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Consumer Behaviur
COURSE MATERIAL
Consumer Behavior
Unit – 1
Introduction:
Condition
( II ) MARKETING SEGMENTATION
Identify product related needs
Group customers with similar need sets
Describe each group
Select Target market
( III ) MARKETING STRATEGY
Product
Price
Distribution
Communication
Service
( IV ) CONSUMER DECISION PROCESS
Problem recognition
Information Search – Internal, External
Alternative Evaluation
Purchase
Use
Evaluation
( V ) OUTCOMES
Customer Satisfaction
Sales
Product / Brand Image
Explain consumer
Psychology, Experiment
Traditional decision making and
Sociology surveys.
behavior
PARANOIDS
LAGGARDS
1. EXPLORERS
a) They are open to embracing the newest of technologies.
b) They are the first ones to be attracted to new technologies.
c) For them, technology is a source of mental stimulation
d) They believe that technology provides them freedom, control and efficiency.
e) They are thought leaders and become a source of information for their friends.
2. PIONEERS
a) They are open to trying new technologies but suffer from some degree of
insecurity.
b) They need some degree of assistance and guidance from the organisation during
their use of new technology.
c) They understand the benefits of technology and want the best and the latest.
d) They are also young; some of them work in technology professions.
e) Most of them have an incidence of computer use in their jobs.
3. SKEPTICS
a) Rank low on motivators but do not have any inhibitions about adopting
technology.
b) They will not be excited about new technology.
c) They wait to see the results of a new technology.
d) They have very low optimism and very low innovativeness.
4. PARANOIDS
a) They are attracted by technology but their insecurity and discomfort levels inhibit
them.
b) They need a little convincing from the marketers to adopt new technology.
c) They also enjoy technology and believe that it increases their efficiency.
d) They might be described as struggling middle class.
e) Most of them are females and not very affluent.
f) They will not take any initiative until they are sure that there are no risks.
5. LAGGARDS
a) Wait for others to adopt technology, and would try only when they convinced
about the benefits.
b) They completely lack faith in technology and not convinced about the benefits of
technology.
c) Most of the laggards are older in age and are in tired.
d) Therefore, efficiency and extended working hours do not attract them.
CUSTOMER
C – COMPANY
U – UTILITY
S – SATISFACTION
T- TECHNOLOGY
O– OPTIONS
M – MONETARY ASPECTS
E – EVALUATION
R – RESPONSE (By Buying / Not buying)
UNIT – 2
Sub Field 1
Firm’s Attributes
Perceived Roles
By this way at last the Industrial buying process can be decided either by
Individual Decision making unit, or by Group decision making unit.
1. ECONOMIC MODEL
PRICE EFFECT - Lesser the price of the product more will be the quantity purchased.
SUBSTITUTION EFFECT - Lesser the price of the substitute product, lesser will be
the utility of the original product bought.
INCOME EFFECT - When more income is earned, or more money is available, more
will be the quantity purchased.
2. PSYCHOLOGICAL MODEL
PSYCHOLOGIC
3. PAVLOVIAN LEARNING MODEL
5. Self actualization: se
• DRIVE - Strong internal stimuli. It stimulates a person to fulfill his desires.
4egoneeds: prestige, status, succes
• CUES - Weak stimuli. It determines when the buyer will respond.
Triggering Cues: activate decision process.
b) Non triggering cues: Influence the decision process, but do not activate it.
1. Product cues
3. Social needs: affection, friendship,
2. Informational cues
2. S afetyandsecurityneeds; protectio
c) Reinforcement : Marketer try to create a good image of the product in the mind of
the consumer for repeat purchases through learning.
4. INPUT, PROCESS AND OUTPUT MODEL
INPUT, PROCESS
PER
5. BUYERS BLACKBOX MODEL
• MBUYER
NES
ED BLAC
RECOGNITION
FIRM ’S O
MARKE T
TING I
EFFORT V
A
T PRODUCT
MARKETING I AWA
OTR
HEE
RNESS
SOCIALSTIMULI O STIMULI
6. SOCIOLOGICAL MODEL
ENVIRO N BUY
£ A consumer is a part of the society.
NMENT R
£ PR
His ODU
buying CT is influenced by groups. ECONOMICAL
behavior
£ PRICE
Primary CUL
groups : family members, relatives close TURAL
associates CU
PROMOTION TECHNO
£ Secondary groups: member of a political party, dress norms are different.
PRICE LOGICAL
PO
£ As a member of an elite organization, his dress LITICALmay be different.
requirements
7. HOWRATH SHETH MODEL PE
• The decision making model is applicable to individuals.
PSY
• It has four sets of variables.
First set: Input
HOWARTH - SHETH
INPUTS
OUTPUTS
STIMULUS
DISPLAY
PHYSICAL SIGNIFICATIVE
STIMULI O
TANGIBLE SE
PRICEPAID QUALITY
PRICE
Prepared by : K.Senthil, Chettinad College of Engineering & Technology
DISTINCTIV
-ENESS
Study Material – Consumer Behavior
UNIT- III
Theory of Motivation
There are numerous theories of motivation, and many of them offer useful
insights for the marketing manager. This section describes Maslow’s motive hierarchy
approach to understanding consumer motivation. Abraham Maslow organized five major
types of human needs into a hierarchy. The need hierarchy illustrates maslow’s
conception of people satisfying their needs in a specified order, from bottom to top. The
need, in ascending order are; physiological needs (Food, Water, Sex and Shelter), Safety
needs (Protection against threat and deprivation), Belongingness needs (Friendship,
Affection, Affiliation and Love), Esteem needs (Independence, Achievement,
recognition, Self respect, Accomplishment and Freedom), Self-Actualization (Realizing
one’s full potential or Self Fulfillment).
Maslow’s hierarchy of needs approach is based on four premises
All human acquire a similar set of motives through genetic endowment and
social interaction.
Some motive are more basic or critical than others
The more basic motives must be satisfied to a minimum level before other
motives are activated
As the basic motive become satisfied, more advanced motives come into
play.
Marketing Strategy and Maslow’s Motive Hierarchy
1. PHYSIOLOGICAL: Food, water, sleeps, and, to an extent, sex, are
physiological motives.
Classifications of Motives
McGuire has developed a motive classification system that is more specific in
understanding consumer behaviour. McGuire’s motives that are of most use to marketing
are briefly described in the following sections.
Need for Consistency: A basic desire is to have all facets or parts of one consistent with
each other. These facets include attitudes, behaviors, opinions, self-images, views of
others, and so forth. Marketers use this in several ways. First, it makes clear the need for
a consistent marketing mix. The second area of marketing interest with consistency is
called cognitive dissonance. This refers to a tendency of consumers to worry about the
wisdom of major purchases after they have been made. Often making a major purchase is
not consistent with the need to save money or to make other purchase.
Need to Attribute Causation: This set of motives deals with our need to determine who
or what causes the things that happen to us. Do we attribute the cause of a favorable or
Need for Affiliation: Affiliation is the need to develop mutually helpful and satisfying
relationship with others. Marketers frequently use such affiliation-based themes as “Your
kids will love you for it” in advertisements.
