n identifi ble distinct, cultur l group, which, while followin g the domin nt cultur l v lues of the over ll society lso h s its own belief, v lues nd customs th t set them p rt from other members of the s me society. 242 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR

Age, Gender, nd Household Influences How Age Affects Consumer Beh vior How Gender Affects Consumer Beh vior How the H ousehold Influences Consumer Beh vior Roles Th t Household Members Pl y Region l, Ethnic, nd Religious Influences Region l Influences Ethnic Influences Religious Influences Psychogr phics: V lues, Person lity, nd Lifestyles V lues Person lity Lifestyles Psychogr phics: Combining V lues, Person lity, nd Lifestyles 11.623.3 Copy Right: R i University 243

Sub-culture c tegories o o o o o o o o N tion lity Religion R ce Age Sex Occup tion Soci l cl ss Geogr phic regions

CONSUMER BEHAVIOUR LESSON 29: CROSS-CULTURAL CONSUMER ANALYSIS Introduction With so much diversity present mong the members of just one n tion ( s in Indi ), we c n e sily ppreci te th t numerous l rger differences m y exist between c itizens of different n tions h ving different cultures, v lues, beliefs, nd l n gu ges. If intern tion l m rketers re to s tisfy the needs of consumers in pote nti lly very distinct m rkets effectively, they must underst nd the relev nt sim il rities nd differences th t exist between the peoples of the countries they d ecide to t rget. In this lesson we will be de ling with the underst nding of cro ss-cultur l consumer n lysis nd lso its imp ct on Consumer beh viour. Activity 1 1 . If you w nted to n me few product th t would be ccept ble to consumers th roughout the world, wh t cultur l f ctors would you be considering?

Underst nd the concept of Cross-Cultur l consumer n lysis Expl in the implic ti ons of Cross-cultur l consumer n lysis on consumer beh viour Expl in the re son s for nd import nce of becoming multin tion l for the Indi n Org nis tion. Disc uss the import nce of cross-cultur l consumer n lysis. Describe the process of ccultur tion. Outline ltern tive multin tion l str tegies. Conduct n initi l ssessment of the multin tion l str tegies used by corpor tions. Describe crosscultur l psychogr phic segment tion. Review the m jor m rketing mist kes m de by multin tion l corpor tions. 1. Cross Cultur l Consumer Beh viour Ch r cteristic fe tures of firm going glob l: 1. 2. 3. 4. 5. 6. High m rket sh re in the domestic m rket Adv nt geous economies of sc le Access to m rketing/m nuf cturing b ses cross glob l borders Av il bility of resources nd c p bilit y to bsorb huge losses Product/technology clout Cost nd differenti tion dv nt ges 244 Copy Right: R i University 11.623.3

Objectives After studying this lesson you should be

ble to:

Cross-cultur l m rketing is defined s the effort to determine to wh t extent the consumers of two or more n tions re simil r or different. This will f cilit te m rketers to underst nd the psychologic l, soci l nd cultur l spects of forei gn consumers they wish to t rget, so s to design effective m rketing str tegies for e ch of the specific n tion l m rkets involved. Cross cultur l m rketing Objectives nd Policies CONSUMER BEHAVIOUR

The firms objectives could be: B sic re s to be understood for cross cultur l m rketing 1. 2. 3. 4. 5. Problems in Cross Cultur l m rketing 1. 2. 3. 4. Gener l wholes ler B sic product speci lty wholes ler Speci lty wholes ler Regio n l wholes ler Loc l wholes ler Ret iler P&G 11.623.3 Copy Right: R i University 245

Domestic exporter Foreign importer Foreign government-solicit the firm to sell bro d To determine how consumers in two or more societies re simil r/different nd devise suit ble, ppropri te str tegies Devise individu lized m rketing str tegy if cultur l beliefs, v lues nd customs of specific country re different L ngu ge & me ning Difference in m rket segment tion opportunities Differences in the criteri for ev lu ting products nd services: App rel firms in Indi bel ieve th t th t the qu lity of the f bric determines the qu lity of the g rment w here s, the J p nese think th t every spect of the g rment from sewing to p ck ging decides qu lity. Differences in consumption p ttern nd perceived benefits of products nd services: le ther exports by Indi Differences in the economic nd cultur l soci l condition nd f mily structure: Soci l cl ss differences h ve been useful in expl ining differences in consumer beh viour in rel tion to ( ) preferences for products nd br nds (b) store p tron ge or shopping beh viour (c 0 exposure to promotion medi nd (d) s vings nd the use of the credit for purc h sing products Problems rel ted to product selection: The m rketer going for cr oss cultur l m rketing h s to select the customers/ m rket not on the b sis of t he superfici l simil rities of ge or income, but by using the re l motiv ting f ctors th t prompt them to ccept or reject products. Problems rel ted to promot ion/m rketing communic tion: e.g. Ariel in the middle e st nd lso Pepsi Proble ms rel ted to pricing: the m rketer h s to djust his pricing policies ccording to the loc l economic conditions nd customs. Problems rel ted to selection of distribution ch nnels: in J p n, P & G used this to sell so p

A comp ny c n enter

foreign m rket

1b. Wh t f ctors might inhibit n ttempt by Apple to position uter s world br nd?

new l ptop comp

Activity 2 Should He d & Shoulders be sold worldwide with the s me formul tion? In the s me p ck ge? With the s me dvertising theme? Expl in your nswers. 2. Cross-Cultur l Consumer An lysis To determine whether nd how to enter foreign m rket, we need to conduct some form of cross-cultur l consumer n lysis. Let us first define wh t is cross-cult ur l consumer n lysis nd then move he d in knowing how to do it. Cross-cultur l consumer n lysis c n be defined s the effort to determine to wh t extent th e consumers of two or more n tions re simil r or different. Such n lysis c n p rovide m rketers with n underst nding of the psychologic l, soci l, nd cultur l ch r cteristics of the foreign consumers they wish to t rget, so th t they c n design effective m rketing str tegies for the specific n tion l m rkets involve d. We will discuss of cross-cultur l consumer n lysis to comp risons of consume rs of different countries. 2.1 Simil rities nd differences mong people A m jor objective of cross-cultur l consumer n lysis is to determine how consumers in two or more societies re simil r nd how they re different. J p nese Culture Tr its J p nese l ngu ge Homogenous H rmony to be v lid nd pre served Group, not individu l, import nt Ambiguous Gener l Unspoken greement Hol d b ck emotions in public Processoriented Fun-oriented M ke long story short N onverb l communic tion import nt Interested in who is spe king Americ n Culture tr its English l ngu ge Diverse Fight for ones beliefs/positio ns Individu listic Cle r-cut Specific Get the f cts str ight Displ y emotions in public Result ori ented Humor oriented M ke short story long Verb l communic tion import nt Inte rested in wh t is spoken CONSUMER BEHAVIOUR Fig 10.1 J p nese nd Americ n cultur l tr its difference 246 Copy Right: R i University 11.623.3

Activity 3 Mercedes-Benz, Germ n c r m nuf cturer, ids using crosscultur l psychogr phic segment tion to develop m rketing c mp igns for new two-se ter sports c r dire cted t consumers in different countries. How should the comp ny m rket the c r in the United St tes? How should it m rket the c r in Indi ? 2. Altern tive Multin tion l Str tegies Some of us m y rgue s m rkets re becoming more nd more simil r, st nd rdized m rketing str tegies re becoming more nd more fe sible. But, some more would rgue b ck th t differences between consumers of v rious n tions re f r too gre t to permit st nd rdized m rketing str tegy. Thus, pr ctic lly spe king, we n eed to work out whether to use sh red needs nd v lues s segment tion str teg y or to use n tion l borders s segment tion str tegy. Sh red needs nd v lues would me n to ppe l to consumers in different countries in terms of their comm on needs, v lues, nd go ls. Using n tion l borders s segment tion str tegy, on the other h nd, would me n to use rel tively different loc l, or specific m r keting str tegies for members of distinctive cultures or countries. Product Str tegy St nd rdized Product Loc lized Product St nd rdized Communic ti ons Glob l str tegy: Uniform product/ Uniform Mess ge Mixed Str tegy: Customized Product/ Uniform Mess ge Loc lized Communic tions Mixed str tegy: Uniform Produ ct/ Customized mess ge Loc l str tegy: Customized Product/ Customized Mess ge CONSUMER BEHAVIOUR Fig 10.2 Altern tive Glob l M rketing Str tegies. 2.1 F voring World Br nd: A lot of comp nies h ve cre ted world br nd products th t re m nuf ctured, p ck g ed, nd positioned in ex ctly the s me w y reg rdless of the country in which th ey re sold. For inst nce, Sony sells its W lkm n in this f shion. 2.2 Ad ptive Glob l M rketing: IN contr st to the bove, some other org nis tions imbibes s tr tegy th t d pts their dvertising mess ges to the specific v lues of p rticu l r cultures. A very good ex mple here would be th t of McDon lds, which tries to loc lize its dvertising to consumers in e ch of the cross-cultur l m rkets in which it oper tes. Fr meworks for ssessing multin tion l str tegies Multin tion l m rketers f ce the ch llenge of cre ting m rketing nd dvertising progr ms c p ble of communic ting effectively with diversity of t rget m rket s. To do lot of fr meworks h ve been developed to which m rketing nd dvertis ing efforts should be either glob lized or loc lized. 11.623.3 Copy Right: R i University 247

F ctors St ge One St ge two St ge three St ge Four St ge Five Description Loc l consumers h ve he rd or re d of br nd m rketed elsewhere but c nnot get it t home. Loc l consumers view br nd m de elsewhere s foreign, m de in p rticul r country but loc lly v il ble. Loc l consumers ccord import ed br nd n tion l st tus; th t is, its n tion l origin is known but does not ffec t their choice. Br nd owned by foreign comp ny is m de either wholly or p rtly domestic lly nd h s come to be perceived by loc ls s loc l br nd; its forei gn origins m y be remembered but the br nd h s been dopted. Br nd h s lost n tion l identity nd consumers everywhere see it s borderless or glob l; not only c n people not identify where it comes from but lso they never sk this question. Key Terms CONSUMER BEHAVIOUR Cross-Cultur l Consumer Beh viour Cross cultur l m rketing Glob l Str tegy Mixed Str tegy Loc l str tegy World Br nd Ad ptive Glob l m rketing Article #1 PS nd QS of Glob l Br nds Glob l m rketers first need to dr ft thorough br nd str tegy, then ensure cons istency, while preserving the utonomy of loc l m n gement. Fig 10.3 Product recognition continuum

An Indonesi n shop st cked with Nestle products, br nd which h s successfully tr nscended region l b rriers. The second nd concluding p rt of this column foc uses on more issues th t m rketers need to keep in mind when t king their br nds glob l. The Br nd Offer A LOGICAL br nd offer should provide simil r communic t ion cross ll the countries. Long-term br nd loy lty is kin to getting the con sumer to m rry br nd nd requires th t the m rketer provide the s me inform ti on one needs to decide upon m rrying person, i.e., inform tion bout the physi c l ttributes, the style nd the ch r cter of the br nd. Questions on physic l ttributes like how well the product performs nd how competitive its price is m y require some d pt tion to loc l m rket conditions nd culture: An Americ n l undry detergent m y not s tisfy n Indi n housewife, used to w shing her l undr y t ne r-boiling temper tures. Physic l ttr ction is in gre t p rt determined by culture. Questions on style, like how the mess ge on physic l ttributes is d elivered, re even more rooted in culture. The British, whose d culture grew fr om m g zines, w nt h rd f cts. Indi n culture is inclined to im gery nd m y res ist h rdsell. Other Asi ns re sensitive to symbolism, Americ ns to humour nd s o on. There is some truth in these gener lities, even though the rules re often successfully broken. Copy Right: R i University 248 11.623.3

Activity 4 B sed on the product recognition continuum given bove, Identify two ex mples e ch for the v rious st ges mentioned. Also justify the re sons on your choice of ex mples.

The ch r cter of the communic tion is the key element of br nding nd the b ckbo ne of glob l br nding str tegy. It requires n bsolute consistency of purpose which one c n only chieve by h ving t the outset very cle r ide of the set of v lues to be linked to the br nd. A McDon lds commerci l from the US, Germ ny , Br zil or J p n is re dily recognised s one, even though it m y h ve been pro duced loc lly, nd by different d gency. It will consistently convey some or ll of the v lues (service, friendliness, underst nding of f mily life) which re tt ched to the comp ny. Glob l m rketers need to first write thorough nd sust in ble br nd str tegy which lists the ch r cter intended for the br nd. The n they should set up n org nis tion which c n t ctfully direct, te ch nd ev lu te the br nds communic tion to ensure consistency, while t the s me time preser ving the utonomy ( nd thereby the qu lity) of loc l m n gement. A thorough unde rst nding of the influence of br nds is necess ry while formul ting glob l br nding str tegy. Tod ys le ding br nds re person lities in their own right nd r e well known in ll societies nd cultures s film heroes, c rtoon ch r cters, s ports st rs or gre t le ders. In Asi , Coc -Col , Se n Connery, Nestle, Sony, B tm n, Mercedes nd Mich el J ckson re equ lly well known. Thous nds of people r el te to br nd person lities in the s me w y s they do to hum n person lities. There is, of course, psychologic l b sis to this nd the psychology behind br nds re lly stems from C rl Jungs work where he described the four functions of th e mind - thinking, sens tion, feeling nd intuition. T ngible Benefits of Glob l Br nd Building Glob l br nd building dr stic lly reduces m rketing investments. A strong br nd needs lower nd lower levels of increment l investment to sust i n itself over time. A new nd unknown pl yer will h ve to spend two to four time s more th n the m rket le der to chieve the s me sh re of mind. Given the huge difference in business volumes, the pressure of the bottomline is much higher fo r n unest blished pl yer. Glob l br nd building f cilit tes long r nge pl nning . The bility of the m n gers of Lever, Nestl or even homegrown org nis tions suc h s Wipro, Hero or TVS to t rget nd budget prim ry s les would be infinitely s impler th n for someone responsible for rel tively unest blished br nd in the glob l m rket. Strong glob l br nds lw ys ccount for more st ble businesses. G lob l br nd building comm nds premium. As long s there is distinct v lue t t ched to your offering, the consumer will lw ys be willing to p y more for it. Th t is the only re son why n unknown br nd c lled Tit n could comm nd subst nti l premium over HMT. Th t is the s me re son why br nd such s BPL t hi gher cost be t the stuffing out of comp nies such s Ak i, Sony nd Philips in t he CTV w rs. Glob l br nd building builds entry b rriers. Hum n beings s spec ies love st tus quo. Therefore, br nd which is entrenched in the consumers mind is very difficult to dislodge. If nothing else, the sheer inerti will override ny cooing nd wooing th t the new entr nt would m ke. This consequently implie s st bility of business nd therefore st bility of revenue. Glob l br nd building incre ses c sh flow efficiency: Tod y, Lever distributor le ves signed checkbooks with the comp ny to be filled in on m teri l disp tch. This is true for most glob l br nds with strong fr nchises. Glob l br nd buildi ng lso incre ses v lue of the business due to the intern tion l presence. Phill ip Morris bought Kr ft from Gener l Foods in 1991 for $13 billion. More th n thr ee times its book v lue. Coc -Col p id $60 million to cquire Thums-Up from P r le. Neither buyer h d ny l cun e in m nuf cturing, fin nce or hum n resources. They merely bought business with very powerful br nd equities nd therefore p id more th n the net worth of the businesses. Str tegic Implic tions There is n ssumption th t the world is becoming homogenised; yet n tion l nd sub-region l cultures do exist. This m kes glob l br nding tough ch llenge nd one th t is h ndled differently from org nis tion to org nis tion. Some comp nies pursue str tegies b sed upon the identific tion of common elements mong countries, whilst others find it more profit ble to d pt nd djust ccording to specific condit ions in v rious m rkets. There re five b sic propositions th t glob l br nd m n ger h s to t ke note of while developing str tegy t the glob l level. Glob l Orient tion t the Corpor te Level M ny m rketers oper te in glob l m rkets wit h str tegy still rooted in the domestic m rket. The str tegy needs to embr ce

the opportunities nd the costs of working in multiple countries. The m rketer h s to look for his competitive dv nt ge outside the country of origin. Wh t wil l llow one to compete nd win in str nge country? Are the product nd the br nd in p rticul r needed in nother culture? Only c reful consider tion of these questions will cre te the right pl tform for glob l br nding str tegy. A Glob l M n gement Te m Glob l m n gement te ms tend to reflect the environment in whi ch they oper te. They re m de up of represent tives of v rious cultures nd b c kgrounds in their respective countries. As result, this type of te m is ch l lenge to m n ge. The work culture nd p ttern v ries cross countries. The key t o building glob l te m is to h ve it st rt by working on something of subst nc e together - to cre te nd build common vision of the future. Th t will glob l ise the comp nys str tegy while est blishing new working rel tionships cross the globe. The D.U.M.B. Test for Glob l Br nd Potenti l Glob l br nding is not simp ly m rketing or dvertising progr mme. It is w y of doing business th t tr n scends the requirements of dvertising nd ffects every spect of the business enterprise. A br nd is very v lu ble commodity in ny m rket - usu lly comm nd ing premium price nd signific nt loy lty mong its regul r users due to the p roposed promise of perform nce - one th t is consistently delivered t re son ble v lue nd meets perceived need mong its consumers. CONSUMER BEHAVIOUR 11.623.3 Copy Right: R i University 249

A simple test to see if the comp ny h s strong glob l br nd potenti l is to see if the br nd meets the D.U.M.B. test. Is the br nd promise Demonstr ble? C n con sumers see the promise of perform nce in ction? Is it Unique nd different from loc lly v il ble ltern tives? Is the promise being m de Me ningful? It doesnt help if the br nd cl ims to offer something th t isnt import nt to the loc l cons umers. Is the promise Believ ble? If they dont buy the cl im they wont buy the pro duct. Technology s En bler If the br nd m n ger m kes bold promise of perform nce with his br nd he must be ble to deliver. Th t requires some en bling techn ology th t c n c rry the br nd round the world. The en bling technology should b e propriet ry, h ve inherent b rriers to direct competitive response, nd be pp lic ble to every m rket the br nd enters. Identifying nd deploying the en bling technology m y be the single most ch llenging m n gement t sk. Ad pt bility to Loc l M rkets A consistent compl int of glob l m n gement te ms is th t home m rk et m n gement tends to ignore the unique ch r cteristics of loc l m rkets. Succes sful glob l products often require t rgeting product g inst different consu mer udience, using signific ntly different m nuf cturing progr mme, or utilis ing different distribution ch nnels. These decisions should be the province of t he loc l m n ger, s long s the glob l br nd nd its en bling technology re no t viol ted. Soci l nd cultur l ch nges provide f vour ble pl tform for glob l br nds. The concept of cultur l block ge is gone from the m rket. It is the glo b l lifestyle, dissemin tion of inform tion through Internet nd more customis t ion of the br nds to c ter to the t ste of the loc l customer th t h s m de m ny multin tion l comp nies successful in different m rkets. The m rketer c nnot re m in shy to this opening up of v rious economies to the glob l business order. W h t needs to be done for m king glob l br nd success is to h ve glob l vis ion with n intern tion lly tr nsfer ble sset b se nd glob l te m to underst nd nd oper te in cultur lly divergent m rkets to re p the benefits of sc le th rough strong v lue proposition nd br nd ssoci tion. Points To Rmember CONSUMER BEHAVIOUR The Imper tive To Be Multin tion l n Glob l Tr de Agreements EU NAFTA n Acquiring Exposure to Other Cultures n Country-of-origin Effects

Chinese consumers consider Sony high-end nd high-qu lity, but m y refuse to buy due to nimosity tow rd J p n High- nimosity consumers own fewer J p nese products th n low- nimosity consumer s 250 Copy Right: R i University 11.623.3

Country of Origin Effects: Neg tive n M ny

nd Positive

CONSUMER BEHAVIOUR T ble 14.2 Some Comp risons Cross-cultur l m rketing is defined s the effort to determine to wh t extent the consumers of two or more n tions re simil r or different. This will f cilit te m rketers to underst nd the psychologic l, soci l nd cultur l spects of forei gn consumers they wish to t rget, so s to design effective m rketing str tegies for e ch of the specific n tion l m rkets involved. Chinese Cultur l Tr its n Centered on Confuci n doctrine n Submissive to uthori ty n Ancestor worship n

Americ n Cultur l Tr its n Individu l centered n Emph sis on selfreli nce n Prim ry f ith in r tion lism n V lues individu l person lity Issues in Cross-Cultur l Consumer An lysis n Simil rities nd Differences Among People n Time Effects n The Growing Glob l Mi ddle Cl ss n Accultur tion Rese rch Techniques Accultur tion Accultur tion

11.623.3 Copy Right: R i University 251

The le rning of

new foreign culture.

V lues

persons duty to f mily nd st te

CONSUMER BEHAVIOUR 252 T ble 14.4 B sic Rese rch Issues in Cross-Cultur l An lysis FACTORS Differences in l ngu ge nd me ning Differences in m rket segment tion o pportunities EXAMPLES Words or concepts m y not me n the s me in two different c ountries. The income, soci l cl ss, ge, nd sex of t rget customers m y differ dr m tic lly in two different countries. Two countries m y differ subst nti lly in the level of consumption or use of products or services. Altern tive Multin tion l Str tegies: Glob l Versus Loc l n F voring World Br nd n Ad ptive Glob l M rketing n Fr mework for Assessing Multin tion l Str tegies Glob l Loc l Mixed Differences in consumption p tterns

Two n tions m y use or consume the s me product in very different w ys. T ble 14.4 continued FACTORS Differences in the criteri for ev lu ting products nd services Differe nces in economic nd soci l conditions nd f mily structure EXAMPLES The benefit s sought from service m y differ from country to country. The style of f mily de cision m king m y v ry signific ntly from country to country. The types nd qu l ity of ret il outlets nd direct -m il lists m y v ry gre tly mong countries. T he v il bility of profession l consumer rese rchers m y v ry consider bly from country to country. World Br nds Differences in m rketing rese rch nd conditions Differences in m rketing rese rch possibilities

Copy Right: R i University 11.623.3

Products th t re m nuf ctured, p ck ged, of the country in which they re sold.

nd positioned the s me w y reg rdless

Differences in the perceived benefits of products

nd services

CONSUMER BEHAVIOUR T ble 14.6 A Fr mework for Altern tive Glob l M rketing Str tegies PRODUCT STRATEGY COMMUNICATON STRATEGY STANDARDIZED COMMUNICATIONS STANDARDIZED PRODUCT Glob l str tegy: Uniform Product/ Uniform Mess ge Mixed str tegy: Custom ized Product/ Uniform Mess ge LOCALIZED COMMUNICATIONS Mixed Str tegy: Uniform P roduct/ Customized Mess ge Loc l Str tegy: Customized Product/ Customized Mess g e Mist ke S mples n Sn pple: LOCALIZED PRODUCT J p nese consumers preferred cle r, less sweet iced te n Oreos: J p nese consum ers only w nted to e t the b se - no cre m. n Ike : Americ n windows re t ller th n Europe n windows. M rketing Mist kes: A F ilure to Underst nd Differences n Product Consider Color n

n Me nings of Yellow U.S. - w rmth Fr nce - fidelity 11.623.3 Copy Right: R i University 253

Me nings of Blue Holl nd w rmth Ir n - de th Sweden coldness Indi

Problems n Promotion l Problems n Pricing

nd Distribution Problems - purity

CONSUMER BEHAVIOUR LESSON 30: TUTORIAL 1. Discuss the import nce of subcultures in segmenting the Indi n m rket for foo d products. Divide Indi into four regions comprising North, South, West nd E s t nd then proceed further 2 . Summ rize n episode of weekly television serie s th t you w tched recently. Describe how the progr m tr nsmitted cultur l belie fs, v lues, nd customs. 254 Copy Right: R i University 11.623.3

2b. Select nd describe three commerci ls th t were bro dc st during the progr m mentioned in the previous question. Do these commerci ls cre te or reflect cult ur l v lues? Expl in you nswers. 3. Using one of the subculture c tegories th t you h ve studied in the lesson, iden tify group th t c n be reg rded s subculture within your university or coll ege. . Describe the norms, v lues, nd beh viours of the subcultures members. b. Interview five members of th t subculture reg rding ttitudes tow rds the use o f credit c rds. c. Wh t re the implic tions of your findings m rketing credit c rds to the group you selected? CONSUMER BEHAVIOUR 11.623.3 Copy Right: R i University 255

UNIT IV CONSUMER DECISION-MAKING CHAPTER 11 : OPINION LEADERSHIP This person is the opinion le der nd m y become n opinion receiver. Individu l s who ctively seek inform tion nd dvice bout products re often c lled opini on seekers. These opinion le ders re very often p rt of the soci l groups nd lso h ve soci l communic tion network. The biggest dv nt ge of the inform l w ord -of-mouth communic tion is th t it is inform l nd interperson l in n ture nd this t kes pl ce between people who re not directly ssoci ted with the comm erci l selling source or the firm. Very often, we c n see th t the form l word-o f-mouth communic tion is more influenti l th n m ss dvertising in determining w hich product or br nd is bought. The word-of-mouth communic tion c n either be f ce-to-f ce communic tion or over the telephone communic tion. HEDONIC BENEFITS Decre se risk of new beh viour Incre se confidence of choice De cre sed cognitive disson nce Incre se likelihood of ccept nce by desired grou p or individu l Feeling of power Objectives After studying this lesson you should be ble to Underst nd the me ning of Opinion le dership Differenti te opinion le ders nd o pinion seekers Bring out the profile of n Opinion Le der Underst nd the situ ti on of overl p of Opinion RECEIV ER 1. Wh t is opinion Le dership? Opinion Le dership is the process by which one person (opinion le der) inform ll y influences the ctions or ttitudes of others, who m y be opinion seekers or m erely opinion recipients. The definition of opinion le dership emph sizes on inf orm l influence. This inform l flow of opinion rel ted influence b t e nt oo mor p o l i r f r e t word-of-mouth ewe w r e e p e s e e r d o s communic tion.. SENDER FUNCTIONAL BENEFITS More inform tion bout options More credible/reli ble inform tion Less time spent on se rch Enh nced rel tionship with nother individu l Potenti l reciprocity group De

of exch nge nd st tus Incre sed ttention Incre se in number

nd prestige of influencing others beh viours Enh nced position within cre sed doubt bout ones own beh viours

LESSON 31: INTRODUCTION TO OPINION LEADERSHIP Introduction In this lesson we de l with n issue of consider ble import nce to consumers nd m rketers like- the inform l influence th t others h ve on consumers beh viour nd the dyn mic processes th t imp ct consumers beh viour. We will ex mine the n ture nd dyn mics of the influence th t friends, neighbors, nd the cqu int nce s h ve on our-consumer rel ted d c s o s T i i f u n ei o t nc l e e i i n . h s n l e c s f e word-of-mouth communic ld tions or the opinion le dership proce ss. We lso consider the person lity nd motiv tions of those who influence, i.e ., opinion le ders nd those who re influenced, i.e., opinion receivers. We wil l lso bring out profile of Opinion le der nd lso identify situ tions where there is overl p of opinion nd lso the frequency of overl p. CONSUMER BEHAVIOUR

of individu ls with simil r beh viours Incre sed cohesion within group S tisf ct ion of verb l expression Fig 31.1 Benefits of word-of-mouth Activity 1 1 . Why is n opinion le der more credible source of product inform tion th n n dvertisement for the s me product?

