CONSUMER BEHAVIOUR

‡ ‡ Definition Consumer behavior is defined as the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that the consumers expect will satisfy their needs. Consumer behavior focuses on how individuals make decisions to spend their available resources ( time, money , effort ) on consumption-related items. Scope of Consumer Behavior 1. Personal consumer ± buys goods and services for his or her own use. - Products are bought for final use by individuals as end users. 2. Organizational consumer ± includes profit, or non-profit businesses, government agencies, institutions. All buy products, goods, services in order to run their organizations.

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CUSTOMER VERSUS CONSUMER
‡ The term µCustomer¶ is specific in terms of brand, company, or shop. ‡ It refers to person who customarily or regularly purchases particular brand, purchases particular company¶s product, or purchases from particular shop. ‡ Thus a person who shops at Bata Stores or who uses Raymond's clothing is a customer of these firms. ‡ µConsumer¶ is a person who generally engages in the activities search, select, use and dispose of products, services, experience, or ideas.

ORGANIZATIONAL BUYER VERSUS INDIVIDUAL BUYER
Individual Buyer
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Purchases goods / services for own use No geographical concentration No bulk purchases, larger in Nos. Elastic Demand from individuals Individual decision making mostly impulsive in nature Buying motive is mostly rational. Lack of professionalism in buying No formalities in buying Decision making process is easy

Organizational Buyer
* Buys goods / services for business use. * Org. buyers are geographically concentrated. * fewer in numbers & bulk purchases. * Fluctuational & In-elastic demand. * many individuals or group involved in decision making. * Buying motive is mostly rational than individual * Org. buyers are knowledgeable & professional * formalities like quotations, proposals are to be followed. * complex decision making with high financial risk, technical aspects, multiple influencing factors etc., * Requires more extensive negotiation over larger period of time.

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Requires less time in negotiation

CUSTOMER VALUE
‡ Customer value is defined as the ratio between the customer¶s perceived benefits( economic, functional, psychological ) and the resources ( monetary, time, effort, psychological ) used to obtain those benefits.

‡ Customer Satisfaction
‡ Customer satisfaction is the individual¶s perception of the performance of the product or service in relation to his or her expectations. Concept of customer satisfaction is a function of customer expectations. A customer whose experience falls below expectations will be dissatisfied. A customer whose experience exceeds his or her expectations, will be very satisfied or delighted.

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CUSTOMER RETENTION
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Customer Retention
Customer Retention is in the best interest of customers stay with the company rather than switch to another firm. In all business situations , it is more expensive to win new customers than to keep existing ones. Customer retentions increases profits in business because, 1. loyal customers buy more products 2. loyal customers are less price sensitive and pay less attention to competitor¶s advertising. 3. servicing existing customers ( familiar with company¶s offerings, processes ) is cheaper. 4. loyal customers spread positive word of mouth and refer other customers. A customer retention driven company closely monitors its customers¶ consumption volume and patterns, establishes tiers of customers according to their profitability levels, develops distinct strategies towards each group of customers.

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CONSUMER MOTIVES
‡ ‡ ‡ ‡ Consumer Motives Consumer has a motive for purchasing a particular product. Motive is a strong feeling, urge, instinct, desire or emotion that makes the buyer to make a decision to buy. Buying motives thus are defined as µthose influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods or service. These motives are generally controlled by economic, social, psychological influences etc. Motives which Influence Purchase Decision The buying motives may be classified into two: i. Product Motives ii. Patronage Motives

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to be admired by others Purchasing Insurance policy Purchasing premium products Rural people imitate urban purchasing antiques Buying health foods. washing machine. mixy Purchasing gift items . membership in health clubs Purchasing micro-oven.CONSUMER MOTIVES ‡ Nature of Motive ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Desire for money Vanity Fear Pride Fashion Possession Health Comfort Love and affection : : : : : : : : : Purchase Decision Purchasing when price falls down Getting costly Items.

To plan out an effective marketing strategies & promotional messages for the target customers. Consumers are often studied because certain decisions are significantly affected by their behavior or expected actions. thinking about products and services . Pertinence to Decision Making ± Micro & Macro perspectives involve understanding the consumers for the purpose of helping a firm to achieve its objectives. interests. of the target segment. ‡ ‡ ‡ ‡ .NEED FOR STUDY OF CONSUMER BEHAVIOUR ‡ ‡ ‡ Marketer gains insight in to the attitudes. Studying consumer behavior plays significant role in our lives. lifestyles. when we do shopping. Understanding consumer behavior can provide insight in to aggregate economic and social trends and perhaps even predict such trends. Study of consumer behavior may suggest ways to increase the efficiency of the market system and improve the well-being of people in society. hearing advertisements.

To design the goals and methods of communicating aspects of the firm and its offerings to target customers. To make decisions regarding the prices to charge for the company¶s products and services and any modification to those prices. To offer the physical product and service features which have major influences among customers. for the company To identify and select the target market and to offer the unique market offerings. To consider of where and how to offer products and services for sale. . To identify and satisfy the consumer¶s wants and needs. for the provision of public services. To achieve the company objectives. To devise integrated strategy in achieving a firm¶s objective through consumer satisfaction. In the decision making of the Governmental agencies. To develop and implement a strategy for delivering an effective combination of want satisfying features to consumers within target markets. To do Market-Opportunity analysis.APPLICATIONS OF CONSUMER BEHAVIOR STUDIES ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ A sound understanding of consumer behavior is essential to the long-run success of any marketing program.

FACTORS INFLUENCING CONSUMER BEHAVIOR ‡ Influences on Consumer Behaviour ‡ Interpersonal Influences ± Family. celebrity ) . ‡ Opinion Leader ( any person or organization whose opinions in his field of expertise is respected by us ) ‡ Culture & Sub-Culture. co-worker. Society. ‡ Non-Personal Influences ± Environment. friends ) or impersonal ( movie star. This group could be personal ( family. ‡ Reference Groups ( consists of people whose approval matter to us. Time . Place. whom we may wish to copy .

5. 3. 2.CONSUMER RESEARCH PROCESS ‡ CB research is a scientific enquiry to collect information about the consumer in all possible details and dimensions. 6. ‡ ‡ ‡ ‡ ‡ ‡ .To predict how consumers will react to promotional messages. 4. To understand why consumers make the purchase decisions. Identifying factors influencing purchase decisions. Ascertaining the level of customer satisfaction. Identifying consumer needs and product expectation levels. 1. Determining demographics of existing and potential users.

‡ * provides wealth of information to the Market researcher. Original research performed by individual researchers or organizations to meet the specific objectives called Secondary Research. statistics.TYPES OF CONSUMER RESEARCH ‡ ‡ ‡ ‡ ‡ Primary Vs Secondary Research Internal Vs External Research Qualitative Vs Quantitative Research Primary Research Primary data pertains to firsthand information collected for a specific purpose. competitive market intelligence. Ex. * Govt. company accounts. patent application job advertisements. casual research. online services. Secondary Research * Secondary data collected originally for a more general purpose. ‡ . Primary research is specially commissioned since it is unlikely that related data is available already. The potential of sale for an innovative new product can only be found through the primary research. popular media Technical / specialist publications third party data services. usually by a third party.

. production distribution records. ‡ Internal Research data can only be primary data. Internal data would include sales. Market survey data ‡ . time. * External research data can be primary or secondary. Census. Ex. External Research * Information collected by outside bodies Census survey. * Ex.TYPES OF CONSUMER RESEARCH ‡ ‡ Internal Research The information available within the organization is termed as Internal Research. effort etc. customer data base etc. IMRB etc. market research comps such as NCAER. and requires maximum resources like money.. * External research data is descriptive & More precise. ‡ Internal research is relatively rapid and require minimal resources.

‡ ‡ Primarily to understand effects of various promotional inputs on the consumer & to predict the consumer behavior. ..pretivism¶. * methods mainly consists of depth interviews Focus group. * the research approach is termed as µ inter. metaphor analysis. ‡ ‡ This research approach is known as¶ Positivism¶. projective techniques etc. empirical and can * the findings cannot be generalized to a be generalized to a larger populations. collage research.TYPES OF CONSUMER RESEARCH ‡ ‡ Quantitative Research Qualitative research mostly deals with numerical information. * to obtain new ideas for promotional campaign and products that can be tested more Thoroughly in larger. large populations. Consists of experiments . & more comprehensive studies. Qualitative Research * Quantitative research deals with less tangible Data such as consumer opinions. survey techniques and observation etc. The findings are descriptive.

customers with complaints or new ideas are able to express them in timely fashion. This research occurs in situations when there is not enough known about consumers to draw conclusions about what variables are influencing their behavior. ‡ ‡ ‡ ‡ ‡ . Consumer Suggestions Many influences and problems encountered by consumers are discovered through the spontaneous suggestions of consumers themselves. In this method.‡ ‡ Exploratory Research TYPES OF CONSUMER RESEARCH Used to identify variables influencing consumers and discover how consumers may tend to react to these factors. Many retailers conduct an informal type of research similar to the familiar µ suggestion box¶. Two significant methods used in exploratory research are * Consumer Suggestions * Focus Groups.

TYPES OF CONSUMER RESEARCH. Understands consumers language and motivations. misleading. Explores new areas as a prelude to a quantitative study. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . package. Advantages in Focus Group Interview Generate hypotheses about consumers and market situations. Suggest fresh & revitalized ideas. Understands consumers lifestyles and personalities. A moderator guides the discussions but allows consumers to interact with each other.EXPLORATORY RESEARCH ‡ ‡ Methods used in Exploratory Research .Focus Group Interview Focus groups generally bring together in a casual setting eight to ten people with similar backgrounds to apply the principles of group dynamics and free association to a marketing problem. or negative. or product concept to determine if anything about it confusing. Check an advertisement. The session which lasts about two hours . Do a postmortem on a failed product. are usually videotaped.

The prediction of consumer¶s behavior and methods of influencing it can be suggested by conclusive research. ‡ .TYPES OF CONSUMER RESEARCH ± CONCLUSIVE RESEARCH ‡ ‡ ‡ Conclusive Research Conclusive research build upon exploratory research. The major goals of conclusive research are to describe consumers¶ behavior and to offer explanations for its causes.

Depth interviews are particularly useful during the early stages of a product / brand development when new ideas are required and little leads been decided. The role of the interviewer is to obtain detailed information on the topic needed within the time available. ) and is best carried out by trained and experienced interviewer.QUALTITATIVE RESEARCH METHODS ‡ ‡ Depth Interviews The aim of depth interview is to secure the maximum amount of useful information from the respondent on a particular topic with the minimum intervention from the interviewer. balance the need for open ended discussion with the need to address certain topics. A depth interview is an unstructured discussion between the interviewer and the respondent. ‡ ‡ ‡ ‡ . Depth interview is generally lengthy ( anything up to 1 Hr.

motivation. and feeling. role play ‡ ‡ ‡ ‡ ‡ ‡ . 1. There are a number of projective techniques available.QUALITATIVE RESEARCH METHODS ‡ ‡ Projective Techniques Projective techniques are used by trained psychologists to understand the respondent¶s hidden attitude . thematic apperception test 4. in the Marketing context. word association 2. Projective techniques are used to explore associations with the particular brand. sentence completion 3.

The session which lasts about two hours . A moderator guides the discussions but allows consumers to interact with each other. or product concept to determine if anything about it confusing. Understands consumers language and motivations. are usually videotaped. Check an advertisement. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Do a postmortem on a failed product. package. misleading. or negative. Suggest fresh & revitalized ideas. Advantages in Focus Group Interview Generate hypotheses about consumers and market situations. Understands consumers lifestyles and personalities.QUALITATIVE RESEARCH PROCESS ‡ ‡ Focus Group Interview Focus groups generally bring together in a casual setting eight to ten people with similar backgrounds to apply the principles of group dynamics and free association to a marketing problem. Explores new areas as a prelude to a quantitative study.

of sounds. consumer perceptions on advertising. Consumer theorists believe that people use metaphors as the most basic method of thought and communication. drawings or pictures to describe or represent feelings about another. say. and marketing strategies.QUALITATIVE RESEARCH METHODS ‡ ‡ Metaphor Analysis Metaphor is the expression of consumers¶ thought processes in the form of series of images. In metaphor analysis. pre-screened respondents were asked to bring in to a depth interview pictures that illustrated their perceptions of the value of advertising. a non-verbal form. Metaphor analysis relies on visual images to assess consumer¶s deep and sub-conscious thoughts about products. music. services. or pictures in their mind. through the use. ‡ ‡ ‡ .

.QUANTITATIVE RESEARCH METHODS ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Quantitative primary data can be basically be collected through Observation method Surveys and questionnaires ( including interviews. through a hidden camera . and postal survey ) Observations A researcher can actually observe the behavior of the consumer. Observations can be of three types. telephone. Observation method is quite useful under those circumstances where we are more interested in behavior than in any mental process. Observations can be carried out in the field or laboratory setting. or by an unknown observer ( to the person being observed ) Non-participatory ± where the subject knows that he is being observed but the researcher takes no part in the activity being conducted by the person being observed Participatory ± here the subject and the researcher interact. Secretive ± when the subject of observation is unaware that he is being observed . Lab observations are naturally in artificial setting and therefore may not reflect true behavior. dairy.

analyze the data 9. determine your sample-who will you survey 3. 1. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . decide on your survey goals-what do you want to learn 2.QUANTITATIVE RESEARCH METHODS ‡ ‡ Mystery Shopping In this method the researcher simply poses as a customer and reports on the nature and quality of the service he receives. pretest the questionnaire 6. Survey Methods Most commonly used method.enter the data 8. design the questionnaire 5. The following are the sequential steps in survey methods. select methodology 4. administer-ask questions 7. present the findings.

THE CONSUMER BEHAVIOR RESEARCH PROCESS Develop Objectives Collect Secondary data Design Qualitative Research ‡Method ‡Screener Questionnaire ‡Discussion Guide Design Quantitative Research ‡Method ‡Screener Questionnaire ‡Discussion Guide Conduct Research ( using highly trained Interviewers ) Exploratory Study Collect Primary Data ( Usually by field Staff ) Analyze Data ( Subjective ) Analyze Data ( Objective ) Prepare Report Prepare Report .

Secondary information includes findings based on research done by outside organizations. . to study consumer attitudes. If more detailed information on purchasing patterns or product usage is needed or if psychological or socio-cultural consumer information is sought . The marketing manager and the researcher to agree at the outset on the purposes and objectives of the study to ensure that the research design is appropriate. A carefully thought-out statement of objectives helps to define the type and level of information needed. data generated in-house for earlier studies and even customer information collected by the firm¶s sales or credit departments. percentage of households use email. Secondary research findings sometimes provide sufficient insight in to the problem at hand to eliminate the need for primary research. then primary data must be collected. The objectives could be to segment the market. Collecting Secondary Data Secondary information is any data originally generated for some purpose other than the present research objectives.‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ THE CONSUMER BEHAVIOR RESEARCH PROCESS Developing Research Objectives The first step in the consumer behavior research process is to carefully define the objectives of the study.

how many to survey ( the sample size ). The method of data collection. sample design. The size of the sample is dependent both on the size f the budget and on the degree of confidence that the market wants to place in the findings. will provide highly reliable findings. how to select them ( the sampling procedure ). Repositioning a product ) then a qualitative study is undertaken. If the findings have the sufficient representative of the total population. Larger the sample size. If descriptive information is needed . type of data collection instrument used. Sampling and Data Collection The sampling plan addresses three questions : whom to survey ( the sampling unit ). then a quantitative study is likely to be undertaken. If the purpose is to get new ideas ( for exp. depending on the sampling procedure adopted. then a probability sample should be chosen. Smaller sample size. will differ for each of the research approach. Interviewing the correct target market or potential target market is basic to the validity of the study. If the researcher wants the findings project able.THE CONSUMER BEHAVIOR RESEARCH PROCESS ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Designing Primary Research The design of a research study is based on the purposes of the study. to the total population. . then a non-probability sample can be selected. the more likely the response will reflect the total universe under study.

THE CONSUMER BEHAVIOR RESEARCH PROCESS ‡ ‡ ‡ ‡ Data Analysis and Reporting Research findings In qualitative research. the researcher supervises the analysis. ‡ ‡ ‡ ‡ ‡ . The body of the report includes a full description of the methodology used and for quantitative research. In quantitative research. A sample of the questionnaire is usually included in the appendix to enable management to evaluate the objectivity of the findings. the research report includes a brief executive summary of the findings. e converted in to numerical scores ) then all of the responses are tabulated and analyzed using sophisticated analytical programs that correlate the data by selected variables and cluster the data by selected demographic characteristics.. also includes tables and graphics to support the findings. Open ended responses are first coded and quantified ( i. Reporting Research findings In both qualitative and quantitative research. Depending on the assignment from marketing management. the moderator or test administrator usually analyzes the responses received. the research report may or may not include recommendations for marketing action.

personality. core cultural values. occupation and education. and attitudes. Bases for Segmentation Geographic segmentation ± division of market by locations. The above referred psychological variables are influencing the consumer decision making and consumption behavior. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Social Segmentation ± market segmentation based on the sociological ( group ) and anthropological variables.e division based on the family life cycle. Demographic segmentation ± division of market based on the demographic variables such as age. perceptions. gender. Demography means to the vital and measurable statistics of a population. i. Psychological Segmentation ± Consumer segmentation based on the specific psychological variables which refers to the inner or intrinsic qualities of the individual consumer. Psychological variable or Psychographics are motivations. learning. marital status. income. social class. sub-cultural memberships and cross-cultural affiliation.CONSUMER MARKET SEGMENTATION ‡ Market segmentation can be defined as the process of dividing a market in to distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix.

goals are simultaneously determined and are specific to a given behavior or action. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Values Values are enduring beliefs that a given behavior or outcome is desirable or good. Thus. When goals are activated we feel motivated to engage in behavior that are relevant to the goals. Consumer is more likely to attend to some information if he finds it relevant to his values. The reason for this is that our values guide what we see as relevant for ourselves. Goals Goals reflect the objectives we would like to achieve in a given situation.PSYCHOGRAPHICS ‡ Psychographics : The science of describing a consumer on the basis of his psychological characteristics. and life style constitute psychographics. Values.CONSUMER BEHAVIOR . Personality. Values act as powerful force ( motivators ) influencing consumer behavior.

