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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?
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.
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.
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.
must have different channels of distribution. etc. This knowledge will be useful to the marketers in exploiting marketing opportunities and meeting the challenges of the market. where. which require after-sale service such as T. sets. 9) Implementing the “Marketing Concept”: This calls for studying the consumer behavior.5. and cultural. Marketers can study actual consumer purchases to find out what they buy. The marketer who takes decision regarding brand. needs. purchase timing. The starting point for understanding buying behavior is the stimulus − response model of buyer behavior (as shown in figure 10. Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy where they buy. This figure shows that marketing and other stimuli enter the consumer’s “black-box” and produce certain responses. The company that really understands how consumers will respond to different product features. Thus study of consumer behavior is important to understand the changes. decisions regarding channels of distribution are taken on the basis of consumer behavior. 5) Exploiting Marketing Opportunities: A study of consumer behavior helps the marketers to understand the consumers. prices. where they are turned into a set of observable buyer responses: product choice. aspirations. Marketers must figure out what is in the buyer’s black-box. For instance. when they buy. which are sold and purchased solely on the basis of low price. 7) Consumer Preferences are Changing and becoming highly diversified: This shift has occurred due to availability of more choice now. problems. The consumers’ response indicates that the shift had occurred. packaging. 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. and promotion. and why they buy. Thus identification of target market before production becomes essential to deliver the desired customer satisfaction and delight. 4) Decision Regarding Sales Promotion: A study of consumer behavior is also vital in making decisions regarding sales promotion. In case of those articles. 1. which has two parts. on the basis of consumer behavior for promoting sales of the products. First. consumers seek value for money. Today. political. the buyer’s characteristics influence how he or she perceives and reacts to the stimuli. technological. dealer choice. Marketing stimuli consist of the four Ps: product. Thus. lesser price but with superior features. and how much. and advertising appeals has a great advantage over its competitors. 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. All these inputs enter the buyer’s black-box.V. price. brand choice. gifts etc. discount. how and how much they buy.1).1. The marketer wants to understand how the stimuli are changed into responses inside the consumer’s black-box. and purchase amount. place. But learning about the whys of consumer buying behavior is not so easy – the answers are often locked deep within the consumer’s head. as customers needs have to be given priority. the information technologies are changing very fast in personal computer industry. the buyer’s decision process itself affects the buyer’s behavior. Model of Consumer Behavior Consumers make many buying decisions every day. expectations. Other stimuli include major forces and events in the buyer’s environment: economic.3) Decision Regarding Channels of Distribution: The goods. refrigerators etc. Second. 8) Rapid Introduction of New Products: Rapid introduction of new product with technological advancement has made the job of studying consumer behavior more imperative. 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. must have cheap and economical distribution channels.1: Black -box Model of Buying Behavior .
moving toward or away form it. Cues are minor stimuli that determine when. or belonging. habits of persons change with age. Perception is the process by which an individual selects. However. furniture. They eat baby food in the early years. Learning involves changes in an individual’s behavior arising from experience. therefore. they learn. lifestyle.1. emotional feelings. perceptions. Salesperson should.6. beliefs and attitudes. Psychological Factors A person’s buying choices are influenced by four major psychological factors – motivation. and personality of behavior.6. Taste in clothes. 3) Learning: When people act. Further the tastes. Factors influencing Consumer decision making Factors Affecting Consumer Behavior A consumer’s buying behavior is influenced by cultural. An attitude is a person’s enduring favorable or unfavorable evaluations.2. and interprets information inputs to create a meaningful picture of the world. discomfort. music. thirst. cues. and food. and how a person responds.1. responses. A belief is a descriptive thought that a person holds about something. or faith. stimuli. A drive is a strong internal stimulus impelling action. esteem. People have attitudes toward almost everything: religion. politics. the prospective buyer will respond in a predictable manner. opinion. Beliefs may be based on knowledge. people acquire beliefs and attitudes. and personality and self-concept.6. Attitudes put them into a frame of mind of liking or disliking an object. Attitudes lead people to behave in a fairly consistent way toward similar objects.It is assumed that if a sales person applies a stimulus (or sales presentation). Personal Factors A buyer’s decisions are also influenced by personal characteristics. clothes. 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. Most human behavior is learned.1. where. A motive is a need that is sufficiently pressing to drive the person to act. and reinforcement. which the salesperson is trying to sell. most foods in the growing and mature years. personal. occupation. the prospect may or may not buy the product. Other needs are psychogenic. and action tendencies toward some object or idea. These include the buyer’s age and stage in the life cycle. Learning theorists that learning is produced through the interplay of drives. How the motivated person actually acts is influenced by his or her perception of the situation. A need becomes a motive when it is aroused to a sufficient level of intensity. 2) Perception: A motivated person is ready to act. social. . and special diets in the later years. they arise from physiological states of tension such as hunger. and psychological factors. perception.1. economic circumstances. 1. learning. Psychological factors of buyer or consumer behavior includes attitudes. motivations. they arise from psychological states of tension such as the need for recognition. Cultural factors exert the broadest and deepest influence. understand the psychological aspects in buyer behavior. 1) Motivation: A person has many needs at any given time. 1) Age and Stage in the Life Cycle: As a person passes through different stages of his life he needs different set of products. Manufacturers are very interested in the beliefs people carry in their heads about their products and services. 4) Beliefs and Attitudes: Through doing and learning. These in turn influence buying behavior. They may or may not carry an emotional charge. Some needs are biogenic. 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. 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. 1.
widowhood. a computer company might discover that many prospects show high self-confidence. savings. sociability. debts. dominance. subculture. we mean distinguishing psychological characters that lead to relatively consistent and enduring responses to environment. Self concept is the totality of person’s thoughts and feelings with reference to himself or herself as the object. and interest rates. Marketers try to identify the occupational groups that have above-average interest in their products and services. Marketers search for relationships between their products and lifestyle groups. Marketers try to develop brand images that match the target market’s self-image. and behaviors through his or her family and other key institutions. 1. social class. The marketer may then aim the brand more clearly at the achiever lifestyle. progress. Cultural Factors Culture. and lunchboxes. 4) Personality and Self-Concept: Each person has a distinct personality that influences buying behavior. The basic characteristics of a culture are as follows: a) Culture exists to serve the needs of the society. A child growing up in the United States is exposed to the following values: achievement and success. b) Culture is acquired from society.and recreation is also age related. Product choice is greatly affected by economic circumstances. dominance. stability. Personality is usually described in terms of such traits as self-confidence. borrowing power. provided that personality types can be classified accurately and that strong correlations exist between certain personality types and product or brand choices. autonomy. defensiveness. spend able income (level. and occupation may lead quite different lifestyles. and autonomy. efficiency and practicality. a computer manufacturer might find that most computer buyers are achievement-oriented. work shoes. reposition. external comfort. The growing child acquires a set of values. activity. country club membership. and re-price their products so they continue to offer value to target customers. 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 .3. Some recent work has identified psychological life-cycle stages. Marketers pay close attention to changing life circumstances – divorce. which are transmitted through both the language and symbolic features of the society. marketers can take steps to redesign. savings and assets (including the percentage that is liquid). Personality can be a useful variable in analyzing consumer behavior. and attitude towards spending versus saving. 3) Lifestyle: People from the same subculture. and adaptability. For example. throughout our life time. d) Culture is transferred from generation to generation with new influences constantly being added to the cultural ‘soup’. norms. and social class are particularly important in buying behavior. material comfort. Social Class e) Culture will be adaptive to the needs of the society. individualism. and time pattern). A blue-collar worker will buy clothes. interests. For example. Related to personality is self-concept (or self-image). c) Culture is learned through interactions with other members of the culture. air travel. A lifestyle is the person’s pattern of living in the world as expressed in activities. rituals. By personality. 2) Occupation and Economic Circumstances: Occupation also influences a person’s consumption pattern. remarriage – and their effect on consumption behavior. freedom. Marketers of income-sensitive goods pay constant attention to trends in personal income. It consists of the learned values.1. and opinions. A company president will buy expensive suits. humanitarianism and youthfulness. Consumption is shaped by the family lifecycle. preferences. perceptions. and symbols of society. and large sailboat. If economic indicators point to a recession. 1) Culture: Culture is the most fundamental determinant of a person’s wants and behavior.6. deference. Lifestyle portrays the “whole person” interacting with his or her environment. 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).
