1.1.

CONSUMER BEHAVIOR
1.1.1. Meaning and Definition of Consumer Behavior
The term individual buyer behavior, end user behavior, consumer behavior, and consumer buying behavior all stands for the same. The study of consumer behavior is the study of how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. It includes the study of what they buy, why they buy it, when they buy it, where they buy it, how often they buy it, and how often they use it. Take the simple product toothpaste. Consumer researchers want to know what types of toothpaste consumers buy (gel, regular, striped, in a tube, with a pump); what brand (national brand, private brand, generic brand); why they buy it (to prevent cavities, to remove stains, to brighten or whiten teeth, to use as a mouthwash, to attract romance); where they buy it (supermarket, drugstore, convenience store); how often they use it (when they wake up, after each meal, when they go to bed, or any combination thereof); and how often they buy it (weekly, biweekly, monthly). Consumer behavior may be defined as the decision process and physical activity individuals engage in when evaluating, acquiring, using, or disposing of goods and services”. According to Belch and Belch, “Consumer behavior is the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires”. According to Solomon, “Consumer behavior is the process involved when individuals or groups select, purchase, use, or dispose of products, services, ideas or experiences to satisfy needs and wants”. Consumer behavior may also be defined as the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society”. According to Leon G. Schiffman and Leslie Lazar Kanuk, “Consumer behavior can be defined as the behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they 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. That includes what they buy, why they buy it, where they buy it, how often they buy it, how often they use it, how they evaluate it after the purchase, the impact of such evaluations on future purchases and how they dispose of it. So in Consumer behavior it is not only learnt, what is the behavior of the consumer when he buys it but also before the consumption, during the consumption and after the consumption?

1.1.2.

Nature/Characteristics of Consumer Behavior

Characteristics of consumer buying behavior are discussed below: 1) Consumer behavior or buyer behavior is the process by which individuals decide whether, what, when, from whom, where and how much to buy. 2) Consumer behavior comprises both mental and physical activities of a consumer. 3) It covers both visible and invisible activities of a buyer. 4) Buyer behavior is very complex. 5) Buyer behavior is very dynamic. 6) An individual’s behavior is influenced by internal and external factors. 7) It is an integral part of human behavior. 8) In many cases, it is the sum total of the behavior of a number of persons. 9) It is influenced by a number of marketing stimuli offered by the marketer. 10) It involves both psychological and social process. 11) Consumer behavior is basically social in nature.

12) 13) 14) 15)

Consumers act differently at different times and often respond differently to the same stimulus at different times. They learn and thereby change their attitudes and behavior. Consumers are heterogeneous in nature and they are all different from each other in certain respects. They often act emotionally rather than rationally.

1.1.3.

Scope of Consumer Behavior

There are varieties of practical applications in the field of consumer behavior. Some involve a societal perspective while others illustrate a micro viewpoint. Together they underscore the importance of understanding consumers for solving a variety of contemporary problems. 1) Consumer Behavior and Marketing Management: Effective business managers realize the importance of marketing to the success of their firm. Marketing may be defined as, “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives”. A sound understanding of consumer behavior is essential to the long-run success of any marketing program. In fact, it is seen as a cornerstone of the marketing concept, an important orientation of philosophy of many marketing managers. The essence of the marketing concept is captured in three interrelated orientations: i) Consumer’s Needs and Wants: When the focus is on identifying and satisfying the wants and needs of consumers, the intention of the firm is not seen as merely providing goods and services. Instead, want and need satisfaction is viewed as the purpose, and providing products and services is the means to achieve that end. ii) Company Objectives: Consumers’ wants and needs are numerous. Therefore, a firm that concentrates on satisfying a small proportion of all desires will most effectively utilize its resources. Company objectives and any of the firm’s special advantages are used as criteria to select the specific wants and needs to be addressed. iii) Integrated Strategy: An integrated effort is most effective in achieving a firm’s objective through consumer satisfaction. For maximum impact this requires that marketing efforts be closely coordinated and compatible with each other and with other activities of the firm. Several major activities can be undertaken by an organization that is marketing-oriented. These include market-opportunity analysis, target-market selection, and marketing-mix determination, which include decisions on the proper combination of marketing variables to offer consumers. i) Market Opportunity Analysis: This activity involves examining trends and conditions in the marketplace to identify consumers’ needs and wants that are not being fully satisfied. The analysis begins with a study of general market trends, such as consumers’ lifestyles and income levels, which may suggest unsatisfied wants and needs. ii) Target-Market Selection: The process of reviewing market opportunities often results in identifying distinct groupings of consumers who have unique wants and needs. This can result in a decision to approach each market segment with a unique marketing offering. Consider the soft-drink market. Here, major segments of ultimate consumers are distinguished by the type of purchase situation: a) The food-store segment, b) The “cold bottle” or vending-machine segment, and c) The fountain market, which includes fast-food outlets. iii) Marketing-Mix Determination: This stage involves developing and implementing a strategy for delivering an effective combination of want satisfying features to consumers within target markets. A series of decisions are made on four major ingredients frequently referred to as the marketing-mix variables: product, price, place and promotion. The following characterizes each area and provides a small sampling of how knowledge of consumer behavior is relevant for decision-making.

a) Product: The nature of the physical product and service features are of concern here, among decisions that are influenced by consumer behavior are: • What size, shape, and features should the product have? • How should it be packaged? • What aspects of service are most important to consumers? • What types of warranties and service programs should be provided? • What types of accessories and associated products should be offered? b) Price: Marketers must make decisions regarding the prices to charge for the company’s products or services and any modification to those prices. These decisions will determine the amount of revenues the firm will generate. A few of the factors involving consumer behavior are: • How price-aware are consumers in the relevant product category? • How sensitive are consumers to price differences among brands? • How large a price reduction is needed to encourage purchases during new-product introductions and sales promotions? • What size discount should be given to those who pay with cash? c) Place: The place variable involves consideration of where and how to offer products and services for sale. It also is concerned with the mechanisms for transferring goods and their ownership to consumers. Decisions influenced by consumer behavior include: • What type of retail outlet should sell the firm’s offering? • Where should they be located, and how many should there be? • What arrangements are needed to distribute products to retailers? • To what extent is it necessary for the company to own or maintain tight control over activities of firms in the channel of distribution? • What image and clientele should the retailer seek to cultivate? d) Promotion: Of concern here are the goals and methods of communicating aspects of the firm and its offerings to target consumers. Consumer-related decisions include: • What methods of promotion are best for each specific situation? • What are the most effective means for gaining consumers’ attention? • What methods best convey the intended message? • How often should a given advertisement be repeated? 2) Consumer Behavior and Non-profit and Social Marketing: Can crime prevention, charitable contributions, or the concept of family planning be sold to people in much the same way that some business firms sell soap? A number of writers have suggested that various social and nonprofit organizations can be viewed as having services or ideas that they are attempting to market to target group of “consumers” or constituents. Such organizations include governmental agencies, religious orders, universities, and charitable institutions. Often these groups must also appeal to the public for support in addition to attempting to satisfy some want or need in society. Clearly, a sound understanding of consumer decision processes can assist their efforts. 3) Consumer Behavior and Governmental Decision-Making: In recent years the relevance of consumerbehavior principles to governmental decision-making has become quite evident. Two major areas of activity have been affected: i) Government Services: It is increasingly evident that government provision of public services can benefit significantly from an understanding of the consumers, or users, of these services. Numerous analysts have noted that frequently failing mass-transportation systems will not be viable alternatives to private automobile travel until government planners fully understand how to appeal to the wants and needs of the public. In other cases, state and municipal planners must make a variety of decisions, including where to locate highways, what areas to consider for future commercial growth, and the type of public services (such as health care and libraries) to offer. The effectiveness of these decisions will be influenced by the extent to which they are based on an adequate understanding of consumers. This requires knowledge of people’s attitudes, beliefs, perceptions and habits as well as how they tend to behave under a variety of circumstances.

ii) Consumer Protection: Many agencies at all levels of government are involved with regulating business practices for the purpose of protecting consumers’ welfare. Some government programs are also designed to influence certain consumer action directly (such as the use of auto seatbelts) and discourage others (speeding, drug abuse, and so on). 4) Consumer Behavior and Demarketing: It has become increasingly clear that consumers are entering an era of scarcity in terms of some natural gas, and even water. These scarcities have led to promotions stressing conservation rather than consumption. The effort of electric power companies to encourage reduction of electrical use serves as one illustration. In other circumstances, consumers have been encouraged to decrease or stop their use of particular goods believe to have harmful effects. Programs designed to reduce drug abuse, gambling, and similar types of consumption are examples. These actions have been undertaken by government agencies, nonprofit organizations, and other private groups. The term “demarketing” refers to all such efforts to encourage consumers to reduce their consumption of a particular product or service. Some demarketing efforts have met with considerable success while many others have made hardly any impact on changing long-established consumption pattern. An analysis of the success and failures of various efforts strongly suggests that demarketing programs must be based on a sound understanding of consumers’ motives, attitudes, and historically established consumption behavior. 5) Consumer Behavior and Consumer Education: Consumer also stands to benefit directly from orderly investigations of their own behavior. This can occur on an individual basis or as part of more formal educational programs For example, when consumers learn that a large proportion of the billions spent annually on grocery products is used for impulse purchases, and not spent according to preplanned shopping lists, consumer may be more willing to plan purchases in an effort to save money. In general, as marketers discover the many variables that can influence consumers’ purchases, marketers have the opportunity to understand better how they affect their own behavior. What is learned about consumer behavior can also directly benefit consumers in a more formal sense. The knowledge can serve as data for the development of educational programs designed to improve consumer’s decision-making regarding products and services. Such courses are now available at the high school and college level and are becoming increasingly popular.

1.1.4.

Importance of Consumer Behavior

In olden days, the importance of consumers’ behavior was not realized because it was seller’s market. But modern marketing is customer-oriented. Therefore, the study of customers’ behavior is vital in framing production policies, price policies, decisions regarding channels of distribution and above all decisions regarding sales promotion. 1) Production Polices: The study of consumer behavior affects production policies of the enterprise. Consumer behavior discovers the habits, tastes and preferences of consumers and such discovery enables an enterprise to plan and develop its products according to these specifications. It is necessary for an enterprise to be in continuous touch with the changes in consumer behavior so that necessary changes in products may be made. 2) Price Policies: The buyer behavior is equally important in having price policies. The buyers of some products purchase only because particular articles are cheaper than the competitive articles available in the market. In such a case the price of such products cannot be raised. On the other hand, some other articles are purchased because it enhances the prestige and social status of persons. The prices of such things can easily be prestige and social status of the persons. The price of such things can easily be raised or fixed higher. Some articles are purchased under particular attitudes and emotions such as khadi garments are purchased who think themselves the followers of Gandhi. Prices of articles purchased under emotional motives, can also be raised.

1. lesser price but with superior features. and how much.1). The starting point for understanding buying behavior is the stimulus − response model of buyer behavior (as shown in figure 10. It enables the producer to know what motive prompts consumer to make purchase and the same are utilized in advertising media to awaken desire to purchase. problems. price. 9) Implementing the “Marketing Concept”: This calls for studying the consumer behavior. 6) Consumers do not always Act or React Predictably: The consumers of the past used to react to price levels as if price and quality had positive relation. All these inputs enter the buyer’s black-box. decisions regarding channels of distribution are taken on the basis of consumer behavior. The marketer wants to understand how the stimuli are changed into responses inside the consumer’s black-box. and advertising appeals has a great advantage over its competitors. The marketer who takes decision regarding brand.5. 4) Decision Regarding Sales Promotion: A study of consumer behavior is also vital in making decisions regarding sales promotion. Marketers must figure out what is in the buyer’s black-box. refrigerators etc. 5) Exploiting Marketing Opportunities: A study of consumer behavior helps the marketers to understand the consumers.1. Marketers can study actual consumer purchases to find out what they buy. which has two parts. where they are turned into a set of observable buyer responses: product choice.1: Black -box Model of Buying Behavior . First. In case of those articles. place. The company that really understands how consumers will respond to different product features. which are sold and purchased solely on the basis of low price. the buyer’s decision process itself affects the buyer’s behavior. Marketing Stimuli Product Price Place Promotion Other Stimuli Economic Technological Political Cultural Buyers Characteristics Cultural Social Personal Psychological Buyers Decision Process Problem recognition Information search Evaluation of alternatives Purchase decision Post purchase behavior Buyers Decisions Product choice Brand choice Dealer choice Purchase timing Purchase amount Figure 10. This knowledge will be useful to the marketers in exploiting marketing opportunities and meeting the challenges of the market. This figure shows that marketing and other stimuli enter the consumer’s “black-box” and produce certain responses.3) Decision Regarding Channels of Distribution: The goods. technological. expectations. consumers seek value for money. purchase timing. Thus study of consumer behavior is important to understand the changes. Thus. must have cheap and economical distribution channels. sets. and purchase amount. packaging. political. when they buy. and promotion. dealer choice. where. For instance. Second. But learning about the whys of consumer buying behavior is not so easy – the answers are often locked deep within the consumer’s head. aspirations. Other stimuli include major forces and events in the buyer’s environment: economic. Today. 8) Rapid Introduction of New Products: Rapid introduction of new product with technological advancement has made the job of studying consumer behavior more imperative. 7) Consumer Preferences are Changing and becoming highly diversified: This shift has occurred due to availability of more choice now. on the basis of consumer behavior for promoting sales of the products. which require after-sale service such as T. needs.V. prices. etc. how and how much they buy. as customers needs have to be given priority. the buyer’s characteristics influence how he or she perceives and reacts to the stimuli. Thus identification of target market before production becomes essential to deliver the desired customer satisfaction and delight. Marketing stimuli consist of the four Ps: product. and why they buy. must have different channels of distribution. gifts etc. Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy where they buy. and cultural. brand choice. Model of Consumer Behavior Consumers make many buying decisions every day. The consumers’ response indicates that the shift had occurred. discount. the information technologies are changing very fast in personal computer industry.

People have attitudes toward almost everything: religion. opinion. music. 1) Age and Stage in the Life Cycle: As a person passes through different stages of his life he needs different set of products. or belonging. Salesperson should.2. cues. Taste in clothes. 1. clothes. learning. and how a person responds. where. Study of consumer behavior helps the salesperson to understand the psychological aspects in selling or why the prospect is buying or not buying the product or services. organizes. Cues are minor stimuli that determine when. Further the tastes. A drive is a strong internal stimulus impelling action. they learn. personal. How the motivated person actually acts is influenced by his or her perception of the situation. 3) Learning: When people act. they arise from psychological states of tension such as the need for recognition. and special diets in the later years.6. Learning involves changes in an individual’s behavior arising from experience.1. the prospective buyer will respond in a predictable manner. 1. or faith. A belief is a descriptive thought that a person holds about something. the prospect may or may not buy the product. . Perception is the process by which an individual selects. Personal Factors A buyer’s decisions are also influenced by personal characteristics. Manufacturers are very interested in the beliefs people carry in their heads about their products and services. Learning theorists that learning is produced through the interplay of drives. Factors influencing Consumer decision making Factors Affecting Consumer Behavior A consumer’s buying behavior is influenced by cultural. lifestyle. beliefs and attitudes. 1) Motivation: A person has many needs at any given time. They eat baby food in the early years.6. Attitudes lead people to behave in a fairly consistent way toward similar objects. and interprets information inputs to create a meaningful picture of the world. Cultural factors exert the broadest and deepest influence. which the salesperson is trying to sell. thirst. politics. Most human behavior is learned. Perception depends not only on the physical stimuli but also on the stimuli’s relation to the surrounding field and on conditions within the individual. they arise from physiological states of tension such as hunger. habits of persons change with age. Attitudes put them into a frame of mind of liking or disliking an object. stimuli. most foods in the growing and mature years. Psychological Factors A person’s buying choices are influenced by four major psychological factors – motivation. people acquire beliefs and attitudes. emotional feelings. and reinforcement. esteem. Beliefs may be based on knowledge. motivations. moving toward or away form it. perception. 4) Beliefs and Attitudes: Through doing and learning.1. understand the psychological aspects in buyer behavior.1. discomfort. Psychological Factors Personal Factors Age and Life Motivation Cycle Stage Perception Occupation Learning Life Style Beliefs and Personality and Attitude Self Concept Cultural Factors Culture Sub Culture Social Class Social Factors Reference Groups Family Roles and Status 1. They may or may not carry an emotional charge.1. An attitude is a person’s enduring favorable or unfavorable evaluations. These in turn influence buying behavior.It is assumed that if a sales person applies a stimulus (or sales presentation). economic circumstances. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the person to act. perceptions. Some needs are biogenic. social. 2) Perception: A motivated person is ready to act. Psychological factors of buyer or consumer behavior includes attitudes. Other needs are psychogenic. These include the buyer’s age and stage in the life cycle. and food. and personality of behavior. therefore.6. and personality and self-concept. and action tendencies toward some object or idea. furniture. and psychological factors. However. responses. occupation.

defensiveness. For example. 3) Lifestyle: People from the same subculture. If economic indicators point to a recession. 2) Occupation and Economic Circumstances: Occupation also influences a person’s consumption pattern. a computer company might discover that many prospects show high self-confidence. Marketers of income-sensitive goods pay constant attention to trends in personal income. 2) Subculture: Each culture consists of smaller subcultures that provide more specific identification and socialization for their Culture Sub Cultures Cultural Factors and Their Relationships . Related to personality is self-concept (or self-image). dominance. and social class are particularly important in buying behavior. widowhood. external comfort. Lifestyle portrays the “whole person” interacting with his or her environment. Social Class e) Culture will be adaptive to the needs of the society.and recreation is also age related. stability. spend able income (level. Some recent work has identified psychological life-cycle stages. deference. borrowing power. dominance. marketers can take steps to redesign. Marketers search for relationships between their products and lifestyle groups. provided that personality types can be classified accurately and that strong correlations exist between certain personality types and product or brand choices. norms. Self concept is the totality of person’s thoughts and feelings with reference to himself or herself as the object. d) Culture is transferred from generation to generation with new influences constantly being added to the cultural ‘soup’. The basic characteristics of a culture are as follows: a) Culture exists to serve the needs of the society. a computer manufacturer might find that most computer buyers are achievement-oriented. Marketers pay close attention to changing life circumstances – divorce. and symbols of society. and behaviors through his or her family and other key institutions. and lunchboxes. By personality. savings and assets (including the percentage that is liquid). 1. freedom. For example. c) Culture is learned through interactions with other members of the culture. Consumption is shaped by the family lifecycle. Product choice is greatly affected by economic circumstances. social class. we mean distinguishing psychological characters that lead to relatively consistent and enduring responses to environment. 1) Culture: Culture is the most fundamental determinant of a person’s wants and behavior. progress. sociability. rituals. interests. and opinions. Personality can be a useful variable in analyzing consumer behavior. activity. Personality is usually described in terms of such traits as self-confidence.3. individualism. throughout our life time. and re-price their products so they continue to offer value to target customers. Marketers try to develop brand images that match the target market’s self-image. remarriage – and their effect on consumption behavior. b) Culture is acquired from society. A lifestyle is the person’s pattern of living in the world as expressed in activities. autonomy. and occupation may lead quite different lifestyles. and interest rates.6.1. reposition. efficiency and practicality. which are transmitted through both the language and symbolic features of the society. air travel. work shoes. and attitude towards spending versus saving. humanitarianism and youthfulness. material comfort. subculture. The marketer may then aim the brand more clearly at the achiever lifestyle. A child growing up in the United States is exposed to the following values: achievement and success. A company president will buy expensive suits. It consists of the learned values. and autonomy. preferences. country club membership. debts. Cultural Factors Culture. and time pattern). perceptions. The growing child acquires a set of values. It is possible that a person’s actual self-concept (how she views herself) differs from her ideal self-concept (how she would like to view herself) and from her others-self-concept (how she thinks others see her). 4) Personality and Self-Concept: Each person has a distinct personality that influences buying behavior. Marketers try to identify the occupational groups that have above-average interest in their products and services. A blue-collar worker will buy clothes. savings. and large sailboat. and adaptability.

and behavior. upper class. e.. semi-skilled and unskilled laborers in the unorganized sector. and social roles and statuses. Every human being because of his sociable nature prefers to evaluate his abilities and opinion based on the comparison of others abilities and opinions. Subcultures include nationalities. Social classes are relatively homogenous and enduring divisions in a society. middle class and the lower class. b) Social class is hierarchical.. According to Philip Kotler. beliefs and behavior”. etc. Stratification sometimes takes the form of a caste system where the members of different castes are reared for certain roles and cannot change their caste membership. Social classes have the following characteristics: a) Persons within a given social class tend to behave more alike. religions. According to Herbert Hyman. interests. Many subcultures make up important market segments. Their families are usually male dominated. status. which are hierarchically ordered and whose members share similar values. upper middle class. stratification takes the form of social classes. and geographic regions. 1) Reference Group: Generally speaking a reference group can designate to any person or group that serves as a point of comparison (or reference) for an individual informing either general or specific values. small business owners. with individuals able to move into a higher social class or drop into a lower class. iii) Contractual Group: Another way of classifying reference group will be in terms of a person's membership or degree of involvement with the group and in terms of the positive or negative influence . a consumer’s behavior is influenced by such social factors as reference groups. Such a group serves as a point of comparison especially for evaluating ones own status. salespeople. attitudes or behavior. and marketers often design products and marketing programs tailored to their needs. racial groups. For example.4. iii) Middle Class: This class consists of white collar workers like middle level and junior executives. d) Social class is continuous rather than concrete. Social class can be subdivided into four categories. 1. ii) Comparative Reference Group: Reference group which will serve as a benchmark for certain specific or narrowly defined attitudes are called comparative reference group. preferences. “Reference group is the type of group that an individual uses as a point of reference in determining his own judgments.members.1. i) Upper Class: This class consists of people who are rich and possess considerable wealth. viz. iv) Lower Class: This class consists of blue collar workers like factory laborers. More frequently. Classification of Reference Groups i) Normative Reference Group: Reference groups that directly influence general or broadly defined values or behavior are usually called normative reference group. family. These people lead a conservative lifestyle and spend moderately. wealth.6. c) Social class is not measured by a single variable but is measured as a weighted function of one’s occupation. Reference groups are of different types. prestige. etc. income.g. education. They have a strong drive for success and indulge in shopping for goods that speak of their social status. “A person’s reference groups consist of all the groups that have a direct (face to face) or indirect influence on the person’s attitudes or behavior”. a child's normative reference group will be his family. These people are more family oriented and depend on their family for economic and emotional support. 3) Social Class: Virtually all-human societies exhibit social stratification. or professionals. ii) Upper Middle Class: This class consists of well-educated people holding top class positions in middle size firms. Social Factors In addition to cultural factors. people with large businesses and wealthy corporate executives.

and the personal and jointly held goals of the spouses determine the importance placed on education or career. 3) Roles and Statuses: A person participates in many groups – family. d) Socialization of Family Members: It encompasses young children and adults. appropriate manner and speech and the selection of suitable educational and occupational or career goals. and children on the purchase of different products and services. Here his behavior will be the opposite or reverse to the norms of the particular reference group. and organizations. c) Suitable Family Lifestyles: Another important family function in terms of consumer behavior is the establishment of a suitable lifestyle for the family. This is a group whose values or behavior does not appeal to the individual. b) Emotional Support: Love. attitudes and behavior which will be in opposition to that of the group. Here a person may have membership or face to face contact but he disapproves of the group values. Husband-wife involvement varies widely by product category and by stage in the buying process. and it has been researched extensively. intimacy. self worth etc. Family is of two types: a) Family of Orientation: From parents a person acquires an orientation towards religion. dress and grooming standards. and courage. and on the selection of other entertainment and recreational activities. support. the person totally disapproves. providing financial means to its dependents is unquestionably a basic family function. People are significantly influenced by their reference groups in at least three ways: a) Reference groups expose an individual to new behaviors and lifestyles.they are able to evolve on the person's attitudes. and drink Chivas Regal scotch. In countries where parents live with their grown children. Marketers are interested in the roles and influence of the husband. affection. vi) Avoidance Group: This may be a group with which the person may not hold membership nor have face to face contact and also of whose values. These are the groups with which the person interacts and has regular contact. A role consists of the activities that a person is expected to perform. behavior and values. clubs. Thus company presidents often drive Mercedes. v) Disclaimant Group: Another type of reference group is the disclaimant group. on reading. Functions of the Family a) Economic Well-Being: Economic security. b) They influence attitudes and self-concept. Upbringing. The person’s position in each group can be defined in terms of role and status. A Supreme Court justice has more status than a sales manager. Marketers are aware of the status symbol potential of products and brands. Here the person will tend to avoid the group and will adopt values. 2) Family: Family members can strongly influence buyer’s behavior. . and a sales manager has more status than an office clerk. wife. interpersonal skills. and is a central function. care. politics. The family is the most important consumer buying organization in society. One such reference group is the contractual group. These generally include moral and religious principles. attitudes and behavior. iv) Aspirational Group: An aspirational group is one to which the individual wishes or aspires to belong. experience. c) They create pressures for conformity that may affect actual product and brand choices. This aspiration acts as a positive influence on that person's attitude and behavior. b) Family of Procreation: This involves a more direct influence on every buying behavior it includes one’s spouse and children. on television viewing. wear expensive suits. Buying roles change with evolving consumer lifestyles. People choose products that communicate their role and status in society. The individual may not have a formal membership and also does not have face to face contact but he aspires to be a member. attitudes and behavior. Each role carries a status. their influence can be substantial.

induce action or determine choice in the purchase of goods or services”. Thus an understanding of buying motives will help the firm to know what are the consumers attitudes. “A motive is an inner urge that moves or prompts a person to action”. listening to the sounds (music). . It is a pleasure shopping at Big Jo’s in Delhi where the sales staff is extremely courteous and treats customers with a great deal of respect.S. According to W.J. ii) Status and Authority: Shopping may provide an opportunity to attain a feeling of status and power by being waited on. stimulus or emotion. 2) Social Motives i) Social Experience: Outside the home shopping can provide opportunities for seeking new acquaintances. which make them act in a particular way while buying certain goods or services. which plays a role in the consumer’s decision to purchase a product/service. or just “people watching”. which are as follows: 1) Personal Motives i) Role-Playing: Shopping activities are learned behavior and are accepted as part of one’s position or role. A consumer purchases a particular product or service because of a strong inner feeling or force. It becomes a buying motive when the individual seeks satisfaction through the purchase of something”. Buying Motives of Consumers Motive is the inner urge that moves or prompts a person to some action. For example. companion shopping. “A motive can be defined as a drive or an urge for which an individual seeks satisfaction.1. encounters with friends. and product symbols reflecting attitudes and lifestyles. iv) Sensory Stimulation: Shopping can provide sensory benefits such as looking at and handling merchandise. ii) Diversion: Shopping can offer a diversion from the routine of daily life and is a form of recreation. Behavior is a goal directed activity. which induce a buyer to purchase a given product. Durian. A buying motive can thus be said to all the desires.7. and smelling the scents. Motive is an effectual desire that prompts one to a definite action. iii) Pleasure of Bargaining: Shopping may offer the enjoyment of gaining a lower price through bargaining. Stanton. Motive | Need (Hungry) Goal (preparing/buying) Goods (Food) Behavior Goal achievement (Eating) Motives behind purchase are of two types. J. feeling. It is expected that a woman expecting her first child will shop extensively for baby clothes and other stuff meant for infants. According to D. It is also accepted that a housewife does the grocery shopping for her home. “Buying motives are those influences or considerations which provide the impulse to buy. considerations and impulses. an urge from within. or visiting sales. Davar. ‘Motive’ can be a strong desire.1. a visit to Weekender will reveal the latest trend in casual wear and it is with this motive in mind that many young shoppers visit Weekender. which instills in him a strong desire to have possession of the same. According to R. Customers purchase any goods as a result of certain mental and economic forces that create desires or wants that they know can be satisfied by the articles offered for purchase. such as mother or housewife. iii) Learning about New Trends: Shopping provides consumers with information about trends and movements. a drive.

what to buy. Generally. Buyer may be the decider or he may be some other person. 2) Influencer: Influencer is a person who explicitly or implicitly has some influence on the final buying decision of others. and head of the family for durable or luxury items. how to buy. i.1. Sometimes. 5) Buyer: The buyer is the person who actually purchase. thirst. the purchaser passes through five distinct stages in taking a decision for purchasing a particular commodity. he thinks much before taking a decision to purchase it. He should initiate all of them to make the purchases of his product at different stages and through different strategies Influencers (Children) Communications Targeted at Children (Taste.. The need can be triggered by internal stimuli. Thus. whether to buy. Children are the deciders for buying the toys. Children (deciders) are the deciders for purchasing the toys. parents are buyers.2: Buying Process . In the former case one of the person’s normal needs-hunger. Image) DecisionMakers (Parents/ Children Communications Targeted at Parents (Nutrition) Purchasers (Parents) Consumers (Children) Information Gatherers (Parents) Various Roles in Family 1. Students are influenced by the advice of the professor while taking a decision to purchase a book. when to buy or where to buy.1. Consumers Decision Making Process / Buying Process Decision-making is a process of selecting an appropriate option from two or more alternatives. he consults others. 6) User: User is the person who actually uses or consumes the services or products. The marketer’s task is to study the buying process and its main participants and their role in the buying process. Here Professor is the influencer. A customer enjoys the freedom of choosing a particular brand or product when there is Problem Recognition more than one brand or product to choose from.e. 4) Gatekeeper: The person or organization or promotional materials which act as a filter on the range of services which enters the decision choice set. in making a purchase decision the consumer goes through the following stages: 1) Problem Recognition: The buying process starts when the buyer recognizes a problem or need. Broadly.9. for some commodities immediately without much consideration such as items of daily use while for some other commodities mainly luxury or durable items. Pre purchase Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior Figure 10. but purchases are made by the parents. which can participate in the buying decision: 1) Initiator: The initiator is a person who first suggests or thinks of the idea of buying the particular service. The purchaser or consumer takes his buying decision. Buying role of Consumers There are following six different roles of persons.1. 3) Decider: The decider is a person who ultimately determines any part or whole of the buying decision. house lady for kitchen provisions.8.