Consumer motivation is one of the driving forces of consumer behavior. 2. 4. Based on the prior knowledge and fresh search he satisfies the need and achieves the goal. Consumers buy and use products because they are motivated by the need and desire to do so. 3. 1.THEORY OF MOTIVATION ‡ ‡ Motivation is the driving force within individuals that impels them to action. Need converts itself in to want and desire to obtain the need satisfying object. 5. Once the need satisfied potential consumer feels a drive to reduce the same. Desire is manifested in a specific goal as the customer searches his memory for the product. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . The consumer motivation comprises of five stages. A motive is a construct representing an observable inner force that stimulates and compels a behavioral response and provides specific directions to that response. The consumer motivation is the process through which needs are satisfied. Latent need becoming explicit.

MOTIVATION PROCESS Need Need Regulation Drive Drive Reduction Want Manifestation of desire Goal Goal attainment Tension Reduction Behavior .

a clinical psychologist . self esteem ) Social Needs ( attraction. Self ± Actualization ( self-fulfillment) Ego Needs ( prestige. formulated a widely accepted theory of human motivation based on the notion of a universal hierarchy of human needs. belonging) Safety & Security Needs (Protection. stability ) Physiological Needs ( Food. shelter ) . air. order. status .MOTIVATION ± HIERARCHY OF NEEDS ‡ Dr. water. Abraham Maslow . friendship .

‡ . This model is based on four premises. Maslow believed that these motivating forces operate more or less in a sequential fashion. which rank in order of importance from lower level needs ( biogenic ) to higher ± level needs. the next level becomes a strong motivator. B. The theory postulates that individuals seek to satisfy lower ± level needs before higher-level needs emerge. As the basic motives are satisfied . C. D. more advanced motives come in to play. those at the next level are felt more intensely. all humans acquire a similar set of motives through genetic endowments and social interaction. as satisfaction at one level increases. Some motives are more basic and critical than others. As the needs at one level are particularly or fully satisfied . More basic motive must be satisfied at least to some minimum levels before other motives are activated. Even if no level or need may be completely satisfied .THEORY OF HIERARCHY OF NEEDS ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Maslow¶s theory identifies five basic levels of human needs. A.

3. ‡ ‡ ‡ ‡ . The theory facilitates product positioning or repositioning. the theory can not be tested empirically. This theory offers useful framework for marketers trying to develop appropriate advertising appeals for their products. there is no way to measure precisely how satisfied one level of need must be before the next higher need becomes operative. 2.HIERARCHY OF NEEDS ± MARKETING APPLICATIONS ‡ ‡ ‡ Limitations of Theory of Hierarchy of Needs 1. 2. the need hierarchy also appears to be very closely bound to the contemporary American culture. Marketing Applications of Theory of Hierarchy of Needs 1.

McGUIRE¶S THEORY OF PSYCHOLOGICAL MOTIVATION ‡ ‡ ‡ McGuire has developed a motive classification system which is more specific than Maslow¶s. behavior. Need to assign cause to an event ± these motives deal with one¶s need to determine who and what causes things to happen.need to defend our identities and egos is another important motive. 7. 1. as applicable in marketing context. 3. are listed below. Need for novelty ± seeking variety and difference out of a need for novelty. Need for cues. self image. Need for assertion ± reflects a consumer¶s need or engaging in those type of activities that will bring about an increase in self esteem as well as esteem in the eyes of others. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Need for ego defense. Need for self expression ± this motive is externally oriented and deals with the need to express one¶s identity to others. 4.these motives reflect the need for observable cues and symbols that enable us to understand what we feel and know. other¶s view point about ourselves. 6. Need for independence ± this arises from the motive to establish a sense of self worth and meaning by achieving self actualization. 9. The list of motives. 8. opinions. 2. Need for consistency ± to observe consistency among various facets like attitude. Need to categorize ± information and experiences in a certain meaningful manner. 5.

interest arises by a product / service Ex. .g.g. create appropriate emotions.Ex : purchase of a car because of its color. .reflected in the status and esteem value of product / service. . e. Functional needs ±Those needs which satisfy a physical/functional purpose. which are contingent on time/place.inferred by an un-expected benefit of a product/service. Social needs ± Needs that Allow identification with desired group.involves the appearance or attractiveness of the product / service. e. Situational needs ±The needs.Ex. e. e.g. Purchase for immediate delivery. Purchase of a car for new experience.Ex : purchase of a car because of its fuel efficiency. shape. e. Epistemic needs ±The Need for knowledge/information.g. logos . emergency repairs.g. Emotional needs ±Those needs which. Purchase of the car because it shows that the buyer is µ cut above¶. soap . size.involves the utility of the product / service or the function it performs. ‡ ‡ ‡ ‡ ‡ . . space. newspaper . reliability. discounted price.‡ ‡ THEORY ON CONSUMER MOTIVES Jagdish Seth identified five consumer motives each oriented to the achievement of specific goals. joy on getting gift. . Ex.

nAFF: need for affiliation: the desire for friendly and close interpersonal relationships. having studied this before McClelland had identified three types of needs: Need for achievement. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . and Need for affiliation nACH: need for achievement: drive to excel: drive to achieve in relation to a set of standards. to strive to succeed. Need for Power. nPOW: need for power: the need to make others behave in a way that they would not have behaved otherwise.Theory of Needs ‡ McCLELLAND¶S Three Needs Theory ‡ As we know.

which will translate into a drive (here the drive will e to obtain food) and the goal will be to satisfy the need (in this example to fee full in the stomach). ‡ Motivating: This implies an activity engaged into by an individual. .Some important terms in Motivation Theory Motives: Motives give direction to human behavior. This is also called person motivation. a driving force compelling the person to move away from someone or something will be known as negative motivation. We can say that a motive is an inner state that energizes. at the basic level. A positive motivation happens when an individual experiences a driving force towards an object or person or situation. On the other hand. or moves and directs or channels behavior towards the goal. by which he or she will channelise the strong motives in a direction that is satisfactory. Motivation: Motivating can be described as the driving force within individuals that impels them into action. ‡ Positive or negative Motivation Motivation can be either positive or negative. activates. For instance. our body has a need (say hunger).

‡ ‡ ‡ ‡ ‡ . Marketing Strategy Implications. 1. Differentiate Marketing Communications for each condition. many consumers are quite un-interested in learning about alternative brands and their characteristics. Consumers may make many purchase decisions without first developing clear brand attitudes or even having much knowledge about alternative brands.Impact of Motivational Research on Marketing Strategies ‡ ‡ Conclusions from Motivational Research Studies 1.Segmenting consumers in to high and low involvement groups and tailoring marketing programs for each. 2. 3. For numerous products or situations. 2. Moving low involvement customers to higher levels.

4. traits. Personality is an internalized system which includes all those aspects of a person that are inherited as well as those hat are learned. The identification of specific personality characteristics associated with consumer behavior has proven to be highly useful in the development of a firm¶s market segmentation strategies. Personality reflects individual differences. Personality is consistent and enduring 3. Personality can change. 2.CONCEPT OF PERSONALITY ‡ Personality is defined as those inner psychological characteristics ( those specific qualities. attributes. factors and mannerisms that distinguish one individual from other individuals ) that both determine and reflect how a person responds to his or her environment. Personality is consistent pattern of responses to the world across situations and over time. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Nature of Personality 1.

and then only group them according to their behavioral similarity. and as part of gradual maturing process on the other. Thus marketers cannot change individual¶s personality. Personality dictates responses that are consistent across situations and endure overtime. Marketers use personality traits to first differentiate individuals. as learning which contributes to personality formation is a continuous process.Personality change overtime in response to situations and events in life on one hand. 2. 1. The individual has to appeal to the relevant personality traits inherent in target customer groups.Characteristics of Personality ‡ ‡ Personality is the sum total of ways in which an individual reacts and interacts. ‡ ‡ ‡ . Personality traits are an important and dominant factors dictate an individual¶s purchase behavior. 3. 4.

‡ ‡ ‡ . To identify the extent to which consumers of the product category are prone to discounts / rebates and how value conscious they are. 2. To avoid targeting innovative products to rigid consumers and consumers with low tolerance for ambiguity. 4. To Position brands to enhance their appeal to target customers by communicating the brand benefits that match consumer personality types. To target less known brands and technological innovations to consumers with high level of self esteem and self confidence. then market accordingly. 3.Marketing Applications of Personality ‡ ‡ Understanding consumer personality and personality traits helps marketers 1.

. hunger. . analysis of their dreams. 1. and the specific nature of their mental and physical adjustment problem. Freudian Theory Also known as µ Psychoanalytic Theory¶ proposed by Sigmund Freud. etc. Neo ± Freudian Theory 3. 2. the ego and the super ego. every individual¶s personality is the product of a struggle among three interacting forces ± the id . Freud constructed his theory based on the patient¶s recollection of early childhood experiences.Theories of Personality ‡ The following theories have played a prominent role in the study of the relationship between consumer behavior and personality. According to Sigmund Freud.basic psychological needs such as thirst. ‡ ‡ ‡ ‡ ‡ ‡ id is the source of strong inborn drives ± considered as µ warehouse¶ of primitive & impulsive drives. Trait Theory. Freudian Theory 1.

There would be no concern about how the drink was acquired or whether it belonged to someone else. Also many of the id impulses are not acceptable to the values of organized society. Ex. The id operates at a very subjective and un-conscious level and is not fully capable of dealing with objective reality. When an individual is hot and thirsty. his id would urge him to grab something cold to drink.Theories of Personality ‡ ‡ Freudian Theory The id operates on what is called µ Pleasure Principle¶ ± id acts to avoid tension and seeks immediate pleasure. ‡ ‡ ‡ Gratification ID System 1 EGO System 3 Super Ego System 2 .

‡ ‡ ‡ ‡ Ego is serving as organized focal point for effective action in the environment.Theories of Personality ± Freud¶s Psychoanalytic Theory ‡ ‡ The ego state is individual¶s conscious control. The hungry person¶s id will encourage him to take away the food from his friend. Ego is the executive of the personality . Ex. ± which is capable of postponing the release of tension until that time when it will be effectively directed at coping with the external environment. Ego state functions as an internal monitor that attempts to balance the impulsive demands of the id and develops capabilities of realistic thinking and ability to deal appropriately with the individual¶s environment. the ego might reason that asking for the food may take longer but may also result in getting a greater portion. Ego state operates on the µ Reality Principle¶.

The superego constitutes the moral part of the individual¶s psychic structure through internalizing the values of society. . ‡ Super ego controls basic strivings of the id which could disrupt the social system and influences the ego to strive for socially approved goals rather than purely realistic ones.Freud¶s Psychoanalytic theory of Personality ‡ The super ego is the third component of personality. ‡ ‡ Super ego represents the ideal by defining what is right and good and it influences the individual to strive for perfection. ‡ Super ego is conceptualized as the individual¶s internal expression of society¶s moral and ethical codes of conduct. ‡ The super ego¶s real is to see that the individual satisfies needs in a socially acceptable fashion.

Defense Mechanisms are unconsciously determined techniques for avoiding or escaping from high levels of tension brought about by unresolved conflicts between components of the personality. ego and super ego states. Understanding the operation of defense mechanisms can assist the marketers in developing marketing and promotional strategies. Applications of Freud¶s Psychoanalytic Theory 1. 2. ego and super-ego in some purchase situations.Freudian proponents suggest that various appeals can assist in resolving the conflict which can develop between the id. defense Mechanisms work. the individual¶s total personality develops and is defined by the relationships among the id. The ego directs behavior that is also acceptable to id and super ego. This idea has been translated in to advertising themes. Advertising Appeals . Ego is capable of resolving many of the conflicts that arise between the three personality components.Freud¶s Psychoanalytic Theory of Personality ‡ ‡ ‡ ‡ ‡ According to Freud. ‡ ‡ ‡ . The ego arbitrates the acceptability of the two forms of expressions of id and super ego in an advertising campaign. When No resolutions achieved for resolving conflicts. This approach in advertising is also known as µ Triple Appeal¶.

security. insecurity and lack of love. compliant orientation ± those move toward people and stress the need for love. modesty.NEO-FREUDIAN PERSONALITY THEORY ‡ Among those who rejected Freud¶s id based personality theory . These feelings motivate individuals to perfect themselves and also to develop methods to cope with anxieties produced by such feelings of inferiority. approval. some reasoned that individual develops a personality through numerous attempts to deal with others in a social setting. These ten needs were classified in to three major orientations. 1. Karen Horney proposed the first theoretical scheme based on Neo-Freudian approach. affection. Individuals are striving to over-come feelings of inferiority and searching for ways to obtain love. The childhood experiences in relating to others produce feelings of inferiority . and brotherhood. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . These individuals tend to exhibit large amounts of empathy and humility and are selfish. According to Neo ± Freudian theory. Horney identified ten major needs which are acquired as a consequence of individuals attempting to find solutions to their problems in developing a personality and dealing with others in a social environment.

Many marketers have used some of the Neo-Freudian theories in marketing applications. freedom. These individuals stress the need for independence. Aggressive orientation ± Those who move against people and stress the need for power . focusing on the measurement of personality in terms of specific psychological characteristics called traits ‡ ‡ ‡ ‡ . strength. 3. and the ability to manipulate others. Detached orientation ± Those move away from people. TRAIT Theory Trait theory is a significant departure from the earlier qualitative measures that are typical of Freudian and neo-Freudian theory. and self-reliance in their dealings with others. It is primarily quantitative or empirical. A CAD ( Compliant. Detached ) instrument was developed to measure people¶s interpersonal orientations within a consumer context.NEO-FREUDIAN THEORY OF PERSONALITY ‡ 2. Aggressive.

Researchers have learned to expect personality to be linked to how consumers make their choices. . and to the purchase or consumption of a broad product category rather than a specific brand. Types of traits measured include: Consumer innovativeness ² how receptive a person is to new experiences. Consumer materialism ² the degree of the consumer¶s attachment to ³worldly possessions. Selected single-trait personality tests increasingly are being developed specifically for use in consumer behavior studies.TRAIT THEORY OF PERSONALITY ‡ ‡ ‡ ‡ ‡ ‡ ‡ A trait is defined as any distinguishing. relatively enduring way in which one individual differs from another.´ Consumer ethnocentrism ² the consumer¶s likelihood to accept or reject foreign-made products.

Variety-novelty seeking. Consumer Innovativeness How receptive are consumers to new products. or new practices? Recent Consumer research indicates a positive relationship between innovative use of the Internet and buying online.based ads for new products. new services. Consumers high in dogmatism are more accepting of authority. Need for uniqueness. Social character.PERSONALITY TRAITS ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Personality traits to be discussed include: Consumer innovativeness. Dogmatism Dogmatism is a personality trait that measures the degree o rigidity an individual displays toward the unfamiliar and toward information that is contrary to their established beliefs. Consumers low in dogmatism are more likely to prefer innovative products to established ones. Dogmatism. Optimum stimulation level. .

to seek purchase-related information. The correspondence between an individual¶s OSL and their actual circumstances has a direct relationship to the amount of stimulation individual¶s desire. Persons with optimum stimulation levels (OSL s) are willing to take risks. . and calm existence. to be innovative. to try new products. If the two are equivalent. Other-directed consumers tend to look to others for direction and are not innovators.INFLUENCE OF PERSONALITY TRAITS IN CONSUMPTION BEHAVIOUR ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Social Character Social character is a personality trait that ranges on a continuum from inner directed to other-directed. They prefer ads that feature social environment and social acceptance. and vice versa. they are under stimulated. Need for Uniqueness These people avoid conformity are the ones who seek to be unique! Optimum Stimulation Level Some people prefer a simple. and to accept new retail facilities. and unusual experiences. complex. Inner-directed consumers tend to rely on their own ³inner´ values or standards in evaluating new products and are innovators. uncluttered. They also prefer ads stressing product features and personal benefits. although others seem to prefer an environment crammed with novel. they tend to be satisfied. If bored.

switching brands to experience new and possibly better alternatives). Consumers with high variety seeking scores might also be attracted to brands that claim to have novel or multiple uses or applications. There appear to be many different types of variety seeking: Exploratory purchase behavior (e. Marketers.. ‡ . Vicarious exploration (e. The stream of research examined here indicates that the consumer innovator differs from the non-innovator in terms of personality orientation. and Use innovativeness (e. This is similar to OSL. Ultimately.INFLUENCE OF PERSONALITY TRAITS IN CONSUMPTION BEHAVIOUR ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Variety-Novelty Seeking. where the consumer uses an already adopted product in a new or novel way). marketers must walk the fine line between offering consumers too little and too much choice. where the consumer secures information about a new or different alternative and then contemplates or even daydreams about the option).g..g.g. benefit from thinking in terms of offering additional options to consumers seeking more product variety. Primary types are variety or novelty seeking. up to a point. The third form of variety or novelty seeking²use innovativeness²is particularly relevant to technological changes..

making judgments as to value and liking. 2. bitter taste ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Color 3. Organization ± Categorization by matching sensed stimulus with similar object in memory.THEORY OF PERCEPTION ‡ CONSUMER PERCEPTIONS. Ex. organizing and interpreting information inputs in to a meaningful and coherent picture of the world. Sensation± Attending to an object/event with one of five senses. Characteristics of Perception Perception is a mental process. e. The process of perception has three sub stages 1. are based on his or her perceptions of their surroundings or environment.Perception is the process of selecting. organizes it and then draws significance or meaning from it. feelings etc. Perception being an intellectual and cognitive process will be subjective in nature.g. whereby an individual selects data or information from the environment. emotions. Perception is basically a cognitive or thinking process and individual activities. Interpretation± Attaching meaning to stimulus.