Need for Modeling: The need for modeling reflects a tendency to base behavior on that
of others. Modeling is a major means by which children learn to become consumers. The
tendency to model explains some of the conformity that occurs within reference groups.
Marketers utilize this motive by showing desirable types of individuals using their
brands.
Need for Novelty: We often seek variety and difference simply out of a need for novelty.
Marketers refer to the outcome of this motive as variety-seeking behavior. This may be a
prime reason for brand switching and some so-called impulse purchasing. The need for
novelty is curvilinear and changes over time. That is, individuals experiencing rapid
change generally become satiated and desire stability, while individuals in stable
environments become “bored” and desire change.
Need for Assertion: The need for assertion reflects a consumer’s need for engaging in
those types of activities that will bring about an increase in self-esteem as well as esteem
in the eyes of others. Individuals with a strong need for assertion are more likely to
complain when dissatisfied with a purchase.
Role of Motives
The role of motives is to arouse and direct the behavior of consumers. The arousal
component activates bodily energy so that it can be used for mental and physical activity.
In their directive role, motives have several important functions for guiding behavior.
These are discussed below:
Defining Basic Strivings: Motives influence consumers to develop and identify their
basic strivings. Included among basic strivings are very general goals such as safety,
affiliation, achievement, or other desired states which consumers seek to achieve. They
serve to guide behavior in a general way across a wide variety of decisions and activities.
Identifying Goal Objects: Although there are exceptions, people often view products or
services as means by which they can satisfy their motives. In fact, consumers often go
one step further and think of products as their actual goals, without realizing that they
actually represent ways of satisfying motives. This motivational push that influences
consumers to identify products as goal objects is of great interest to marketers,
particularly since it appears that it can be influenced. Certainly, the features designed into
a product can affect the degree to which consumers may accept it as a goal or means for
achieving some goal.
Influencing Choice Criteria: Motives also guide consumers in developing criteria for
evaluating products. Thus, for a car buyer strongly influenced by the convenience motive,
features such as electronic speed control and automatic driver-seat adjustments would
become more important choice criteria than would style or mileage.
Directing Other Influences: Motives affect the individual determinants of perception,
learning, personality, attitudes, and how people process information. This also results in
directional influences on behavior. For example, motives influence information
processing, which in turn regulates how we interpret and respond to our environment.
Motives Arousal
A variety of mechanisms can trigger the arousal of motivates and energize
consumers. The following may work alone or in combination to activate behavior.
Physiological Conditions: This source of arousal acts to satisfy our biological needs for
food, water, and other life-sustaining necessities. Depriving such a bodily need generates
an uncomfortable state of tension. When this tension is sufficiently strong, arousal occurs
to provide energy necessary to satisfy the need. The consumer’s previous experience and
present situation will strongly influence the directions any heightened activity will take.
Cognitive Activity: Humans engage in considerable cognitive activity (thinking and
reasoning) even when the objects of their thoughts are not physically present. This
thinking, considered by some to be daydreaming or fantasy, can also act as a motive
trigger. One way this occurs is when consumers deliberate about unsatisfied wants.
Situational Conditions: The particular situation confronting consumers may also trigger
arousal. This can occur when the situation draws attention to an existing physiological
condition, for example an advertisement for Coca-cola suddenly makes you aware of
being thirsty. Here, the need for liquids may have been present, but not yet strong enough
to trigger arousal. Seeing the advertisement draws attention to the condition and leads to
activity. Situational conditions can also work alone to generate motive arousal. This
appears to occur when circumstances draw consumers’ attention to the disparity between
their present state and something viewed as a better condition.
Stimulus Properties: Certain properties of external stimuli themselves also seem to have
the power to generate arousal. These collative properties include the characteristics of
novelty, surprising ness, ambiguity, and uncertainty. Stimuli possessing and sufficient
amount of these properties have the potential of drawing attention to themselves by
arousing an individual’s curiosity or desire for exploration. As such, they represent a
special type of situational condition. Stimuli with arousal potential are important for
marketers because they can be used to attract and focus consumers’ attention.
Cognitive
Processes
Tension
Reduction
CONSUMER PERCEPTION
Perception is defined as the “process by which an individual selects, organizes and
interprets stimuli into a meaningful and clear picture of the world.”
In simple, “How we see the world around us”. {Ex: There is a glass filled with fifty
percent water, while a person may say that the glass is “Half Filled”. another person may
finds the glass to be “Half Empty”. technically speaking, both the interpretations are
same, but the fifty percent filled or empty glass is seen or perceived differently by the
two people.
Consumer Research, in fact, proves that after the consumer develops a perception
of some “object” to follow the initial message, the consumer actually feels the needs to
hear or se the rest of it because a sense of having closure prevails,
This is called Zeigernik Effect.
It is not an uncommon situation which observes when we go to a bank. If three
customers go to a bank to withdraw money,
The first may chose to go to an ATM, Where no one is waiting in line.
Second person stands in a waiting line and
Third one may ask his wife to go to the withdrawal window.
Why these varying modes of behavior by each one when they have gone to buy the
same service offering (of withdrawing money from the bank)?
It is because; each individual brings a unique set of perceptions and attitudes to the
process that influences behavior.
Perception is made up of different concept. However within the frame work of
consumer behaviour, the basic elements or concept of perception include; Sensation,
Absolute Threshold, Differential Threshold, Subliminal Perception.
Sensation: Sensation is the immediate and direct response of the sensory organs to
stimuli. A stimuli is any unit of input to any of the senses. Examples of stimuli (i.e.
sensory input) include products, packages, brand names, advertisements, and
commercials. Sensory receptors are the human organs (the eyes, ears, nose, mouth, and
skin) that receive sensory inputs. Their sensory functions are to see, hear, smell, taste and
feel. All of these functions are come to play, either singly or in combination, in the
evaluation and use of most consumer products.
Absolute Threshold: The lowest level at which an individual can experience a sensation
is called the absolute threshold. The point at which a person can detect and differentiate
between “something” and “nothing” is that person’s absolute threshold for that stimulus.
Package designers try to determine consumers’ absolute thresholds to make sure that their
new-product designs will stand out from competitors’ packages on retailers’ shelves.
Differential Threshold: The minimal difference that can be detected between two
similar stimuli is called differential threshold, or the just noticeable different. When it
comes to product improvements, marketers very much want to meet or exceed the
consumer’s differential threshold; that is, they want consumers to readily perceive any
improvements made in the original product.
Subliminal Perception: Stimuli that are too weak or too brief to be consciously seen or
heard may nevertheless be strong enough to be perceived by one or more receptor cells.
This process is called subliminal perception. Because the stimulus is beneath the
threshold, or “limens”, of conscious awareness, though obviously not beneath the
absolute threshold of the receptors involved.
Perception Process
In studying consumer behaviour, perception process are divided into five parts
this includes; Pre-attentive Processing, Selection, Organization, Interpretation and
Elaboration.
Pre-attentive Processing: Pre-attentive processing refers to the simultaneous
preconscious monitoring of all sensory channels for events that will require a shift in
attention. This kind of pre-attentive processing is what makes it possible for us to
suddenly hear our name spoken across a crowed, noisy room or wake at the cry of a baby.