semi-skilled and unskilled laborers in the unorganized sector. They have a strong drive for success and indulge in shopping for goods that speak of their social status. viz. upper middle class. c) Social class is not measured by a single variable but is measured as a weighted function of one’s occupation. Their families are usually male dominated.g. iv) Lower Class: This class consists of blue collar workers like factory laborers. upper class. More frequently. Many subcultures make up important market segments. etc. Social class can be subdivided into four categories. 1. a child's normative reference group will be his family. education. ii) Upper Middle Class: This class consists of well-educated people holding top class positions in middle size firms. iii) Middle Class: This class consists of white collar workers like middle level and junior executives. 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 . religions. interests. ii) Comparative Reference Group: Reference group which will serve as a benchmark for certain specific or narrowly defined attitudes are called comparative reference group. “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”. which are hierarchically ordered and whose members share similar values.4. Every human being because of his sociable nature prefers to evaluate his abilities and opinion based on the comparison of others abilities and opinions.members. 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. 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. These people are more family oriented and depend on their family for economic and emotional support. income.1. with individuals able to move into a higher social class or drop into a lower class. According to Herbert Hyman. Such a group serves as a point of comparison especially for evaluating ones own status. Reference groups are of different types. For example. Social Factors In addition to cultural factors. and marketers often design products and marketing programs tailored to their needs. beliefs and behavior”. and social roles and statuses. Subcultures include nationalities. family. racial groups. small business owners. etc. salespeople. status. b) Social class is hierarchical.. or professionals. stratification takes the form of social classes. wealth. attitudes or behavior. According to Philip Kotler. preferences. people with large businesses and wealthy corporate executives. d) Social class is continuous rather than concrete. 3) Social Class: Virtually all-human societies exhibit social stratification. Social classes are relatively homogenous and enduring divisions in a society. and behavior. e. These people lead a conservative lifestyle and spend moderately.. middle class and the lower class. Social classes have the following characteristics: a) Persons within a given social class tend to behave more alike.6. prestige. 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. “Reference group is the type of group that an individual uses as a point of reference in determining his own judgments. i) Upper Class: This class consists of people who are rich and possess considerable wealth. a consumer’s behavior is influenced by such social factors as reference groups. and geographic regions.
A role consists of the activities that a person is expected to perform. People choose products that communicate their role and status in society. wife. c) They create pressures for conformity that may affect actual product and brand choices. providing financial means to its dependents is unquestionably a basic family function. and children on the purchase of different products and services. behavior and values. and organizations. affection. Family is of two types: a) Family of Orientation: From parents a person acquires an orientation towards religion. Here the person will tend to avoid the group and will adopt values. One such reference group is the contractual group. c) Suitable Family Lifestyles: Another important family function in terms of consumer behavior is the establishment of a suitable lifestyle for the family. and courage. Marketers are aware of the status symbol potential of products and brands. 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. and the personal and jointly held goals of the spouses determine the importance placed on education or career. dress and grooming standards. People are significantly influenced by their reference groups in at least three ways: a) Reference groups expose an individual to new behaviors and lifestyles. Buying roles change with evolving consumer lifestyles. Here a person may have membership or face to face contact but he disapproves of the group values. and on the selection of other entertainment and recreational activities. 3) Roles and Statuses: A person participates in many groups – family. b) They influence attitudes and self-concept. These are the groups with which the person interacts and has regular contact. appropriate manner and speech and the selection of suitable educational and occupational or career goals. wear expensive suits. d) Socialization of Family Members: It encompasses young children and adults. and is a central function. clubs. on television viewing. intimacy. Each role carries a status. Upbringing. Functions of the Family a) Economic Well-Being: Economic security. These generally include moral and religious principles. Marketers are interested in the roles and influence of the husband. support. The individual may not have a formal membership and also does not have face to face contact but he aspires to be a member. This aspiration acts as a positive influence on that person's attitude and behavior. and drink Chivas Regal scotch. Husband-wife involvement varies widely by product category and by stage in the buying process. attitudes and behavior which will be in opposition to that of the group. care. attitudes and behavior. politics. The family is the most important consumer buying organization in society. interpersonal skills. experience. attitudes and behavior. A Supreme Court justice has more status than a sales manager. This is a group whose values or behavior does not appeal to the individual. 2) Family: Family members can strongly influence buyer’s behavior. Here his behavior will be the opposite or reverse to the norms of the particular reference group. In countries where parents live with their grown children. and it has been researched extensively. the person totally disapproves. their influence can be substantial. . Thus company presidents often drive Mercedes. v) Disclaimant Group: Another type of reference group is the disclaimant group.they are able to evolve on the person's attitudes. The person’s position in each group can be defined in terms of role and status. self worth etc. iv) Aspirational Group: An aspirational group is one to which the individual wishes or aspires to belong. b) Family of Procreation: This involves a more direct influence on every buying behavior it includes one’s spouse and children. b) Emotional Support: Love. and a sales manager has more status than an office clerk. on reading.
“A motive can be defined as a drive or an urge for which an individual seeks satisfaction. which induce a buyer to purchase a given product. such as mother or housewife. According to D. For example. A consumer purchases a particular product or service because of a strong inner feeling or force. and smelling the scents. iv) Sensory Stimulation: Shopping can provide sensory benefits such as looking at and handling merchandise. 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. ‘Motive’ can be a strong desire. which make them act in a particular way while buying certain goods or services. J. companion shopping. It is expected that a woman expecting her first child will shop extensively for baby clothes and other stuff meant for infants. ii) Status and Authority: Shopping may provide an opportunity to attain a feeling of status and power by being waited on. iii) Learning about New Trends: Shopping provides consumers with information about trends and movements. “Buying motives are those influences or considerations which provide the impulse to buy. Stanton. Davar. or visiting sales. an urge from within. Durian. and product symbols reflecting attitudes and lifestyles. . 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. considerations and impulses. feeling. a drive. It becomes a buying motive when the individual seeks satisfaction through the purchase of something”. which plays a role in the consumer’s decision to purchase a product/service. iii) Pleasure of Bargaining: Shopping may offer the enjoyment of gaining a lower price through bargaining. or just “people watching”. Motive | Need (Hungry) Goal (preparing/buying) Goods (Food) Behavior Goal achievement (Eating) Motives behind purchase are of two types. A buying motive can thus be said to all the desires.1. Behavior is a goal directed activity.7.J. Thus an understanding of buying motives will help the firm to know what are the consumers attitudes. Motive is an effectual desire that prompts one to a definite action. encounters with friends. ii) Diversion: Shopping can offer a diversion from the routine of daily life and is a form of recreation. According to R. 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.S. 2) Social Motives i) Social Experience: Outside the home shopping can provide opportunities for seeking new acquaintances. listening to the sounds (music). 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. Buying Motives of Consumers Motive is the inner urge that moves or prompts a person to some action. It is also accepted that a housewife does the grocery shopping for her home.1. According to W. which instills in him a strong desire to have possession of the same. “A motive is an inner urge that moves or prompts a person to action”. induce action or determine choice in the purchase of goods or services”. stimulus or emotion.
1. i. he thinks much before taking a decision to purchase it.9. and head of the family for durable or luxury items. whether to buy.. Here Professor is the influencer.2: Buying Process . Thus. when to buy or where to buy. The need can be triggered by internal stimuli. Buying role of Consumers There are following six different roles of persons. 3) Decider: The decider is a person who ultimately determines any part or whole of the buying decision. what to buy. In the former case one of the person’s normal needs-hunger. for some commodities immediately without much consideration such as items of daily use while for some other commodities mainly luxury or durable items. Sometimes.1. parents are buyers. Generally.8. The purchaser or consumer takes his buying decision. Broadly. 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. 6) User: User is the person who actually uses or consumes the services or products. 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. the purchaser passes through five distinct stages in taking a decision for purchasing a particular commodity. The marketer’s task is to study the buying process and its main participants and their role in the buying process.1. how to buy. 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. but purchases are made by the parents. he consults others. Children (deciders) are the deciders for purchasing the toys. 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. Consumers Decision Making Process / Buying Process Decision-making is a process of selecting an appropriate option from two or more alternatives. 2) Influencer: Influencer is a person who explicitly or implicitly has some influence on the final buying decision of others.e. Children are the deciders for buying the toys. house lady for kitchen provisions. thirst. 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. 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. Pre purchase Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior Figure 10. Buyer may be the decider or he may be some other person. 5) Buyer: The buyer is the person who actually purchase.
g. 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.. a need is aroused by an external stimulus. We can distinguish between two levels of arousal. Each information sources performs a different function in influencing the buying decision. or she watches a television ad for a Hawaiian vacation. Consumer information sources fall into four groups. Some basic concepts will help us understand consumer evaluation processes. the probability that the consumer will buy. physicians often learn of new drugs from commercial sources but turn to other doctors for evaluative information. iii) Public Sources: Mass media. At the next level the person may enter active information search: looking for reading material. In the latter case. iv) Experiential Sources: Handling. ii) The consumer is looking for certain benefit from the product solution. neighbors. examining. Commercial information normally performs an informing function. i) The consumer is trying to satisfy a need. dealers. A person passes a bakery and sees freshly baked bread that stimulates her hunger. Generally speaking the consumer receives most of the information about a product from commercial source–that is. salespersons. Evaluative Criteria Beliefs Attitudes Intentions Figure 10. a product possesses various characteristics. There are several decision evaluation processes the most current models of. marketers can identify the most frequent stimuli that spark an interest in a product category. rating organization. phoning friends and visiting stores to learn about the product of key interest to the marketers. The milder search state is called heightened attention. the relevant evaluative criteria may be fuel economy. uses the product. in the consumer’s mind. The relative amount and influence of these information sources vary with the product category and the buyer’s characteristics. purchase price and reliability. are the major information sources to which the consumer will turn and the relative influence each will have on the subsequent purchase decision. They can then develop marketing strategies that trigger consumer interest. consumer. In the car example. At this level a person simply becomes more receptive to information about a product. Evaluation may be thought of as a system as depicted in figure 10.e.sex-rises to a threshold level and become a drive. But most effective information comes from personal sources. she admires a neighbor’s new car. 3) Evaluation of Alternatives: There is no single evaluation process used by all consumers or by one consumer in all buying situations. iv) Intentions: These measure the probability that attitudes will be acted upon. That is. Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers.3: i) Evaluative (Choice) Criteria: These are the dimensions used by consumers to compare or evaluate products or brands. acquaintance ii) Commercial Sources: Advertising.3: Evaluation System ii) Beliefs: These are the degrees to which. e. i) Personal Sources: Family.. The assumption is that favorable attitudes will increase purchase intentions. which see the process as cognitively oriented. For example. friends. they see the consumer as framing judgment largely on a conscious and rational basis. . i. 2) Pre-purchase Information Search: An aroused consumer will be inclined to search for more information. marketers-dominated sources. and personal sources perform a legitimizing or evaluation function. displays. packaging. roominess.