Selective distortion is the tendency to twist information into personal meanings and interpret information in a way that will fit our pre-conceptions.Theory of Perception ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Perceptual Processes: 1. there is not much that marketers can do about selective distortion. satisfies current needs. Selective distortion 3. intensity of input changes (sharp price drop). if it is linked to an event. Selective attention means that marketers have to work hard to attract consumers¶ notice. Selective attention Selective Attention. Advertisers that use comparative advertisements (pitching one product against another). A stimuli is more likely to be attended to . have to be very careful that consumers do not distort the facts and perceive that the advertisement was for the competitor. Selective Distortion. 2. Unfortunately. . Selective retention.

Sensitivity to stimuli varies with the quality of an individual¶s sensory receptors and the amount or intensity of the stimuli to which he/she is exposed. the difference of input. taste. the eyes. Sensation itself depends on energy change. smell. sound. ‡ .e.sending messages to their target market. we are likely to remember good points mentioned about competing products. Selective retention explains why marketers use drama and repetition in . ears. forgets those that don¶t. sight. Human sensitivity refers to the experience of sensation. Sensory receptors are the human organs (i. nose. Basic Concepts in Perception Process Sensation is the immediate and direct response of the sensory organs to stimuli. or touch. People will forget much that they learn but will tend to retain information that supports their attitudes and beliefs..Theories of Perception ‡ ‡ ‡ ‡ ‡ ‡ * ‡ ‡ Selective retention. We remember inputs that support our beliefs. (an advertisement. a package. Because of selective retention. and a brand name). mouth. and skin) that receive sensory inputs. A stimulus is any unit of input to any of the senses.

they are sensory acuity. Individual Response factors The following are the individual factors affecting the sensory perceptions. Factors influencing Sensory Perception 1. and store décor. packaging. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Individual Factors Stimulus Factors Sensory cues are such attributes as colour. bitter and floral etc. Perception The five senses ± sight . Sensory acuity ± different people used to have different capacities to recognize and differentiate among certain sensory cues.‡ ‡ Sensory and taste govern sensory perception. Marketers recognize the importance of colours and use it intelligently and extensively in product design. tempo and pitch. shape. promotion. touch. sweet. sensory preferences and consumer expectations.. Stimulus Factors 2. Colour is a powerful cue in visual perception. smell. and size. hear Sensory perception focuses on specific attributes of a product or service and how these attributes are understood and evaluated by consumers.

Reference Prices A reference price is any price that a consumer uses as a basis for comparison in judging another price. Services are intangible image becomes a key factor in differentiating a service from its competition. An advertiser generally uses a higher external reference price (³sold elsewhere at. Perceived Price How a consumer perceives a price (perceived price)²as high.´) in an ad in which a lower sales price is being offered.. Reference prices can be external or internal. Many service marketers have developed strategies to provide customers with visual images and tangible reminders of their service offerings. to persuade the consumer that the product advertised is a really good buy. ‡ ‡ ‡ ‡ ‡ ‡ . as fair² has a strong influence on both purchase intentions and purchase satisfaction. as low. service marketers face several unique problems in positioning and promoting their offerings.Marketing Applications of Perception ‡ ‡ Positioning of Services Compared with manufacturing firms.. The marketing objective is to enable the consumer to link a specific image with a specific brand name.

Many consumers use country-of-origin stereotypes to evaluate products. so consumers rely on surrogate or extrinsic cues when purchasing services. etc. Consumers are unable to compare services side-by-side as they do products. Perceived Quality of Services It is more difficult for consumers to evaluate the quality of services than the quality of products. Marketers try to standardize their services in order to provide consistency of quality. store image. a) Intrinsic cues are physical characteristics of the product itself. color. they are often unable to identify that product in a taste test. brand image. Perceived Quality of Products Intrinsic cues are concerned with physical characteristics of the product itself. defective services are difficult to correct. . but in reality. b) Extrinsic cues are such things as price. or aroma. size. and promotional message. etc. store image. Researchers have concluded that the service quality that a customer perceives is a function of the magnitude and direction of the gap between expected service and the customer¶s assessment of the service actually delivered. color. a) Consumers like to think they base quality evaluations on intrinsic cues. As a result. such as size. flavor. brand image. service environment. flavor. price. Service is consumed as it is being produced. consumers often evaluate quality on the basis of extrinsic cues. b) In the absence of actual experience with a product.‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Perceived Quality Marketing Applications of Perception Consumers often judge the quality of a product (perceived quality) on the basis of a variety of informational cues.

Marketers have used the price/quality relationship to position their products as the topquality offering in their product category. Other studies suggest consumers are actually relying on a well-known brand name as a quality indicator. A number of research studies support the view that consumers rely on price as an indicator of product quality. ‡ * ‡ ‡ ‡ . Because price is so often considered to be an indicator of quality. c) Consumers use price as a surrogate indicator of quality if they have little information or little confidence in their ability to make a choice. b) There is a positive price/quality relationship. some products deliberately emphasize a high price to underscore their claims of quality.Marketing Applications of Perception ‡ ‡ Price/Quality Relationship Perceived product value has been described as a trade-off between the product¶s perceived benefits (or quality) and perceived sacrifice required to acquire it.

Gestalt Theory of Perception ‡ ‡ Consumers perceive the overall form of a product . size. Values ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . contrast. object . and situation perceived. intensity. Intensity ± More attention is usually gained as intensity increases. Involvement 3. Gestalt principle implies that the process of perception is influenced by stimulus factors & individual response factors. electro-magnetic and other observable characteristics of person . Colour & Contrast ± color perception involves subjective judgments. Individual Response factors 1. not its individual features. Position Isolation ± centering a small object in a virtually blank page draws the eyes to it immedaitely. Size ± Large sizes tend to attract greater attention than small. position. chemical. movement. and isolation. Needs 4. The Stimulus factors are physical. Interest 2. The stimulus factors which affect sensory perception include colour.

learning theorists in general agree that in order for learning to occur. consumer learning is a process. cues. that is. Despite their different viewpoints. ‡ ‡ Several points in this definition are worth noting. ‡ ‡ ‡ c) Most learning theorists recognize the existence of different types of learning and explain the differences through the use of distinctive models of learning. it continually evolves and changes as a result of newly acquired knowledge from actual experience. almost reflexive responses to the learning of abstract concepts and complex problem solving. The term learning encompasses the total range of learning. response. .CONSUMER LEARNING ‡ Consumer learning is a process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behavior. a) First. b) Both newly acquired knowledge and personal experience serve as feedback to the individual and provide the basis for future behavior in similar situations. certain basic elements must be present²motivation. and reinforcement. from simple.

They may seek information concerning the prices.PRINCIPAL ELEMENTS OF LEARNING ‡ ‡ Motivation is based on needs and goals and Motivation acts as a spur to learning. ‡ The degree of involvement determines the consumer¶s level of motivation to search for knowledge or information about a product or service. styling. Cues serve to direct consumer drives when they are consistent with their expectations. quality and characteristics of tennis racquets. advertising. and store displays all serve as cues to help consumers fulfill their needs. For Ex. price. packaging. Conversely. ‡ ‡ ‡ ‡ . Uncovering consumer motives is one of the prime tasks of marketers who then try to teach motivated consumer segments why and how their products will fulfill the consumer¶s needs. Cues are the stimuli that give direction to the motive of learning. individuals who are not interested in tennis are likely to ignore all information related to the game. a) In the marketplace. Men and women who want to become good tennis players are motivated to learn all they can about tennis and to practice whenever they can.

‡ ‡ . The response a consumer makes depends heavily on previous learning. depends on how related responses were reinforced previously.How individuals react to a cue²how they behave²constitutes their response. consumers can learn to develop successful means of responding to their needs or changing conditions. that. A response is not tied to a need in a one-to-one fashion. Reinforced behavior tends to be repeated. A need or motive may evoke a whole variety of responses.PRINCIPAL ELEMENTS OF LEARNING ‡ ‡ ‡ ‡ Response .Reinforcement increases the likelihood that a specific response will occur in the future as the result of particular cues or stimuli. Reinforcement . in turn.

Strength of Learning ± heavily influenced by importance. and imagery. repetition. The greater the number of stimulus repetitions that occurs. Importance ± refers to the value that the consumer places on the information to be learned. Imagery refers to the images created by words. The more imagery contained in the material. Reinforcement is anything which increases the likelihood that a given response will be repeated in the future. the more likely we are to learn it. reinforcement. The rate at which extinction occurs is inversely related to the strength of the original learning. Repetition is the more times we are exposed to the information or practice a certain kind of behavior .CHARACTERISTICS OF LEARNING ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ There are several characteristics of learning which are relevant and of interest to marketers. Learning lasts longer.Extinction Extinction or forgetting occurs when the reinforcement for the learned response is withdrawn. 1. when the more important the material to be leaned. more reinforcement received during the learning process. 2. .

‡ ‡ ‡ ‡ . the more likely effective retrieval is to occur. 5. Many a time.Stimulus Discrimination Stimulus Discrimination refers to the process of learning to respond differently to somewhat similar stimuli. Marketers use Advertising as one of the ways to differentiate their products from others by brand differences.Stimulus Generalization Stimulus generalization occurs when a response to one stimulus is elicited by a similar but distinct stimulus. 4. the more likely relevant information will be retrieved when required. This characteristic of consumer learning is used by marketers to develop brand extensions. the shopping environment is replicated to bring the learning environment much closer to the retrieval environment.Response Environment The stronger the original learning. real or symbolic advertising. The more the retrieval situation offers cues similar to the cues present during learning.CHARACTERISTICS OF LEARNING ‡ ‡ ‡ ‡ ‡ ‡ 3.

Behavioural Learning Theories Learning Theories Connectionist Learning ( Development of connections between stimulus ± Response ) Cognitive Learning Classical Conditioning Instrumental Conditioning Conditioning Conditioning refers to learning based on association of stimulus ( information ) and response ( behaviour or feeling ) .

PAVLOVIAN MODEL OF CLASSICAL CONDITIONING Unconditioned Stimulus Meat Paste Unconditioned Response Salivation Conditioned Stimulus Bell AFTER REPEATED PAIRINGS Conditioned Stimulus Bell Conditioned Response Salivation .

CLASSICAL CONDITIONING
‡ Early classical conditioning theorists regarded all organisms ( both animal & human ) as relatively passive entities that could be taught certain behaviors through repetition ( or conditioning ). a) Conditioning involved building automatic responses to stimuli. Ivan Pavlov was the first to describe conditioning and to propose it as a general model of how learning occurs. b) For Pavlov, conditioned learning results when a stimulus that is paired with another stimulus elicits a known response and serves to produce the same response when used alone. c) He used dogs to demonstrate his theories. d) The dogs were hungry and highly motivated to eat. e) Pavlov sounded a bell and then immediately applied a meat paste to the dogs¶ tongues, which caused them to salivate. f) After a sufficient number of repetitions of the bell sound, followed almost immediately by the food, the bell alone caused the dogs to salivate. In a consumer behavior context, an unconditioned stimulus might consist of a well-known brand symbol (e.g., the Microsoft ³windows´ icon) that implies technological superiority and trouble-free operation (the unconditioned response). Conditioned stimuli might consist of new products bearing well-known symbols. ‡ ‡ ‡

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COGNITIVE ASSOCIATIVE LEARNING
‡ ‡ Classical conditioning is seen as cognitive associative learning not the acquisition of new reflexes, but the acquisition of new knowledge about the world. Optimal conditioning²that is, the creation of a strong association between the conditioned stimulus (CS) and the unconditioned stimulus (US)²requires forward conditioning; that is, the CS should precede the US, repeated pairings of the CS and the US, a CS and US that logically belong together, a CS that is novel and unfamiliar, and a US that is biologically or symbolically salient. This model is Neo- pavlovian Conditioning. Under neo- Pavlovian conditioning, the consumer can be viewed as an information seeker who uses logical and perceptual relations among events, along with his or her own preconceptions, to form a sophisticated representation of the world. Strategic Applications of Classical Conditioning Three basic concepts derive from classical conditioning: repetition, stimulus generalization, and stimulus discrimination. 1. Repetition works by increasing the strength of the association and by slowing the process of forgetting. a) After a certain number of repetitions retention declines. b) This effect is known as advertising wear out and can be decreased by varying the advertising messages. c) Wear out may be avoided by varying the message through cosmetic variation or substantive variation.

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STRATEGIC APPLICATIONS OF CLASSICAL CONDITIONING
‡ ‡ ‡ ‡ ‡ ‡ ‡ 2. Stimulus generalization explains why imitative ³me too´ products succeed in the marketplace: consumers confuse them with the original product they have seen advertised. a) It also explains why manufacturers of private label brands try to make their packaging closely resemble the national brand leaders. The principle of stimulus generalization is applied by marketers to product line, form, and category extensions. b) In product line extensions, the marketer adds related products to an already established brand, knowing that the new product is more likely to be adopted when it is associated with a known and trusted brand name. c) Marketers offer product form extensions that include different sizes, different colors, and even different flavors. d) Product category extensions generally target new market segments. i) The success of this strategy depends on a number of factors. ii) For example, if the image of the parent brand is one of quality, consumers are more likely to bring positive associations to the new category extensions. Family branding²the practice of marketing a whole line of company products under the same brand name² is another strategy that capitalizes on the consumer¶s ability to generalize favorable brand associations from one product to the next. Retail private branding often achieves the same effect as family branding.

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that a product or service has in the mind of the consumer is critical to its success. market leaders want the consumer to discriminate among similar stimuli. d) In general.STRATEGIC APPLICATIONS OF CLASSICAL CONDITIONING ‡ ‡ 3. Stimulus discrimination is the opposite of stimulus generalization and results in the selection of specific stimulus from among similar stimuli. which seeks to establish a unique image for a brand in the consumer¶s mind. b) The image. c) Unlike the imitator who hopes consumers will generalize their perceptions and attribute special characteristics of the market leader¶s products to their own products. meaningful. a) The consumer¶s ability to discriminate among similar stimuli is the basis of positioning strategy. the longer the period of learning²of associating a brand name with a specific product²the more likely the consumer is to discriminate. stimulus generalization. or position. The key to stimulus discrimination is effective positioning. and the less likely to generalize the stimulus. and stimulus discrimination are all major applied concepts that help explain consumer behavior. ‡ ‡ ‡ ‡ ‡ ‡ . It often is quite difficult to unseat a brand leader once stimulus discrimination has occurred. The principles of classical conditioning provide the theoretical underpinnings for many marketing applications. Most product differentiation strategies are designed to distinguish a product or brand from that of competitors on the basis of an attribute that is relevant. a major competitive advantage. e) Repetition. and valuable to consumers.

Skinner. instrumental conditioning suggests that consumers learn by means of a trialand error process in which some purchase behaviors result in more favorable outcomes (i. Instrumental learning theorists believe that learning occurs through a trial-and error process.e. ‡ ‡ . b) Although classical conditioning is useful in explaining how consumers learn very simple kinds of behaviors. instrumental conditioning is more helpful in explaining complex. F.INSTRUMENTAL CONDITIONING ‡ ‡ ‡ ‡ ‡ ‡ ‡ Instrumental Conditioning also called as µ Operant Conditioning¶. the stimulus that results in the most satisfactory response is the one that is learned. most individual learning occurs in a controlled environment in which individuals are ³rewarded´ for choosing an appropriate behavior. instrumental conditioning requires a link between a stimulus and a response. goal-directed activities. According to American psychologist B. the consumer who tries several brands and styles of jeans before finding a style that fits her figure (positive reinforcement) has engaged in instrumental learning. In a marketing context. with habits formed as a result of rewards received for certain responses or behaviors. c) In consumer behavior terms. a) In instrumental conditioning. d) A favorable experience is instrumental in teaching the individual to repeat a specific behavior. rewards) than other purchase behaviors.. Like classical conditioning.