256 Copy Right: R i University 11.623.3

You would h ve observed th t one of the p rties in word-ofmouth encounter usu lly offers dvice or inform tion bout product or service, such s which of se ver l br nds is best, or how p rticul r product m y be used.

CONSUMER BEHAVIOUR Le rn how to use or consume product Le rn wh t products re new in the m rketp l ce Buy products th t h ve the pprov l of others, thereby ensuring ccept nce Fig 31.2 Motiv tions of Opinion Le ders nd Opinion Receivers Activity 2 Describe two situ tions in which you served s n opinion le der nd two situ ti ons in which you sought consumption rel ted dvice/inform tion from n opinion l e der. Indic te your rel tionship to the persons with which you inter cted. Are t he circumst nces during which you eng ged in word-of-mouth communic tions consis tent with those in the m teri l th t we studied? Expl in. 11.623.3 Copy Right: R i University 257

Now, usu lly, in word-of-mouth situ tion, we must h ve one p rty, which offers dvice, or inform tion bout product or service such s which of sever l br n ds is best. This person is the opinion le der. But, this person m y become n op inion receiver when nother product or service is brought up s p rt of the disc ussion. So, we c n s y th t Individu ls who seek inform tion nd dvice bout pr oducts sometimes re opinion seekers. OPINION LEADERS Self-Improvement Motiv tions Reduce post purch se uncert inty or disson nce G in ttention or st tus Assert superiority nd expertise Feel like n dventurer Experience the power of Converting others Product-Involvement Motiv tions Express s tisf ction or diss tisf ction with product or service Soci l I nvolvement Motiv tions Express neighborliness nd friendship by discussing produ cts or services th t m y be useful to others Mess ge Involvement Motiv tions Exp ress ones re ction to stimul ting dvertisement by telling others bout it OPIN ION RECIEVERS Reduce the risk of m king purch se commitment Reduce rese rch ti me

Me surement of Opinion Le dership Wh t methods or techniques c n we use to me sure opinion le dership? There re f our popul r methods to me sure opinion le dership: ) b) c) d) The self-design t ing method. The sociometric method. The key inform nt method. The objective meth od. The objective method is much like controlled experimentit involves pl cing new pr oducts or new product inform tion with selected individu ls nd then tr cing the resulting Web of interperson l communic tion concerning the relev nt product(s). CONSUMER BEHAVIOUR 2. Ch r cteristics of Opinion Le ders Let us now t ke look t the m in ch r cteristics of opinion le ders. Some of t he m in fe tures th t ll opinion le ders h ve re: 1. Opinion le ders re perce ived to be highly credible sources of product rel ted inform tion. Opinion le de rs re persons who re considered to be knowledge ble. They often voice their op inion b sed on first h nd inform tion. Opinion le ders re greg rious people nd lso h ve lot of experience: Their experience s shopper nd user sets them p rt from other people. Since most of their dvice is b sed on first h nd expe rience, opinion receivers h ve lot of confidence in their dvice. Besides, bec use of their greg rious n ture, people enjoy inter cting with them. Opinion le ders usu lly provide unbi sed inform tion, th t is they provide both f vour ble nd unf vor ble inform tion to the opinion seekers: This dds credibility to the m nd opinion seekers h ve f ith th t they re receiving correct inform tion. Op inion le ders re both sources of inform tion nd dvice Opinion le ders h ve go t gre ter exposure to the medi , especi lly in their re of le dership Opinion le ders tend to be consumer innov tors Opinion le ders h ve got some person l pr oduct specific ch r cteristics like person lity tr its, soci l st tus nd demogr phic ch r cteristics

Let me expl in e ch of the methods in gre ter det ils: In the self-design ting m ethod, respondents re sked to ev lu te the extent to which they h ve provided others with inform tion bout product c tegory or specific br nd or h ve other wise influenced the purch se decisions of others. The self-design ting technique is used more often th n other methods for me suring opinion le dership bec use consumer rese rchers find it e sy to include in m rket rese rch questionn ires. Bec use this method relies on the respondents self-ev lu tion, however, it m y be open to bi s. The sociometric method me sures the person-to-person inform l com munic tion of consumers concerning products or product c tegories. In this metho d, Respondents re sked to identify: i) The specific individu ls (if ny) to wh om they provided dvice or inform tion bout the product or br nd under study. T he specific individu ls (if ny) who provided them with dvice or inform tion b out the product or br nd under study. 2. 3. 4. 5. 6. 7. ii) Individu ls design ted by the prim ry respondent re tent tively cl ssified s o pinion le ders. Any int ct community provides n opportunity to me sure nd ev l u te the flow of word-of-mouth communic tions concerning new product nd its s ubsequent imp ct on product tri l. A key inform nt is person who is keenly w re or knowledge ble bout the n ture of soci l communic tions mong members of specific group. The key inform nt is sked to identify those individu ls in the group who re most likely to be opinion le ders. The key inform nt does not h v

e to be member of the group under study. This rese rch method is rel tively in expensive, bec use it requires th t only one individu l or t most sever l indiv idu ls be intensively interviewed, where s the self-design ting nd sociometric methods require th t consumer s mple or entire community be interviewed. The k ey inform nt method, however, is gener lly not used by m rketers bec use of the difficulties inherent in identifying n individu l who c n objectively identify opinion le ders in relev nt consumer group. The key inform nt method would see m to be of gre test potenti l use in the study of industri l or institution l op inion le dership. 258 3. A profile of Opinion Le ders Now who c n be opinion le ders. So we need to study profile of opinion le de r so th t we c n identify them. As you c n underst nd, it would be very diffic ult job to ex ctly identify, profile for th t m tter, but we h ve tried to h v e gener lized profile s shown in figure 11.1 Gener l ttributes cross product c tegories Innov tiveness Willingness to t lk Self-Confidence Greg riousness Cognitive differenti tion C tegory specific ttri butes Interest Knowledge Speci l-interest medi exposure S me ge S me soci l st tus Soci l exposure outside group Fig 31.3 Profile of Opinion Le ders Copy Right: R i University 11.623.3

Activity 3 . N me some of the potenti l c ndid tes to be considered s celebrities for pro moting the following products/services nd concepts: i. He d che remedy ii. Soft drink iii. B by food iv. Wom ns m g zine v. Sne kers vi. Web port l vii. B nk vi ii. Courier service ix. He lth clinic x. Airline service b. Wh t re your re sons for selecting these celebrities? CONSUMER BEHAVIOUR 11.623.3 Copy Right: R i University 259

The Interperson l Flow of Communic tion You might h ve observed th t ide s often flow from r dio nd print medi to opin ion le ders nd from them to the gener l public. This is the concept behind the two-step flow of communic tion This so-c lled two-step flow of communic tion the ory portr ys opinion le ders s direct receivers of inform tion from imperson l m ss-medi sources, which in turn tr nsmit ( nd interpret) this inform tion to t he m sses. This theory views the opinion le der s middlem n between the imper son l m ss medi nd the m jority of society. The illustr tion c n be s seen be low: CONSUMER BEHAVIOUR c) Multistep Flow of Communic tion Theory A more comprehensive model of the interpe rson l flow of communic tion depicts the tr nsmission of inform tion from the me di s Multistep flow. The revised model t kes into ccount the f ct th t info rm tion nd influence often re two-w y processes in which opinion le ders both influence nd re influenced by opinion receivers. The figure below presents n illustr tion of the multi-step flow of communic tion theory. Activity 4 True/F lse Questions 1. Opinion le dership nd word of mouth communic tions re very different. 2. Once n opinion le der, lw ys n opinion le der, in ny othe r product c tegory. 3. 4. 5. 6. 7. 8. 9. An opinion le der m y be n opinion see ker in nother product c tegory t the s me time. Opinion le dership only t kes pl ce in f ce-to-f ce setting. Opinion le ders never g in nything from dispen sing dvice. Opinion le ders only dispense positive product inform tion Opinion le ders re more likely to dispense positive product inform tion. Opinion le der s only dispense inform tion but do not give dvice. Opinion le dership is br nd specific. Opinion Le dership nd the Firms M rketing Str tegy At the end let us see how opinion le dership ffects n org niz tions m rketing s tr tegy! M rketers h ve long been w re of the power th t opinion le dership exe rts on consumers preferences nd ctu l purch se beh vior. M ny m rketers look fo r n opportunity to encour ge word-ofmouth communic tions nd other f vor ble in form l convers tions. New product designers t ke dv nt ge of the effectiveness of word-of-mouth communic tion by deliber tely designing products to h ve word-o

1. Frequency nd Overl p of Opinion Often we c n see th t more th n h lf of the people studied in ny consumer rese rch project re cl ssified s opinion le ders with respect to some self-selected product c tegory. The frequency of consumer opinion le dership suggests th t pe ople re sufficiently interested in t le st one product or product c tegory to t lk bout it nd give dvice concerning it to others. Here we h ve very inter esting question. Do opinion le ders in one c tegory in one c tegory tend to be o pinion le ders in nother c tegory lso? And, m rket rese rch suggests the exist ence of speci l c tegory of opinion le ders, the m rket m ven. These re the c onsumers who possess wide r nge of inform tion bout m ny different types of p roducts, ret il outlets, nd other dimensions of m rkets. Let us discuss nd fin d out more bout m rket m vens. Some import nt ch r cteristics ssoci ted with m rket m ven re: ) They both initi te discussions with other consumers nd resp ond to requests for m rket inform tion. b) Although they ppe r to fit the profi le of opinion le ders in th t they h ve high levels of br nd w reness nd tend to try more br nds, unlike opinion le ders their influence extends beyond the re lm of high-involvement products. M rket m vens re lso distinguish ble from ot her opinion le ders bec use their influence stems not so much from product exper ience but from more gener l knowledge or m rket expertise th t le ds them to n e rly w reness of wide rr y of new products nd services.

10. An opinion le der m y become one in order to reduce ny post purch se disson nce they might be feeling. 11. The most popul r me surement method of opinion l e dership is the self-design ting method. 12. Opinion le ders usu lly belong to the s me ge group s their opinion receivers. 260 Copy Right: R i University 11.623.3

f-mouth potenti l. A new product should give customers something to t lk

bout.

Proof of the power of word-of-mouth is the c ses in which critics h te movie nd the viewing public like it nd tell their friends. In inst nces where inform l word of mouth does not spont neously emerge from the uniqueness of the product or its m rketing str tegy, some m rketers h ve deliber tely ttempted to stimul te or to simul te opinion le dership. Progr ms Designed to Stimul te Opinion Le dership Advertising nd promotion l progr ms designed to persu de consumers to t ell your friends how much you like our product re one w y in which m rketers enc our ge consumer discussions of their products or services. The objective of pr omotion l str tegy of stimul tion is to run dvertisements or direct m rketing progr m th t is sufficiently interesting nd inform tive to provoke consumers i nto discussing the benefits of the product with others. Advertisements Simul tin g Opinion Le dership A firms dvertisements c n lso be designed to simul te prod uct discussions by portr ying people in the ct of inform l communic tion. Word-of-Mouth M y Be Uncontroll ble In f ct, m ny times it might be more fruitful to cre te product-specific opinion le ders. Key Terms CONSUMER BEHAVIOUR Opinion Le der Opinion Le dership Opinion receiver Opinion seeker Two-step flow of communic tion theory Multistep flow of communic tion M rket m vens Points To Remember Inform l communic tion is difficult to control. Neg tive comments, frequently in the form of rumors th t re untrue, c n sweep through the m rketpl ce to the de triment of product. Indeed, study by the White House Office of Consumer Aff irs found th t 90 percent or more of unh ppy customers would not do business g in with the comp ny th t is the source of their diss tisf ction. E ch diss tisfi ed customer will sh re his or her griev nce with t le st nine other people, nd 13 percent of unh ppy customers will tell more th n 20 people bout the neg tiv e experience. Some common rumor themes re: The product w s produced under uns n it ry conditions. The product cont ined n unwholesome or cultur lly un ccept bl e ingredient. The product functioned s n undesir ble depress nt or stimul nt. The product included c ncer-c using element or gent. The firm w s owned or in fluenced by n unfriendly or misguided foreign country, government l gency, or religious cult. Some m rketers h ve used toll-free telephone numbers in n ttem pt to he d off neg tive word-of-mouth, displ ying n 800 number prominently on t heir products l bels. A p rticul rly ch llenging form of neg tive word-of-mouth c n be gener ted tod y over the Internet, when diss tisfied consumer decides to p ost his or her story on bulletin bo rd for ll to see. Cre tion of Opinion Le ders M rketing str tegists gree th t promotion l efforts would be signific ntly improved if they could segment their m rkets into opinion le ders nd opinion r eceivers. 11.623.3 Opinion Le dership The process by which one person (the opinion le der) inform lly influences the c onsumption ctions or ttitudes of others who m y be opinion seekers or opinion recipients. Copy Right: R i University 261

CONSUMER BEHAVIOUR 262 Wh t is Opinion Le dership? Figure 15.1 F ctors Le ding to Neg tive Word-of-Mouth Beh vior Individu l F ctors + + + Neg tive WOM Likelihood of Repurch se Opinion Le der Opinion Receiver Attitudin l F ctors Product Involvement Opinion Seeker Situ tion l F ctors + Re sons for the Effectiveness of Opinion Le dership n n n n n Motiv tions Behind Opinion Le dership n The Credibility Positive nd Neg tive Product Inform tion Inform tion nd Advice Opi nion Le dership Is C tegorySpecific Opinion Le dership Is Two-w y Street Needs of Opinion Le ders n The Needs of Opinion Receivers n Purch se P ls n Surr og te Buyers versus Opinion Le ders Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR The Needs of Opinion Le ders n n n n T ble 15.3 A Comp rison of Motiv tions (Excerpts) OPINION LEADERS OPINION RECEIVERS Reduce the risk of m king purch se commitmen t Reduce se rch time SELF-IMPROVEMENT MOTIVATIONS Reduce post-purch se uncert in ty or disson nce G in ttention or st tus Assert superiority nd expertise Feel like n dventurer PRODUCT-INVOLVEMENT MOTIVATIONS Express s tisf ction or diss tisf ction with product or service Le rn wh t products re new in the m rketpl ce Self involvement Soci l involvement Product involvement Mess ge involvement

The Needs of Opinion Receivers n New-product or new us ge inform tion n Reduction of perceived risk n Reduction of se rch time n Receiving the pprov l of the opinion Me surement of Opinion Le dership n Self-Design ting Method n Sociometric le der Method n Key Inform nt Method n Objective Method 11.623.3 Copy Right: R i University 263

Le rn how to use or consume

product

CONSUMER BEHAVIOUR 264 T ble 15.5 Me suring Opinion Le dership OPINION LEADERSHIP LEADERSHIP MEASUREMENT METHOD DESCRIPTION OF METHOD SAMPLE QU ESTIONS ASKED QUESTIONS ASKED T ble 15.6 Profile of Opinion Le ders GENERALIZED ATTRIBUTES ACROSS PRODUCT CATEGORIES Innov tiveness Willingness to t lk Self-confidence Greg riousness Cognitive differenti tion CATEGORY-SPECIFIC A TTRIBUTES Interest Knowledge Speci l-interest medi exposure S me ge S me soci l st tus Soci l exposure outside group SELF-DESIGNATING METHOD E ch respondent is sked series of questions to determine the degree to which he or she perceives himself or herself to be n opinion le der. Do you influence other people in their selection of products? SOCIOMETRIC METHOD

T ble 15.5 continued OPINION LEADERSHIP MEASUREMENT METHOD METHOD DESCRIPTION OF METHOD DESCRIPTION M ETHOD SAMPLE SAMPLE QUESTIONS QUESTIONS ASKED KEY INFORMANT METHOD

Who re the most influenti l people in the group? M rket M ven M ven OBJECTIVE METHOD

H ve you tried the product? Individu ls whose influence stems from gener l knowledge or m rket expertise t h t le ds to n e rly w reness of new products nd services. Copy Right: R i University 11.623.3

Artifici lly pl ces individu ls in ures results of their efforts.

position to

ct

s opinion le ders nd me s

C refully selected key inform nts in ion le ders.

soci l system

re

sked to design te opin

Whom do you

sk?Who sks you for info

bout th t product c tegory?

Members of soci l system whom they go for dvice.

re sked to identify to whom they give

dvice nd to

CONSUMER BEHAVIOUR The Interperson l Flow of Communic tion n Two-Step Figure 15.5 Multistep Flow of Communic tion Theory Step 2

A communic tion model th t portr ys opinion le ders s direct receivers of infor m tion from m ss medi sources who, in turn, interpret nd tr nsmit this inform tion. n Multistep Opinion Opinion Le ders Le ders Step 3 Opinion Opinion Receivers/ Receivers/ Seekers Seekers Step 1b Flow Inform tion Inform tion Receivers Receivers A revision of the tr dition l two-step theory th t shows multiple communic tion flows Figure 15.4 Two-Step Flow of Communic tion Theory Step 1 M ss Medi M ss Medi Opinion Opinion Le ders Le ders Step 2 Opinion Opin ion Receivers Receivers (the m sses) (the m sses) Issues In Opinion Le dership nd M rketing Str tegy n Progr ms Designed to Stimul te Opinion Le dership n Advertisements Stimul ting Opinion Le dership n Word of Mouth M y Be Uncontroll ble n Cre tion of Opinion Le ders

11.623.3 Copy Right: R i University 265

Flow M ss Medi M ss Medi Step 1

CONSUMER BEHAVIOUR LESSON 32: DIFFUSION PROCESS Introduction We s consumers lw ys find new innov tion-ide or product or even new service ttr ctive. However, for the firm which is trying its h nd t the new innov tio n, there is lw ys question h nging round How f st will the diffusion of the i nnov tion t ke pl ce? This is to s y th t ny innov tion h s got n element of ri sk involved. The firm will introduce new concept or new product fter n int ensive rese rch is c rried out by it. Thus we see th t the process of diffusion of innov tion is very critic l to firm. In this lesson we will study the conce pt of diffusion nd the process of diffusion in det ils. Some new product innov tion, which were e sily ccepted by customers New Product 1. V cuum cle ner (Eurek Forbes) Benefit Communic ted Comp ct, e sy to use v cuum cle ner to keep home cl n nd tidy, home delivery fter demonstr tion. Port l piece of s fety equipment-fire extinguisher. A convenient low cost ltern tive to the tr dition l met l or concrete w ter t nk Premixed scouring so lution in the form of b r inste d of w ste prone powder. A mosquito repellentwhi ch h s no smoke, no fumes, no sh, no cre m, no mosquitos Drier, more comfort bl e th n cloth, dispos ble di per for b bies.

Underst nd the concept of diffusion nd doption of new products/innov tion. Exp l in the process of diffusion. Apply the concepts of v rious dopter c tegories. 1. Diffusion The first question here is wh t is diffusion? Thus let us try to define diffusio n Diffusion is m cro process concerned with the spre d of new product n inn ov tion from its source to the consuming public. Adoption is micro process th t focuses on the st ges through which n individu l consumer p sses when decidin g to ccept or reject new product. Diffusion of innov tions is the process by which ccept nce of n innov tion (new products or new service or new ide ) is s pre d by communic tion (m ss medi , s les people, inform l convers tion) to memb ers of the t rget m rket over period of time. The four b sic elements re incl uded in this definition. Fig 12.1 Ex mples of new products/services e sily ccepted by consumers 2. The Diffusion Process Now let us try to underst nd how the diffusion process t kes pl ce. The diffusio n process Spre ding of n innov tions ccept nce nd use through popul tion Diff usion is the process by which the ccept nce of n innov tion ( new product, new service, new ide or new pr ctice) is spre d by communic tion (m ss medi , s lespeople, or inform l convers tions) to members of soci l system ( t rget m rket) over period of time. The four b sic elements of this process re: 1. Th e Innov tion: V rious ppro ches which h ve been t ken to define new product o r new service include . Firm-oriented definitions: A firm oriented ppro ch t re ts the newness of product from the perspective of the comp ny producing or m rketing it. When the product is new to the firm it is considered to be new. b. P roduct oriented definitions: Product-oriented ppro ch focuses on the fe tures i nherent in the product itself nd on the effects these fe tures re likely 266

2. Fire extinguisher (Re l V lue) 3. Pl stic w ter t nk (Sintex) 4. Utensil cle ner c ke (Rin c ke) 5. Mosquito repellent m tt (Good Knight) 6. Di per (Huggys)

Objectives After studying this lesson you should be

ble to:

 Copy Right: R i University 11.623.3

to h ve on consumers est blished us ge p tterns. Three types of product innov tio ns could be: Continuous innov tion h ving the le st disruptive influence on est blished p tterns involving the introduction of modified product, r ther th n tot lly new product. E.g., l test version of Microsoft Office; dyn mic lly cont inuous innov tion which m y involve the cre tion of new product or the modific tion of n existing product e.g., dispos ble di pers, CD pl yers; discontinuous innov tions requiring consumers to dopt new beh vior p tterns e.g., TV, f x m chines, Internet c. M rket oriented definitions: Judges the newness of product in terms of how much exposure consumers h ve to the new product. The definition s could be: ( ). A product id considered new if it h s been purch sed by rel t ively sm ll (fixed) percent ge of the potenti l m rket. (b). A product is consid ered new if it h s been on he m rket for rel tively short (specified) period o f time. Consumer oriented definitions: A new product is ny product th t poten ti l consumer judges to be new. Influence of Product Ch r cteristics on diffusion Wh t re the product ch r cter istics th t influence diffusion? The most import nt of them re: A. Rel tive Adv nt ge: The degree to which potenti l customers perceive new product s superi or to existing substitutes is its rel tive dv nt ge. E.g., f x m chine B. Comp tibility: The degree to which potenti l consumers feel new product is consistent with their persistent with their present needs, v lues, nd pr ctices is me s ure of its comp tibility. E.g., CD pl yers C. Complexity: The degree to which new product is difficult to underst nd or use, ffects product ccept nce. D. Tr i bility: Refers to the degree to which new product is c p ble of being on l imited b sis. E. Oper bility: Or Communic bility is the e se with which products benefits or ttributes c n be observed, im gined, or described to potenti l cons umers. Org nis tion Diffusion of Communic tion And Inform tion CONSUMER BEHAVIOUR d. Influencer Activity 1 Expl in s precisely s possible the differences between continuous, dyn mic lly continuous, nd discontinuous innov tions. Give some ex mples of e ch, other th n those mentioned in the text. Consumer Consumer decision process for Innov tion Accept X number Of people Reject X number Of people

2. T ec n l o C mmuni i:n quickly n h hnes f o c t oHow innov tion spre ds through m rket depends to gre t extent on communic tions between the m rketer nd consumers, s well s communic tion mong consumers i.e ., word-of-mouth communic tion. Thus this communic tion will include two types o f communic tion: . Communic tion between m rketers nd consumers b. Communic ti on mong consumers i.e., word of mouth. Consumer inform tion sources f ll into four c tegories:

Demise of Diffusion of Innov tion Fig 12.2 Adoption Process innov tion

nd Diffusion of Innov tion

Person l sources: F mily, friends, neighbors, nd cqu int nces. Commerci l sour ces: s les people, dvertising, s les promotion techniques. Public sources: M ss medi , consumer r ting org nis tions Experiment l sources: Demonstr tion, h ndl ing s mples. 11.623.3 Copy Right: R i University 267

CONSUMER BEHAVIOUR The key point to remember is th t soci l systems orient tion is the clim te in which m rketers must oper te to g in ccept nce for their new products. For ex m ple, in recent ye rs, the World h s experienced decline in the dem nd for red me t. The growing interest in he lth nd fitness throught the n tion h s cre ted clim te in which red me t is considered too high in f t nd c lorie content. At the s me time, the consumption of chicken nd fish h s incre sed, bec use the se foods s tisfy the prev iling nutrition l v lues of gre t number of consumer s. 4. Time: Time perv des the study of diffusion in three distinct but interrel ted w ys: . The mount of purch se time: Purch se time refers to the mount of time th t el pses between consumers initi l w reness of new product or service nd the point t which they purch se or reject it. For inst nce, when the conce pt of Home L nd super m rket w s introduced by Ash Ch v n in Pune, p rt from off ering v riety of qu lity products, lso give n uncondition l gu r ntee of rep l cement or refund, home delivery of ll, even single item telephonic orders t no extr cost. And beyond business, Homel nd lso offers free services like phon e, electricity, credit c rd nd cell phone bill p yments. b. The identific tion of dopter c tegories: The concept of dopter c tegories involves cl ssific ti on scheme th t indic tes where consumer st nds in rel tion to other consumers in terms of time. Five dopter c tegories re frequently used viz., innov tors, e rly dopters, e rly m jority, l te m jority, nd l gg rds. Innov tors E rly Adopters E rly M jority L te m jority L gg rds Venturesome-very e ger to try new ide s; ccept ble if risk is d ring; more cosm opolite soci l rel tionships; communic tes with other innov tors Respect- more i ntegr ted into the loc l soci l system; the persons to check with before doptin g new ide ; c tegory cont ins gre test number of opinion le ders; re role mod els Deliber te- dopt new ide s just prior to the ver ge time; seldom hold le de rship positions; deliber te for some time before dopting Skeptic l- dopt new id e s just fter the ver ge time; dopting m y be both n economic necessity nd re ction to peer pressures; innov tions ppro ched c utiously Tr dition l-the l st people to dopt n innov tion; most loc lite in outlook; oriented to the p st

As depicted in figure 12.2 bove dopter c tegories re gener lly depicted s t king on the ch r cteristics of norm l distribution i.e., bell-sh ped curve t h t describes the tot l popul tion th t ultim tely dopts product. Now let us look t the ch r cteristics of e ch of these c tegories. Figure 12.3 below descr ibes just the s me. Adopter C tegory Description Rel tive percent ge within which the popul tion th t eventu lly dopts 2.5%

Depending on the innov tion or new product, nd the prospective customers, the f irms try to dopt cost effective w y of communic ting with them. 3. The Soci l System: The diffusion of new product usu lly t kes pl ce in soci l setting frequently referred to s soci l system. In our c se, the terms m rket segment nd t rget segment m y be more relev nt th n the term soci l system used in dif fusion rese rch. A soci l system is physic l, soci l, or cultur l environment to which people belong nd within which they function. For ex mple, for new hybr id seed rice, the soci l system might consist of ll f rmers in number of loc l vill ges.