3: Evaluation System ii) Beliefs: These are the degrees to which.g.3: i) Evaluative (Choice) Criteria: These are the dimensions used by consumers to compare or evaluate products or brands. In the car example. physicians often learn of new drugs from commercial sources but turn to other doctors for evaluative information. or she watches a television ad for a Hawaiian vacation. a need is aroused by an external stimulus. the relevant evaluative criteria may be fuel economy. marketers can identify the most frequent stimuli that spark an interest in a product category. iv) Intentions: These measure the probability that attitudes will be acted upon. phoning friends and visiting stores to learn about the product of key interest to the marketers. consumer. Commercial information normally performs an informing function. she admires a neighbor’s new car. dealers. iii) Attitudes: These are the degrees of liking or disliking a product and are in turn dependent on the evaluative criteria used to judge the products and the beliefs about the product measured by those criteria. are the major information sources to which the consumer will turn and the relative influence each will have on the subsequent purchase decision. iii) Public Sources: Mass media. Generally speaking the consumer receives most of the information about a product from commercial source–that is. acquaintance ii) Commercial Sources: Advertising. 2) Pre-purchase Information Search: An aroused consumer will be inclined to search for more information. the probability that the consumer will buy. Some basic concepts will help us understand consumer evaluation processes. in the consumer’s mind. a product possesses various characteristics. At this level a person simply becomes more receptive to information about a product. 3) Evaluation of Alternatives: There is no single evaluation process used by all consumers or by one consumer in all buying situations. friends.. packaging. That is. Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers. e. rating organization. Evaluative Criteria Beliefs Attitudes Intentions Figure 10. ii) The consumer is looking for certain benefit from the product solution. At the next level the person may enter active information search: looking for reading material. examining. Consumer information sources fall into four groups. they see the consumer as framing judgment largely on a conscious and rational basis. neighbors. Each information sources performs a different function in influencing the buying decision. We can distinguish between two levels of arousal. and personal sources perform a legitimizing or evaluation function. The milder search state is called heightened attention. purchase price and reliability. For example. i) The consumer is trying to satisfy a need. There are several decision evaluation processes the most current models of. In the latter case. But most effective information comes from personal sources. A person passes a bakery and sees freshly baked bread that stimulates her hunger. displays. roominess. i. The relative amount and influence of these information sources vary with the product category and the buyer’s characteristics. salespersons. They can then develop marketing strategies that trigger consumer interest. iv) Experiential Sources: Handling. which see the process as cognitively oriented. Evaluation may be thought of as a system as depicted in figure 10.e.. i) Personal Sources: Family. The assumption is that favorable attitudes will increase purchase intentions. uses the product. marketers-dominated sources.sex-rises to a threshold level and become a drive. .

The extent to which another person’s attitude reduces. However. the consumer will experience some level of satisfaction or dissatisfaction. The consumer’s brand image will vary with his or her experience as filtered by the effects of selective perception selective distortion and selective retention. if it beyond expectations the customer is delighted. A consumer’s decision to modify. iii) Quantity decision (one computer). ii) The second factor is unanticipated situation factors that may erupt to change the purchase intention. Private action includes making a decision to stop buying the product (exit option) or. Consumers vary as to which product attributers they see as most relevant and the importance they attach to each attribute. For example. b) The consumer’s motivation to comply with the other person’s wishes. ii) Post-purchase Actions: The consumer’s satisfaction or dissatisfaction with the product will influence subsequent behavior. The consumer develops a set of brand beliefs about where each brand stands on each attribute. postpone. If the consumer is satisfied he or she will exhibit a higher probability of purchasing the product again. the consumer forms preference among the brand in the choice. The may take public action by complaining to the company. or avoid a purchase decision is heavily influenced by perceived risk. or complaining to other groups (such as business private or government agencies). if it meets expectations the customers is satisfied. The market for a product can often be segmented according to attributes that are salient to different consumer groups. In all these case the seller has done a poor job of satisfying the customer. i) The first factor is the attitudes of others. The set of beliefs about a brand makes up the brand image. Purchase of everyday product involves fewer decisions and less deliberation. ii) Vendor decision (dealer 2). 4) Purchase Decision: In the evaluation stage. Marketers must monitor post purchase satisfaction. The amount of perceived risk varies with the amount of money at stake the amount of attribute uncertainty and the amount of consumer self-confidence. and v) Payment-method decision (credit card). post purchase actions and post purchase product uses. . the consumer may make up to five purchase sub decisions: i) A brand decision (brand A). They may seek information that confirms its high value. two factors can intervene between the purchase intention and the purchase decision. the customer is disappointed. i) Post-purchase Satisfaction: What determines whether the buyer will be highly satisfied. The marketer’s job does not end when the product is bought. The attributes of interest to buyers vary by product. iv) Timing decision (weekend). These feelings signify a difference in whether the customer buys the product again and talks favorably or unfavorably about the product to others. 5) Post-purchase Behavior: After purchasing the product. going to a lawyer.iii) The consumer sees each product as a bundle of attributers with varying abilities of delivering the benefit sought to satisfy this need. one’s preferred alternative depends on two things: a) The intensity of the other person’s negative attitude towards the consumer’s preferred alternative. in buying sugar a consumer gives little thought to the vendor or payment method. warning friends (voice option). somewhat satisfies or dissatisfied with a purchase? The buyer’s satisfaction is a function of the closeness between the buyer’s expectations and the product’s perceived performance. Preferences and even purchase intentions are not completely reliable predictors of purchase behavior. The consumer may also form an intention to buy the most preferred brand. Dissatisfied consumer may abandon or return the product. They will pay the most attention to attributers that deliver the sought benefit. If performance falls short of expectations. In executing a purchase intention.

a tennis racket. If consumers store the product in a closet..iii) Post-purchase Use and Disposal: Marketers should also monitor how buyers use and dispose of the product. a personal computer. Consumer may also find new uses for the product. The marketers must understand the information gathering and evaluation activities of the prospective consumers. Their search for additional information is more like “fine-tuning”.10. If they sell or trade the product new product sales will be depressed. in others. If all purchase decisions required extensive effort. So the buyers have to take very few decisions for the purchase of such type of goods. if all purchases were routine. This behavior is adopted for the purchase of low cost. frequently purchased items. etc. consumers have some experience with the product category and a well-established set of criteria with which to evaluate the brands they are considering. then consumer decision-making would be an exhausting process that left little time for anything else. On a continuum of effort ranging from very high to very low. The products in this class are generally classified as low involvement goods. off-price offers. 1. increase his brand comprehension and gain confidence in the brand. 3) Habitual Buying Behavior/Routinized Response Behavior: At this level. The marketer has to ensure two tasks: i) The marketer must continue to provide satisfaction to the existing customers by maintaining quality. the consumer needs a great deal of information to establish a set of criteria on which to judge specific brands and a correspondingly large amount of information concerning each of the brands to be considered. which will help the buyer to gather more information. The decisions to buy toothpaste. they may search for a small amount of additional information. the product is probably not very satisfying and word-of-mouth will be not being strong. They have to educate the prospective buyers to learn about the attributes of the product class. they have not fully established preferences concerning a select group of brands. The buyers are very well aware of the product class. know the brands and also have a clear preference among the brands.4: Types of Buying Behavior 1) Complex Buying Behavior/Extensive Problem Solving: At this level. or search or take a lot of time to make the purchase. In some situations. service and value. 2) Dissonance-Reducing Buying Behavior/Limited Problem Solving: At this level consumers already have established the basic criteria for evaluating the product category and the various brands in the category. then they would tend to be monotonous and would provide little pleasure or novelty. ii) He must try to attract new customers by making use of sales promotion techniques like point of purchase displays. However. Subcultures Buying Habits of Consumers/Levels of Consumer Decision-Making Consumer decision making varies with the types of buying decision.1. and also introduce new features to the products. and a new car are all very different. Here the marketer’s job is to design a communication programme. On the other hand. we can distinguish four specific levels of consumer decision-making: High Involvement Significant Differences between Brands Few Differences between Brands Complex buying behavior Dissonance-reducing buying behavior Low Involvement Variety-seeking buying behavior Habitual buying behavior Figure 10. they simply review what they already know. Here the buyers do not give much thought. . they must gather additional brand information to discriminate among the various brands.

and sponsoring frequent reminder advertising. . because they do not understand exactly what they are selling. More specific examination involves assessing any unique abilities the company might have in satisfying identified consumer desires. 4) Variety-Seeking Buying Behavior: Some buying situation are characterized by low involvement but significant brand differences. it is seen as a cornerstone of the marketing concept.11. he or she gives-up resources in the form of time. The following descriptions explore the role of consumer behavior in designing and deploying three major marketing activities: 1) Market-Opportunity Analysis: This activity involves examining trends and conditions in the marketplace to identify consumers’ needs and wants that are not being fully satisfied. this function enables the consumer to enjoy the benefits of information availability in a very convenient package. Outcomes like these are valuable and what the customer is ultimately buying. a product is potentially valuable bundle of benefits. With this in mind. In fact. light product to function as an electronic reader. we can ask. Challenger firms will encourage variety seeking by offering lower prices. What does he or she really get? Well. the marketing communications should aim at supplying information and help the consumer to evaluate and feel good about his/her brand choice. an important orientation or philosophy of many marketing managers. Consider a customer who purchases a kindle. The market leader and the minor brand in this product category have different marketing strategies. such as consumers’ lifestyles and income levels. and energy in return for whatever is being sold. Medium High Automatic Minimal Convenience Very limited Habit Brand loyalty Semiautomatic Limited Mixed Limited Inertia to repurchase Brand Switching If dissatisfied Complex Extensive Shopping Complex Loyalty if satisfied Complaint if dissatisfied 1. avoiding out-of-stock conditions. A consumer is not really buying attributes or the physical parts of a product. No reasonable consumer would trade any significant sum of money for plastic and circuitry. is this really what the consumer wants? The fact is. Theodore Levitt was one of the most famous marketing researchers. Characteristics Purchase Involvement Level Problem Recognition Information Search and Evaluation Purchasing Orientation Post Purchase Processes Characteristics of Consumer Problem-Solving Approaches Routine Problem Limited Problem Solving Extensive Problem Solving Solving Low. In other words. A sound understanding of consumer behavior is essential to the long-run success of any marketing program. the tangibles include mostly plastic and some integrated circuitry. These are the parts that make-up the product. coupons.1. the plastic enables the product to be small and light and the integrated circuitry enables this small. However. Once again. and advertising that presents reasons for trying something new. Consumer Behavior and Marketing Strategy Net Matter When a consumer buys something. money. Marketing firms often adopt poor strategies when they do not understand exactly what a product truly is. The market leader will try to encourage habitual buying behavior by dominating the shelf space. deals. The analysis begins with a study of general market trends.their relative importance and the high standing of the marketer’s brand on the more important brand attributes. here consumers often do a lot of brand switching. which may suggest unsatisfied wants and needs. free samples.

It begins with an analysis of the market the organization is considering. Unique packaging arrangements (container type and size). which includes fast-food outlets. For example. image. As figure aside indicates. place. the Colgate-Palmolive company was able to identify a unique group of consumers in need of a certain type of deodorant soap. securing these benefits requires paying Consumer Decision Process Problem recognition for the car. weight training books. the strengths and weaknesses of competitors. major segments of ultimate consumers are distinguished by the type of purchase situation: i) The food store segment. Price. An excellent example of this occurred in the bath soap market. and even companionship. gasoline. price. Here. and parking fees. In other cases. This can result in a decision to approach each market segment with a unique marketing offering. Development of Irish Spring for this target group led to the capturing of 15 per cent of the deodorant soap market within three years of introduction. pleasure. the marketer may decide to concentrate company efforts on serving only one or a few of the identified target-markets. Consumers’ reactions to this marketing strategy determine the organization’s success or failure. an organization must provide target customers more value than is provided by its competitors. status. an understanding of consumer behavior is the basis for marketing strategy formulation. owning a car can provide a Firm number of benefits. It is the difference Purchase between the total benefits and the total costs that constitutes customer Use value. Customer value is the difference between Outcomes all the benefits derived from a total product and all the costs and risks of Individual acquiring those benefits. For example. depending on the person and the type of car. However. 2) Target-Market Selection: The process of reviewing market opportunities often results in identifying distinct groupings of consumers who have unique wants and needs. ii) The “cold bottle” or vending machine segment. Marketing strategy is conceptually very simple. the economic and technological forces Marketing Strategy Product. However. point of purchase promotions. insurance. Promotion. and clothing. Alternative evaluation and dealing with traffic jams and other frustrations. Service Market Segmentation Identify product-related need sets Group customers with similar need sets Describe each group Select attractive segment(s) to target Market Analysis Company Competitors Conditions Consumers Marketing Strategy and Consumer Behavior . Distribution. comfort. maintenance. This requires a detailed analysis of the organization’s capabilities. and iii) The fountain market. adding to environmental pollution. and promotion. and they have significant impacts on the larger society in which they occur. To survive in a competitive environment. By segmenting consumers according to their lifestyle patterns and personalities. these reactions also determine the success of the consumers in meeting their needs.A variety of recent trends have resulted in many new product offerings for consumer satisfaction. Consider the soft drink market. and other variations are made for each segment. 3) Marketing-Mix Determination: This stage involves developing and implementing a strategy for delivering an effective combination of want-satisfying features to consumers within target-markets. as well Information search as risking injury from an accident. companies sensing consumers’ unmet medical needs have offered coin-operated blood pressure testing machines at shopping centers and other convenient locations. Society including flexible transportation. A series of decisions are made on four major ingredients frequently referred to as the marketing mix-variables – product. Evaluation Providing superior customer value requires the organization to do a better job of anticipating and reacting to customer needs than the competition does. In the healthcare field. companies attuned to the fitness interests of Americans have been quick to offer such new products as exercise bicycles.

Marketing skills would include new-product development capabilities. or revised communication plan. Although IBM had an excellent reputation with large business customers and a very strong direct salesforce for serving them. and they must do it better than existing solutions. existing product innovation. brand and product choices. reputation. service capabilities. Market Analysis Components i) Consumer Insight and Product Development: When marketers attempt to get consumers to buy their products. that is. the organization identifies groups of individuals. market and consumer knowledge. brand extension. general managerial skills. it involves determining the product features. All these factors add dimension and insight to the potential success of a plan for a new product or service. Next. resulting in an insight that can lead to a new product. research and development capabilities. and expectations.affecting the market. marketing research abilities. and so forth. For example. On the basis of the consumer analysis undertaken in this step. Management then selects one or more of these segments as target markets based on the firm’s capabilities relative to those of its competition (given current and forecast economic and technological conditions). and curiosity. or customer information) with intuition. researchers and marketers search for ways to channel ideation (the process of forming and relating ideas) to allow consumers to be more focused and productive. A traditional approach to this type of analysis focuses strategic thinking on staying ahead . IBM’s first attempt to enter the home computer market with the PC Jr. or firms with similar needs. often the bottom-line issue is a failure to understand the intended market. these strengths were not relevant to the household consumer market. ii) Company: A firm must fully understand its own ability to meet customer needs. Consumer insight can be defined as an understanding of consumers’ expressed and unspoken needs and realities that affect how they make life. Failure to adequately understand one’s own strengths can cause serious problems. For example. and the current and potential customers in the market. 1) Market Analysis: Market analysis is the process of analyzing changing consumer trends. creativity. was a failure in part for this reason. sales data. characteristics that marketers can use to target product offerings and advertising to specific segments. media preferences. company strengths and resources. This entire set of characteristics is often referred to as the total product. This process combines facts (either from primary or secondary research. channel strength. including its financial condition. geographic location. wants. iii) Current and Potential Competitors: A thorough market analysis also examines current and potential competitors. The total product is presented to the target market. Organizations around the world continue to spend billions of dollars annually on product concepts that would never be introduced to the marketplace if they had been more closely tested against consumer insight. poor performance. distribution and services that will provide customers with superior value. communications. Marketing strategy seeks to provide the customer with more value than the competition while still producing a profit for the firm. As companies turn to consumer feedback for new product guidance and ideas. not those of a management team. or ineffective communication. These market segments are described in terms of demographics. households. and marketing skills. production capabilities. highly innovative consumers attach more importance to stimulation. and the technological. Marketing strategy is formulated in terms of the marketing mix. technological sophistication. advertising abilities. Why is this failure rate so high? The answer is simple and straightforward – a new product must satisfy customers’ needs. Although formal analyses might point to product life-cycles. and economic environments. legal. most of the time they fail. price. Different consumers possess different levels of innovativeness. which is consistently engaged in processing information and making decisions designed to maintain or enhance its lifestyle (individuals and households) or performance (businesses and other organizations). affecting which advertising and positioning strategies will be most effective. current and potential competitors. many firms don’t understand how targeted consumers are likely to react to new products. This involves evaluating all aspects of the firm. providing better information to marketers. marketing strategy is formulated. and so forth.

they should be described in terms of their demographics. iii) Describing each group. sporty automobiles appears to exist in many young single individuals. cater to a large segment thus proving itself to be economical to the market segment need. Tastes and combinations of food products would change significantly across states. Thus. how easy will it be for competitors to enter the market. The deterioration of the physical environment has produced not only consumer demand for environmentally sound products but also government regulations affecting product design and manufacturing. Clearly.P. With these potential capabilities they should develop such product that satisfy more than one need. the need for moderately priced. iv) Selecting an attractive segment(s) to serve. young couples with no . International agreements such as NAFTA (North America Free Trade Agreement) have greatly reduced international trade barriers and increased the level of both competition and consumer expectations for many products. fun. and how will current competitors react? Firms can construct alternative scenarios to anticipate reactions of current competitors and anticipate how firms. iii) Description of Each Group: Once consumers with similar need sets are identified. more innovative firms pay less attention to matching and beating their rivals. an existing product. 2) Market Segmentation: Perhaps the most important marketing decision a firm makes is the selection of one or more market segments on which to focus. How does a firm accomplish this. which might include looking at existing competitive products and figuring out how to add a feature that might make a product “just a little better” in the mind of consumers. Market segment involves four steps: i) Identifying product related need sets. In India. each region. For example. the physical environment. might respond with similar products. ii) Grouping customers with similar need sets. but focus instead on using innovation to weaken or make competitors irrelevant in the marketplace. we cannot communicate effectively with our customers if we do not understand the context in which our product is purchased and consumed. Since a market segment has unique needs. or some other skill set. A market segment is a portion of a larger market whose needs differ somewhat from the larger market. and middle-aged couples whose children have left home. a segment must be larger enough to be served profitably.of the competition. young couples with no children. This step generally involves consumer research. Logistics and infrastructure across the interiors of Maharashtra and M. It could also involve an analysis of current consumption patterns. a firm that develops a total product focused solely on the needs of that segment will be able to meet the segment’s desires better than a firm whose product or service attempts to meet the needs of multiple segments. while many young single individuals. government regulations. In addition. services according to their capabilities may be a reputation. a technology. provides a different environment. lifestyles. would require radically different strategies. Other. It is only with such a complete understanding that we can be sure we have correctly identified the need set. including focus group interviews. and the language they use to describe it. In order to design an effective marketing program. surveys. i) Product-Related Need Sets: Organization should identify needs of the market and offer a product. iv) Conditions: The state of the economy. how it is thought about by our customers. and product concept tests. ii) Customers with Similar Need Sets: The next step is to group consumers with similar need sets. features. though not necessarily competitors at present. These consumers can be grouped into one segment as far as product features and perhaps even product image are concerned despite sharply different demographics. and technological developments affect consumer needs and expectations as well as company and competitor capabilities. a firm cannot develop a sound marketing strategy without anticipating the conditions under which that strategy will be implemented. To be viable. it is necessary to have a complete understanding of the potential customers. The development of computers has changed the way many people work and has created new industries. each state. and media usage.

. d) Desirable Products: These products deliver high practical value alongwith pleasurable value. Where will consumers expect and want to buy this product – through mass retailers. and the cost of providing the superior value. Plus they help consumers immediately and have long-running benefits. but they can be harmful in the long-run. ii) Distribution: The second element of the marketing mix is place (or distribution). but they also may lead to long-term problems for both the consumer and society. electronic retailing. or catalogs? An expensive or highly complex product like jewelry might sell better in a specialty store in which consumers receive personal assistance with product choice and operations instructions. place. often described as the four P’s (product. the media required to reach each group and the appropriate language and themes to use with each group would likely differ. Consumer research is critically important in developing segmentation strategy as well as formulating the marketing mix. firms decide the most effective outlets through which to sell their products and how best to get them there. price. weight-loss products which give consumers immediate results by curbing their appetites. and so forth are important considerations. and middle-aged couples whose children have left home may want the same features in an automobile. For example. An example might be a faulty appliance. In this phase. these categories represent how long a consumer expert the benefits of the product to last: a) Deficient Products: These products have little to no potential to create value of any type. i) Product: The largest ethical concern regarding the product portion of the marketing mix is whether the products are harmful to the consumer or to society as a whole. b) Salutary Product: These products are good for both consumers and society in the long-run. Obviously consumer wants to avoid offering products that are considered deficient. products fall into four categories pertaining to social responsibility. and both also are affected by the decision process of consumers. but they do not provide pleasure value. But it is important to realize that individual responsibility and freedom are important factors when it comes to the consumer’s decision to use these products. consumers enjoy cigarettes and alcohol but these products obviously can be harmful to consumer’s health and the health of others. Generally. For example. direct selling. The failure to disclose that a product will not function properly without necessary components is unethical. Salutary products offer practical value. the size and growth of the segment. whereas simple.children. Such a plan must specify the essential components of the marketing mix. everyday products might sell better in mass retail outlets. This decision is based on our ability to provide the selected segment(s) with superior customer value at a profit. When used correctly. the intensity of the current and anticpirated competition. The pleasing products category is usually the one where ethical issues come-up. Thus. these products have the long-run benefit to consumers of losing weight. For example. iv) Attractive Segment(s) to serve: Once we are sure we have a thorough understanding of each segment. 3) Marketing Strategies: Marketing strategy involves a plan to meet the needs and desires of specific target markets by providing value to that target better than competitors. Products can often lead to shortterm consumer satisfaction. c) Pleasing Products: These products provide pleasure value to consumers. we must select our target market – that segment(s) of the larger market on which we will focus our marketing effort. and promotion). vehicle air bags have great value but they do not necessarily provide pleasure or entertainment.

use direct mail. It is mostly in the interest of marketing managers to push consumers toward the added value end of the spectrum where more customer satisfaction can be given. feel good about having bought the product. packaging. specific magazines. is prohibited by law. This creates skepticism and a decline in trust toward the promotional message. or a host of other communications effects. Developing an effective message requires a thorough understanding of the meaning the target audience attaches to words and symbols. b) What Effects do Businesses Wants its Communications to have on the Target Audience: Often a manager will state that the purpose of advertising and other marketing communications is to increase sales. For example. it may seek to have the audience learn something about the product. This practice is actually prohibited by law as well. A firm marketing such items would be wise to communicate directly with these individuals. the behavioral objective for most marketing communications is often much more immediate. highest prices charged and greater profits made. pictures. which media (television. It is well documented that the relationship between price and perceived value will always interplay in people’s minds when choosing particular products. c) What Message will achieve the Desired Effect on Audience: What words. and word-of-mouth marketing. magazines. recommend the product to others. many times consumers believe that products are promoted in ways that are “too good to be true”. others are focused on channel members or those who influence the target-market members. public relations. Price ← Continuous movement → Added value Consumer concerns will pitch backwards and forward between price and added value depending on both functional and emotional concerns. d) What Means and Media should be used to reach the Target Audience: Should we use personal sales to provide information? Can we rely on the package to provide needed information? Should we advertise in mass media. An unethical use of pricing is to state that a regular price is a sales price. websites. . or rely on consumers to find us on the Internet? If we advertise in mass media. Unfortunately. Marketing communications include advertising. salesforce. For example. An effective communications strategy requires answers to the following questions: a) With Whom Businesses Want to Communicate: While most messages are aimed at the targetmarket members. and any other signal that the firm provides about itself and its products. The best approach depends on the situation at hand. like the product. It is also common for consumers to complain about marketing efforts that lead to overall higher prices. seek more information about the product. radio. sales promotion. as well as knowledge of the perception process. a company that pays millions of dollars for a Super Bowl commercial will often face criticism from consumers and push back on price. Marketers use the “price” as a statement of value received from an offering that may or may not be monetary – it is important that consumers see that same value. While this may be the ultimate objective. which is known as the bait-and-switch method. iv) Communications: As marketers use promotion to communicate a product’s value through techniques such as advertising. Internet) and which specific vehicles (television programs. Promoting an item as being on sale and then informing the consumer that the product is out of stock and hat a more expensive item should be bought is unethical. and symbols should we use to capture attention and produce the desired effect? Marketing messages can range from purely factual statements to pure symbolism. pediatric nurses are often asked for advice concerning diapers and other non-medical infant care items. This practice. and so forth) should we use? Answering these questions requires an understanding both of the media that the target audiences use and of the effect that advertising in those media would have on the product’s image.iii) Price: Price will also have its emotive as well as functional content. That is. newspapers.

Therefore. decide that it is the best available solution. Service as a separate component of the marketing mix plays critical role in determining market share and relative price in competitive markets. proceed to buy it. the outcomes of the firm’s marketing strategy are determined by its interaction with the consumer decision process. or year? Do consumers seek information shortly before purchasing our product? If so. customer satisfaction is a major concern of marketers. Thus. and feelings about the product or brand. Auxiliary services cost money to provide. v) Service: Here. This is because a brand whose position matches the desired position of a target market is likely to be purchased when a need for that product arises. A firm that does not explicitly manage its auxiliary services is at a competitive disadvantage. virtually all firms evaluate the success of their marketing programs in terms of sales. Thus. requires that customers continue to believe that your brand meets their needs and offers superior value after they have used it. and it must be enough to satisfy their needs. month. That is. c) Customer Satisfaction: Marketers have discovered that it is generally more profitable to maintain existing customers than to replace them with new customers. where? Answering these questions requires knowledge of the decision process used by the target market for this product. and become satisfied with the results of the purchase. and thus future sales. 4) Consumer Decisions: The consumer decision process intervenes between the marketing strategy (as implemented in the marketing mix) and the outcomes. The firm can succeed only if consumers see a need that its product can solve. as they produce the revenue necessary for the firm to continue in business. However. . while free pickup and delivery of the car would be an auxiliary service. It does not require purchase or use for it to develop. Retaining current customers requires that they be satisfied with their purchase and use of the product. as well as by direct experience with it. pictorial representations.e) When Should Business Communicate with the Target Audience: Should we concentrate our communications near the time that purchases tend to be made or evenly throughout the week. Providing services that customers do not value can result in high costs and high prices without a corresponding increase in customer value. it is essential that the firm furnish only those services that provide value to the target customers. Therefore. creating satisfied customers. we would consider car repair to be a product (primary service). It is determined by communications about the brand from the firm and other sources. You must deliver as much or more value than your customers initially expected. one must have a thorough understanding of the potential consumers’ needs and of their information acquisition processes to succeed at this task. This image consists of a set of beliefs. Most marketing firms specify the product position they want their brands to have and measure these positions on an ongoing basis. become aware of the product and its capabilities. Our total product Competitors’ total products Consumer decision process Superior value expected Sales Perceived value delivered Customer satisfaction Creating Satisfied Customer b) Sales: Sales are a critical outcome. convincing consumers that your brand offers superior value is necessary in order to make the initial sale. Obviously. As figure above indicates. service refers to auxiliary or peripheral activities that are performed to enhance the primary product or service. Sales are likely to occur only if the initial consumer analysis was correct and if the marketing mix matches the consumer decision process. 5) Outcomes i) Firm Outcomes a) Product Position: The most basic outcome for a firm or a marketing strategy is its product position – an image of the product or brand in the consumer’s mind relative to competing products and brands.

The types of products and brands purchased influence the balance of payments. at times they differ. However. is a major determinant of the state of a given country’s economy. their own and other societies. health care. we must remain aware that consumer behavior has a dark side. and wage levels. Injurious consumption occurs when individuals or groups make consumption decisions that have negative consequences for their long-run well-being. whether or not a purchase is made. A regression in the United States or a strong shift toward purchasing only American-made products would have profound negative consequences on the economies of many other countries. fulfilling one need affects their ability to fulfill others due to either financial or time constraints. the availability and cost of capital. Decisions concerning how much to spend for private goods (personal purchases) rather than public goods (support for public education. and so forth. particularly large wealthy societies like the United States. MARKET SEGMENTATION . and Japan. The social costs of smoking-induced illnesses. For most consumers. b) Injurious Consumption: While we tend to focus on the benefits of consumption. affects society as well as the individuals involved. industry growth rates. This can range from none (or even negative if a purchase increases the need rather than reduces it) to complete. parks. Western Europe. is some level of satisfaction of the need that initiated the consumption process. Injurious consumption. The cumulative impact of many small decisions to spend financial resources to meet needs now will limit their ability to meet what may be critically important needs after retirement. employment levels. they have a major impact on the social welfare of a society 1. both developed and developing. some estimates indicate that most Americans are not saving at a level that will allow them to maintain a lifestyle near their current one when they retire. For example. alcoholism. and drug abuse are staggering. These two processes are closely related and are often identical. b) Physical Environment Outcomes: Consumers make decisions that have a major impact on the physical environments of both. The cumulative effect of American consumer’ decisions to rely on relatively large private cars rather than mass transit results in significant air pollution in American cities as well as the consumption of non-renewable resources from other countries.ii) Individual Outcomes a) Need Satisfaction: The most obvious outcome of the consumption process for an individual.2. have a major impact on the economic health of many other countries. iii) Society Outcomes a) Economic Outcomes: The cumulative impact of consumers’ purchase decisions. including the decision to forgo consumption. Decisions made in one society. Two key processes are involved – the actual need fulfillment and the perceived need fulfillment. To the extent that marketing activities increase or decrease injurious consumption. and so forth) are generally made indirectly by consumers’ elected representatives. c) Social Welfare: Consumer decisions affect the general social welfare of a society. These decisions have a major impact on the overall quality of life in a society. Their decisions on whether to buy or save affect economic growth.