‡ . * Learning to adapt and control one¶s environment is better explained by this theory. Learners discover appropriate response.CLASSICAL CONDITIONING Vs INSTRUMENTAL CONDITIONING Classical Conditioning ‡ Involves an already established response to another stimulus Instrumental Conditioning * No previous stimulus ± response connection necessary. * The outcome of instrumental conditioning Dependent on learner¶s actions. ‡ The outcome of classical conditioning is not dependent on learner¶s actions. Changes in goal-directed behavior. Useful in explaining how consumers learn brand names and acquire / change their opinions. ‡ Classical conditioning influences development * The instrumental conditioning influences and changes in opinions. tastes and goals. tastes . goals.

which provided that the likelihood for a response would be repeated.REINFORCEMENT BEHAVIOUR ‡ ‡ ‡ ‡ Reinforcement of Behavior Skinner distinguished two types of reinforcement (or reward) influence. Forgetting and extinction²when a learned response is no longer reinforced. which is designed to discourage behavior. c) Either positive or negative reinforcement can be used to elicit a desired response. to the point at which the link between the stimulus and the expected reward is eliminated. ‡ ‡ ‡ ‡ . that is. Fear appeals in ad messages are examples of negative reinforcement. it diminishes to the point of extinction. b) Negative reinforcement is an unpleasant or negative outcome that also serves to encourage a specific behavior. a) Forgetting is often related to the passage of time. a) The first type. d) Negative reinforcement should not be confused with punishment. this is known as the process of decay. consists of events that strengthen the likelihood of a specific response. positive reinforcement.

Variable ratios tend to engender high rates of desired behavior and are somewhat resistant to extinction²perhaps because. a) Shaping increases the probabilities that certain desired consumer behavior will occur. Shaping²the reinforcement of behaviors that must be performed by consumers before the desired behavior can be performed is called shaping. systematic (fixed ratio) reinforcement. Marketers have identified three types of reinforcement schedules: total (or continuous) reinforcement. Reinforcement schedules²marketers have found that product quality must be consistently high and provide customer satisfaction with each use for desired consumer behavior to continue. and random (variable ratio) reinforcement. for many consumers. ‡ ‡ ‡ ‡ .REINFORCEMENT BEHAVIOUR ‡ ‡ b) Marketers can overcome forgetting through repetition and can combat extinction through the deliberate enhancement of consumer satisfaction. hope springs eternal.

of driving too fast. accomplishment. c) Children learn much of their social behavior and consumer behavior by observing their older siblings or their parents. Sometimes ads depict negative consequences for certain types of behavior. through a process psychologists call modeling or observational learning (also called vicarious learning). ‡ ‡ ‡ ‡ ‡ ‡ ‡ . b) Their role models are usually people they admire because of such traits as appearance. Advertisers recognize the importance of observational learning in their selection of models.Modeling or Observational Learning ‡ Learning theorists have noted that a considerable amount of learning takes place in the absence of direct reinforcement. the ensuing results (reinforcement) that occur. d) This is particularly true of public policy ads. which may show the negative consequences of smoking. either positive or negative. whether celebrities or unknowns. and even social class. a) Modeling is the process through which individuals learn behavior by observing the behavior of others and the consequences of such behavior. or taking drugs. and they imitate (model) the positively reinforced behavior when faced with similar situations. They observe how others behave in response to certain situations (stimuli). skill.

it is believed that content is stored in the memory in separate storehouses for further processing. the greater his or her ability to make use of product information. a short-term store. Sensory store²all data comes to us through our senses. and it gives some control over their environment. Individuals differ in terms of their ability to form mental images and in their ability to recall information. Information Processing The human mind processes the information it receives as input much as a computer does. ‡ ‡ ‡ ‡ . a sensory store. and a long-term store.Cognitive Learning Theory ‡ ‡ ‡ ‡ Cognitive learning is based on mental activity. a) Information processing is related to both the consumer¶s cognitive ability and the complexity of the information to be processed. Cognitive learning theory holds that the kind of learning most characteristic of human beings is problem solving. our senses do not transmit information as whole images. and Retrieve Information The structure of memory²because information processing occurs in stages. however. How Consumers Store. Retain. The more experience a consumer has with a product category.

Cognitive Learning Theory ‡ Information Processing & Memory Stores Sensory Input Rehearsal Encoding Retrieval Sensory Store Working Memory ( Short term store ) Long Term Store Forgotten Lost Forgotten lost Forgotten unavailable .

it is moved to the short term store. c) This suggests that it¶s easy for marketers to get information into the consumer¶s sensory store. f) If data is not rehearsed and transferred. then the data is transferred to the long-term store. d) This is our working memory.Cognitive Learning Theory ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ a) The separate pieces of information are synchronized as a single image. Short-term store²if the data survives the sensory store. b) This sensory store holds the image of a sensory input for just a second or two. it is lost in a few seconds. Rehearsal and encoding²the amount of information available for delivery from the short-term store to the long-term store depends on the amount of rehearsal an individual gives to it. . or even years. but hard to make a lasting impression. e) If rehearsal²the silent. weeks. mental repetition of material² takes place. Long-term store²once data is transferred to the long-term store it can last for days.

Cognitive Learning Theory ‡ ‡ ‡ ‡ ‡ ‡ ‡ g) Encoding is the process by which we select and assign a word or visual image to represent a perceived object.. k) There are contradictory studies on what constitutes overload. ‡ ‡ of information are forged. j) It appears to be a function of the amount of information and time frame of that information. . concepts) with links among them. Retention²information is constantly organized and reorganized as new links between chunks m) In fact.e. i) How much consumers encode depends on their cognitive commitment to the intake of the information and their gender. h) Learning visually takes less time than learning verbal information. many information-processing theorists view the long-term store as a network consisting of nodes (i. l) The difficulty is determining the point of ³overload. Information overload takes place when the consumer is presented with too much information.

Cognitive Learning Theory ‡ ‡ ‡ ‡ ‡ ‡ ‡ n) As individuals gain more knowledge they expand their network of relationships. . o) This process is known as activation. s) The degree of prior knowledge is an important consideration. and sometimes their search for additional information. q) Research has found that older adults appear to be more reliant on scheme based information processing strategies than younger adults. p) The total package of associations brought to mind when a cue is activated is called a schema. which involves relating new data to old to make the material more meaningful. i) Consumers recode what they have already encoded to include larger amounts of information (chunking). r) Consumers¶ information search is often dependent upon how similar or dissimilar (discrepant) presented products are to product categories already stored in memory.

‡ ‡ ‡ ‡ Retrieval is the process by which we recover information from long-term storage.. rather than its attributes.e. by the order in which it is acquired) and semantically (according to significant concepts). y) Motivated consumers are likely to spend time interpreting and elaborating on information they find relevant to their needs. w) A great deal of research is focused on how individuals retrieve information from memory. . x) Studies show that consumers tend to remember the product¶s benefits. u) Information is stored in long-term memory in two ways: episodically (i.Cognitive Learning Theory ‡ ‡ ‡ t) Knowledgeable consumers can take in more complex chunks of information than those who are less knowledgeable in the product category. and are likely to activate such relevant knowledge from long-term memory. v) Many learning theorists believe that memories stored semantically are organized into frameworks by which we integrate new data with previous experience.

Cognitive Learning Theory ‡ z) Research findings suggest that incongruent (e. b) Advertisements for competing brands or for other products made by the same manufacturer can lower the consumer¶s ability to remember advertised brand information. c) There are actually two kinds of interference. unexpected) elements pierce consumers¶ perceptual screens and improve the memorability of an ad when these elements are relevant to the advertising message. Interference effects are caused by confusion with competing ads and result in a failure to retrieve. ii) Old learning can interfere with the recall of recently learned material. i) New learning can interfere with the retrieval of previously stored material.g. a) Incongruent elements that are not relevant to an ad also pierce the consumer¶s perceptual screen but provide no memorability for the product. ‡ ‡ ‡ ‡ ‡ .

Models of Cognitive Learning PROMOTIONAL MODEL TRICOMPONENT MODEL DECISIONMAKING MODEL INNOVATION ADOPTION MODEL AWARENESS INNOVATION DECISION PROCESS KNOWLEDGE ATTENTION COGNITIVE AWARENESS KNOWLEDGE INTEREST AFFECTIVE EVALUATION INTEREST EVALUATION PERSUATION SEQUENTIAL STAGES OF LEARNING DESIRE ACTION CONATIVE PURCHASE POSTPURCHASE EVALUATION TRIAL ADOPTION DECISION CONFIRMATION .

The right side of the brain is emotional.and high-involvement. The Individuals who are exposed to verbal information cognitively analyze the information through the left brain processing and form mental images. Split Brain Theory states that the right and left hemispheres of the brain specialize in the kinds of information they process. Limitations of Split ± Brain Theory Research suggests the spheres of the brain do not always operate independently of each other. and realistic. speaking. impulsive. The right hemisphere of the brain is concerned with non-verbal . timeless. There is evidence that both sides of the brain are capable of low. metaphoric. It does seem the right side is more cognitively oriented and the left side more affectively oriented. The left hemisphere is primarily responsible for cognitive activities such as reading. pictorial. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . The left side of the brain is rational. but work together to process information. and attributional information processing. and holistic information. active. and intuitive.SPLIT ± BRAIN THEORY ‡ ‡ Split Brain theory developed from a stream of research called hemispheral lateralization.

Print media (newspapers and magazines) are considered left hemisphere or high-involvement activity. Right-brain theory is consistent with classical conditioning and stresses the importance of the visual component of advertising. c) The left hemisphere is associated with high-involvement information. d) Recent research suggests that pictorial cues help recall and familiarity. a) Because it is largely pictorial. .INVOLVEMENT THEORY & MEDIA STRATEGY ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Individuals passively process and store right-brain information. encouraging evaluation. including the creative use of symbols. f) Pictorial cues are more effective at generating recall and familiarity with the product. e) The right-brain processing theory stresses the importance of the visual component of advertising. b) Passive learning was thought to occur through repeated exposures to low involvement information. TV viewing is considered a right hemisphere activity. although verbal cues trigger cognitive functions. although verbal cues (which trigger left-brain processing) generate cognitive activity that encourages consumers to evaluate the advantages and disadvantages of the product.

b) Others differentiate between situational. it makes sense to develop an involvement profile. products situations.MEASURES OF INVOLVEMENT ‡ Researchers have defined and conceptualized involvement in a variety of ways including ego involvement. risk perception. and response involvement. c) Researchers who regard involvement as a cognitive state are concerned with the measurement of ego involvement. persons. and purchase importance. and purchase decisions. Because of the many different dimensions and conceptualizations of involvement. commitment. communication involvement. The lack of a clear definition about the essential components of involvement poses some measurement problems. enduring. ‡ ‡ ‡ ‡ ‡ ‡ . a) Some studies have tried to differentiate between brand involvement and product involvement. rather than to measure a single involvement level. e) Others argue that involvement should be measured by the degree of importance the product has to the buyer. d) Researchers who focus on the behavioral aspects of involvement measure such factors as the search for and evaluation of product information. extent of information search. purchase importance.

length. g) By understanding the nature of low involvement information processing. a) Brand-loyal customers provide the basis for a stable and growing market share. b) Brands with larger market shares have proportionately larger groups of loyal buyers. f) The left-brain (cognitive processing)/right-brain (passive processing) paradigm seems to have strong implications for the content.Marketing Applications of Involvement ‡ ‡ Involvement theory has a number of strategic applications for the marketer. marketers can take steps to increase consumer involvement with their ads. and presentation of both print and television advertisements. Measures of Consumer Learning Market share and the number of brand-loyal consumers are the dual goals of consumer learning. ‡ ‡ ‡ ‡ .

Culture is a system of collectively held values. in turn. influence the way a person is likely to respond in a specific situation.‡ ‡ Definition of µ Culture¶ CULTURE Culture is defined as the complex whole that includes knowledge. Customs Customs are overt modes of behaviour that constitute culturally approved or acceptable ways of behaving in specific situations. custom and any other capabilities and habits acquired by man as a member of society. morals. Culture is defined as the sum total of learned beliefs. Customs consist of everyday or routine behaviour ‡ ‡ ‡ ‡ ‡ ‡ ‡ . belief. law. Culture is the collective programming of human mind that distinguishes the members of one human group from those of another. art. values and customs that serve to direct the consumer behaviour of members of a particular society. Beliefs & Values Beliefs & Values are mental images that affect a wide range of specific attitudes that .

‡ ‡ ‡ ‡ ‡ . or by watching TV and film actors in action 3. 2. Informal learning: we learn by imitating the behaviour of our parents. These elements are the observable in nature. Formal learning: parents and elders teach children the proper way to behave. language. This learning may influence your response both as a student and individual towards education. Technical learning: instructions are given about the specific method by which certain things to done such as painting. friends. 1. singing etc. Elements of Culture Culture is exhibited by the customs. symbols and rituals within the society. dancing. you have been taught that you need to study to be successful and happy in life.WAYS OF LEARNING CULTURE ‡ ‡ Culture is learned through the following three ways. For instance.

rewards and punishments. . Culture is adaptive ± it changes in response to the needs of the society. Culture is environmental and exists to serve the needs of the society. Culture is socially acquired. Culture makes life more efficient All members of a certain cultural group follow same norms. Culture is cumulative and transferred from one generation to another.CHRACTERISTICS OF CULTURE ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Culture is learned ± by interacting with other members of the cultural group Culture regulates society ±Norms. Multiple cultures are nested hierarchically . We are not born with any cultural knowledge. standards of behaviour.

and make life more convenient. career oriented educational centers are coming up. This is reflected in the soaring sale of Washing machines. Materialism: There is a very definite shift in the people¶s cultural value from spiritualism towards materialism. microwaves. good health and smart appearance are on premium today. Even exclusive shops are retailing designer clothes. 3. We are spending more money than ever before on acquiring products such as air-conditioners. Slimming centers and beauty parlors are mushrooming in all major cities of the country. Pressure cookers. and still they cannot seem to meet the demand. cars CD players etc. This is evident from the fact that so many professional. which adds to our physical comfort as well as status. physical fitness. As a specific instance count the number of institutions offering courses and training in computers that has opened in your city. Education: People in our society today wish to acquire relevant education and skills that would help improve their career prospects. 2. frozen food etc. 4. food processors. Physical appearance: Today. Cosmetics for both women and men are being sold in increasing numbers. Mixer grinders.SOME CHANGES IN OUR CULTURE ‡ 1. ‡ ‡ ‡ . Convenience: as more and more women are joining the work force there is an increasing demand for products that help lighten and relieve the daily household chores.

Subculture The culture of a group within the larger society. rituals. age. customs. religion. Group identification based on nationality of origin. myths and heroes . Corporate culture The company¶s values. Popular culture The culture of the masses with norms of mass appeal. gender. common to everyone.TYPES OF CULTURE ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ National culture The culture prevalent in a nation. etc. region. race.

Chinese.Sub . middle. elderly. Srilankan. while following the dominant cultural values of the overall society also has its own belief. Sikhs. values and customs that set them apart from other members of the same society.Culture ‡ A subculture is an identifiable distinct. which. Sub-culture categories are: Nationality: Indian. teacher. Female Occupation: Farmer. Christians Race: Asian. Islam. matured Sex: Male. North-eastern India ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . cultural group. lower Geographic regions: South India. middle aged. business Social class: upper. Pakistani. teens. youth. white Age: young. Japanese Religion: Hinduism. black. American.

Firstly. and Household Influences on Consumer Behavior Among the four major age groups. religious beliefs and values can influence consumer. Sex roles are changing. Gender. 2.Cultures on Consumer Behaviour ‡ ‡ ‡ ‡ 1. are the consumers of tomorrow and have an increasing influence on family decisions. and men are becoming more sensitive and caring. and marketing strategy can sometimes be tailored specifically to these regions. the wedding ceremony. Secondly. ethnic. Gender shows different consumption patterns and perceptions of consumption situations ±E. Regional. Age. The very diverse Asian American subculture is described as young and having higher socioeconomic status. Gender is consistent throughout lifetime. and being strongly brand loyal. Finally. and population trends will dramatically alter the demographic profile of the country in the next 50 years. influencing customer values and preferences.g. information processing. ‡ ‡ ‡ ‡ . who need to establish an identity.Influences of Sub. and consumption patterns. and religious differences. decision styles. our country has a number of different ethnic groups. Ethnic. marketing strategies can be developed for this group.. Also. and Religious Influences on Consumer Behavior The three major aspects of culture that have important effects on consumer behavior are regional. Women are becoming more professional and independent. Teens. men and women can differ in terms of traits. Many marketers now becoming multicultural in their marketing activities by trying to appeal to a variety of cultures at the same time. placing strong value on the family and the group. consumption patterns may differ in various regions of India and the world. In spite of its diversity.

Some are regarded as terminal values and reflect desired end states that guide behavior across many different situations. (3) Dual-career families. (4) Increased divorce. and (5) Fewer children. with some values being viewed as more important than others. and Lifestyles The roles of psychographics in affecting consumer behaviour are detailed below. 3. Second. Psychographics: Values. First. . Values are enduring beliefs about things that are important. work and play. youth. decider. autonomic. Domain-specific values are those that are relevant within a given sphere of activity. They are learned through the processes of socialization and acculturation. family and children. Marketers use tools like value segmentation to identify consumer groups with common values. The proportion of nontraditional households has increased due to factors such as (1) later marriages.Cultures on Consumer Behaviour ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Households play a key role in consumer behavior. Households also exert an important influence on acquisition and consumption patterns. health. (2) Cohabitation. Instrumental values are those needed to achieve these desired end states. buyer. and technology. household members can play different roles in the decision process (gatekeeper. hedonism. or syncratic. husbands and wives vary in their influence in the decision process.Influences of Sub. the home. influencer.dominant. Personality. wife-dominant. Our values exist in an organized value system. Western cultures tend to place a relatively high value on material goods. depending on the situation husband. and user).