; suspicious of the new 13.5% 34.0% 34.0% 16.0% 100% Figure 12.3 Adopter c tegories Activity 2 Toshib h s introduced n ultr -slim l ptop computer th t weighs two pounds, h s colour screen, nd h s powerful processor into which full-size desktop sc reen nd keybo rd c n be e sily plugged. How c n the comp ny use the diffusion o f innov tions fr mework to develop promotion l, pricing, nd distribution str te gies t rgeted to the following c tegories? . b. c. d. e. 268

Innov tors E rly dopters E rly M jority L te m jority L gg rds 11.623.3 Copy Right: R i University

Fig 12.2 the sequence nd proportion of

dopter c tegories

The r te of doption: The r te of doption is concerned with how long it t kes new product or service to be dopted by members of soci l system i.e., how qu ickly it t kes new product to be ccepted by those who will ultim tely dopt i t. Me ning Time between w reness nd purch se Ex mples If you look t your c rs fue l meter nd it re ds Empty you stop t the next petrol pump you come to. If you r e shopping for your second c r, you m y t ke while to m ke purch se, s long s your present c r is working fine. Innov tors re the first to dopt new pr oduct, nd l gg rds re the l st CONSUMER BEHAVIOUR Type of Time Purch se time Adopter c tegories R te of doption A cl ssific tion scheme th t indic tes where consumer st nds, in rel tion to o thers, when dopting new product How long it t kes new product or service to be dopted by members of soci l system Bl ck- nd-white TVs were dopted by consumers much more quickly th n their m nuf cturers h d envisioned; in contr st, tr sh comp ctors h ve never been widely d opted Fig 12.4 Import nce of Time in the Diffusion process The m rketing objective for l unching new products is to g in wide ccept nce from the m rket s quickly s possible. So s to obt in huge m rket sh re with the new product, m rketers eith er dopt Penetr ting str tegy, i.e., low introductory price to discour ge comp etitors from entering the m rket or go for Skimming str tegy. Role of Person l Influence Person l influence is nother import nt f ctor, which pl ys role in the dopti on process of new products. This refers to wh t effect the st tements m de but new product by one person will h ve on nother persons ch nge in ttitude or prob bility. This me ns th t b sed on the comments or views expressed by ones person l friend or cqu int nce one m y ch nge the decision to dopt new product or innov tion. It is usu lly observed th t consumers nd especi lly women prefer to consult one nothers friends nd v lue the opinions expressed by them bout new products, the qu lity differences mong the different br nds, store t which to purch se to experience shopping nd so on. 11.623.3 Copy Right: R i University 269

Key Terms CONSUMER BEHAVIOUR Consumer innov tors Continuous innov tions Diffusion of innov tions Diffusion pr ocess Discontinuous innov tion Dyn mic lly continuous innov tion Innov tions A d esire to ch llenge the intellect with complex problems nd g in recognition for solving them sp rks innov tion. Money is lso motiv tion, but only to n extent. Why Do People Innov te? Activity 3 Wh t re the m in competitive ch llenges f cing firms in which underst nding of diffusion of innov tions might be useful? LAST time, I det iled how the open source model of softw re works. To rec p, we h ve never-before environment, where people from round the world contribute t heir time nd energy for no monet ry rew rd, using the Internet s meeting poi nt, ll for the joy of seeing their n me s contributor to l rge, import nt project. P rt of the lesson from this story is on the competitive front. Once g in, we h ve situ tion where domin nt gi nt is f cing disruption from the most unlikely of sources, nd is stumbling bec use it c nnot underst nd wh t mot iv tes the ch llenger. However, the more interesting p rt of the story is in how it rel tes to innov tion. The unlikely open source model h s resulted in n inn ov tion explosion of sort never seen before. Sourceforge, key Web site for o pen source softw re, now h s something like 60,000 ongoing softw re projects. Th ts right: 60,000! And this does not even begin to count the number of other Web sites th t host simil r softw re. True, some projects re more or less defunct, nd some re simple me-toos. But even llowing for ll this, there is still hu ge number of ide s th t h ve t ken concrete, us ble sh pe. Any norm l org nis ti on would love to h ve n ide -gener ting m chine like this. So wh ts h ppened her e? Wh t h s sp rked off wh t is prob bly one of the worlds most f scin ting model s ever of innov tion? And c n this be of ny use to norm l, everyd y org nis tio ns in more mund ne businesses? I think it does. In f ct, I would go further nd s y this is truly epoch l experiment being c rried out, nd one th t needs f r more ex min tion by m n gement theorists. But getting b ck to wh t could h ve s p rked it off. None of wh t re tr dition lly thought of s the f ctors driving innov tion were present here. Necessity is the mother of invention, is wh t weve ll been told. But wh t necessity? None of these people re lly needs to develop so ftw re for free. And wh t bout n over ll guiding force? None g in. As I expl ined l st time, nobody owns open source softw re. Neither is there ny over ll o bjective, which decrees which type of project to follow nd which not to follow. Fin lly, nd I think cruci lly, wh tever h ppened to the gospel th t people wil l innov te only if they get p id for it? Cert inly not in this c se. 270 Copy Right: R i University 11.623.3

Non dopter C tegories A cl ssific tion of the non- dopter c tegories would incl ude: . b. c. d. e. The un w re group: Those consumers who re not w re of the new product Symbolic rejectors: Who, though w re of the product, h ve decided g inst buying it. Symbolic dopters: Who know the product will be useful for the m but h ve not tried it. Tri l dopters: Who h ve tried the product nd lso rej ected the s me. Tri l rejectors

All of which should m ke us re-ex mine these fund ment l ssumptions, p rticul r ly two. The first rel tes to why people innov te. And no, money is not the sole nswer. Truly innov tive people, those who will lw ys look for better w y, be it in softw re products or m rketing processes, re motiv ted by money only to cert in extent. For them, the journey itself is n import nt p rt of the rew r d. These re people who love to m tch their intellect g inst tough problems. Wh en the problem is fin lly solved, fin nci l rew rd is welcome ( s lw ys!), bu t wh t they re lly w nt is recognition of their intellectu l bility, nd to be identified s the person who solved knotty problem. Which in turn me ns th t ny innov tion system must h ve rew rd mech nism th t does two key things. Firs t, innov tive contributions need to be form lly recognised, nd not just rew rde d with n occ sion l p t on the b ck. Second, it must move w y from the common current pr ctice of n nnu l, comp ny-wide innov tion w rd to series of ye r -round, function-specific w rds. The second issue is the question of wh t sp rk s innov tion. Cert inly the desire to do something new, but wh t is lso needed is the opportunity to tr nsl te th t desire into ction. There is no doubt th t softw re progr mmers lw ys cr ved recognition, but without the Internet, open s ource softw re could not h ve existed on this sc le. And definitely, the p ce of innov tion th t one sees in open source would not be possible without the Inter net-led quick nd e sy exch nge of ide s. In other words, the innov tion environ ment is critic l, nd th ts second m jor le rning for corpor tes. It is n rti cle of f ith th t m n gers will perform better if their s l ry is linked to perf orm nce, or if the org nis tion deliber tely fosters intern l competition. Yet, without n e sy exch nge of ide s, innov tion is not going to t ke off, nd inte rn l competition encour ges m n gers to keep their ide s to themselves. Perform nce-linked bonuses reduce the incentive to t ke risks. These mech nisms could re sult in m jor divergence between the individu ls objectives nd the org nis tio ns needs. None of which is to s y th t intern l competition nd perform nce-linke d bonuses re b d per se. The point inste d is th t if these (or ny simil r mec h nisms) re to be inst lled, it is critic l to lso inst ll knowledge-sh ring nd risk-inducing mech nisms to b l nce their neg tive effects on innov tion. Wit hout this, they will inevit bly le d to long-term loss of competitiveness. These le rnings point the w y to n underst nding of the innov tion process, which in turn is the beginning of developing full-fledged innov tion system. And witho ut such system in pl ce, even the l rgest of tod ys corpor tes will find its do min nce eroded in few ye rs. Bre the E sy With Innov tion If the FMCG m rkets re s tur ted, innov tion is the route to t ke. The US m rket h s shown how ... the Indi n pl yers now h ve to t ke the cue. A DISH w sh liquid which soothes yo u with rom ther py, gel th t p ints your teeth whiter in fortnight, sh mp oo th t protects your h ir from ultr violet r ys ... These re not flights of f ncy but ex mples of innov tive products which h ve kept 11.623.3 FMCG s les zipping in m ture m rkets such s the US over the p st couple of ye r s, even s moribund economy took its toll on consumer spending. Innov tive pro ducts, which h ve sp wned whole new c tegories, h ve been instrument l in drivin g FMCG s les growth in these m ture m rkets. An indic tion th t innov tion m y b e the w y forw rd for Indi n FMCG m rketers who re gr ppling with fl t growth r tes in c tegories such s so ps, detergents nd toothp stes. The penetr tion of or l hygiene products such s toothp stes is ne r tot l in the US. Yet, in the five ye rs to 2002, the US or l c re m rket is estim ted to h ve exp nded by ne rly 19 per cent. Th nks to innov tive products, which bro d-b sed the c tegory, the m rket now st nds t $4.5 billion, ccording to Euromonitor, rese rch gen cy. Home teeth-whitening products such s P&Gs Crest Whitestrips nd Colg tes Simp ly White, which debuted just ye r go, h ve been behind the recent resurgence in or l c re s les in the US. Crest Whitestrips is n dhesive strip th t you p ste on your teeth nd peel off for whitening effect. Colg tes Simply White is gel which is p inted on teeth; it promises whiter teeth fter just fortnight of use. The st id toothbrush c tegory h s been rejuven ted s consumers gr du te from m nu l to electric toothbrushes. P&G, Gillette nd Colg te h ve rolled out

slew of electric nd b ttery-oper ted toothbrushes t ttr ctive prices, to p ush consumers into m king the switch. In so ps, liquid so ps nd shower gels, es peci lly those with mild nd n tur l ingredients, h ve been hit with consumers nd h ve helped m ke up for the fl gging s les of convention l b r so ps. Among the successful products in the c tegory h ve been Dove liquid so p, which is so ld on the ultr -mild pl nk, nd Colg tes Arom Ther py r nge of shower gels nd h nd so ps, which promises to relieve stress through fr gr nce. After notching up ro bust growth in recent ye rs, the m rket for liquid so ps nd shower gels in the US is now worth round $700 million, lmost three-fourths the size of the conven tion l b r so p m rket. In cosmetics nd toiletries, it is g in innov tion to t he rescue. Products such s Ol y D ily F ci ls, from P&G, cle nsing cloth th t offers quick-fix f ci l, h ve revived s les. According to Inform tion Resourc es Inc, rese rch gency th t monitors ret il s les, niche products such s ski n-firming products, cne tre tments nd cosmetics for men h ve m n ged to post o ver 12 per cent s les growth in 2002, helping to compens te for the decline in convention l skin products such s moisturisers. In h ir c re products, the m r ket for styling gels nd mousses h s been r cing he d, even s th t for convent ion l sh mpoos nd conditioners grew by b rely one per cent in 2002. The success of these products h s kept the rese rch dep rtments t the FMCG m jors working overtime. On the nvil, re dish wipes (dispos ble dish w shing cloths), oil-b s ed shower gels (which promise to repl ce body oils) nd host of h irstyling pr oducts which m y help m ke your h irstyle look more tousled, curly, dry or wet. CONSUMER BEHAVIOUR Copy Right: R i University 271

C n Indi n FMCG comp nies t ke the innov tion route to bring seemingly m ture c tegories b ck to life? Comp nies h ve lre dy begun testing the w ters. Hindust n Lever h s been m rketing the Lux liquid body w sh r nge from Unilevers portfoli o for some time now. Colg te-P lmolive Indi recently introduced the P lmolive A rom Ther py shower gel r nge in select metros. Electric toothbrushes re lso be ginning to m ke n ppe r nce, with Gillette nd Colg te putting limited r nge of products on the ret il shelves. Sources in ret il tr de feel th t the Indi n m rket for such products is still very n rrow. But if these l unches click, eve n with sm ll section of consumers, it m y fford bre ther to the MNCs in the Indi n FMCG sp ce. Br nd choices t the lower end of the FMCG m rket re incre singly being determined by price cuts nd freebies. If the MNCs m n ge to cre te more sp ce t the premium end of the m rket, they c n bre the bit e sier in t he knowledge th t there re t le st few segments where region l competitors w ill st y out of their h ir. With the dvent of cre m-b sed products, do you see consumers upgr ding from pow ders nd liquids to cre ms? If so, does Godrej pl n to enter the cre m segment o f the h ir dyes m rket? Consumers do upgr de to better offerings, but not to oth er forms of products. If there is superior product offering, there will be con sumers t the top end. Th t is wh t h s h ppened with LOre l Cre m. Those of our consumers who w nt to shift upw rds, re now shifting to ColourSoft, which is in liquid form. Godrej h s recently l unched Kesh K l , n oil-b sed dye. Wh t is the current size of the br nd? Kesh K l s m rket sh re h s been rising every mont h since its l unch. It h s the potenti l to become f irly l rge br nd in our p ortfolio. We decided to l unch this product bec use there were no pl yers in thi s c tegory. We h ve gre t hopes for this product. You h ve l unched ColourGloss sh mpoo, which t rgetted t people who colour their h ir. Is this just n extens ion of your h ir colour business or re there pl ns to enter other segments of t he sh mpoo m rket? This is n extension of our h ir colour business. Through Col ourGloss sh mpoo, we re t rgetting ll those with coloured h ir. Not only those who use h ir dyes, but lso those who use henn nd other n tur l products. You r h ir oil br nd Anoop does not ppe r to h ve seen much ctivity of l te. Why i s this? Wh t re the future pl ns for the h ir oils m rket? Anoop is oper ting i n niche segment. The br nd h s some loy l customers who h ve experienced the b enefits of this br nd. There is no problem on distribution. The br nd is widely v il ble. For s les, this product relies m inly on word of mouth nd positive u ser experience. Anoop is lre dy well positioned, we do not w nt to tinker with it. Wh t is the current size of the h ir colour m rket? Wh t is the products pene tr tion level? The h ir colour m rket is currently Rs 250 crore, excluding the h enn m rket, which is very l rge. Nobody h s n ide of the size of the henn m rket. The br nded h ir colour m rket is just sm ll p rt of the entire m rket. H ir dye is used by just 20 per cent of the popul tion. So we see potenti l for incre sing penetr tion levels. Wh t re your str tegies to pep up growth r tes i n this segment? New offerings h ve helped us improve growth in this c tegory. Ou r offering of powder h ir dye in s chet form h s exploded the c tegory. Our offe ring of Kesh K l , the oil-b sed dye, is g in exp nding the lower segment of th e m rket. We would like to l unch more such offerings to cre te w reness of thi s c tegory. Product innov tion, p ck ging, unique offerings, better v il bility nd fford bility re f ctors th t h ve helped us to grow the segment. We will continue with these. How much does the h ir colour business contribute to Godrej So ps revenues nd profits? I c nnot sh re the profit figures. In terms of reve nue, the h ir colour business contributes bout 20 per cent to the topline. CONSUMER BEHAVIOUR Product Innov tion nd Unique Offerings H ve Helped Comp nies Grow H ir colour is the f stest-growing segment of the h ir c re industry. The Rs 250 -crore Indi n h ir colour m rket is exp nding t more th n 25 per cent nnu lly nd Godrej So ps, whose presence in the segment d tes b ck sever l ye rs, is the m rket le der. Over the p st couple of ye rs, the m rket for h ir dyes h s been

buzz with ctivity with MNCs such s LOre l entering the fr y. How is Godrej So ps coping? Afford bility, product innov tion, nd ccess, re f ctors th t h ve helped us exp nd the segment. We would continue with these, s ys Dr R kesh Kum r Sinh , Gener l M n ger (Consumer Products Division), Godrej So ps Ltd in n inte rview with Business Line. Excerpts from the interview: Growth r tes in h ir c re products such s sh mpoos nd h ir oils h ve been slowing down in the p st ye r . Wh t h s been your experience with h ir colour? The high growth r te in the h ir colour segment is p rtly bec use of the consider ble promotion l ctivity in the m rket. As we re the le ders in this m rket, we re consciously trying to e xp nd the m rket. It is growing upw rds of 25 per cent nd we expect the growth r tes to continue. As m rket le der, it is our responsibility to ensure th t t he c tegory grows. Godrej h s tr dition lly domin ted the lower end of the h ir colour m rket with liquid nd powder dyes. H s the entry of MNCs such s Well nd LOre l t the higher end imp cted your m rket sh re? No. In the s me period l st ye r, you will see th t our m rket sh re h s grown. The new entr nts such s LOre l h ve helped exp nd the m rket. We now h ve presence in the upper end wit h our br nd Godrej ColourSoft. Over ll s les of ColourSoft re comp r ble to LOre l. As for Well , the br nd h s lw ys been sm ller th n us. LOre l is t the bs olute top end of the m rket. However, the g p between LOre l nd ColourSoft is n rrowing. 272 Copy Right: R i University 11.623.3

Wh t re your pl ns for the h ir c re so ps Godrej Shik k i nd Crowning Glory? Do you see potenti l there or h s th t c tegory died out? The c tegory h s not d ied out bec use there re lot of consumers who do buy these br nds. Shik k i i s big seller mong people who w nt to use n tur l product for their h ir. Cr owning Glory lso h s its own set of loy l customers. The growth r tes in these br nds m y not be simil r to wh t you c n expect in other br nds. But the curren t trend will continue. Both the Shik k i nd Crowning Glory offerings re unique nd they deliver the goods to the consumer. We do not w nt to rel unch these pr oducts without better offerings t this juncture. We ch nged the formul tion of Crowning Glory l st ye r nd consumer feedb ck suggests it is 80 per cent better now. These products re holding up g inst the shift to sh mpoos. Points to Pon der CONSUMER BEHAVIOUR The Diffusion Process The Innov tion The ch nnels of Communic tion The Soci l System Time DIFFUSION Diffusion is the process by which the ccept nce of n innov tion ( new product , new service, new ide or new pr ctice) is spre d by communic tion (m ss medi , s lespeople, or inform l convers tions) to members of soci l system ( t rg et m rket) over period of time. The four b sic elements of this process re: The Innov tion Firm-oriented definitions Product oriented definitions M rket oriented definitio ns Consumer oriented definitions 11.623.3 Copy Right: R i University 273

CONSUMER BEHAVIOUR 274 Influence of Product Ch r cteristics on diffusion Rel tive Adv nt ge Comp tibility Complexity Tri bility Oper bility Type of Time Purch se time Adopter c tegories R te of doption Time The mount of purch se time The identific tion of dopter c tegories The r te of doption Non dopter C tegories . b. c. d. e. The un w re group Symbolic rejectors. Symbolic dopters Tri l do pters Tri l rejectors Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Adopter C tegory Innov tors E rly Adopters E rly M jority L te m jority L gg rds Notes 11.623.3 Copy Right: R i University 275

CONSUMER BEHAVIOUR LESSON 33: ADOPTION PROCESS Introduction In this ch pter we explore f ctors th t encour ge nd discour ge ccept nce or r ejection of new products nd services. Specific lly, we will underst nd the proc ess of doption of innov tion th t is t ken by consumers nd lso study the st g es of doption process St ges in the doption process: Usu lly we h ve seen th t the consumer moves through five st ges in rriving t decision to purch se or reject new product: Aw reness Interest Desire Action Interest Ev lu tion Tri l Objectives After studying this lesson, you should be ble to: Underst nd the doption process Discuss the five st ges in the consumer doption process. Profile the consumer innov tor. List nd expl in the person lity tr it s of the consumer innov tor Aw reness Adoption Process After studying the l st lesson you h ve f ir ide bout the process of diffusi on of innov tion. Now let us concentr te on the doption process. The focus of t his process is the st ges through which n individu l consumer p sses lthough rriving t decision to try or not to try or to continue using or to discontinu e using new product. Wh t ex ctly is doption of innov tion? Customer ccept n ce of the innov tion for continued use! We c n thus define the doption process s the ment l process through which n individu l p sses from first he ring n i nnov tion to fin l doption. (Philip Kotler). Fig 12.1 St ges of dopting new pr oducts Adoption WE h ve lre dy le rnt bout the st ges in the doption process in m rketing m n gement course in the e rlier semester.

276 Copy Right: R i University 11.623.3

Activity 1 A l rge m nuf cturer of drug nd person l grooming products w nts to introduce new toothp ste br nd in ddition to the three lre dy m rketed. Ev lu te for th e firm wh t inform tion might be used for innov tion studies to guide introducti on of the product.

But, nevertheless, we re discussing the m in ch r cteristics of e ch st ge nd I m depicting the s me in the form of t ble s given in figure 12.1 N me of St ge Aw renes s Wh t h ppens during this st ge Consumer is first expose d to the product innov tion Consumer is interested in the product nd se rches f or ddition l inform tion Ex mple R jesh sees n d for new digit l c mer in the newsp per R jesh re ds bout the c mer on the m nuf cturers web site, nd th en goes to c mer tore ne r his office nd h s s lesperson show him the c me r . After t lking with knowledge ble friend, R jesh decides th t his c mer sh ould be ble to provide him with the photos he needs to use in PowerPoint presen t tions. He lso likes the f ct th t it uses st nd rd floppy disks for stor ge. Si nce c mer c nnot be tried like bottle of new moisturising lotion, R jesh buys the c mer from de ler offering 14-d y full refund policy. R jesh finds th t the c mer is e sy to use nd the results re excellent; consequently, he keep s the digit l c mer . Activity 2 Tick the correct choice 1. The shortest doption process would be the doption o f _____. . f shion b. f ds c. product cl sses d. br nds 2. When Hewlett-P ck rd introduces its l test microchip t very high price to consumers who re willi ng to p y top doll r for the l test technology, then gr du lly lowers the price in stepwise f shion to ttr ct ddition l m rket segments, it is pr cticing _____ str tegy. . m rket penetr tion b. m rket skimming c. diffusion d. product obsolescence 3. According to the five st ges of the doption process, consume r goes through the st ges, st rting out with the first st ge which is _____. . need recognition b. w reness c. interest d. tri l 4. The st ges in the doption process end: . with consumer tri l of the product. b. with consumer doption o f the product. c. with consumer rejection of the product. d. either b or c 5. Pe rson l nd interperson l sources become most import nt in the _____ st ge of the doption process. . w reness b. tri l c. doption d. ev lu tion 6. Which of t he following is not ch r cteristic of the consumer innov tor? . dogm tic b. h ve need for uniqueness c. re inner-directed d. re v riety seeking CONSUMER BEHAVIOUR Interest Ev lu tio n Consumer decides whether or not to believe th t this product or service will s t isfy the need Tri l

Adoption /Rejectio n If tri l is f vour ble, consumer decides to use the product on full. R ther th n limited b sis-if unf vour ble, the consumer decides to reject it.