For example. This research provides the marketer with the vital information on the basis of which he eventually enters a consumer market with a relevant product. Hindustan Lever Limited (HLL) was the largest Fast Moving Consumer Goods (FMCG) Company in India. what they wear. In shampoos. ice-cream (Kwality-Walls). If the target market is too broad. Ponds and Rexona are for women. deodorant (Axe. a business can retain customers who might otherwise switch to competing products and brands. for example they grow older. This phenomenon has led marketers to segment markets. wants. and Wheel). which caters to the need of a large segment of population having dandruff. Minor brands suffer from lack of scale economies in production and marketing. drive. pressures from distributors and limited space on the shelves. Knorr-Annapurna and Modern Foods). therefore. By segmenting markets. lower-priced product. Gone are the days when one product suited all. drink. and ii) The cost of communicating to customers becomes too high / unprofitable. is a statement of their individuality. and household care (Vim). and Wheel caters to the lower end of the market. A lot of research is put in before a marketer segments the market or recognizes a consumer segment. businesses can raise average prices and subsequently enhance profits. or where they live. 4) Retain More Customers: Customer circumstances change. These are: 1) Better Matching of Customer Needs: Customer needs differ. Ponds. food (Kissan. There are several important reasons why businesses should attempt to segment their markets. personal wash (Lifebuoy. beverages (Brooke Bond. form families. By marketing products that appeal to customers at different stages of their life (“life-cycle”). there is a strong risk that: i) The key customers are missed. Liril. fabric wash (Surf. while Sunsilk is targeted as the hair expert for different hair kinds. 5) Target Marketing Communications: Businesses need to deliver their marketing message to a relevant customer audience. and Rexona). Rin. while Axe is targeted at men. Their needs. 2) Enhanced Profits for Business: Customers have different disposable income. it is unlikely to be maximizing its profitability. The segments where HLL was present included skin care (Fair & Lovely and Ponds). HLL is a highly consumer-focused company with different brands catering to different consumer segments with different needs and purchasing power. Annapurna atta. By segmenting markets. The era of mass markets has now given way to micro-markets with a highly individualistic profile. Rin is aimed at the mid-market segment. especially Clinic AllClear anti-dandruff shampoo. 3) Better Opportunities for Growth: Market segmentation can build sales. Elle 18 line of color enamel is targeted at early teens and young adults. change jobs or get promoted. change their buying patterns. Lux. Consumers now are much more demanding and the need for products suiting their tastes and preferences has increased.In 2004. While Surf caters to the high-end consumers. In Lakme. Creating separate offers for each segment makes sense and provides customers with a better solution. Bru. each solving some problem or catering to some consumer need. the target customer can be reached more often and at lower cost. Clinic is for healthy hair. eats. different in how sensitive they are to price. oral care (Pepsodent and Close-up). customers can be encouraged to “trade-up” after being introduced to a particular product with an introductory. hair care (Sunsilk and Clinic). and Breeze). They are. businesses can often achieve competitive production and marketing costs and become the . 6) Gain Share of the Market Segment: Unless a business has a strong or leading share of a market. Lipton). Most marketers today. In deodorants. color cosmetics (Lakme). and preferences are different and so the products they buy will have to match these. deal in a large variety of products targeted at various consumer segments. Through careful segmentation and targeting.

Meaning and Definition of Market Segmentation The concept of market segment is based on the fact that the markets of commodities are not homogenous but they are heterogeneous. According to R. Citibank provides different mixes of banking services in its branches depending on neighborhood demographics. 2 1 3 No market segmentation Complete segmentation Market segmentation of Income classes 1. S. segmentation offers the opportunity for smaller firms to compete with bigger ones.” or “one-to-one marketing”. the segment of heavy smokers includes those who are trying to stop smoking and those who don’t care.2. Levels of Market Segmentation Levels of market segmentation are as follows: 1) Segment Marketing: A market segment consists of a large identifiable group within a market with similar wants. neighborhoods.2. 4) Individual Marketing: The ultimate level of segmentation leads to “segments of one. income and purchasing techniques. habits. where any group can conceivably be selected as a target market to be met with distinct marketing mix”.” “customized marketing. geographical location. even individual stores). Market represents a group of customers having common characteristics but two customers are never common in their nature. The main aim of market segmentation is to prepare separate programmes or strategies to all segments so that maximum satisfaction to consumers of different segments may be provided.1. In other words. typically a small market whose needs are not well served. hobbies. Figure 7. “Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers. 3.2 B A Market segmentation by Age classes A and B 1. For example. According to Philip Kotler. “The purpose of market segmentation is to determine difference among them or marketing to them”. They differ in their behavior and buying decisions.preferred choice of customers and distributors. On the basis of these characteristics. For example. 2) Niche Marketing: A niche is a more narrowly defined group. According to William J. purchasing power. 2. Davas. each of which tends to be homogeneous in full significant aspects”. Stanton. 3) Local Marketing: Target marketing is leading to marketing programs being tailored to the needs and wants of local customer groups (trading areas. customers having similar qualities are grouped in segments. buying attitudes. an auto company may identify four broad segments: car buyers who are primarily seeking basic transportation or high performance or luxury of safety. According to Philip Kotler. “Grouping of buyers or segmenting the market is described as market segmentation”. or buying habits. 1. consumers were served as individuals: the tailor made the suit and the cobbler designed shoes for the individual . “Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-market or segments. Marketers usually identify niches by dividing a segment into sub segments or by defining a group seeking a distinctive mix of benefits.2. For centuries.

clothing. Basis of consumer market segmentation can be broadly divided into four broad categories which are shown in figure below. children. On the basis of age. a state-wide campaign targeting Texas beer drinkers. Geographic segmentation refers to segmenting markets by region of a country or the world.2. such as a census tract. and air-conditioning and heating systems are products with varying appeal. In demographic segmentation the market is divided into groups on the basis of variable such as age. water and snow skis. income.1. A company then needs to identify which market segments it can serve effectively. occupation. race. nationality and social class. 4) A more regional approach allows consumer goods companies to react more quickly to competition. Consumer goods companies take a regional approach to marketing for four reasons. generation. The geographic location of customers does help the firm in planning its marketing offer. Market density means the number of people within a unit of land. family size. Miller Lite developed the “Miller Lite True to Texas” marketing program. market size.3. Customers in upstate New York can order Reuben sandwiches. 3) Many packaged-goods manufacturers are introducing new regional brands intended to appeal to local preferences. Climate is commonly used for geographic segmentation because of its dramatic impact on residents’ needs and purchasing behavior. which are as follows: 1) Many firms need to find new ways to generate sales because of sluggish and intensely competitive markets. market density. Consumer market can be segmented into various segments by using different basis.2. and those in Texas can get eggs with salsa.3. Cracker Barrel. adults and old.1. a restaurant known in the South for home-style cooking. Geographic Segmentation This is generally the starting point of all market segmentation strategies. young. religion. Bases for Market Segmentation Companies cannot connect with all customers in large. broad. 2) Gender and Sexual Orientation: When God created human being he made Males and Females and gave them distinct survival needs.3. family life-cycle. or diverse markets. The gender segmentation is one of the most common forms of segmentation as around the globe man and woman have always been vocal about their separate needs. managers need to understand what makes each segment unique and different. Basis for Segmenting Consumer Markets Geographic Segmentation Demographic Segmentation Psychographic Segmentation Behavioral Segmentation 1. For example.. education. Some of the demographic variables used are: 1) Age and Life-Cycle Stage: Consumers wants and liabilities change with age. Demographic Segmentation The next commonly used basis for market segmentation is the demographic characteristics of the market. But they can divide such markets into groups of consumers or segments with distinct needs and wants.2. depending on climate. This decision requires a keen understanding of consumer behavior and careful strategic thinking. is altering its menu outside its core southern market to reflect local tastes. . Snow-blowers.2. Demographic variables are the most popular bases for distinguishing customer groups. 2) Computerized checkout stations with scanners give retailers an accurate assessment of which brands sell best in their region. This type of segmentation is quite common in dividing the rural and urban consumer market. 1. To develop the best marketing plans. gender. or climate. a market can be divided into four parts viz.

An unmarried bachelor prefers to enjoy life and his purchase behavior will show more of food and entertainment and less of furniture. Not only during festivals but in normal life also people with different religious beliefs develop different lifestyles and different behavior as consumer. at a basic level. These studies are typically customized to the client’s specific product category. 6) Family Size: The size of the family affects the amount and size of purchases. traditions and cultures also differentiate and segment the market. 8) Educational Level: The academic standard segments people with same income i. Life style concept as a basis for segmentation is quite reasonable and desirable. psychology and demography. Life style reflects the overall manner in which persons live and spend time and money.3. and race/ethnicity. reading habits etc. In India it is as diverse as from few hundred rupees a month to millions a month. culture.2. Even though the two may be of the same age. 3) Values: Some marketers segment by core values. 1. They endow their products with brand personality that corresponds to consumer personalities. In other words. 4) Income: Income varies along the population in any country. home furnishings.e. motivations. clothing. In this scenario the customers will behave differently in terms of wants as per their income. 5) Social Class: It has a strong influence on preference in cars. For example. People according to their situation and bringing up develop their own beliefs. 4) Beliefs: This is one of the parameters of segmentation used by marketers to sell products. income level. people develop religious beliefs as per the religion they follow. It is for this reason that marketing communicators also began investigating consumers’ psychographic characteristics as a means of obtaining a richer understanding of consumer behavior and how best to influence consumers to respond positively to marketing efforts. But a married person will purchase house and the furniture. the form of targeting that historically preceded it and which now is practiced in conjunction with psychographics. Numerous marketing research firms conduct psychographic studies for individual clients. 7) Occupation: Various occupations can influence the buying behavior. This is because of the following psychographic variables: 1) Life Styles: Life style concept is also considered as another important variable determining buyer behavior. leisure activities. gender. the questionnaire items included in a psychographics study are selected in view of the unique characteristics of the product category. .e. Life style concept has interdisciplinary approach as it involves sociology. with a similar ability to buy into their different likelihood to buy. However. And their purchase behaviors are greatly influenced by their beliefs. Marketers for many years based their targeting decisions almost exclusively on their audiences’ demographic characteristics – considerations such as the market’s age group. sophisticated practitioners eventually realized that demographic information tells only part of the story about consumers’ buying preferences and purchase behaviors. In general. Core values go much deeper than behavior or attitude and determine. people’s choices and desires over the long term. each of the customers may have a different attitude towards risk-taking and new product and stores. Marketers who segment by values believe that by appealing to people’s inner selves it is possible to influence their outer-selves.3) Marital Status: Life style of a person depends on whether he is married or not. People in sales and people in academic training will have different purchase behavior. values. The consumption pattern of a big-sized joint family differs from a small-sized nucleus family. psychographics refers to information about consumers’ attitudes. belief systems that underlie consumer attitudes and behavior. from the same profession. 2) Personality: Marketers have used personality variables to segment markets. with similar education and income. It is behavioral concept enabling us to grasp and predict buyer behavior. their purchase behavior. i. Many Companies design products and services for specific social classes. Psychographic Segmentation Often it has been seen that two consumers with the same demographic characteristics may act in an entirely different manner. 9) Religion: Religious rituals. and lifestyles as they relate to buying behavior in a particular product category.3. It is important to place the role of psychographic targeting in context of demographics.

They also favor established products and show their success around. They are active. so that the marketer is able to reach the segment in an economical way. lifestyle. have value and function properly. Marketers also are on the look-out for new media that can reach the audience with minimum waste. By catering to a segment. They are conservative and predictable. social resources. explore. etc. and decision-making. The demographic characteristics like. income. . They have wide interests and are concerned with social issues and are open to change. circulation. value order. Work provides them with a sense of duty. Each of these segments has a distinctive lifestyle. 4) Achievers: They are also placed high in the Maslow’s hierarchy of needs and are career and work-oriented. This can be done by VALS segmentation.In addition to psychographic studies that are customized to a client’s particular needs. strong faiths. They make their dreams come true. They are workaholics. conventional people. Besides money and physical resources. and competition. on the top are the people with abundant resources. They prefer leisure at home. Abundant resources Principle Fulfilled Status Actualize r Achiever Striver Struggler Figure 7. They look for products which are durable. i. authority and image is important to them. and in government. The target segment has to be profitable. age. and have high self-esteem. They are well-informed about the world. They live conventional lives. Profits are the backbone of any organization. 1) Fulfilled: As the name suggests. and responsibility. They have modest resources sufficient to meet their needs.. The segment must also be accessible. They are practical consumers and conservative. but the segment must also grow in size. material rewards and prestige. profits must be ensured. VALS segments.3. sex education. so that the people belonging to a segment not only remain there. they are satisfied and mature people who are well-educated. This classification is based on Maslow’s hierarchy of needs. 3) Actualizers: They have abundant resources and are sophisticated in their taste and habits.3: Values and Lifestyle Segments (VALS) Action Experienc er Maker Believer Minimal resources For a segment to be worthwhile. it is more difficult to identify psychographic characteristics of attitudes. knowledge. with their needs. The figure shows their characteristics as well. occupation. interests. 2) Believers: They are in the principle-oriented category. The segment should be such that profits can be gained. They develop. it must have a proper size. possessed by those at the bottom are very little and as move upwards the resources increase. At the bottom are the people with minimal resources and. attitude. beliefs. benefits. and are ready to increase their knowledge. They are conservative. The eight segments also differ in their resources and orientations. people at the bottom lack in education. One of the best known of these is SRI Consulting Business Intelligence’s (SRIC-BI’s) VALS system.e. consists of eight general psychographic segments as shown in figure 7. This divides the consumer into three general groups or segments. role. They can be reached through various media. They have taste and are leaders in business. marital status can easily be identified. enough number of people in the segment to make it feasible. The resources. and beliefs. It must be stable. They use established brands. However. and express themselves in a variety of ways. This study was made on American people. religion. psychological resources and in self-confidence. Brand Managers can purchase “off-the-shelf” psychographic data from services that develop psychographic profiles of people independently of any particular product or service.

Winning moments etc. They are people engaged in construction work and work with their hands and in the industry. In contrast.4. But people prefer different cars because they seek different benefits. This pattern of behavior changes. they buy stuff which helps them in achieving their purpose. They see success with money. and rebellious. all that helps them in practical work. suspicious of new ideas. whereas other consumers may buy these products on a weekly basis.5) Strivers: They are a status-oriented category. buyers-readiness stage. rather than simply a breakfast meal. Diwali. On a purchase of same product different customer look for different benefit because of which they buy products from different companies which satisfy their specific needs. usage rate. and psychological resources. but have a low income as they are striving to find a secure place in life. or as a gift/ an accessory/ a dress item/ a jewellery item. enthusiastic. buyers are divided into groups on the basis of their knowledge of. impulsive. Occasion segmentation helps boost product usage. 8) Makers: They are in the action-oriented category. Makers experience the work by working on it. without strong social bonds. pick-up trucks and. They are concerned about the opinion of others. wine or boxes of chocolates for celebrating birthdays or Christmas. purchase a product. as they are enthusiastic to new ideas. According to the occasions buyers develop a need.3. 2) Benefits: Here. They are low in economic. At any given time. young. music. movies. ii) Special: Marriage. Many marketers believe that behavioral variables – occasions. or durability. struggling for existence. loyalty status. sports. Behavioral Segmentation In behavioral segmentation. Republic Day etc. 7) Experiencers: They are action-oriented. 1. vital. recently Kellogg’s has attempted to change the image of cereals to that of an ‘any time’ snack. The major behavioral variables used by marketers to segment the market are as follows: 1) Occasions: Buyers can be distinguished according to the occasions on which they develop a need. Another example of occasional segmentation is orange juice which is most often consumed at breakfast. There can be 2 types of occasions: i) Regular: Like Holi.2. They represent a modest market and are loyal to their favorite brands. It can help firms expand product usage. There are unaware buyers. They like to be stylish. user status. the marketer identifies benefits that a customer looks for when buying a product. The basic function of a car is transportation. have a low status in society. people who are aware but not interested. Education is low. some consumers may only purchase flowers. For example. Buyer ‘readiness’ or preparedness is one of the important variable used for segmenting the market. Marketers often try to change customer perception of the best time to consumer a product by promoting alternative uses for a product. Eid. Anniversary. Independence Day. purchase a product or use a product. This has been a very effective method of segmenting the market for watches. or response to a product. those who will positively buy the product. food. use of. social. They are politically conservative. A company can consider critical life events to see whether they are accompanied by certain needs. where a customer may buy for just knowing the time. They are avid consumers and spend much on entertainment. The benefits can be of four types. They are despairing and. clothing. Let us explain them with the choice of cars: . For example. They have enough resources and experiment in new ventures. Their chief concern is to fulfill their primary needs of physiological security and safety needs. They indulge in exercise. They wish to be upwardly mobile and strive for more. people who are interested and are desirous to buy and lastly. They have construction skills and value self-sufficiency. low skilled. but orange growers have promoted drinking orange juice as a cool and refreshing drink at other times of the day. outdoor recreation and social activities. benefits. etc. 6) Stragglers: These are poor people. They buy tools. buyers are at different stages of readiness. Coca-Cola’s “Coke in the Morning” advertising campaign attempts to increase Coke consumption by promoting the beverage as an early morning pick-me-up. videos. Buyers can be classified according to the benefits they seek. and attitude – are the best starting points for consulting market segments. or use a product or when they get the idea to buy. Let us take the example of a car. attitude towards.

e. ii) Potential Users: This is the category where the usage rate is expected to be highest. as it is the most important part of their profession. those who will positively buy the product. and cigarette markets. people who are aware but not interested. 3) User Status: Markets can be segmented into following classes depending on the user status. ii) Medium: The fashion-conscious teenagers are the medium users of cosmetics i. but may lack money to purchase the product. iv) Interested: People who have information and hence are variety-seekers. a fashion conscious lady or a regular corporate and nowadays because of fall in its price students also are the regular users. For example. politicians mostly use Hindustan Motors Ambassador bulletproof car. buyers are at different stages of readiness. A market consists of people in different stages of readiness to buy a product. soft drinks. 4) Quantity Consumed/Usage Rate: The quantity consumed at any given time has also been the basis for segmenting the beverages (tea. ii) Service: At times people buy things to avail some specific service.i) Quality: There are people for whom the quality matters most in any purchase. the teenagers first deodorant used may be in his college days. ii) Aware: People who have seen the advertisements but do not have enough knowledge about the technology. . For example. Accordingly. people who are interested and are desirous to buy and lastly. colleagues. probably have taken a trial. need cosmetics on a regular basis. There are unaware buyers. breweries. In case of cosmetics an average housewife who is not very fashion conscious is a light user of the cosmetics. iii) Heavy: There are people for whom the cosmetics are the most important purchase and they are heavy users of it. iii) Economy: For most of the people belonging to the middle and lower income group price is the most important deciding factor in case of any purchase. These people when go for a purchase of any car apart before quality and service their first criteria of choice will be the price of the car and their preference will be for cars like Maruti 800. iv) Regular User: A corporate big-wig always in big party or conference. These people look for the economy in every purchase. At this stage more than quality or price the service that the product can give matters more. Celebrities in entertainment world. coffee). iv) Specially: People can be adventurous and sporty in purchase decisions for car and they would prefer Ferari etc. the models etc. In our example fashionable teenager. These various stages are: i) Unaware: People not following technology trend and completely unaware about its improvement and new innovations. iii) Informed: These people get information from friends. 5) Buyer-Readiness Stage: Another variable used for segmenting the market is buyer ‘readiness’ or preparedness to buy the product. The differentiation between them is based on the benchmark quantity defined by the marketer for each segment. iii) First time Users: The users who use it for the first time. the following market segments are visible: i) Light: These are the categories of the users who are very infrequent users. v) Desired: These are the people who have gathered detailed knowledge. relatives who are users or technical people. At any given time. Skoda Octavia. So when they buy cars they buy Mercedes Benz. Let us see how we can divide the users of deodorant in different categories: i) Non-User: A 10-year child or 70-year old in our country generally do not use deodorant. Let us explain the category of user with an example of a product say Deodorant. they use it very frequently. corporate people are the potential users of deodorant. v) Ex-User: Somebody who stopped using for some reasons may be due to allergies or due to switching to some substitutes like perfume are the ex-users of the product.

giving false promise or by the service provided. and Colgate Fluoride project an element of gum-care. Some people who develop a very negative attitude towards life do not enjoy and hence behaves in a very different manner from the person whose attitude is to always have fun and live life to the fullest. Babool. Promise. cinthol. cleanliness. iii) Indifferent: There are some people who are technology averse with systematic purchasing pattern. lux.. They do not prove to be potential users of credit cards. ii) Fluoride Segment: This group of buyers constituted above 15% of the market. They definitely need credit cards. Close-up. pears. Pepsodent after its launch found some customers of Colgate switching between the two brands. which affect their consumption pattern also. cigarette smokers and tea drinkers are some customer groups where such hard-core loyalties are commonly visible. Hence the marketing decision makers have taken this as a parameter to segment the population. iv) New Segment: In 2007. in case of credit cards. lux. This consists of brands like Colgate. Vicco. and pears. The popular brands are Neem. For example. As per the 1988 data. Dabur etc. 6) Loyalty Status (Competition Related): Consumers have varying degrees of loyalty to specific brands. The marketer needs to watch such customers and motivate them to shift to the hard core loyalty segment. Market Segmentation of Some Consumer Markets 1) Toothpaste Market: The toothpaste market in India can be divided into five segments. Newspaper readers. Pepsodent. They would never ever go for a credit card. lux. Five attitude groups can be found in a market. hygiene and special protection of the teeth. cinthol. Colgate Active Salt and Close-up Maxfresh were first introduced and today this new segment is facing intense competition. brands like Forhans. They may not carry cash all the time but suddenly decide to buy something. Here. a housewife who buys lux. These brands mostly emphasize on freshness. Cibaca Top. stores and other entities. For example. ii) Positive: They are serious but mobile people who need to buy suddenly at any time. iii) Split Loyals: Consumers who shift their loyalty from one brand to other and isolate between it. in her nine shopping expeditions will be considered as a soft core loyal. Ponds and Anchor white. and overall dental care. iv) Negative: People can be spendthrifts who fear of loosing money or misusing it. They may switch for a variety or for a special deal. 7) Attitude: People have different attitudes towards different aspects of life. These are the customers for whom brand switching is as easy as changing a shirt. foam.vi) Intended to Buy: People who have the knowledge. . iii) Herbal Segment: This segment has captured barely 2% of the market. They would prefer to purchase with cash after thinking over the need for purchase. Cibaca.4. cinthol. where each brand emphasizes on the natural or herbal constituents in it. iv) Switchers: Switchers are those customers who never stick to a brand. Buyers can be divided into four groups according to brand loyalty status: i) Hard Core Loyals: Hard core loyals are those customers who continue to buy the same brand over and over again. has the purchasing capacity and desire and are ready to buy. the segment sizes were as follows: i) Cosmetic Segment: This segment occupies 83% of the market. there are some hidden costs which are not clarified by the salesperson during selling 1. For example. Hostile: People at times become very much irritated either by salespeople calling or meeting anytime. in a credit card market they can be distinguished as follows: i) Enthusiastic: These are people having tendency of impulsive purchase. ii) Soft Core Loyals: Those who are loyal to two or three brands in a product group are called soft-core loyals.2.

behavior. 3) Soap Market: Price is the major basis for segmenting the toilet soap market. Accordingly. and 30% of the market in terms of value. it is analyzed using factor analysis. Cinthol Lime. But over the years. The total size of the premium soap market was ` 350 crore in January. The objective of this questionnaire is to collect data on: a) Attributes sought in a product and their priority ratings. and ii) Based on this insight developing a questionnaire which is administered to a sample group of consumers. The leading brands and companies in the premium segment are.4. the market segments formed are as follows: i) Popular Segment: This segment accounts for about 87% of the market in terms of quantity and 70% of the market in terms of value (size about ` 1. Brands include Breeze. Liril and pears. iii) Low Income Group: Prefer mopeds primarily because they provide individual mobility at the lowest possible cost. the segment consisting of brands like Lifebuoy and Lux.4.1.2. This is the main reason why they opt for heavier motorcycles (175 cc or above). Vigil. price and safety? ii) Young People: Who generally settle for aesthetics or good looks? That is why the 100 cc motorcycle is their first choice. psychographic. In this category. b) Brand awareness and rating of different brands. ii) Economy Segment: It consists of brands like Hamam. For example. iv) Rural Buyers: Are primarily concerned about maneuverability through rough terrain. Market Segmentation Procedure/ How to Segment the Market It is an accepted view that the market segmentation procedure consists primarily of three stages: 1) Survey Stage: This is divided into two parts. Hero Honda’s Ambition. Santoor and Rexona. with equal emphasis on strategies to target the rural population. Factors Influencing Segmentation Factors Influencing Segmentation Size. 3) Profiling Stage: In this stage each cluster is profiled in terms of demographic.2. This is used to identify factors that differentiate customer groups. This segment caters to by and large urban territories. Tarun and Nirma Chemicals.2.2) Two Wheeler Market: The two-wheeler market can be segmented with respect to consumer behavior as follows: i) Married People: Who generally look for fuel-efficiency. and Margo and Mysore Sandal. Objectives and Resources of the Company Competitive Structure of the Industry Life Cycle Stage The major factors which influence segmentation are shown in figure below and must be taken into consideration. known as the ‘discount segment’. Another recent development in the popular segment has been the emergence of a new segment between the ‘Janata’ and the ‘economy’ segment due to changes in the excise structure. Cluster analysis is now used to cluster customers into maximally different groups. attitudes. 1. Lux. 2) Analysis Stage: After collecting the data. iii) Premium Segment: High-priced soaps account for roughly 13% of the market in terms of quantity. their prices have increased. Fa. media habits. 1992 and there were more than 70 brands. The popular segment may further be subdivided by price again. d) Customer attitudes towards the generic product or product category itself.000 crore). c) Product usage patterns. The marketer can give each segment a name based on a dominant distinguishing characteristics. 1. Dove. i) Focus group discussions and in-depth interviews with a view to get an insight into consumer motivation.000 million. Dettol. 1) Size. The Lifebuoy soap brand is the single largest band selling annually ` 4. attitudes and behavior. psychographics. e) Demographics. and media habits of sample respondents. Bajaj’s Pulsar. Objectives and Resources of the Company: The size of the company and the Type of Product and Market Nature of Market Competitive Strategy of Firm . viz. soaps are priced reasonably. and consumption habits.

for example.4. small businesses. at lunch time or as a full three or four course dinner. it is no use allocating a huge budget there. For example. programmes and strategies for different markets based on rivals’ strategies.3. catering and hospitality services. 3) Allocation of Marketing Budget: It is on the basis of market segmentation that marketing budget is adjusted for a particular region or locality. Competitive Strategy of Firm: Competitive strategy of a firm also has an influence on segmentation. the Ford Motor Co. for instance. notebooks. will want to sell to the world and so segment on a global scale whilst the local hairdresser will service a very small catchment area and segment accordingly. Segmentation strategies differ according to market such as segmentation strategies differ in competitive market from non – competitive market. but by customer groups (privates. 5) Understanding and Meeting the Needs of Consumers: It helps the marketer to fully understand the needs. segmentation reduces the risk of aggregation. Resources of company also determine the extent of segmentation. . large businesses. Life Cycle Stage: Lifecycle stage of a product also affects segmentation decisions. Thai. servers. 6) Minimizing Aggregation Risk: By dividing the market and designing specific marketing mix to each segment. who may not notice ads carefully. tastes and expectations of the consumers of different segments so that precise and clear decisions can be taken to harness marketing opportunities. Organizations that choose to segment the consumers and focus on target markets are more successful in highly competitive environments. In the place where the sales opportunities are limited. which is defined as the risk of not being able to satisfy customer needs with one marketing mix to all segments. does not organize its website by product groups (desktops. Competition and the need to attract more customers have led to the theme pub offering an ever greater choice of food and real ales. Type of Product and Market: Some companies have a simple product portfolio that lends itself to easy segmentation. policies and programmes. policies and strategies of competitors in all the segments. 4) Fighting Competition Effectively: The segmentation helps the producers to face the competition of competitors effectively by making a deep study of the products. the use of personal selling is better marketing tool. financial services. Nature of Market: Nature of market also influences the segmentation decision. behavior. In the past a pub might have offered a choice of two different beers and a salad sandwich or a sausage roll. The greater the selection on offer the more consumers will demand choice and the greater will be the need for tight segmentation. 2) Better Position to Spot Marketing Opportunities: The producer can make a fair estimate of the volume of his sale and the possibilities of furthering his sales. An example of this might be the change that has happened with the traditional English pub.2) 3) 4) 5) 6) resources it has available will dictate to a great extent how it segments its market. for example. It is possible to satisfy a variety of customer needs with a limited product range by using different forms. Now many pubs offer a choice of over 20 different beers and food as diverse as Italian. bread. habits. the strategy of approach can be readjusted accordingly to push the sales on the basis of marketing research. petrol. The computer manufacturer Dell. Competitive Structure of the Industry: In the main the more competitive the market the more each organization will look toward differentiating their product so as to gain competitive advantage. This helps in adopting different policies. 1. In the region where response of the customers is poor. potatoes. industrial cleaning products. public/state organizations). whilst others have a more complex product mix making it much harder. in case of highly mobile customers. For example. Benefits of Market Segmentation Several benefits of market segmentation are as follows: 1) Adjustment of Product and Marketing Appeals: Market segmentation presents an opportunity to understand the nature of the market. fashion clothes. incentives and promotional activities.).2. French and American to be eaten as a snack. as company having moderate resources will have limited segmentation whereas company having substantial resources will have broad segmentation. bundles. The seller can adjust his thrust to attract the maximum number of customers by various publicity media and appeals. all at prices that match their targeted customer’s expectations. printers etc.