Influences of Sub- Cultures on Consumer Behaviour
‡ Personality consists of the distinctive patterns of behaviors, tendencies, qualities, and personal dispositions that make people different from one another. Approaches to the study of personality include 1. The psychoanalytic approach, which sees personality arising from unconscious internal struggles within the mind at key stages of development; 2. Trait theories, which attempt to identify a set of personality characteristics that describe and differentiate individuals, such as introversion, extroversion, and stability; 3. Phenomenological approaches, which propose that personality is shaped by an individual¶s interpretation of life events 4. Social-psychological theories, which focus on how individuals act in social situations (e.g., compliant, detached, or aggressive); and 5. Behavioral approaches, which view an individual¶s personality in terms of past rewards and punishments.

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Influences of Sub- Cultures on Consumer Behaviour
‡ Influences of cultural values on the purchase decisions.
Product Class Choice criteria ( critical product Attributes ) Beliefs and Attitudes about Product class Product class Selection Brand selection

Terminal Values

Instrumental Values

Brand Choice Criteria ( critical brand Attributes )

Beliefs and Attitudes about brands

CROSS - CULTURES
‡ ‡ ‡ CROSS CULTURAL CONSUMER BEHAVIOUR Cross cultural marketing: Objectives and Policies Cross-cultural marketing is defined as ³the effort to determine to what extent the consumers of two or more nations are similar or different. This will facilitate marketers to understand the psychological, social and cultural aspects of foreign consumers they wish to target, so as to design effective marketing strategies for each of the specific national markets involved.´ A company can enter a foreign market as a Domestic exporter Foreign importer Foreign government-solicit the firm to sell abroad The firm¶s objectives could be: To determine how consumers in two or more societies are similar/different and devise suitable, appropriate strategies· Devise individualized marketing strategy if cultural beliefs, values and customs of a specific country are different.

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P & G used this to sell soap. Cost and differentiation advantages Problems in Cross Cultural marketing 1. High market share in the domestic market 2.CHRACTERISTICS OF CROSS-CULTURAL MARKETING ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ 1. Availability of resources and capability to absorb huge losses 5. 4. Problems related to product selection: The marketer going for cross cultural marketing has to select the customers/ market not on the basis of the superficial similarities of age or income. Ariel in the middle east and also Pepsi 3. Product/technology clout 6. Problems related to promotion/marketing communication: e. ‡ ‡ ‡ .g. Problems related to pricing: the marketer has to adjust his pricing policies according to the local economic conditions and customs. Advantageous economies of scale 3. Access to marketing/manufacturing bases across global borders 4. Problems related to selection of distribution channels: in Japan. 2. but by using the real motivating factors that prompt them to accept or reject products.

Singapore. insecticides. washing powder. If the society values collective activity. Individual/ collective: Whether individual initiation has more value than collective activity? Romantic orientation: This depicts whether the communication is more effective which emphasizes courtship or otherwise. This is achieved by forming alliances with others. Performance/ status: A status oriented society cares for higher standards of living. Environment Oriented Values Cleanliness: If a culture lays too much stress on cleanliness. less importance is given to brand names. In performance oriented societies. This is true for the United States.‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ CROSS Values ± CULTURES ± CULTURAL VALUES I. It gives rise to following questions which affect consumer behaviour. There is scope for the sale of beauty creams. vacuum cleaner. The relationship influences marketing practices. II. and chooses quality goods and established brand names and high prices items. Youth/ age: Are prestige roles assigned to younger or older members of the society. The marketers adopt strategies accordingly. ‡ ‡ . Germans do not give the same amount of emphasis to brand names. decisions will be taken in a group. etc. Other Oriented This shows the relationship between individuals and the society. Thailand and most Arabic countries. soaps. a lot of emphasis is placed on this aspect and perfumes and deodorants are widely used. In many countries a romantic theme is more successful. Japan. American society is youth oriented and Korean is age oriented. deodorants. Decisions are taken by mature people in Korea. where rewards and prestige is based on an individual's performance. Products which function equally well and may not be big brand names are used. Competitive/ Cooperation: Whether competition leads to success. Malaysia. Adult/ child theme: Is family life concentrated round children or adults? What role do children play in decision-making? Masculine/ Feminine: Whether the society is male dominant or women dominant or balanced. In western countries. Indonesia.

CROSS ± CULTURAL CONSUMER ANALYSIS ‡ Cross-cultural consumer analysis can be defined as the effort to determine to what extent the consumers of two or more nations are similar or different. Such analysis can provide marketers with an understanding of the psychological. so that they can design effective marketing strategies for the specific national markets involved. important · Ambiguous · General · Hold back emotions in public · Process-oriented · Make a long story short · Nonverbal communication important · Interested in who is speaking American Culture traits * Diverse · Fight for one¶s beliefs/positions · Individualistic · Clear-cut · Specific · Display emotions in public · Result oriented · Make a short story long · Verbal communication important · Interested in what is spoken . and cultural characteristics of the foreign consumers they wish to target. not individual. Similarities & Differences among people ‡ Japanese Culture Traits * Homogenous · Harmony to be valid and preserved · Group. social.

and goals. Using national borders as a segmentation strategy would mean to use relatively different local or specific marketing strategies for members of distinctive cultures or countries.CROSS. Alternative Global Marketing Strategies Product Strategy Standardized Communications Global strategy: Uniform product/ Uniform Message Mixed Strategy: Customized Product/ Uniform Message Localized Communications Mixed strategy: Uniform Product/ Customized message Local strategy: Customized Product/ Customized Message Standardized Product Localized Product .CULTURES & MULTINATIONAL MARKETING STRATEGIES ‡ ‡ ‡ ‡ ‡ ‡ Alternative Multinational Strategies The differences between consumers of various nations are far too great to permit a standardized marketing strategy. Whether to use shared needs and values as a segmentation strategy or to use national borders as a segmentation strategy? Shared needs and values would mean to appeal to consumers in different countries in terms of their common needs. values.

Global brand building builds entry barriers. Phillip Morris bought Kraft from General Foods in 1991 for $13 billion. Sony sells its Walkman in this fashion. Sony and Philips in the CTV wars. a brand which is entrenched in the consumer¶s mind is very difficult to dislodge. finance or human resources. some other organizations imbibe a strategy that adapts their advertising messages to the specific values of particular cultures. the consumer will always be willing to pay more for it. Given the huge difference in business volumes.CROSS-CULTURES & MULTINATIONAL MARKETING STRATEGIES ‡ 1. which tries to localize its advertising to consumers in each of the cross-cultural markets in which it operates. That is the only reason why an unknown brand called Titan could command a substantial premium over HMT. They merely bought business with very powerful brand equities and therefore paid more than the net worth of the businesses. Tangible Benefits of Global Brand Building Global brand building drastically reduces marketing investments. Global brand building commands a premium. 2. Neither buyer had any lacunae in manufacturing. Adaptive Global Marketing: In contrast to the above. A new and unknown player will have to spend two to four times more than the market leader to achieve the same share of mind. Human beings as a species love status quo. Therefore. As long as there is a distinct value attached to your offering. Strong global brands always account for more stable businesses. That is the same reason why a brand such as BPL at a higher cost beat the stuffing out of companies such as Akai. Global brand building increases cash flow efficiency: Global brand building also increases value of the business due to the international presence. Coca-Cola paid $60 million to acquire Thumbs-Up from Parle. and positioned in exactly the same way regardless of the country in which they are sold. more than three times its book value. ‡ ‡ ‡ ‡ ‡ ‡ . A very good example here would be that of McDonald¶s. the pressure of the bottom-line is much higher for an unestablished player. For instance. A strong brand needs lower and lower levels of incremental investment to sustain itself over time. packaged. Favoring a World Brand: A lot of companies have created world brand products that are manufactured.

Some companies pursue strategies based upon the identification of common elements among countries.Strategic Implications of Multinational Marketing Strategies ‡ There is an assumption that the world is becoming homogenized. The marketer has to look for his competitive advantage outside the country of origin. yet national and sub-regional cultures do exist. Many marketers operate in global markets with a strategy still rooted in the domestic market. This makes global branding a tough challenge and one that is handled differently from organization to organization. ‡ ‡ ‡ ‡ ‡ . whilst others find it more profitable to adapt and adjust according to specific conditions in various markets. What will allow one to compete and win in a strange country? Are the product and the brand in particular needed in another culture? Only careful consideration of these questions will create the right platform for a global branding strategy. The strategy needs to embrace the opportunities and the costs of working in multiple countries. There are five basic propositions that a global brand manager has to take note of while developing strategy at the global level.

1.Large versus Small groups. if a person interacts only occasionally with such others. with neighbors. then these individuals can be considered as a primary group for that person. Types of Groups . ‡ ‡ . then these others constitute a secondary group for that person.Membership versus Symbolic groups. or does not consider their opinions to be important. From this definition.Four different types of group classification: 1.Formal versus Informal groups.Primary versus Secondary groups. or with co-workers whose opinions are valued). 3. 4. 2. it can be seen that the critical distinctions between primary and secondary groups are the frequency with which the individual interacts with them and the importance of the groups to the individual. On the other hand. Primary versus Secondary Groups If a person interacts on a regular basis with other individuals (with members of his or her family.GROUPS ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ A group may be defined as two or more people who interact to accomplish some goals.

would be classified as a formal group. a formal membership list). specific roles and authority levels (a president. increase the knowledge or skills of members). or three co-workers who. the members' roles. On the other hand. if it consists. treasurer. improve their children's education. say. of four women who were in the same college sorority and who meet for dinner once a month. and the group's purpose are clearly defined. TYPES OF GROUPS ‡ ‡ ‡ . if a group is more loosely defined. and specific goals (to support a political candidate. and secretary). that is. see each other frequently then it is considered an informal group. with their spouses. the extent to which the group structure. then it would be classified as a formal group.g. with elected officers and members who meet regularly to discuss topics of civic interest. If a group has a highly defined structure (e.. The local chapter of the American Red Cross.‡ ‡ 2. Formal versus Informal Groups Another useful way to classify groups is by the extent of their formality.

despite acting like a member by adopting the group's values. with its numerous subordinate divisions. is considered a symbolic group. Clearly. county. A large group might be thought of as one in which a single member is not likely to know more than a few of the group's members personally. Membership versus Symbolic Groups Another useful way to classify groups is by membership versus symbolic groups. for her. In the realm of consumer behavior. and behavior. TYPES OF GROUPS ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Large versus Small Groups It is often desirable to distinguish between groups in terms of their size or complexity. Examples of large groups include such complex organizations as General Motors. In contrast. informal. primary membership groups are of the great interest to marketers because they exert the greatest potential influence on consumer purchase decisions. In summary. For example. we can say that small. A membership group is a group to which a person either belongs or would qualify for membership. a group in which an individual is not likely to receive membership. members of a small group are likely to know every member personally and to be aware of every member's specific role or activities in the group. and thus a more compelling. In contrast. each staff member of a college newspaper is likely to know all the other members and be aware of their duties and interests within the group.‡ ‡ 3. influence on consumer behavior. and city chapters. a membership group. attitudes. 4. and the American Bar Association. actual membership groups offer a more direct. we are principally concerned with the study of small groups. For example. with its many state. since such groups are more likely to influence the consumption behavior of group members. the group of women with whom a young homemaker plays golf weekly or with whom she hopes to play golf when an opening occurs would be considered. or be fully aware of the specific roles or activities of more than a limited number of other group members.

SIX BASIC CONSUMER RELEVANT GROUPS ‡ ‡ The Six basic consumer-relevant groups are 1. Formal Social Groups.. usually unstructured and lack specific authority levels. members of such groups have frequent opportunity to informally discuss products. after an individual's family. it is friends who are most likely to influence the individual's purchase decisions. formal social groups are more remote and serve a different function for the individual. 3. consumption behavior of other members whom they admire. A person joins a formal social group to fulfill such specific goals as making new friends. services. Membership in a formal social group may influence a consumer's behavior in several ways.. meeting "important" people (e. such groups are of interest to marketers. and behavior. Because members of a formal social group often consume certain products together. or promoting a specific cause. or stores. 2. The Family ± the family has a greater extent of influence on the establishment of a wide range of values. For example. In terms of relative influence. ‡ ‡ ‡ .g. attitudes.Friendship groups are informal groups because they are. for career advancement). The Friendship Groups . Some members may copy the.

for clothing. more pervasive. and those that organize to address broader. Shopping with others also provides an element of social fun to an often boring but necessary task. A special type of shopping group is the in-home shopping group. People like to shop with others who they feel have more experience with or knowledge about a desired product or service. Shopping Groups . Consumer Action Groups .‡ TYPESwho shop together-whether for food. The in-home party approach provides marketers with an opportunity to demonstrate the features of their products simultaneously to a group of potential customers. to attend a "party" devoted to the marketing of a specific line of products.has emerged in response to the consumerist movement. This type of consumer group has become increasingly visible since the 1960s and has been able to influence product design and marketing practices of both manufacturers and retailers. Such groups are often offshoots of family or friendship groups. problem areas and operate over an extended or indefinite period of time. which typically consists of a group of women who gather together in the home of a friend. 5.Two or more people pass the time.A particular kind of consumer group-a consumer action group. can be called a shopping group. ‡ ‡ ‡ ‡ ‡ . Consumer action groups can be divided into two broad categories: those that organize to correct a specific consumer abuse and then disband. or simply to OF GROUPS 4.

cause-specific consumer action groups. are examples of temporary. The sheer amount of time that people spend at their jobs. Their direct and sustained work relationship offers substantial opportunity for one or more members to influence the consumer-related attitudes and activities of other team members. Both the formal work group and the informal friendship/work group have the potential for influencing consumer behavior. provides ample opportunity for work groups to serve as a major influence on the consumption behavior of members. The formal work group consists of those individuals who work together as a team. frequently more than thirty-five hours per week. 6. Work groups. ‡ ‡ ‡ ‡ ‡ . Members of informal work groups may influence the consumption behavior of other members during coffee or lunch breaks or after-hours meetings. or a group of irate community members who unite to block the entrance of a fast-food outlet into their middle-class neighborhood.TYPES OF GROUPS ‡ A group of tenants who band together to dramatize their dissatisfaction with the quality of service provided by their landlord.

social class is used to assign individuals or families to a social-class category Characteristics of Social Classes: The main characteristics of Social class 1. with individuals able to move into a higher social class or drop into a lower class. status. education. prestige. But. Persons within a given social class tend to behave more alike 2. a range of social positions.¶ Social class is more of a continuum. on which each member of society can be placed. so that members of each class have relatively the same status and the members of all other classes have either more or less status.SOCIAL CLASS ‡ Social class can be defined as µThe division of members of a society into a hierarchy of distinct status classes. Social class is not measured by a single variable but is measured as a weighted function of one¶s occupation. Social class is hierarchical 3. i. 4. wealth..e. we go by this framework. income. Thus. etc. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . social researchers have divided this continuum into a small number of specific classes. Social class is continuous rather than concrete.

For example. No. drawing handsome salary. could be inherited or earned. executives or middle level managers of companies.Hierarchical organization of social classes is called social stratification. less income. For example. drawing handsome salary of which certain amount can be saved and invested. Value & Prestige enjoyed Low Social Class Factors affecting Social Class 1 Lower Class Lower level occupation with no authority. or postgraduates. and no education or minimum education. the earned status is based on a person¶s actions and performance. working in a very senior position or a person born into a rich family. Graduates. S. The inherited status is an outcome of a person¶s birth in a particular family . Status.SOCIAL CLASS ‡ ‡ ‡ Social Stratification . Labour class or clerks etc. Authoritative person. at the end result of stratification. executives¶ managers of companies with authority. very often professionally qualified. The status. with a good background of education 2 Medium Middle Class 3 High Higher Class .

local and foreign vacations. With an appropriately large slice of income this class offers attractive opportunities to the marketers of designer clothing.Impact of social class ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Provides a sense of identity Imposes a set of µnormative¶ behaviors Classes share values. aspire to belong. leisure related items. Upper upper class has access to prosperity . customs and activities Marketing response to customers of different economic means Marketing to the low-income consumer Some marketers ambivalent as not perceived as long-term customers constitutes a substantial group Target with value-oriented strategies Social Class & Buying Behavior People¶s buying behavior is strongly influenced by the social class to which they belong. . possessions. Besides . prestige.. Etc. and power. rather than by income alone. it has also been observed that people from similar social classes are living in common geographical clusters.

and behavior. and sports heroes). attitudes. rock stars. the group can be symbolic: prosperous business people. or behavior. The usefulness of this concept is enhanced by the fact that it places no restrictions on group size or membership. This basic concept provides a valuable perspective for understanding the impact of other people on an individual's consumption beliefs. attitudes. It also provides some insight into methods that Groups can be used to effect desired changes in consumer behavior. ‡ ‡ ‡ ‡ .e. A reference group is any person or group that serves as a point of companion (or reference) for an individual in the formation of either general or specific values. nor does it require that consumers identify with a tangible group (i.REFERENCE GROUPS ‡ Reference groups are groups that serve as a frame of reference for individuals in their purchase decisions..