Fig 12.1 the st ges in the Adoption process 11.623.3 Copy Right: R i University 277

Consumer uses the product on

limited b sis

7.

Non-innov tors would be defined s those who purch se none or only one of the ne w f shion products. Interest in the Product C tegory Consumer innov tors re muc h more interested th n either l ter dopters or non- dopters in the product c te gories th t they re mong the first to purch se. Consumer innov tors re more l ikely th n non-innov tors to seek inform tion concerning their specific interest s from v riety of inform l nd m ss medi sources. They re more likely to giv e gre ter deliber tion to the purch se of new products or services in their re s of interest th n noninnov tors. The Innov tor is n Opinion Le der You will se e th t there is strong tendency for consumer opinion le ders to be innov tors. Consumer innov tors provide other consumers with inform tion nd dvice bout n ew products. Those who receive such dvice frequently follow it. The consumer in nov tor often influences the ccept nce or rejection of new products. When innov tors re enthusi stic bout new product nd encour ge others to try it, the p roduct is likely to receive bro der nd quicker ccept nce. Bec use motiv ted co nsumer innov tors c n influence the r te of ccept nce or rejection of new pro duct, they influence its eventu l success or f ilure. Person lity Tr its Consume r innov tors gener lly re less dogm tic th n noninnov tors. Consistent with the ir open-mindedness, it ppe rs th t innov tive beh vior is n expression of n i ndividu ls need for uniqueness. Still further, consumer innov tors ll differ fro m non-innov tors in terms of soci l ch r cter. Consumer innov tors re inner-dir ected. In contr st, non-innov tors re other-directed. The initi l purch sers of new line of utomobiles might be inner-directed, where s the l ter purch sers of the s me utomobile might be other-directed. This suggests th t s ccept nc e of product progresses from e rly to l ter dopters, gr du l shift occurs i n the person lity type of dopters from inner-directedness to other-directedness . There lso ppe rs to be link between optimum stimul tion level nd consumer innov tiveness. Individu ls who seek lifestyle rich with novel, complex, nd unusu l experiences (i.e., high optimum stimul tion levels) re more willing to risk trying new products, to be innov tive, to seek purch se-rel ted inform tion , nd to ccept new ret il f cilities. V riety-seeking consumers tend to be br n d switchers nd purch sers of innov tive products nd services. CONSUMER BEHAVIOUR 8.

9. Demogr phics of consumer innov tors re different from non-innov tors. Which of the following is not necess rily ch r cteristic of consumer innov tor? . re l tively young b. more likely to be form lly educ ted c. re fin nci lly more se cure d. more m il th n fem le St ges in the ment l processing of n innov tion: Here g in we t ke cursory g l nce t the processing th t h ppens inside our br in reg rding ny innov tion. To identify the st ges in such processing, we c n s y th t the following re the st ges:

Consumer innov tors they h ve gre ter d gener l interest m l the bove re ch r

re likely to h ve ll the following medi h bits except: . tot l exposure to m g zines. b. they re more likely to re g zines. c. they re less likely to w tch television. d. l cteristics of consumer innov tors

_____ is the degree of uncert inty or fe r bout the consequences of th t consumer feels when considering the purch se of new product. ed risk b. V riety seeking c. Inner directedness d. Venturesomeness

purch se . Perceiv

Exposure Inform tion g thering Ev lu tion Tri l doption Accept nce or rejection A Profile of the Consumer Innov tor Who is consumer innov tor? Consumer innov tors c n be defined s the rel tivel y sm ll group of consumers who re the e rliest purch sers of new product. The problem with this definition is the concept e rliest! Innov tors re defined s t he first 2.5 percent of the soci l system to dopt n innov tion. In m ny m rket ing diffusion studies, however, the definition of the consumer innov tor h s bee n derived from the st tus of the new product under investig tion. Other rese rch ers h ve defined innov tors in terms of their innov tiveness, th t is, their pur ch se of some minimum number of new products from selected group of new produc ts. 278 Copy Right: R i University 11.623.3

Are There Gener lized Consumer Innov tors? Do consumer innov tors in one product c tegory tend to be consumer innov tors in other product c tegories? Not necess rily! The overl p of innov tiveness cross product c tegories, like opinion le dership, seems to be limited to product c tegories th t re closely rel ted to t he s me b sic interest re . Such p ttern suggests th t it is gener lly good m rketing str tegy to t rget new product to consumers who were the first to t ry other products in the s me b sic product c tegory. There is evidence th t sug gests th t new type of more gener lized high-tech innov tor does exist, th t is, the ch nge le der. Such individu ls tend to embr ce nd popul rize m ny of the in nov tions th t re ultim tely ccepted by the m instre m popul tion. They tend t o h ve wide r nge of person l nd profession l cont cts representing different occup tion l nd soci l groups; most often, these cont cts tend to be we k ties o r cqu int nces. Ch nge le ders lso ppe r to f ll into one of two distinct gro ups: A younger group c n be ch r cterized s being stimul tionseeking, soci ble, nd h ving high levels of f shion w reness. A middle- ged group is highly self -confident nd h s very high inform tion-seeking needs. Simil r to ch nge le der s, technophiles re individu ls who purch se technologic lly dv nced products soo n fter their m rket debut. Such individu ls tend to be technic lly curious peop le. Another group responding to technology re dults who re c tegorized s tech thusi stspeople who re most likely to purch se or subscribe to emerging products nd services th t re technologic lly oriented. These consumers re typic lly yo unger, better educ ted, nd more ffluent. CONSUMER BEHAVIOUR Desir ble Ch r cteristics of Innov tions Now, let us see in brief, wh t should be the m in ch r cteristics th t re desir

Perceived Risk Perceived risk is the degree of uncert inty or fe r bout the con sequences of purch se th t consumer feels when considering the purch se of new product. Rese rch on perceived risk nd the tri l of new products overwhelm ingly indic tes th t the consumer innov tor is lowrisk perceiver; th t is, the y experience little fe r of trying new products or services. Purch se nd Consum ption Ch r cteristics Consumer innov tors re less br nd loy l. Consumer innov t ors re more likely to be de l-prone. Consumer innov tors re lso likely to be he vy users of the product c tegory in which they innov te. Specific lly, they p urch se l rger qu ntities nd consume more of the product th n noninnov tors. Fi n lly, for products like VCRs, PCs, microw ve ovens, 35-mm c mer s, nd food pro cessors, us ge v riety is likely to be relev nt dimension of new product diffu sion. To sum up, positive rel tionship exists between innov tive beh vior nd he vy us ge. Medi H bits Comp risons of the medi h bits of innov tors nd noni nnov tors cross such widely diverse re s of consumption s f shion clothing n d new utomotive services suggest th t innov tors h ve somewh t gre ter tot l ex posure to m g zines th n noninnov tors, p rticul rly to speci l-interest m g zin es devoted to the product c tegory in which they innov te. Consumer innov tors re lso less likely to w tch television th n noninnov tors. Studies concerning t he rel tionship between innov tive beh vior nd exposure to other m ss medi , su ch s r dio nd newsp pers, h ve been too few, nd the results h ve been too v r ied to dr w ny useful conclusions. Soci l Ch r cteristics Consumer innov tors re more soci lly ccepted nd soci lly involved th n noninnov tors. This gre ter soci l ccept nce nd involvement of consumer innov tors m y help expl in why t hey function s effective opinion le ders. Demogr phic Ch r cteristics It is re son ble to ssume th t the ge of the consumer innov tor is rel ted to the speci fic product c tegory in which he or she innov tes. Rese rch suggests th t consum er innov tors tend to be younger th n either l ter dopters or noninnov tors. Pr ob bly bec use m ny of the products selected for rese rch ttention re p rticul rly ttr ctive to younger consumers. Consumer innov tors h ve more form l educ tion, higher person l or f mily incomes, nd re more likely to h ve higher occu p tion l st tus (to be profession ls or hold m n geri l positions) th n l ter d opters or noninnov tors.

ble in ny innov tion.

Identifying Opinion Le ders nd Innov tors A very import nt p rt of our discussi on on innov tors nd opinion le ders is how to identify them? Do they h ve ny f e tures or ch r cteristics, which m ke them, st nd out in public? Not lw ys! 11.623.3 Copy Right: R i University 279

Rel it to it sm

tive dv nt geIs it better th n existing products? Perceived riskHow likely is th t the rel tive dv nt ge will ccrue? ComplexityHow e sy is the innov tion comprehend? Communic bilityIs the innov tion soci lly visible? Comp tibilityIs consistent with existing beh viours/ v lues? Tri l bilityC n it be tried on ller sc le?

CONSUMER BEHAVIOUR Risk t king V riety seeking Being in the upper socio-economic str t Less well i ntegr ted soci lly Opinion le der ch r cteristics include: High involvement with the product Soci lly well integr ted More exposed to v r iety of medi sources In le dership positions in soci l, politic l nd community org nis tions Resist nce to innov tion We p use here to sk question. If innov tion is so good, why do people resist innov tion? This h ppens m inly bec use of two re sons: out of h bit or bec use of some perceived risk. H bit A le rned sequence of responses to previously encountered stimuli Perceived risk Perform nce riskThe product does not perform or h s h rmful side e ffects. Soci l riskSignific nt others might not pprove of innov tion doption. In figure 12.2 below we show typology of innov tion resist nce nd try to see how on the b sis of these p r meters we c n h ve different types of innov tion r esist nces. A typology of innov tion resist nce Risk Low We k 1. No resist nce innov tions (new nd improved versions of est bli shed product; f ds nd f shions) 2. H bitresist nce innov tions (continuous nd repl cement innov tions) High 3. Risk-resist nce innov tions (discontinuous nd repl cement innov tions) H bit Strong 4. Du l resist nce innov tions (soci l progr ms) Fig 12.2 Innov tion resist nce Source: J gdish N. Sheth, Psychology of innov tion resist nce: The less developed concept, Rese rch in M rketing 4, 1981, pp. 273-8 2. 280 Copy Right: R i University 11.623.3

Activity 3 With the dv ncement of digit l technology, some comp nies pl n to introduce int er ctive TV systems th t will llow viewers to select films from video libr ries nd view them on dem nd. Among people you know, identify two who re likely to be the innov tors for such new service nd construct consumer profiles using the ch r cteristics of consumer innov tors discussed in the text.

But, for the purpose of m king c tegory, we c n definitely identify some ch r cteristics. Innov tor ch r cteristics include

Key Terms Choosing Your Entry Str tegy Pioneering is ssoci ted with innov tion. Comp nies th t desire to pioneer need to invest their resources to innov te their products nd processes. CONSUMER BEHAVIOUR

Article 1 Medi Innov tion C n Overcome AD Clutter IN n er m rked by dvertising clutter, rethink on str tegies to m ke televis ion dvertising sizzle nd sp rkle is needed, ccording to Mr. S m B ls r , Ch i rm n nd M n ging Director, M dison Communic tions Pvt Ltd. Convention lly, br nd building copy plus medi efficiency resulted in br nd power. Tod y, we ddition lly need medi innov tion to these inputs, which will result in Nucle r Power, M r B ls r told deleg tion to Ad-Wise 2002, TV Airtime Selling, Pl nning nd Bu ying Forum, org nised by Indi ntelevision.com. Bec use of the br nd clutter, dv ertising h s f iled to m ke n imp ct. Therefore, televisions sh re of the dvert ising pie m y not go to 60 per cent from the current 40 per cent. However, press dvertising h s begun to respond very well in the f ce of competition from tele vision. Mr. B ls r cited the ex mple of the popul r TV show R jni, sponsored by G odrej. The results were mir culous. Over one ye r, Godrejs d spend incre sed from Rs 1 crore to Rs 4 crore, Mr. B ls r s id. Simil rly, in 1989, Cinthol Lime ch ieved 5.3 per cent sh re of the premium so p m rket in one month with medi effi ciency. We just took eight spots on M h bh r t over four consecutive Sund ys nd we chieved this. E rlier, dvertising w s confined to prime time television. In 2 001, there were 32 l kh spots for 6.57 crore seconds s comp red to 24 l kh spot s nd 5.22 crore seconds in 2000. Mr. B ls r suggested six methods to chieve N ucle r Power Invest in Progr mming, M ximise S lience, Push Br nd V lues, Att ck Competition, Cre te Opportunities nd T ke Risks. According to Mr. B ls r , con vention lly, comp nies were not verse to risk. Now comp nies re becoming risk verse when it comes to medi decisions, he s id. 11.623.3 A hum n-like robot developed by Sony Corpor tion. The comp ny h s const ntly inn ov ted its product offering nd h s pioneered few c tegories. PIONEER or follo w? This discussion h s lre dy t ken up three issues in this column. Its time now to decide which fits your org niz tion. In the previous issue, it w s pointed o ut th t the choice of str tegy is not n bsolute. Of course, it will depend to some extent on the industry fe tures. More import nt, the correct str tegy in n y given c se depends upon comp nys competencies, nd how ligned they c n be to p rticul r str tegy. Lets begin with pioneering. If you think bout it, this i s closely linked to innov tion, the current buzzword. Almost every comp ny we t lk to w nts to be more innov tive. But wh t does this word re lly me n? Does it me n just dding more useful fe tures to existing products (like pilfer proof c ps )? Or does it me n coming out with first time products (like mosquito m ts)? Wh t bout continu lly improving existing processes (like using h nd-helds for the s les force)? And how bout new medi buying model? All these re innov tions. B ut, the resources, processes nd v lues needed to m ximize the return from e ch of these re widely different, nd comp nies r rely excel t more th n one type of innov tion. Indeed, it is very difficult to do so. So, if you w nt to pioneer m rket, the first re lity check is to underst nd your product innov tion bil ities. This is complex topic ( nd we will come b ck to it in future rticles), but for now, sk yourself this question: C n we, ye r fter ye r, come up with series of truly new products (like 3M nd Gillette), or is our product innov t

Adopter c tegories Adoption process St ges in the doption process Innov tors L gg rds Comp tibility Complexity Tri bility Observ bility Us ge b rriers V lue b rriers Risk b rriers Rel tive Adv nt ge Discontinuous innov tion Continuous inno v tion Dyn mic lly continuous innov tion

 Copy Right: R i University 281

ion process more suited to increment l improvements in existing products (like new so p perfume, or powdered drink with better solubility)? If the nswer is the l tter, pioneering is obviously not for your org niz tion. Unless

you c n m ke determined effort to lter mindsets nd bilities tow rds innov t ion. Closely rel ted, nd of p rticul r import nce in consumer m rketing, is the level nd type of m rketing skills. For n innov tion in n industri l product, the benefits re, or should be, obvious to the end-user. In consumer goods, the y h ve to be communic ted strongly nd convincingly. For ex mple, new industri l co ting th t l sts twice s long s existing ones t sm ll premium will pr ctic lly sell itself. But in house p ints, convincing consumers to p y premium for new technology exterior p int is f r more difficult, nd needs differen t type of m rketing skill. The question here is: C n we effectively educ te the consumer nd cre te new m rket by communic ting the dv nt ges of tot lly ne w concept, or re we better t communic ting the benefits of our product vis--vis competing products? The f ct is th t for m jority of comp nies, pioneering s str tegy is not n e sy option. This does not me n th t they c n never h ve killer ide , but r ther, th t such n ide will be the exception r ther th n the rule. Actu lly, the 3M or Gillette level of pioneering is extremely dem nding, nd very few comp nies c n sust in the p ce. Most of them f ll into the second c tegory, with processes ge red tow rds increment l improvements, enlivened by occ sion l fl shes of disruptive product innov tion. If you re to follow, the obvi ous question is - how best c n you enter m rket s follower? This is where complex interpl y between your resources nd innov tion bility, nd th t of th e domin nt incumbent comes in. Further, it is e sier to mount successful tt c k if there is diss tisf ction with the current le der, th n if it is perceived t o be of high qu lity. In fr mework for l te entr nt str tegies, Sh nk r nd Kr ishn murthi h ve proposed eight options. These r nge from niche str tegy to n innov tion-led str tegy, with the pplic bility depending on the ch llengers lev el of resources, bility to innov te, nd the domin nt incumbents perceived produ ct qu lity. Being l te entr nt is not b d ide - business history is replete with c ses where l te entr nts h ve eventu lly outsold pioneers. The point is t h t wh t works for one comp ny m y be dis strous for nother. In f ct, the key i ssue in developing n entry str tegy is disp ssion te ppr is l of your own we knesses, process th t is f r more difficult th n it sounds. Points To Remember CONSUMER BEHAVIOUR Adoption process We c n thus define the doption process s the ment l process through which n i ndividu l p sses from first he ring n innov tion to fin l doption. (Philip Kot ler). St ges in the doption process Aw reness Interest Ev lu tion Tri l Adoption/Rejection 282 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR St ges in the ment l processing of n innov tion Exposure Inform tion g thering Ev lu tion Tri l doption Accept nce or rejection Innov tor ch r cteristics Risk t king V riety seeking Being in the upper socio-economic str t Less well i ntegr ted soci lly

Resist nce to innov tion H bit Perceived risk 11.623.3 Copy Right: R i University 283

Desir ble ch r cteristics of innov tions Rel tive dv nt ge Perceived risk Complexity Communic bility Comp tibility Tri l bility

CONSUMER BEHAVIOUR 284 A typology of innov tion resist nce No resist nce innov tions H bit-resist nce innov tions . Risk-resist nce innov t ions Du l resist nce innov tions Notes Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 34: TUTORIAL 1. Sony is introducing 27-inch TV with built in VCR, picture-in-picture fe ture, nd fe ture th t llows the viewer to simult neously view frozen fr mes of the l st sign ls received from 12 ch nnels should obt in inform tion on the following items: Wh t recommend tions would you m ke to Sony reg rding the initi l t rget for the new TV m rket? How would you identify the innov tors for this product? Select three ch r cteristics of consumer innov tors from the list below nd expl in how Sony might use e ch of these ch r cteristics to influence the doption process nd speed up the diffusion of the new product?(Product interest, opinion le der, person lity, purch se nd consumption tr its, medi h bits, soc i l ch r cteristics, demogr phic ch r cteristics) Should Sony follow penetr ti on or skimming policy in introducing the product? Why? Notes 11.623.3 Copy Right: R i University 285

LESSON 35: DECISION MAKING PROCESS Introduction We s consumes re interested in the purch se of goods nd services to s tisfy o ur person l, soci l, nd environment l needs. In this lesson we re considering the v rious levels of decisionm king nd then go he d to expl in the process of consumer decision-m king. We will be expl ining the v rious models, which signi fy the consumer decision-m king process. The most import nt spect here is th t we consider consumers decisions not s the end point but r ther s the beginning point of consumption process. UNIT IV CONSUMER DECISION-MAKING CHAPTER 12 : CONSUMER DECISION-MAKING Qu lis Ret il Level Type of Ret il Outlet I. Comp ny Showroom II. Exclusive Br n d de ler outlet III. De ler outlet with own service f cility IV. De ler outlet c losest to home V. De ler outlet recommended by friend CONSUMER BEHAVIOUR

Identify the different levels of consumer decision-m king Expl in the process of consumer decision-m king 1. Levels of Consumer Decisions As buyer or consumer you re ll the time m king decisions such s wh t produc t to buy ( book or shirt s birthd y present for your friend), which br nd (Lux, Liril, Dove, P lmolive) from where (Dep rtment l store, corner shop, chemi st), etc. The process by which person is required to m ke choice from v riou s ltern tive options is referred to s decision-m king. Fig. 13.1 below present s summ ry of the different levels of purch se rel ted decisions most commonly encountered by consumers. The t ble highlights the bro d r nge of choices the co nsumers h ve to select from when m king decision, st rting from the generic pr oduct c tegory level to the br nd level nd the ret il outlet level. Level of Decision Generic Product c tegory level Br nd Level Altern tive Two whe el or Four wheel vehicle Power Driven I. Scooter II. Motorcycle Scooter I. B j j II. Kinetic Motorcycles I. Y m h II. Hero Hond I. C r II. SUV C r I. M ruti C r II. S ntro Xing SUV I. T t Sumo II. Toyot Qu lis Fig 13.1 Levels of purch se rel ted consumer decisions for person l tr nsport 2. Decision m king Process Customer decisions re those decisions customers m ke in the m rketpl ce s user s, p yers nd buyers. Decisions re often guided by ment l budgeting.Customer set s budget for p rticul r product or service. The most b sic nd import nt req uirement for the m rketer is to underst nd how consumers m ke choices. M king decision is r tion l nd conscious process in which the consumer ev lu tes e c h of the v il ble ltern tives to select the best mongst them. 2.1 Consumer In form tion Processing Model Tr dition lly, consumer rese rchers h ve ppro ched d ecisionm king process from r tion l perspective. This domin nt school of thoug ht views consumers s being cognitive (i.e., problem-solving) nd, to some but lesser degree, emotion l.1 Such view is reflected in the st ge model of typ ic l buying process (often c lled the consumer inform tion processing model) dep icted in Figure 13.2. Problem Recognition Inform tion Se rch Ev lu tion nd Selection of Altern tives

Le rning Objectives After re ding this lesson you should be

ble to:

Decision Implement tion Post-purch se Ev lu tion Ret il Level Type of Ret il Outlet Figure 13.2 The Consumer Inform tion Processing Model Copy Right: R i University 286 11.623.3

Source: Adopted from Kotler (1997), Schiffm n nd K nuk (1997), nd Solomon (199 6) In this model, the consumer p sses through five st ges: problem recognition, inform tion se rch, ev lu tion nd selection of ltern tives, decision implement tion, nd postpurch se ev lu tion. Step 1-Problem Recognition Evoked set (Br nds rec lled) CONSUMER BEHAVIOUR Aw reness Set ( ll the br nds in the w reness) Br nds not rec lled A customer problem could be ny st te of depriv tion, discomfort or w nting, bot h physic l nd psychologic l e.g. Were out of milk nd bre d nd Im hungry! Re lis ti on by customer th t he/she needs to buy something to get b ck to norm l st te of comfort both physic lly nd psychologic lly could be the recognition of problem . e.g. Id better get to the store before it closes! In this inform tion-processing model, the consumer buying process begins when the buyer recognizes problem or need. For ex mple, Deep k m y re lize th t his best suit doesnt look contempor r y ny more. Or, You m y recognize th t your person l computer is not performing s well s you thought it should. These re the kinds of problem th t we s cons umers encounter ll the time. When we found out difference between the ctu l st te nd desired st te, problem is recognized. When we find problem, we u su lly try to solve the problem. We, in other words, recognize the need to solve the problem. But how? Stimuli for problem recognition The different stimuli, wh ich le ds to the recognition of problems re: Consider tion set (Br nds considered) Fig 13.3 Aw reness, evoked nd consider tion sets Br nds not considered Fig 13.3 Aw reness, evoked nd consider tion sets As illustr ted in the di gr m bove, customers se rch for inform tion bout ltern tive w ys of solving their problems nd they consider only select subset of br nds. Aw reness set ll br nds th t the customer is w re of Evoked set ll those br n ds th t the customer remembers t decision-m king time Consider tion set those b r nds in the evoked set th t the customer will consider buying Sources of Inform tion Intern l stimuli m y include perceived st tes of physic l or psychologic l disco mfort such s hunger or boredom Extern l stimuli m y include m rketpl ce inform tion e.g. the smell of freshly b ked bre d Prim ry versus second ry dem nd Prim ry dem nd is for product c tegory while second ry dem nd is for specific br nd within the c tegory

Non-m rketer sources Person l sources Friends nd other cqu int nces P st exper ience Independent sources Public inform tion like news report in medi , governme nt public tions, Indi Tod y m g zine Product or service experts like ph rm cist s, house ppr isers Internet Step 2-Inform tion Se rch

M rketer sources Advertising S lespersons Product/service brochures Store displ ys Comp ny web sites

Fig 13.4 Sources of inform tion for customers Se rch Str tegies Se rch str tegies re the p tterns of inform tion cquisition customers use to s olve their decision problems. 1. Routine, extended nd limited problem solving: Routine no new inform tion considered Extended extensive se rch nd deliber tion Limited limited time nd effort inves ted System tic comprehensive se rch nd ev lu tion Heuristic quick rules of thum b nd shortcuts 2. System tic versus heuristic se rch: 11.623.3 Copy Right: R i University 287

When consumer discovers problem, he/she is likely to se rch for more inform tion. You m y simply p y more ttention to product inform tion of person l com puter. You become more ttentive to computer ds, computers purch sed by your fr iends, nd peer convers tions bout computers. Or, you m y more ctively seek in form tion by visiting stores, t lking to friends, or re ding computer m g zines, mong others. Through g thering inform tion, the consumer le rns more bout som e br nds th t compete in the m rket nd their f u e dc t r s i s T e r t c l y t e ei of e t r s n h r c e i t c . h o e i l , h rtot l set s br nds v il ble to you, but you will become w re of only subset of the br nds ( w reness set) in the m rket. Some of these br nds m y s tisfy your initi l buying criteri , such s price nd processing speed (consider tion set). As you proceed to more inform tion se rch, only few will rem in s strong c ndid tes (choice set ).