11) Higher Market Shares: In contrast to an undifferentiated marketing strategy. Hence. 8) Benefits to the Consumers: The segmentation benefits the customers as the company produces and supplies products that serve customers' interest and satisfy their needs and wants. marketing activities can be targeted at highly attractive market segments in the beginning. 2) Buyers often choose from a repertoire or a list of acceptable brands. 4) The markets examined by them were not heavily segmented as the differences between brands were too insignificant to matter. According to E. or for different occasions or for a change etc. the fixation of times in memory so that they can be recalled or organized. Limitations of Market Segmentation The major limitations of market segmentation are as follows: 1) Markets are not made up of segments with different wants because buyers of one brand buy other brands as well.4. customers and companies can conveniently settle down with each other.2.g. the process of acquiring insight into situation”. channel partners and customers. From marketing point of view the marketer has to develop different marketing mixes for different segments. R. It strengthens the brand and ensures profitability. Thus. no concept of differentiation among products is needed to explain market success. Given the fact that people alternate between the brands of their list. CONSUMER LEARNING 1. which can then be satisfied through unique product or promotional offerings.3. Such a targeted communications allows stressing those criteria that are most relevant for each particular segment (e. Meaning and Definition of Learning Learning may be described as “The process of acquiring the ability to respond adequately to a situation which may or may not have been previously encountered. organizations have better chances to increase their market shares in the overall market. the favorable modification of response tendencies consequent upon previous experience.3. 3) The various brands may be indistinguishable in product form yet differ widely in market share. On that basis. Moreover when segmentation attains higher levels of sophistication and perfection. 1. organizations can create their own 'niche products' and thus attract additional customer groups. Thus. Market leadership in selected segments improves the competitive position of the whole organization in its relationship with suppliers. From production point of view. Hilgard. 10) Stimulating Innovation: It is necessary to communicate in a segment-specific way even if product features and brand identity are identical in all market segments. they can safely rely on each others’ discrimination. segmentation supports the development of niche strategies. the producer producing in mass quantities is much cheaper than making variety of products. . learning can be defined as a relatively permanent change in behavior as a result of prior experiences. 1. reliability vs. This is because the same buyer may buy products in different segments of the market for different family members. particularly the building of a new series of complex coordinated motor response. it would be incorrect to presume and believe that a brand can be successfully positioned to appeal to a very narrow segment. prestige). “Learning is a relatively permanent change in behavior that occurs as a result of prior experience”. 9) Filling Gaps: Segmentation can help in finding out the unfilled gaps in a market. price vs.4. 5) Market segmentation can be an expensive process for both the producer and the marketer. Hence segmentation does not mean that those within a segment buy only in that segment.1. By segmenting markets. as at such stage. 12) Better Utilization of Marketing Resources: More resources can be allocated to segments in which there are more possibilities of selling the products and fewer resources may be allocated to the segments in which there are fewer possibilities.7) Targeted Marketing: Targeted marketing plans for particular segments allow to individually approach customer groups that otherwise would look out for specialized niche players.

Symbols also allow marketers to communicate with consumers through such vehicles as brand names (Kodak and Sony). and advertising. as well as family. it should not be temporary. Learned Behavior A learned behavior is a behavior that was observed by an individual that they find it to be beneficial to them in some way. 2) Symbolic Learning and Problems Solving: People learn symbolic meanings that enable highly efficient communication through the development of languages. respond as a result of experience in a manner different from the way he formerly behaved”.Ironically. .3. it can be said that change in behavior indicates that learning has taken place and that learning is a change in behavior. knowledge should be implemented.3. For example tying r shoes is a learned behavior crying is not. and signs (Mc Donald’s Golden Arches). People acquire most of their attitudes. Culture and social class through such institutions as schools and religious organizations. learning is the result of information processing. it should be reflected in the behavior. It is adaptive modification of behavior by experience. i. 2) Change should last for a considerable period of time. Thus. Conditions for learning There are following two conditions: 1) Whatever knowledge is being acquired. Baby” for Diet Pepsi).3. provide learning experiences that greatly influence the type of lifestyle people seek and the products they consume.3.. and interact with others. preferences.e. Consumer learning can occur unintentionally and this type of learning can strongly influence the behavior of consumers. behaviors. friends. McGehee. slogans (“got the right one. knowledge of learning principles can be useful in understanding how consumers’ wants and motives are acquired and how their tastes are developed. we also learn methods of responding to various purchase situations. For example. Genetic constraints may limit what can be learned. or learning to read closely the fine print in purchase contracts. In fact. symbolic meanings. As consumers. there's a motivating factor behind it. mass media. 1.1. According to W.2. and feelings through learning. and rather it should be permanent. Consequently. i.3.. 1. Learning certainly occurs intentionally.2. Learning mechanism helps consumers to adapt to a changing environment. 1. Types of Learned Behavior 1) Physical Behavior: Generally. Nature of Learning Consumers’ learning is an important component of their behavior.3. values. we learn many physical behavior patterns useful in responding to a variety of situation faced in everyday life. 1. all healthy humans learn to walk. Learning is any change in the content or organization of long-term memory or behavior. tastes. “Learning has taken place if an individual behaves reacts. consumer behavior is largely learned behavior. and also it can be conditioned. as when a problem is recognized and information is acquired about products which might solve the problem. The learned behavior is a conditioned response to a stimulus through either voluntary or unvoluntary intent. These may take the forms of learning to act dissatisfied when hearing the first price quote on a car.3. Learning is essential to the consumption process.e. A learned behavior is some type of action or reflex that learns. talk.

4) Response Environment: It appears that consumers generally learn more information than they are able to retrieve. Discrimination is learned over time when the same response to two similar but noticeably different stimuli leads to different consequences (reinforcement). ii) Reinforcement is anything. Thus. the probability of the brand being forgotten by the consumers is very high. One factor that influences the ability to retrieve stored information is the strength of the original learning. Discrimination is learned over time when the same response to two similar but noticeably different stimuli leads to different consequences (reinforcement). iv) Imagery refers to the images created by words. The greater the number of non-reinforced trials. Stimuli which the consumer can use to distinguish between various items in their environment are often termed discriminative stimuli. These words may either be a brand name or a corporate name. 1) Extinction: Person can “unlearn” material or behavior that has been previously learned. Very simply. For example. That is. iii) The amount of reward during learning trials is large. the consumer has engaged in stimulus generalization. because it helps them adapt to their environment. a consumer who has learnt over repeated use the Surf detergent is effective and washes the best will assume that their surf Excel will also be very effective. and v) A partial reinforcement schedule occurs during learning. The more likely relevant information will be retrieved when required. both from the print and the electronic media. the more times person is exposed to information. This unlearning process is termed extinction and occurs when over time. consumers frequently have relevant information stored in memory that firm cannot access when desired. i) Importance refers to the value that the consumer places on the information to be learned.3) Affective Learning: Humans learn to value certain elements of their environment and dislike others. ii) The number of previously reinforced trials is large. and motives as well as what products satisfy these needs. goals. Stimuli which the consumer can use to distinguish between various items in their environment are often termed discriminative stimuli. 3) Stimulus Discrimination: Learning to discriminate between various objects or events is important for consumers. Thus. The stronger the original learning. . Learning also influences consumers’ development of favorable attitudes toward a company and its products. Resistance to extinction also strengthens when: i) Impelling motives are strong. iii) Repetition increases the strength and speed of learning. The strength of learning is heavily influenced by four factors: importance. which increases the likelihood that a given response will be repeated in the future. and imagery. 1. a learned response is made to a stimulus but reinforcement does not occur. if the advertisements for a particular brand are withdrawn for a considerable period of time. the more likely person is to learn it. repetition. because it helps them adapt to their environment. . Characteristics of Learning 1) Strength of Learning: What is required to bring about a strong and long-lasting learned response? Advertisements of most brands hammer into the customer the benefits and qualities of their respective brands so that the customer does not forget them.3. the less likely the response is to occur.4. 2) Stimulus Generalization: Learning to discriminate between various objects or events is important for consumers. or practice a certain kind of behavior. iv) Reward is delayed during the learning process. This means that consumers learn many of their wants. reinforcement. These attitudes will affect the tendency to purchase various brands. but complete extinction is rare.

Because reinforced behavior tends to be repeated. response. Conditions Relevant to High and Low Involvement Strategies A moment’s reflection will reveal that people learn things in different ways. Primarily. Figure shows the two general situations and the two specific learning theories that are as follows: Situation Learning approach Specific learning theory Classical Learning approach Situation Conditioning HighInvolvement Learning Situation Operant Conditioning LowInvolvement Learning Situation Iconic Rote Cognitive Vicarious/ Modeling Cognitive Reasoning/ Analogy Commonly used Occasionally used Learning Theories in High.and Low-Involvement Situations . Consumers can learn to develop successful means of responding to their needs of changing conditions. such as promotions and product colors.5. cues.6. That is. which consumers can use to choose between various response options in a learning situation.3. People can identify clothes that are stylish even though they never really think much about clothing styles. 1. it must again be emphasized that the inability to observe responses does not necessarily mean that learning is not taking place. 1) Motivation: The concept of motivation is important to learning theory. motivation is based on needs and goals. The shopping environment is packed with cues. Learning may occur in either a high-involvement or a low-involvement situation. an individual reading laptop buyer’s guide prior to purchasing a computer is probably highly motivated to learn relevant material dealing with the various computer brands. and reinforcement. Elements of Learning Consumers learn in several ways. Remember. A high-involvement learning situation is one in which the consumer is motivated to process or learn the material. Responses appropriate to a particular situation are learned over time through experience in facing that situation. 2) Cues: A cue may be viewed as a weak stimulus not strong enough to arouse consumers. it influences the manner in which consumers respond to a motive. but capable of providing direction to motivated activity. Conditions Relevant to High and Low Involvement Strategies. A consumer whose television program is interrupted by a commercial for a product he or she does not currently use or feel a desire for generally has little motivation to learn the material presented in the commercial. The occurrence of a response is not always observable. Therefore. Motivation acts as a spur to learning. there are four elements of learning: motivation.1. 3) Response: A response may be viewed as a mental or physical activity the consumer makes in reaction to a stimulus situation. A low-involvement learning situation is one in which the consumer has little or no motivation to process or learn the material.3. For example. 4) Reinforcement: Perhaps the most widely acceptable view of reinforcement is anything that follows a response and increases the tendency for the response to reoccur in a similar situation.

1.3.7.

Types of Learning

Various theories have been developed to explain different aspects of learning. As figure 1.17 depicts, the first major division is among the Behavioral/connectionist, cognitive and socialistic schools of thought. While cognitive interpretations place emphasis on the discovery of patterns and insight, connectionists argue that what humans learn are connections or associations between stimuli and responses and according to social learning theory people learn through different means like observation of others, direct experiences and indirect experiences. Types of learning theories are: 1) Behavioral Learning Theory 2) Cognitive Learning Theory Learning Theories 3) Social Learning Theory

Behavioural

Cognitive

Social Learning

Classical conditioning (S - R)

Operant conditioning (R - S)

S - Stimulus R - Response

Figure 1.17: Classification of Learning Theories

1) Behavioral/Connectionist Learning Theory: Some learning theorists maintain that learning involves the development of connections between a stimulus and some response to it. That is, the association of a response and a stimulus is the connection that is learned. A portion of this group minimizes the importance of reinforcement to learning, while others stress its crucial role. Reinforcement is employed in conjunction with two fundamentally different methods of learning connections: classical and operant conditioning. i) Classical Conditioning: A type of conditioning in which an individual responds to some stimulus that would not ordinarily produce such a response. Ivan Pavlov, a Russian physiologist conducted experiments to teach dogs to salivate in response to the ringing of a bell. A simple surgical procedure allowed Pavlov to measure accurately the amount of saliva secreted by a dog. When Pavlov presented the dog with a piece of meat, they exhibited a noticeable increase in salivation.
Unconditioned Stimulus: (US) Meat paste

Conditioned Stimulus: (CS) Bell

Unconditioned Response: (UR) Salivation

Conditioned Stimulus: (CS) Bell

Conditioned Response: (CR) Salivation

Figure 1.18: Pavlovian Model of Classical Conditioning

When Pavlov withheld the presentation of meat and merely rang a bell, the dog did not salivate. Then Pavlov proceeded to link the meat and the ringing of the bell. After repeatedly hearing the bell before getting the food, the dog began to salivate as soon as the bell rang. After a while, the dog would salivate merely at the sound of the bell, even if no food was offered. In effect, the dog had learned to respond – i.e., to salivate – to the bell. The meat was an unconditioned stimulus; the reaction that took place whenever the unconditioned stimulus occurred was called the unconditioned response. The bell was an artificial stimulus, or which is called as conditioned stimulus. The last key concept is the conditioned response. This describes the behavior of the dog; it salivated in reaction to the bell alone. Classical conditioning has some important implications for understanding human behavior. Since higher-order conditioning for learning by human beings is important, its implication must be recognized. For example, higher-order conditioning can explain how learning can be transferred to stimuli other than those used in the original conditioning. Another implication of higher-order conditioning is that reinforcement can be acquired. A conditioned stimulus conditioning is that reinforcement can be acquired. A conditioned stimulus becomes reinforcing under higher-order conditioning. Classical conditioning is passive. Something happens and person reacts in a specific way. It is voluntary rather than reflexive. Requirements for Utilizing Classical Conditioning If advertisers are to use classical conditioning concepts to influence consumers, several conditions must occur. McSweeney and Bierley cite four conditions: a) There should be no other Stimuli that could Over-shadow the Unconditioned Stimulus: For example, assume the Marlboro cowboy was always portrayed on a white horse. It is possible the white horse might have over-shadowed the cowboy as a stimulus, thus weakening the association between the cowboy and the product. This is known as the over-shadowing effect. b) Unconditioned Stimuli should have no Previous Associations to other Brands or Product Categories: Assume a beer company decides to use a cowboy in its advertising to convey a macho image to its target group. The campaign would be ineffective because of the association already established by the Marlboro cowboy. This is referred to as the blocking effect. c) Unconditioned Stimulus should not be Overly Familiar and should be Presented Alone: Consumers could become over-saturated with certain stimuli that frequently appear in the mass media (known as a pre-exposure effect). Such stimuli are unlikely to be effective as the unconditioned stimulus. For example, the tuxedo has been shown so often as a symbol of luxury that it has probably lost its effectiveness. d) Classical Conditioning is more Effective when the Conditioned Stimulus is New: Consumers have established associations for well-known products. Given Pillsbury’s strong association with the doughboy, it would be difficult for the company to link its products with a new unconditioned stimulus. ii) Operant Conditioning: A type of conditioning in which desired voluntary behavior leads to a reward or prevents a punishment. People learn to behave to get something they want or to avoid something they don’t want. Operant behavior means voluntary or learned behavior in contrast to reflexive or unlearned behavior. The tendency to repeat such behavior is influenced by the reinforcement or lack of reinforcement brought about by the consequences of the behavior. Reinforcement, therefore, strengthens a behavior and increases the likelihood that it will be repeated.

The Harvard psychologist B.F. Skinner did research for operant conditioning, Skinner argued that creating pleasing consequences to follow specific forms of behavior would increase the frequency of that behavior. People will most likely engage in desired behaviors if they are positively reinforced for doing so. Rewards are most effective if they immediately follow the desired response. In addition, behavior that is not rewarded, or is punished, is less likely to be repeated.
Operant Behavior and their Consequences Behaviors Works Talks to others Enters a restaurant Enters a library Increases productivity Completes a difficult assignments Consequences Is paid Meets more people Obtains food Finds a book Receives merit pay Receives praise promotion

The Individual

and

One can see illustrations of operating conditioning everywhere. A simple example of the operant behavior is the application of brake by a vehicle driver to avoid accident. Here, the possibility of accident without application of brake is stimulus situation, application of brake is the behavior and avoidance of accident is the consequence of behavior. Through this process, human beings learn what behaviors will be rewarding and they engage in those behaviors. Difference between Classical and Operant Conditioning
Classical Conditioning Responses are elicited from a person (reactive). Responses are fixed to stimulus (no choice). CS is stimulus such as sound, an object, a person. Conditioning is implemented before response. First stimulus is produced and then desired behavior is expected. Operant Conditioning Responses are emitted by a person (proactive). Responses are variable in types and degrees (choice). CS is a situation such as office, a social setting, a specific set of circumstances. Conditioning is implemented after response. First behavior pattern is got and then either by reward or by avoidance of punishment, behavior is reinforced.

Marketing Applications of Behavioral Learning Theories Behavioral learning theories have had a greater impact on research that addresses assessment and treatment of severe behavior problems of persons with mental retardation than with any other clinical group. While cognitive, psychodynamic, client-centered, Gestalt, and other therapies have captured the interest of many professionals working with other client populations, behavioral procedures have remained unrivaled as the dominant treatment orientation with mentally retarded persons. Operant learning concepts and procedures are, therefore, reviewed using treated problem behaviors to exemplify past and current trends. 2) Cognitive Learning Theory: Instead of viewing learning as the development of connections between stimuli and responses, cognitive theorists stress the importance of perception, problem solving, and insight. This viewpoint contends that much learning occurs not as a result of trial and error or practice but through discovering meaningful patterns which helps in solving problems. Cognitive learning involves learning ideas, concepts, attitudes, and facts that contribute to person’s ability to reason, solve problems, and learn relationships without direct experience or reinforcement. Cognitive learning can range from very simple information acquisition to complex, creative problem solving. Figure 1.19 illustrates some underpinnings of the cognitive view of learning.
Feedback

Steps 1: In the cognitive view. People draw on their experiences and uses past learning as a basis for present behavior. These experiences represent presumed knowledge or cognitions. Perceived Behavioral
Prior Learning Choice consequences Figure 1.19: Cognitive Theory of Learning

Steps 2: People make choices about their behavior. The employee recognizes his or her two alternatives and chooses one. Steps 3: People recognize the consequences of their choices. Thus, when the employee finds the job assignments rewarding and fulfilling, he or she will recognize that the choice was a good one and will understand why. Steps 4: People evaluate those consequences and add them to prior learning, which affects future choices. Faced with the same job choices next year, the employee very likely will choose the same one. Various forms of cognitive learning could be: i) Iconic Rote Learning: Involves learning the association between two or more concepts in the absence of conditioning. ii) Vicarious Learning/Modeling: Is another important way in which consumer learning takes place. It is not necessary for consumers to directly experience a reward to learn. Instead, the consumer can observe the behavior of other and adjust that of his accordingly. Likewise, he may also use image to anticipate the outcome of various courses of action. Reasoning: Represents the most complex form of cognitive learning. In reasoning, individuals engage in creative thinking to restructure and recombine existing information as well as new information to form new associations and concepts. Marketing Applications of Cognitive Learning Theory Cognitive learning is relevant in understanding the process of consumer decision-making. Consumers recognize a need, evaluate alternatives to meet that need, select the product they believe will most likely to satisfy them (insight), and then evaluate the degree to which the product meets the need (goal achievement). A study of the purchasing patterns of recent residents of a community reflects a process of cognitive learning. Andreasen and Durkson studied the purchasing patterns of three groups of households selected according to the time they had been living in the Philadelphia area – less than three months, one and a half to two years, and three years or more. The researchers believed there would be little difference among the three groups for national brands. However for local brands, they predicted that the longer a family lived in the area, closer brand awareness and purchasing would be to those of established residents. Results confirmed their hypothesis. The families living in the area one and a half to two years were closer to the purchase patterns of the established residents than were families living in the area three months or less. Andreasen and Durkson identified three learning tasks in a new market environment: i) Brand identification, ii) Brand evaluation, and iii) Establishment of regular behavioral patterns with respect to the evaluated brands. This perspective clearly reflects a cognitive orientation to learning. 3) Social Learning Theory: People can learn through observation and direct experience. Learning comes from watching models – presents, teachers, peers, motion picture and television performers, bosses, and so forth. Social learning theory is an extension of operant conditioning, i.e., it assumes that behavior is a function of consequences it also acknowledges the existence of observational learning and the importance of perception in learning. Social learning involves several processes as shown in figure 1.20:

or products. without without conditioning.e.. likely to be repeated wrinkle and generates several They taste “all right”. plans to use only American. This process then demonstrates that the individual can perform the modeled activities.pay attention to the advertising. purchased. i. ii) Retention Processes: A model’s influence will depend on how well the individual remembers the model’s action after the model is no longer readily available. iv) Reinforcement Processes: Individuals will be motivated to exhibit the modeled behavior if positive incentives or rewards are provided. Two or more concepts A jogger learns about various A consumer learns that Apple become associated brands of running shoes as a makes home computers. iii) Motor Reproduction Processes: After a person has seen a new behavior by observing the model. learned better. or similar in estimation. Theory Classical Conditioning Operant Conditioning Iconic Rote Learning . she finds enjoyable.. Summary of Learning Theories with Examples of Involvement Level Description High-Involvement Example Low-Involvement Example A response elicited by The favorable emotional The favorable emotional response one object will be response elicited by the word elicited by a song comes to be elicited by the second America comes to be elicited by elicited by a brand name. made parts. and performed more often.20: Observation Learning: An Overview i) Attention Processes: People learn from a model only when they recognize and pay attention to its critical features. result of closely reading many ever really thinking about Apple shoe advertisements that he or advertisements. important.Model Observer Behavior Pay attention to model remember what model did Practice mode’s behavior Motivated to imitate model? Imitate model’s behavior Figure 1. A sport coat made consumer continues to purchase arises in the future. People tend to be most influenced by models that are attractive. object. i. given A suit is purchased and the A familiar brand of peas is reinforcement is more purchaser finds that it does not purchased without much thought.e. Behaviors that are positively reinforced will be given more attention. A response. The when the same situation compliments. by the same firm is then this brand. the watching must be converted to doing. repeatedly available. if both objects the brand Chrysler after a consistently paired with that song frequently occur consumer reads that Chrysler even though the consumer does not together.

and brands with larger market shares have proportionately larger groups of loyal buyers. Noticing an unpleasant aroma in the carpet. from ads for search products (i. Comprehension is a function of the message characteristics. the consumer is asked whether he or she has read a specific magazine or watched a specific television show. In recognition tests. 2) Cognitive Responses to Advertising: Another measure of consumer learning is the degree to which consumers accurately comprehend the intended advertising message. Marketers focus their promotional budgets on trying to teach consumers that their brands are best and that their products will best solve the consumers’ problems and satisfy their needs. These findings show that marketers may be under-informing consumers when advertising search products. the consumer’s opportunity and ability to process the information.. Pre-tests are used to determine which. Thus. and which they read most. and to the company’s own prior ads. In recall tests. durable items purchased infrequently following an extensive information search). the consumer is shown an ad and asked whether he or she remembers seeing it and can remember any of its salient points.8. the dual goals of consumer learning are increased market share and brand-loyal consumers. very expensive. their resulting attitudes toward the product and the brand. After qualifying as having read a given issue of a magazine. and the consumer’s motivation (or level of involvement). A number of syndicated research services conduct recognition and recall tests. 1. to competitive ads. such as the Starch Readership Service. A consumer watches the reactions people have to her friend’s new short skirt before deciding to buy one. Recognition tests are based on aided recall. the brand. if any should be changed to improve the impact and memorability of future ads. A recent study using Starch readership scores demonstrated that consumers received more information from advertisements for shopping products (i. Various measures of consumer learning: recognition and recall measures. A child learns that men do not wear dresses without ever really thinking about it. and if so. high-priced clothing and accessories) than from ads for convenience goods (i. the product advertised.3. respondents are presented with the magazine and asked to pointout which ads they noted. many marketers conduct copy testing either before the advertising is actually run in media (called pre-testing) or after it appears (post-testing). cognitive measures.e. They are also asked which parts of the ads they noted and read most. These goals are interdependent: Brand-loyal customers provide the basis for a stable and growing market share. elements of an advertising message should be revised before major media expenses are incurred. Measures of Consumer Learning For many marketers. surprisingly. it is important for the marketer to measure how effectively consumers have “learned” its message. and the attitudinal and behavioral measures of brand loyalty.e.e. To ensure a high level of comprehension. whereas recall tests use unaided recall. A consumer believes that baking soda removes odors from the refrigerator. low-priced items purchased routinely) and. Finding that the store is out of black pepper. Post-tests are used to evaluate the effectiveness of an ad that has already run. the extent to which they have read it or seen it and can recall its content. Individuals use thinking to re-structure and recombine existing information to form new associations and concepts.Vicarious Learning or Modeling Reasoning/Analogy Behaviors are learned by watching the outcomes of others’ behaviors or by imagining the outcome of a potential behavior. the consumer decides to sweep some baking soda into the carpet. and any salient points about the product.. can recall any ads or commercials seen. and to identify which elements. . if any. which they associated with the advertiser. 1) Recognition and Recall Measures: Recognition and recall tests are conducted to determine whether consumers remember seeing an ad. which evaluates the effectiveness of magazine advertisements. An advertiser can gauge the effectiveness of a given ad by comparing its readership recognition scores to similar-sized ads. and their purchase intentions. a consumer decides to substitute white pepper..

and enhances perceived value. emphasize the role of mental processes in building brand loyalty.3. Brand equity facilitates the acceptance of new products and the allocation of preferred shelf space. leading to a strong brand preference and repeat purchase behavior. . ii) Attitudinal Measures: They are concerned with consumers’ overall feelings (i. A basic issue among researchers is whether to define brand loyalty in terms of consumer behavior or consumer attitudes. Well-known brand names are known as megabrands. This framework also reflects a correlation among consumer involvement and the cognitive and behavioral dimensions of brand loyalty. There is no single definition of this concept. b) Brand drivers. perceived quality. 1.e. Often consumers buy from a mix of brands within their acceptable range (i. brand equity is the added value bestowed on the product by the brand name. and c) Social drivers. their evoked set). ii) Cognitive Researches: Cognitive researches.3) Attitudinal and Behavioral Measures of Brand Loyalty: The attitudinal and behavioral measures of brand loyalty are: i) Brand Loyalty: It is the ultimate desired outcome of consumer learning. They believe that consumers engage in extensive problem-solving behavior involving brand and attribute comparisons. evaluation) about the product and the brand. For many companies.. on the other hand. behavioral definitions (such as frequency of purchase or proportion of total purchases) lack precision.e. Loyalty programs are generally designed with the intention of forming and maintaining brand loyalty. and premium pricing options. From a consumer’s perspective. These influences produce four types of loyalty: a) No loyalty (no purchase at all and no cognitive attachment to the brand). iii) Behavioral Measures: They are based on observable responses to promotional stimuli – purchase behavior. leading to repeat purchase. their most valuable assets are their brand names.9. and their purchase intentions. b) Covetous loyalty (no purchase but strong attachment and predisposition towards the brand that was developed from the person’s social environment). because they do not distinguish the “real” brand-loyal buyer.. i) Behavioral Scientists: Behavioral scientists who favor the theory of instrumental conditioning believe that brand loyalty results from an initial product trial that is reinforced through satisfaction. c) Inertia loyalty (purchasing the brand because of habit and convenience but without any emotional attachment to the brand). and d) Premium loyalty (high attachment to the brand and high repeat purchase). An integrated conceptual framework views consumer loyalty as the function of three groups of influences: a) Consumer drivers. rather than attitude toward the product or brand. Brand Equity Brand equity refers to the value inherent in a well-known brand name. To cognitive learning theorists.

According to Bloemer and Kasper.As brand that has been promoted heavily in the past retains a cumulative level of name recognition. Customers may express high satisfaction levels with a company in a survey. 1. customers can be very satisfied and still not be loyal. In their published research. market share. and the cost of acquiring new customers goes down.3. brand loyalty becomes evident when choices are made and actions taken by customers. and profitability all go up.10. Customer loyalty is very essential for the growth of organization because loyal customer: . When a company consistently delivers superior value and win brand loyalty. It is a self-reinforcing system in which the company delivers superior value consistently to find and keep highquality customers. 2) It is a form of behavioral response (act of purchase). To marketers. 4) It exists with respect to one or more alternative brands. knowing that it is easier to buy than to create a brand name with enduring strength. Brand equity is important to marketers because it leads to brand loyalty.. 1. which in turn leads to increased market share and greater profits. Loyalty in sense is a willful commitment to the brand in view of perceived satisfaction.1. they rendered a distinction between repeat purchases and actual brand loyalty. the buyer would prefer not to buy any substitute in case of non-availability of the brand he has specifically opted for. Loyalty is demonstrated by the actions of the customer. The economic benefits of high brand loyalty are measurable.3.e. sell. they assert that a repeat purchase behavior “is the actual re-buying of a brand” whereas loyalty includes “antecedents” or a reason/fact occurring before the behavior. 1. In the packaged goods industry. but satisfaction does not equal loyalty. It uses another product’s brand equity to enhance the primary brand’s equity. Customer loyalty can be defined as the strength of the relationship between an individual’s relative attitude and repeat patronage with a supplier. 5) It is a function of psychological process. license) their brand names. to encourage repeat purchase. companies buy. The action of loyalty is a positive. and rent (i. 3) It is expressed over time by some decision-making unit. Brand equity enables companies to charge a price premium – an additional amount over and above the price of an identical store brand.10. Suppose a buyer visits a shop in anticipation of selecting a brand or opting for a specific service.3. two brand names are featured on a single product. Brand loyalty describes the tendency of a customer to choose one business or product over another for a particular need. He would prefer waiting for the brand of his preference.2. the major function of learning theory is to teach consumers that their product is best. repeated behavior of preferring one brand of a product from among the several brands available. Features of Brand Loyalty Following are the essential features of customer loyalty for a brand: 1) It is biased (not random). as well as those that offer good ratings. A relatively new strategy among some marketers is co-branding (also called double branding). Importance of Brand Loyalty Loyalty leaders are successful because they have designed their entire business systems around brand loyalty. and to develop loyalty to the brand name. To exemplify this point. Note the use of the word “choose” though. reviews. revenues. Building a highly loyal customer base must be integral to the basic business strategy. or testimonials.10. “Brand loyalty implies that consumers bind themselves to products or services as a result of a deep-seated commitment”. customers may be described as being “brand loyal” because they tend to choose a certain brand of soap more often than others. Brand Loyalty The term brand loyalty is used to describe the behavior of repeat purchases. In co-branding. Loyalty may be explained further.