Selection: Perceptual selection refers to the fact that consumers select only a small
portion of the stimuli to which they are exposed for conscious processing, or what we
might term focal attention. To get the consumer’s focal attention, an escalation of sensory
impulses is required.
Organization: The third part in the perceptual process is perceptual organization.
Consumers classify perceptions into categories and apply prior knowledge about the
categories to organize them. Basically, categorization involves comparison between a
perceived target and categorical knowledge. Categorization is a fundamental sense-make
activity that encompasses all forms of stimulus situations.
Interpretation: The fourth part in the perceptual process is interpretation. The
interpretation of perceptual stimuli involves the application of learned associations
between perceptual cues, or signs, and meanings to novel stimuli. These associations are,
on turn, based on individual expectations, motivations, and experiences grounded in
cultural convention. Hence, interpretation depends on consumer knowledge structures. At
least two different sorts of knowledge structures are important to interpretation. One type,
called schemas. Schemas includes organized collections of beliefs and feelings that a
person has about objects, ideas, people, of situations. The second type of knowledge
structure, called scripts, includes sequences of actions associated with objects, ideas,
people, or situations.
Elaboration: Sometimes consumer interpretation of perceptual stimuli also includes
high levels of elaboration. Elaboration reflects the extent to which perceptual stimuli are
integrated with prior knowledge structures. Interpretation always involves some
elaboration, that is, some accessing of prior knowledge structures; but this can be at low
levels such as simply recognition. At high levels of elaboration, people engage in
processes such as counter arguing, problem solving, daydreaming, and fantasizing.
Elaboration produces freedom of memory and attitude from the specific details of the
original message or its setting. It can even result in a boomerang effect where the attitude
change is opposite to that advocated in the persuasive message.
ELEMENTS OF PERCEPTION:
People’s perceptions are limited by three ongoing processes of selectivity:
1. SELECTIVE EXPOSURE : It is the process by which people avoid stimuli in their
environment such as leaving the cinema hall when a song sequence is shown or
leaving the room while commercials are on a TV. The process is explained below:
• People are more likely to notice stimuli that relate to current need.
For Example
A person, who is not in the market for a personal loan, will not even look at the ad
showing low interest rates whereas one who is looking for a personal loan will
notice and even go through such an ad.
• People are more likely to notice stimuli that they expect or anticipate.
For Example
If a bank is promoting non – traditional bank service like, mutual funds or travel
related services and it has placed a mutual fund counter or travel agent’s desk in
the bank, many customers may not notice it, because they do not expect these
from a bank. Therefore, for calling attention of the people to those non –
traditional services “Promotional techniques” must be used.
• People are more likely to notice stimuli that are large in relation to normal
size of stimuli.
For Example:
Generally, companies selling cellular phone or credit card and even bankers run
quarter page or one – third of page ads in newspapers. If these are running for
nearly a month and suddenly there is a full page colorful ad for a week readers are
more likely to notice the “AD” because it is large in relation to useful ads.
2. SELECTIVE DISTORTION: It is the Phenomenon in which an individual
compares new information with his existing store of knowledge or frame of reference
and then in the case of an inconsistency, alerts the new information to confirm to he
established beliefs.
3. SELECTIVE RETENTION: It is the Phenomenon of retaining in memory only
part of what is perceived and particularly information that supports their existing
attitudes and beliefs. It has been found that consumers are much more likely to recall
seeing ads for their own bank than ads for other banks. Their own bank’s ads support
their choice of the bank. A large number of consumers cannot remember a typical
TV commercial one day after seeing it, if they are not using the product or if the ad is
nothing extraordinary.
The four factors that influence the way people perceive stimuli are:
Social Factors
Cultural Factors
Psychological Factors
Personal Factors.
EXTERNAL FACTORS INFLUENCING CONSUMER PERCEPTION:
1. NATURE: When the consumer sees any advertisement or product they may be
captured by the object which is visual or auditory, and whether it involves pictures,
people or animals. Pictures attract attention more readily than words, a picture with a
human beings attracts attention more than a picture of inanimate objects alone.
2. LOCATION: The consumer may be easily attracted by a picture. The best
location of a visual picture is directly in the front of the eyes or centre of a page. In
newspaper a position in the upper portion of a page is more favorable than; one in the
lower portions, left hand side receives more attention then the right hand side.
3. INTENSITY: Higher intensity always attracts rather than lower intensity. For ex;
A loud noise, Strong odour, bright light will be noticed more than a soft sound, weak
odour or dim light.
4. SIZE: Generally objects of larger size attract more attention then the smaller
ones. In advertising full page spread attracts more attention than a few lines in the
classified section.
5. CONTRAST: Usually plant safety signs which have black lettering on a yellow
background or white lettering on a red background are attention drawing.
6. MOVEMENT: The moving object receives more attention than an object
standing still.
7. REPETITION: Advertisement of a product flashed daily on TV is based on the
principle of repetitions.
8. NOVELTY AND FAMILIARITY: New objects in the familiar settings or
familiar objects in new setting will draw the attention of the perceiver.
word, hidden meaning words are generally sexual in nature and are also called disguised
stimuli.
PERSONALITY AND CONSUMER BEHAVIOUR
Personality can be defined as those inner psychological characteristics that both
determine and reflect how a person responds to his environment.
INNER CHARACTERISTICS: Attributes, Traits, and Mannerisms that distinguish
one individual from other individuals.
FACTORS INFLUENCING PERSONALITY:
1. Parent Inheritance
2. Brought up environment
3. Own individuality
NATURE OF PERSONALITY:
Personality reflects Individual differences
Personality is consistent and enduring
Personality can change.
PERSONALITY THEORIES:
1. Sigmund Freud’s Psycho Analytic Theory of Personality
2. Neo – Freudian Personality Theory
3. Trait Theory
4. The Theory of Self Concept
3. TRAIT THEORY :
This Theory is Primarily quantitative or empirical. A Trait is defined as “ any
Distinguishing, relatively enduring way in which one individual differs from other.”
Trait Theory is based on certain Assumptions:
1. Relatively stable in Characters.
2. Limited number of trait common to most of all.
3. People only differ in the degree of position.
Selected Single Trait Personality Test – {Which measure just one trait, like self-
confidence}.
1. CONSUMER INNOVATIVENESS: How a person responds to new
experiences.
2. CONSUMER MATERIALISM : The degree of the Consumer’s attachment to
“Worldly Possessions”.
3. CONSUMER ETHNOCENTRISM : The consumer’s likelihood to accept or
Reject Foreign Made Products.
3. Community Level
4. Group Level.
• PERSONAL LEVEL: Consumer includes things of personal possession like
jewelleries, dresses, cosmetics etc. in defining one’s self. Understanding the
range of moods and personalities can help the marketer offer products which
implicitly carry the message “you are what you wear”.
• FAMILY LEVEL : This part of the extended self includes a consumer’s
residence and the things in it. The home is a symbolic body of the extended self
at the family level. “Dressing your home ….. Reflects the unique aura of your
own personality.