3. Str tegies to de l with missing inform tion:

Amount of Se rch The mount of time spent se rching is determined by: Perceived risk: perform nce, soci l, psychologic l, fin nci l nd obsolescence r isk Involvement: perceived import nce of product F mili rity nd expertise: b se d on previous inform tion cquisition nd person l experience Time pressure: cus tomers incre singly time poor Function l versus expressive n ture of product: boug ht for perform nce or soci l v lue Inform tion overlo d: too much inform tion Figure 13.5 Hier rchic l View of Needs, Benefits, nd Attributes From this figur e nd the preceding discussion, you might recognize th t the product ttributes re relev nt nd import nt only to the extent th t they le d to cert in set of benefits. Likewise, benefits re me ningful only if they c n ddress the proble m nd be instrument l to s tisfy the underlying need. As the underlying need is often person l, consumers differ s to their beliefs bout wh t product benefits nd ttributes re more (or less) import nt nd relev nt in s tisfying their ne eds. B sed on their person l judgment on import nce of benefits nd ttributes, consumers develop set of ttitudes (or preferences) tow rd the v rious br nds. One m y express his/ her preferences of the br nds in terms of r nking, prob bi lity of choice, nd so forth. Models The specific m nner in which customers selec t one of the ltern tives could be either through: 1 Compens tory model CONSUMER BEHAVIOUR All ttributes re ev lu ted with ment l tr de-off of perceived we knesses nd s trengths. Conjunctive minimum cut-offs set for relev nt ttributes Disjunctive t r deoffs between spects of choice ltern tives m de Lexicogr phic ttributes r e r nked in order of import nce Elimin tion by spects ttributes re r ted in o rder of import nce nd cutoff v lues defined 2 Non-compens tory models Step 3-Ev lu tion nd Selection of Altern tives How does the consumer process competitive br nd inform tion nd ev lu te the v l ue of the br nds? Unfortun tely there is no single, simple ev lu tion process p plied by ll consumers or by one consumer in ll buying situ tions. One domin nt view, however, is to see the ev lu tion process s being cognitively driven nd r tion l. Under this view, consumer is trying to solve the problem nd ultim tely s tisfying his/her need. In other words, he/she will look for problem-solvi ng benefits from the product. The consumer, then, looks for products with cert in set of ttributes th t deliver the benefits. Thus, the consumer sees e ch pr oduct s bundle of ttributes with different levels of bility of delivering t he problem solving benefits to s tisfy his/her need. The distinctions mong the need, benefits, nd ttributes re very import nt. One useful w y to org nize th e rel tionships mong the three is hier rchic l one (Figure 13.5). Although si

Inter ttribute inference v lue inferred from nother ttribute Ev lu tive tency missing ttribute ssumed to conform to over ll ev lu tion Other-br r ging use of ver ge v lue from ev lu tion of ttribute for other br nds ve cue void option with missing inform tion or ssign it low or neg tive

consis nd ve Neg ti v lue

mplified, Figure 13.5 is n ex mple of how bundle of ttributes (i.e., produ ct or, more specific lly, person l computer) rel tes to your benefits nd underl ying needs. How nd when models used Two-st ge choice process: For import nt decisions might use noncompens tory first nd then compens tory R pid heuristics: Simple rules of thumb used for low-risk/ involvement decisions S tisficing: Selecting n ccept ble ltern tive r ther th n se rching for best ltern tive

Underlying Needs Helps Me Survive R i University MBA Pogr m Benefits Port bility Doesnt Bre k down Economy Comput tion l Horse Power W rr nty Attributes Size Br nd Reput tion Softw re Bundle CPU Speed Price H rd Drive Size GlobeNet Re dy 288 Copy Right: R i University 11.623.3

Step 4 Purch se Decision Implement tion CONSUMER BEHAVIOUR To ctu lly implement the purch se decision, however, consumer needs to select both specific items (br nds) nd specific outlets (where to buy) to resolve the problems. There re, in f ct, three w ys these decisions c n be m de: 1) simult neously; 2) item first, outlet second; or 3) outlet first, item second. In m ny situ tions, consumers eng ge in simult neous selection process of stores nd br nds. For ex mple, in your person l computer c se, you m y select set of br nds b sed on both the products technic l fe tures ( ttributes) nd v il bility o f br nds in the computer stores nd m il-order c t logs you know well. It is ls o possible; th t you decide where to buy (e.g., Computer world in your neighborh ood) nd then choose one or two br nds the store c rries. Once the br nd nd out let h ve been decided, the consumer moves on to the tr ns ction (buying). Choice Identific tion Fig 13.6 Post-purch se Disson nce El bor te Ev lu tion Diss tisf ction Purch se Product Use Disposition Repe t Purch se Motiv tion Figure 13.8 El bor te Post-purch se Ev lu tion Source: Adopted from H wkins, Bes t, nd Coney (1983) According to the rese rch, the likelihood of experiencing th is kind of disson nce nd the m gnitude of it is function of:

Purch se intent Purch se implement tion Bec use disson nce is uncomfort ble, the consumer m y use one or more of the fol lowing ppro ches to reduce it: Customer beh viour t the purch se step Incre se the desir bility of the br nd purch sed. Decre se the desir bility of r ejected ltern tives. Decre se the import nce of the purch se decision. Reject t he neg tive d t on the br nd purch sed. Step 5-Post-purch se Ev lu tion The type of preceding decision-m king process directly influences post-purch se ev lu tion processes. Directly relev nt here is the level of purch se involvemen t of the consumer. Purch se involvement is often referred to s the level of conc ern for or interest in the purch se 2 situ tion, nd it determines how extensivel y the consumer se rches inform tion in m king purch se decision. Although purc

The degree of commitment or irrevoc bility of the decision, The import nce of th e decision to the consumer, The difficulty of choosing mong the ltern tives, nd The individu ls tendency to experience nxiety.

h se involvement is viewed s continuum (from low to high), it is useful to co nsider two extreme c ses here. Suppose one buys cert in br nd of product (e.g. , Diet Pepsi) s m tter of h bit (h bitu l purch se). For him/her, buying co l drink is very low purch se involvement situ tion, nd he/she is not likely to se rch nd ev lu te product inform tion extensively. In such c se, the cons umer would simply purch se, consume nd/or dispose of the product with very limi ted post-purch se ev lu tion, nd gener lly m int in high level of repe t purc h se motiv tion (Figure 13.7). If the disson nce bout the purch se is not reduced, the nxiety m y tr nsform i nto diss tisf ction (gener l or specific). Cert inly, this neg tive experience le ds to new problem recognition (Figure 1), nd the consumer will eng ge in nother problem solving process. The difference, however, is th t in the next ro und of process, memory of the previous neg tive experience nd diss tisf ction w ill be used s p rt of inform tion. Therefore, the prob bility for the uns tisf ctory br nd to be re-selected nd repurch sed will be signific ntly lower th n b efore. Future response *Exit *Voice *Loy lty Purch se Product Use Disposition Simple Ev lu tion Repe t Purch se Motiv tion S tisf ction/diss tisf ction Figure 13.7 Low Involvement Purch se Source: H wkins, Best, nd Coney (1983) How ever, if the purch se involvement is high nd the consumer is involved in extens ive purch se decision m king (e.g., person l computer), he/she is more likely to be involved in more el bor te post-purch se ev lu tion often by questioning the rightness of the decision: Did I m ke the right choice? Should I h ve gone with other br nd? This is common re ction fter m king difficult, complex, rel tiv ely perm nent decision. This type of doubt nd nxiety is referred to s postpur ch se cognitive disson nce (Figure 13.8). Experience ev lu tion Decision confirm tion Fig 13.9 Steps in the post-purch se ph se 11.623.3 Copy Right: R i University 289

 Decision confirm tion: Need to confirm wisdom of decision Cognitive disson nce: post-purch se doubt Reduced by seeking more inform tion or v lid tion from others Experience ev lu t ion:

CONSUMER BEHAVIOUR Is product consumed routinely or while being consciously ev lu ted? Purch se S tisf ction/diss tisf ction: Us ge outcome Role of pre-purch se expect tions Exit: diss tisfied customers m y never purch se the br nd g inVoice: diss tisfied customers compl in Conviction Future response Preference Likelihood of compl ining depends on: Diss tisf ction signific nce Attributions of the m rketer Customers person lity tr itsLoy lty: s tisfied customers purch se the br nd repe tedly Activity 2 Reflect on how you might choose e ch of the following products or ser vices: An irline for holid y to Switzerl nd Toothp ste during trip to cou ntry where none of your usu l br nds is v il ble A c r. For e ch, indic te whet her you would use: A two-ph se or single-ph se decision str tegy A compens tory o r noncompens tory model, or both A heuristic, nd wh t this might be. Think g in bout e ch product or service in the previous question. Wh t sources of inform tion in e ch c tegory (e.g. intern l, extern l, m rketer or nonm rketer) would you be likely to use? Would some of these be more useful to you during the l ter r ther th n e rlier st ges in the decision process? Expl in your nswer. For whic h of these decisions re you likely to h ve experienced cognitive disson nce? Wh y or why not? Wh t ctions re you likely to h ve t ken to reduce th t disson nce? Wh t c n m rketer do, in e ch c se, to help overcome th t disson nce? Liking Knowledge

2.2 The Hier rchy of Effects model Another widely used model in m rketing th t ttempts to expl in consumer decision-m king process is c lled the hier rchy of e ffects model. Although different rese rchers developed slightly different models , the b sic ide is the s me: people experience sequence of psychologic l st g es before purch sing product. Such model is provided in Figure 13.10.

Activity 2 Aw reness Un w reness Figure 13.10 A Gener l Model of the Hier rchy of Effects Source: Adopted from De lozier (1976) Origin lly conceived to expl in how dvertising ffects consumers p urch se decisions, the hier rchy of effects (HOE) model focuses on consumer le r ning th t t kes pl ce s he/she processes inform tion from the extern l world. T he HOE model begins with the st te where consumer h s no w reness bout the b r nd (un w re) then develops w reness triggered by extern l stimuli, such s d vertising mess ge or word of mouth. As he/she obt ins nd processes more inform ti on, the consumer develops more specific knowledge bout the br nd. The knowledge , then, is used s b sis to form liking (or disliking), le ding to preferenc e of br nd(s) rel tive to the others. However, people need to be pushed beyond t he preference st ge to ctu lly buy the br nd of preference. The preference st g e, fter ll, simply me ns th t the consumer h s formed preference psychologic lly . Now it t kes conviction for him/her before ctu lly buying the br nd. By now, you might h ve re lized t le st two points. One, it seems re son ble th t not ll the consumers re t the s me st ge. For ex mple, you m y be in the un w reness st ge rel tive to Wr ngler Je ns, but Lee m y be in the preference st ge . Two, it lso seems re son ble th t not ll people t one st ge move onto the n ext st ge. For ex mple, some consumers who h ve formed preference to M ggi Tom t o S uce m y not form ny conviction to buy the product. Furthermore, some people m y need more time before moving onto the next st ge th n others. 290 Copy Right: R i University 11.623.3

The HOE model is quite simil r to the consumer inform tionprocessing model bec u se it lso ssumes th t people re cognitively driven, thinking inform tion proc essors. Controversy exists, of course, s to whether th t is necess rily true. S ome m y cl im th t they often form liking nd preference (emotion l response or feeling) tow rd br nds before developing cognitive judgment (knowledge or thinki ng) on them. Others rgue th t people form preference nd knowledge simult neous ly. Although e ch rgument h s its own support, the gener l model (cognition fir st, preference second) seems to be v lid especi lly in rel tively complex or hig h-involvement decision m king situ tions (e.g., c rs, computers), providing co nceptu l fr mework for thinking bout the sequence of events, which begins from the initi l w reness to the fin l ction (i.e., purch sing). 2.3 The Implic tio ns We h ve reviewed two of the most widely ccepted models of consumer decisionm king process. These re b sed on theories nd rese rch of soci l psychology, c onsumer beh vior, nd m rketing. As m n gers r ther th n c demics, however, we h ve sever l more tough questions to sk. Here re some of them: Activity 3 ) Consider the c se of consumer dur ble th t you m y h ve recently purch sed. Try to rec ll the ctu l process you might h ve undergone in buying th t. Write down the specific ctivities you undertook t e ch st ge of the decision-m king process. CONSUMER BEHAVIOUR The ide of the inform tion-processing model seems re son ble. But, we know th t we s individu ls re not living in v cuum. Th t is, when we re m king pur ch se decision, we re const ntly influenced by other f ctors th n just inform t ion, such s f mily, friends, cultur l v lues, soci l cl ss, or subculture. Oh, wh t bout physiologic l needs, such s sex, hunger, s fety? Might these lso f fect which br nd we choose nd buy? How nd where do these f ctors pl y roles in the inform tionprocessing model? Wh t would be some of the pr ctic l implic tio ns of the inform tion-processing model for m rketing m n ger who is trying to m rket, s y, mount in bikes? If he/she knows bout the inform tion-processing mo del, wh t could he/she do differently in, for ex mple, the new product introduct ion? Wh t would be the implic tions of the HOE model for m rketing m n gers? For ex mple, wh t should n dvertising m n ger me sure to know the effectiveness of his/her dvertising c mp ign? Should he/she me sure s les? Under wh t circumst nce s consumers re more likely to develop liking (feeling) first, knowing (thinking) se cond? Wh t would be some of the products/services in those situ tions? Why? 11.623.3 Copy Right: R i University 291

b) Do you find ny difference in the ppro ch described bove nd the ppro ch t h t you m y h ve followed? Wh t could be the difference for these differences? NOTES CONSUMER BEHAVIOUR (Endnotes) 1 See lso Schiffm n, Leon G. nd Leslie L z r K nuk (1997), Consumer Beh vior, Up per S ddle River, New Jersey: Prentice H ll. nd Solomon, Mich el R. (1996), Con sumer Beh vior: Buying, H ving, nd Being, Englewood Cliffs, New Jersey: Prentic e H ll. For more det iled discussions nd p per cit tions, refer to Engel, J mes F., Roger D. Bl ckwell, nd P ul W. Min rd (1993), Consumer Beh vior, 7th ed., Fort Worth, Tex s: Dryden Press. nd Wilkie, Willi m L. (1990), Consumer Beh vio r, 2nd ed., New York, New York: John Wiley & Sons. H wkins, Del I., R. J. Best, nd K. A. Coney (1983), Consumer Beh vior: Implic tions for M rketing Str tegy, Pl no, Tex s: Business Public tions Inc. 2 Key Terms Generic Product level Br nd level Ret il Level Consumer Inform tion Processing M odel Aw reness Set Evoked Set Consider tion Set System tic Se rch Points To Remember Levels of Consumer Decisions Generic Product c tegory level Br nd level Ret il level 292 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR INPUT/ EXT. INFLUENCE LEVELS OF DECISION MAKING Extensive Problem Solving PROCESS/ C.D.M. FIRMS MARKETING EFFORTS 4 PS SOCIOCULTURAL ENVIRONMENT FAMILY INFORMATION SOURCES OTHERS SOCIAL CLASS SUBCULTURE Limited Problem Solving Routinized Response Beh vior NEED RECOGNITION PREPURCHASE SEARCH EVALUATION OF ALTERNATIVES PSYCHOLOGICAL FIELD MOTIVATION PERCEPTION LEARNING PERSONALITY ATTITUDES EXPERIENCE OUTPUT/ P.D.B. PURCHASE 1. TRIAL 2. REPEAT PURCHASE POST PURCHASE EVALUATION MODELS OF CONSUMERS: Four views of consumer decision m king Economic view P ssive view Cognitive view Emotion l view CONSUMER GIFTING BEHAVIOUR RELATIONSHIP MARKETING The firm provides: The customer provides: Products / services Individu l ttention Continuous inform tion Price offers Service, perks , extr s Trust nd Promises Repe t purch se Incre sed loy lty Goodwill Positive word of mouth 11.623.3 Copy Right: R i University 293

CONSUMER BEHAVIOUR 294 Decision m king Process Consumer Inform tion Processing Model The Hier rchy of Effects Model The Hier rchy of Effects model Un w reness Aw reness Knowledge Liking Preference Conviction Purch se Consumer Inform tion processing Model Step 1: Problem recognition Step 2: Inform tion Se rch Step 3: Ev lu tion nd Se lection of Altern tives Step 4: Purch se Decision Implement tion Step 5: Post-Pu rch se Ev lu tion Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 36: TYPES OF PURCHASE DECISION BEHAVIOUR Introduction Consumer buying beh viour v ries with the type of buying decision. The buying de cision process further v ries with the type of product involved. For inst nce, w hile decision for buying bre d is lmost utom tic, the decision for buying l ptop is more deliber te nd time consuming. Simil rly, there is gre t de l o f difference in buying tube of toothp ste, pp rels for yourself nd Televis ion set for your home. This will depend on how complex the decision is likely to be nd the degree of involvement required from the p rticip nts. In other words , more complex the decisions, more the involvement of buying p rticip nts nd mo re the buyer deliber tion. (2) money, nd (3) inform tion reception nd processi ng c p bilities or ttention. Gener lly there re distinct limits on the v il b ility of e ch, thus requiring some c reful lloc tion. (c). Motiv tion: Psycholo gists nd m rketers like h ve conducted wide v riety of studies to determine wh t t kes pl ce when go l-directed beh vour is energized nd ctiv ted. Ch pter 3 discusses motiv tion thoroughly. (d). Knowledge: Knowledge is defined s info rm tion stored in memory. It encomp sses v st rr y of items such s the v il bility nd ch r cteristics of products nd services; where nd when to buy; nd how to use products. One m in go l of dvertising nd selling is to provide rel ev nt knowledge nd inform tion to consumers so s to ssist them with decisionm king, especi lly in extended problem solving. (e). Attitudes: Beh viour is str ongly influenced by ttitudes tow rd given br nd or product. An ttitude is si mply n over ll ev lu tion of n ltern tive, r nging from positive to neg tive. Once formed, ttitudes pl y directive role on future choice nd re difficult to ch nge. Nevertheless, ttitude ch nge is common m rketing go l, s you h v e seen in Ch pter 6. b. Environment l Influences: In ddition to individu l v ri bles, the decision process beh viour of consumers is lso influenced by environ ment l f ctors which include culture, soci l cl ss, f mily, person l influence nd situ tion ( ). Culture: Culture refers to the v lues, ide s, rtif cts, nd o ther me ningful symbols th t help individu ls communic te, interpret, nd ev lu te s members of society. Ch pter 10 provides comprehensive overview of cultur l issues from both glob l s well s domestic perspective. (b). Soci l cl ss: Soci l cl sses re divisions within society th t comprise individu ls sh ring s imil r v lues, interests, nd beh viours. You h ve lso seen this discussed in c h pter 9. Socioeconomic st tus differences m y le d to differing forms of consum er beh viour, s y for ex mple, the types of bever ges served, the m ke nd style of c r driven, the kind of food liked, nd the styles of dress preferred (c). F mily: Since the field of consumer rese rch w s founded, the f mily h s been f ocus of rese rch. As you h ve le rnt in e rlier ch pters, the f mily often is th e prim ry decisionm king unit, with complex nd v rying p ttern of roles nd f unctions. Cooper tion nd conflict often occur simult neously with interesting b eh viour l outcomes. (d). Person l influence: As consumers, those with whom we c losely ssoci te often ffect our beh viours. This is referred 295 Objectives After re ding this lesson, you should be ble to:

1. V ri bles th t sh pe the decision Process How people m ke decisions continue to interest rese rchers nd str tegists bec u se of its complexity nd dyn mic n ture. Even with ll the options v il ble to them, people re usu lly quite r tion l nd m ke system tic use of the inform ti on, nd usu lly consider the implic tions of their ctions before they decide to eng ge or not eng ge in given beh viour. In this section, we summ rize inform

Differenti te between types of buyer decision beh viour Identify f ctors influencing problemsolving.

nd expl in the

tion bout v ri bles th t c n influence decision-m king. onsumer decision m kin g is influenced nd sh ped by m ny f ctors nd determin nts th t f ll into three c tegories: . b. c. Individu l differences Environment l influences Psychologi c l processes.

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We h ve lre dy covered ll these f ctors in depth in e rlier lessons; hence we re just presenting summ ry of them. . Individu l Differences There re five m jor c tegories of individu l differences, which ffect beh viour, viz., ( ). D emogr phics, psychogr phics, v lues nd person lity: The decision processes nd buying beh viour gets very much ffected by how people differ. You h ve re d bo ut these influences e rlier. These v ri bles include wh t h s come to be known s psychogr phic rese rch to probe into those individu l tr its, v lues, beliefs, nd preferred beh viour p tterns th t correl te with beh viour in m rket segmen ts. (b). Consumer resources: E ch person brings three prim ry resources into eve ry decision-m king situ tions: (1) time,

to s person l influence. Consumers often respond to perceived pressures to conf orm to the norms nd expect tions provided by others-seeking nd t king their co unsel on buying choices, observing wh t others re doing s inform tion bout co nsumption choices, nd comp ring their decisions to those of others. (e). Situ t ion: Beh viours ch nge s situ tions ch nge. Sometimes these ch nges re err tic nd unpredict ble, such s job l yoff, nd t other times, they c n be predicte d by rese rch. Situ tion is tre ted s rese rch v ri ble in its own right nd is discussed in v rious ch pters. c. Psychologic l Processes: At the end, those who wish to underst nd nd influence consumer beh viour must h ve pr ctic l gr sp of three b sic psychologic l processes: ( ). Inform tion processing: Communi c tion is bottomline m rketing ctivity. Therefore, consumer rese rchers h ve long been interested in discovering how people receive, process, nd m ke sense of m rketing communic tions. (b). Le rning: Anyone ttempting to influence the c onsumer is trying to bring bout le rning, the process by which experience le ds to ch nges in knowledge nd beh viour. Le rning theory is relev nt, especi lly for those products nd services bought on the b sis of rel tively little reflect ion nd ev lu tion. (c). Attitude nd beh viour ch nge: ch nges in ttitude nd beh vour re n import nt m rketing objective th t reflects b sic psychologic l influences nd h ve been the subject of dec des of intensive rese rch. iii. Promotion CONSUMER BEHAVIOUR iv. Pl ce (distribution) v.