iii) Quantity decision (one computer). They will pay the most attention to attributers that deliver the sought benefit. Consumers vary as to which product attributers they see as most relevant and the importance they attach to each attribute. 4) Purchase Decision: In the evaluation stage.iii) The consumer sees each product as a bundle of attributers with varying abilities of delivering the benefit sought to satisfy this need. The set of beliefs about a brand makes up the brand image. or avoid a purchase decision is heavily influenced by perceived risk. 5) Post-purchase Behavior: After purchasing the product. For example. If performance falls short of expectations. or complaining to other groups (such as business private or government agencies). postpone. b) The consumer’s motivation to comply with the other person’s wishes. The consumer develops a set of brand beliefs about where each brand stands on each attribute. 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. The may take public action by complaining to the company. The attributes of interest to buyers vary by product. ii) The second factor is unanticipated situation factors that may erupt to change the purchase intention. Preferences and even purchase intentions are not completely reliable predictors of purchase behavior. In executing a purchase intention. A consumer’s decision to modify. They may seek information that confirms its high value. ii) Post-purchase Actions: The consumer’s satisfaction or dissatisfaction with the product will influence subsequent behavior. the customer is disappointed. if it beyond expectations the customer is delighted. iv) Timing decision (weekend). 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. Marketers must monitor post purchase satisfaction. Private action includes making a decision to stop buying the product (exit option) or. . The extent to which another person’s attitude reduces. Dissatisfied consumer may abandon or return the product. if it meets expectations the customers is satisfied. However. These feelings signify a difference in whether the customer buys the product again and talks favorably or unfavorably about the product to others. in buying sugar a consumer gives little thought to the vendor or payment method. warning friends (voice option). the consumer may make up to five purchase sub decisions: i) A brand decision (brand A). going to a lawyer. post purchase actions and post purchase product uses. The market for a product can often be segmented according to attributes that are salient to different consumer groups. ii) Vendor decision (dealer 2). In all these case the seller has done a poor job of satisfying the customer. i) Post-purchase Satisfaction: What determines whether the buyer will be highly satisfied. 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. The marketer’s job does not end when the product is bought. Purchase of everyday product involves fewer decisions and less deliberation. The consumer may also form an intention to buy the most preferred brand. the consumer will experience some level of satisfaction or dissatisfaction. the consumer forms preference among the brand in the choice. If the consumer is satisfied he or she will exhibit a higher probability of purchasing the product again. two factors can intervene between the purchase intention and the purchase decision. i) The first factor is the attitudes of others. and v) Payment-method decision (credit card). one’s preferred alternative depends on two things: a) The intensity of the other person’s negative attitude towards the consumer’s preferred alternative.
3) Habitual Buying Behavior/Routinized Response Behavior: At this level. etc. 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. consumers have some experience with the product category and a well-established set of criteria with which to evaluate the brands they are considering. So the buyers have to take very few decisions for the purchase of such type of goods. The buyers are very well aware of the product class. On the other hand. 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. they simply review what they already know. Their search for additional information is more like “fine-tuning”. The decisions to buy toothpaste. However. they must gather additional brand information to discriminate among the various brands. If they sell or trade the product new product sales will be depressed. increase his brand comprehension and gain confidence in the brand. a personal computer. and a new car are all very different. If all purchase decisions required extensive effort. and also introduce new features to the products. The marketers must understand the information gathering and evaluation activities of the prospective consumers. Here the buyers do not give much thought. if all purchases were routine.10. 1. Subcultures Buying Habits of Consumers/Levels of Consumer Decision-Making Consumer decision making varies with the types of buying decision. ii) He must try to attract new customers by making use of sales promotion techniques like point of purchase displays. On a continuum of effort ranging from very high to very low. If consumers store the product in a closet. Here the marketer’s job is to design a communication programme. which will help the buyer to gather more information. This behavior is adopted for the purchase of low cost.1. they may search for a small amount of additional information. they have not fully established preferences concerning a select group of brands. . or search or take a lot of time to make the purchase. The products in this class are generally classified as low involvement goods. a tennis racket. They have to educate the prospective buyers to learn about the attributes of the product class.4: Types of Buying Behavior 1) Complex Buying Behavior/Extensive Problem Solving: At this level. the product is probably not very satisfying and word-of-mouth will be not being strong. The marketer has to ensure two tasks: i) The marketer must continue to provide satisfaction to the existing customers by maintaining quality. 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. service and value.. in others. off-price offers. know the brands and also have a clear preference among the brands.iii) Post-purchase Use and Disposal: Marketers should also monitor how buyers use and dispose of the product. then consumer decision-making would be an exhausting process that left little time for anything else. then they would tend to be monotonous and would provide little pleasure or novelty. frequently purchased items. In some situations. Consumer may also find new uses for the product.
Consider a customer who purchases a kindle. and sponsoring frequent reminder advertising. is this really what the consumer wants? The fact is. More specific examination involves assessing any unique abilities the company might have in satisfying identified consumer desires. coupons. light product to function as an electronic reader. However. the tangibles include mostly plastic and some integrated circuitry. Theodore Levitt was one of the most famous marketing researchers. the marketing communications should aim at supplying information and help the consumer to evaluate and feel good about his/her brand choice. money. Consumer Behavior and Marketing Strategy Net Matter When a consumer buys something. 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. The market leader and the minor brand in this product category have different marketing strategies. The market leader will try to encourage habitual buying behavior by dominating the shelf space. we can ask. 4) Variety-Seeking Buying Behavior: Some buying situation are characterized by low involvement but significant brand differences. the plastic enables the product to be small and light and the integrated circuitry enables this small. Once again. Marketing firms often adopt poor strategies when they do not understand exactly what a product truly is. which may suggest unsatisfied wants and needs. No reasonable consumer would trade any significant sum of money for plastic and circuitry. . In fact. a product is potentially valuable bundle of benefits. such as consumers’ lifestyles and income levels. With this in mind. Challenger firms will encourage variety seeking by offering lower prices. The analysis begins with a study of general market trends. avoiding out-of-stock conditions.their relative importance and the high standing of the marketer’s brand on the more important brand attributes. he or she gives-up resources in the form of time. Outcomes like these are valuable and what the customer is ultimately buying. it is seen as a cornerstone of the marketing concept. In other words. 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. an important orientation or philosophy of many marketing managers. this function enables the consumer to enjoy the benefits of information availability in a very convenient package. free samples. and energy in return for whatever is being sold. here consumers often do a lot of brand switching. These are the parts that make-up the product. and advertising that presents reasons for trying something new. 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.11. A sound understanding of consumer behavior is essential to the long-run success of any marketing program. deals.1. because they do not understand exactly what they are selling. A consumer is not really buying attributes or the physical parts of a product. What does he or she really get? Well.