This category is somewhat safe because they would switch only when competition is able to overcome switching costs for them.3. However. The other three are in-between states. 3) Employee Loyalty: Loyalty works from the top down.10. 4) Affect Driven Loyalty Customers: The fourth category of loyalty implies that the buyers like the brand. 5) Committed Customers: At the next level of loyalty. a reminder card for a tune-up. It becomes a vehicle of self expression. or a holiday greeting card. Building Brand Loyalty Many business firms neglect their loyal customer base in pursuit of new customers. It happens when buyers perceive it to be a part of them. their efforts toward building brand loyalty will certainly pay-off. Five levels of brand loyalty can be distinguished. The buying is done on a basis other than brand. These buyers have no reason to switch but may actually switch given the stimulations from the competitors. 1. The commitment is “an enduring desire to continue the relationship and to work to ensure its continuance”. Become immune to the pull of the competition. If a company is loyal to its employees. They are vulnerable and can succumb to benefits offered by the competition. Train the staff to do the same. 2) Habitual Buyers: The second category of buyers comprises the ones satisfied with the brand (absence of dissatisfaction). It is an affect driven loyalty. extending from committed buyer at one extreme to switcher or indifferent buyer at the other extreme. There are following ten ways of building brand loyalty as: 1) Communicate: Whether it is an e-mail. These buyers are switchers and are indifferent to the brand. reach-out to the steady customers. since the cost to attract new customers is significantly more than to maintain their relationship with existing ones. Each state implies a different type of brand equity asset and different types of marketing challenges. the indifferent buyer does not attach any importance to the brand. 1. They identify with the brand. across product-lines. These can be called ‘habitual buyers’.10. monthly flier. For example. money. and risk. The strong identification may be based on functionality or images/symbolism that it signifies. It may operate at different levels. newsletter. This attachment may get developed as the result of prolonged relationship (usage over a long period of time) or use experience or perceived high quality.3. Give the benefit of the doubt to the company when something goes wrong. like availability or price. 5) Customer Incentives: Give customers a reason to return to the business.1) 2) 3) 4) 5) Purchase products and services again and again over time. Levels of Brand Loyalty Brand loyalty is not a dichotomous construct. the customers tend to be committed to the brand. In all these categories of customers. 1) Indifferent Buyers: At the lowest level. 4) Employee Training: Train employees in the manner that they like to interact with customers.3. because children outgrow shoes quickly. Refer company’s products and services to others. 3) Switching-Cost loyal Customers: The third category of buyers is satisfied with the brand. Customers get committed to a brand when the brand achieves personal significance for them. the owner of a children’s shoe store might offer a card that makes the tenth pair of . 2) Customer Service: Go the extra distance and meet customer needs. People in this category consider a brand as a friend. a virtually negligible element of attitudinal commitment to the brand is visible. Empower employees to make decisions that benefit the customer. Increase the volume of their purchases and buy beyond traditional purchases. Customers remember being treated well. they will feel positively about their jobs and pass that loyalty along to the customers. They tend to have some sort of emotional attachment to the brand. This set can be called ‘switching-cost loyal’ customers.4. though they have switching costs in terms of time. They all signify different shades of behavioral loyalty.

Process for Reaching Loyal Customers The reach of loyal customers involves a sequence of actions. For the purpose of market identification. 9) People over Technology: The harder it is for a customer to speak to a sales man when he/she has a problem. new promotion strategy formulation.shoes half price.3: Process towards Reaching Loyal Customers 1) Market Identification: The market for a brand constitutes the potential customers for the brand. As partners and advisors. 4) The resource provider. a dentist may give a free cleaning to anyone who has seen him regularly for five years. The roles played by loyal customers are those of: 1) The partner. 8) Be Flexible: Try to solve customer problems or complaints to the best. Marketing Audit enables to find appropriate markets and also shape the role that the . and its effectiveness.10. The sequence has been illustrated as below: Identification of Prospects Categorization of Prospects Conversion of Prospects into Customers Conversion of Customers to Loyal Customers Figure 4. 2) The advisor. Loyal customers serve as their major idea sources. Need for Loyal Customers Loyal customers are the assets of an organization.3. deliver it on Wednesday. 10) Know their Names: Get to know the names of regular customers or at least recognize their faces. Marketing Audit is a purposeful examination of marketing environment. Likewise.3. the organization may go in for a Marketing Audit Program. 1.6. 1. and 6) The experience shaper. and through each role they contribute effectively towards the betterment of the organization. Add other products and/or services that accompany or compliment the products that the regular customers buy regularly. When the brand already exists. the loyal customers involve themselves in the organization’s regular activities. developing incentive schemes. etc. And make sure that staff understands everything they can about the products. starting with identification of the right market for the product concerned. Be reliable. 7) Reliability: If a purchase will arrive on Wednesday. a market is to be developed. Loyal customers play six important roles. packages design.10. marketing activities. 5) The change driver. 3) The custodian. the market comprises of current customers for brand would have been manufactured in tune with the market requirements or in tune with the brand’s characteristics. 6) Product Awareness: Know what the steady patrons purchase and keep these items in stock. let customers know immediately and compensate them for their inconvenience. If something goes wrong. Many companies recruit loyal customers in their customer panel and tap their creativity for application in various activities such as new product development. the less likely it is that salesman will see that customer again. It is a systematic approach to review the activities of marketing functions towards reaching marketing goals.5.

who identifies market niches and operates. It is likely that many organizations simultaneously pursue multiple strategies so as to have market entry. The consumers have started showing highly differential needs. For the purpose of market existence and expansion. iv) Diversification Strategy: Diversification strategy on the other hand refers to the organization’s attempt to market a line of closely related products. the marketers consider the whole market as an undifferentiated one and adopt the same marketing mix strategies without any differentiation to attain marketing goals. Nichers often identify profitable nichers and carry-on their marketing operations. as those strategies have registered proven success. ii) Product Development: Product development strategy is concerned with developing new brands and products for the current market. In today’s context. appropriate strategies are to be worked-out towards market existence and market expansion. 2) Segmented and Target Market: From mass marketing. Therefore. Industrial . the organization may adopt any one of the following strategies: i) Market Penetration: Market penetration strategy refers to the organization’s efforts to expand the market share by increasing sales of the existing brand in the current market. v) Location. iii) Income. It also involves development of new products. market development strategy refers to developing new markets for the current brand of the organization. Those criteria include: i) Age. Market challenger is a close competitor organization to the market leader. vii) Type of customers. the marketers have switched over to targeting segmented markets. Having made the market entry. a single. ii) Marital status. The organization can have its market entry in one of the identified markets. iv) Gender. Under the mass marketing approach. ii) Market Challenger: Market challenger challenges the market share of the market leader. and expansion. iii) Market Follower: Market follower is the main follower of market leader. ix) Lifestyle. and xi) Extent of loyalty. This approach would work as long as the market size is small and easily approachable. iii) Market Development: On these lines. Market existence depends on the number of loyal customers the organization can develop. Market segmentation therefore refers to grouping of customers on the basis of selected criteria. Nichers confine their operations in a much-limited way. vi) Volume of purchase. in terms of its market share is expected to play any one of the following roles as: i) Market Leader: A market leader has the largest market share and it leads the other competing firms with regard to all marketing-related activities particularly pricing-related activities. They simply fall in line with the strategies of market leaders.organization has to play in the identified market. existence. viii) Buying habits. This approach is because of a number of advantages being associated therewith. Today. The organization. As such customers are to be grouped on a common base and a strategy relevant to the group has to be framed to win the game marketing. market size has expanded in all respects. which refers to considering every individual customer as a market and developing appropriate strategies to satisfy the customer’s need. x) Benefit expected. the focus is towards customized marketing approach. iv) Market Nicher: Market nicher is a small player. undifferentiated approach would no longer be relevant and purposeful.

the buyer. ii) Through friends and relatives. viz. There are three terms normally used in this context. Effective prospecting would help in identifying a large number of potential customers in the target market. In a very strict sense. a careful marketing action plan should therefore be evolved and implemented effectively. In the light of the characteristics of the target market. return on investments. 3) Prospective Customers: In the target market. and the organization can meet those requirements profitably.4: Loyal Customer Ladder . the target market would be identified. and it is immaterial whether he is involved in the purchase activity or not. vi) Blind telephone calls. From among the prospective customers. A consumer is one who consumes a product of an organization. competing forces. The method of getting prospective customers may be any one of the following or a combination of more than one method like: i) Referral letters. and not merely the one who ultimately enjoys the benefits of a product or service. the consumer.marketers and service-marketing organizations have started adopting this approach towards a very effective marketing performance. and therefore the prospect identification could be called as the lifeblood of the entire scope of marketing activities.. ix) Follow-up of the competitor’s customers. Customer is one who repeatedly buy from one source. Selection of target market would be governed by factors such as the organization’s capabilities. whose requirements have been identified. Target market refers to a welldefined set of prospective customers. potential customers would be identified by means of a systematic approach. iv) Through trade associations. suitable marketing strategies would be evolved. iii) Various directories. the organization identifies customer in terms of their purchase intention as most promising prospect to the least promising prospect. This categorization must follow relevant strategies to convert the prospects into customers. vii) Developing database. viii) Cold canvassing. all those who are involved in the process of transfer of ownership of a product from the production center to the consumption center are customers. etc. and x) Customers of related products. From among the market segments. v) Advertisements. future prospects. who form the foundation of loyal customers. the buyer refers to the one who buys a product or a service and it is immaterial whether he consumes it or not. 5) Loyal Customer Ladder: A customer reaches the status of a loyal customer by passing through a series of stages. An analytical look at the process of reaching the status of loyal customer would reveal the following Customer by Loyalty sequences: Customer by Insistence Customer by Repetition Customer by Choice Customer by Occasion Customer by Chance Figure 4. and the customer. The sequence may be illustrated as: In order to reach the loyal customer. and so on. 4) Customers: In a broader sense.

and what type of factors influence these allegiances. ii) Customer by Occasion: The customer by occasion would be an occasional customer. However. advertisers must break consumer habits. or by own attempts a prospective customer buys the brand and thereby he becomes the customer by chance. but distinguishes it in a memorable and . depending on the extent of his need fulfillment and other associated factors. Perhaps these categories of customers’ exhibits divided loyalty status at this stage. 1. improving consumer’s loyalty to brands permit marketers to maintain a comfortable and lasting position in the marketplace.3. a customer may move further to the status of customer by choice under the conditions in which he perceives that the brand would satisfy him more as compared to other brands. to re-purchase a brand continually. and reinforce those habits by reminding consumers of the value of their purchase. The organization must view the product. does not mean marketers have to start from scratch when it comes to interpreting why certain consumers are loyal to certain brands. the marketer should accept the fact that the customer keeps the brand under evaluation status only. He would include the present brand also in his preferred set and show interest towards buying this brand. Consumer behavior is habitual because habits are safe and familiar. or not felt the need for such a product category. vi) Customer by Loyalty: Reaching of loyal customers requires careful marketing approach and systematic planning and execution of all aspects connected with marketing functions. iii) Customer by Choice: From the occasional customer. At this stage. the customer insists upon the same brand and becomes a customer by insistence. Thus. It occurs because the consumer perceives that the brand offers the right product features. clear message that not only distinguishes their brand from the competitors’. He may have a preferred set of brands already. or may have used the competitor brand.10. image or level of quality at the right price. Just because we have entered a new era. The casual choice he made by chance will help him towards arriving at a further decision to continue or discontinue the purchase he made. process. The image surrounding a company’s brand is the principal source of its competitive advantage and is therefore a valuable strategic asset. v) Customer by Insistence: During the repeat purchase period. his level of preference towards the brand moves upward. help them acquire new habits. it is a continuation of trends in human behavior that have been following cyclical patterns throughout the country’s history. many companies are not adept at disseminating a strong. and encourage them to continue purchasing those products in the future.7. Brand loyalty is the consumer’s conscious or unconscious decision. and ultimately reaches the status of customer’s by loyalty that is to be maintained and improved by means of developing appropriate relationship with the customers concerned.i) Customer by Chance: Thanks to the influence of marketing efforts. The customer by chance may be a person who previously may not have used the brand. iv) Customer by Repetition: His choice of the present brand gets repeated and this would mean that the customer reaches the stage of customer by repetition. In order to create brand loyalty. the customer is slowly moving towards the status of undivided loyalty to the brand. Influence of brand loyalty on Consumer Behavior In today’s highly competitive environment. Unfortunately. expressed through intention or behavior. The new millennium is not just a new beginning. and the people behind it from the customers and competitors’ point-ofview and make appropriate marketing decisions.

In fact. brand-customer relationships could be based on psychological constructs like personality. Quite often. 1. who feel vastly re-assured when this happens. it performs what it promises to do. the brand must carry following issues in the form of attribute or characteristic: 1) Trust: Trust is the customer’s willingness to rely on the brand.11.e.3. Good brands are consistent in their performance – their performance can be predicted with great confidence. 3) Accessibility: How accessible is the company behind the brand? Accessibility is crucial for the development of strong brand relationships. It is about a brand’s integrity.. Just like a person without attention-grabbing characteristics. and where both parties come together to form a social dyad. A strong symbol or company logo can also help to generate brand loyalty by making it quickly identifiable. The brand does not exhibit opportunistic behavior to exploit its customers. and lifestyle. This strategy uses financial rewards as the primary weapon to retain customers for longer duration. Loyal customers have confidence in the brand they buy. brands are preferred for their ability to deliver psychological satisfactions – their ability to help customers to express themselves in a desirable manner or to satisfy esteem needs. and instead. The challenge for all brands is to avoid the pitfalls of portraying a muddled or negative image. 5) Commitment: How dedicated is the company to its customers? Customers become loyal when they perceive that a brand is genuinely interested in its customers. Recall the old-time village grocer or miller who interacted with customers personally. but as an overall brand image that defines a company’s philosophies. the customer can bank upon the brand’s larger system. Good companies make themselves available and easily accessible to their customers. 4) Responsiveness: How quickly and earnestly does a brand respond to customer complaints and inquiries? Good brands exhibit a high degree of willingness to help their customers. Does the brand deliver what it promises to consistently over time? Lack of consistency creates a situation of uncertainty for the customers. customers’ end goals and needs are truly addressed by the brands. firms in auto component industries develop . It is this consistency and confidence that helps a brand to forge ties with customers. For example. 7) Social Bonds: Any exchange between individuals first tends to be a social exchange. They relate well with other people who patronize the brand. 8) Psychological Bonds: Sometimes. It comes when the brand stands for reliability. A brand needs more than identity. Brands which have integrity inspire trust. The need for responsiveness is greater in industrial and service exchanges. where customer-seller interaction tends to be for long-term duration. Trust is a major building-block in building brand and customer relationship. Social bonding is one of the oldest ways of forging relationships. The frequent flier programs in airlines or frequent buyer program in the retail or hotel industry are some examples of financial bonding strategy. 9) Financial Bonds: Customer bonds could also be based on economic or financial benefits that a brand seeks to offer to its customers. Harley-Davidson achieved great success through its HOG (Harley Owners Group) affinity program. This is especially true for industrial and service brands. a company should view its brand to be not just a product or service.positive manner. In times of need. it needs a personality. where the interface is of long-term duration and involves high risk. create a broad brand vision or identity that recognizes a brand as something greater than a set of attributes that can be imitated or surpassed. 6) Affinity: Strong brand-customer relationships are formed when customers are able to identify with the brand or the company.. i. 10) Structural Bonds: Customer relationships could be based on a physical connection which could be created between buyer’s system and seller’s system. self-concept.e. 2) Consistency: Consistency is absence of variations or deviations. Opportunities for social bonding are much more in service and industrial selling situations. These rewards come in the form of discounts or financial gains that could be accumulated over time. Issues in Brand Loyalty For building brand loyalty for a particular brand. a brand with no personality can easily be passed right over. i.

Also. Srivastava and Shocker. However. Srivastava and Shocker. its name and symbol add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers”. A variety of opinions exist about brand equity. miss the essential point. even small retail brands develop structural bonds with their neighborhood customers with online communication systems or even through cable TV ads. Kapferer. There is even a coalition devoted to the fostering and preservation of brand equity. It is also true. that brands become a burden. . In other words. the definition should reflect the role of the brand in the dynamics of consumer choice in a competitive environment. Important academic contributors throughout the 1990s were Aaker. its name and symbol that add to or subtract from the value provided by the product or service to a firm and or that firm’s competitions”. its name and symbol that add to or subtract from the value provided by a product or service to a firm and or to that firm’s competitors”. Brand Equity The concept of brand equity began to be used widely in the 1980s by advertising practitioners. According to Aaker. Brand equity can be defined as the stored value built up in a brand for achieving competitive advantage.1. The brand can be both a value enhancer and a value driller. “Brand equity is a set of brand assets and liabilities linked to a brand. However. 1. brand equity (or subtracts) value to a firm in the form of price premium. and Keller The concept of brand equity is based on the idea that a brand has a value greater than the sum of its tangible assets. or competitive advantage. a universally accepted brand equity content and meaning as well as measure has not been forthcoming. of advertising agency presentations and of negotiation by acquirers of companies. Important academic contributors throughout the 1990s were Aaker. Some pharmaceutical firms have developed online communication-based bonds with hospitals. Meaning and Definition of Brand Equity The concept of brand equity began to be used widely in the 1980s by advertising practitioners.structural ties in the form of just-in-time supply system with automobile manufacturers. Brands are valued for their equity. Brands add value. Its measurement depends on how it is defined. Those who argue that brand equity cannot be measured. “Brand equity can be thought of as the additional cash flow achieved by associating a brand with the underlying product or service”. Kapferer.3. That definition must have pragmatic value to a marketer of consumer products or services. Some of these are as follows: “Brand Equity” refers to “a set of assets and liabilities linked to brand. It cannot be assayed like the gold content in a piece of ore. Almost all conceptualizations of brand equity agree today that the phenomena involve the value added to a product by consumers’ associations and perceptions of a particular brand. trade leverage.3. and Keller. It should help to improve marketing effectiveness and efficiency by providing a yardstick with which to evaluate these things. Everyone in the marketing profession agrees that brands can add substantial value. According to Biel. 1. The concept of brand equity is based on the idea that a brand has a value greater than the sum of its tangible assets. It does not exist in nature in the manner that the specific gravity of elements exists as a physical entity.12. sometimes. Brand equity is by definition an intangible asset. Brand equity is by definition an intangible asset. Brand equity is the subject of seminars. “Brand equity consists of differential attributes underpinning a brand which gives increased value to the firm’s balance sheet”.12. These forms of bonding are common in the industrial marketing scenario. Brand equity refers to a “set of assets and liabilities linked to a brand. According to Chernatony and McDonald.

12. and 3) The financial value. “Brand equity creates value both for the marketer and the customer”. which can be explained as follows: 1) Value to Customers: Brand equity assets can enhance or decrease value for customers. and ‘demystify’ (clarify) the concept of brand equity.3. A brand is useful in aiding customers in interpreting. All these are outcomes.3. and storing information about products and brands. achieving equity is impossible. Drive toward or against brand Customer Behavior Discrimination and Value Brand Equity (Surplus ±) Product Perception/ Knowledge Structure Worth of the Brand Brand communication and contacts Figure 2. It is this which leads to financial benefits and reduced costs. It is the fundamental core/block.12. It simplifies this process. or the willingness to pay more for a brand. Conceptualizing Brand Equity There appears to be a broad consensus on the value of brand equity but it comes with a slight area of darkness around it. 2) The customer. 1. A powerful brand symbolizes a loyal customer base. “Brand equity is defined in terms of marketing effects uniquely attributable to the brands. interpret. The marketing literature is laden with works which explore. Brands are taken by customers as chunks of information which are easily decoded (drawn meaning thereof) and . At the most fundamental level. or image or perceptions that a customer has about the brand that drive the outcomes. However. A brand’s equity is valuable to customers because: i) It helps customers in information processing. The advantages of brand equity direct academic and managerial attention to its measurement and management. The value that a brand generates is not self-generated. which would not have been occurred if the same product or service did not have the brand name”.According to Keller. three types of leanings seem visible: 1) The brand. certain outcomes result from the marketing of a product or service because of its brand name. A brand’s ability to draw customers again and again and command premium is directly related to what it stands for in a customer’s mind. Brands strength lies in this intervening variable. There are similarities beneath apparent divergence in thoughts. The brand perception or image is the key driver of brand pull and push. In the absence of a brand. The product and its attributes – both tangible and intangible – are the inputs to the equity model. According to Aaker. It is the consumer’s knowledge structure. But the most crucial link between the input and output is the consumer – the consumer’s mental framework. different views guide what the brand equity exactly is. Value Creation by Brand Equity A brand adds value in a number of ways.1: Conceptualizing Brand Equity 1. processing. At the heart of brand equity is customer equity – an unwavering customer franchise which stands by the brand. to be more precise. For example.3. It is the brand which is the basis of equity or value. It is generated through the discriminating response that customers exhibit in favor of a brand. Brand equity definitions more or less converge on some crucial points. It is monetization of these that is called financial worth or value that is added by the brand.2. The best way of integrating these different views is by conceptualizing the brand equity in terms of the inputthroughput-output model.

A firm benefits from the equity in the following ways: i) The effectiveness and efficiency of marketing programs is increased by brand equity assets. 1. Johnson & Johnson’s ‘Savlon’ is hardly able to compete in the market. ii) Brand equity dimensions allow a firm to have greater customer loyalty. Brand equity is an implicit assurance of success. Brands transform customer experience. like tooth paste). For example. satisfaction from drinking Nescafe is different from drinking an unbranded coffee. Brand equity holds immense potential to create economic value for the markets. iii) The final value to the customer comes in the form of usage satisfaction. Keller’s Approach of Brand Equity Keller talked about customer-based brand equity as brand equity is seen from the perspective of the consumer. launching of a new product with extension may be much simpler. RCI has grown into many product categories by relying on the brand equity of ‘Dettol’. Once these become proprietary to a brand. ‘Dettol’ has so strongly entrenched itself with ‘antiseptic’ that other competitors are just not able to make a dent in its market. It can only be done once it is understood what drives brand equity. etc. easy. retaining a customer is much less costly than retention when a product is unbranded. For example. The customers can exhibit preference and commitment to a brand only.12. it may partially happen due to lack of brand loyalty and preference. other brands are at a disadvantage. In fact. The advantages listed above make compelling reasons in favor of creation. One feels more confident in purchasing a brand (imagine buying an unbranded product. 2) Value to Marketer: Brand equity also plays a critical role in enhancing value for the marketer. It considerably reduces chaos possibilities that may occur in the absence of branding. protection. Similarly. most firms now rely on brand extensions to achieve growth rather than launch new brands. and less costly. a customer may willingly support a brand in spite of greater sacrifice that needs to be made. The brand associations and quality move the product beyond its ‘thingness’ boundary enveloping it with images that customers value and identify with. It is how the value is added. Trade partners’ exhibit skepticism in dealing with a brand without equity because of the uncertainties it brings along with it. Although useful perspectives concerning brand equity have been put forth. brand equity is a provider of competitive advantage. A brand blocks entry of rivals in a customer’s mind on the same turf. ii) A brand’s assets enhance customer confidence in the purchase decision. In fact. That is. Familiarity creates confidence. the CBBE model provides a unique point of view as to what brand equity is and how it should be built. It happens because of familiarity with a brand. and enhancement of equity of a brand. It imposes barriers on the entry of competitors. channels welcome brands with equity and give access to point of purchase displays. It provides guarantee of promised delivery.3. vi) Finally. brands with premium pricing are the ones which enjoy strong equity in the market. iv) Brand equity provides great opportunities for growth. The expenditure associated with a brand to achieve a goal generally tends to be less than an unbranded product aiming to achieve the same goal.stored in a proper order (classification). Brand stands for consistency and assurance. It is easier to get access in the distribution chain when the brand has equity. Brand equity makes growth easier for the firms. .4. Brands can build equity occupying positions and attribute associations in a preemptive fashion. introduces the Customer-Based Brand Equity (CBBE) Model. Therefore. This model incorporates theoretical advances and managerial practices in understanding and influencing consumer behavior. shelf space. A greater number of loyal customers in the basket automatically reduce the expenditures that need to be incurred in maintaining a customer base. measured. v) Brand equity is a good source of achieving leverage in distribution channels. For example. The same may be true for ‘Fair & Lovely’ in the fairness cream market. iii) Brand equity allows a firm to charge premium. Two questions often arise regarding brands – ‘What makes a brand strong?’ and ‘How to build a strong brand?’ To answer these questions. For example. and managed.

because it creates the differential effect that drives brand equity. and behavior related to all aspects of the marketing (e. 1. beliefs. What marketers need. images. including information that is verbal. Thus.g. felt. brand knowledge is the key to creating brand equity. or evaluations of a proposed brand extension). On the other hand. visual. preferences. “the power of a brand lies in what resides in the minds of customers”. perceptions.13: Brand Knowledge . 3) Consumer Response to Marketing: The differential response by consumers that makes-up the brand equity is reflected in perceptions. and heard about the brand as a result of their experiences.g. Thus. In particular.” A brand is said to have positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified than when it is not (e. brand knowledge can be characterized in terms of two components as shown in figure 6. when the product is attributed to a fictitious name or is unnamed).3. recall of copy points from an ad. then the brand name product is essentially a commodity. then. brand equity ultimately depends on what resides in the minds of consumers. Competition. or contextual in nature. “Customer-based brand equity is defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. a brand with positive customer-based brand equity might result in consumers being more accepting of a brand extension. brand knowledge is conceptualized here as consisting of a brand node in memory with a variety of associations linked to it.. There are three ingredients to this definition: 1) Differential Effect: Brand equity arises from differences in consumer response.The basic premise of the CBBE model is that the power of a brand lies in what customers have learned. a brand is said to have negative customer-based brand equity if consumers react less favorably to marketing activity for the brand compared with an unnamed or fictitiously named version of the product.12. less sensitive to price increases and withdrawal of advertising support or more willing to seek the brand in a new distribution channel. although strongly influenced by the marketing activity of the firm. Consistent with the associative network memory model.3.6. An influential model of memory developed by psychologists is helpful in that regard. If no differences occur.12. Brand equity Brand knowledge Brand awareness Brand image Brand Recall Brand Recognition Simple recall Top of the Mind (TOM) recall Dominant recall Brand Associations Favorability of Associations Strength of associations Uniqueness of Associations Attribute association Benefit association Attitude association Figure 6. would then be based on price. The associative network memory model views memory as a network of nodes and links in which nodes represent stored information or concepts and links represent the strength of association.13. choice of a brand. The challenge for marketers in building a strong brand is ensuring that customers have the right type of experiences with products and services and their accompanying marketing campaigns so that the desired thoughts. abstract. 1. most likely. Aaker’s Approach of Brand Equity Brand Knowledge From the perspective of the CBBE model. In other words. Any type of information can be stored in the memory network. is an insightful way to represent how brand knowledge exists in consumer memory. seen. and opinions become linked to the brand. 2) Brand Knowledge: These differences in response are a result of consumers’ knowledge and experience of the brand.. feelings. actions in response to a sales promotion.5.

g. packaging. all that matters is the resulting favorability. user.). at home (when making a consumption choice). or event. and strong in their nature.). or wherever. Benefit association can be functional (speeds faster. brand recall requires that consumers correctly generate the brand from memory when given a relevant cue. consumers must seek the brand and therefore be able to retrieve it from memory when appropriate. So. Associations will vary in the strength of their connection to the brand node. b) Benefit Association: Consumer less interested in product attributes but more interested in its benefits. Attitude has three component as cognitive (knowledge perception that a person has about a brand). experiential (adventure.. place. brand associations can also be created in a variety of other ways: by direct experience. magazine reviews or other media) and word-of-mouth. of processing that information receives as well as the nature. For example. intension to behave in certain manner. on the other hand.. brand recognition may be more important because the product will be present. It determines buying decisions. etc. strength. if decisions are made in the shop. For example. and by assumptions or inferences from the brand itself (e. the needs fulfilled by the category or a purchase or usage situation as a cue. part of selected group. The definition of customer-based brand equity does not distinguish between the source of brand associations and the manner in which they are formed. country. c) Attitude Association: Attitude is an important psychological construct. when consumers go to a shop. it is probably more important that the consumer be able to recall the brand from memory. etc. of that processing.) and can be non-product-related (price. This realization has important implications for building brand equity. and uniqueness of brand associations. For example. or quality. affective (emotion and feelings that someone has towards a brand). The all association discussed above are required to be favorable. completeness.. unique. There are basically three types of brand associations as: a) Attribute Association: These descriptive features which are used to characterize a product or service. and finally co-native component (behavioral or action-oriented. For this reason. is it the case that they will be able to recognize the brand as one to which they have been exposed? ii) Brand Recall: It relates to consumers’ ability to retrieve the brand from memory when given the product category. etc. brand recognition requires that consumers can correctly discriminate the brand as having been seen or heard before. and unique associations to the brand in memory. humorous. Outside the shop or in any situation where the brand is not present.1) Brand Awareness: It consists of: i) Brand Recognition: It relates to consumers’ ability to confirm exposure to the brand when given the brand as a cue. e.). functions. water resist. from information communicated about the brand from the firm or other sources (e. symbolic (prestige. and quantity. powerful. etc. channel of distribution or some particular person. performance.g. thrill. its name or logo) or from the identification of the brand with a company. 2) Brand Image i) Brand Association: A positive brand image is created by marketing campaigns that link strong. ii) Strength of Brand Associations: Making sure that associations are linked strongly to the brand will depend on how the marketing campaign and other factors affect consumers’ brand experiences. Besides marketer-controlled sources of information. Benefit associations are suggestions as to what a product or service can do for them. Strength is a function of both the amount. usage etc). The relative importance of brand recall and recognition will depend on the extent to which consumers make product-related decisions with the brand present or not.g. brand recall is critical for service and online brands. recall of Kellogg’s Corn Flakes will depend on consumers’ ability to retrieve the brand when they think of the cereal category or of what they should eat for breakfast or eat for a snack at the shop (when making a purchase). favorable. Attribute association can be product-related (safe. In other words. The more deeply a person thinks about product information and relates it to existing . likelihood to buy the brand).

the stronger the resulting brand associations. Brand equity refers to a “set of assets and liabilities linked to a brand. efficient. such as user type or usage situation.brand knowledge. they may be based on product-related or non-product-related attributes or benefits. In fact. in many categories. and so on. trademarks. and so forth.7. its name and symbol that add to or subtract from the value provided by a product or service to a firm and or to that firm’s competitors”. channel relationships. Brand Loyalty Reduced marketing cost Attracting new customers Brand Awareness Anchor to which other associations can be attached Familiarity/Liking Signal of commitment Brand to be considered Value to Customer by Enhancing Processing of information Confidence in purchase decision Use satisfaction Perceived Quality Reason to buy Differentiate/Position Price Extensions Help process information Create positive attitude/feelings Reason to buy Differentiate/Position Extensions Competitive Advantage Figure 6.14. how important or valued is the image association to the brand attitudes and decisions made by consumers? Desirability depends on three factors: a) How relevant consumers find the brand association? b) How distinctive consumers find the brand association? c) How believable consumers find the brand association? iv) Uniqueness of Brand Associations: Brand associations may or may not be shared with competing brands. The essence of positioning is that the brand has a sustainable competitive advantage or ‘unique selling proposition’ that gives consumers a compelling reason why they should buy that particular brand. In terms of desirability. Aaker’s Approach of Brand Equity To understand the dynamics of brand. reliable. Aaker provides a framework called equity. brand equity provides (or negatively subtracts) values to a firm in the form of price premium. colorful.3. iii) Favorability of Brand Associations: Favorable associations for a brand are those associations that are desirable to consumers and are successfully highly convenient.g. effective. may more easily create unique associations (e.14: Factors Influencing Brand Equity Brand Associations Other Proprietary Brand Assets Value to Firm by Enhancing Effectiveness of marketing program Brand loyalty Prices/Margins Brand extensions Trade leverage Competitive advantage . Aaker illustrates the influence of these factors on brand equity and its contribution to the customer and the manufacturer or owner firm. In other words.12. Two factors facilitating such strength of association are the relevance of the information and the consistency with which this information is presented over time.. the rugged Western image of Marlboro cigarettes). These differences may be communicated explicitly by making direct comparisons with competitors or may be highlighted implicitly. as listed below: 1) Brand loyalty 2) Brand name awareness 3) Brand’s perceived quality 4) Brand association in addition to the perceived quality and 5) Other proprietary brand assets like patents. Aaker’s approach of brand equity is represented in figure 6. non-product-related attributes. The brand’s assets can be categorized in five groups. Furthermore. 1. trade leverage or competitive advantage.