Activity 1 A comp ny is pl nning to introduce Business d ily in the Indi n M rket. As m rketing consult nt to this comp ny, wh t motiv tion l, perception nd ttitudin l ch r cteristics will you consider for devising the four Ps for this product. i. Product

i. Pie i rc 296

2. Types of decision beh viour Sometimes consumers undert ke complex decision process requiring subst nti l mounts of time nd energy. In situ tions in which consumers re m king decisio n for the first time, ctions must be b sed on some form of problem solving. Whe n this process is very complex, it is c lled extended problem solving (EPS). Lim ited problem solving (LPS), however, represents lower degree of complexity. At the lowest end of the continuum st nds wh t is known s routinised response beh viour (RRB) 1.1 Initi l Purch se We will now distinguish these three m jor type s of buying beh viour: (1) Routinised response beh vior (RRB)/ H bitu lbuying be h vior: This is the simplest type of beh viour. This occurs when the consumer l re dy h s some experience of buying nd using the product. Usu lly, this kind of beh viour is dopted for the purch se of low cost, frequently used items. In su ch c ses the buyers do not give much thought, or se rch nd lso do not t ke l ot of time to m ke the purch se. Most of the time the buyer is f mili r with the v rious br nds v il ble nd the ttributes of e ch nd h s well-est blished criteri for selecting their own br nd. The buyers re well w re of the product cl ss, know the br nds nd lso h ve cle r preference mong the

Kindly repe t this ctivity for .

service of your choice such

s b nking product

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br nds. The degree of involvement in buying such products is low. In such c se , the m rketer h s to ensure two t sks: ( ) The m rketer must continue to provid e s tisf ction to the existing customers by m int ining qu lity, service nd v l ue. (b) He must try to ttr ct new customers by m king use of s les promotion te chniques like points of purch se displ ys, off-price offers, etc., nd lso intr oduce new fe tures to the products. (2) Limited problem solving (LPS)/ Disson nc e reducing buying beh vior: In this type of buying beh vior, the consumer is f m ili r with the product nd v rious br nds v il ble, but h s no est blished br n d preference. Here the buyer is more complex s comp red to routine buying beh v ior bec use the consumer is confronted with n unf mili r br nd in f mili r pr oduct cl ss. The consumer would like to g ther ddition l inform tion bout the br nds to rrive t his br nd decision. For inst nce, housewife buys refined v eget ble oils for her cooking nd she m y be f mili r with the concept of veget ble oil, v n sp ti nd ghee. She m y lso know th t Dh r , D ld nd Sundrop re some of the le ding br nds v il ble. But to est blish her choice of br nd, she would like to check with her friends nd regul r store bout the ttributes of e ch. This buying beh vior s described limited problem solving bec use the buye rs re in situ tion where they re fully w re of the product cl ss but not f mili r with ll the br nds nd their fe tures. Limited problem solving lso t ke s pl ce when consumer encounters n unf mili r or new br nd in known product c tegory. The housewife, who buys refined veget ble oil, on her next visit to t he m rket, sees new br nd of oil, S ffol . Ap rt from buying new br nd, this br nd of oil lso cl ims the unique ttribute of being low in cholesterol. To rrive t decision, whether or not to buy this br nd, the housewife needs to g ther inform tion bout the new br nd, which will llow her to comp re it with th e known br nds. Here the m rketers job is to design communic tion progr mme, wh ich will help the buyer to g ther more inform tion, incre se his br nd comprehen sion nd g in confidence in the br nd. (3) Extensive problem solving (EPS)/Compl ex buying beh vior: This buying is referred to s complex buying beh vior bec use the consumer is in n unf mili r product cl ss nd is not cle r bout wh t c riteri to consider for buying. Extensive problem solving occurs when the consum er is encountering new product c tegory. He needs inform tion on both the prod uct c tegory s well s the v rious br nds v il ble in it. This kind of decisio n is the most complex type. For inst nce, you m y become interested in purch sin g Color Television set to repl ce the existing bl ck nd white one. You m y h ve he rd of the v rious br nd n mes like BPL, Ak i, etc. but l ck cle r br nd co ncepts. You do not know wh t product ttributes or fe tures to consider while ch oosing good television set. So yours is n extensive problem solving. The m rk eting str tegy for such buying beh vior must be such th t it f cilit tes the con sumers inform tion g thering nd le rning process bout the product c tegory nd his own br nd. The m rketer must underst nd the inform tion g thering nd ev lu tion ctivities of the prospecti ve consumers. They h ve to educ te the prospective buyers to le rn bout the tt ributes of the product cl ss, their rel tive import nce nd the high st nding of the m rketers br nd on the more import nt br nd ttributes. The m rketer must be ble to provide his consumer with very specific nd unique set of positive t tributes reg rding his own br nd, so th t the purch se decision is m de in his f vour. N other words, the m rketing communic tions should be imed t supplying inform tion nd help the consumer to ev lu te nd feel good bout his/her br nd choice. The concept of EPS is most pplic ble to new products. The product m y b e new t the generic level e.g., Good Knight Mosquito repell nt m ts or it m y b e n est blished product concept but new for p rticul r consumer. IN c se of new product concept like re dy to cook inst nt sn ck, the entire consumer unive rse is unf mili r with the product. The m rketer h s to spend l rge mounts of m oney in educ ting the consumers bout his product. The consumer in turn need g re t de l of inform tion before they c n t ke decision; nd the decision proce ss t kes longer time. On the other h nd, you m y h ve the situ tion where the product concept is well understood by m jority of the consumers, but it is bei ng bought or used by p rticul r consumer for the first time. To t ke very si

mple ex mple, trib l who is exposed to the concept of toothp ste for the first time in his life will seek lot of inform tion nd t ke long time to decide. Bec use fro him, buying toothp ste is n EPS beh viour, where s for most of u s it is simply Routinised response beh viour. 1.2 Repe t Purch ses Most purch se s re repe ted over time. When repe t purch ses occur, there re two possibiliti es: ( ) repe ted problem solving, nd (b) h bitu l decision-m king. ( ) Repe ted Problem solving: Repe t purch ses often require continued problem solving. Seve r l f ctors including diss tisf ction with previous purch se resulting in br nd switch or ret il stock outs when the ret iler doesnt h ve product v il ble c n le d to this outcome. (b) H bitu l decision m king: H bitu l t kes different forms, depending on the decision process followed in the initi l purch ses: CONSUMER BEHAVIOUR Br nd loy lty/Comp ny loy lty: Consumers h ve cert in expect tions bout the pro ducts they buy nd the ret ilers from whom they buy. The s tisf ction th t consu mers experience when their expect tions re met or exceeded often results in loy lty to th t product or ret iler. For the most p rt, consumers w nt to rew rd th ese comp nies with continued use over timeth t is, br nd or comp ny loy lty, whic h c n be highly resist nt to ch nge. Inerti : There re cert in c tegories of pr oducts in which there is limited br nd loy lty, for inst nce toothp ste. Where ny degree of loy lty does not exist, it mostly consists of sever l br nds, ll o f which re bout equ l. Buying h bits of this type re b sed on inerti nd re unst ble. Although there is no incentive to switch, this 297 11.623.3 Copy Right: R i University

m y occur quite when prices re lowered with coupon or nother br nd is promot ed s offering something new. 1.3 Impulse Buying Impulse purch ses re the le st complex form of LPS but differs in some forms import nt w ys. This kind of buyi ng m y be expl ined s n unpl nned, spur-of-the-moment ction triggered by prod uct displ y or point-of-s le promotion. The m in ch r cteristics of Impulse buyi ng re:

CONSUMER BEHAVIOUR Re dy-m de or m de to order From furniture shop or to be built t home Type of m teri l for fr me: wood, steel, luminum Type of m teri l for cushion: cloth, rexine, le ther Design: with or without rmrests, height, depth of se t, se ting c p city, loose or fixed cushion. A sudden nd spont neous desire to ct ccomp nied by urgency. A st te of psycho logic l disequilibrium in which person c n feel tempor rily out of control. Th e onset of conflict nd struggle th t is resolved by n immedi te ction. Minim l objective ev lu tion exists-emotion l consider tions domin te. A l ck of reg r d for consequences.

Thus, depending on the type of decision being m de, the degree nd strength of ctive re soning will v ry. There re three f ctors, which influence the degree o f ctive re soning th t is undert ken by the consumer in his process of decision -m king. These re: i. ii. i. Involvement Altern tive differenti tion, nd Invol vement: The degree of person l involvement is key f ctor in sh ping the type o f decision process th t consumers will be followed. Involvement is the level of perceived person l import nce nd/or interest evoked by stimulus within spec ific situ tion. When product is perceived to be of gre t import nce to the cus tomer, such s person l clothing, or its purch se involves gre t de l of money or risk such s jeweler, c r, house, comp ny sh res, the level of involvement i n m king the decision is likely to be very high. The consumer is likely to spend gre t de l of time before rriving t the fin l decision. In contr st, when b uying items which do not reflect much on the consumers person lity or their purch se involves sm ll mounts of money or the risks ssoci ted with them is not hig h, the degree of involvement of the consumer is likely to be low. Products such s shoes, polish, toilet so p, toothp ste, biscuits etc. would f ll in this c te gory. Sever l f ctors exist th t determine the degree of involvement consumers h ve in m king decision. Some of them re s under: (i). Person l f ctors: The degree of involvement tends to be higher when the outcome of the decision ffect s the person directly. Person l f ctors include self-im ge, he lth, be uty, or p hysic l condition. Without ctiv tion of need nd drive, there will be no involv ement, nd it is strongest when the product or service is perceived s enh ncing selfim ge. When th t is the c se, involvement is likely to be enduring nd no f unction s st ble tr it, s opposed to being situ tion l or tempor ry. For ex mple, the purch se of the wedding trousse u, tends to be high involvement deci sion bec use your wedding is speci l occ sion nd it lso ffects directly you r self-im ge nd looks. A consumers physic l h ndic p m y lso ffect how involve d he or she is in buying home. Are there steps le ding up to the house? Is the re bedroom on the first floor, nd re doorw ys wide enough to ccommod te w heel ch ir? Although there is n bsence of the c reful re soning of EPS, there is not the i ndifference th t ccomp nies LPS. A high sense of emotion l involvement nd urge ncy, in effect, short-circuits the re soning process nd motiv tes immedi te ct

In the c se of bre d, the only decision v ri bles m y be which br nd, qu ntity nd ret il outlet. But in the c se of buying sof set the decision v ri bles r e f r more in number. These m y be:

iii. Time pressure Fig 13.1 C tegories of purch se beh viors Fig 13.1 shows four c tegories of purc h sing p tterns, r nging from br nd loy lty to v riety seeking. It incorpor tes f ctors such s consumer commitment or loy lty to br nds nd the number of br nd s purch sed in p rticul r time period. F ctors influencing the extent of probl em solving E ch decision you m ke involves n el bor te ment l thought process, degree of ctive re soning, though on the surf ce it m y not lw ys seem to be so. This m y be bec use over period of time you h ve t ken cert in decisions so m ny times th t they now seem to be m de lmost utom tic lly but th t is not true t ll. Even your d ily decision of buying lo f of bre d involves the el ement of ctive re soning s buying new sof set for your dr wing room. Howeve r, in the former c se, the extent nd intensity of ctive re soning m y be much less s comp red to the l tter c se. 298 Copy Right: R i University 11.623.3

ion. 1.4 V riety Seeking Consumers often express s tisf ction with their present br nd but still eng ge in br nd switching. The motive is v riety seeking, which occurs most often when there re m ny simil r ltern tives, frequent br nd shif ts, nd high purch se frequency. It c n occur simply bec use someone is bored wi th his or her current br nd choice, or it c n be prompted by extern l cues s st ore stock outs or coupons th t promote switching. Number of Br nds Purch sed in given time period SINGLE MULTIPLE Consumer HIGH Br nd V riety commitment Loy lty Seeking LOW Repe t Derived Purch se v ried beh viour beh viour

prob bly buy wh tever is re dily v il ble. While tr veling your c r tyre busts nd you dont h ve sp re nd hence you need to buy new one. At th t time you w ould buy the br nd th t is v il ble t wh tever price without giving it too muc h thought. But under different situ tion, when you need to buy new tyres, you would cert inly like to find the fe tures of nylon nd r di l tyres nd ev lu te v rious br nds e.g., Modi, MRF, Dunlop nd Apollo etc. on their individu l dv nt ges nd dis dv nt ges. CONSUMER BEHAVIOUR Activiity 1 . For e ch of the product/service given below, identify whether the purch se de cision involves high or low degree of involvement under norm l circumst nces: i. C r tyre ii. A p ir of sne kers iii. Rest ur nt iv. Toothp ste v. Motorcycle vi. Microw ve vii. Swe ter viii. VCD Pl yer ix. A bottler of Pepsi x. Book Shelf . In respect of the bove products, record which differenti ted ltern tives ( br nds) re v il ble in the m rket? Copy Right: R i University

(ii). Product f ctors: Products or br nds lso become involving if there is some perceived risk in purch sing nd using them. M ny types of perceived risks h ve been identified, including physic l (risk of bodily h rm), psychologic l (espec i lly, neg tive effect on self-im ge), perform nce (fe r th t the product will not perform s expected), nd fin nci l (risk th t outcomes will le d to loss o f e rnings). As is logic l, the gre ter the perceived risk, the gre ter the like lihood of high involvement. When perceived risk becomes un ccept bly high, there is motiv tion either to void purch se nd use ltogether or to minimize risk t hrough the se rch nd pre-purch se ltern tive ev lu tion st ges in extended pro blem solving. For ex mple, we m y become highly involved in the choice of doct or, especi lly when surgery is required, bec use of the high-perceived risk. (ii i). Situ tion l f ctors: Situ tion l or instrument l involvement includes f ctor s such s whether the product is purch sed for person l use or s gift, nd wh ether it is consumed lone or with others. Situ tion l involvement ch nges over time: it m y be strong on tempor ry b sis nd w nes once purch sing outcomes re resolved. This is usu lly the c se with f ds such s trendy clothing items in which involvement is high initi lly but quickly diminishes once the item is wor n nd f shions begin to ch nge. There lso re times when n otherwise uninvolvi ng product t kes on different degree of relev nce bec use ii. Differenti tion: When the consumer perceives th t the v rious ltern tives which re v il ble re very different from one nother in terms of their fe tures nd benefits offer ed, he is likely to spend more time in g thering inform tion bout nd ev lu tin g these different fe tures. On the other h nd, in c se of products which re not very different from one nother either in terms of their fe tures or benefits o ffered, the consumer is bound to perceive them s being lmost the s me nd buy the first v il ble product/br nd which s tisfies his minimum expect tion. He wi ll not like to spend much time in ev lu ting the v rious ltern tives. The v rio us br nds of w shing powder v il ble in the m rket tod y re n excellent ex mp le of low level of differenti tion with the consumer perceiving the different br nds to be offering lmost identic l benefit. All the br nds such s surf, Ariel , Tide, Rin, Nirm , etc., look simil r with identic l p cking nd c rry lmost t he s me price t g. Till few ye rs go the br nded shoes w s highly undifferent i ted with B t offering st nd rd options to consumers in terms of styles of sho es. Then c me the different pl yers in this m rket like Woodl nds, Liberty, Acti on, nd host of other multin tion l br nds cre ting on the w y multitude of segments in the otherwise st id shoes m rket like form l, c su l, sports shoes e tc. iii. Time pressure: When you re under pressure to m ke decision, you c nn ot fford to spend long time finding out bout the v rious products or br nds. You would 11.623.3

299

Key Terms CONSUMER BEHAVIOUR

Points To Remember V ri bles sh ping the decision Process Individu l differences Environment l influences Culture Soci l cl ss F mily Person l influence Situ tion Environment l influences Psychologic l processes 300 Copy Right: R i University 11.623.3

Individu l differences Demogr phics, psychogr phics, v lues nd person lity : Consumer resources Motiv tion Knowledge Attitudes

Individu l differences Environment l influences Psychologic l processes. Demogr phics Psychogr phics V lues Person lity Consumer resources Involvement Altern ti ve differenti tion Time pressure V riety Seeking Impulse Buying H bitu l decisio n m king Repe ted Problem solving Repe t Purch ses Psychologic l processes Exten ded problem solving (EPS) Limited problem solving (LPS) Routinised response beh vior (RRB) H bitu l-buying beh vior Disson nce reducing buying beh vior Complex buying beh vior

CONSUMER BEHAVIOUR

F ctors influencing the extent of problem solving i. ii. iii. Involvement Altern tive differenti tion, nd Time pressure Types of decision beh viour Initi l Purch se Routinised response beh vior (RRB) Limited problem solving (LPS) Extensive probl em solving (EPS) Involvement Person l f ctors Product f ctors Situ tion l f ctors Repe t Purch ses Repe ted Problem solving H bitu l decision m king 11.623.3 Copy Right: R i University 301

Psychologic l processes Inform tion processing Le rning Attitude

nd beh viour ch nge

CONSUMER BEHAVIOUR LESSON 37: TUTORIAL A college student h s to purch se new person l computer. Wh t f ctors does he consider before purch sing it? Dr w flowch rt to expl in his decision m king p rocess? Wh t f ctors might c use the student to experience post purch se disson nce? How might the student try to overcome it? How c n the ret iler who sold the computer help reduce the students disson nce? How c n the computers m nuf cturer help? Notes 302 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR LESSON 38: MODELS OF CONSUMER BUYING Introduction A model is very often referred to s n bstr ct represent tion of process or rel tionship. We tend to hold v rious models in our minds, which llow us to m k e sense of the world, nd lso help to predict the likely course of events. To p ut it simply, models help us in the development of theories, underst nding compl ex rel tionships, nd providing the fr mework fro discussions nd rese rch work. IN this ch pter we h ve m de efforts to ex mine the v rious models h ving relev nce to the consumer decision process. The prim ry concern is to use the models to underst nd consumer beh viour. Consumer beh viorists s well s m rketers re interested in underst nding how nd why cert in decisions re m de. In the left -h nd column bove, we c n see th t the decision process begins with the consume r recognising th t he or she needs or w nts to buy n item. Attention is then de voted to the t sk in h nd nd inform tion g thered. The consumer ev lu tes the o ptions v il ble, m kes his or her choice nd purch ses the product. At ny st g e in the process, events encountered t one st ge m y c use the consumer to reve rt to previous st ge; for ex mple, during ev lu tion, none of the options v i l ble m y prove s tisf ctory nd the consumer m y therefore decide to re ssess t he initi l need nd begin the process g in for completely different ltern ti ve solution. Conversely, with very common or repe t purch ses, p rticul r st ges (e.g. inform tion se rch) m y be p ssed through without conscious ttention bei ng pplied (i.e. m y be utom tised) bec use the inform tion required is lre dy v il ble in memory. Fin lly, note how the decision process doesnt end with purc h se - the extent to which purch se is deemed successful or unsuccessful will feed b ck to influence future purch se decisions. To the right of the di gr m, w e see environment l f ctors, which m y influence the decision-m king process t ny st ge. This c tegory would include whole rr y of v ri bles, r nging from exposure to dvertising nd promotion l m teri ls through to store tmosphere, c rowding nd the opinions of signific nt others. The di gr m is summ ry of the models v il ble which, however complex they m y ppe r, ll hypothesize the s m e line r decision-m king process. There is no one single univers lly ccepted mo del, e ch h ving its own p rticul r strengths nd we knesses. In w y, this is prob bly reflection of the m ny different consumer motiv tions highlighted bo ve p rticul r models being stronger th n others for specific types of shopping. There re two m in problems with mod l models such s this when it comes to thei r usefulness to the m rketer. Firstly, the box- nd- rrow ppro ch is r ther descri ptive. It tells us the decision-m king st ges the customer negoti tes, but tells us very little bout how the m rketer c n ctu lly influence these st ges to m ke his or her product/service the preferred option. The second we kness of this ppro ch is closely rel ted to the first. Note how the environment is merely lump ed together to the right of the di gr m. When we consider ll of the f ctors this encomp sses (store loc tion, l yout, dvertising, prev iling socio-economic con ditions, etc.), this seems woefully in dequ te. Moreover, the loc tion of the en vironment box sep r te to the decision-m king process gives the impression of th e environment s simply being something out there, divorced from the individu l sh opper. The re lity, of course, is th t Fig 14.1 Objectives After going through this lesson you should be ble to: Underst nd the import nce of Consumer modelling in decision-m king. Expl in the different simple models used in decisionm king Expl in the How rd-Sheth model of decision m king An lyse the Engel-Koll t-Bl ckwell model of decision m king 1. Consumer Decision-M king Since the 1960s, the study of consumer beh viour h s focused l rgely upon consumer decision-m king processes. Influenced by cognitiv e psychology, number of so-c lled mod l models (or box- nd- rrow models) h ve be

en proposed, presenting the v rious st ges the consumer goes through when choosi ng product to buy or store to shop in, presented in flow-ch rt form t (e.g. Nicosi , 1966; Engel et l., 1995). A r ther stylised summ ry of these mod l mod els might look something like this:11.623.3 Copy Right: R i University 303

consumers re p rt of the environment, inter cting with environment l f ctors nd influencing e ch other. A more ccur te model of consumer decision-m king wo uld prob bly loc te the environment box s follows: fields: (1) The source of mess ge to the consumers ttitude (2) The se rch for nd ev lu tion of ltern tives (3) The ct of purch se (4) Stor ge nd the use of the purch sed product. The model ttempted to demonstr te how the comp ny inf luences the consumer through its promotion l nd dvertising ctivities. However , criticisms h ve been r ised bout this model, include its descriptive content, its brevity, th t it h s never been fully tested nd is now considered historic l (Dubois, 2000). (Engel et l, 1995) developed model to expl in consumer beh viour nd highlighted five st ges of the decision m king process: (1) motiv tio n nd recognition of need (2) inform tion se rch (3) ev lu te ltern tives (4) p urch se (5) outcomes. Motiv tion, often referred to s need recognition, is indi vidu l to every consumer, nd focuses on the three key determin nts, inform tion stored in the memory, individu l influences nd environment l f ctors. Consumer s will consider the g p between the ide l st te nd the current perceived st te, thereby deciding whether to progress forw rd to the next st ge of the process, inform tion se rch. Se rch t kes two forms intern l nd extern l. The dependence on the two se rch modes will v ry in rel tion to the need recognised nd the in dividu l situ tion. Although inform tion se rch is prim rily conducted intern ll y, with the extreme level of involvement necess ry to m ke university choice i t is likely th t n extern l se rch would be used. It could be suggested th t wh en students enter the university decision m king process they dopt s tisfying ppro ch. Rese rch by (B kewell & Gibson-Sweet, 1998) suggested th t students m ke university decisions on incomplete inform tion. This is likely s students re busy, with work nd ex ms nd eventu lly get overlo ded with inform tion, so stop se rching. Furthermore, s educ tion l choice is gener lly one-off, the s e rch is likely to be quite extensive. This is supported by (Ass el, 1992) who r eports th t, buyer decision m king process v ry with the type of decision, nd t h t the more complex the decision, the more buyer deliber tion. Obviously univer sity choice is one of the most import nt decisions th t needs to be m de in st udents life with extensive decision m king t king pl ce, where signific nt lev el of effort is put into identifying key criteri nd moving through the decisio n m king process. Furthermore, if there re widely different ltern tives from w hich to choose from, then consumers re likely to get more involved in the decis ion m king process (Wells & Prensky, 1996). However, consumers re not lw ys r tion l nd do not consider ll the ltern tives. (Fox ll, 1980) when suggesting the limit tions to decisionm king models, st tes th t the models ssume n unre listic degree of consumer r tion lity. Often only n evoked set is considered (B lythe, 1997) this being limited number of ltern tives. When ev lu ting ltern tives, belief, ttitudes nd intentions re considered. This will then reduce t he ltern tives to the most suit ble options v il ble. Altern tive ev lu tion w ill lso be ffected by individu l differences, such s motiv tion, ttitudes n d knowledge s well s environment l influences. It is likely th t potenti l stu dents b se their ev lu tion on limited number of key criteri s opposed to lo oking t whole university offerings. At the fin l purch se st ge new f ctors m y ch nge the initi l decision. For inst nce in n c demic decision the issue of A level ex m gr des is likely to 11.623.3 CONSUMER BEHAVIOUR Fig 14.2 As you c n see, this revised model loc tes the decision-m king process within the environment box, recognising th t the individu l is p rt of the envir onment. 1.1 Consumer Decision M king Models Types of consumer beh viour models: Simple models

Bl ck Box models Person l v ri ble models Person l V ri ble/Post Purch se S tisf ction model

Perh ps the most useful set of c tegories is th t of low, medium or high level m odels. In this c se the level refers to the level of complexity - so low level model would be rel tively simple represent tion of the phenomenon while hig h level model of the s me event would be much more complex nd det iled nd incl ude more v ri bles. One of the most cited models is th t of the Bl ck Box (see Sol om n, B mossy & Askeg rd, 1999). Bl ck box models focus solely on inputs nd ou tputs nd do not consider intern l v ri bles. They suggest th t given stimulus will prompt p rticul r response, within this processing centre; memory, go ls nd expect tions re considered. Simple bl ck box models re b sed on identifi ble observ ble nd me sur ble v ri bles, however they re un ble to predict or e xpl in beh viour. Over time more comprehensives models h ve been proposed. One o f the e rliest decision m king models is the 1966 Nicosi Model cited in (Dubois , 2000). The model is split into four key 304 Copy Right: R i University

Engel, Koll t nd Bl ckwell How rd-Sheth Nicosi

Comprehensive models Engel, Bl ckwell

nd Mini rd

pl y n import nt role. Outcome c n either be s tisf ction or diss tisf ction. W hen s tisf ction is prev lent then the recognised need h s been met nd s tisfie d. However, if this is not the c se post-purch se cognitive disson nce m y occur where different ttitudes h ve to be weighed up s p rt of decision, nd the neg tive fe tures of the chosen ltern tive st rt to be pp rent, this then c us es diss tisf ction. Consumers c n try to ignore this, ch nge the decision m de, or concentr te on the good points of the decision m de to try nd reduce the dis s tisfied feeling. Models of Consumer Beh viour 1. Economic model: Economic mode l of consumer beh viour is one-dimension l. This me ns th t buying decisions of person re governed by the concept of utility. Being r tion l m n he will m ke his purch se decisions with the intention of m ximizing the utility/ benefits . Economic model is b sed on cert in predictions of buying beh viour ( ) price e ffect-lesser the price of the product, more will be the qu ntity purch sed (b) L esser the price of the substitute product, lesser will be the qu ntity of the or igin l product bought (substitution effect) (c) More the purch sing power, more will be the qu ntity purch sed (income effect). 2. Le rning model: Cl ssic l psy chologists h ve been interested in the form tion nd s tisf ction of needs nd t stes. They rgued th t living beings were influenced by both inn te needs such s the prim ry needs of hunger, thirst, sex, shelter nd le rned needs like fe r & guilt. A drive or intern l stimulus which when directed tow rds drive-reduc ing object becomes motive. The v rious products or service will ct s stimu lus to s tisfy drives. For ex mple, if you re hungry you will be driven tow r ds food, which fter consumption will reduce the drive nd provide nd provide s tisf ction. Psycho n lytic l model: This model is b sed on the work of psycholo gists who were concerned with person lity. They were of the view th t hum n need s nd motives oper ted t the conscious s well s subconscious levels. Sigmund Freud developed this theory. According to him hum n beh viour or person lity for th t m tter is the outcome of three components, viz., ( ) id which is the source of ll psychic energy which drives us s ction (b) super ego which is the intern l represent tion of wh t is pproved by the society (c) ego which is the conscious directing id impulses to find gr tific tion in soci lly ccept ble m nner. Thus we c n s y th t hum n beh viour is directed by complex set of deep-se ted mot ives. This me ns th t buyers will be influenced by symbolic f ctors in buying product. Motiv tion l rese rch h s been involved in investing motives of consume r beh viour so s to develop suit ble m rketing implic tions ccordingly. M rket ers h ve been using this ppro ch to gener te ide s for developing product-design, fe tures, dvertising nd other promotion l techn iques. 4. The sociologic l model: According to this model the individu l buyer i s p rt of the institution c lled society. Since he is living in society, get s influenced by it nd in turn lso influences it in its p th of development. He is pl ying m ny roles s p rt of v rious form l nd inform l ssoci tions or org nis tions i.e., s f mily member, s n employee of firm, s member of profession l forum nd s n ctive member of n inform l cultur l org niz ti on. CONSUMER BEHAVIOUR 1.1 The How rd Sheth Model of Buying Beh viour This model serves two purposes: 1 . 2. It indic tes how complex the whole question of consumer beh viour is. It pr ovides the fr mework for including v rious concepts like le rning, perception, ttitudes, etc., which pl y role in influencing consumer beh viour. 3. Inputs: In the How rd Sheth theory, the most signific nt stimulus ffecting the buying beh viour re the inform tion cues bout the ch r cteristics of the produ ct. These cues m y be signific tive if it comes to the buyer from the product it self when he is involved in shopping ctivity. A simil r set of cues, which r e symbolic in n ture, m y lso ct s inform tion sources. Both these signific t

Commerci l Noncommerci l Fig 14.3 Inform tion Sources 11.623.3 Copy Right: R i University 305

ive nd symbolic inform tion cues represent the firms m rketing efforts. The bro d or product ch r cteristics cting s inform tion cues re qu lity, price, dis tinctiveness, service nd v il bility. There re imperson l sources like m ss m edi communic tions nd dvertising, over which the firm h s no control. However , the inform tion sources lso include s les nd service personnel who c n dd nd help the m rketing efforts of the firm. The third source is soci l inform tio n cues which could ffect buying beh viour tow rds the product or br nd nd thes e include f mily, friends or other members of the group with whom buyer comes in to cont ct or to which he spires to be in. The soci l source is person l nd th e comp ny m rketer h s no control over this source. Person l (soci l) ) S lesmen b) Service person l ) F mily b) Reference groups c) Soci l cl ss Imperson l ) Product (Signific tive) b) Advertising (Symbolic) ) Print med (New Stories) b) Independent testing such s consumer reports.