Consumers’ reactions to this marketing strategy determine the organization’s success or failure. and even companionship. Consider the soft drink market. major segments of ultimate consumers are distinguished by the type of purchase situation: i) The food store segment. For example. place. Promotion.A variety of recent trends have resulted in many new product offerings for consumer satisfaction. an understanding of consumer behavior is the basis for marketing strategy formulation. status. price. To survive in a competitive environment. However. Society including flexible transportation. Evaluation Providing superior customer value requires the organization to do a better job of anticipating and reacting to customer needs than the competition does. It is the difference Purchase between the total benefits and the total costs that constitutes customer Use value. and promotion. the marketer may decide to concentrate company efforts on serving only one or a few of the identified target-markets. Unique packaging arrangements (container type and size). insurance. weight training books. However. 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 . and clothing. 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. ii) The “cold bottle” or vending machine segment. 2) Target-Market Selection: The process of reviewing market opportunities often results in identifying distinct groupings of consumers who have unique wants and needs. and they have significant impacts on the larger society in which they occur. the economic and technological forces Marketing Strategy Product. depending on the person and the type of car. For example. and parking fees. This can result in a decision to approach each market segment with a unique marketing offering. as well Information search as risking injury from an accident. Marketing strategy is conceptually very simple. adding to environmental pollution. Distribution. gasoline. companies attuned to the fitness interests of Americans have been quick to offer such new products as exercise bicycles. As figure aside indicates. pleasure. image. companies sensing consumers’ unmet medical needs have offered coin-operated blood pressure testing machines at shopping centers and other convenient locations. these reactions also determine the success of the consumers in meeting their needs. the strengths and weaknesses of competitors. In other cases. 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. It begins with an analysis of the market the organization is considering. This requires a detailed analysis of the organization’s capabilities. maintenance. the Colgate-Palmolive company was able to identify a unique group of consumers in need of a certain type of deodorant soap. 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. point of purchase promotions. Alternative evaluation and dealing with traffic jams and other frustrations. an organization must provide target customers more value than is provided by its competitors. By segmenting consumers according to their lifestyle patterns and personalities. comfort. Price. owning a car can provide a Firm number of benefits. An excellent example of this occurred in the bath soap market. and other variations are made for each segment. securing these benefits requires paying Consumer Decision Process Problem recognition for the car. which includes fast-food outlets. A series of decisions are made on four major ingredients frequently referred to as the marketing mix-variables – product. and iii) The fountain market. Here. In the healthcare field.
channel strength. or revised communication plan. Marketing strategy is formulated in terms of the marketing mix. often the bottom-line issue is a failure to understand the intended market. brand extension. 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 so forth. and curiosity. these strengths were not relevant to the household consumer market. and the technological. marketing research abilities. was a failure in part for this reason. it involves determining the product features. As companies turn to consumer feedback for new product guidance and ideas. not those of a management team. technological sophistication. ii) Company: A firm must fully understand its own ability to meet customer needs. advertising abilities. 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. market and consumer knowledge. and so forth.affecting the market. Although formal analyses might point to product life-cycles. This process combines facts (either from primary or secondary research. general managerial skills. that is. 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. This entire set of characteristics is often referred to as the total product. the organization identifies groups of individuals. Next. reputation. wants. This involves evaluating all aspects of the firm. highly innovative consumers attach more importance to stimulation. For example. or ineffective communication. many firms don’t understand how targeted consumers are likely to react to new products. Marketing skills would include new-product development capabilities. Market Analysis Components i) Consumer Insight and Product Development: When marketers attempt to get consumers to buy their products. and expectations. iii) Current and Potential Competitors: A thorough market analysis also examines current and potential competitors. households. sales data. legal. resulting in an insight that can lead to a new product. production capabilities. creativity. including its financial condition. IBM’s first attempt to enter the home computer market with the PC Jr. Consumer insight can be defined as an understanding of consumers’ expressed and unspoken needs and realities that affect how they make life. or firms with similar needs. The total product is presented to the target market. A traditional approach to this type of analysis focuses strategic thinking on staying ahead . 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). providing better information to marketers. and the current and potential customers in the market. most of the time they fail. Although IBM had an excellent reputation with large business customers and a very strong direct salesforce for serving them. These market segments are described in terms of demographics. media preferences. brand and product choices. On the basis of the consumer analysis undertaken in this step. company strengths and resources. or customer information) with intuition. communications. geographic location. price. existing product innovation. For example. and marketing skills. 1) Market Analysis: Market analysis is the process of analyzing changing consumer trends. affecting which advertising and positioning strategies will be most effective. Why is this failure rate so high? The answer is simple and straightforward – a new product must satisfy customers’ needs. characteristics that marketers can use to target product offerings and advertising to specific segments. service capabilities. current and potential competitors. Failure to adequately understand one’s own strengths can cause serious problems. marketing strategy is formulated. Different consumers possess different levels of innovativeness. research and development capabilities. distribution and services that will provide customers with superior value. Marketing strategy seeks to provide the customer with more value than the competition while still producing a profit for the firm. and economic environments. All these factors add dimension and insight to the potential success of a plan for a new product or service. and they must do it better than existing solutions. poor performance.
In India. and the language they use to describe it. For example. 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. This step generally involves consumer research. a firm cannot develop a sound marketing strategy without anticipating the conditions under which that strategy will be implemented. Market segment involves four steps: i) Identifying product related need sets. i) Product-Related Need Sets: Organization should identify needs of the market and offer a product. 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. cater to a large segment thus proving itself to be economical to the market segment need. while many young single individuals. and media usage. 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. To be viable. it is necessary to have a complete understanding of the potential customers. each region. provides a different environment. and how will current competitors react? Firms can construct alternative scenarios to anticipate reactions of current competitors and anticipate how firms. young couples with no children. 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. Clearly. would require radically different strategies. including focus group interviews. Tastes and combinations of food products would change significantly across states. they should be described in terms of their demographics. might respond with similar products. each state. A market segment is a portion of a larger market whose needs differ somewhat from the larger market. 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. It is only with such a complete understanding that we can be sure we have correctly identified the need set. but focus instead on using innovation to weaken or make competitors irrelevant in the marketplace. the physical environment. Other. lifestyles. iv) Selecting an attractive segment(s) to serve. the need for moderately priced.of the competition. services according to their capabilities may be a reputation. more innovative firms pay less attention to matching and beating their rivals. how it is thought about by our customers. Thus. These consumers can be grouped into one segment as far as product features and perhaps even product image are concerned despite sharply different demographics. In addition. iii) Describing each group. features. we cannot communicate effectively with our customers if we do not understand the context in which our product is purchased and consumed. though not necessarily competitors at present. and product concept tests. a technology. ii) Grouping customers with similar need sets. and technological developments affect consumer needs and expectations as well as company and competitor capabilities. iii) Description of Each Group: Once consumers with similar need sets are identified. how easy will it be for competitors to enter the market. Logistics and infrastructure across the interiors of Maharashtra and M. young couples with no . With these potential capabilities they should develop such product that satisfy more than one need. How does a firm accomplish this. an existing product. iv) Conditions: The state of the economy. government regulations. and middle-aged couples whose children have left home. It could also involve an analysis of current consumption patterns. fun. ii) Customers with Similar Need Sets: The next step is to group consumers with similar need sets. sporty automobiles appears to exist in many young single individuals. a segment must be larger enough to be served profitably. or some other skill set. In order to design an effective marketing program. The development of computers has changed the way many people work and has created new industries.P. Since a market segment has unique needs. surveys.
and middle-aged couples whose children have left home may want the same features in an automobile. often described as the four P’s (product.children. everyday products might sell better in mass retail outlets. direct selling. Such a plan must specify the essential components of the marketing mix. Generally. weight-loss products which give consumers immediate results by curbing their appetites. 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. 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. Obviously consumer wants to avoid offering products that are considered deficient. The pleasing products category is usually the one where ethical issues come-up. vehicle air bags have great value but they do not necessarily provide pleasure or entertainment. This decision is based on our ability to provide the selected segment(s) with superior customer value at a profit. 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. When used correctly. whereas simple. but they also may lead to long-term problems for both the consumer and society. these products have the long-run benefit to consumers of losing weight. products fall into four categories pertaining to social responsibility. For example. Products can often lead to shortterm consumer satisfaction. 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. and so forth are important considerations. Where will consumers expect and want to buy this product – through mass retailers. For example. Consumer research is critically important in developing segmentation strategy as well as formulating the marketing mix. the media required to reach each group and the appropriate language and themes to use with each group would likely differ. c) Pleasing Products: These products provide pleasure value to consumers. the size and growth of the segment. d) Desirable Products: These products deliver high practical value alongwith pleasurable value. . The failure to disclose that a product will not function properly without necessary components is unethical. and the cost of providing the superior value. For example. ii) Distribution: The second element of the marketing mix is place (or distribution). but they can be harmful in the long-run. Plus they help consumers immediately and have long-running benefits. we must select our target market – that segment(s) of the larger market on which we will focus our marketing effort. consumers enjoy cigarettes and alcohol but these products obviously can be harmful to consumer’s health and the health of others. place. Salutary products offer practical value. b) Salutary Product: These products are good for both consumers and society in the long-run. and both also are affected by the decision process of consumers. the intensity of the current and anticpirated competition. price. In this phase. 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. firms decide the most effective outlets through which to sell their products and how best to get them there. and promotion). An example might be a faulty appliance. Thus. iv) Attractive Segment(s) to serve: Once we are sure we have a thorough understanding of each segment.