• COMMUNITY LEVEL : Whereby the consumer tends to personalize the
environment in which he has grown up, the neighborhood where he stays or
stayed, this is basically coming from sense of belonging. A marketer can use the
extended self image at the community level by evoking the nostalgic feeling of
the childhood memory. People are generally nostalgic about the place where they
have spent their childhood.
• GROUP LEVEL : When one feels attached to certain social group. The
consumer feels part of a crowd of cricket spectators, part of a sports team, etc.
[Ex: To evoking the self image at the group level is the famous Cadbury Milk
Chocolate bar where the husband is playing cricket and the wife is eating
chocolate out of tension]
The imported thing to be noted is that such a trend of personalizing, giving the
product a separate personal identity, is increasing.
The reason being, marketers have realized that personality plays a vital role in the
purchase behavior, and if the right product is given the right personality touch,
marketer will meet with great success.
CONSUMER LEARNING
According to Oxford Dictionary “Learning is knowledge got by study of a
subject of systematic investigation.
In Marketing Management, “Consumer learning holds lot of significance for a
marketer and he is vitally interested in teaching the consumer about the product, Its
attributes, how to buy it, how to use it, and even how to dispose it.”
In a Marketer’s language, “learning is an ongoing process by which consumers
get the knowledge about purchase and consumption of a product and use the experience
of one time buying for future buying.”
In overall Consumer Learning is defined as the process by which individuals
acquire the purchase and consumption knowledge and experience they apply to future
related behaviour.
ELEMENTS OF LEARNING:
Despite their different viewpoints, learning theorists in general agree that in order for
learning to occur, certain basic elements must be present. The elements included in most
learning theories are
Motivation
Cues
Response
Reinforcement
1. MOTIVATION: Motivation plays a vital role in consumer learning, it acts as an
initial impetus to learning.
{For Example, a career minded student who wants to do a MBA course to
enhance the chances of a bright career will be “motivated” to search for a MBA
admission advertisement. The student will try to get information about the time of
admission test, fees structure of various MBA schools, placement scenario etc.}
On the other hand, a well established professional will be relatively disinterested
ion all such information. While, a retired person will be completely dis interested in
these kinds of information. Once the marketers know consumer motive, they try to teach
the consumer about the product.
2. CUES: Cues give direction to a motivated consumer. An aspiring MBA student will
get the cue from an advertisement, talking about a MBA programme, the type of course,
number of specialization the student can avail, and computer facility in the college and
quality of the faculty, all are cues, which guide the consumer.
3. RESPONSE: The aspiring MBA student, who gets a positive cue from the
advertisement, will respond to the advertisement. If he takes action in the favor of the ad
then it will be a positive response. If he further searches for other similar ads his
response to the original ad is a negative one, while if he simply overlooks the ad he is
giving a neutral response.
4. REINFORCEMENT: The memorable learning experience reinforces the buying
behavior, negative memories will take the consumer away from previous buying behavior
or pattern, while positive memories will reinforce the previous buying behavior as is
likely to happen to the computer student.
THEORIES OF CONSUMER LEARNING
An analogous model is one experiment with the human beings. Think when you
have your dinner everyday at 9”0” clock along with watching your favorite program
Crorepathi on TV.
Eventually, with the theme music of the program you will feel like eating even if
you are not actually hungry because you are unconsciously associating the two, theme
music and dinner.
UNCONDITIONED
STIMULUS : Dinner
Aromas
UNCONDITIONED
RESPONSE : SALIVATION
CONDITIONED
STIMULUS : 9 O’ clock
T.V. Programme
CONDITIONED CONDITIONED
STIMULUS : 9 O’ RESPONSE: SALIVATION
clock T.V.
Programme
II) STIMULUS GENERALISATION: Pavlov found that the dogs salivated not only to
the sound of the bell but also to similar sound of jangling keys. As like as this, if the
consumer learns certain attributes about a particular product of a particular brand,
through SG he will associate other products of the same brand with similar attributes.
PRODUCT LINE EXTENSION: This is commonly practiced marketing
strategy of adding related products to an established brand. The products vary from
each other only superficially, may be in terms of the package, flavor, added facility
etc., EX : Britannia Bread. They are marketing different types bread. Premium
Quality White Bread, Spongy Sandwich Milk Bread, Energy plus – Whole Meal
Bread, Fruity – Sliced Fruit Bread.
PRODUCT FORM EXTENSION: When the same product is offered in
different physical form, EX: Lifebuoy soap is obtained in bar form and liquid form.
Raga Herbal Shampoo was obtained in powder form and liquid form.
PRODUCT CATEGORY EXTENSION: Originally the company starts with
few products. Once the brand name is established, the company diversifies into
making other products. EX: LG is a known name in Color TV. This is now followed
by Refrigerator, Washing Machines, Personal Computer, Cell Phone, and Air Cooler.
As like as this BPL, Britannia, ITC, HLL are also example for PCE.
FAMILY BRANDING: This is the practice of marketing a whole line of
products under the same brand name. EX: Maggi Soup Range. Initially only tomato
soup was introduced followed by various other flavors such as Chicken Soup, Mixed
Vegetable Soup, Mushroom Soup, and Tomato Soup. Nestle- Milkmaid – Gulab
Jamun Mix, Kesar Kulfi, and Chocolate pudding.
LICENSING: When a well known brand allows its name to be used by another
brand. Well known people allow their names to be associated with certain products
like EX: Scooty Pep with Preethi Zintha, Sharukkan with Hyundai. Sonya Mirza
with Getz, Dairy Milk with Amithap Batchan , Toyota Innova with Aamir Khan.
Sachin with MRF.
III) STIMULI DISCRIMINATION : It is the ability in the consumer to discriminate
one stimulus from the other and position them , according to his need. This is key to the
marketers success. That is why from time to time the marketers reward the loyal
customers by the way of providing discount coupons for traveling by the same airline
above a certain KM. Regular buyers in super market also get similar kinds of discounts.
2. INSTRUMENTAL ( Or ) OPERANT CONDITIONING THEORY
American Psychologist B.F.Skinner demonstrated this theory through the process
of trial and error. Once you come across a favorable outcome, it reaches the individual to
repeat the behaviour. Consumers, to satisfy their needs, may have tried various
alternative options and will remember products which satisfied or made them feel good,
and will respond to those products positively in future. It is called Positive
Reinforcement Or Rewarded Performance. Suppose, the product did not satisfy the
consumer means they shirk away from such products and also have Negative
Reinforcement Or Unrewarded Performance .
The Advertisement of Detegerents, Deodorants, and Footwear often use this
concept.
EX: Wheel Soap Ad. – It is based on housewife’s agony of washing clothes with various
other brands but not able to clean properly her husband’s clothes causing embarrassment
to the husband, till the wife discovers “Wheel”.
The message is that we should avoid the ordinary soaps which will bring in negative
outcome and only use the advertised product.
UNREWARDED –
Try Soap I Chemicals are too
Strong
Stimulus
Situation - Try Soap II UNREWARDED –
Need a Good Less in Quantity
Washing Soap
Try Soap IV
REWARDED –
PERFECT SOAP
The Reinforcement Rate and frequency can be of various types. At what rate an
advertisement should be shown to the consumer for a proper learning will vary on
product type, stage of product life cycle etc., Following is the reinforcement schedule.