Perceptu l Constructs: This refers to ll the complex st tes or psychologic l pr ocesses (perception) nd how the individu l de ls with the inform tion cues rece ived from v rious sources. It c n be seen th t ll inform tion v il ble is not ttended to ( ttention) nd m y not lw ys be cryst l cle r in its me nings ( mb iguity). Although the individu l m y be eng ged in n overt se rch for inform ti on, sometimes he/she m y be bomb rded with unw nted inform tion. Moreover, ny i nform tion cues to which the individu l m y ttend m y be distorted (perceptu l bi s) s result of his own fr me of reference. Le rning Constructs: The second s et of hypothetic l constructs in this theory re more complex nd numerous. Motiv es refers to the go ls the individu l ttempts to chieve through his/her buying beh viour. These go ls re derived from the v rious drives (needs), which m y be cting s cue for his/her motive. More closely rel ted to the buyers intentio n in his ttitude tow rds the product/br nd. Whether he/she formed positive t titude tow rds the product/br nd. Other le rning constructs include br nd compreh ension i.e., knowledge/ w reness bout the br nd ch r cteristic fe tures th t for ms the b sis for the buyers evoked set of ltern tives; choice criteri , nd the confidence the individu l h s bout his/ her br nd comprehension, ttitudes, or intentions. Fin lly, the model includes construct, s tisf ction. This refers to feedb ck mech nism, i.e., the post purch se nd post use ev lu tion of the output of the process. Output: The purch se decision is the output. If fter using the product, the consumer is s tisfied with it, this will reinforce his positive t titude nd purch se intent bout the product nd br nd. Also, the positive ttit ude m kes the consumer more ttentive to the product/br nds stimuli nd further i ncre ses his br nd comprehension. If the consumer is diss tisfied with experienc e of using the product/br nd, it will trigger off re ction of neg tive ttitud e, low ttention to the product stimuli. Poor br nd comprehension nd neg tive i ntention to purch se. Exogenous or extern l V ri bles: This theory lso includes number of v ri bles, which re not expl ined but h ve be ring on some or l l of the constructs discussed bove nd indirectly influences the output or cons umer response. 1. Soci l nd org niz tion l setting: M n is b sic lly soci l nim l. Bec use of his inter ctions with v rious groups nd society, they look to e ch other for guid nce reg rding wh t to buy, how to buy/dress, etc. Soci l cl ss: In order to conform to the norms of the soci l cl ss to which he/she belong s, the individu l will be eng ged in beh viour, which will be ccept ble to th e soci l cl ss to which it belongs. Culture: refers to the sh red, somewh t cons istent p ttern of beh viour of group of people. E ch culture h s set of beli efs, v lues, etc. So the p ttern of buyer beh viour will be b sed on p ttern o f beh viour sh red in specific subset of l rger culture- subculture tr it. 4. Purch sing power/ Fin nci l st tus: The money/income v il ble for purch sing go ods nd services during some specific time period lso pl ys role in influenci ng the consumption p ttern nd thereby his buying beh viour. CONSUMER BEHAVIOUR 2.2 Engel-Koll t-Bl ckwell Model V ri bles grouped into c tegories ) Stimulus inputs b) inform tion processing c ) decision process nd d) v ri bles influencing the decision process

Strength of model De ls with low-involvement situ tions. It is suggested th t in low involvement situ tion the degree to which the v rious st ges in the model re undert ken decre ses Problems with model No w y of testing e.g. If h d ide o f person lity ch r cteristics how could they be pplied or me sured in rel tion to predicting buyer beh viour L ck of specificity i.e. v ri bles re n med in su

perfici lly pl usible w y but not specified in ny oper tion l det il 2. 3. 306 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Fig 14.5 Engel-Koll t-Bl ckwell model (Source: J. Engel, D. Koll t nd R. Bl ckw ell, Consumer Beh viour, Dryden Press, New York, 1978) This model t lks of consu mer beh viour s decision m king process in the form of 5 steps or ctivities. The five steps re s under: 1. Problem recognition: the consumer will recognis e difference between his or her ctu l st te nd wh t the ide l st te should b e. This m y occur on ccount of extern l stimuli. Inform tion se rch: Initi lly the inform tion v il ble with the consumer m y be consistent to other beliefs nd ttitudes held by him or her. While being involved in n inform tion seeking or se rch st ge, the consumer will try to g ther more inform tion from v rious s ources. The individu l gets exposure of the stimuli which m y c tch his or her ttention, be received nd stored or ret ined in memory. This method of inform ti on is selective in n ture nd the consumer will ccept the inform tion, which is conclusive to wh t is perceived by them. Altern tive ev lu tion: Now the indivi du l will ev lu te the ltern te br nds. The methods used for ev lu ting the v r ious products will depend on the consumers underlying go ls, motives nd person l ity. The consumer lso h s cert in predetermined beliefs bout the v rious br nd s in terms of the ch r cteristics ssoci ted with the different br nds. 4. Choic e: the consumers choice will depend on his or her intention nd ttitude. The cho ice will depend on norm tive compli nce nd nticip ted circumst nces. Norm tive compli nce rel tes to the extent to which the consumer is influenced by other p eople like friends, f mily members etc. Outcome: The outcome m y either be positive o Ap rt from these 5 steps the model lso includes number of other rel ted v ri bles grouped into five c tegories. Inform tion input Inform tion processing Product-br nd ev lu tion Gener l motiv ting influences Intern lized environment l influences The Engel-Koll t-Bl ckwel l model consist of four components: i. ii. Inform tion processing Centr l contro l Unit (see fig 14.5) 2. 3. iii. Decision Process nd iv. Environment l influences 11.623.3 Copy Right: R i University 307

i. Inform tion processing: this component comprises the consumers selective exposure , ttention, comprehension nd retention of stimuli rel ting to product or br nd received from m rketing nd non-m rketing sources. As m rketer, the first s tep is to ensure th t consumer is exposed to your mess ge or stimuli, p ys tt ention to it, underst nds wh t it is ll bout nd lso remembers it. Purch sing power Problem recognition Inform tion se rch Altern tive ev lu tion C hoice Inform tion input Inform tion processing Product-br nd ev lu tion Gener l motiv ting influences CONSUMER BEHAVIOUR ii. Centr l Control Unit: The stimuli thus received nd ret ined re processed i n the centr l control unit. The stimuli is processed nd interpreted with the he lp of four psychologic l filter: . Stored inform tion nd p st experience bout the product/br nd which serves s memory for comp ring different ltern tives ; b. Ev lu tive criteri which the consumer uses in judging the ltern tives; c. Gener l nd specific ttitudes which influence the purch se decision; d. B sic person lity tr its, which influence how the consumer is likely to respond to v r ious ltern tives. iii. Decision process: The decision process component of the model consist of: . Problem recognition b. Intern l se rch nd ev lu tion c. e. Extern l se rch nd ev lu tion Decision outcomes d. Purch se processes If the p urch se decision is such th t it requires extensive problem solving, the consume r would go through ll the bove five st ges. In c se of limited problem solving or routinised response beh viour, some of the intervening st ges m y be skipped nd the consumer m y directly re ch the purch se decision. iv. Environment l In fluences: The environment l f ctors th t m y influence the consumers purch se dec ision re income, culture, f mily, soci l cl ss nd physic l situ tions. Dependi ng on the specific product under consider tion, these f ctors m y h ve f vor b le or unf vor ble influence on the purch se decision. Key Terms Points To Remember Types of consumer beh viour models Simple models o Bl ck Box models o Person l v ri ble models Person l V ri ble/Po st Purch se S tisf ction model Comprehensive models o Engel, Bl ckwell nd Mini rd o Engel, Koll t nd Bl ckwell o How rd-Sheth o Nicosi line r decision-m king process Bl ck Box Economic model Le rning model Psycho n l ytic l model The sociologic l model Perceptu l Constructs Le rning Constructs Ex ogenous or extern l V ri bles 308 Copy Right: R i University 11.623.3

CONSUMER BEHAVIOUR Models of consumer beh viour Economic model Le rning model Psycho n lytic l model The sociologic l model Exogenous or extern l V ri bles Soci l nd org niz tion l setting Soci l cl ss Culture Purch sing power/ Fin nci l st tus The How rd Sheth Model of Buying Beh viour Inputs Perceptu l Constructs Le rning Constructs Exogenous or extern l V ri bles Engel-Koll t-Bl ckwell Model Problem recognition Inform tion se rch Altern tive ev lu tion Choice 11.623.3 Copy Right: R i University 309

CONSUMER BEHAVIOUR 310

Notes Copy Right: R i University 11.623.3

Engel-Koll t-Bl ckwell Model (Cont) Inform tion input Inform tion processing Product-br nd ev lu tion Gener l motiv ting influences Intern lized environment l influences

CONSUMER BEHAVIOUR LESSON 39: INDUSTRIAL BUYING BEHAVIOUR Introduction A model is very often referred to s n bstr ct represent tion of process or rel tionship. In this ch pter we re going to de l with the industri l buying pr ocess with the help of the Sheth model of Industri l buying. 2. Ch r cteristics of the Product nd the Buying Org nis tion In the figure 14.2 of the model these elements re coded (2). In this Sheth t lk s of the ctu l buying process nd contends th t it is ffected by: The Product Specific F ctors (2 ) re:

Underst nd the industri l buying process Expl in the Sheth model of Industri l b uying Beh viour Time pressure: Group decision will t ke longer time s comp red to individu l on es. Perceived risk: When the decision involves risk, more members of the DMU wil l be involved. Type of purch se :If the type of problem is n extensive problem, then more members of the decision m king unit (DMU) will be required unlike s imple repe t purch se, where single individu l c n be sked to c rry out the d ecision. This model concentr tes on the purch sing process nd highlights the import nce of four m in f ctors: ( ) The expect tions of the individu ls m king up the deci sion m king unit (b) The ch r cteristics of both the product nd the org nis tio n (c) The n ture of the decision m king process (d) The situ tion v ri bles Thes e f ctors re discussed more in det il: 1. Expect tions within the org nis tion These elements re mentioned under (1). According to Sheth, every person in the DMU brings with them, their unique set of ttitudes nd orient tions. Their expe ct tions will be conditioned by the individu l b ckground (1 ) educ tion (gener l or profession l), role orient tion ( ccount nt, production m n ger, engineer e tc.,) life style. Their expect tion will ll be influenced by: The v rious sourc es of inform tion (1 b) - (s les persons, exhibition nd tr de shows, direct m i l, press rele ses, journ l dvertising, profession l nd technic l conferences, tr de news, Comp ny Specific F ctors (2b) re: Org niz tion l orient tion ;-Is the firm s le s nd m rketing oriented? Or is it technology domin ted one etc., Depending on h ow the org nis tion sees itself will determine the intern l power b l nce nd in fluence in the DMU. Org niz tion size: - Depending on the size of the org nis tion, will determine t he group decision-m king. If the org nis tion size is sm ll, it is more likely t h t single buyer will possess ll the relev nt inform tion. But if the org nis tion is l rge one, it is more likely th t there will be group decision m king . Degree of centr liz tion: - Decentr lized org nis tion involve lot more peop le in the decision m king th n centr lized org nis tions, which h ve centr liz ed buying function.

Objectives After studying this lesson you should be

ble to

3. N ture of the Decision-m king Process In the model, the elements re coded (3) Sheth h s differenti ted between utono mous decisions nd those t ken jointly by the DMU. When decision is t ken uto nomously, it is usu lly (rel tively) str ightforw rd. However, when group is i nvolved in decision-m king, conflict is likely to rise bec use of the different go ls nd orient tions with the people within the group. The model lso devotes section (3) on how to solve the conflict: Problem solving Persu sion B rg ining Politicking 11.623.3 Copy Right: R i University 311

World of mouth) nd the process through which they h ve obt ined the inform tion . Perceptu l distortion (1 d) (could be s result of the form of communic tion ). The persons previous experience (1 e), which will medi te the incoming inform tion. The ctive se rch (1 c) c n be c rried out by nyone listed in the DMU - p urch sing gents, engineers, users, others .

4. Situ tion l V ri bles These elements re coded (4) in the model. Here Sheth h s referred to unforeseen f ctors, those th t f ll outside the control of the decision-m king unit (DMU) nd could ffect the purch sing org nis tion or the suppliers. For ex mple - ind ustri l rel tion problem, m jor bre kdowns, c sh flow problems, b nkruptcy etc. Model of Industri l Beh viour CONSUMER BEHAVIOUR SUB FIELD 1 FIRMS ATTRIBUTE MESSAGE EXPOSURE SUB FIELD 2 CONSUMERS ATTRIBUTE (Predispositions) ATTITUDE EXPERIENCE Field 2 se rch for nd ev lu tion of SEARCH me ns end (s) rel tion(s) (pre ction field EVALUATION MOTIVATION Field 4 The feed b ck

Activity 1 Identify ny org nis tion nd find out whether it is production domin ted or tec hnology domin ted. Which re the key dep rtments or personnel involved in m king purch ses directly rel ted to the production process? 312 Copy Right: R i University 11.623.3

CONSUMPTION STORAGE Field 3 The DECISION purch sing eh vior

ction (Action) Purch sing b

C se 2 Industri l M rketing Apex Electric l Comp ny Ltd Mr. N th n, s les m n ger of Apex Electric l Co. Ltd, received propos l from h is region l m nger t B ng lore for opening sub-office in Chenn i nd w s cons idering wh t the best decision would be the comp nys short-run s well s long-ru n interests. The comp ny w s in the business of m nuf cturing nd m rketing elec tric motors of wide r nge of horse powers th t could be used s prime mover in numerous pplic tions. The comp nys f ctory nd he d office were situ ted in M umb i nd it h d br nch offices t New Delhi, Kolk t nd B ng lore: e ch he ded by region l m n ger. The region l office t B ng lore w s responsible for s l es in K rn t k , T mil N du nd Ker l . The comp ny lso m int ined godown t B ng lore, which, w s used s the stocking center for feeding s les to the entir e region. The comp nys distribution network h d grown over sever l ye rs nd s s uch there w s no one rule by which the rr ngements could be expl ined. In K rn t k , due to the proximity of the region l he dqu rters, the distribution networ k w s closely controlled by the region l office. The comp ny h d sever l de lers covering s les nd they ll purch sed goods directly from the region l office. All the de lers got fixed discount. The ultim te price for the customers were fixed by the comp ny. E ch de ler covered specific re , which w s gener lly o ne to sever l districts nd the comp ny discour ged the interference of one de l er in nothers territory. However, in the cities of B ng lore nd Mysore, there w ere more th n one de ler. They collectively covered the s les in the city. The c omp ny s lesmen regul rly cont cted the de lers nd the office m int ined good m rketing inform tion. In the st tes of T mil N du nd Ker l , however, the rr n gement w s quite different. Due to some historic l re sons, ll the s les in thi s territory were ch nneled through one distributor. This distributor in turn h d ppointed his own de lers to cover the cities of Chenn i nd Kochi nd other di stricts in these 2 st tes. The region l office, therefore, h d very little infor m tion on the ex ct m rketing set-up in this territory nd the distributor oper ted lmost independently. On sever l occ sion, the region l m n ger h d ttempte d to bring the distributor under closer control. He h d the impression th t the comp ny w s not ble to exploit the full potenti l of the region l due to the u thorit ri n rule of the distributor. He occ sion lly received reports th t the d istributor w s not even w re of cert in import nt tenders flo ted in the region nd th t on other occ sions he h d not bothered to submit quot tions in time. T here were lso compl ints from de lers th t they did not get f ir de l nd wou ld inste d prefer to de l with the comp ny directly. The s les nd service perso nnel of the region l office used to visit the st tes of T mil N du nd Ker l on ly when requested specific lly by the distributor. Their independent visits were gener lly objected to by the distributor, s it would me n by-p ssing him. The re l problem behind this w s th t the distributor h d, in the initi l st tes, gi ven consider ble fin nci l help to the comp ny. He w s lso n import nt sh reho lder nd thus h d connections t the highest level. This did not me n, however, th t the top m n gement w s prep red to s crifice the com p nys interests. But t the s me time they preferred to le ve the distributor und isturbed. The region l m n ger felt th t the little pieces of neg tive feedb ck he h d received could be the tip of the iceberg. However, in the bsence of ny inform tion, he could not put up convincing c se g inst the distributor. He h d lw ys been helpless whenever some de ler working under the distributor compl ined to him. He felt it would seriously ffect their mor le if they re lized th t the comp ny could not control the distributor. He h d discussed this m tter t length with the s les m n ger, Mr N th n re lized th t some tightrope w ling w s needed if he h d to steer nd cle r this problem. Mr. N th n w s, however, n xious to do something bout it nd one ide w s to open n office t Chenn i, th e he dqu rters of the distributor. While this would be for the decl red purpose of helping the distributor in his m rketing effort, it would lso put n utom t ic check on undesir ble pr ctices. Moreover, the suboffice could collect more f ctu l inform tion th t could be used to put up convincing c se g inst the dis tributor, if such need rose. Accordingly, the region l m n ger h d now submit ted det iled propos l for opening sub-office t Chenn i, which would look f

ter T mil N du to st rt with. The comp ny h d strict policy of insisting on th e region l office to chieve fixed r tio of s les per rupee of expense. For th e B nglore office this r tio w s 50 in the previous ye r when the s les were Rs 2 crore nd expensed Rs 4 l kh. Of this, the s les in T mil N du were Rs 50 l kh . The propos l st ted th t s les forec st of Rs. 60 l kh could be expected in T mil N du next ye r nd estim ted expenses of Chenn i sub-office t Rs 1.2 l kh , thus chieving r tio of Rs 50 s les per rupee of expense. Among other things , the det ils of the propos l st ted the following splitting up of the expensesRs 40,000 tow rds s l ries nd Rs 30,000 tow rds tr veling expenses of 2 s les p ersonnel who would be tr nsferred from B ng lore to Chenn i. CONSUMER BEHAVIOUR Questions 1. 2. Wh t decision would you t ke if you were in pl ce of Mr. N th n? Do you fe el the propos l of new sub-office is economic lly justified g inst the st ted p olicy of the comp ny? If yes, why? If no, then how could it be m de justifi ble. ? T ken from the question p pers of F culty of M n gement, Delhi University questi on p per for April 1995. M ximum time to solve this c se study: 40 minutes. Key Terms Decision m king unit Situ tion v ri bles Perceptu l distortion Active se rch Pro duct Specific F ctors Time pressure 11.623.3 Copy Right: R i University 313

 Type of purch se Perceived risk Org niz tion l orient tion Org niz tion size Deg ree of centr liz tion Problem solving Persu sion B rg ining Politicking It ccounts for bout 35 per cent of the tot l be rings m rket. The electric l i ndustry is nother m jor driver of the OE be rings dem nd. Industry m jors such s SKF, F g nd NRB h ve strong presence in the OE segment of the be rings indu stry. Given this b ckdrop, it is evident th t the business prospects for domesti c be rings producers hinges on utomobile output nd industri l growth. Toll of the slowdown Being the single l rgest source of dem nd, the prospects of the dom estic be rings industry is influenced l rgely by the countrys utomobile producti on. Due to the sh rp slowdown in the utomobile output, the perform nce of domes tic be rings producers w s ffected in 1999-2000 nd 2000-01. NRB Be rings, for inst nce, s w its turnover drop to Rs 137.6 crore for the ye r ended M rch 2001 from Rs 141.94 crore recorded the previous ye r. The comp nys post-t x e rnings d ropped to Rs 8.31 crore from Rs 12.17 crore. The perform nce of other be rings c omp nies such s Antifriction Be rings or Asi n Be rings w s no better. SKF nd F g were bro d exceptions to over ll subdued trend. By virtue of presence cross wide spectrum of industries nd the introduction of new products, both comp n ies m n ged to record much improved perform nces comp red to others in the indus try. Ap rt from the slowdown in the uto sector, the economic nd industri l ct ivity too w s t low ebb during this period, which compounded the problem for do mestic producers prim rily exposed to the OE segment. However, the improvement i n commerci l vehicle nd twowheeler production over the l st six months resulted in higher business volume for industry m jors. SKF, for inst nce, recorded 17 jump in turnover to Rs 199.5 crore for six months ended June 2002. NRB too s w turnover grow in this period. However, F g Be rings s w rel tively sober tre nd owing to the over ll slowdown in the export m rkets it c ters to. Profit bili ty under stress Though the recent improvement in uto production pushed up s les volume, the bottomlines continue to rem in under pressure owing to the rise in input costs nd mounting competitive pressure both from within nd che per impor ts. Despite 17 per cent rise in turnover, SKFs oper ting profit for the h lf ye r ended June 2002 dropped to Rs 31.66 crore from Rs 34.79 crore. Even fter cc ounting for drop in income from other sources, the comp nys oper ting profit do es not reflect the buoy ncy in the turnover. The rise in input cost (including s teel) h s pl yed key role in ffecting profit bility of domestic comp nies. Th e competitive pressure nd the c p city overh ng in the industry h s prevented d omestic m jors from revising prices, especi lly in the OE segment. CONSUMER BEHAVIOUR Article Discuss the following rticles in cl ss Be rings Industry: Friction Free? BEING he vily dependent on the utomobile sector, the be rings industry h s h d some relief due to recent improvements in the production of commerci l vehicles nd two-wheelers. However, the profit bility nd the bottomlines of industry m j ors continue to rem in subdued owing to mounting competitive pressure. If the re cent developments in the industry re ny indic tion, the be rings industry is p rogressing tow rds more dyn mic ph se. While top glob l comp nies such s SKF, F g nd Torrington h ve presence in Indi , INA Germ ny recently entered the f r y by setting up production f cilities here. Other glob l m jors such s NSK n d Koyo Be rings of J p n h ve entered the Indi n m rket through m rketing outlet s. On the other h nd, the flow of che per imported be rings (especi lly from Chi n ) continues to ffect business volumes of domestic producers, p rticul rly in the lucr tive repl cement segment. Ag inst this b ckdrop, domestic comp nies re t king quite few efforts to rem in enh nce business volume. From n investmen t perspective, it would be s fer to reduce equity exposure in the be rings indus

try owing to rel tive uncert inty pert ining to ne r-term growth prospects. More over, the sh re price of top comp nies such s SKF Be rings, F g Be rings nd NR B Be rings h ve lre dy ppreci ted from the levels th t existed s y 6-8 months go. Given this scen rio, it would be better to book profits nd p re exposures. A fresh look t comp nies in the be rings industry would be w rr nted l ter if the recent pick-up in the utomobile sector gets stretched for longer period. Piggyb cking on uto sector The dem nd for the Rs 2,300 crore be rings industry flows from origin l equipment (OE) nd the repl cement m rket. Of the two, the O E segment ccounts for bout 60 per cent of the m rket while the repl cement m r ket chips in with the rem ining 40 per cent. As f r s the OE segment is concern ed, the utomobile industry is the single l rgest driver of dem nd. 314 Copy Right: R i University 11.623.3

As result, the incre se in turnover h s not tr nsl ted into rise in post-t x e rnings. Where repl cement is the key In the repl cement m rket, the bulk of t he dem nd ccrues from the industri l segment, including he vy engineering, text ile m chinery nd consumer dur bles. Unlike the utomobile segment, in the indus tri l sector the repl cement m rket segment is the princip l driver of dem nd. T he repl cement m rket is lso ch r cterised by the presence of l rge number of p l yers from the unorg nised nd the sm ll sc le sector. These producers offer pr oducts t subst nti lly lower prices either by ev ding or seeking exemption from levies such s excise duty nd s les t x. As result, the unorg nised sector c ters to bout 15 per cent of the current be rings m rket dem nd. Ap rt from the unorg nised sector pl yers, the repl cement m rket is lso serviced, to l rge extent, by the imported be rings. Imports ccount for bout 30 per cent of the tot l be rings m rket. This could be p rtly expl ined by better product re lis t ions in this m rket. Imports re presently concentr ted in product segments wher e domestic producers do not h ve ny presence. While non-CRM user is powerless to ddress this re lity, comp nies th t segmen t nd m rket ccording to CRM str tegy c n grow their business che ply by simp ly serving fewer unprofit ble customers, ll of whom c n be efficiently identifi ed nd t rgeted. Th t might sound n them to comp nies conditioned to the often ( b)used term Customer is king. He still is, only this time the comp nies get to choose their kings. However enterprise-wide projects require huge investments. S o wh t it is to be done? If your comp ny underst nds th t CRM is critic l but th e funds re not v il ble to implement qu lity c p bility, one possible w y to move he d could be the rele se the critic l funds str tegy. It requires you to t hink of CRM s holistic business str tegy nd one w y to fund holistic CRM s tr tegy is to cre te oper tion l efficiencies in nother p rt of the business, f or e.g., in the b ck office. Most comp nies h ve invested huge qu ntities of c p it l in their b ck-office environments. To move forw rd in tod ys economic re lit y, these comp nies need to free investments in one re of the business to fund more import nt business str tegies such s CRM. Comp nies need to view ssets in two c tegories, str tegic nd non-str tegic. Str tegic ssets re those viewed s vit l to the future growth nd success of the business. This does not me n th t non-str tegic investments re not import nt. It simply implies th t they repr esent n opportunity to g in ccess to locked-up c pit l. Str tegic ssets provi de growth in good times nd insul te g inst downturns, investments th t strengt hen rel tionships with customers such s CRM, s les force utom tion (SFA), m rk eting utom tion (MA) nd customer inter ction centres could be considered str t egic ssets, while non-str tegic investments m y include b ck office systems, de sktop m inten nce leg cy systems or ny other non-critic l ctivity th t is done in-house. After this segreg tion, ltern tive rr ngements like outsourcing sho uld be considered to reduce costs in these non-str tegic re s in order to free c pit l for str tegic IT investments. The outsourcing ltern tive Lets consider t he outsourcing ltern tive. Theoutsourcing model c n be implemented in two w ys. The first is to let the outsourcer fund the c pit l required for the CRM projec t, for ex mple entering into de l with outsourced customer cont ct centres. Th is is good option s there is no immedi te c sh outflow. However this option i ncre ses the tot l cost of ownership, s the outsourcer will ch rge the interest on the c pit l. Also this option m y not be ttr ctive for org nis tions th t w nt to ret in control over the ssets but h ve funding constr ints for the entir e CRM initi tive. The other option is to prioritise the CRM initi tives nd use the v il ble c sh to fund the higher priority initi tives nd postpone the othe rs until the outsourced services provide enough s vings to move he d with other initi tives. This option reduces the tot l cost of ownership, nd lso en bles org nis tion to re lise its CRM vision. This is more conserv tive ppro ch, but then so re most CFOs. In this c se CONSUMER BEHAVIOUR Customer Is King, But Which One?