which media (television. and word-of-mouth marketing. a company that pays millions of dollars for a Super Bowl commercial will often face criticism from consumers and push back on price. 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. the behavioral objective for most marketing communications is often much more immediate. pictures. is prohibited by law. It is also common for consumers to complain about marketing efforts that lead to overall higher prices. newspapers. salesforce. Unfortunately. highest prices charged and greater profits made. 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. 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. Internet) and which specific vehicles (television programs. seek more information about the product. magazines. For example. as well as knowledge of the perception process. public relations. 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. many times consumers believe that products are promoted in ways that are “too good to be true”. sales promotion.iii) Price: Price will also have its emotive as well as functional content. This creates skepticism and a decline in trust toward the promotional message. This practice. c) What Message will achieve the Desired Effect on Audience: What words. or a host of other communications effects. others are focused on channel members or those who influence the target-market members. This practice is actually prohibited by law as well. 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. and any other signal that the firm provides about itself and its products. websites. or rely on consumers to find us on the Internet? If we advertise in mass media. A firm marketing such items would be wise to communicate directly with these individuals. which is known as the bait-and-switch method. 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. packaging. The best approach depends on the situation at hand. like the product. While this may be the ultimate objective. feel good about having bought the product. 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. specific magazines. Price ← Continuous movement → Added value Consumer concerns will pitch backwards and forward between price and added value depending on both functional and emotional concerns. Marketing communications include advertising. iv) Communications: As marketers use promotion to communicate a product’s value through techniques such as advertising. pediatric nurses are often asked for advice concerning diapers and other non-medical infant care items. it may seek to have the audience learn something about the product. An unethical use of pricing is to state that a regular price is a sales price. For example. recommend the product to others. radio. and symbols should we use to capture attention and produce the desired effect? Marketing messages can range from purely factual statements to pure symbolism. . Developing an effective message requires a thorough understanding of the meaning the target audience attaches to words and symbols. use direct mail. That is. It is well documented that the relationship between price and perceived value will always interplay in people’s minds when choosing particular products.
while free pickup and delivery of the car would be an auxiliary service. However. proceed to buy it. and feelings about the product or brand. Most marketing firms specify the product position they want their brands to have and measure these positions on an ongoing basis. Retaining current customers requires that they be satisfied with their purchase and use of the product. service refers to auxiliary or peripheral activities that are performed to enhance the primary product or service.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. That is. 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. month. Sales are likely to occur only if the initial consumer analysis was correct and if the marketing mix matches the consumer decision process. It does not require purchase or use for it to develop. Providing services that customers do not value can result in high costs and high prices without a corresponding increase in customer value. As figure above indicates. it is essential that the firm furnish only those services that provide value to the target customers. Auxiliary services cost money to provide. we would consider car repair to be a product (primary service). requires that customers continue to believe that your brand meets their needs and offers superior value after they have used it. Therefore. customer satisfaction is a major concern of marketers. virtually all firms evaluate the success of their marketing programs in terms of sales. 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. the outcomes of the firm’s marketing strategy are determined by its interaction with the consumer decision process. become aware of the product and its capabilities. creating satisfied customers. Service as a separate component of the marketing mix plays critical role in determining market share and relative price in competitive markets. Thus. c) Customer Satisfaction: Marketers have discovered that it is generally more profitable to maintain existing customers than to replace them with new customers. You must deliver as much or more value than your customers initially expected. Obviously. and thus future sales. It is determined by communications about the brand from the firm and other sources. Thus. or year? Do consumers seek information shortly before purchasing our product? If so. Therefore. as they produce the revenue necessary for the firm to continue in business. . convincing consumers that your brand offers superior value is necessary in order to make the initial sale. one must have a thorough understanding of the potential consumers’ needs and of their information acquisition processes to succeed at this task. v) Service: Here. This image consists of a set of beliefs. and it must be enough to satisfy their needs. A firm that does not explicitly manage its auxiliary services is at a competitive disadvantage. as well as by direct experience with it. decide that it is the best available solution. 4) Consumer Decisions: The consumer decision process intervenes between the marketing strategy (as implemented in the marketing mix) and the outcomes. 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. pictorial representations. and become satisfied with the results of the purchase. where? Answering these questions requires knowledge of the decision process used by the target market for this product. The firm can succeed only if consumers see a need that its product can solve.
c) Social Welfare: Consumer decisions affect the general social welfare of a society. b) Physical Environment Outcomes: Consumers make decisions that have a major impact on the physical environments of both. MARKET SEGMENTATION . 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. industry growth rates. Decisions made in one society. To the extent that marketing activities increase or decrease injurious consumption. their own and other societies. and so forth. and so forth) are generally made indirectly by consumers’ elected representatives. Injurious consumption occurs when individuals or groups make consumption decisions that have negative consequences for their long-run well-being. and wage levels. Their decisions on whether to buy or save affect economic growth. including the decision to forgo consumption. have a major impact on the economic health of many other countries. and drug abuse are staggering.ii) Individual Outcomes a) Need Satisfaction: The most obvious outcome of the consumption process for an individual. at times they differ. we must remain aware that consumer behavior has a dark side.2. The social costs of smoking-induced illnesses. These two processes are closely related and are often identical. is a major determinant of the state of a given country’s economy. is some level of satisfaction of the need that initiated the consumption process. employment levels. fulfilling one need affects their ability to fulfill others due to either financial or time constraints. For example. Decisions concerning how much to spend for private goods (personal purchases) rather than public goods (support for public education. the availability and cost of capital. This can range from none (or even negative if a purchase increases the need rather than reduces it) to complete. Western Europe. These decisions have a major impact on the overall quality of life in a society. 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. health care. whether or not a purchase is made. particularly large wealthy societies like the United States. b) Injurious Consumption: While we tend to focus on the benefits of consumption. and Japan. Injurious consumption. both developed and developing. The types of products and brands purchased influence the balance of payments. they have a major impact on the social welfare of a society 1. However. iii) Society Outcomes a) Economic Outcomes: The cumulative impact of consumers’ purchase decisions. Two key processes are involved – the actual need fulfillment and the perceived need fulfillment. alcoholism. parks. 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. For most consumers. affects society as well as the individuals involved. 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.
Annapurna atta. which caters to the need of a large segment of population having dandruff. oral care (Pepsodent and Close-up). deal in a large variety of products targeted at various consumer segments. For example. and Rexona). there is a strong risk that: i) The key customers are missed. 5) Target Marketing Communications: Businesses need to deliver their marketing message to a relevant customer audience. Bru. fabric wash (Surf. each solving some problem or catering to some consumer need. Rin is aimed at the mid-market segment. Their needs. Liril. They are. 6) Gain Share of the Market Segment: Unless a business has a strong or leading share of a market. pressures from distributors and limited space on the shelves. Through careful segmentation and targeting. drive. HLL is a highly consumer-focused company with different brands catering to different consumer segments with different needs and purchasing power.In 2004. If the target market is too broad. food (Kissan. This research provides the marketer with the vital information on the basis of which he eventually enters a consumer market with a relevant product. the target customer can be reached more often and at lower cost. and Breeze). A lot of research is put in before a marketer segments the market or recognizes a consumer segment. color cosmetics (Lakme). for example they grow older. There are several important reasons why businesses should attempt to segment their markets. and ii) The cost of communicating to customers becomes too high / unprofitable. Knorr-Annapurna and Modern Foods). Ponds and Rexona are for women. personal wash (Lifebuoy. By segmenting markets. eats. change their buying patterns. therefore. wants. Creating separate offers for each segment makes sense and provides customers with a better solution. 3) Better Opportunities for Growth: Market segmentation can build sales. The era of mass markets has now given way to micro-markets with a highly individualistic profile. By marketing products that appeal to customers at different stages of their life (“life-cycle”). and Wheel). lower-priced product. businesses can often achieve competitive production and marketing costs and become the . Consumers now are much more demanding and the need for products suiting their tastes and preferences has increased. businesses can raise average prices and subsequently enhance profits. or where they live. and Wheel caters to the lower end of the market. Elle 18 line of color enamel is targeted at early teens and young adults. Most marketers today. While Surf caters to the high-end consumers. Lipton). and household care (Vim). By segmenting markets. The segments where HLL was present included skin care (Fair & Lovely and Ponds). change jobs or get promoted. Hindustan Lever Limited (HLL) was the largest Fast Moving Consumer Goods (FMCG) Company in India. Ponds. ice-cream (Kwality-Walls). form families. These are: 1) Better Matching of Customer Needs: Customer needs differ. it is unlikely to be maximizing its profitability. deodorant (Axe. Rin. Minor brands suffer from lack of scale economies in production and marketing. while Sunsilk is targeted as the hair expert for different hair kinds. a business can retain customers who might otherwise switch to competing products and brands. is a statement of their individuality. Clinic is for healthy hair. 4) Retain More Customers: Customer circumstances change. and preferences are different and so the products they buy will have to match these. hair care (Sunsilk and Clinic). This phenomenon has led marketers to segment markets. Gone are the days when one product suited all. beverages (Brooke Bond. especially Clinic AllClear anti-dandruff shampoo. what they wear. customers can be encouraged to “trade-up” after being introduced to a particular product with an introductory. In shampoos. In Lakme. different in how sensitive they are to price. while Axe is targeted at men. Lux. 2) Enhanced Profits for Business: Customers have different disposable income. drink. In deodorants.
customers having similar qualities are grouped in segments.2 B A Market segmentation by Age classes A and B 1. For example.2. 2 1 3 No market segmentation Complete segmentation Market segmentation of Income classes 1.” or “one-to-one marketing”. Stanton. purchasing power.” “customized marketing. segmentation offers the opportunity for smaller firms to compete with bigger ones. each of which tends to be homogeneous in full significant aspects”. They differ in their behavior and buying decisions. According to William J. Figure 7. In other words. For centuries. 3) Local Marketing: Target marketing is leading to marketing programs being tailored to the needs and wants of local customer groups (trading areas. Citibank provides different mixes of banking services in its branches depending on neighborhood demographics. or buying habits. 2) Niche Marketing: A niche is a more narrowly defined group. Davas. “Grouping of buyers or segmenting the market is described as market segmentation”. 4) Individual Marketing: The ultimate level of segmentation leads to “segments of one. typically a small market whose needs are not well served. hobbies. Marketers usually identify niches by dividing a segment into sub segments or by defining a group seeking a distinctive mix of benefits. buying attitudes. “Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-market or segments. neighborhoods. consumers were served as individuals: the tailor made the suit and the cobbler designed shoes for the individual .2. “The purpose of market segmentation is to determine difference among them or marketing to them”. Market represents a group of customers having common characteristics but two customers are never common in their nature. According to Philip Kotler. On the basis of these characteristics. “Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers. income and purchasing techniques. 2. where any group can conceivably be selected as a target market to be met with distinct marketing mix”. S. 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. geographical location. habits. 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.preferred choice of customers and distributors. an auto company may identify four broad segments: car buyers who are primarily seeking basic transportation or high performance or luxury of safety. 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. According to Philip Kotler. the segment of heavy smokers includes those who are trying to stop smoking and those who don’t care. For example.2. 1. 3. According to R.1. even individual stores).