1. FIXED – INTERVAL REINFORCEMENT : There is a fixed time gap
between the response and reward. Under such circumstances consumer tends to
respond slowly after the reinforcement.
2. VARIABLE - INTERVAL REINFORCEMENT: The marketer or advertiser
wants to keep an element of surprise and expectancy in the consumers so the
reinforcement is delivered at intervals varying in length.
3. FIXED – RATIO REINFORCEMENT: Reinforcement can be given at fixed
ratio.
4. VARIABLE – RATIO REINFORCEMENT: Consumer learns after certain
number of responses, but how many that neither the learner nor the teacher knows.
Here again predicting the appearance of consumer’s learned response is difficult.
1) INVOLVEMENT THEORY:
Our Human Brain can be divided into two parts, LEFT BRAIN and RIGHT BRAIN.
LEFT BRAIN - Responsible for – Reading, Writing, Speaking –Print Medium
High Involvement - While seeing any AD related with Financial Investment, High Rate
of return.
Low Involvement - RIGHT BRAIN – Responsible for – Emotional and intuitive
activities, Pictorial Version, Imagination ---Picture or TV Media, Seeing a
advertisement related with nail polish and cosmetics.
specific consumer purchase: to obtain repeat purchases, the product must satisfy the goals
sought by the consumer; and to induce the consumer to make the first purchase, the
promotional messages must promise the appropriate type of reinforcement – that is,
satisfaction of the consumer’s goals.
Repetition: Repetition increases the strength and speed of learning. Quite simply, the
more times we are exposed to information or practice a behavior, the more likely we are
to learn it. The effects of repetition are, of course, directly related to the importance of the
information and the reinforcement given. Less repetition of an advertising message is
necessary for us to learn the message if the subject matter is very important or if there is a
great deal of relevant reinforcement. Since many advertisements do not contain
information of current importance to consumers or direct rewards for learning, repetition
plays a critical role in the promotion process for many products.
Imagery: Imagery Words, whether a brand name or a corporate slogan, create certain
images. The theory behind the imagery effect is that high imagery words leave a dual
code since they can be stored in memory on the basis of both verbal pictorial dimensions,
while low-imagery words can only be coded verbally. High-imagery brand names are
learned more quickly than are low-imagery names. Likewise, advertising claims
consistent with the image evoked by the brand name are easy to recall.
Extinction: Extinction, or forgetting as it is more commonly termed, occurs when the
reinforcement for the learned response is withdrawn, the learned response is no longer
used, or the individual is no longer reminded of response. The rate at which extinction
occurs is inversely related to the strength of the original learning. That is, the more
important the material, the more reinforcement, the more repetition, and the greater the
imagery and the more resistant the learning is to extinction.
Stimulus Generalization: Stimulus generalization (often referred to as the rub-off effect)
occurs when a response to one stimulus is elicited by a similar but distinct stimulus.
Thus, a consumer who learns that cookies taste good and therefore assumes that their new
Chocolate cones will also taste good has engaged in stimulus generalization. The fact that
stimulus generalization is common provides a major source of brand equity and brand
extensions based on brand equity.
CONSUMER ATTITUDES
In general Attitude is “Learned predisposition to respond in a consistently
favourable and unfavourable manner with respect to a given stimuli.”
Attitude may also be defined as “an enduring organization of motivational,
emotional, perceptual, and cognitive process with respect to some aspect of the
individual’s world. This views attitude as being made up of three components: the
cognitive or knowledge component, the affective or emotional component and the
cognitive or behavioral tendency component.
Attitude Function
Attitudes serve four key functions for individuals:
Knowledge function: some attitudes serve primarily as a means of organizing beliefs
about objects or activities such as brands and shopping. These attitudes may be accurate
or inaccurate with respect to “objective” reality, but the attitude will often determine
subsequent behaviors rather than “reality”.
and intensity of a person’s attitude toward a product have been said to provide marketers
with an estimate of his or her readiness to act toward, or purchase, the product. However,
a marketer must also understand how important the consumer’s attitude is viz -a-vis other
attitudes, and the situational constraints, such as ability to pay, that might inhibit the
consumer from making a purchase decision.
Attitude Have Structure: Attitudes display organization, which means that they have
internal consistency and possess inter-attitudinal centrality. They also tend to be stale, to
have varying degrees of salience, and to be generalizable. The structure of human
attitudes may be viewed as a complex set erected in a type of circular pattern. At the
center of this structure are the individual’s important values and self-concept. Attitudes
close to the hub of this system are said to have a high degree of centrality. Other attitudes
located farther out in the structure possess less centrality. Attitudes do not stand in
isolation. They are associated with each other to form a complex whole. This implies that
a certain degree of consistency must exist between them. That is, because they are
related, there must be some amount of “fit” between them, or conflict will result. Also,
because the more central attitudes are related to a larger number of other attitudes, they
must exhibit a greater degree of consistency than more peripheral attitudes do. Because
attitudes cluster into a structure, they tend to show stability over time. The length of time
may not be infinite, but it is far from being temporary. Also, because attitudes are
learned, they tend to become stronger, or at least more resistant to change, the longer they
are held. Thus, newly formed attitudes are easier to change and less stable than are older
ones of equal strength. Attitudes tend to be generalizable. That is, a person’s attitude
toward a specific object tends to generalize toward a class of objects.
Attitude Are Learned: They develop from our personal experiences with reality, as well
as from information from friends, salespeople, and news media. They are also derived
from both direct and indirect experiences in life. Thus, it is important to recognize that
learning precedes attitude formation and change, and that principles of learning can aid
marketers in developing and changing consumer attitudes.
CHANGE IN ATTITUDE:
Attitude Change can be defined as “ a finding that at a given time, a significantly
higher or lower proportion of the population holds certain attitudes than at an earlier
time”. In marketing, a consumer’s attitude towards a particular brand may be because of
his belief about certain attributes present in the brand and the relative importance of these
attributes.
So marketers try to bring about attitude changes by the following way.
• These persons places high value on personal appearance consistent with his career
and life style.
• They may buy at least three new suits a year
• They belong to several organizations and revealed contemporary attitudes and
opinions.
By using this AIO Inventory we have identified five female lifestyle groups and five
male lifestyle groups.
responsiveness to specific needs assurance and acceptability etc. from the service
provider.
A Consumer expects fundamental benefits, not fancies.
A Consumer expects performance and not empty promises.
A Consumer expects Competency.
IN CASE OF AN AUTOMOBILE REPAIR:
A Consumer expects things to be explained.
A Consumer expects to know why you have suggested repairs.
A Consumer wants to be shown respect.
A Consumer wants competency ( Job done right, the first time)
IN CASE OF HOTELS :
A Consumer expects a clean and secure room to be provided.
A Consumer wants to be treated as a guest.
A Consumer wants the premises to be kept.
IN CASE OF INSURANCE:
A Consumer wants up to date information.
A Consumer wants to be treated fairly in case of claims, etc.
A consumer wants to be provided with prompt service.
FOR OTHER SERVICES AND PRODUCTS:
A Consumer wants reliability which is the ability to perform the promised service,
dependability and accuracy.