A comparative reference group might be a neighboring family whose lifestyle appears to be admirable and worthy of imitation (the way they maintain their home.g. which foods to select for good nutrition. comparative reference groups influence the expression of specific consumer attitudes and behavior. appropriate ways to dress for specific occasions. their choice of home furnishings and cars. Reference groups that serve as benchmarks for specific or narrowly defined attitudes or behavior are called comparative reference groups. It is likely that the specific influences of comparative reference groups are to some measure dependent upon the basic values and behavior patterns established early in a person's development by normative reference groups. An example of a child's normative reference group is the immediate family. how and where to shop. ‡ ‡ ‡ ‡ ‡ . what constitutes "good" value). the number and types of vacations they take). which is likely to play an important role in molding the child's general consumer values and behavior (e.Classification of Reference Groups ‡ ‡ Reference groups that influence general values or behavior are called normative reference groups.. Normative reference groups influence the development of a basic code of behavior. Both normative and comparative reference groups are important.

3. and behavior. and 4. attitudes. Avoidance groups. Aspirational groups. Thus a contactual group has a positive influence on an individual's attitudes or behavior. 1. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Disclaimant groups. attitudes. 2. Contactual groups. A contactual group is a group in which a person holds membership or has regular faceto-face contact and of whose values. Four types of reference groups that emerge from a cross-classification of these factors: 1.TYPES OF REFERENCE GROUPS ‡ Reference groups can be classified in terms of a person's membership or degree of Involvement with the group and in terms of the positive or negative influences they have on his or her values. and standards he or she approves.

attitudes. attitudes. An aspirational group is a group in which a person does not hold membership and does not have face-toface contact. A disclaimant group is a group in which a person holds membership or has face-to-face contact but disapproves of the group's values. but wants to be a member. On the other hand. An avoidance group is a group in which a person does not hold membership and does not have face-toface contact and disapproves of the group's values. Factors that Affect Reference Group Influence The degree of influence that a reference group exerts on an individual's behavior usually depends on the nature of the individual and the product and on specific social factors. Information and Experience An individual who has firsthand experience with a product or service. Thus the person tends to adopt attitudes and behavior that are in opposition to the norms of the group. Thus it serves as a positive influence on that person's attitudes or behavior. a person who has little or no firsthand experience with a product or service. is more likely to seek out the advice or example of others. advertising may be misleading or deceptive). and behavior. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . a person who believes that relevant. or can easily obtain full information about it. 3. and does not expect to have access to objective information about it (e. and behavior.g. 4. Thus 'the person tends to adopt attitudes and behavior that are in opposition to those of the group. is less likely to be influenced by the advice or example of others..TYPES OF REFERENCE GROUPS ‡ 2.

and Power of the Reference Group A reference group that is perceived as credible. it may be verbally conspicuous it may be highly interesting or it may be easily described to others. and that will stand out and be noticed (e. A visually conspicuous product is one that can be seen and identified by others. laundry soaps) are less likely to be purchased with a reference group in mind. attractive. For example. when consumers are concerned with obtaining accurate information about the performance or quality of a product or service. a luxury item or novelty product). fashion clothing. they are likely to be persuaded by those they consider to be trustworthy and knowledgeable. home furniture) are most likely to be purchased with an eye to the reactions of relevant others. Even if a product is not visually conspicuous. Products that are especially conspicuous and status-revealing (a new automobile. Attractiveness. ‡ ‡ ‡ ‡ ‡ . Products that are less conspicuous (canned fruits.. or powerful can induce consumer attitude and behavior change.g. Conspicuousness of the Product The potential influence of a reference group varies according to how visually or verbally conspicuous a product is to others.Factors affecting Reference Group¶s Influence ‡ ‡ ‡ Credibility.

brand-Plus items.duct-plus. In other cases. brand-plus items. and for some products. reference groups influence the brand (or type) decision. these products are called product-minus. brand-minus items. reference groups influence only the product category decision. reference groups influence neither the product category nor the brand decision. Such products are called pro. along with an initial classification of a small number of product categories ‡ ‡ ‡ ‡ . Such products are called product-plus. brand minus items. In still other cases. Finally. in some cases. The idea of classifying products and brands into four groups in terms of the suitability of a reference group appeal was first suggested in the mid-1950s. These products are called product-minus.Reference Group Impact on Product and Brand Choice ‡ In some cases. reference groups may influence both a person's product category and brand (or type) choices.

Influence the individual to adopt attitudes and behavior that are consistent with the norms of the group. Legitimize an individual's decision to use the same products as the group.e.Reference Group & Consumer Conformity ‡ ‡ Reference Groups and Consumer Conformity Marketers are particularly interested in the ability of reference groups to change consumer attitudes and behavior (i. 3. Inform or make the individual aware of a specific product or brand. a reference group must 1. Provide the individual with the opportunity to compare his or her own thinking with the attitudes and behavior of the group.. To be capable of such influence. 4. ‡ ‡ ‡ ‡ ‡ . to encourage conformity). 2. The ability of reference groups to influence consumer conformity is demonstrated by the results of a classic experiment designed to compare the effects.

where the personality employed is generally well known to the relevant target segment.Benefits of the Reference Group Appeal ‡ ‡ Increased Brand Awareness Reference group appeals provide the advertiser with the opportunity to gain and retain the attention of prospective consumers with greater ease and effectiveness than is possible with many other types of promotional campaigns. Celebrities tend to draw attention to the product through their own popularity. The example set by the endorser or testimonial-giver may demonstrate to the consumer that uncertainty about the product purchase is unwarranted: Following are examples of how reference group appeals serve to lower the consumer's perceived risk. This gives the advertiser a competitive advantage in gaining audience attention. particularly on television where there are so many brief and similar commercial announcements. Reduced Perceived Risk The use of one or more reference group appeals may also serve to lower the consumer's perceived risk in purchasing a specific product. ‡ ‡ ‡ ‡ ‡ . Celebrity ± The reference group appeal.

When consumers are worried about how a product will affect them personally. For eg. "If he says it works. For eg." Expert. they welcome the comments of an acknowledged or apparent expert.Examples of how reference group appeals serve to lower the consumer's perceived risk ‡ ‡ ‡ ‡ ‡ ‡ Celebrity. For eg. Consumers who admire a particular celebrity often have the following reactions to the celebrity's endorsement or testimonial. they are likely to be influenced by a common man endorsement or testimonial. then it really must work." . "People just like me are using that product. When consumers are concerned about the technical aspects of a product." Common Man. "She wouldn't do a commercial for that product if she didn't believe it was really good.

OPINION LEADER
‡ An opinion leader acts as an information broker between the mass media and the opinions and behaviour of an individual group. Opinion leaders are people whose position, experience, and knowledge renders them particularly suitable for providing relevant and credible information. Opinion leaders could be personally known people like friends, etc., or those could be people like reviewers, critics, etc., Opinion leaders develop first hand experience with products and communicate their reactions to consumers subsequently. Opinion leadership is product specific ± thus opinion leader for one product category may become an opinion follower for another. Opinion leaders are a part of general category of gate keepers. Gate keepers have special influence or power in offering information about any offering to a market. ‡

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Characteristics of opinion leaders
‡ 1. Opinion leaders have the same social class position as non-leaders, although they may have higher social status within the class. 2. opinion leaders have great exposure to mass media that are relevant to their area of interest. 3.Opinion leaders have greater interest and knowledge of the area of interest than nonleaders. 4. opinion leaders are more gregarious than non-leaders. This is because opinion leaders have to interact with those they have to influence. Thus opinion leaders are generally more sociable. 5.Opinion leaders have more innovativeness than do non-leaders. 6. Opinion leaders are more familiar with and loyal to group standards and values than are non-leaders. 7. Opinion leaders exhibit the trait of public and individuation which is a state in which they feel differentiated to some degree from other people and choose to act differently from them. ‡

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OPINION LEADERS ± REASONS WHY OPINION LEADERS ATTEMPT TO INFLUENCE OTHER
‡ 1. Product ± involvement ± use of a product or service may create a tension that may need to be reduced by way of talk , recommendation , and enthusiasm. 2. Self ± involvement ± more emphasis on ways in which an influencer can gratify certain emotional needs. 3. other involvement ± product talk fills the need to give something to the listener. To share one¶s happiness with the influence , or to express love, care, or friendship therefore can be the reason. 4. Message ± involvement ± talking may also be stimulated by great messages that are used to present the product.

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and children) living together. high-tech companies have formed a consortium to standardize technology that has been developed to monitor and manage households. For example. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . consumer analysts have enormous interest in whether families have children and how many they have. Children increase family demand for clothing. or adoption who reside together. The nuclear family is the immediate group of father. marriage. and employment status. Other structural changes affect the types of products that are manufactured. mother. higher-priced restaurants. food. and adult clothing. Structural Variables Affecting Families and Households Structural variables include the age of the head of household or family. whereas the one established by marriage is the family of procreation. plus other relatives. including travel. The family into which one is born is called the family of orientation. and education. such as grandparents. furniture.FAMILY ‡ A family is a group of two or more persons related by blood. and parents-in-law. presence of children. homes. marital status. cousins. medical care. The extended family is the nuclear family. while they decrease demand for many discretionary items. For example. uncles and aunts. in Japan.

criticism) minimize the ability to share feelings. thereby restricting movement in the dimensions of cohesion and adaptability. Understanding whether family members are satisfied with family purchase requires communication within the family. adaptability. Adaptability measures the ability of a family to change its power structure. and communication. Positive communication skills (such as empathy. Three sociological variables that help explain how family¶s function includes cohesion.SOCIOLOGICAL VARIABLES AFFECTING FAMILY ‡ ‡ ‡ ‡ ‡ ‡ Marketers can understand family and household decisions better by examining the sociological dimensions of how families make consumer decisions. role relationships. double binds. critical to movement on the other two dimensions. Cohesion is the emotional bonding between family members. and relationship rules in response to situational and developmental stress. Communication is a facilitating dimension. reflective listening. supportive comments) enable family members to share their changing needs as they relate to cohesion and adaptability. ‡ ‡ . It measures how close to each other family members feel on an emotional level. Cohesion reflects a sense of connectedness to or separateness from other family members. The degree of adaptability shows how well a family can meet the challenges presented by changing situations. Negative communication skills (such as double messages.

including the allocation of time. ‡ ‡ ‡ ‡ ‡ ‡ .The provision of emotional nourishment (including love. dress and grooming standard.FUNCTIONS OF THE FAMILY ‡ Four basic functions provided by the family are particularly relevant to a discussion of consumer behaviour. greatly influence consumption patterns. These generally include moral and religious principles. These include (1) Economic well-being . In fulfilling this function. appropriate manners and speech.The socialization of family members. goals. (3) Suitable family lifestyles . affection. this process consists of imparting to children the basic value and modes of behaviour consistent with the culture. and intimacy) to its members is an important basic function of the contemporary family. Socialization skills (manners. (4) Family-member socialization .Providing financial means to its dependents is unquestionably a basic family function. (2) Emotional support .Family lifestyle commitments. and the selection of suitable educational and occupational or career goals. especially young children. values. is a central family function. the family provides support and encouragement and assists its members in coping with personal or social problems. In large part. interpersonal skills. and other qualities) are imparted to a child directly through instruction and indirectly through observation of the behaviour of parents and older siblings.

The traditional FLC describes family patterns as consumers marry. and retire. leave home. Stage : III : Post parenthood : An older married couple with no children living at home. lose a spouse. Consumer researchers have always been attracted of a series of family life cycle ( FLC ) to understand the behaviour of consumers at various stages of their lives so as to effectively design the right marketing strategy. have children.FAMILY LIFE CYCLE ‡ Families pass through a series of stages that change them over time. But consumers don¶t necessarily have to pass through all these stages-thy can skip multiple stages. The four basic stages in Family Life Cycle ( FLC ) may be summarized as Stage : I : Bachelorhood : Young single adult living apart from parents. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . The concept may need to be changed to household life cycle (HLC) or consumer life cycle (CLC) in the future to reflect changes in society. This process historically has been called the family life cycle (FLC). Stage : II : Parenthood : Married couple with at least one child at home. Stage : IV : Dissolution : one surviving spouse.

home appliances.Family Life Cycle ( FLC Stages in Family Life Cycle Bachelorhood (Young. car. no financial burdens Better off financially.basic kitchen equipment basic furniture. probability of home ownership on the higher side). single staying alone ) Parenthood (young married just attained Parenthood ) Post parenthood (growing children or grown up Children) Dissolution (retired & lone survivingspouse) ) Economic circumstances Likely Buying Behaviour Earning reasonable good salary. At times drastic cut in income is likely. not interested in spending. and magazines.toys. chest & cough medicines Financial position improved with wife working. though home purchases at peak. Seeks more of attention. not able to save more. . two wheeler. vacation with friends Buys baby food. Interested in vacation packages Buy more medicinal products other products like the retired people. affection and security conscious Income though good. diapers. Buy more tasteful furniture. less liquid assets. Buy. Concentrates on home improvements.

They also have the highest purchase rate and highest average purchases of durable good (particularly furniture and appliances) and appear to be more susceptible to advertising. families are likely to move into their first home. Newly Married Couples Newly married couples without children are usually better off financially than they were when they were single. recreation. vacations. food away from home. vacations. and decide if one parent will stay to care for the child or if they will both work and buy daycare services.Family Life Cycle ( FLC ) ‡ ‡ Young Singles Young singles may live alone. clothing. fashions. with their nuclear families. alcoholic beverages. These requirements reduce families¶ ability to save. or they may co. and purchase new items such as baby food. and the husband and wife are often dissatisfied with their financial position. Although earnings tend to be relatively low. Full Nest I With the arrival of the first child. These families tend to spend a substantial amount of their incomes on cars. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . sleds. and other products. parents begin to change their roles in the family. these consumers usually don¶t have many financial obligations and don¶t feel the need to save for their futures or retirement. since they often have two incomes available to spend on one household. purchases furniture and furnishings for the child. and other leisure activities. In this stage. or with friends.habitate with partners in this stage. Many of them find themselves spending as much as they make on cars. furnishings for first residences away from home. toys. and skates.

and the children earn from occasional and part-time employment. the youngest child has reached school age. and spends money on education.Family Life Cycle ( FLC ) ‡ ‡ Full Nest II In this stage. buying additional PCs for their older children. and a computer. No Kids Couples who marry and do not have children are likely to have more disposable income to spend on charities. Not only do they have fewer expenses. since the family tends to buy largesized packages of food and cleaning suppliers. the employed spouse¶s income has improved. The family typically replaces some worn pieces of furniture. these couples are more likely to be dual-wage earners. Consumption patterns continue to be heavily influenced by the children. Full Nest III As the family grows older and parents enter their min-40s. sports equipment. Depending on where children go to college and how many are seeking higher education. the financial position of the family may be tighter than other instances. bicycles. buys some luxury appliances. Consequently. but the family finds itself consuming more and in larger quantities. and entertainment than others in their age range. Families also spend more on computers in this stage. the family¶s financial position usually improves. making it easier for them to retire earlier if they save appropriately. the second wage earner is receiving a higher salary. clothing. their financial position usually continues to improve because the primary wage earner¶s income rises. Married. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . music lessons. travel.

usually resulting in a reduction in income and disposable income. and medicines. sports utility vehicles. and volunteering. Therefore. the income earners have retired. age 40 or older.Family Life Cycle ( FLC ) ‡ ‡ Older Singles Single. centering on such items as medical appliances and health. Many continue working part time to supplement their retirement and keep them socially involved. and product for their grand children. either group of which may or may not have children living in the household. they spend on home improvements. allowing them to spend time traveling. Expenditures become health oriented. But many of these families continue to be active and in good health. This group now has more available income to spend on travel and leisure but feels the pressure to save for the future. luxury items. exercising. travel. may be single again (ending married status because of divorce or death of a spouse). food away from home. The children have left home and are financially independent allowing the family to save more. the family is most satisfied with its financial position. since there is no second income on which to rely as they get older. or never married (because they prefer to live independently or because they co-habitate with partners). ‡ ‡ ‡ ‡ ‡ . In this stage discretionary income is spent on what the couple wants rather than on what the children need. Empty Nest II But this time. vacations. Empty Nest I At this stage.

Retired Solitary Survivor Retired solitary survivors follow the same general consumption patterns as solitary survivors. sickness care. and some may choose to remarry. and security based on their lifestyle choices. and develop consumer-specific marketing strategies. Depending on how much they have been able to save throughout their lifetimes. they can afford to buy a wide range of products.‡ ‡ Solitary Survivor Family Life Cycle ( FLC ) Solitary survivors be either employed or not employed. If the surviving spouse has worked outside the home in the past. These individuals have special needs for attention. Those who are not employed are often on fixed incomes and may move in with friends to share housing expenses and companionship. ‡ ‡ ‡ ‡ ‡ . their income may not be as high. affection. and services. identify niches. Expenditures for clothing and food usually decline in this stage. but they often add additional information about consumer markets to analyze their needs. Marketers use the descriptions of these FLC stages when analyzing marketing and communication strategies for products and services. travel entertainment. however. with income spent on health care. he or she usually continues employment or goes back to work to live on earned income (rather than saving) and remain socially active.