. Snow-blowers. Demographic Segmentation The next commonly used basis for market segmentation is the demographic characteristics of the market. education. Miller Lite developed the “Miller Lite True to Texas” marketing program. Some of the demographic variables used are: 1) Age and Life-Cycle Stage: Consumers wants and liabilities change with age. religion. a market can be divided into four parts viz. . depending on climate.2. race. Demographic variables are the most popular bases for distinguishing customer groups. market density. family life-cycle. Basis of consumer market segmentation can be broadly divided into four broad categories which are shown in figure below. which are as follows: 1) Many firms need to find new ways to generate sales because of sluggish and intensely competitive markets. or climate. For example. young. 3) Many packaged-goods manufacturers are introducing new regional brands intended to appeal to local preferences. income. water and snow skis. A company then needs to identify which market segments it can serve effectively. children. Consumer market can be segmented into various segments by using different basis. This decision requires a keen understanding of consumer behavior and careful strategic thinking. Geographic segmentation refers to segmenting markets by region of a country or the world.2. is altering its menu outside its core southern market to reflect local tastes. To develop the best marketing plans. a restaurant known in the South for home-style cooking. generation. market size.3. 2) Computerized checkout stations with scanners give retailers an accurate assessment of which brands sell best in their region. Cracker Barrel. Customers in upstate New York can order Reuben sandwiches.3. Climate is commonly used for geographic segmentation because of its dramatic impact on residents’ needs and purchasing behavior. Consumer goods companies take a regional approach to marketing for four reasons. 4) A more regional approach allows consumer goods companies to react more quickly to competition.3. Bases for Market Segmentation Companies cannot connect with all customers in large.1. occupation. Basis for Segmenting Consumer Markets Geographic Segmentation Demographic Segmentation Psychographic Segmentation Behavioral Segmentation 1.2.2. or diverse markets. On the basis of age. a state-wide campaign targeting Texas beer drinkers.1. such as a census tract. gender. and those in Texas can get eggs with salsa. The geographic location of customers does help the firm in planning its marketing offer. This type of segmentation is quite common in dividing the rural and urban consumer market. nationality and social class. Geographic Segmentation This is generally the starting point of all market segmentation strategies. 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. broad. clothing. But they can divide such markets into groups of consumers or segments with distinct needs and wants. In demographic segmentation the market is divided into groups on the basis of variable such as age. 1. Market density means the number of people within a unit of land. and air-conditioning and heating systems are products with varying appeal. adults and old. managers need to understand what makes each segment unique and different. 2) Gender and Sexual Orientation: When God created human being he made Males and Females and gave them distinct survival needs. family size.
leisure activities. In India it is as diverse as from few hundred rupees a month to millions a month. with a similar ability to buy into their different likelihood to buy. 1. 7) Occupation: Various occupations can influence the buying behavior.e. It is behavioral concept enabling us to grasp and predict buyer behavior.3. sophisticated practitioners eventually realized that demographic information tells only part of the story about consumers’ buying preferences and purchase behaviors. values. 8) Educational Level: The academic standard segments people with same income i. An unmarried bachelor prefers to enjoy life and his purchase behavior will show more of food and entertainment and less of furniture. Life style reflects the overall manner in which persons live and spend time and money. gender. and race/ethnicity. reading habits etc. . This is because of the following psychographic variables: 1) Life Styles: Life style concept is also considered as another important variable determining buyer behavior.3) Marital Status: Life style of a person depends on whether he is married or not. 5) Social Class: It has a strong influence on preference in cars. People according to their situation and bringing up develop their own beliefs.2. It is important to place the role of psychographic targeting in context of demographics. Core values go much deeper than behavior or attitude and determine. Life style concept as a basis for segmentation is quite reasonable and desirable.3. In general. 6) Family Size: The size of the family affects the amount and size of purchases. 3) Values: Some marketers segment by core values. the questionnaire items included in a psychographics study are selected in view of the unique characteristics of the product category. and lifestyles as they relate to buying behavior in a particular product category. Life style concept has interdisciplinary approach as it involves sociology. clothing. psychographics refers to information about consumers’ attitudes. But a married person will purchase house and the furniture. i. people develop religious beliefs as per the religion they follow. However. home furnishings. These studies are typically customized to the client’s specific product category. People in sales and people in academic training will have different purchase behavior. In this scenario the customers will behave differently in terms of wants as per their income. 4) Income: Income varies along the population in any country. from the same profession. Marketers for many years based their targeting decisions almost exclusively on their audiences’ demographic characteristics – considerations such as the market’s age group. In other words. people’s choices and desires over the long term. culture. each of the customers may have a different attitude towards risk-taking and new product and stores.e. Many Companies design products and services for specific social classes. the form of targeting that historically preceded it and which now is practiced in conjunction with psychographics. psychology and demography. traditions and cultures also differentiate and segment the market. Marketers who segment by values believe that by appealing to people’s inner selves it is possible to influence their outer-selves. with similar education and income. And their purchase behaviors are greatly influenced by their beliefs. Numerous marketing research firms conduct psychographic studies for individual clients. Psychographic Segmentation Often it has been seen that two consumers with the same demographic characteristics may act in an entirely different manner. income level. 2) Personality: Marketers have used personality variables to segment markets. 9) Religion: Religious rituals. belief systems that underlie consumer attitudes and behavior. motivations. Even though the two may be of the same age. Not only during festivals but in normal life also people with different religious beliefs develop different lifestyles and different behavior as consumer. For example. 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. their purchase behavior. at a basic level. 4) Beliefs: This is one of the parameters of segmentation used by marketers to sell products. The consumption pattern of a big-sized joint family differs from a small-sized nucleus family. They endow their products with brand personality that corresponds to consumer personalities.
They are well-informed about the world. This study was made on American people. enough number of people in the segment to make it feasible. They are conservative and predictable. They have modest resources sufficient to meet their needs. They have wide interests and are concerned with social issues and are open to change. By catering to a segment. This can be done by VALS segmentation. and beliefs. age. explore. The target segment has to be profitable. Each of these segments has a distinctive lifestyle. They prefer leisure at home. They use established brands.e. value order. The demographic characteristics like. The segment must also be accessible. 4) Achievers: They are also placed high in the Maslow’s hierarchy of needs and are career and work-oriented. This classification is based on Maslow’s hierarchy of needs. They look for products which are durable. it is more difficult to identify psychographic characteristics of attitudes. The segment should be such that profits can be gained. social resources. authority and image is important to them. have value and function properly. benefits. and responsibility. They have taste and are leaders in business.In addition to psychographic studies that are customized to a client’s particular needs. role. However. psychological resources and in self-confidence. 2) Believers: They are in the principle-oriented category. Profits are the backbone of any organization. Abundant resources Principle Fulfilled Status Actualize r Achiever Striver Struggler Figure 7. 1) Fulfilled: As the name suggests. conventional people. Marketers also are on the look-out for new media that can reach the audience with minimum waste. but the segment must also grow in size. on the top are the people with abundant resources. and in government. people at the bottom lack in education.3. The figure shows their characteristics as well. it must have a proper size. profits must be ensured. attitude. They are practical consumers and conservative. sex education.3: Values and Lifestyle Segments (VALS) Action Experienc er Maker Believer Minimal resources For a segment to be worthwhile. They are conservative. circulation. beliefs. they are satisfied and mature people who are well-educated. VALS segments. The resources. and have high self-esteem. and are ready to increase their knowledge. knowledge. They live conventional lives. religion. They are workaholics. This divides the consumer into three general groups or segments. At the bottom are the people with minimal resources and. lifestyle. income. and express themselves in a variety of ways. One of the best known of these is SRI Consulting Business Intelligence’s (SRIC-BI’s) VALS system. It must be stable. They are active. consists of eight general psychographic segments as shown in figure 7. material rewards and prestige. and competition. Brand Managers can purchase “off-the-shelf” psychographic data from services that develop psychographic profiles of people independently of any particular product or service. i. marital status can easily be identified. They also favor established products and show their success around. so that the people belonging to a segment not only remain there. 3) Actualizers: They have abundant resources and are sophisticated in their taste and habits. occupation. . The eight segments also differ in their resources and orientations. interests. so that the marketer is able to reach the segment in an economical way. etc. Work provides them with a sense of duty. They make their dreams come true. and decision-making.. with their needs. strong faiths. possessed by those at the bottom are very little and as move upwards the resources increase. They can be reached through various media. Besides money and physical resources. They develop.