A Consumer wants tangibility or the appearance of physical facilities,
equi9pment, personnel and other materials.
A Consumer wants responsiveness – the responsiveness to a query or to a call, ex.
Telephone enquiries. Sometimes nobody picks up the phone for a long time,
which irritates and turns off a consumer.
A Consumer wants assurance – the knowledge and courtesy of employees and
their ability to convey trust and confidence.
A Consumer wants empathy – the caring individual attention provided to
customers. Salesman putting himself in the customer’s shoes.
CONSUMER SATISFACTION
In Marketing, customer is very often referred to as a “King”. Customers are value
maximizers. Consumer Satisfaction is defined by Webster’s Dictionary as, “Fulfillment
of a need or want.”
Satisfaction is a person’s feelings of pleasure or disappointment, resulting from
comparison of a product’s perceived and actual performance in relation to his
expectations.
Satisfaction is often a subjective phenomenon and depends on the consumer’s
state of mind at the time of purchase and more importantly at the time of consumption. It
is important because in a large number of cases, some degree of post purchase dissonance
is evident among customers.
Many companies are aiming at high satisfaction because customers who are just
satisfied find it easy to switch when a better offer comes along. Those who are highly
satisfied are much less ready to switch. In fact, emphasis has shifted from mere
satisfaction to delight of customers. High satisfaction or delight creates an emotional
affinity with the brand and the supplier, not just a rational preference. The result is high
customer loyalty.
From the marketing viewpoint, products should have the ability to deliver value
satisfaction to consumers for whom these are intended. This satisfaction may be both
real and / or psychological. For example, when a house wife buys a Lakeme Lipstick,
she not only buys a chemical compound having some tangible features but also buys
beauty. The former may deliver a real value but the psychological value is delivered by
the latter.
Some Cautions in Measuring Customer Satisfaction:
When Customers rate their satisfaction with an element of the company’s
performance – say, delivery – the company needs to recognize that customers vary in
how they define good delivery. It could mean early delivery, on time delivery, order
completeness, and so on. It is not sufficient if a product enjoys a good market share. If
the company sits back. One fine day it might find that the market share enjoyed by it was
only a mirage created by artificial market conditions. It is essential for companies to
periodically assess customer satisfaction levels and take remedial action if needed.
So, in order to meet and beat competition, marketers are also interested in finding
out ways to have brand loyal customers. And they have to retain consumer loyalty.
UNIT – III
Concept of Group
A group consists of people who have a sense of relatedness as a result of
interaction with each other. Not every collection of individuals is a group, as the term is
used by sociologists. Actually, we can distinguish three different collections of people:
aggregations, categories, and groups. An aggregation is any number of people who are in
close proximity to one another at a given time. While, a category is any number of people
who have some particular attributes in common.
Classification of Group
Groups may be classified according to a number of dimensions, including
function, degree of personal involvement, and degree of organization.
Group by Content of Function
Group can viewed from the content of their function. Group can be categorized
along such lines as students, factory workers, church members, and so on. Actually, these
are subtypes of the major kinds of groups that we encounter in a complex society, which
could generally be categorized along such lines as family, ethnic, age, sex, political,
religious, residential, occupational, educational and so forth.
Group by Degree of Personal Involvement
By using this criterion, we can identify two different types of groups: primary and
secondary. The hallmark of a primary group is that interpersonal relationships take place
usually on face-to-face basis, with great frequency, and on an intimate level. These
groups have shared norms and interlocking roles. Families, work groups, and even
recreational groups (if individuals have some depth of personal involvement) are
examples of such groups.
Secondary groups are those in which the relationship among members is
relatively impersonal and formalized. This amounts to a residual category that includes
all groups that are not primary, such as political parties, unions, occasional sports groups.
Although such groups are secondary, the interpersonal relationships that occur may
nevertheless be face-to-face. The distinction lies in the lack of intimacy of personal
involvement.
partially prescribes what sort of role behavior is acceptable and thus what is expected.
For instance, an upper-class husband who is a successful physician may feel that in his
position he is expected to drive an expensive car, live in an exclusive neighborhood, dress
in fashionable clothes, and give generously to charities. Conversely, a lower-class
husband who is an assembly-line worker may feel comfortable in a role in which he
drives a pickup truck, lives in a bungalow, wear jeans and boots, and drinks beer with his
friends. Role has a strong, pervasive influence on our activities as consumers. For
example, other people have expectations regarding the products we buy to meet the needs
of our roles. Just a few of the many consumption decision directly affected include the
places we shop, the clothes we wear, the cars we drive, the house in which we live, and
the recreational activities we engage in. marketers, therefore, help individuals play their
roles by providing the right costumes and props to be used in gaining acceptance by some
group. Again, it’s the symbols of products that provide so much of the satisfaction that
accrues from a product.
Socialization - Socialization refers to the process by which a new member learns the
system of values, norms, and expected behavior patterns of the groups being entered.
When a new student arrives on a university campus, she or he soon learns from fellow
students what is expected in the way of dress, eating patterns, class attendance, extra-
curricular activities, and so on. Residents new to a neighborhood soon learn what patterns
are expected in the group concerning home maintenance; learn lawns and landscaping,
interior decoration, entertaining and so on. Thus, individuals are continually engaging in
the process of socialization (although it is more intense at an early age) as they encounter
new groups that have an impact on their lives. Consumer socialization, therefore, is the
process by which individuals acquire skills, knowledge, and attitudes relevant to their
effective functioning as consumers in the marketplace. This is particularly relevant to
young people, although, as an ongoing process, it has usefulness in other situations, too,
as was indicated above.
Power - Groups have power to influence their members’ behavior. Various sources of
social power may be operative in different social group situations: reward power,
coercive power, legitimate power, expert power, and referent power. Marketers seek to
use these forms of power to influence consumers.
SOCIAL CLASS
Social class is defined as ranking of people within a culture. Social classes are
based on such attributes as income, occupation, education and type of dwelling.
The social class based on three variables.
1. Family Income
2. Occupational Status
3. Education Attainment.
Types of Social class system:
1. Upper Class: Members of this highest class, the social elite, come from old and
usually well known families and live on inherited wealth, although some work at formal
jobs.
2. Lower Upper Class: These professionals and business people often start life in the
middle class but rise by virtue of their outstanding abilities and high earnings.
3. Upper Middle Class: This class is made up of professionals, small business owners
and corporate managers with comfortable incomes.
4. Middle Class: The middle class is composed of both white and blue collar workers
who earn an average salary.
5. Working Class: Made up largely of blue collar workers. This largest of the social
classes also includes people who earn average salary but apt for a blue – collar life style.
6. Upper Lower Class: These working poor perform unsupplied labor and memorial
work for minimal wages.
7. Lower Lower Class: The members of the lowest class dwell in poverty: they are
unemployed and often on welfare.
Class Structure in India:
The class structure in India is different from those of the other nations.
Brahmins
Kshatriyas
Vasihyas
shudras
These four castes have further sub groups nearing 3000. The relative sizes and
structures of social class vary by culture.
3. Savings, Spending and credits: Upper Class consumers are more conscious about
their future. They prefer to invest in real estate and stocks. They are the big insuring
customers. They believe in long – term in contrast to short – term gratifications.