Generate alternatives and consider options beyond media advertising. Singer lends heritage and expertise to sewing machines. Modify the identity as needed for different market segments and products.3. “Brand equity may be defined as the enhancement in perceived utility and desirability that a brand name confers on a product. and especially brand associations. Maintain symbols.12. and execution. Five dimensions were identified by Lasser. These are as follows: . Have specific communication objectives. 2) Value Proposition: Know the value proposition for each brand that has a driver role. 4) Execution: Execute the communication program so that it not only is on target with the identity and position but achieves brilliance and durability. 8) Tracking Brand Equity: Track brand equity over time. 5) Consistency over Time: Have as a goal a consistent identity. Identify range brands and. as well as the brand-as-product. Understand the customer/brand relationship. media. develop an identity and specify how that identity will be different in disparate product contexts. have a brand position that will provide clear guidance to those implementing a communication program. including brand awareness. 6) Brand System: Make sure the brands in the portfolio are consistent and synergistic. Know their roles.8.1.12. perceived quality.3. It is the customer’s perception of the overall superiority of a product carrying that brand name compared with other brands. 3) Brand Position: For each brand. for each. 7) Brand Leverage: Extend brands and develop co-branding programs only if the brand identity will be both used and reinforced. Beware when a brand is being used in a business where it is not the cornerstone. and metaphors that work. Consider emotional and symbolic benefits as well as functional benefits. 9) Brand Responsibility: Have someone in charge of the brand who will create the identity and positions and coordinate the execution over organizational units. Recall that a position is the part of the identity that is actively communicated. Understand and resist organizational biases toward changing the identity. position. Relative Superiority Approach of Brand Equity Brand equity is the relative superiority of a brand over the others. and Sharma.” Brands add perceived superiority by bringing in all that they stand for. Brandas-organization and brand-as-symbol. take care to manage the integrity of the resulting brand identity. Know the strategic brands. and Arrow guarantees ‘shirt engineering’ and perfection to the shirts it sells.9. 1. If a brand is moved up or down. imagery. 10) Invest in Brands: Continue investing in brands even when the financial goals are not being met. Identify the core identity. and markets. Aaker’s Guidelines for Building Strong Brands 1) Brand Identity: Have an identity for each brand. Remember that an image is how you are perceived. position. Consider the perspective of the brand-as-person. Especially note areas where the brand identity and positioning and communication objectives are not reflected in the perceptions of the brand. Have or develop silver bullets to help support brand identities and positions. and an identity is how you aspire to be perceived. Know how endorser brands will provide credibility. Exploit branded features and services. Use sub-brands to clarify and modify. brand loyalty. For example. Mittal. Brands bring alongwith them a set of associations. the name Haldiram’s brings with it an assurance of quality and authenticity of taste to what are otherwise simple snacks. and execution over time.

the feeling that the brand tries to elicit in customers (purposeful. the whole is not even something that customers know or can say they want. They enjoy their association with it. in what esteem (if at all) is the brand held by the social or reference group of the customer? 3) Value: Value refers to the perception of value delivered by the brand. Most have a good sense of one or two areas in which their brand may excel or may need help. brand equity is tied both to the actual quality of the product or service and to various intangible factors. “usage imagery” (the type of situations in which the brand is used). Ten attributes shared by the world’s top brands are: 1) Brand Excels at Delivering the Benefits Customers Truly Desire: Why do customers really buy a product? Not because the product is a collection of attributes but because those attributes. That is. 3) Pricing Strategy is Based on Consumers’ Perceptions of Value: The right blend of product quality. was inspired by the romance and the sense of community he felt in Italian coffee bars and coffee houses. Gillette pours millions of dollars into R&D to ensure that its razor blades are as technologically advanced as possible.12. and the people behind the brand can be relied upon. a brand report card could be constructed. Without losing sight of their core strengths.It is not just a cup of coffee. and prices is very difficult to achieve but well worth the effort. 1.10. The rewards of having a strong brand are clear. For example. and many other tangible and intangible factors. many (understandably) would find it difficult even to identify all of the factors they should be considering. Then while on vacation in Italy. few managers are able to step back and assess their brand’s particular strengths and weaknesses objectively.1) Performance: This aspect of equity focuses on the operational aspect of the brand. 2) Brand Stays Relevant: In strong brands. But if pressed. In some cases. For example. design. exciting. Starbucks was a small Seattle-area coffee retailer. in implementing its value-pricing strategy for the Cascade automatic-dishwashing detergent brand. Many managers are woefully unaware of how price can and should relate to what customers think of a product. and the type of relationship it seeks to build with its customers (committed. it is not easy to keep in perspective all the parts that affect the whole. A brand’s trustworthiness is based on beliefs that a brand would not compromise on quality. now Starbucks chairman. and he saw an opportunity. costs. 2) Social Image: What is the social image of the brand? That is. competent. The culture grabbed him. Sometimes. How fault-free and longer lasting is the brand? Is the brand flawless in its product’s physical construction? Performance dimension is the customer’s judgment on these aspects of the brand. what is ratio between what is received and what is sacrificed? 4) Trustworthiness: It is the customer’s faith in the brand. warm). Brand identifications is based on its ability to strike a chord with what they are psychologically and what they want to be. features. it would always take care of a customer’s interests. The problem is. seasonal). In 1983. consider Starbucks . 5) Identification: It is identification of customers with the brand. Brand Report Card Building and properly managing brand equity has become a priority for companies of all sizes. When one is immersed in the day-to-day management of a brand. rugged). the service. Customers identify with what a brand represents in terms of its symbolism and imagery. the strongest brands stay on the leading edge in the product arena and tweak their intangibles to fit the times. customers feel attached to the brand they use. Those intangibles include “user imagery” (the type of person who uses the brand). For example. casual.3. in all types of markets. After all. On the basis of the attributes shared by the world’s topmost brands. in all types of industries. Procter & Gamble made a cost-cutting change in its formulation that had an adverse effect on the . from strong brand equity flow customer loyalty and profits. create an attractive whole. and they therefore charge too little or too much. Howard Schultz. together with the brand’s image. the type of personality the brand portrays (sincere.

and so on. in the fiscal year after Procter & Gamble switched to EDLP (during which it also worked very hard to streamline operations and lower costs). Brands at each level of the hierarchy contribute to the overall equity of the portfolio through their individual ability to make consumers aware of the various products and foster favorable associations with them. it can be dangerous to try to cover too much ground with one brand or to overlap two brands in the same portfolio. such as enhancing or reinforcing consumer awareness of the brand or its image and helping to protect the brand both competitively and legally. they create and maintain different brands for different market segments. and different brands within a company hold different powers. 7) Brand makes Use of and Coordinates a Full Repertoire of Marketing Activities to Build Equity: At its most basic level. the recent effort focused on the return of the popular contour bottle. and sponsorship (its extensive involvement with the Olympics). The most successful brands in this regard keep-up with competitors by creating points of parity in those areas where competitors are trying to find an advantage while at the same time creating points of difference to achieve advantages over competitors in some other areas. Procter & Gamble did successfully align its prices with consumer perceptions of its products’ value while maintaining acceptable profit levels. P&G immediately returned to the brand’s old formulation. which offers. the brand Coca Cola makes excellent use of many kinds of marketing activities.). though. They are similar to and different from competing brands in certain reliably identifiable ways. the Mercedes-Benz and Sony brands hold clear advantages in product superiority and match competitors’ level of service. Calvin Klein and Harley-Davidson excel at providing compelling user and usage imagery while offering adequate or even strong performance. each brand should have its own boundaries. A second brand name under that umbrella might be targeted at the family market. If it is clear what customers like and do not like about a brand and what core associations are linked to the brand. For example. the company reported its highest profit margins in 21 years. . As a result. 8) Brand’s Managers Understand what the Brand Means to Consumers: Managers of strong brands appreciate the totality of their brand’s image. a trading post for collectors of Coke memorabilia. among other things. i.e. They also include direct response (the Coca-Cola catalog. slogans. For example. symbols. By continuity. For example. then it should also be clear whether any given action will dovetail nicely with the brand or create friction. The lesson to P&G and others is that value pricing should not be adopted at the expense of essential brand-building activities. By contrast. games. managers are able to make decisions regarding the brand with confidence. attitudes. 4) Brand is Properly Positioned: Brands that are well-positioned occupy particular niches in consumers’ minds. In fact.g. and a virtual look at the World of Coca-Cola museum in Atlanta). These include media advertising (such as the global “Always Coca-Cola” campaign). Strong brands mix and match these elements to perform a number of brand-related functions. beliefs. and behaviors customers associate with their brand. it is meant that the brand’s image does not get muddled or lost in a cacophony of marketing efforts that confuse customers by sending conflicting messages. all the different perceptions. packaging. Saturn and Nordstrom lead their respective packs in service and hold their own in quality. which sells licensed Coke merchandise) and interactive media (the company’s website. brand acts as an umbrella.product’s performance under certain – albeit somewhat a typical – water conditions. In response. 5) Brand is Consistent: Maintaining a strong brand means striking the right balance between continuity in marketing activities and the kind of change needed to stay relevant. with its well-known shift to an “Everyday Low Pricing” (EDLP) strategy. promotions (e. a brand is made-up of all the marketing elements that can be trademarked – logos. Lever Brothers quickly countered attacking Cascade’s core equity of producing “virtually spotless” dishes out of the dishwasher. or companywide. At the same time. Single product lines are often sold under different brand names. whether created intentionally by the company or not.. 6) Brand Portfolio and Hierarchy make Sense: Most companies do not have only one brand. signage.. Managers of the strongest brands also appreciate the specific roles that different marketing activities can play in building brand equity. third brand name might nest one level below the family brand and appeal to boys or be used for one type of product. The corporate.

2.. Genuine brands. These are the drivers of brand equity. of exactly what the brand does and could mean to consumers (called a “brand exploratory”). and other proprietary assets. the more differentiated the better. David Aaker summarizes them well as perceived quality. 5) Other Proprietary Assets: One of the common misperceptions is that the way to build loyalty is to focus on future sales. 3) Brand Associations: Organizations are discovering the benefits of Perceived Quality Name Awareness Other Proprietary Assets associating their brand with other images. however. Brand bribery exists when a particular industry becomes perceived as a commodity (i. as evidenced by the tremendous attention given to the Baldrige Awards for quality management and the J. Power and Associates Satisfaction Research. Nike with Michael Jordan. McDonald’s with Disney. A brand audit is an exercise designed to assess the health of a given brand.e. brand associations. Two prime examples are large domestic airlines and supermarket chains.2 brands. and Intel uses a distinctive audible tone to help consumers relate to their brands’ products and services. Awareness’s without differentiation produces well-known commodity brand names that can become marginally profit-able. managers want to take shortcuts and bypass more basic branding considerations – such as achieving the necessary level of brand awareness – in favor of concentrating on flashier aspects of brand building related to image. because they are buying their way to loyalty through what might be referred to as brand bribery. The old saying. name awareness. and unique associations with the brand in their memory. 1) Perceived Quality: There is no question that perceived quality is essential. favorable. An overwhelming focus on future sales can become a distraction for brands. Other proprietary assets such as patents. “you can tell a person by the company she keeps” applies here.3.9) Brand is given Proper Support and that Support is Sustained Over the Long-Run: Brand equity must be carefully constructed. trademarks. 4) Brand Loyalty: The most often forgotten driver in building brand equity is brand loyalty. Many brands in these industries have . Typically. and become vulnerable to extinction. it consists of a detailed internal description of exactly how the brand has been marketed (called a “brand inventory”) and a thorough external investigation. It is also important to see how that same picture looks to customers.11. In Managing Brand Equity. Brand associations can be very helpful to consumers in their processing of information about a brand. Starbucks associated with Marriott. and unique attributes can be very helpful as well when consumers must sift through the clutter of choices that exists in today’s marketplace. set as a priority to be perceived first and foremost as a “friend” to the consumers. 10) Company Monitors Sources of Brand Equity: Strong brands generally make good and frequent use of indepth brand audits and ongoing brand-tracking studies.12. A firm foundation for brand equity requires that consumers have the proper depth and breadth of awareness and strong. Frequent flyer and customer loyalty programs are tools some brands utilize in an attempt to lock customers into future purchases. Brand audits are particularly useful when they are scheduled on a periodic basis. brand loyalty.2. Too often. 2) Name Awareness: or familiarity is also a driver of overall brand Brand Drivers Brand Associations Brand Equity Brand Loyalty equity. On any given day. ultimately it is only as good as the consumer perceives it. 1. Regardless of how one chooses to rate perceived quality. and especially other Figure 2. It is critical for managers holding the reins of a brand portfolio to get a clear picture of the products and services being offered and how they are being marketed and branded. relatively undifferentiated among brand choices) and characterized by lack of outstanding service or quality. Drivers of Brand Equity There are many ways for a brand to communicate its benefits. however. through focus groups and other consumer research.D. There is nothing like a satisfied customer to tell a brand’s story and influence others. icons. and they are outlined in figure 2. a brand will likely have customers in each of the four primary loyalty segments outlined in figure 2. How does a brand create absolute loyalty? The key is to exceed customers’ expectations and pleasantly surprise them whenever possible. exhibit little loyalty. Customers can be characterized by a variety of loyalty descriptions.

It is one of the way to build brand equity is. Regarding supermarkets.3. An organization can leverage brand to grow bigger and better. and brand loyalty.2: Secondary Sources of Brand Knowledge . 5) Customer Opinion: Always look for customer opinion because they know the best and worst about the product. in effect. associations.3. Brand Leverage A brand is a very prominent asset owned by an organization. 1.13. John’s wort. 2) Quality: New product must incorporate quality ingredient because first impression is the last impression.2): Ingredients Company Alliances Extensions Employees Other Brands Country of Origin People Brand Places Endorsers Things Third-Party Endorsements Causes Channels Events Figure 4. Lux soap and shampoo. or changes in the rules. Procter and Gamble ask for the customer idea for their product through their customer portal.resorted to brand bribery in the form of “frequent customer” incentives and other promotional tactics because they have not been able to differentiate their offerings or have not become perceived as “real friends” to consumers. For example. 4) Brand Extension: To polish the brand. For example.12. Brand bribery can backfire if customers feel that the “deal” may not really be a bargain or that the process is a hassle. such as St. Proper market research allows the company to launch a right brand for the right segment. and over-the-counter vitamins or health supplements. It is endowed with awareness. The customer purchasing the product always willing to get more than the value he paid for the product. Organization should take care of the customer to maintain the value of brand in the marketplace. LG monitors and mobiles. Rewarding customer loyalty is a wonderful strategy. That is. alcoholic beverages. Sources of Brand Equity The sources of brand equity are as follows: 1) Market Research: Introducing brand in the market needs quantities or qualitative research to get familiar with the trends and different attributes. privacy concerns can also become a concern for consumers. to “borrow” it. bring some new products and services under the umbrella of same brand name. 3) Marketing Mix: The proper use of marketing mix adds value in the brand marketing. create brand equity by linking the brand to other information in memory that conveys meaning to consumers (see figure 4. If customers are satisfied with the quality of your product then customers will suggest other people to go for this product by sharing good thoughts. Dettol soap and shampoo. fine print. Consumers become very unhappy when they can’t use their benefits (such as free airline tickets or coupons) because of restrictions.12. Insurance companies are all too eager to learn who’s purchasing which medications. Promotion and personal relation increase brand equity. 1. 6) Protecting the Brand Equity: The brand name can be establish and compete among the competitors brand only if the quality match the perception of the customer. perceived quality. but it should not be the only reason customers return.

There are countless such examples where companies use their existing brands to enter new product opportunities. Lux. 2) Burton could rely on its rural New England origins. Thus. In creating the marketing program to support the new Dominator surfboard. 5) Burton could find one or more top professional surfers to endorse the surfboard. The fairness cream market in India is growing enormously at the rate of 25% per annum compared to the overall . For example. calling it “Dominator by Burton”. spokespeople (through endorsements). found that strong brands on an average generated Total Returns to Shareholders (TRS) of 1. Companies always focus on leveraging on brand value for new products and further improving the value of already existing products. its brand name. as well as to other brands (through ingredient or cobranding). Research conducted by McKinsey on the connection between brand strength and corporate performance on around 130 consumer companies. but such a geographical location would seem to have little relevance to surfing. and outerwear – decided to introduce a new surfboard called “The Dominator”.1 per cent. Companies generally try to leverage on the brand equity of established brands for other new products. Leveraging is capitalizing on the existing brand name to move into other product opportunities.9 per cent above the industry average while weaker brands stayed behind the industry average by 3. Burton could build equity by linking the brand to these other entities. to countries or other geographical regions (through identification of product origin). characters (through licensing). 6) Burton could secure and publicize favorable ratings from third-party sources such as Surfer or Surfing magazine. independent of the associations created by the surfboard itself. or any other aspects of the marketing program. For example. clothing. Consumers’ evaluations of the new product would be influenced by how they felt about Burton and how they felt that such knowledge predicted the quality of a Burton surfboard. or some other third-party sources (through awards or reviews). as they are aware that a strong brand always improves the value to its shareholders. such as the company itself (through branding strategies). Godrej’s Fairglow soap brand was extended to its fairness cream. sporting or cultural events (through sponsorship). and to channels of distribution (through channel strategy). used its brand name to move into the liquid soap and shampoo market. Burton could attempt to leverage secondary brand knowledge in a number of different ways: 1) It could leverage associations to the corporate brand by “sub-branding” the product.These “secondary” brand associations can link the brand to sources. Burton has gained over a third of the snowboard market by closely aligning itself with top professional riders and creating a strong amateur snowboarder community around the country. and its profits. bindings. 3) Burton could also sell through popular surf shops in the hope that its credibility would “rub-off” on the Dominator brand. 4) Burton could co-brand by identifying a strong ingredient brand for its foam or fiberglass materials (as Wilson did by incorporating Goodyear tire rubber on the soles of its ProStaff Classic tennis shoes). or it could sponsor a surfing competition or even the entire Association of Surfing Professionals (ASP) World Tour. Kingfisher’s brand name was used by the UB Group to enter the airline business. Marketers resort to this method so that consumers will perceive the new brand as having some of the characteristics of the existing brand. assume Burton – makers of snowboards as well as ski boots.

. Means of Leveraging Brand Equity Different means by which secondary brand knowledge can be created by linking the brand are shown in figure below: Means of Leveraging Brand Equity Company Channels of Distribution Co-Branding Licensing Celebrity Endorsement Sporting.14. HLL later leveraged on the brand equity of Fair & Lovely cream and introduced Fair & Lovely fairness soap in March 2001. In particular. Subsequently. however. Three main branding options exist for a new product: i) Create a new brand. Godrej introduced Fair Glow soap and later leveraged on the brand equity of the soap to introduce Fair Glow cream. exercise in American athletic shoes. or Other Events Third-Party Sources Country of Origin and other Geographic Areas 1) Company: The branding strategies adopted by the company that makes a product or offers a service are an important determinant of the strength of association from the brand to the company and any other existing brands. many players entered the fairness cream market. Leveraging a co-ordination brand may not always be useful. In 2000.g. the country or geographic location from which it is seen as originating may also become linked to the brand and generate secondary associations. Cultural. a co-ordination or family brand can be a source of much brand equity.g. To the extent that the brand is linked to another existing brand. depending on the awareness and image involved. Choosing brands with strong national ties may reflect a deliberate decision to maximize product utility and communicate self-image based on what consumers believe about products from those countries.. a number of brands are able to create a strong point of difference in part because of consumers’ identification of and beliefs about the country of origin. HLL introduced the Fair & Lovely fairness cream in 1975 and this continued to dominate the market and enjoyed a significant market share until 1998 when CavinCare introduced its Fairever cream and grabbed about seven percent of the fairness cream market. logos. Many countries have become known for expertise in certain product categories or for conveying a particular type of image. then knowledge about the other brand may also become linked to the brand. the world is becoming a “cultural bazaar” where consumers can pick and choose brands originating in different countries based on their beliefs about the quality of certain types of products from certain countries or the image that these brands or products communicate. as with options 2 and 3. 2) Country of Origin and other Geographic Areas: Besides the company that makes the product.cosmetic market growth rate of just 15% per annum. Existing brands may be related to the co-ordination brand (e. symbols. Thus. a consumer from anywhere in the world may choose to wear Italian suits. iii) Combine an existing and new brand. Thus. drive a German car. As noted by many.3. Nokia 8290 digital phone) and may involve names.. and so forth. 1. listen to a Japanese compact disc player. which became a huge success. ii) Adopt or modify an existing brand. Nokia) or a specific product brand (e. or drink English beer.

many retailers aggressively advertise and promote directly to customers. TGI Friday's frozen appetizers. the means by which they sell them. A prerequisite for this strategy is that the ingredient has to be of essential. Both are leaders in their segments and have now come together to enhance their market share with their combined efforts. McDonald’s thus restricts the availability of Coca-Cola’s rival. The advantages are that both brands can benefit from the symbiotic effects of combining two strong brands. many desktop manufacturers use the ‘Intel Inside’ mark along with their brand names to benefit from the image of Intel chips. . This process accelerated as movies and later television became a staple of American business. When they use the Citibank credit card to book a Jet Airways ticket. and Lucite nail polish are only a fraction of the products carrying well-known brand names which are made under license by companies unrelated to the companies who own the brand. A very good example is Jet Airways-Citibank Credit Cards. Coke in combination with McDonald’s also increases the brand image of the two complementary brands. Breyers yogurt. The rise of brand licensing did not begin until much later. United. a basic ingredient of the product is mentioned next to the actual products name. they accumulate credit points. this strategy also leads to improving the brand image and should motivate customers to become loyal to these brands. Dodge power tools. companies were willing to pay a royalty on net sales of their products to rent the product of an established brand name. Because of associations to product assortment. such as a bottle of Coke with McDonald’s burgers. Retail stores can indirectly affect the brand equity of the products they sell by influencing the nature of associations that are inferred about these products on the basis of the associations linked to the retail stores in the minds of consumers. both in the area of patents and trademarks. For example. To more directly shape their image. Trademark licensing has a rich history in American business. none of which were manufactured by the Walt Disney Company. Mickey Mouse's popularity in the 1930s and 1940s resulted in an explosion of toys. Moreover. Each helps the other in improving the awareness of the other brand. ii) Co-operative branding is the joint venture of two or more brands to form a new product or service. yes. None of these companies can individually make a dent in the market. they stand tall in the market. McDonalds play food. within an agreed territory. Pepsi. largely beginning with the rise of mass entertainment such as the movies. and so forth. pricing and credit policy. which can be exchanged later for some other service benefits like discounts in the value of tickets or gifts. as companies realized they could make real dollars renting out their equity to manufacturers.3) Channels of Distribution: Channels of distribution can directly affect the equity of the brands they sell by the supporting actions that they take. companies combine their efforts to introduce a product with two different brand names in a bid to carry over the image of the two parent brands to the new product. where both brands are well established in their respective segments. 4) Co-Branding: In co-branding strategy. Co-branding can take three forms: i) Ingredient Branding: In this form. Burger King t-shirts and even ghastly Good Humor Halloween costumes became commonplace. Retailers create these associations through the products and brands they stock. differentiating and high quality. iii) Complementary branding involves the marketing of two brands together to encourage co- consumption or co-purchases. Brand extensions later made the brand licensing marketplace much more lucrative. Brand licensing is well-established business. Licensing is used by brand owners to extend a trademark or character onto products of a completely different nature. costs such as advertising and communications can be shared. and so on. 5) Licensing: Brand licensing is the process of creating and managing contracts between the owner of a brand and a company or individual who wants to use the brand in association with a product. Instead of spending untold millions to create a new brand. Customers also gain by using the facility. for an agreed period of time. in its outlets and ensures more exposure and visibility to Coke. retailers have their own brand images in consumers’ minds. comics and later television. when corporations found that consumers would actually pay money for products with the logos of their favorite brands on them. as the name suggests. and consumer products with the lovable rodent's likeness on them. Apart from offering discounts. quality of service. books.

But too many times brands use the wrong celebrities. sight. 7) Sporting. Robbins.g.4. Cultural. A brand without a focus will never find the correct celebrity to match the brand. and without believability a celebrity endorsement is worthless. The main means by which an event can transfer associations is on the basis of various dimensions of credibility. “Perception includes all those processes by which an individual receives information about his environment – seeing. Celebrities are most helpful because they can star in advertising campaigns and participate in company events. The critical question in the study of perception is why the same universe is viewed differently by different persons? The answer is the perception. CONSUMER PERCEPTION 1. According to Joseph Reitz. Tiger Woods endorsing the Buick brand makes no sense at all.4. A celebrity is not a replacement for an idea. Perception is the process through which the information from outside environment is selected. taste etc. The bottom line is that the only thing that makes a brand successful is owning a word in the mind.6) Celebrity Endorsement: Celebrity endorsements remain a popular tool for marketers. There is just no believability that Tiger is dying to drive a Buick. 8) Third-Party Sources: Finally. 1. Different people perceive the universe differently.1. Endorsements from leading magazines (e. According to S. Employees might feel proud of having the celebrity endorsing their company. People might talk about the celebrity but that rarely translates into much for the brand. Consumers might be more apt to watch your ad if it has a celebrity. Customers might be more apt to participate in events when a celebrity involved.g. hearing. American Dental Association). film critic Roger Ebert) can obviously improve perceptions of and attitudes toward brands. Perception is the process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment According to Kolasa. and experts (e. . Third-party sources can also have an effect at a more local level. The PR attention generated by a celebrity does not build your brand. organizations (e. or Other Events: Events have their own set of associations that may become linked to a sponsoring brand under certain conditions. The $40 million General Motors reportedly paid Tiger for his 5-year contract ending in 2009 is not money well spent.P. tasting. the Good Housekeeping seal has been seen as a mark of quality for decades (offering product replacement or refunds for defective products for up to two years from purchase). received. organized and interpreted to make it meaningful to us. A brand may seem more likable or perhaps even trustworthy or expert by virtue of becoming linked to an event. Having a celebrity endorse your brand can be helpful for a well-known brand in need of maintaining attention for its brand and category.g. For example. feeling. But the only thing that builds a brand in the mind of the consumer is PR and word-of-mouth generated by an idea... smell. PC magazine).. it should be noted that secondary associations can be created in a number of different ways by linking the brand to various third-party sources. and smelling”. “Perception is selection and organization of material which stems from the outside environment at one time or the other to provide the meaningful entity we experience”. Meaning and Definition of Perception Human beings are constantly attacked by numerous sensory stimulations including noise. Too many companies use a celebrity in an attempt to establish credibility with consumers. Using a celebrity is also not a replacement for brand PR. “Perception may be defined as a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment”.