impulsive. social. enthusiastic. Eid. pick-up trucks and. Anniversary. where a customer may buy for just knowing the time. They are avid consumers and spend much on entertainment. They are low in economic. food. attitude towards. This has been a very effective method of segmenting the market for watches.4. and rebellious. Many marketers believe that behavioral variables – occasions. and psychological resources. videos. They are despairing and. They see success with money. Marketers often try to change customer perception of the best time to consumer a product by promoting alternative uses for a product. They indulge in exercise. or durability. whereas other consumers may buy these products on a weekly basis. 1. buyers are at different stages of readiness. This pattern of behavior changes. loyalty status. Another example of occasional segmentation is orange juice which is most often consumed at breakfast. or response to a product.2. rather than simply a breakfast meal. They are people engaged in construction work and work with their hands and in the industry. benefits. wine or boxes of chocolates for celebrating birthdays or Christmas. They buy tools. suspicious of new ideas. Makers experience the work by working on it. sports. But people prefer different cars because they seek different benefits. Their chief concern is to fulfill their primary needs of physiological security and safety needs. but orange growers have promoted drinking orange juice as a cool and refreshing drink at other times of the day. user status. Occasion segmentation helps boost product usage. have a low status in society. as they are enthusiastic to new ideas. Buyer ‘readiness’ or preparedness is one of the important variable used for segmenting the market.5) Strivers: They are a status-oriented category. They have enough resources and experiment in new ventures. those who will positively buy the product. purchase a product. 2) Benefits: Here. 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. buyers are divided into groups on the basis of their knowledge of. 6) Stragglers: These are poor people. usage rate. It can help firms expand product usage. people who are aware but not interested. struggling for existence. music. Winning moments etc. In contrast. without strong social bonds. 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. use of. recently Kellogg’s has attempted to change the image of cereals to that of an ‘any time’ snack. Buyers can be classified according to the benefits they seek. etc. Independence Day. There are unaware buyers. At any given time. They have construction skills and value self-sufficiency. For example.3. 7) Experiencers: They are action-oriented. Republic Day etc. For example. but have a low income as they are striving to find a secure place in life. people who are interested and are desirous to buy and lastly. some consumers may only purchase flowers. vital. or as a gift/ an accessory/ a dress item/ a jewellery item. clothing. or use a product or when they get the idea to buy. young. Diwali. They are concerned about the opinion of others. Education is low. The basic function of a car is transportation. all that helps them in practical work. low skilled. A company can consider critical life events to see whether they are accompanied by certain needs. 8) Makers: They are in the action-oriented category. Behavioral Segmentation In behavioral segmentation. buyers-readiness stage. They wish to be upwardly mobile and strive for more. ii) Special: Marriage. There can be 2 types of occasions: i) Regular: Like Holi. they buy stuff which helps them in achieving their purpose. movies. Let us take the example of a car. According to the occasions buyers develop a need. They represent a modest market and are loyal to their favorite brands. The benefits can be of four types. the marketer identifies benefits that a customer looks for when buying a product. and attitude – are the best starting points for consulting market segments. purchase a product or use a product. 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. They are politically conservative. They like to be stylish. outdoor recreation and social activities. Let us explain them with the choice of cars: .
and cigarette markets. breweries. In our example fashionable teenager. colleagues. coffee). 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. These people look for the economy in every purchase. The differentiation between them is based on the benchmark quantity defined by the marketer for each segment. need cosmetics on a regular basis. ii) Aware: People who have seen the advertisements but do not have enough knowledge about the technology. a fashion conscious lady or a regular corporate and nowadays because of fall in its price students also are the regular users. the following market segments are visible: i) Light: These are the categories of the users who are very infrequent users. iii) Heavy: There are people for whom the cosmetics are the most important purchase and they are heavy users of it. 3) User Status: Markets can be segmented into following classes depending on the user status. soft drinks.e. These various stages are: i) Unaware: People not following technology trend and completely unaware about its improvement and new innovations. In case of cosmetics an average housewife who is not very fashion conscious is a light user of the cosmetics. 5) Buyer-Readiness Stage: Another variable used for segmenting the market is buyer ‘readiness’ or preparedness to buy the product. Skoda Octavia. So when they buy cars they buy Mercedes Benz. Let us explain the category of user with an example of a product say Deodorant. There are unaware buyers. buyers are at different stages of readiness. For example. Accordingly. iii) Informed: These people get information from friends. v) Desired: These are the people who have gathered detailed knowledge. For example. 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. people who are aware but not interested. ii) Potential Users: This is the category where the usage rate is expected to be highest. Celebrities in entertainment world. but may lack money to purchase the product. those who will positively buy the product. probably have taken a trial. ii) Medium: The fashion-conscious teenagers are the medium users of cosmetics i. iv) Interested: People who have information and hence are variety-seekers. ii) Service: At times people buy things to avail some specific service. . as it is the most important part of their profession.i) Quality: There are people for whom the quality matters most in any purchase. politicians mostly use Hindustan Motors Ambassador bulletproof car. At any given time. At this stage more than quality or price the service that the product can give matters more. they use it very frequently. iii) First time Users: The users who use it for the first time. A market consists of people in different stages of readiness to buy a product. people who are interested and are desirous to buy and lastly. relatives who are users or technical people. 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. 4) Quantity Consumed/Usage Rate: The quantity consumed at any given time has also been the basis for segmenting the beverages (tea. the teenagers first deodorant used may be in his college days. iv) Regular User: A corporate big-wig always in big party or conference. corporate people are the potential users of deodorant. iv) Specially: People can be adventurous and sporty in purchase decisions for car and they would prefer Ferari etc. 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. the models etc.
For example. Dabur etc. Ponds and Anchor white. Vicco. ii) Soft Core Loyals: Those who are loyal to two or three brands in a product group are called soft-core loyals. They may not carry cash all the time but suddenly decide to buy something. Colgate Active Salt and Close-up Maxfresh were first introduced and today this new segment is facing intense competition. Cibaca. Hence the marketing decision makers have taken this as a parameter to segment the population. The popular brands are Neem. in case of credit cards. iii) Herbal Segment: This segment has captured barely 2% of the market. These are the customers for whom brand switching is as easy as changing a shirt.vi) Intended to Buy: People who have the knowledge. iv) Negative: People can be spendthrifts who fear of loosing money or misusing it. foam. there are some hidden costs which are not clarified by the salesperson during selling 1. 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.2. They would never ever go for a credit card. cinthol. and pears. iv) New Segment: In 2007. stores and other entities. brands like Forhans. pears.4. ii) Positive: They are serious but mobile people who need to buy suddenly at any time. They definitely need credit cards. Here. They may switch for a variety or for a special deal. Newspaper readers. iv) Switchers: Switchers are those customers who never stick to a brand. The marketer needs to watch such customers and motivate them to shift to the hard core loyalty segment. 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. 6) Loyalty Status (Competition Related): Consumers have varying degrees of loyalty to specific brands. lux. Pepsodent after its launch found some customers of Colgate switching between the two brands.. the segment sizes were as follows: i) Cosmetic Segment: This segment occupies 83% of the market. This consists of brands like Colgate. ii) Fluoride Segment: This group of buyers constituted above 15% of the market. Cibaca Top. iii) Indifferent: There are some people who are technology averse with systematic purchasing pattern. For example. Market Segmentation of Some Consumer Markets 1) Toothpaste Market: The toothpaste market in India can be divided into five segments. Promise. cigarette smokers and tea drinkers are some customer groups where such hard-core loyalties are commonly visible. cinthol. 7) Attitude: People have different attitudes towards different aspects of life. These brands mostly emphasize on freshness. As per the 1988 data. lux. where each brand emphasizes on the natural or herbal constituents in it. . and overall dental care. has the purchasing capacity and desire and are ready to buy. cinthol. in a credit card market they can be distinguished as follows: i) Enthusiastic: These are people having tendency of impulsive purchase. For example. and Colgate Fluoride project an element of gum-care. Hostile: People at times become very much irritated either by salespeople calling or meeting anytime. Babool. 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. which affect their consumption pattern also. lux. hygiene and special protection of the teeth. Close-up. giving false promise or by the service provided. Five attitude groups can be found in a market. They would prefer to purchase with cash after thinking over the need for purchase. They do not prove to be potential users of credit cards. a housewife who buys lux. Pepsodent. cleanliness.