The lower class believes in immediate gratification and their savings are linked to
safety and security.
How credit card is used, is typical phenomenon. An individual of upper class uses
a credit card to meet his credit bills.
Whereas middle class credit card holder uses it for installment purchases.
CULTURE
Concept and Nature of Culture
Culture refers to a set of values, ideas, artifacts, and other meaningful symbols
that help individuals communicate, interpret, and evaluate as members of society. Culture
does not include instincts, nor does it include idiosyncratic behavior occurring as one-
time solution to a unique problem.
Culture provides people with a sense of identity and an understanding of
acceptable behavior within society. Some of the more important attitudes and behaviors
influenced by culture are the following; Sense of self and space; Communication and
language; Dress and appearance; Food and feeding habits; Time and time
consciousness; Relationships (family, organizations, government, etc.); Values and
norms; Beliefs and attitudes; Mental process and learning; Work
habits and practices.
The purpose of our discussion on consumer behaviour and not withstanding the
diversity of the concept, culture can be defined as the sum total of learned beliefs, values,
and customs that serve to direct the consumer behavior of members of a particular
society.
In other words, Culture is the complex whole that includes knowledge, belief, art,
law, morals, customs, and any other capabilities and habits acquired by humans as
members of society.
Several aspects of culture require elaboration. First, culture is a comprehensive
concept. It includes almost everything that influences an individual’s thought process and
behaviors. While culture does not determine the nature of frequency of biological drives
such as hunger or sex, it does influence if, when, and how these drives will be gratified. It
not only influences our preferences but how we make decision and even how we perceive
the world around us. Second, culture is acquired. It does not include inherited responses
and predispositions. However, since much of human behavior is learned rather than
innate, culture does affect a wide array of behaviors.
Third, the complexity of modern societies is such that culture seldom provides
detailed prescriptions for appropriate behavior. Instead, in most industrial societies,
culture supplies boundaries within which most individuals think and act. Finally, the
nature of cultural influences is such that we are seldom aware of them. One behaves,
thinks, and feels in a manner consistent with other members of the same culture because
it seems “natural” or “right” to do so. The influence of culture is similar to the air we
breathe; it is everywhere and is generally taken for granted unless there is a fairly rapid
change in its nature.
Basic Characteristics of Culture
Although the definitions of culture presented earlier are excellent, they seek to
characterize culture in only a few words. It is evident that the concept is difficult to
convey clearly in any definition. However, despite the challenges involve in defining the
concept, many social scientists agree that the following features are essential.
Culture is invented - Culture does not simply “exist” somewhere waiting to be
discovered. People invent their culture. This invention consists of three interdependent
elements: (1) an ideological component, that consists of the ideas, beliefs, values and
ways of reasoning that human beings learn to accept in defining what is desirable and
undesirable; (2) a technological component that consists of the skills, crafts, and arts that
enable humans to produce material goods derived from the natural environment; and (3)
an organizational component (such as the family and social class) that makes it possible
for humans to coordinate their behavior effectively with the actions of others.
Culture is learned - Culture is not instinctive, but is learned beginning early in life and
is charged with a good deal of emotion. The great strength of this cultural stamp handed
down from one generation to another is such that at an early age, children are firmly
imbued with their culture’s ways of acting, thinking, and feeling. This obviously has
important implications for the behavior of consumers because these preconditions of that
behavior are molded by their culture from birth.
Culture is Social Shared - Culture is a group phenomenon, shared by human beings
living in organized societies and kept relatively uniform by social pressure. The group
that is involved in this sharing may range from a whole society to a smaller unit such as a
family.
Cultures are Similar but Different - All cultures exhibit certain similarities. For
example, each of the following elements is found in all societies: a calendar, cooking,
courtship, dancing, education, family, gestures, government, housing, language, law,
music, and religious ritual. There is, however, great variation from society to society in
nature of each of these elements, which may result in important consumer-behavior
differences around the world.
Culture is Gratifying and Persistent - Culture satisfies basic biological needs as well as
learned needs. It consists of habits that will be maintained and reinforced as long as those
who practice them are gratified. Because of this gratification, cultural elements are
handed down from generation to generation. Thus, people are comfortable doing things in
the customary way, such as traditional marriage found in Nigeria.
Our thorough inculcation with culture causes it to persist even when we are
exposed to other cultures. No matter where we go or what we do, we cannot escape our
cultural heritage.
Culture is Adaptive - In spite of our resistance to change, cultures are gradually and
continuously changing. Some societies are quite static, with a very slow rate of change,
while others are more dynamic, with very rapid changes taking place.
Culture is Organized and Integrated - A culture “hangs together” that is, its parts fit
together. Although every culture has some inconsistent elements, it tends to form a
consistent and integrated whole.
Culture is Prescriptive - Culture involves ideal standards or patterns of behavior so that
members of society have a common understanding of the right and proper way to think,
feel, and act. Norms are society’s rules or guidelines specifying what behavior are
appropriate or inappropriate in given situations.
Concept and Types of Cultural Values
FAMILY GROUP
The term Family is a basic concept; it is not easy to define because family
composition as well as the roles played by family member is almost always in transition.
Family is defined as “Two or more persons related by blood, adoption or marriage
who reside together”.
Family Types:
1. Nuclear Family: It consists of two adults of opposite sex living in a socially approved
sex relationship with their children. It consists of husband, wife and their offspring.
2. Joint Family: It includes a nuclear family and other relatives such as parents of
husband/wife, aunts, uncles and grand parents, also.
ix. Delayed Full Nest: female head is 35-64, couple (married or unmarried), youngest
child under 6.
x. Full Nest III: female head is 35-64, couple (married or unmarried), youngest child 6 or
over.
xi. Single Parent III: head is 35-64, youngest child 6 or over.
xii. Bachelor III: head is 65 or older, single (never married, divorced, separated,
widowed), not dependent children.
xiii. Older Couple (Empty Nest): female head is 65 or older, couple (married or
unmarried), no dependent children.
The modernized family life cycle is based on age (of the female in the household,
if appropriate), which is traced through the groups of young, middle aged, and elderly.
These various ages are affected by two types of critical events: (1) marriage and
separation (by divorce or death), and (2) arrival of the first child and departure of the last
child. Thus, the modernized family life cycle accounts for four household types over
three age groups through a person’s lifetime.
worthy of imitation {The way they maintain their home, their choice of home
furnishings, etc.}
c) Contractual Reference Group: This group is one in which a person holds a
membership or has regular face to face contact and whose values, attitudes and
standards he approves. Thus, a contractual group is likely to have a congruent
influence on an individual’s attitudes on behavior
d) Aspirational Reference Group: It is one in which person doesn’t have a
membership but aspires to be a member. Thus, this has a positive influence on the
behavior.
e) Disclaimant Reference Group: It is the group in which a person holds
membership but whose values, attitudes and standards he disapproves. Hence, it has a
negative impact on the behavior of the person.
f) Avoidance Reference Group: This group is one in which neither a person holds
membership nor he aspires to be the part of the group. Thus, person tends to adopt
attitudes and behaviors that are opposite to the norms of such group.