Components of Perception Perception is a process of sensory organs. These messages are then translated into action and behavior. 3) Recognition: After paying attention to the stimuli. touch. Taking employees to the attention stage is essential in an organization for making them behave in a systematic and required order..3. The stimuli that are paid attention depend purely on the people’s selection capacity and the intensity of stimuli. 3) Subjective Process: Perception is a subjective process and different people may perceive the same environmental event differently based on what particular aspects of the situation they choose to absorb. The perception starts with the awareness of these stimuli. emotions. ears. written messages. receiving stimuli and translating the stimuli into action. 1. people's actions. organizes it. touch of the product and people. the employees try to recognize whether the stimuli are worth realizing..e. tongue and skin. The manner in which a person perceives the environment affects his behavior. hearing. and the manner in which they interpret it to obtain the understanding of the situation.4. or feelings are triggered by the perception of their surroundings.4. odor.2. During the attention process. and obtains meaning from it. The physical senses used by people are vision. However.15: Components of Perception 1) Stimuli: The receipt of information is the stimulus which results in sensation. Perception is a two-phase activity. Recognizing these stimuli takes place only after paying attention to them.1. . The messages or incoming stimuli are recognized before they are transmitted into behavior. how they organize this information. Some of the stimuli are reacted to while others are ignored without being paid any attention. Knowledge and behavior depend on senses and their stimulation. the eyes. i. smell and taste. thoughts. sensory and neural mechanisms are affected and the message receiver becomes involved in understanding the stimuli. information. The stimulation coming to these organs may be through action. nose. Socio-cultural Work relation Covert or Internal Environment Sensor Self Attention Sensory and Neural Mechanisms Recognition Mediators and Physical organisms Translation Response organism Decisions Satisfaction Expectation and Performance Evaluation Performance Action Satisfaction Reaction Retrospection Behavior Overt Physical Action Covert Mental State Figure 1. Stimuli Overt Environment Physical. etc. Features of Perception The features of perception are: 1) Intellectual Process: Perception is the intellectual process through which a person selects the data from the environment. Thus. Intuitions and hunches are known as the sixth sense. oral communication. The mind gets information through the five sense organs. These senses are influenced by a larger number of stimuli which may be action. 2) Cognitive or Psychological Process: Perception is a basic cognitive or psychological process. viz. 2) Attention: Stimuli are selectively attended to by people. taste. consideration and feelings.

may smell the mouth-watering aroma of freshly baked cakes. For example.4. social systems and characteristics of the perceiver. Specifically. A performance-reward relationship is established to motivate people. Employees confronted with stimuli select only a few stimuli of their choice and leave other stimuli unattended and unrecognized.. We can feel the energy in the pulsating music played at a disco. The overt behavior of perception is witnessed in the form of physical activities of the employees and covert behavior is observed in the form of mental evaluation and self-esteem. The evaluation process is translation. Marketing Implications Fast music. The behavioral termination of perception may be overt or covert. whereas a slow tempo can increase sales as much as 38 per cent because it encourages leisurely shopping (although consumers tend to be completely unaware of this influence on their behavior). As person enter a bakery. They confront these stimuli. a fast tempo is more desirable in restaurants because consumers will eat faster. In the above example. interpret them and behave according to their background and understanding. The type of music being played in a retail outlet can have an interesting effect on shopping behavior. the stimuli must be recognized by the individual. reaction or other behavior. 1. The perception process is purely mental before it is converted into action. their first reaction will probably be one of admiration. the first reflex that is initiated in him is known as sensation.noticeable-difference 4) Subliminal Perception 1) Sensation When a person is exposed to any of the marketing stimuli or an ad. He has immediately translated the stimulus into an appropriate action. It is a response to change in sensory inputs. tends to energize. 7) Satisfaction: High performance gives more satisfaction. Factors influencing the selective process may be external as well as internal. For example. Elements of Perception The elements of perception are sensation. they also try to provide him with cues to perceive the product in a specific way. people are delighted. i. when a person come across a beautiful ad of a Mercedes Benz ‘E-class’ on the center spread of a magazine.before the stage of translation. . stimuli. They not only try to leave a mark on the consumer’s mind.e. a fast tempo creates a more rapid traffic flow. These are discussed in the following sections: 1) Sensation 2) Absolute Threshold 3) Just. The level of satisfaction is calculated with the difference in performance and expectation. 6) Performance: Proper behavior leads to higher performance. like that played at aerobics classes. it results in satisfaction. but when performance is equal to expectation. the car driver after recognizing the stimuli uses the clutch and brake to stop the car. slow music can be soothing. The recognition process is dependent on mental acceptability. 4) Translation: The stimuli are evaluated before being converted into action or behavior. The conversion is translation. 5) Behavior: Behavior is the outcome of the cognitive process. organizational structure. absolute threshold. The behavior of employees depends on perception which is visible in the form of action. High performers become a source of stimuli and motivation to other employees. Several stimuli are observed everyday by individuals. If the performance is more than the expectation. and subliminal perception. It is an overt and covert response. How one responds to a stimulus received by any of the five senses is called sensation.4. in contrast. And perception is how person understand a sensation and co-relate it with his needs and personality. differential threshold. notice and register them in their minds. the thundering light in the Rin detergent ad may lead the consumer to expect that kind of cleaning for his clothes. However. Marketers try to advertise their products in such a way that they will appeal to the consumer’s senses.

say.53 CB by Majumdar] Application of Just.5kg package of Surf Excel Blue detergent from `110 to `120 or.thereby allowing greater turnover and higher sales. Page no. Music can also affect moods.. an additional level of stimulus equivalent to the JND must be added for the majority of people to perceive a difference between the resulting stimulus and the initial stimulus.noticeable-difference to Consumer Behavior Book Matter [Book Code: 22. Consumers here may perceive these as a significant change in the prices of these two brands. packaging. or lower price) are very apparent to consumers without being wastefully extravagant (i. states that the stronger the initial stimulus. ii) Hindustan Unilever increases the price of a 1. Marketing Implications The obvious implication is that consumers will only consciously perceive a marketing stimulus when it is sufficiently high in intensity to be above the absolute threshold. consumers’ sensory receptors will not be activated and the stimulus will not be consciously perceived. So only when the price is changed by `10..000 or more.14.e. Before that point. remain below the JND). 3) Just. Marketers use the concept of JND for product pricing. larger size. A better strategy would have been to introduce several successive versions of the polish. a silver polish manufacturer introduced an extension of its silver polish brand that prolonged the shine of the silver by months but raised its product price by merely pennies. and promotion decisions. Just. the consumers will notice the price change.000. reductions in product size or quality. the billboard is below the absolute threshold and not sufficiently intense to be seen. According to Weber’s law.g. or the Just Noticeable Difference (the JND)... the absolute threshold is the amount of intensity needed to detect a difference between something and nothing. A nineteenth-century German scientist named Ernst Weber discovered that the JND between two stimuli was not an absolute amount. In other words. improved or updated packaging.noticeable-difference The minimal difference that can be detected between two similar stimuli is called the differential threshold. Weber’s law. but an amount relative to the intensity of the first stimulus. By doing so.e. the greater the additional intensity needed for the second stimulus to be perceived as different. the company decreased its sales revenue. and ii) So that product improvements (e. as it has come to be known.noticeable-difference to Consumer Behavior Manufacturers and marketers endeavor to determine the relevant JND for their products for two very different reasons: i) So that negative changes (e. For example. Likeable and familiar music can induce good moods. or increases in product price) are not readily discernible to the public (i. whereas discordant sounds and music in a disliked style can induce bad moods 2) Absolute Threshold The absolute threshold is the minimum level of stimulus intensity needed for a stimulus to be perceived.g. Thus if images or words in a commercial are too small or the sound level is too low. in an apparent misunderstanding of the JND. For Example. they are at or just above the JND). each version with a shine that lasts longer than . Suppose you are driving on the highway and a billboard is in the distance. The absolute threshold is that point at which you can first see the billboard. i) JND for a car model may exist at a level of `10. some years ago. the price of a 100gram pack of Lux toilet soap is raised to `21 from `18.

the reductions in quantity were below most consumers’ JND for these products. 4) Subliminal Perception The concept of the perceptual threshold is important for another phenomenon – subliminal perception. Factors Influencing Perception Individuals may look at the same thing. has been updated seven times from 1936 to 1996. A need is a feeling of tension or discomfort when one thinks he is missing something or requires something. e. The manufacturer of Huggies reduced the number of diapers in a package from 240 to 228 (and continued pricing it at $31.4. when it comes to price increases. Less than the JND is wasted effort because the improvement will not be perceived. more than the JND is wasteful because it reduces the level of repeat sales. with pre-attentive processing the stimulus is fully present – if a person shift attention and look directly at the ad or billboard. less than the JND is desirable because consumers are unlikely to notice it. Although advertising agencies deny using such stimuli. Betty Crocker. Subliminal perception is different from pre-attentive processing. subliminal stimuli are presented so quickly or are so degraded that the very act of perceiving them is difficult. This perception is perhaps fostered by the availability of self-help tapes with subliminal messages that claim to help consumers stop smoking. subliminal exposure to these messages influenced viewers’ purchase of Coke and popcorn. lower than the JND). some people claim that marketers are brainwashing consumers and attempting to manipulate them. and our perception of them is called subliminal perception. Marketers often want to update their existing package designs without losing the ready recognition of consumers. Similarly people with different needs select different items to remember or respond to. the General Mills symbol. so that consumers will perceive minimal difference between succeeding versions. These factors include: 1) Characteristics of the Perceiver (Internal Factors) i) Needs and Motives: People’s perception is determined by their inner needs. For example.5 ounces (and maintained the price at $3. at a magazine article instead of an ad in person’s peripheral vision. Marketing Implications The question of whether stimuli presented subliminally affect consumers’ responses has generated considerable controversy in the marketing field. ii) Self-concept: The way a person views the world depends a great deal on the self-concept or image he has about himself. so short a time that you are not consciously aware of them. However..the previous version (and at or slightly above the JND) and offered at a higher price (but a price. With subliminal perception attention is directed squarely at the stimulus. each carefully designed to fall below the JND. lose weight. Suppose a person sitting at a movie and is exposed to messages like “Eat popcorn” and “Drink Coke”.e.5. and feel more relaxed. Marketers decrease the product quantity included in the packages. Stimuli like these. but perceive it differently. marketers very much want to meet or exceed the consumer’s differential threshold. while leaving the prices unchanged – thus. With pre-attentive processing attention is directed at something other than the stimulus. 1. increasing the per unit price. It can be thought . and the original popcorn-Coke study has been discredited.5 ounces to 13. the person can easily see it.g. The self-concept plays an important role in perceptual selectivity. On the other hand. In contrast. i. Also. These people also believe that ads containing these stimuli are effective.. When it comes to product improvements.e. A number of factors operate to shape and sometimes distort perception. PepsiCo reduced the weight of one snack food bag from 14. each message is shown on the screen for only a fraction of a second. A widely known but fraudulent study in the advertising industry claimed that consumers at a movie theater were subliminally exposed to messages on the movie screen that read “Eat popcorn” and “Drink Coke”.29).99). in effect.. People with different needs usually experience different stimuli. are called subliminal messages. presented below the threshold level of awareness. Reportedly. they want consumers to readily perceive any improvements made in the original product. They usually make a number of small changes. i.

greater the frequency with which a sensory stimulus is presented. If a person has been betrayed by a couple of friends in the past. The greater the intensity of stimulus. . It establishes dominance and enhances perceptual selection. iv) Past Experience: A person's past experiences mould the way he perceives the current situation. v) Current Psychological State: The emotional and psychological states of an individual are likely to influence how things are perceived. a technical manager may expect ignorance about the technical feature of a product from the non-technical people. or any number of situational factors. it gets more attention than in normal case. the higher is the probability that it is perceived. Thus. the greater the chances we select it for attention. as can location. he is likely to perceive the same situation differently than if he is elated. The individual normally censors stimulus inputs to avoid disturbance of his existing beliefs. The time at which an object or event is seen can influence attention. expectations affect people’s perception. light. a fact is conceived not on what it is but what a person believes it to be. ii) Intensity: High intensity increases the chances of selection.16: Factors that Influence Perception 2) Characteristics of the Target or Perceived (External Factors) i) Size: The bigger the size of the perceived stimulus. v) Contrast: Stimuli that contrast with the surrounding environment are more likely to be attention catching than the stimuli that blend in. Factors in the Situation Physical setting Social setting Organizational setting Factors in the Perceiver Needs and motives Self Concept Past Experience Beliefs Expectations Current Psychological State Perception Factors in the Target Intensity Frequency Status Size Contrast Figure 1. the more likely it will be noticed. Size attracts the attention of an individual. if sentences are underlined. iv) Status: Perception is also influenced by the status of the perceiver.of as an internal form of attention-getting and is largely based on the individual's complex psychological make-up. Repetition increases our sensitivity and alertness to the stimulus. iii) Beliefs: A person’s beliefs have profound influence on his perception. Thus. 3) Characteristics of the Situation: The context in which we see objects or events is important. High status people can exert greater influence on perception of an employee than low status people. Thus. If the message is bright. iii) Frequency: Repeated external stimulus is more attention-attracting than a single time. In the organizational setting. he would tend to distrust any new friendship that he might be in the process of developing. Elements in the surrounding environment influence our perception. The contrast principle states that external stimuli that stand out against the background or which are not what are expected will receive better attention. heat. Expectations are related with the state of anticipation of particular behavior from a person. If a person is depressed. A contrasting effect can be caused by color/size or any other factor that is unusual. vi) Expectations: Expectations affect what a person perceives.

intensive stimulation “bounces off” most individuals.4. perception is the result of two different kinds of inputs that interact to form the personal pictures – the perceptions – that each individual experiences.1. Thus many objects or stimuli are stopped from entering our perceptual system by the above two processes. they subconsciously organize the stimuli they do recognize according to widely held psychological principles. people select only some. who subconsciously block (adapt to) a heavy bombardment of stimuli. bright or loud enough to activate our senses. This selectivity is enhanced by two related processes. needs. and expectations. inner needs. the individuals will not be able to consider all available information necessary to initiate behavior. These factors are self concept. Various external and internal factors influence our process of stimuli selection. response salience and perceptual defense as given below: . According to the principles of sensation. motives. The mechanism involves selection.4. Because each person is a unique individual. Process of Perception An individual perceive things differently with respect to other individual . 1. a new home owner near an airport might be excessively bothered by the noise. Without this ability of selection. This explains why no two people see the world in precisely the same way. Individuals are very selective as to which stimuli they “recognize”.4. “sensory adaptation” relates to human being ability to tune out certain stimuli to which he has been continuously exposed. These stimuli are the input given to start with the process of perception.There are lot of stimuli in the environment to which different meanings are given. Rather. response disposition. and they interpret such stimuli (they give meaning to them) subjectively in accordance with their personal needs. wants. and learning) based on previous experience. and experiences.2. Perceptual Inputs and Perceptual Mechanism Human beings are constantly bombarded with stimuli during every minute and every hour of everyday. expectations.1. with unique experiences. 2) Sensory Adaptation: Second process known as. The combination of these two very different kinds of inputs produces for each human being a very private. Otherwise. The aspects of perception – the selection. All the remaining stimuli must compete for attention. Perceptual Selection There are a variety and a multitude of stimuli confronting us everyday affecting all our senses. very personal picture of the world. desires. the billions of different stimuli to which human being are constantly exposed might serve to confuse and keep perpetually disoriented in a constantly changing environment.6. However. One type of input is physical stimuli from the outside environment.1. The sensory world is made up of an almost infinite number of discrete sensations that are constantly and subtly changing. and interpretation of stimuli are: 1.6. organization.1.2. Out of all these stimuli. “sensory activation” assumes that human being senses are activated only by a certain type of stimuli so that some stimuli may go unnoticed if these are not strong. Perceptual selectivity refers to the tendency to select certain objects from the environment for attention such that these objects are consistent with our existing beliefs.4. 1. expectations. but such noise does not bother those who have been living there for a long time and have been exposed to this noise over this long period. values and needs. organization and interpretation resulting into behavioral responses or action like opinion. For example. buying etc. Internal or Personal Factors in Perceptual Selection The internal factors relate to the perceiver and include such factors as learning and motivation. 1) Sensory Activation: First process known as. it follows that each individual’s perceptions are also unique. the other type of input is provided by individuals themselves in the form of certain pre-dispositions (expectations. neither of these consequences tends to occur.6. because perception is not a function of sensory input alone. beliefs.6.

5) Response Disposition: Response disposition refers to a person’s tendency to perceive familiar stimuli rather than unfamiliar ones. 1. Similarly. Thus. the more likely it is to be perceived. commercials on televisions are slightly louder than the regular programmes. based on the intensity principle. Thus. strong odor or bright light is noticed more as compared to a soft sound. Expectations are related with the state of anticipation of a particular behavior from a person. For example.2. a person will perceive the things with which he is familiar. repetition. Though such expectations may change because of direct contact. or union officials use rough language. 2) Beliefs: A person’s beliefs have profound influence on his perception. motion and order as given below: 1) Size: The larger the size of the object. They select only that aspects which they find match with their characteristics. novelty and familiarity. This is referred to as ‘maintenance of cognitive consistency’. For this reason. 7) Perceptual Defense: Perception defense refers to the screening of those elements which create conflict and threatening situation in people. intensity. The reason for this phenomenon lies in the background of the people for which they are trained. weak odor. 3) Expectations: Expectations affect what a person perceives.2. It can be thought of as an internal form of attention-getting and is largely based on the individual’s complex psychological makeup. People’s own characteristics affect the characteristics which they are likely to see in others.1. For example. a control problem by accounting people. The need is a feeling of tension or discomfort when one thinks he is missing something or when he feels he has not quite closed a gap in his knowledge. the more likely that it will be noticed. and human relations problem by personnel people. people with different needs select different items to remember or respond to. more than seven feet tall will stand out in a crowd. It indicates that type of response salience which people have affects their perception.1) Self-Concept: The way a person views the world depends a great deal on the concept or image he has about himself. not from other points of view. A loud sound. a warning sign in a plant. expectations affect people’s perception. We are most likely to notice things that stand out because of their size relative to other things in that area. or dim light.4. 4) Inner Needs: People’s perception is determined by their inner needs.6. People with different needs usually experience different stimuli. For example. a particular problem in an organization may be viewed as a marketing problem by marketing personnel. Such expectations may affect the perception. Some of these external factors are size. This concept plays an internal role in perceptual selectivity. a fact is conceived not on what it is but what a person believes it to be. Conversely. Thus. 3) Contrast: If an object in some way contrasts with its surroundings. and expectations may fall near actual but a mental set about beliefs. 6) Response Salience: Response salience is the set of dispositions which are determined not by the familiarity of the stimulus situations. Knowing oneself makes it easier to see others accurately. but by the person’s own cognitive predispositions. They are trained to look at the situation from one point of view only. such as “DANGER” written in . contrast. External Factors in Perceptual Selection External factors relate to the characteristics of objects or people that activate our senses and thus get our attention. They may even perceive other factors to be present that are not a part of the stimulus situation. we also become aware of the objects that are smaller in size than their surroundings. The individual normally censors stimulus inputs to avoid disturbance of his existing beliefs. it is more noticeable. a technical manager may expect ignorance about the technical features of a product from non-technical people. advertising companies use large billboards and signs that capture the perceiver’s attention. Thus. expectations and values filters perception and may be lasting and difficult to change. This factor is shown below: 2) Intensity: The intensity principle of attention states that the more intense the external stimulus is. a basketball player. Even in the organizational setting.

For example. Work instructions that are repeated tend to be received better. the letter M will be more often remembered than other letters. For example. receives the most attention. This principle simply implies that the perceived object or person or event stands out distinct from its background and occupies the cognitive space of the individual. In the following diagram.4. workers may pay more attention to the materials being moved by them on a conveyor belt as compared to the maintenance needs of a machine lying next to them. In addition. when workers’ jobs are changed from time to time. 1. According to Morgan and King. light or sound associated with objects. in job rotation. size or color tend to be grouped together. Advertisers use this principle in their advertising by designing signs which incorporate moving parts. the shaded square would be noticed first because of its contrast with other squares. You do not try to understand what the white spaces in the middle of black letters could mean. Instead he perceives organized patterns. For instance. A person rarely perceives the extent of color. The principle of similarity is exemplified when objects of similar shape.3. 7) Order: The order in which the objects or stimuli are presented is an important factor influencing selective attention. Marketing managers and advertisers use this principle in order to get the customers’ attention. we tend to group them together and this organizing mechanism helps us to deal with information in an efficient way rather than getting bogged down and confused with so many details. the greater the tendency to perceive them as a common group.4. Sometimes. repetition increases our sensitivity or alertness to the stimulus”. they become more attentive to their new jobs as compared to the previous ones. thus making the other pieces of information less significant. if all visitors to a plant . Sometimes. New objects or events in a familiar setting. A manager who interviews twenty women and one man for a job would remember the man first because of contrast. Factors Affecting Perceptual Organization 1) Figure and Ground: Figure-Ground principle is generally considered to be the most basic form of perceptual organization. commercials on televisions (moving ones) get more attention than print media. Perceptual Organisation Perceptual Organization emphasizes on the subsequent activities that take place in the perceptual process after a stimulus is received.3. For example. M M M B M P M M G M M M M M M M M M A O 5) Novelty and Familiarity: Novelty and familiarity principle states that either a novel or a familiar external situation can serve as attention-getter. 2) Perceptual Grouping: Grouping is the tendency to curb individual stimuli into meaningful patterns. Some of the factors underlying his grouping are: i) Similarity: The principle of similarity states that the greater the similarity of the stimuli. you see white as the background and black as the letters or words to be read.6. 6) Motion: Motion principle states that a moving object draws more attention as compared to a stationary object.black against a yellow background would be noticed more quickly because of the contrast factor. if we perceive objects or people with similar characteristics. or familiar objects or events in new setting draw better attention. the first piece of information among many pieces received. a writer of a communication may intentionally build up to a major point by proceeding through several smaller and less important points. For example. In the following illustration.1. as you read this page. For example. the most important piece is left to the end in order to heighten the curiosity and perceptive attention.6. 4) Repetition: A repeated message is more likely to be perceived than a single message. stimuli and identifiable whole objects. 1. “a stimulus that is repeated has a better chance of catching us during one of the periods when our attention to a task is waning. communication in familiar jargons attracts more attention. For example. Similarly.

This principle permits the individuals to have some constancy or stability in a tremendously variable and highly complex world. The following figure demonstrates the proximity principle. the inflexible managers may require that employers follow a set and step by step routine leaving no ground for implementation of out of line innovative ideas.g. . even when some parts of the object are missing. Because of this type of perception. four or five depending on their nearness to each other: iii) Closure: The principle of closure relates to the tendencies of the people to perceive objects as a whole. But there is a difference. the manager will tend to ignore it. honest. on the whole. the workers can identify all the white hats as the group of visitors. because it does not fit with the overall impression. 3) Perceptual Constancy: Constancy is one of the more sophisticated forms of perceptual organization. ii) Proximity: The principle of proximity or nearness states that a group of stimuli that are close together will be perceived as a whole pattern of parts belonging together. a hard worker. the players in cricket field on the opposite side of the field do not look smaller than those closer to you even though their images on the retina of the eye are much smaller. The ten squares in the figure are seen as pairs of two. in the following figure the sections of the figures are not complete. only some people in the group may be inefficient. This concept gives a person a sense of stability in this changing world. if a manger perceives a worker. For example. For example. If constancy were not at work.are required to wear white hats while the supervisors wear blue hats. the top of a glass bottle is seen as circular whether we view it from the side or from the top. iv) Continuity: Continuity is closely related to closure. sincere. then even. There are several aspects of constancy: i) Shape Constancy: Whenever an object appears to maintain its shape despite marked changes in the retinal image e. whereas the continuity principle says that a person will tend to perceive continuous lines of pattern. then the entire group will be considered responsible even though. Closure supplies missing stimuli. For example. Only the obvious patterns or relationships will be perceived. The continuity may lead to inflexible or non creative thinking on the part of the organizational participants. the world would be very chaotic and disorganized for the individual. but being familiar with the shapes we tend to close the gaps and perceive it as a whole: Speaking from the point of view of an organization. ii) Size Constancy: The size constancy refers to the fact that as an object is moved further away from us we tend to see it as more or less invariant in size. if he behaves in a contradictory way sometimes (which is a kind of a gap. three. that he has about the worker. several people working on a machine will be considered as a single group so that if the productivity on that particular machine is low. The person’s perceptual process will close the gaps that are unfilled from sensory input.

The role of expectations (the so-called ‘Pygmalion effect’) can thus be explained by the concept of the perceptual set. 3) Halo Effect In the halo effect the person develops an opinion or attitude towards a single person or object. 1. While meeting a group of workers. The owner of a red car sees it as red in the bright sunlight as well as in dim twilight. Interpretation/Perceptual Interpretation After the data have been received and organized.4. Another manager – having different beliefs. It gives meaning and value to simple stimuli. and opinions – may have a different interpretation of the same phenomenon. the perceiver interprets the data in various ways. events.4. Indeed. Stereotyping is necessary for economy of perception. his subsequent perceptions of the same person are influenced by this attitude. manager will tend to interpret their behavior according to this mental set. Factors Affecting Perceptual Interpretation Various factors contribute to this interpretation of data which are given as below: 1) Perceptual Set Previously held beliefs about objects influence perception of similar objects.1. it is called stereotyping. But stereotypes also lead to prejudices about various groups of people. 2) Stereotyping When people form opinions about a particular class of objects or persons and act according to such opinions. without checking whether their opinions or attitudes were accurate in the first instance or not.6. a pat on the back. 4) Perceptual Context: The highest and most sophisticated form of organization is ‘perceptual context’.iii) Color Constancy: Color constancy implies that familiar objects are perceived to be of the same color in varied conditions. situations and other persons in the environment. Perception is said to have taken place only after the data are interpreted. mistakes made by the latter may be condoned or the interpretation may give the latter the benefit of . These general opinions or attitudes a person has constitute the perceptual set. In such a case. managers perceive a manager as being more honest than a worker. Accordingly. shape and color of objects would change as the worker moved about and it would make the job almost impossible.4. the manger already has a mental or perceptual set. Manager’s subsequent perceptions will be influenced by this set. which influence perception and interpretation of data. a verbal order.6. perceptual defense may play a very important role in understanding union-management and supervisor-subordinate relationship. For example. For example. For example. shirk work.] 5) Perceptual Defense: Closely related to perceptual context is the perceptual defense. The word ‘stereotype’ has been used to indicate a generally favorable or unfavorable opinion a person holds for a particular group of people. attitudes. Some studies made in organizations indicate how the mental set operates: People having different individual opinions about various groups of people tend to form similar individual opinions when they meet new people based on these. just as a worker perceives another worker as being more honest than a manager. If someone has a favorable attitude towards a person. Without perceptual constancy the size.1. perception is essentially giving meaning to the various data received and interpreted 1. a new policy. Most studies verify the existence of a perceptual defense mechanism. a raised eye brow or a suggestion takes on special meaning when placed in the context of the work organization. The organizational structure and culture provide the primary context in which workers and managers do their perceiving. a manager may have developed a general belief that workers are lazy.4. objects. and want to get all the advantages from an organization without giving their best to it. if a manager has a good impression about a particular subordinates (a positive halo effect). For example. A person may build a defense against stimuli or situational events in a particular context that are personally or culturally unacceptable or threatening.

experience and attitudes. When similar mistakes are made by another person about whom the manager has an unfavorable opinion (Negative Halo effect. In the above case. the manager may tend to interpret even feedback information received according to the preconceived impression. they do take on meaning and value for the perceiver. the recipient uses perceptual defense to deal with this phenomenon. So when they do find someone who is like them. 10) Attribution When people give cause and effect explanation to the observed behavior. 4) Perceptual Defense Perceptual defense is used by the perceiver to deal with conflicting messages and data. Further. 6) Selective Perception People selectively interpret what they see on the basis of their interests. when done by another employee. so we take it for granted that other people are equally honest and trustworthy. Thus.doubt. goes unnoticed. a memo. a raised eyebrow. or why some people may be reprimanded by their boss for doing something that. When observing other who actually are like them. but explain the behavior of others by their personal dispositions. Defense mechanism could include: i) Denial of the information or data received ii) Some modification of the data received iii) Justification for holding on to one’s own belief 5) Perceptual Context The context in which an object is placed influences perception. 8) Impression People who engage in projection tend to perceive others according to what they themselves are like rather than according to what the person being observed is really like. a suggestion. or a pat on the back takes on special meaning and value when placed in the context of a work situation. . if a manager gets data from a union on strike. background. but it may be inferred that he is sincere towards his duties. performance appraisal must not be based on half-cooked or incomplete information. as a result of the halo effect. 9) Inference There is a tendency on the part of some people to judge others on limited information. The organizational culture and structure provide the primary context in which workers and managers do their perceiving. Rusty Halo or Horns effects) those mistakes may be perceptually exaggerated as irresponsible behavior. For example. Only when the doodles are placed in a verbal context. a verbal order. 7) Projection Attributing one’s own characteristics to other people. they are naturally correct. You are more likely to notice cars like your own. showing that it is taking positive steps in the direction of resolving conflicts or is doing something useful for the organization. fellow employees and others must also be taken into consideration. If the data a person receives threaten beliefs already held. we engage in selective perception. There is a tendency for the individuals to attribute their own behavior to situational factors. the productivity and the behavior of the concerned employee towards customers. Perceptual distortion occurs because of attribution on two counts: i) Fundamental Attribution Error: The tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgments about the behavior of others. a new policy. the manager may find such data in conflict with a preconceived opinion that the union is by and large negative in its approach. these observers are quite accurate—not because they perceptive but because they always judge people as being similar to themselves. For example. Since we can’t observe everything going on about us. it is known as attribution. an employee might be sitting at his desk throughout the working hours without doing anything. Perception is distorted sometimes by the efforts of the perceiver to attribute a causal explanation to an outcome. Thus. The visual stimuli by themselves are meaningless. If we are honest and trustworthy.

interesting. This is called self-fulfilling prophecy. point-of-purchase displays. The total mix of in-store information cues (brands available. Information is the primary raw material the marketer works with while influencing consumers. He then act in a defensive manner and distort or even totally shut out what is actually occurring. Shelf position and amount of shelf space influence on which items and brands are given more attention. This increases total exposure. brands and advertising messages may vary significantly from one part of a company’s market to another. and advertising combine to form the meaning of store image assigned. which refers to the reception and interpretation of external stimuli by an individual. begins with the process of sensation and is a selective mental operation. as a result. Thus. 1. Consumers react to advertisements. or from which they derive satisfaction of needs and wants. The consumer forms a perception about the store. It is a known fact that consumers cannot process all the information. 12) Self-fulfilling Prophecy Based on expectations. if a manager expects good results from his people. Without attention being given to a stimulus. some bias in perception may creep in. use exposure very effectively. Thus. People give their attention largely to those things which are novel. he tend to twist or avoid that which is an unpalatable threat to his ego. Shopper’s Stop. Store interiors (of Ebony.) are designed with frequently sought-out items being separated so that the average consumers will travel through more of the store. Perception and Marketing Strategy Perception. 11) Distortions Distortion occurs when a person twist and manipulate events either consciously or unconsciously. A brand name which is difficult to pronounce and does not convey much of a visual image is not likely to find appeal amongst the target consumers. packages and so on according to their motives. Consumer behavior is process of learning of which perception is only the beginning. attitudes and social situation and each individual’s perception of these marketing mix elements is unique to him or her. prices. products. . Managers should take active steps to reduce this perceived risk as a normal part of any marketing strategy. layout. Hence. Therefore. they are not likely to let him down. 2) Brand Name and Logo Development: Brand names are important for both consumer and industrial products.7. Consumers perceive several types of risk in the purchase of many products.). Point-of-purchase displays also attract attention to sale and newly launched items.ii) Self Serving Bias: The tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors. Retailers. external building characteristics. etc. He often tend to distort reality when it is unfavorable to us. Perceptions of stores (store images). A study of perception is useful in the following areas: 1) Retail Strategy: Most retail environments contain a vast array of information. Retailers must ensure that consumers do not become frustrated and minimize their in-store information processing. etc. expectations become reality. In other words. therefore. because it threatens our self-image. In many cases it has been found that people try to validate their perceptions of reality (or expected performance) when those perceptions are faulty. little perception will take place.4. distortion is due to defense mechanisms that operate when one encounters data or receives information that is incongruent with one’s self-concept. an understanding of the perception of information is an essential guide to marketing strategy. Stores are designed with highly visible shelves and overhead signs to make locating items as easy as possible. retailers need to be concerned about information overload. For example.