Customer Rel tionship M n gement (CRM) will help comp ny t rget its most v lu ble customers. MOST chief inform tion officers (CIOs) m y believe th t these re not the right times for new projects with expensive funding requirements. But t his might prove myopic, especi lly where customer rel tionship m n gement (CRM) is concerned. The l st thing n org nis tion would w nt now is to lose customers . This is the time to tighten rel tionships with customers. It is on the strengt h of these rel tionships th t comp nies will survive the downturn. In f ct, most m rket n lysts re telling comp nies to invest in the most suit ble CRM techno logy before the competition be ts them to it. Why is CRM str tegic? Though it c nnot be suggested th t CRM pplic tions c n compens te for ll the ill effects o f slower economy, they c n help to m ximise customer v lue. A slowing economy me ns customers spend less, but one of the b sic ims of CRM is to g in sh re of the customers w llet so th t the comp ny g ins on n over ll b sis. This focus on the customer helps p rticul rly in tight situ tion, s ll customers re n ot equ l. In ny customer b se, there will lmost cert inly exist some customers who tend to cost more to serve th n they re likely to return in profit. Theref ore, the sm rt comp ny will grow its business by m n ging its customer rel tions hips in order to m ke e ch individu l customer optim lly profit ble. If you know your customers nd prospects nd how they v ry by v lue, revenue nd/or profit potenti l, it m kes sense to concentr te on those who re more likely to gener t e the most profit. 11.623.3 Copy Right: R i University 315

comp nies (especi lly in the c se of business-to-business m rketing context). 2) A non-tr ns ction l orient tion on the p rt of the m rketer. A tr ns ction is one-off inter ction nd hence CRM involves combin tion of str tegies th t b uilds the rel tionship between the m rketer nd customer over period of time ( though tr ns ction-b sed loy lty progr mmes c n be formul ted). The m rketer mus t be willing to invest in infr structure required to implement CRM. The infr str ucture could include Web-b sed h rdw re/softw re, which could effectively h rnes s the dv nt ges of CRM. CONSUMER BEHAVIOUR 3) Customer Rel tionship M n gement (CRM) h s become topic of interest, especi ll y with the onset of e-commerce. As CRM is term th t is used in bro d sense, m rketing pr ctitioner needs to underst nd wh t CRM is, in terms of its pplic bility to the org nis tion, its imp ct nd its benefits to customers. There is need to underst nd th t CRM is n over ll str tegy for the org nis tion nd no t just s les tool with short-term orient tion. It requires long-term pl nning nd nything longterm requires strong org nis tion l commitment nd ppropri t e investment. CRM s concept is s old s m rketing itself. Firms in both cons umer nd business-to-business m rketing h ve lw ys (either by ccident or by in tent) m de ttempts to encour ge repe t buying from consumers. A consumer would h ve experienced nd re lised this spect of CRM in n indirect form from grocer y shops or even l rge outlets. In tod ys context, wh t h s been dded to this ki nd of CRM is the coll bor tive nd co-oper tive spect from the consumers end. T his kind of coll bor tive effort could ssume either complex form in businessto-business m rketing (with different buying influences) or it could just involv e the consumer using credit c rd sh ring his person l (demogr phic nd psychog r phic) inform tion with the m rketer. The CRM structure for business-to-busines s m rketing m y be different from th t of consumer m rketing. The concept of CRM CRM is rel tionship process which comp ny c n cultiv te with its customer g roups/segments in such w y th t it would benefit both the customer nd the com p ny. The prerequisites of ny CRM progr mme re: 1) Both the comp ny nd the cu stomer should be willing to st y committed to the rel tionship th t is b sed on mutu l benefit. This is required bec use process ch nges m y h ve to be initi te d in both org nis tions. Hence, the top m n gement h s to be convinced bout CRM in both the CRM nd its link gesAny CRM progr mme should be ssoci ted with the spects of l oy lty nd customer s tisf ction. These two spects point out th t different cus tomer segments/groups would be interested in different dimensions of the offerin gs m de by the m rketer. The implic tions will depend on the m nner in which loy lty progr mmes re pl nned nd s tisf ction p r meters re monitored. The selec tion of the t rget segment (or specific comp nies in business-to-business cont ext) is lso of utmost import nce. This is bec use profit bility of CRM progr mme will v ry cross segments (or comp nies). Rese rch shows th t only round 20 per cent of consumers using the frequent flier progr mmes in the irline indust ry contribute to round 80 per cent of profit bility. Given the f ct th t these progr mmes c nnot be stopped bruptly (should the need rise due to profit bilit y re sons), especi lly when competitive irline comp nies re following suit, comp ny h s to be very c reful in selecting specific segments of customers even for str tegy such s frequent flier progr mme (common in the intern tion l ir line circuit). A comp ny such s T t Steel, which h s invested he vily in its c

the org nis tion will of course h ve to w it until the v lue in unlocked through outsourcing. But selecting n outsourcing v lue th t c n be quickly re lised c n minimise even this downside. This ltern tive thus develops oper tion l effici encies simult neously with the CRM c p bilities. Seeking Customers And Ret ining Them

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old-rolled mill infr structure, would like to select segment such s utomobil es nd/or specific comp nies in this segment, which re conscious of the dv nt ges of h ving rel tionship with T t Steel. These comp nies re lso likely to p y premium for the rel tionship, s it is likely to produce the differenti t ion which consumers of the end-product re likely to ppreci te (for ex mple, co nsumers buying c rs). While there is subst nti l growth in the SOHO (sm ll offic e home office) segment nd in SMEs (sm ll nd medium enterprises), comp ny suc h s Dell Computers m y decide to concentr te on l rge comp nies for its CRM pro gr mmes for loy lty nd profit bility. It m y lso be essenti l for comp ny to ssess the lifetime v lue of customer before formul ting CRM progr mme. Whi le loy lty nd s tisf ction re strongly linked to CRM progr mmes, the specific objective of one m y h ve to be decided by comp ny before pl nning it. For ex mple, reducing the cost of distribution m y be the objective of CRM progr mme. This m y involve working out nd restructuring ordering p tterns, t king into c onsider tion the consumption p tterns nd inventory levels t the customers end nd the production systems t the m nuf cturers end.

CONSUMER BEHAVIOUR

for procuring sp res from different comp nies, if trucks re bought from differe nt m nuf cturers. A comp ny with CRM progr mme is likely to give the customer enh nced priority in terms of ttention p rt from cost s vings over period of time. The one-to-one m rketing progr mme, which is gener lly ssoci ted with co nsumer products, could lso be effectively pplied to business-tobusiness m rket ing. Procter & G mble h s speci l te m to service nd develop its business wit h W l-M rt, the l rgest ret iler ch in in the world. The Key Account M n gement concept, in which customer te ms re employed by comp nies (chemic ls nd comput ers m y be ex mples), is kind of oneto-one m rketing nd when this concept is extended to comp ny which h s multiple loc tions ( comp ny m rketing m chiner y to consumer product comp ny in sever l loc tions) the concept becomes N tion l Account M n gement progr mmes. Such str tegies involve extensive resource ll oc tion to te ms nd in-depth pl nning with customer on their specific needs. CR M nd consumer products Loy lty progr mmes, which re common in the irline nd credit c rd industries, re continuity progr mmes. The limit tion of these progr mmes is the domin nt presence of tr ns ction-orient tion. A typic l rel tionshi p progr mme should not be dependent on sheer tr ns ction l v lue. Firms should lso h ve ppropri te segments b sed on customer yield, which essenti lly point t o profit bility spects. A structured nd pl nned effort with extensive rese rch involving sever l spects of the buying process m y be required to focus on the right type of segments. The best form of such loy lty progr mmes should combine tr ns ction l elements with inform tion bout the c tegory nd bout the specif ic needs of the consumers. Hence, combin tion of tr ns ction l orient tion nd one-to-one orient tion (not only in terms of price but lso in terms of speci l ised nd customised needs) is likely to be effective in seeking nd keeping cust omers. A br nd such s Ponds offers customised dvice on skinc re to individu l consumers nd in the process is ble to cre te d t b se of consumers. This non -tr ns ction l ppro ch of dr wing customers tow rds the br nd could be combined with specific str tegies of offering cert in benefits to speci l consumers who h ve purch sed the products of the br nd beyond specific v lue over period o f time. Frequency m rketing progr mmes nd inter ctive progr mmes could be focus ed on specific segments depending on the response of consumers over period of time. A prerequisite for CRM, especi lly in consumer products, is the v il bili ty of inform tion on demogr phics, psychogr phics nd spending p tterns. In the Indi n context, it m y t ke little longer for m rketers to provide such inform tion bec use est blishing d t b se would depend on the penetr tion of credit c rds nd their us ge t ret il points. D t -mining techniques lso enh nce the qu lity of one-to-one progr mmes. The Net nd CRM In country where computer pe netr tion nd Internet penetr tion is low, it m y be too e rly to discuss the im p ct of the Net on CRM. But it m y be worthwhile to study the e-loy lty

Simil rly, in consumer m rketing, the objective of CRM progr mme for f st fo od comp ny m y be to incre se the frequency of purch se of food item. A promot ion for the br nd c n be p rt of the CRM progr mme. This would result in repe t purch se from cross-section of consumers nd they m y lso be s tisfied with the m nner in which the comp ny h s done it (for ex mple, providing v riety o f recipes with food item, for segment which the comp ny believes could be lo y l). Loy lty in c tegories such s f st foods, so ps nd confectionery could be driven through innov tive CRM progr mmes. Ap rt from loy lty nd s tisf ction l ink ges, communic tion is vit l spect of ny CRM progr mme. Communic tion wit h reg rd to sophistic ted offerings concerning the product c tegory, the efforts of the comp ny/br nd to keep itself upd ted in terms of the benefits offered, s tisfied customers of CRM progr mme nd specific benefits of CRM progr mme m y help m rketer keep in touch with prospective t rget segment of consumers who m y like to be p rt of CRM progr mme. The following guidelines m y en bl e m rketer to identify specific customer groups which m y be men ble to CRM p rogr mmes.

Business-to-business m rkets Segment tion criteri Percent ge of Customer Profit bility Price sensitive (no frill offering) Pre-s le service Annu l M inten nce Contr ct nd sp res Willingness to try innov tive products

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The l st criterion m y be especi lly be useful to comp nies which oper te with s ophistic ted technology. These comp nies, working with the l test technology, m y w nt to est blish CRM progr mme for customers who re willing to try out inn ov tive products, if it would benefit their pplic tions. Xerox worked with irc r ft comp nies (such s Boeing) to introduce its Docutech model of copiers, whic h is ide l to edit, copy nd process sever l p ges of d t , most suited for irc r ft m inten nce m nu ls. A distinctive m nu l could be used for every ircr ft. A m nuf cturer of trucks (such s Ashok Leyl nd or T t Engineering) m y be int erested in CRM progr mme with fleet owners who own sever l vehicles of their m ke. A m inten nce p ck ge c n be customised for every customer depending on the number nd us ge of vehicles. The customer is likely to be involved in the prog r mme if it lso includes sp res m n gement. Loy lty is lmost logic l sequenc e in this context bec use the customer re lises th t there is link between the CRM progr mme nd the cost s vings ( chieved by buying the s me br nd of truck) over period of time. The customer is likely to h ve the benefit of de ling wi th the s me comp ny with reg rd to m inten nce schedules, inter-person l rel tio nships, reduction in bre kdown due to recurring problem bec use it c n be nti cip ted nd voided nd the prob ble l ck of switching cost

most Indi n comp nies, like most comp nies intern tion lly, h ve policies th t w ere designed to protect them from customers s opposed to policies th t re desi gned to ctu lly m ke it e sy for customers. So, I think one of the things top m n gement needs to do is look through ll the policies they h ve nd see which o nes m y ctu lly be d m ging to some customers nd work t correcting them. One spect of CRM is developing customer loy lty tow rds the comp ny. Wh t bout the reverse: s in how do you get the comp ny nd its employees to be loy l to cust omers? Wh t I find works the best is simple - tr ining. The best w y to do th t employee tr ining is to ctu lly h ve the employees, the customers nd the m n g ement ll together in room working through the issues from the customers point of view. Th ts the w y we use customer scen rio m pping to bring in group of cust omers nd s y how do you w nt to do business with us in these different re s? Th t gets everybody on the s me pl tform nd shows them ex ctly which policies need to be ch nged nd how. And the employees c n then see wh t ctions they c n t k e to improve things. You lso need to put into pl ce system to monitor nd me sure both customer s tisf ction nd those p rticul r incidents th t m tter the m ost to customers, wh t I c ll the moments of truth. Thus, everybody c n see wh t t he bottomline is _ wh t the imp ct is in terms of customer loy lty, incre sed sh re of w llet, incre sed spending on the p rt of th t group of customers nd so on. Wont culture h ve something to do with the w y customers give feedb ck to the comp ny? Its one thing to get the customers, employees nd the m n gement in r oom, but its nother thing to get the customers to give honest feedb ck, especi l ly in Indi where people tend to be extremely polite. Wh t does comp ny do in such situ tion? I h ve discovered th t the customer scen rio m pping ppro ch wo rks re lly well cross cultures, nd h ve done it ll over the world. The re son is bec use you re not just sking the customers Wh t do you think? or How re we doing? Wh t you re doing is getting the customer to st nd up nd objectively s y Heres how I would ide lly like my t sk ccomplished. And s they go through it, if your f cilit tion is good, you c n sk them Is th t the w y youd re lly like to d o it? or Is th t the w y you do it tod y so you dont hurt peoples feelings? And when you get bunch of customers together nd re lly egg them on, they will get very honest. How does the customer scen rio m pping ppro ch work? We define customer scen rio s the set of steps customer needs or is willing to t ke in order to re ch their desired outcome. And scen rios re different by context. So custom

p ttern in developed m rkets s they offer cert in interesting insights. The fol lowing spects would be useful for e-m rketers to formul te their str tegies: 1. E-commerce (in B2C) should necess rily focus on v lue benefits. V lue, in this context, could be the ddition l price discount, which is offered by the e-store . Ret iling, the world over, is b nking on the spect of price (W l-M rt, KM rt nd other l rge ret ilers). Am zon.coms prices re 30 to 40 per cent lower th n the prices offered in brick nd mort r stores. Hence, there is need to combine inform tion oriented non-tr ns ction l progr mmes with the low-price str tegies . Excitement in the form of exclusive l unches m y be required to keep online cu stomers coming b ck to the store. F bm rt recently h d n exclusive l unch on th e Net. Studies show th t if customer retention is incre sed by five per cent, pr ofits go up by 25-30 per cent. An llied finding in rese rch studies is th t new customers cost bout 20-40 per cent more th n th t comp red to tr dition l ret il outlets but repe t consumers spend twice s much in the second nd third ye r th n wh t they spend in the first six months (in cert in c tegories). Perh ps, th ts why e-stores exp nd their product c tegories even t the cost of focus. (A m zon.com de ls with c tegories such s books, music, grocery nd gift items nd h s the infr structure to de l with 16 million stock keeping units.) Repe t con sumers re lso known to spre d the word of mouse through referr ls. CRM, in thi s context, h s to show gre t c re in segmenting customers nd offerings, which re customised to these micro-niches. Micro-niches could emerge s result of di versity in preferences cross c tegories. Yet g in, the lifetime v lue of custo mers selected for rel tionships becomes critic l, p rt from the technologic l i nfr structure required for tr cking the preferences of these customers fter win ning their through inter ctive w ys.

er whos in hurry is going to h ve different scen rio from customer whos got time to sp re. The other thing bout scen rios is th t t e ch step of the w y t he customer m y choose to use different touch points. And wh t you w nt to do is to c pture ll those touch points so you c n see the whole scen rio. Th ts the r e son we dvoc te using customer scen rios s opposed to designing business proc esses, CONSUMER BEHAVIOUR 2. 3. CRM could be very useful m rketing tool if m rketers re ble to integr te con ceptu l thinking nd sophistic ted technology. EMPOWER CUSTOMERS TO SOLVE PROBLEM S If you just focus on g thering inform tion bout your customers nd m rketing to them, nd dont focus on execution, then you re not going to ctu lly get the re w rds of CRM. Indi n businesses t lk gre t de l bout customers m ttering to th em. Yet, customer rel tionship initi tives re mostly limited to things like smi ling t customers nd s ying Come g in, sir or H ve gre t d y, M d me. But is thi s enough, nd more import nt, wh t do corpor tes here re lly need to do? I think one of the dv nt ges th t Indi ns h ve is th t they re very courteous, very o utgoing nd very cordi l. So th ts kind of step one. But from customer rel tion ship m n gement (CRM) st ndpoint, the big shift in thinking is re lly getting in to the customers shoes nd underst nding wh t it is the customer is trying to cc omplish, nd then org nising yourself so you c n ctu lly do th t. On the frontl ine it me ns th t the person serving the customer needs to be empowered to m ke decisions nd t ke ctions th t will ctu lly solve the customers problems. I thi nk right now 318 Copy Right: R i University 11.623.3

bec use the customer scen rios re very context-driven nd they ch nge lot. So wh t you w nt to figure out is how you c n lign your business processes s cus tomer scen rios ch nge. Its lso continuous process. So you pick p rticul r t rget segment of people who beh ve in p rticul r w y nd youll find th t three to six key scen rios re common in terms of how they inter ct with your firm, n d you then pick the ones th t re the re s of frustr tion for those customers. And once youve begun to fix those, you work on the next set, nd the customers ke ep r ising the b r. And once the b sics re over they keep coming b ck nd s yin g If you could do this for me it would be re lly good. Its kind of lock-in, but i ts more seduction bec use you h ve shown customers th t you c n t ke c re of thei r b sic needs nd now they re willing to sh re with you wh t they re lly w nt. The other tool youve developed is the customer flight deck. How does it work? The cu stomer flight deck is designed to set the service m rk for perform nce me surem ent system th t focuses only on the customer m trix. Its just w y to get sn p shot view nd continuous view of the m trix round e ch of your customer segment s. So g in, we recommend th t clients do sep r te flight deck for e ch customer segment. And there re four things we suggest to me sure nd monitor _ the cust omer numbers, how youre doing nd building the number of customers nd the depth of your rel tionship; how youre doing on customer retention for th t group; how y oure doing the qu lity of customer experiences of th t group me sured by those mom ents of truth nd the outcomes youve identified; nd then how youre doing on profit bility s defined by customer revenues minus cost-to-serve t the very b sic. T he other thing th ts very specific bout this ppro ch is th t the m trix is me s ured in s ne r re l-time s possible. So, the comp nies we work with re survey ing ll the time, every ten minutes if they c n! A lot of your work t lks bout the success of Tescos online grocery ret iling venture. On the other h nd, Webv n , which w s perh ps tr ilbl zer in online grocery ret iling, l nded in trouble . Why do you think this h ppened? Wh t I h ve noticed bout Tesco is th t unlike everybody else who went fter the online grocery m rket, Tesco st rted with ope r tion l efficiency. It st rted by s ying If we were to do home delivery on m s s sc le, how do we chieve the sc le in e ch store nd not build up sep r te dis tribution systems, sep r te set of w rehouses nd so on. The interesting thing bout Tesco is th t the system w s designed by store m n ger. He knew ex ctly wh t the tr ffic p tterns were in the store, he knew how to optimise it both for customers nd the employees. So do ll good CRM systems need to involve frontli ne employees t the design st ge? Yes, bsolutely. And they lso need to go ll the w y b ck through. This is where my definition of CRM is little different nd expl ins why I c ll it CMR (customer-m n ged rel tionship) inste d of CRM. Be c use, if you just focus on g thering inform tion bout your customers nd m rke ting to your customers, nd you dont focus on execution, how you ctu lly deliver your product s nd services, then you re not going to ctu lly get the rew rds of CRM. You c n spend millions on CRM systems, but if you dont ctu lly improve the efficiency nd effectiveness of how you deliver those products nd services, its not going to help. Points to Ponder CONSUMER BEHAVIOUR Sheth Model of Industri l Buying Expect tions of individu ls m king up the DMU Ch r cteristics of both the produc t nd the org nis tion The n ture of the decision m king process The situ tion v ri bles 11.623.3 Copy Right: R i University 319

CONSUMER BEHAVIOUR BIBLIOGRAPHY Books 1. 2. 3. 4. 5. 6. 7. 8. 9. Bl ckwell Roger D., Mini rd W. P ul & Engel F. J mes Consumer Beh vior (Vik s Publishing House 2003) Schiffm n Leon G. & K nuk Leslie L z r Consumer Beh vior (Prentice H ll of Indi Pvt Ltd, Eighth Edition) Kotler P & Armstrong G-Principles of M rketing (Prentice H ll of Indi Pvt Ltd, 2001) N ir Suj R. Consumer beh viour in Indi n Perspective (Him l y Publishing House ) Neelmegh m S-M rketing in Indi C ses & Re ding (Vik s Publishing House Pvt. L td., 2002) R m sw my VS, N m kum ri S-M rketing M n gement (M cmill n Indi Limi ted, 1995) Kotler P- M rketing M n gement (Prentice H ll Of Indi Pvt. Ltd., 200 2) Ev ns J.R., nd Berm n B - M rketing (Bizt ntr , 2003) Kotler P- M rketing M n gement The Millennium Edition (Prentice-H ll Public tion, 2000) 10. S xen R M rketing M n gement (T t -McGr w Hill, 2002) 11. R m sw my V.S., nd N m kum r i S. - M rketing M n gement (M cmill n, 2002) 12. Kum r R mesh S- Applic tion ex ercises in M rketing (Vik s Publishing House Pvt Ltd, 2000) 13. Sengupt Subroto -Br nd Positioning (T t Mc Gr w Hill, 1990) 14. C rver, C.S., & Scheier, M.F. (2000). Perspectives on person lity (4th ed.) Boston: Allyn nd B con. 15. Burge r, J.M. (1993). Person lity (3rd ed.) P cific Grove, CA: Brooks/Cole. 16. Schult z, D., & Schultz, S.E. (1994). Theories of person lity (5th ed.) P cific Grove, CA: Brooks/Cole. 17. C rver, C. S., & Scheier, M. F. (2000). Perspectives on Per son lity (4th ed.) Needh m Heights, MA: Simon & Schuster. 18. Ph res, J. E. (199 1). Introduction to Person lity (3rd ed.). New York: H rper Collins. Websites: www.economictimes.com www.businessstr tegym trix.htm www.bcgm trix.com www.ge.co m www.udel.edu www.br nding si .com www.beckm nm rketing8e.nelson.com www.le rnm rketing.net www.m rketingprofessors.net www.m rketingte cher.com www.prenh ll.c om www.buseco.mon sh.edu www.tutor2u.net www.le pthought.com www.netmb .com www. quickmb .com Journ ls: 1. 2. 3. 4. 5. The Economic Times supplements Br nd Equity, Corpor te Dossier Bus iness Indi Business Tod y Business World The Economist 320 Copy Right: R i University 11.623.3