NECESSITY LUXURY
Weak reference group influence on product {-} Strong reference group influence
on product { + }
CELEBRITY APPEAL
Celebrity – Celebrities are persons who are admired by the public on one count and the
other. Such persons are athletes, cine-stars, sports-heroes and TV personalities.
Advertisers use these celebrities for promoting their products with the expectation that
their appeal would influence the readers or viewers.
Celebrity Appeal can be further divided in to 4 types.
UNIT – 5
DIFFUSION OF INNOVATION
Diffusion is a process by which a new product is accepted and spreads
through a market. It is a group phenomenon, in which first an idea is perceived, then it
spreads through out the market, and then individuals and groups adopt the product.
DEFINITION:
“Diffusion is a process by which the acceptance of an innovation and new
product, a new idea, a new service, is spread by communication to members of a social
system over a period of time.”
Types of Diffusion Process
1. Typical Diffusion Process: It shows a slow growth or adoption. It later rises
rapidly, and then a period of slow growth is noticed.
2. Fast Diffusion Process: The product clicks immediately. The spread of
innovation is very quick. People patronize the product immediately and later on
there is again slow diffusion.
3. Slow Diffusion Process: The product takes a lot of time to diffuse or spread, and
the consumer follows a pattern of adoption slowly by getting acquainted with the
product.
The rate of spread of innovation depends on a number of factors:
1. Type of Group: Some groups, who are young, affluent and highly educated,
accept changes faster than the old, traditional and poor groups. This shows that
the target market is an important determinant of the rate of diffusion.
2. Perceived Risk: The more the risk associated with changing to new innovation,
the slower is the rate of diffusion. The risk consists of the product not performing
as expected, the risk of the consequences of change – over, and the risk of
reverting back to the old product, if not satisfied with the innovative product.
3. Type of Decision: An individual decision is faster then collective ones.
4. Marketing Effort: This also affects the diffusion process. More aggressive
marketing effort, consisting of high and continuous advertising expenditure,
diffuses faster then otherwise.
5. Trial: The trial can be taken at low cost and low risk, the diffusion is faster.
Some products can be borrowed, rented or, their trial can be taken at retail outlets.
These products like medicines and other low priced items have faster diffusion.
6. Fulfillment of felt need: The faster a need is satisfied or fulfilled by a product,
the greater is the rate of its diffusion.
7. Compatibility: The more the product is compatible with the beliefs, attitudes and
values of the individual or group the faster the diffusion – vegetables soup for
vegetarians, ordinary microwave no roasting.
8. Relevant Advantage: The advantage could be of price, quality, ease of handling,
product quality. To have quick diffusion, the product must offer either a price
advantage or a performance advantage. Washing machine is expensive but a
labour saving device.
9. Complexity: If the product is complex {difficult to understand and use} the
diffusion is slower. The product may be complex but its use must be easy.
10. Observability: The more easily the positive effects of the products can be
observed, the more discussion takes place and faster the diffusion process. Eg.
Cell phones.
CLASSIFICATION OF ADOPTERS:
Adopters can be classified into five groups based on the time when they adopt.
INNOVATORS: The first 2.5% adopt innovation
EARLY ADOPTERS: The next 13.5% to adopt.
EARLY MAJORITY: The next 34% to adopt.
LATE MAJORITY: The next 34% to adopt
LAGGARDS: The final 16% to adopt.
INNOVATORS:
They are venturesome risk takers. They are younger, more educated and socially
mobile. They have the capacity to absorb risk associated with the new product. They are
cosmopolitan in outlook, are aware and make use of commercial media. And are eager to
learn about new products, are progressive, ready to use new products.
EARLY ADOPTERS:
They take a calculated risk before investing and using new innovations. They are
opinion leaders and provide information to groups, but they are also concerned about
failure. Therefore, they weigh advantages and disadvantages of the product before
plunging in for a purchase.
EARLY MAJORITY:
They tend to be more continuous and use the product after the innovators and
early adopters seem to be satisfied with it. They are elders, well educated and less
socially mobile. They rely heavily on inter personal source of information. They
constitute 34 percent of the consumers.
LATE MOJORITY:
They are doubtful and skeptical about the innovation of new products. They tend
to use the product not so much because of innovation, but because of other pressures –
non availability of the product and social pressures. They have less social status, and less
socially mobile then the previous group.
LAGGARDS:
They are more traditional. They possess limited social interaction and are
oriented to the past. They adopt the innovations with great reluctance. They constitute a
small portion of 16 percent of the consumers.
MARKET STRATEGY RELATED TO DIFFUSION:
There are differences in the early purchasers or innovators and late purchasers.
The strategy for the target market adopted, is a “ moving target market “ approach.
Diffusion Enhancement Strategies:
The idea is to find out the diffusion inhibitors and to eliminate them for the
enhancement of diffusion. For this the diffusion determinants are analyzed, and diffusion
strategies framed.
2. SECONDARY ROLES
Users: They use the products thus, initiating the purchase process. They report on the
product performance (Ex. Worker.)
Buyers: Formal authority, high level officers, major role is selection of suppliers and
negotiating purchases (Ex; Purchase Department)
Gate keepers: Control the flow of information into buying centre identifies key buying
influence: (Ex: Receptionist, Secretary)
TYPES OF BUYING SITUATIONS:
1. STRAIGHT REBUY: This type of situation is found when there is repetitive or
routine basis order given by the buyer to older. (in) supplier. Reasons can be numerous –
small orders, satisfaction with present suppliers, time shortage etc., but this gives
opportunities for out suppliers to step in and even supply the real orders so as to step in
the organization. (Ex: when company faces a situation of computer stationary shortage,
company orders in routine, to the old supplier of computer stationery.)
2. MODIFIED REBUY: This situation occurs when buyer wants to modify any
purchase, which is improvement in product specification, price reduction, and change in
terms and conditions, etc. This poses a threat and opportunity to in supplier. Out supplier
can take this as a good chance to make an entry by meeting this expectation, (EX: if the
company has computer PC of 32 MB CD, now wants a new computer supplied to be of
64 MB).
3. NEW TASK: This is the most risky decision of buyer. Buyer goes for first time
purchase of product. Buyer does not have any previous knowledge, information or data
to compare. Naturally the buyer takes a lot of time to decide about the purchase. The
first supplier becomes the benchmark for the next purchases. Buyer’s advantage of
learning curve is not there.
This new task division requires maximum sales persons convincing. New task
usually involves more number of persons in buying centers compared to other two buying
situations, (Ex: company is planning to buy a palm top computer for the first time)
FACTORS INFLUENCING INDUSTRIAL BUYER BEHAVIOUR
1. ENVIRONMENTAL FACTOR
Level of Demand Technology Improvement
Economic Outlook Political Environment
Value of Money Competition Level Changes
Supply Conditions
2. ORGANISATIONAL FACTOR
Objectives Organizational Structure
Policies Organizational System Followed
Procedures
3. INTERPERSONAL FACTOR
Authority Empathy
Status Persuasiveness
4. INDIVIDUAL PARTICIPANT
Age Job position
Income Personality
Educational qualification Attitude towards risk