It was originally to be called – “Gateway”. Even television advertisers are concerned about where within the commercial break their ad appears and the interest level aroused by the program. print. the marketer must find media the target market is interested in and place their advertising messages in those media. in appropriate media. Since. and the electronic. in a magazine like Femina. Besides how a product and service is presented (its logo) is also equally important. This is essentially a low involvement product. care should be taken to ensure that the target audience interprets the message in the advertisement correctly. Marketers determine the media to which consumers in the target market are most frequently exposed and then place their advertising messages in those media. the brand name “Compaq” for a computer was created in such a fashion. Advertises of Synergie Eye Contour Gel take care to place their ads opposite this column to get maximum reader interest. consumers have limited involvement with the product category. the product. For products like these. money and effort in developing a right kind of logo for all their company products. To a large extent. A marketer should make effort to attract attention to a package or advertisements. Interest in a product tends to arise only when the need for the product arises. While using stimulus characteristics. animated cartoons to attract attention to the advertisement. advertisers insist that their ads appear opposite certain articles and columns. Consumers are not always actively interested in a product. and ii) Convey meaning. For example. Under such circumstances. 4) Advertisement and Package Design: Advertisements and packages must perform two critical tasks: i) Capture attention. For other products and target markets. Advertising is also concerned about the placement of their advertisements. For example. attention does not pose much of a problem. For Compaq. what he does depends on the target market. and the situation. it is obvious that name selection influences how consumers interpret product features. consumers are highly involved with the product and will go to considerable lengths to secure product relevant information. Products such as carbonated drinks and detergents. Suppose that marketer is responsible for developing a campaign designed to increase the number of users for a liquid ‘toilet cleaner’. the market is interested in. there is a particular column devoted to queries on skin/beauty care. While advertising in magazines.There are companies which use linguistics and computers to create names that convey the appropriate meaning for products. they will most likely attend to it sometimes it is the other way round. Consumers of these kinds of product will search for media where relevant information is available. This is the reason why companies devote so much of time. it is difficult to reach consumers at exactly this point. From this. two strategies appear reasonable: i) To utilize stimulus characteristics such as full-page ads bright colors. while ‘paq’ means small. marketers have the difficult task of trying to communicate with them at times when their interest level is low and non-existent. 5) Advertising Evaluation: A successful advertisement (or any other form of marketing message) must accomplish four tasks: i) Exposure: It must physically reach the consumer. For some products and target markets (fashion items and accessories and heavy users of these items). But the focus on choosing this brand name was on the total meaning conveyed by the interaction of the meaning of the name’s parts. Interest in this product arises only when the need for the same surfaces. ‘com’ means computer and communications. . The topic may range from using celebrities endorsing the virtues of the product or using health and cleanliness as a major plank. If the target market is interested in the product category. and ii) To tie the message to a topic. For example. Once consumers are exposed to the message. The unique spelling attracts attention and also gives “a scientific” impression. and in that particular brand. 3) Media Strategy: The fact that the exposure process is selective rather than random is the underlying basis for effective media strategies.

Marketers attempt to understand buying behavior for several reasons. only few reach one’s awareness. hearing. and opinion leaders. and culture and sub-cultures. including roles. An individual at different times may perceive the same item in a number of ways. and lifestyles. A firm’s ability to establish and maintain satisfying customer relationship requires an understanding of buying behavior. taste. For example. that the room light is on. smell polluted air or water. receive’s information inputs. organizing. smell. reference groups. Information inputs that relate to one’s strongest needs at a given time are more likely to be selected to reach awareness. or touch a product. iv) Memory: It must be stored in memory in a manner that will allow retrieval under the proper circumstances. 1) Buyers’ reactions to a firm’s marketing strategy have a great impact on the firm’s success. Consumer buying behavior refers to the buying behavior of ultimate consumers. it occurs when a person receives information inconsistent with personal feelings or beliefs. 1. psychological influences are considered on purchasing decisions – perception. It is concluded with a discussion of social influences that affect buying behavior. If you are concentrating on this paragraph. those who purchase products for personal or household use and not for business purposes. when. social classes. Different people perceive the same thing at the same time in different ways. Buying behavior is the decision processes and acts of people involved in buying. 2) In the marketing concept stresses that a firm should create a marketing mix that satisfies customers. marketers must examine the main influences on what. Perception Process and Buying behavior Marketers at successful organizations like McDonald’s. This phenomenon is sometimes called selective exposure because an individual select which inputs will reach awareness.4. and how consumers buy. you probably are not aware that cars outside are making noise. they do not reach your awareness until they are pointed-out. and using products. Although one receives numerous pieces of information at once. marketers are in a better position to predict how consumers will respond to marketing strategies. The selective nature of perception. family. see a friend. 3) By gaining a better understanding of the factors that affect buying behavior. When a person hear an advertisement. or that you are touching this page. perception is a three-step process. influence their behavior as consumers. As the definition indicates.Partly determine people’s general behavior and thus. go great efforts to understand their customers’ needs and gain a better grasp of customers’ buying behavior.8. It is not by random chance that many fast-food commercials are aired near mealtimes. personality and self-concept. on seeing an . Marketers strategies make use perceptual processes to gain and retain customer. Even through these perception processes operate internally. where. and touch. An individual’s current set of needs affects selective exposure.ii) Attention: It must be attended to by the consumer. motives. Information inputs are sensations received through sight. Perception is the process of selecting. Even though you receive these inputs. Consumer buying behavior is influenced by the perception also which is psychological influence. To find-out what satisfies buyers. and interpreting information inputs to produce meaning. iii) Interpretation: It must be properly interpreted. the first step may result not only in selective exposure but also in two other conditions: 1) Selective Distortion: It is changing or twisting currently received information. Here. Person select some input and ignore others because do not have the ability to be conscious of all inputs at one time. Customers are more likely to turn in to these advertisements at these times. they are very much affected by social forces outside the individual. learning attitudes.

4) Perceived price. When people are looking for the old. is the assignment of meaning to what has been organized. retail stores. Consumer’s imagery is concerned with: 1) Product positioning. One method. In an attempt to draw attention to its brand.4. Although marketers cannot control buyers’ perceptions. Interpretation. Page no. services. Several problems may arise from such attempts. Unless a product or package change is accompanied by a promotional program that makes people aware of the change. Consumer Imagery Book Matter [Book Code: 22. and . they also wanted a classic look so that customers would perceive their products to be the familiar ones they had been buying for years. a manufacturer that changes a product or its package faces a major problem. a customer may forget many selling points if they contradict personal beliefs. Consumers’ perceive images of products brands. they often try to influence them through information. prices. and manufacturers. 2) Selective Retention: In selective retention. called closure. 1. an individual must mentally organize and integrate new information with what is already stored in memory. when Smucker’s re-designed its packaging.14. For example. a buyer who perceives information inputs to be inconsistent with prior beliefs is likely to forget the information quickly.9. First. People use several methods to organize. Products and brands have symbolic value for individuals. a buyer may block-out a salesperson’s presentation.111. CB By Majumdar] Consumers have a number of enduring perceptions. however. a person remembers information inputs that support personal feelings and beliefs and forgets inputs that do not. Third. Thus. 3) Positioning of services. a buyer may receive a seller’s information but perceive it differently than was intended. 5) Perceived quality. For example.advertisement promoting a disliked brand. Second. product quality. marketers told designers that although they wanted a more contemporary package design. To produce meaning. that are particularly relevant to the study of consumer behavior. or images. familiar product or package. occurs when a person mentally fills in missing elements in a pattern or statement. it can be said that perceptual process influences buying behavior of consumer which should be intelligently used by marketers. a viewer may distort the information to make it more consistent with prior views. when a toothpaste producer advertises that “35 per cent of the people who use this toothpaste have fewer cavities”. For this reason. a customer might infer that 65 per cent of users have more cavities. the third step in the perceptual process. A person bases interpretation on what he or she expects or what is familiar. 6) Price/quality relationship. 8) Manufacturer’s image. a consumer’s perceptual process may operate such that a seller’s information never reaches that person. an organization may suffer a sales decline. they may not recognize the new one. who evaluate them. After hearing a sales presentation and leaving a store. For example. on the basis of their consistency (congruence) with their personal pictures of themselves. sounds or statements in its advertisements. an advertiser will capitalize on closure by using incomplete images. 2) Product repositioning. 7) Retail store image. Information inputs that reach awareness are not received in an organized form. This distortion substantially lessens the effect of the advertisement on the individual. The second step in the process of perception is perceptual organization.

it might be the mint taste or tartar control Important product attributes like taste are useful segmentation tools because they are easy to identify. As products become more complex and the marketplace more crowded. Successful positioning is based on consumer’s reality and familiarity. For example. The benefits featured in a product’s positioning must reflect attributes that are important to and congruent with the perceptions of the targeted consumer segment. when segmenting the market for digital cameras. it might be that it tastes great or that it is less filling. 4) By Product or Service Class: Margarine competes as an alternative to butter. companies have relied on product attributes such as resolution quality to define market segments and develop appropriate products. 2) By Use or. Marketers of different brand in the same category can effectively differential their offerings only if they stress the benefits that their brands provide rather than their products’ physical features. 3) By User: Facebook is a social networking site used exclusively by college students. consumers rely more on the product’s image and claimed benefits than on its actual attributes in making purchase decisions. its positioning. The Kodak Company offers cameras ranging from 6 megapixels to 14 megapixels for the non-professional camera buyer. Positioning is what the customer believes and not what the provider wants them to believe. Positioning Strategies The major positioning strategies are: 1) By Attribute or Benefit: This is the most frequently used positioning strategy. Only college students may participate with their campus e-mail IDs.9. Ford and Chevy need not apply. 6) By Price or Quality: Tiffany and Costco both sell diamonds.4. It compliments the company’s segmentation strategy and selection of target markets. 1. For a light beer. i. Product Positioning The way a product is perceived or positioned by a consumer is probably more important than what it actually is. 5) By Competitor: BMW and Mercedes often compare themselves to each other segmenting the market to just the crème de la crème of the automobile market.e. but also very difficult to create and maintain. In today’s highly competitive marketplace. Managing product positioning requires that marketer . Positioning is more important to the ultimate success of a product than are its actual characteristics. Application: The users of Apple computers can design and use graphics more easily than with Windows or UNIX. Marketers use the following to position their products: NET MATTER The essence of successful marketing is the image that a product has in the mind of the consumer. although products that are poorly made will not succeed in the long run on the basis of image alone. a distinctive product image is most important. Tiffany wants us to believe that their diamonds are of the highest quality. The core of effective positioning is a unique position that the product occupies in the mind of the consumer. Product positioning is the essence of the marketing mix. Apple positions its computers based on how the computer will be used.. It converges what the meaning of the product is and how it can fulfill the consumer needs. while butter provides better taste and wholesome ingredients. For toothpaste. Positioning can change due the counter measures taken at the competition. Margarine is positioned as a lower cost and healthier alternative to butter. while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices. Facebook is too cool for MySpace and serves a smaller. more sophisticated cohort.9) Perceived risk.1.

Once the image of a product is established in the consumer’s mind. when first opened. Attribute ratings are then subjected to various statistical techniques and a perceptual map can be extracted. this is the job of market research not just what the entrepreneur thinks is true. Product Re-Positioning From time to time. products or brands that consumers consider similar share like benefits and attributes. such as a competitor cutting into the brand’s market share or too many competitors stressing the same attribute. Typically. consumer’s resists change. lightness. All of the outlet designs were the same.9. Consumer parked the car and went to the window to order and pickup very-low-priced burgers. comparable to the Ford Thunderbird. Perceptual Mapping Marketers use a method called perceptual mapping to position products against competitors.2. Here. For example. Perceptual maps measure the way products are positioned in the minds of consumers and show these perceptions on a graph whose axes are formed by produce attributes. Checkers or Rally’s of today. and/or promotional or personal selling benefits. Another reason to re-position a product or service is to satisfy changing consumer preferences. Re-positioning involves reeducating the consumer about changes in important product. fries. etc. were part of a chain similar to the Hot ‘N’ Now Hamburgers. in response to changes in the market environment.4. playing up brand attributes that had previously been ignored. marketers re-position products. first introduced as a small sporty car. how the attributes relating to the product are seen in the customers’ eyes and whether there are any product “gaps” in the market. Researchers create perceptual maps by surveying members of the target market. McDonald’s restaurants. similar brands are . generally. 1. On the map. the marketer may be forced to re-position it in response to market events. Now McDonald’s offers sit-down family restaurants with an emphasis on value at lower prices. For example. asking people to rate products across multiple product attributes. The maps provide a research tool to assess how multiple products in a category are positioned. The growth of the fast-food chain McDonald’s can also be viewed from the perspective of repositioning. likely attributes used in the analysis would include sweetness. and is impossible to achieve overnight. The menu is extensive and the interior and exterior decor varies from restaurant to restaurant Regardless of how well positioned a product appears to be. The Mercury Cougar. however. By understanding the perceptual maps of consumers in targeted segments. often with a fun place for the kids to play. some premium brand marketers have repositioned their brands to justify their higher prices. rather than trying to meet the lower prices of high-quality privatelabel competition. Subjectivity Perceptual Mapping Prevention Selectivity Expectation Past Experience Influences on Perceptual Mapping Measuring consumer perceptions is an important part of positioning. they see it in terms of a map or grid that clusters like product of brands together. carbonation. Perceptual mapping is based on the belief that when consumers think of a product category. and shakes. the segment targeted as well as the image of the car changed. Repositioning is difficult to achieve effectively. fruitiness. price. marketers can see where their products fit with others in the market. distribution.know the customer and that he understand the competition. if researchers were interested in soft drinks. was successfully re-positioned as a mid-sized car.

. Thus. and the Fairfield Inn provides rooms and suites at “prices that will make customers smile”. Marriott’s Hotels and Resorts brand claims to provide customers with “superior service and genuine care”. Gaps typically indicate: 1) A true opportunity in the market that marketer might be able to pursue. Many service companies feature real service employees in their ads (as tangible cues) and some use peoplefocused themes to differentiate themselves. such as air pump athletic shoes and shoes with shocks. These include delivery vehicles painted in distinct colors. and mouse-pads on laptop computers). one thing a perceptual map tells marketers is who their direct competitors are (those plotted near to one another) and what brands represent less vigorous competition. 1. based on consumer reference prices. Perceptions of price unfairness affect consumers’ perceptions of product value and.4.4. which is why there is not competitor there. the Courtyard brand provides “essential services and amenities to business travelers”. No one is happy knowing he or she paid twice as much for an airline ticket or a theater ticket as the person in the next seat. For example. the Residence Inn is designed for extended stays. image becomes a key factor in differentiating a service from its competition.4. the marketing objective is to enable the consumer to link a specific image with a specific brand name. imaginative experiences and delights its customers’ senses”. as low. as fair – has a strong influence on both purchase intentions and purchase satisfaction. relationship pricing. Thus. the Renaissance Hotels and Resorts brand provides “distinctive decor. However. Internal reference prices are those prices (or price ranges) retrieved by the consumer from memory. Reference prices can be external or internal. they must be careful to avoid perceptual confusion among their customers. and efficiency pricing.plotted close together. and dissimilar brands are plotted far apart. For example. proposed three types of pricing strategies based on the customer’s perception of the value provided by the purchase: satisfaction-based pricing. Reference Prices Products advertised as “on sale” tend to create enhanced customer perceptions of savings and value. 2) A combination of attributes that nobody actually needs or wants.”) in an ad offering a lower sales price. consider the perception of price fairness. and that the differential pricing strategies used by some marketers are perceived as unfair by customers not eligible for the special prices. and a variety of other specialty items. It enables them to see gaps in the positioning of all brands in the product or service class and to identify areas in which consumer needs are not being adequately met. For example. lightweight cell-phones. Positioning of Services Compared with manufacturing firms. One study. 1. focused on the special challenges of service industries in pricing intangible products. Many service companies market several versions of their service to different market segments by using a differentiated positioning strategy.9. their willingness to patronize a store or a service. Internal .3. if a magazine publisher wants to introduce a new magazine to Generation Y. (There are many examples of products invented to fill these types of gaps. An advertiser generally uses a higher external reference price (“sold elsewhere at. Many service marketers have developed strategies to provide customers with visual images and tangible reminders of their service offerings. ultimately.. affinity club members).9. The technique of perceptual mapping helps marketers to determine just how their products or services appear to consumers in relation to competitive brands on one or more relevant characteristics. and 3) A combination of attributes that is impossible to deliver to the consumer without the development of new technology. service marketers face several unique problems in positioning and promoting their offerings. A reference price is any price that a consumer uses as a basis for comparison in judging another price. there is some evidence that customers do pay attention to the prices paid by other customers (such as senior citizens. he may use perceptual mapping to uncover niche of consumers with a special set of interests that are not being adequately or equally addressed by other magazines targeted to the same demographic segment. Because services are intangible. packaged hotel soaps and shampoos. Perceived Price/Price Image How a consumer perceives a price – as high. frequent flyers. Different formats used in sales advertisements have differing impacts. to persuade the consumer that the product advertised is a really good buy. restaurant matchbooks. Blank spaces on perceptual maps indicate gaps in the market.

Consumers like to believe that they base their evaluations of product quality on intrinsic cues.. In some cases. page no.e. in food. consumers use physical characteristics (e. Unlike products. they note the quality of the office and examining room furnishings.14. even in classes taught by the same professor). a defective haircut is difficult to correct. however. 1. they are variable they are perishable. To overcome the fact that consumers are unable to compare competing services side-by-side as they do with competing products. Whereas a defective product is likely to be detected by factory quality control inspectors before it ever reaches the consumer. most services are first sold and then produced and consumed simultaneously.9. and from customer to customer (e.67.g. others are extrinsic. which are first produced. and then consumed. consumers’ internal reference prices change. Perceived Quality NET MATTER Consumers often judge the quality of a product or service on the basis of a variety of informational cues that they associate with the product. 1.4. such cues provide the basis for perceptions of product and service quality: 1) Perceived Quality of Products: Cues that are intrinsic concern physical characteristics of the product itself.68. in haircuts.. there is little opportunity to correct it. This is true because of certain distinctive characteristics of services: They are intangible. However. then sold. an inferior service is consumed as it is being produced: thus. In evaluating a doctor’s services. CB by Majumdar] . from service employee to service employee..5. the interactive quality of services often declines.4. Either singly or together. and the professionalism of the nurse. extrinsic cues) to evaluate service quality. Without special effort by the service provider to ensure consistency of services during peak hours. Some of these cues are intrinsic to the product or service. the flavor of ice cream or cake) to judge product quality.6.g. or aroma. such as size. consumers rely on surrogate cues (i. which many consumers value.9. and they are simultaneously produced and consumed.. in waitperson service. marketers try to standardize their services in order to provide consistency of quality. because that enables them to justify their product decisions (either positive or negative) as being “rational” or “objective” product choices. During peak demand hours.g.reference prices play a major role in consumers’ evaluations and perceptions of value of an advertised (external) price deal. they use extrinsic characteristics to judge quality. e. Because the actual quality of services can vary from day to day. service image is likely to decline. just as the negative impression caused by an abrupt or careless waiter is difficult to correct. as well as in the believability of any advertised reference price. the pleasantness of the receptionist. More often than not. color. 2) Perceived Quality of Services: It is more difficult for consumers to evaluate the quality of services than the quality of products. flavor. all contribute to the consumer’s overall evaluation of the quality of a doctor’s services. The downside of service standardization is the loss of customized services. because both the customer and the service provider are hurried and under stress. For example. the number (and source) of framed degrees on the wall. Some marketers try to change demand patterns in order to distribute the service more equally over time. Price/Quality Relationship Book Matter [Book Code:22.

phone ordering. store layout. Because price is so often considered an indicator of quality. ease of merchandise return. aisle placement and width. Outlet image. whether of a retail store. and credit policies. location convenience. If person feel there is a good match between the image of an outlet and person own self-image. and carpeting and architecture. Different functional attributes suit different types of customers and different shopping situations. such as performance and durability. some product advertisements deliberately emphasize a high price to underscore the marketers’ claims of quality. Elevators. It could be the layout. selection or assortment. Outlet image results from a mix of functional and psychological attributes. salesclerk service. Merchandise Service Clientele Physical Facilities Convenience Promotion Table 3-10: Image Attributes at Retail Stores Quality. and so on. One study suggested that consumers using a price/quality relationship are actually relying on a well-known (and. but Consumer know – both from local advertising and from conversations with others who shop there – that the store stocks the type of goods Consumer is seeking. merchandise offered as part of the service. At the same time. rest rooms. find it overwhelming and would rather go to a small office supply retailer or order from a catalog. and other factors that can be measured to some degree and used to compare one outlet objectively with its competitors. that consumers attribute different qualities to identical products that carry different price tags. and that such consumer characteristics as age and income affect the perception of value.9. at times. the retail outlet image is wrong for Consumer. Social-class appeal. Image is very much in the eye of the beholder – it is what the consumer perceives it to be and it varies from person to person. . a home shopping network. Service in general. and store personnel. air conditioning. Something about the place is not what Consumer expected or is not quite right. may also include store layout. products with lower prices maybe interpreted as reduced quality. Consumer have not shopped there before. As Consumer walk into the store. 1. self-image congruency (fit between self-image and store image). price ranges. and pricing. warranties. They include such subjective considerations as a sense of belonging. delivery service. others. Retail Store Image Consumer walks into a department store with several purchases in mind. shopping ease. a feeling of warmth or friendliness or a feeling of excitement.7. Marketers understand that.Perceived product value has been described as a trade-off between the product’s perceived benefits (or quality) and the perceived sacrifice – both monetary and non-monetary – necessary to acquire it. they rely less on the price and brand name as indicators of quality than while they evaluate the product’s prestige and symbolic value. hence. For whatever reasons. Although some enjoy the wide selection of a store like Office Depot. and symbols and colors. styling or fashion.4. Psychological attributes are a little more difficult to identify and compare across outlets. has a great deal to do with why consumers choose to shop there. A number of research studies have found that consumers rely on price as an indicator of product quality. displays. in service situations. Consumer stop dead in his tracks. and Consumer turn around and leave. A later study found out that consumers use price and brand to evaluate the prestige of the product but do not generally use these cues when they evaluate the product’s performance. a catalog. A shopper hoping to spend a few quiet moments wandering around a bookstore is at ease with a very different set of psychological attributes than the customer at a busy newsstand looking for a magazine to read on the train when traveling home after work. the lighting. presence of self-service. Perhaps it is the combination of all these that makes Consumer feet uneasy. the clerks or even the other shoppers. person is more likely to shop there. Functional attributes include merchandise selection. more expensive) brand name as an indicator of quality without actually relying directly on price per se. General convenience. when consumers evaluate more concrete attributes of a product. and parking access. preferring speed and ease in shopping. Sales promotions. credit policies. guarantees. lighting. advertising. the merchandise. a retailer’s home page on the web or even a flea market.

Manufacturers’ Image Consumer imagery extends beyond perceived price and store image to the producers themselves. the extent to which the consumer is uncertain about the personal consequences of buying. brand will be worth what it costs. Thus.9. social. using or deposing of an offering. Manufacturers who enjoy a favorable image generally find that their new products are accepted more readily than those of manufacturers who have a less favorable or even a “neutral” image. and situational-ideal-social images.e. As perceived risk increases. Retail stores have images of their own that serve to influence the perceived quality of products they carry and the decisions of consumers as to where to shop. Another factor of consumers’ motivation to process information about a product or brand is perceived risk. There is a positive correlation between pioneer brand image and an individual’s ideal self-image. Conservative versus modern projection of the store. decor. if a consumer believes that using the brand is fun. and reliability.4.e. which suggests that positive perceptions toward pioneer brands lead to positive purchase intentions. they often hesitate to make the final decision because they cannot be sure that all of their buying goals will be accomplished with the purchase. conversely. magnitude of price advantage). Perceived Risk Dowling and Staelin defined risk as a consumer’s perceptions of the uncertainty and adverse consequences of engaging in an activity. The type of product the consumer wishes to buy influences his or her selection of a retail outlet. When consumers intend to buy a product or a service. acceptance. However. reputation. customers’ feelings of warmth.4. frequency of price advantage) as having lower prices overall than competing stores that offer larger discounts on a smaller number of products (i. ideal-social.. when it is tempting to hold frequent large sales covering many items. or ease. Regardless of what she actually pays for the dress she selects (regular price or marked-down price). 1. but it tends to be higher: 1) When little information is available about the offering. the consumer’s evaluation of a product often is influenced by the knowledge of where it was bought. Merchandise in use and returns and adjustments policies. ideal. and lighting. 2) When the offering is new. Consumers choose brands perceived as similar to their own actual. such strategies may result in an unwanted change in store image. A consumer wishing to buy an elegant dress for a special occasion may go to a store with an elegant.8. 1. Consumers are more likely to pay attention to and carefully process marketing communications when perceived risk is high.9. Thus. she will probably perceive its quality to be high. If negative outcomes are likely or positive outcomes are unlikely. frequent advertising that presents large numbers of price specials reinforces consumer beliefs about the competitiveness of a store’s prices. music. In times of heavy competition. he will buy it and use it when he is having fun with his friends and to him. and product assortments. consumers tend to collect more information and evaluate it carefully. These images stem from their design and physical environment. This finding has important implications for retailers’ positioning strategies.. and . perceived risk is high.Store Atmosphere Institutional Factors Post-transaction Satisfaction Atmosphere of congeniality. such as Saks Fifth Avenue. 3) When the offering has a high price. their pricing strategies. high-fashion image. Consumer behavior is motivated to reduce risk.9. she may perceive the quality of the identical dress to be much lower if she buys it in an off-price store with low-price image. so long as he perceives it as fun. A study of retail store image based on comparative pricing strategies found that consumers tend to perceive stores that offer a small discount on a large number of items (i. Perceived risk can be associated with any product or service.

functional risk. obviously have lower perceived risk than those who do not engage in high-risk activities.9. such as smoking or drug use. whether or not such risks actually exist. An individual’s perception of risk varies with product categories. self-confidence or ego? 4) Social Risk: If I buy Product X. CB by Majumdar] 1. how much of my time will I have wasted in search or will my use of the item require more time than I had anticipated or am willing to give? 7) Linked-Decision Risk: If 1 buy Product X. financial risk. The following are common types of risk: 1) Functional or Performance Risk: If I buy Product X. They would rather exclude some perfectly good alternatives than chance a poor selection.4. time risk) in the purchase of a plasma television set than in the purchase of an automobile. psychological risk.1. will it actually deliver the benefits it promises? 2) Financial Risk: If I buy Product X.9. and time risk. Risk that is not perceived – no matter how real or how dangerous – will not influence consumer behavior. physical risk. product choices) to a few safe alternatives. Types of Perceived Risk Every purchase decision involves some level of risk.2. Some consumers tend to perceive high degrees of risk in various consumption situations.14. the consumer perceives some degree of “risk” in making a purchase decision. Perceived risk is defined as the uncertainty that consumers face when they cannot foresee the consequences of their purchase decisions.9. For example. There are several types of risk that can discourage consumers from either making a choice or delaying the purchase decision. will I lose money? Will I find it does not give the anticipated value for the money? Can I find the same product for a lower price somewhere else? 3) Psychological Risk: If I buy Product X. Risk Reduction Strategies Book Matter [Book Code: 22. consumers are likely to perceive a higher degree of risk (e. 1. will this result in additional purchases of other goods or services as a direct result of having selected this item? 1. The major types of risks that consumers perceive when making product decisions include functional risk. one beyond my ability to use properly or one that is poorly manufactured? 6) Time Risk: If I buy Product X and it proves inadequate.9.4. will owning it in any way damage my self-image. depending on the person. Variation of Perception of Risk Consumer perception of risk varies.4) When the offering is low priced Consumers must constantly make decisions regarding what products or services to buy and where to buy them. adolescents who engage in high-risk consumption activities. It should be stressed that consumers are influenced by risks that they perceive. will other people think less of me because I made a socially unacceptable choice? 5) Physiological Risk: If I buy Product X.69.. others tend to perceive little risk. Page no. the situation. The degree of risk that consumers perceive and their own tolerance for risk taking are factors that influence their purchase strategies.g. and the culture. is there potential for physical harm because I selected a product of inferior quality. The amount of risk perceived depends on the specific consumer. the product. High-risk perceivers are often described as narrow categorizers because they limit their choices (e. This definition highlights two relevant dimensions of perceived risk: uncertainty and consequences.g. Researchers have also identified product-specific perceived risk . this type of risk is termed product-category perceived risk. financial risk.9. social risk. Because the outcomes (or consequences) of such decisions are often uncertain.3. For example. Low-risk perceivers have been described as broad categorizers because they tend to make their choices from a much wider range of alternatives.4.9..

4) Social Risk: Social risk is the risk that a poor product choice may result in social embarrassment. 6) Time Risk: Time risk is the risk that the time spent in product search may be wasted if the product does not perform as expected. from a celebrity.4.The types of perceived risk are: 1) Functional Risk: Functional risk is the risk that the product will not perform as expected.4. and rely on its reputation. well-known brand. 4) Buy the brand that has been tested and approved by a private testing company. 5) Buy the brand offering a money-back guarantee with the product. 2) Buy the brand that the consumer has used before and has found satisfactory. 7) Buy the most expensive and elaborate model of the product. 3) Financial Risk: Financial risk is the risk that the product will not be worth its cost. How Consumers’ Handle Risk/Dealing with Perceived Risk Consumers develop various strategies to relieve perceived risk. 3) Buy a major. including the following: 1) Buy the brand whose advertising has endorsements or testimonials from typical consumers. 1. . 6) Buy the brand that has been tested and approved by a branch of the government.9. 5) Psychological Risk: Psychological risk is the risk that a poor product choice will bruise the consumer’s ego.9. 2) Physical Risk: Physical risk is the risk to self and others that the product may pose. or from an expert on the product.

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