Both multiple roles and multiple actors are normal. involve financial. and who should buy them is a complicated process involving a variety or roles and actors. Expressive roles involve supporting other family members in the decision making process and expressing the family¶s aesthetic or emotional needs. which retail outlet to use. are users of cereals. how and when products are used. Determining what products should be bought. and many other products but may not be the buyers. for example. also known as functional or economic roles. clothing. Instrumental roles. remembering that different family members will assume different roles depending on the situation and product. which may be assumed by spouses. and other functions performed by group members.‡ Families use products even though individuals usually buy them. performance. including upholding family norms. Individual Roles in Family Purchases Family consumption decisions involve at least five definable roles. although the children may be important as influencers and users. or other members of a household. Children. toys. Marketers need to communicate with consumers assuming each of these roles. children. One or both of the parents may be the decider and the buyer. Role Behavior Families and other groups exhibit what sociologist Talcott Parsons called instrumental and expressive role behaviors. FAMILY DECISION MAKING ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ .

3. 2. The teenaged son who wants a racing bicycle. Gatekeepers: Those family members who control the flow of information about a product/service thus influencing the decisions of other family members. The husband and wife may jointly decide about the purchase of a new refrigerator. 4. Deciders: Family members who have the power to unilaterally or jointly decide whether or not to buy a product or service. which are consumed by all the family members. rations and toiletries. 1. The housewife tells her family about the new eatery that has opened in the neighborhood and her favorable description about it influences her husband and teenaged children. thereby influencing his father¶s decision in favour of his preferred brand. may withhold from his father much of the relevant information on all brands except the one that he fancies. A housewife may be the person who actually buys all the foodstuffs. Buyers: Those family members who actually buy a particular product or service.Key Family Consumption Roles ‡ ‡ There are eight distinct roles in the family decision-making process. ‡ ‡ ‡ . Influencers: Those family members who provide information and advice and thus influence the purchase.

lentils. watch the television. Maintainers: Family member(s) who service or repair the product so that it will provide continued satisfaction. spices.Key Family Consumption Roles ‡ 5. The housewife may prepare the family meal using raw vegetables. 8. oil and other ingredients. Users: Those family members who use or consume a particular product or service. 6. ‡ ‡ ‡ . Preparers: Those family members who transform or prepare the product into the form in which it is actually consumed. All family members may use the car. and listen to the stereo music system 7. Disposers: Family member(s) who initiate or carry out the disposal or discontinuation of a particular product or service.

CONSUMER DECISION PROCESS ‡ ‡ LOW PURCHASE INVOLVEMENT HIGH PURCHASE INVOLVEMENT Habitual Decision Making Limited Decision Making Extended Decision Making Problem Recognition Selective Problem Recognition Generic Problem Recognition Generic Information Search Limited internal Information Research ‡ Internal ‡ Limited external Information Search ‡ Internal ‡ External Alternative Evaluation ‡ Few Attributes ‡ Simple Decision Rules ‡ Few Alternatives Alternative Evaluation ‡Many attributes ‡ Complex decision rules ‡ many alternatives Purchase Purchase Purchase Post Purchase ‡No dissonance ‡ Very limited evaluation Post Purchase ‡No dissonance ‡ Limited evaluation Post Purchase ‡Dissonance ‡ Complex Evaluation .

conflict resolution Consumer Decision Process ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . This arouses and activates the consumption related decision process. 1. Problem recognition occurs when a person recognizes a gap of significant magnitude between a perceived desired state and the actual state.‡ ‡ Problem Recognition Problem recognition or need recognition is the first step of the five steps consumer takes as he moves through the decision process. Satisfaction optimization 2. The motives are grouped in to five types. Satisfaction maintenance 3. problem avoidance 5. prevention of possible failure problems 4. Reasons for buying are motives. social environment and various other internal & external factors. the personality traits of an individual.

emergency. etc. Evolving Problem ± problem arrives unannounced. 2. Routine Problems ± these are due to difference between actual and desired states which requires immediate solution by way of purchasing goods such as convenience goods. etc. 3. Emergency Problem ± these problems occur suddenly and solution to be found immediately.marketing effort ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . planning. Depleted or inadequate stock of goods 2. Changing financial circumstances 4.. 1. Planning Problem ± problem which do not require immediate solution. and evolving immediacy. 4..Discontent with existing stock of goods 3.Types of Problem Recognition ‡ Problems can fall in various categories. yet needs no immediate solution. Situations leading to problem recognition 1. The problem situation could be routine.

thumbing through catalogues and magazines.Information Search & Decision Making ‡ ‡ ‡ ‡ ‡ ‡ ‡ Need for search of Information . Pre-purchase Search Once the consumer has recognized a problem and feels motivated to solve it. Customer has clear and conscious objective to collect information for solving a specific problem Browsing. reading brochures all fall in this category. window shopping. Different types of Information Search 1. 2. ‡ ‡ ‡ ‡ .Information may be sought on ( 1 ) appropriate evaluation criteria for the solution of the problem ( 2 ) the existence of various alternative solutions ( 3 ) the performance of each alternative solution on each evaluation criterion. he will engage in pre-purchase search. It may be due to increased interest in product category and the desire to stay-up-to date. Post-Purchase search A consumer continues to evaluate other options available in the market place.

. feelings and experiences. media reports. External search involves that information can be gathered from an almost unlimited variety of sources outside of the individual. window displays etc. External Search ± if the information in the memory is misleading. evaluation done earlier and experience. experts. 2. extent of search ± internal search can vary from a simple recall of only a brand name to a more complete search through memory for relevant information . inadequate. attributes.Types of Search ± Internal & External Search ‡ ‡ Internal search involves consumer¶s own recall from memory.kind of information retrieved ± four major kinds of information namely brand name. or is suspect. External search sources could be from personal sources ( friends. Dimensions of Internal search 1. sales people ) or from impersonal sources ( advertising. ) ‡ ‡ ‡ ‡ . knowledge. then an external search is required. and experience.

type of product sought Strategies for information search Maintenance strategy ± Disrupt Strategy Capture Strategy Intercept strategy Preference Strategy Acceptance Strategy ‡ ‡ ‡ ‡ ‡ ‡ .External Search 1. Customer¶s own characteristics 3.Situational factors 4.‡ ‡ ‡ ‡ ‡ ‡ Factors responsible for External search Activity Information Search . Perceived value of search Vs perceived costs attached 2. Actual or perceived risk in decision making 5.

Evaluation criteria are the various features that a customer looks for in response to a particular type of problem. and situation to situation. shape. Evaluate criteria Evaluation of Alternatives On Each criterion Application of Decision Rules Selection of alternatives Importance of criteria Alternatives considered . such as price. Evaluative criteria can be tangible. from product to product. Evaluative criteria can differ in number. size. Evaluation criteria are typically product features or attributes associated either with benefits desired by the customer or the costs he has to incur. and importance.Evaluation of Alternatives ‡ ‡ ‡ ‡ ‡ Information gathered from sponsored and non-sponsored sources by a customer forms the basis of evaluation. This evaluation in turn leads to formation of attitude. type. or performance characteristics or intangible such as brand image or feelings associated with ownership or use. color. Evaluating criteria vary from consumer to consumer.

A consumer is more or less price elastic depending on the degree of substitutability of one brand by the others. If the product does not prove satisfactory on all the evaluative criteria . This apparent brand quality relationship is most likely tied to the perceived risk associated with a poor purchase decision. Non-Compensatory Decision Rules A non-compensatory rule is one in which the weaknesses of a possible alternative are not offset by its strengths. Consumers may use either compensatory or non-compensatory processes as decision rules in evaluating attributes of the alternative products under consideration. Brand Reputation ± brand name is perceived frequently to be an indicator of product or service quality by the customers. Disjunctive Non-Compensatory Decision Rules are of 4 types.Evaluation of alternatives ± Evaluative criteria ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Price as Evaluative criteria ± Price acts as most significant influences in alternatives evaluation. the consumer will not buy the product. Decision Rules Consumer decision rules govern the way in which different consumers evaluate different products in different buying situations. Conjunctive elimination by aspects lexicographic rules .

as with the lexicographic rule. a consumer considers all evaluative criteria as determinant and a minimum acceptable value or score is established for each one. then there is no clear winner. Any product alternative considered must meet this score on each determinant attribute in order that it is accepted. The remaining alternatives are then compared using the process of elimination. Lexicography Rule Using this rule. Then some other rule has to be used to decide about the brand to be purchased. the consumer first decides which criteria are determinants of his choice while which ones are not. Then he establishes a minimum score on each one. Brands which do reach the minimum acceptable score don¶t have to be evaluated any further. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . The alternatives that don¶t meet each minimum are eliminated. This rule seeks maximum performance at each stage.Consumer Decision Rules ‡ ‡ ‡ Disjunctive Rule Using this rule. If more than one brand meets this minimum . Elimination by aspects rule The consumer ranks the evaluative criteria and also sets minimum scores that must be met on each of them. Conjunctive Rule Using the rule. ranks each of the evaluative criteria in order of importance.

‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Compensatory Decision Rule ± compensatory rule are more practical as the consumer is able to make trade-off while comparing alternatives. If one attribute is very strong. with the overall evaluation being the sum of the weighted ratings along each attribute. the consumer assigns a relative weight to each evaluative criterion based on its perceived importance. it may compensate for the weakness in another. This decision rule evaluates brand individually along all dimensions or attributes . Then the score on each evaluative criterion is multiplied by the relative weight to produce a weighted score. Weighted additive rule Using this rule. Simple Addictive Rule Using this rule. Consumer Decision Rules . This rule assumes that all criteria are of equal importance. the consumer totals the score on all evaluative criteria for each alternative and the highest score wins. This approach uses more than one evaluation criterion for assessment by consumers. These weighted scores are summed up and the brand with highest weighted score is chosen.

shopping provides sensory benefits such as looking at and handling merchandise. Self. Status & Authority ± shopping may provide an opportunity to attain a feeling of status & power. Sensory stimulation. Physical Activity ± shopping provides considerable amount of physical exercise. Pleasure of bargaining ± shopping provides enjoyment of gaining a lower price through bargaining.Gratification ± shopping is motivated by the utility of the buying process itself. Outlet Selection ‡ ‡ ‡ ‡ ‡ ‡ . Communication with others having a similar interest. Learning about new trends ± shopping provides information about trends and movements. listening to sounds. Peer group attraction ± certain stores provide a meeting place for peer groups may gather. Diversion ± shopping can offer a diversion from the routine of daily life. companion shopping. encounters with friends.‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Reasons for shopping by consumers Personal Motives Role Playing ± shopping activities are learned behavior & accepted as part of one¶s role. visiting special sales. Social Motives Shopping provides opportunities for seeking new acquaintances.

Factors determining retail outlet selection ‡ 1. Customer Services ± retail stores offer numerous services to attract customers. 4. to persuade. 6. 5. the greater is heir likelihood to purchase from that store. 3. selection or assortment. ‡ ‡ ‡ ‡ ‡ ‡ . Clientele ± consumers tend to patronize those stores where people belonging to similar social class are perceived to be shopping. Advertising and Sales Promotion ± to inform. 2.Merchandise ± quality. guarantees and pricing are considered important. to remind the customers of the store . 7. Personnel ± employees of a retailer are also instrumental in influencing the store¶s image. Store Design and Physical Facilities ± the design characteristics of a store visibly reflect its image and can dramatically influence patronage. Store location ± the closer consumers are to store. fashion .

The perception of these risks differs among consumer. Shopping orientation Individuals go shopping to seek diversion from routine activities. ‡ ‡ ‡ ‡ ‡ ‡ . sensory stimulation. The relative importance of these motives varies both across individuals and within individuals over time as the situation changes. represent high levels of economic complexity. Products closely related to a consumer¶s public image present high levels of social risk. A shopping style that puts particular emphasis on certain activities is called shopping orientation. learning about new trends etc. based partly on their past experiences and partly on their lifestyles. Certain products ..Consumer characteristics to store choice ‡ ‡ ‡ Perceived Risk The risk of purchase of products involves economic and social consequences. because of their expense or technical complexity . social interaction.

In store Purchasing Behavior Displays Price Reductions Store Layout Alternative Evaluation Modify Intended Purchase Behavior Stockouts Sales Personnel .

Stockouts ± store being temporarily out of a particular brand. store layout ± the location of items within a store has an important influence in the purchase of both product categories and brands. layout . 7. floor coverings. affect a consumer purchase decision. Point-of ±Purchase Displays ± visual representation and location of the POP material lends to the effectiveness of the stores. skill. the nature of the customer¶s buying task and the customer ± sales person relationship will have major impact on consumer purchases. air conditioning. 4. Price reductions and promotional deals ± In-store price reductions do affect brand decisions.Store atmosphere is influenced by such attributes as lighting. music. 3.In store purchasing behaviour ‡ 1. 2. 5. dress and behaviour of sales personnel etc.Store Atmosphere ± stores atmosphere or environment affects the shopper¶s mood and willingness to visit and linger. ‡ ‡ ‡ ‡ ‡ ‡ .. presentation of merchandise. Sales Personnel ± the sales person¶s knowledge . 6. and authority.

This involves what is normally called µ purchasing¶ the product. PURCHASE ‡ ‡ ‡ ‡ ‡ ‡ . Marketing implications of purchase behavior The marketer can segment the market on the basis of purchaser influences. the consumer must complete the transaction. The marketer can make an appropriate offer and position the offer. However credit plays a major role in consumer purchases in today¶s society.‡ Once the brand and the store have been identified . Traditionally the purchase involves paying cash to acquire the right of the product. The marketer can identify the relevance of each situational factor on the buying process of his customers.

Sacred and Profane consumption Consumption arising out of special events are considered sacred consumptions. rituals involve the use of goods / services . ‡ ‡ ‡ ‡ ‡ ‡ ‡ . and are repeated with some regularity. 3. it is important for marketers to understand them and the ritualistic behaviours they give rise to.Consumption and Post-Consumption responses ‡ ‡ ‡ ‡ Types of consumption 1. respond to changing consumer needs with new products and promotions. Ritual consumption ± rituals are patterns of behaviour tied to events that we consider important in our lives. Because. 2. 2. Marketing applications of consumption behaviour ± Marketers to 1. occur in fixed or predictable sequence. Rituals usually have some special symbolic meaning to us. develop and market products around needs triggered by consumer rituals. Consumptions which are part of everyday life are considered to be profane consumption. position products to match the physical and social contexts of the consumption situation.

Satisfaction refers to the buyer¶s state of being adequately rewarded in a buying situation for the sacrifice he has made. ± Post ± Consumption outcomes Evaluation of alternatives Purchase Product Expectation Confirmation or disconfirmation Product Performance satisfaction Dissatisfaction . he is likely to buy it again. too. if the customer is not happy with the purchase. as also other products by the same marketer. On the other hand. The customer even tell his friends about the product and they buy it . he will not buy anything from that marketer and he will his friends to do the same.Customer satisfaction Vs Dissatisfaction ‡ ‡ ‡ If the customer is happy with the product he bought. he will not only write off that product.

Post consumption outcomes ‡ Consumers form certain expectations prior to the purchase. importance of the purchase decision. from situation to situation and from purchase to purchase.consumer¶s tendency toward anxiety. The experience and intensity of post-purchase dissonance varies from customer to customer .Post-purchase dissonance occurs before the consumer make a determination concerning whether a product or service is satisfactory. there is a feeling of uncertainty about whether the right choice is being made. Post ± Purchase Dissonance . Post-purchase dissonance is a function of 1. 2. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ( a ) change his evaluation of alternatives ( b ) seeking new information ( c ) changing attitudes .finality of the purchase decision 4. To reduce Dissonance. The level of satisfaction or dissatisfaction depends upon how well the product¶s performance meets our expectations. the consumer may adopt the following.clarity of the final purchase choice. 3.

Number of brands available. Encourage brand and outlet loyalty 2. .Post-Purchase Behaviour ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ The most positive outcome from achieving customer satisfaction is to gain customer loyalty. level of perceived risk 6. 2. or outlet which results in repeated purchase. Factors influencing Brand Loyalty 1. marketer. use feedback from both positive and negative post-purchase behaviours to improve products and promotions. Loyalty is a feeling of commitment on the part of the consumer to a product. Marketing Applications of Post-Purchase behaviour ± Marketers will be able to 1. brand benefits. 4. brand. frequency of purchase 3. offer swift redress to consumers who complain and thereby regain a positive brand or outlet image. perceived difference among brands 4. respond promptly to dispel rumors and other negative communications 3. level of involvement 5.

Dis.satisfaction responses of a customer Dissatisfaction of customer Take actions Take no action ( by consumer ) Less favourable attitude Complain to Legal authority Store or manufacturer Complain to Stop buying That brand Or store Warn friends Private or Government agencies Initiate action .

Disposition of the Product ‡ ‡ Disposition of the product and or its container may occur before. Product Get rid of It Permanently Keep it Get rid of it temporarily Use it to Serve Original purpose Convert it to Serve new purpose Store it Rent it Loan it Recycle it Throw it away Give it away Trade it Sell it To be sold To be used Direct to consumer Thru¶ middlemen To middleman . during . No disposition is involved for products that are fully consumed ( ice cream in cones ). and after product use.

‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . 3. availability of recycling and so on. The frequent decisions by consumers to sell. The method of disposition may vary considerably across products. The method of disposition depends on the following factors. situational factors extrinsic to the product. trade. of the Product Disposition behaviour is primarily determined by current needs of friend. 1. How the disposition decisions affect the Marketing Strategies of the firm ? Dispositions decision affect the purchase decisions of both the individual making the disposition and other individuals in the market for that product category. to aid the consumers in the disposition of the product. Factors intrinsic to the product. or give away used products may result in a large second hand market which can reduce the market for new products.‡ Dispositionsituational variables such as availability of storage space. Of the decision maker. marketers have initiated exchange schemes where the consumer is given the option of buying anew product in exchange for his older one. psychological characts. 2.

‡ ‡ ‡ ‡ ‡ ‡ . to assist in constructing a theory that guides research on consumer behaviour. Model simplifies by incorporating only those aspects of reality that interest the model builder. consumer models serves to structure systematic and logical thinking about consumers.MODELS OF CONSUMER BEHAVIOUR ‡ ‡ ‡ A model can be defined as simplified representation of reality. as they attempt to include a great variety of consumer behaviours. Some models are designed to represent a very specific aspect of behaviour. Consumer behaviour models can be classified in terms of scope. Models aid in understanding the complex relationship between variables influencing a consumer. to facilitate learning what is presently known about consumer behaviour. such as consumer¶s repetitive purchase of the same brand over a period of time. Uses of Consumer Models 1. 4. Other models are comprehensive models. 3. These comprehensive models are less detailed in nature so that they can represent many diverse situations. 2.

Exogenous and Endogenous variables ± variables that have a clearly defined effect on consumer behaviour are included in a model and are thus called Endogenous variables. The variables which have a poorly defined effect on behaviour and are not included in the consumer models are called Exogenous consumer models. The intervening variables modify the relationship between the stimulus received and the response made but cannot be observed. cultural and other factors. A response may be a result of either a certain stimulus acting forcefully on the consumer or it may arise as a result of processes internal to a customer. Intervening Variables ± these variables exists between stimulus and response. 4. though in turn they could be internal or external. 1. Stimulus and Response ± A stimulus is an input to consumer behaviour and a response is the observable manifestation of consumer ± behaviour. social .Building Blocks of consumer decision making models ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ The variables employed in consumer decision making models can be categorized as follows. 3. Internal and External Variables ± internal variables are a result of internal physiological processes or psychological processes. These intervening variables are exogenous . External variables arise as a result of external influences like economic . 2. .

Stimulus Response Model Response Stimulus Consumer Mind Black Box ‡ ‡ ‡ ‡ Simplest form of black box model of consumer decision-making. brand) ( purchase ) Consumer mind ‡ Marketer Non-Controlled variables ( economic. consumer centre model. Black Box model rely solely on observable stimulus variables and responses. Consumer Centre Model ( considers many variables together which influence purchase behaviour ) Marketer controlled variables positive response ( ad. availability. social. This model ignores the internal processing of stimulus in the consumer mind. & input-output model ) Black Box refers to the human mind.MODELS OF CONSUMER BEHAVIOUR ‡ ‡ ‡ ‡ ‡ Black Box Model ( stimulus response model. reference group) Negative response ( rejection of offer ) .

‡ INPUTS STIMULUS CHANNELS Communication PROCESSOR Consumer Outputs Response ‡ Product ‡ Availability ‡ Quality. ‡ Style ‡ Options ‡ Image ‡ Service ‡Price ‡ Personal ‡ Acquaintances ‡ Observations.Black Box Models of consumer decision making ‡ ‡ Input ± Output Model . This model ignores the internal processes. This model talks about buying influences ( stimuli ) and the purchase related responses ( response variables). ‡ Non-personal ‡ Advertisements ‡ Sales force Choices about + Product Black Box ‡ Brand ‡ Quantity ‡ Frequency ‡ Dealer .This model was developed by Kotler.

ECONOMIC MODEL This theory was first advanced by the economists. Disposable personal income represents potential purchasing power that a buyer has. The change in income has direct relation on buying habits. Disposable Personal Income The economists attempted to establish relationship between income and spending. Personal consumption spending tends both to rise and fall at a slower rate than what disposable personal income does.MODELS OF CONSUMER BEHAVIOUR ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Traditional Models of Consumer Behaviours . The economic factors which affect the buyers behaviour are: 1. They follow the law of marginal utility. An individual buyer seeks to spend his money on such goods which give maximum satisfaction (utility) according to his interests and at relative cost. . According to this theory the consumers are assumed to be rational and conscious about economic calculations. They gave formal explanation of buyer behaviour.affects the purchasing power. The buying behaviour is determined by the income ± its distribution and level .

. who actually buys with current income.Economic Model of Consumer Behaviour ‡ ‡ ‡ ‡ ‡ ‡ ‡ 1. 5. 2. they dispose of their income. They are: ‡ ‡ ‡ ‡ ‡ . readily marketable shares and bonds. 4. Liquidity of Funds The present buying plans are greatly influenced by liquidity of assets readily convertible into cash. A buyer can command more purchasing power. this convertable assets influence and offer freedom to buyer. Income Expectation The income expected to get in future has direct relation with the buying behaviour. television and so on. Size of family income Size of family and size of family income affect the spending and saving patterns. The expectation of higher or lower income has a direct effect on spending plans. 3. If the buyers give importance to the present needs. bank balances come into this category. µBuy now and pay later¶ plays its role effectively in the rapid growth of market for car.hire purchase. And buyers spend less if they give importance to future needs. scooter. installment purchase etc. Tendency to Spend and to Save This goes to the habit of spending or saving with the disposable income of buyers. washing machine. Usually large families spend more and small families spend less in comparison. For example. play an important role in purchase decision. It is based on certain predictions of buying behavoiur. furniture. However. The economic model of consumer behaviour is uni -dimensional. Consumer Credit Facility of consumer credit system .

Economic Model of Consumer Behaviour ‡ ‡ ‡ ‡ ‡ ‡ ‡ a. higher the sales of this product d. higher are the sales Limitations of Economic Model The behavioral researchers believe that this model ignores all the other aspects such as perception. motivation. it is felt that the economic model is inadequate. Lower the size of substitute product. Hence. Higher the promotional expenses. learning. Lower the price of the product. Further. Higher the real income. and socio-cultural factors. ‡ . higher the sales b. lower the sale of this product c. it is also observed that consumer also gets influenced by other marketing variables such as products. It assumes that market is homogeneous where markets are assumed to be heterogeneous. attitude and personality. effective distribution network and marketing communication.

Here. as a family member.e. ‡ ‡ ‡ . a mother takes a decision to buy a tiny cycle for her child. the cycle is purchased by the father and the user is the child.Models of Consumer Behaviour ± Sociological Model ‡ ‡ ‡ According to this theory the individual decision and behaviour are quite often influenced by the family and the society. the decision may be made by one. The individual gets influenced by it and in turn also influences it in its path of development.. Hence the individual is largely influenced by the group in which he is a member. employee of a firm. and the product is used by yet another member of the family. and as an active member of an informal cultural organization. member of professional forum. The individual plays many roles as a part of formal and informal associations or organizations i. actual buying may be done by another. For example.

It explains the way consumers compare available products in order to choose the best which fits their needs and desires. financial status Exogenous variable Drive Stimuli Perception Learning outputs . Consumers learn by finding out the relevant information about products through two sources of information: ( a ) Social sources ( b ). It emphasizes three key variables.‡ ‡ ‡ ‡ ‡ ‡ The Howard .perception. Commercial sources The gathered information is used for comparison of alternative brands according to various choice criteria.SHETH MODEL Social class.Sheth model shows the processes and variables influencing the buyer behaviour before and during the purchase. BASIC STRUCTURE OF BUYING BEHAVIOUR HOWARD . learning and attitude formation.

Product information obtained from friends acquaintances and reference groups. availability and distinctiveness ii. Motives ignite a drive to search and secure information from alternatives.HOWARD .non observable variables. Exogenous or outside variables such as social class. Stimulus. say quality. Input or stimuli: i.SHETH MODEL ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ The following predictions can be made about the model i. They lead to goal directed behaviour satisfaction. financial status etc. Thus. price. are used to predict perception and learning. This model describes the buying behaviour in various stages. In this manner the resulting perception is selected.input variables are marketing programme and social environment. iii.. Stage 1: Motives are based on needs demanding satisfaction. Commercial information on them. a number of products or brands are perceived and considered by the consumers mind. Stimuli or perceived learning occurs and results in output Ii. . Product themselves in the market ii. Output occurs on the basis of the perception and learning.

The marketer is interested in this outcome. Stage3: The choice criteria gives rise to predisposition. attitude. time pressure etc. ‡ ‡ ‡ ‡ ‡ ‡ ‡ . If they do not occur.HOWARD . The market must offer a good marketing-mix that is used by the buyer to influence the choice criteria. social factors and personal factors. Buying behaviour is influenced by motives (rational / emotional curiosity) attitudes. This may be in form of price. perception. Satisfaction leads to repurchase. Now. Stage 4: Feedback of purchase experience is sent to the buyer which shows if the actual satisfaction was equal to the expected satisfaction. external variables such as financial status. and repeat orders indicate brand loyalty. Sudden hindrances may sometimes stop the process. the preference results in a response output such as attention. inadequate supply of brand. buying intention and preferably actual purchase. only few will receive further consideration.the relative preference in favour of particular brand. many brands are eliminated or left out for further consideration. comprehension. Each will have plus / minus points. These choice considerations act as connecting links between motives and selected brands choice consideration which provide a structure to motives and the process of learning and experience.SHETH MODEL ‡ Stage 2: While evaluating. These considerations develop as criteria / rule to decide on the goods that have the prospects of yielding maximum satisfaction.

HOWARD .SHETH MODEL Black Box of the Buyer Behaviour Marketing Policy stimulus input variable Brand in the shop Response output variable Purchase motives inhibitors alternatives predisposition Intention Attitude Choice criteria Social information Commercial information Selection perception Evolved set comprehension of the brand Attention satisfaction Marketing ± Mix of the product .

g. learning. cultural and inter-personal influences and effects advertising and communications. The external factors may be in the form of group. personality. The marketer is expected to be aware of the person centered factors such as buyer motivation. attitudes.SHETH MODEL ‡ ‡ ‡ Thus models of buyer behaviour are generally based on certain factors internal to the consumer e. perceptions.. attitudes and perceptions. learning. The modern concepts of the buying behaviour state that the behaviour is the result of interaction between people centered factors and situation centered factors. values and beliefs. The action of individuals is the result of both internal / external factors and interactions to the consumer decision making processes.HOWARD . Similarly. marketers must be aware of social environment and internal personal interactions influencing the buyer behaviour Outside Variables Personality Social Class Financial Status and Trial Culture Importance of Purchase Time Pressure ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ .

an expert in consumer motivation and behaviour has developed this in 1966.NICOSIA MODEL OF CONSUMER BEHAVIOUR ‡ ‡ The buyer behaviour model is taken from the marketing mans point of view. He tried to explain buyer behaviour by establishing a link between the organization and its prospective consumer. with a decision to buy the product or else the reverse may occur. The Nicosia model divides the above activity explanation into four basic areas: ‡ ‡ ‡ ‡ ‡ . This may result in a search for the product or an evaluation of the product attributes by the consumer. it may result in a positive response. the consumer will have a certain attitude towards the product. Based on the situation. Francesco Nicosia. Here the messages from the company initially influence the predisposition of the consumer towards the product and service. If this step satisfies the consumer. It is also called systems model as the human is analysed as a system. with stimuli as the input to the system and the human behaviour as an output of the system.

Area 3: This area explains as how the consumer actually buys the product . ‡ ‡ . The advertising message from the company will reach the consumers attributes. If the above step motivates to buy the product / service. Certain attributes may develop sometimes depending upon the way the message is received by the consumer. Area 4: This is related to the uses of the purchase items. Area 2: This area is related to the search and evaluation undertaken by the consumer of the advertised product and also to verify if other alternatives are variable. The newly developed attribute becomes the input for area 2. it becomes the input for the third area. This can also be used as an out put to receive feedback on sales results to the firm.NICOSIA MODEL OF CONSUMER BEHAVIOUR ‡ ‡ ‡ Area 1: Field one has two sub areas-the consumer attributes and the firms attributes.

Nicosia Model of consumer behaviour Field 1 from source of a message to consumer attitude Attitude Sub Field 1 Firm¶s attributes Message Exposure experience Sub field 2 Consumers attributes field 2 search for field 2 search for & evaluation of means Search field 4 feedback Evaluation motivation Consumption Storage Decision Action field 3 purchasing action .

In a third stage. the consumer evaluates all the alternatives with the help of available information. Information processing. The various models of consumer involvement help marketers to study purchase behaviour across product segments . In the second stage consumer collect information about the product and brands. In the first stage.NICOSIA MODEL ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Consumers usually go through five stages in arriving at a purchase decision. Later in stage four. consumer experiences post-purchase satisfaction or dissatisfaction. the customer identifies an unsatisfied need. the customer makes a purchase decision. and Transmission of information. The degree of involvement has a lot of impact on search of information. And finally in the fifth stage.

purchase 5. motivation and need recognition 2.ENGEL ± BLACKWELL-MINIARD MODEL ‡ The Engel ± Blackwell. This model stands as one of the most popular representations of consumer behaviour. This model has a decision process of five activities which occur over time.Miniard model was originally developed in 1968 by Engel. The variables are grouped in to four general categories.search for information 3.outcomes. 1.Kollat. alternative evaluation 4. Blackwell and has gone through numerous revisions. ( a ) stimulus inputs ( b ) information processing ( c ) decision-process ( d ) variables influencing the decision process ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ .

ENGEL ± BLACKWELL-MINIARD MODEL Need recognition Exposure Stimuli Marketer Dominated other Internal search Search beliefs Attention comprehension Memory acceptance Alternative evaluation attitudes intention Environmnt Influences ‡Culture ‡Social class ‡Personal Influence ‡Family ‡situation retention purchase External search outcomes Individual Differences ‡Consumer Resources ‡Motivation ‡Involvement ‡Knowledge ‡Attitudes ‡Personality ‡Lifestyle ‡demographics dissatisfaction satisfaction .

the product evaluation process will be very rigorous and if necessary the consumer will shop at many outlets. there are two significantly different modes of operation by consumers. Consumer has low motivation to search for brand information and is only willing to engage in a non-rigorous evaluation of alternatives. Under EPS.ENGEL ± BLACKWELL-MINIARD MODEL ‡ ‡ ‡ ‡ According to this model. Consumer is not motivated to shop at many outlets and satisfaction with the purchase will encourage repurchase because of inertia . Satisfaction with brand is crucial for continued commitment to use the brand. 2. not real loyalty with the product. 1. ‡ ‡ ‡ ‡ ‡ . Limited problem solving behaviour ( LPS ) Consumer is operating under low levels of involvement and low levels of perceived risk. Extended problem-solving behaviour ( EPS ) ± EPS characterized by high levels of involvement and high levels of perceived risk.

The first step in processing involves exposure to such stimuli. individual characteristics such as involvement level of consumer. information stored in memory 2. the model is activated with the consumer recognizing the need from three possible influences. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . activities which the consumer uses to derive meaning from stimuli. 1. The next stage is information search.ENGEL ± BLACKWELL-MINIARD MODEL ‡ Under EPS . Any informational inputs are subjected to information processing . consumers . environmental influences 3. After the exposure the stimuli must capture the consumer¶s conscious attention to significantly influence extensive problem solving. The consumer searches internal memory to determine what is known about the alternatives and how to choose among them. External search for information will be activated if the consumer does not feel comfortable with his existing knowledge.

The alternative evaluation stage involves comparing information about the alternative brands gained through the search process to evaluate criteria which are product ±judging standards that have been stored in permanent memory. The alternative evaluation process leads to an intention to make a purchase of the most favourably evaluated brand. but if the alternative does not meet the expectations. The intention will then lead to purchase behaviour. the process is a continuous one and does not stop with the purchase. Hence. for further processing. dis satisfaction is the result. At this point the consumer begins to use the product and evaluation continues by comparing performance to expectations. One outcome is satisfaction. and holding this meaning in short ± term memory. ‡ ‡ ‡ ‡ ‡ .ENGEL ± BLACKWELL-MINIARD MODEL ‡ The attention stage is highly selective since it tends to ignore most stimuli and admit only those that the individual believes are important. The comprehension stage then involves deriving meaning from information that has been attended to . These results may lead to further search for information about the brand and or changes in beliefs.

Role of motives in influencing behaviour is also quite vague. flow of the model is quite flexible and incorporates many theories such as motivation.limited problem solving situations the consumer is not highly involved and a number of stages are shortened or pursued by the consumer with less vigor. . External search also likely to b minimal and often information is acquired by just seeing ads and µ running into¶ the sources of the product information. considers many variables in influencing consumers 2. attitude change.ENGEL ± BLACKWELL-MINIARD MODEL ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ In. Advantages of Engel-Blackwell-Miniard Model 1. 4. repurchase is likely but brand loyalty is not likely due to the lack of involvement. Limitations Vagueness regarding the role of some variables. and purchase is made with minimal deliberation. Alternatives are often evaluated by determining whether they meet some minimal level of acceptability . focus on levels of consumer¶s involvement 3. If the brand meets expectation. information processing. its emphasis on the decision-making process regarding purchases.

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