Hero Honda’s Ambition. Factors Influencing Segmentation Factors Influencing Segmentation Size. 1) Size. their prices have increased. The popular segment may further be subdivided by price again. 3) Profiling Stage: In this stage each cluster is profiled in terms of demographic.1. iii) Low Income Group: Prefer mopeds primarily because they provide individual mobility at the lowest possible cost.4. and consumption habits. Tarun and Nirma Chemicals. i) Focus group discussions and in-depth interviews with a view to get an insight into consumer motivation. Bajaj’s Pulsar. 2) Analysis Stage: After collecting the data. The marketer can give each segment a name based on a dominant distinguishing characteristics. 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. it is analyzed using factor analysis.000 crore). behavior. attitudes and behavior. This is the main reason why they opt for heavier motorcycles (175 cc or above). b) Brand awareness and rating of different brands. Lux.2. The total size of the premium soap market was ` 350 crore in January. 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. e) Demographics. iv) Rural Buyers: Are primarily concerned about maneuverability through rough terrain. Dettol. The leading brands and companies in the premium segment are. and Margo and Mysore Sandal.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. Liril and pears. The Lifebuoy soap brand is the single largest band selling annually ` 4. psychographics. 1. viz. psychographic. In this category. with equal emphasis on strategies to target the rural population. 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 ` 1.2. This is used to identify factors that differentiate customer groups. The objective of this questionnaire is to collect data on: a) Attributes sought in a product and their priority ratings. the segment consisting of brands like Lifebuoy and Lux. Dove. soaps are priced reasonably. 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 . ii) Economy Segment: It consists of brands like Hamam. media habits. Cinthol Lime.2. and 30% of the market in terms of value. c) Product usage patterns. But over the years. 1992 and there were more than 70 brands. 1. 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.000 million. 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. Cluster analysis is now used to cluster customers into maximally different groups. Santoor and Rexona. This segment caters to by and large urban territories. d) Customer attitudes towards the generic product or product category itself. Brands include Breeze. Accordingly. attitudes. iii) Premium Segment: High-priced soaps account for roughly 13% of the market in terms of quantity. 3) Soap Market: Price is the major basis for segmenting the toilet soap market. For example. Vigil.4. and ii) Based on this insight developing a questionnaire which is administered to a sample group of consumers. Fa. and media habits of sample respondents.
the use of personal selling is better marketing tool. French and American to be eaten as a snack. Nature of Market: Nature of market also influences the segmentation decision. petrol. 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. policies and strategies of competitors in all the segments. This helps in adopting different policies. The greater the selection on offer the more consumers will demand choice and the greater will be the need for tight segmentation. It is possible to satisfy a variety of customer needs with a limited product range by using different forms. Segmentation strategies differ according to market such as segmentation strategies differ in competitive market from non – competitive market.2) 3) 4) 5) 6) resources it has available will dictate to a great extent how it segments its market. for example. Life Cycle Stage: Lifecycle stage of a product also affects segmentation decisions.4. all at prices that match their targeted customer’s expectations. The seller can adjust his thrust to attract the maximum number of customers by various publicity media and appeals. bundles. for instance. Now many pubs offer a choice of over 20 different beers and food as diverse as Italian. In the region where response of the customers is poor. bread. The computer manufacturer Dell. Resources of company also determine the extent of segmentation.2. catering and hospitality services. servers. tastes and expectations of the consumers of different segments so that precise and clear decisions can be taken to harness marketing opportunities. 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. potatoes. it is no use allocating a huge budget there. large businesses. who may not notice ads carefully. . 6) Minimizing Aggregation Risk: By dividing the market and designing specific marketing mix to each segment. but by customer groups (privates. In the place where the sales opportunities are limited. habits. public/state organizations). Organizations that choose to segment the consumers and focus on target markets are more successful in highly competitive environments. in case of highly mobile customers. 3) Allocation of Marketing Budget: It is on the basis of market segmentation that marketing budget is adjusted for a particular region or locality. fashion clothes. incentives and promotional activities. as company having moderate resources will have limited segmentation whereas company having substantial resources will have broad segmentation. behavior. In the past a pub might have offered a choice of two different beers and a salad sandwich or a sausage roll. the strategy of approach can be readjusted accordingly to push the sales on the basis of marketing research. programmes and strategies for different markets based on rivals’ strategies. Thai. An example of this might be the change that has happened with the traditional English pub. Type of Product and Market: Some companies have a simple product portfolio that lends itself to easy segmentation. For example. segmentation reduces the risk of aggregation. whilst others have a more complex product mix making it much harder. does not organize its website by product groups (desktops.3. financial services. 4) Fighting Competition Effectively: The segmentation helps the producers to face the competition of competitors effectively by making a deep study of the products. printers etc. the Ford Motor Co. 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. policies and programmes. 1. For example. for example. 5) Understanding and Meeting the Needs of Consumers: It helps the marketer to fully understand the needs. at lunch time or as a full three or four course dinner. which is defined as the risk of not being able to satisfy customer needs with one marketing mix to all segments. 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.). small businesses. notebooks. industrial cleaning products. Competitive Strategy of Firm: Competitive strategy of a firm also has an influence on segmentation. Competition and the need to attract more customers have led to the theme pub offering an ever greater choice of food and real ales.
the favorable modification of response tendencies consequent upon previous experience.3. particularly the building of a new series of complex coordinated motor response. 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. 9) Filling Gaps: Segmentation can help in finding out the unfilled gaps in a market. marketing activities can be targeted at highly attractive market segments in the beginning. reliability vs. On that basis. 2) Buyers often choose from a repertoire or a list of acceptable brands. or for different occasions or for a change etc. they can safely rely on each others’ discrimination. 1. channel partners and customers. 5) Market segmentation can be an expensive process for both the producer and the marketer. the producer producing in mass quantities is much cheaper than making variety of products. Thus.4. learning can be defined as a relatively permanent change in behavior as a result of prior experiences. no concept of differentiation among products is needed to explain market success. 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. “Learning is a relatively permanent change in behavior that occurs as a result of prior experience”. 1.2. 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. 11) Higher Market Shares: In contrast to an undifferentiated marketing strategy.1. According to E. Given the fact that people alternate between the brands of their list. . Hence. price vs. 3) The various brands may be indistinguishable in product form yet differ widely in market share. as at such stage. Market leadership in selected segments improves the competitive position of the whole organization in its relationship with suppliers. From production point of view. the fixation of times in memory so that they can be recalled or organized. the process of acquiring insight into situation”. By segmenting markets. customers and companies can conveniently settle down with each other. it would be incorrect to presume and believe that a brand can be successfully positioned to appeal to a very narrow segment. segmentation supports the development of niche strategies. 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. Thus.7) Targeted Marketing: Targeted marketing plans for particular segments allow to individually approach customer groups that otherwise would look out for specialized niche players. From marketing point of view the marketer has to develop different marketing mixes for different segments. organizations have better chances to increase their market shares in the overall market. prestige). 4) The markets examined by them were not heavily segmented as the differences between brands were too insignificant to matter.g. 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. This is because the same buyer may buy products in different segments of the market for different family members. Hilgard. which can then be satisfied through unique product or promotional offerings. Such a targeted communications allows stressing those criteria that are most relevant for each particular segment (e.4. Hence segmentation does not mean that those within a segment buy only in that segment. Moreover when segmentation attains higher levels of sophistication and perfection. R. It strengthens the brand and ensures profitability.3. CONSUMER LEARNING 1. organizations can create their own 'niche products' and thus attract additional customer groups.
it should be reflected in the behavior.e. 2) Symbolic Learning and Problems Solving: People learn symbolic meanings that enable highly efficient communication through the development of languages. and also it can be conditioned. . As consumers. there's a motivating factor behind it. mass media. Learning is any change in the content or organization of long-term memory or behavior. we also learn methods of responding to various purchase situations. For example. slogans (“got the right one. Consumer learning can occur unintentionally and this type of learning can strongly influence the behavior of consumers. Types of Learned Behavior 1) Physical Behavior: Generally. 2) Change should last for a considerable period of time. It is adaptive modification of behavior by experience. People acquire most of their attitudes. values.. and feelings through learning. it should not be temporary. “Learning has taken place if an individual behaves reacts. Consequently. tastes.3. Learning certainly occurs intentionally. as when a problem is recognized and information is acquired about products which might solve the problem. as well as family. Thus. i. and signs (Mc Donald’s Golden Arches). i. behaviors.e. or learning to read closely the fine print in purchase contracts. symbolic meanings. 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. all healthy humans learn to walk. we learn many physical behavior patterns useful in responding to a variety of situation faced in everyday life.3.2.3. knowledge of learning principles can be useful in understanding how consumers’ wants and motives are acquired and how their tastes are developed. talk.3. and rather it should be permanent. it can be said that change in behavior indicates that learning has taken place and that learning is a change in behavior.3.Ironically.3. Learning is essential to the consumption process. In fact. Culture and social class through such institutions as schools and religious organizations. Symbols also allow marketers to communicate with consumers through such vehicles as brand names (Kodak and Sony). McGehee.3. preferences. The learned behavior is a conditioned response to a stimulus through either voluntary or unvoluntary intent. 1. For example tying r shoes is a learned behavior crying is not. Genetic constraints may limit what can be learned. 1. respond as a result of experience in a manner different from the way he formerly behaved”. These may take the forms of learning to act dissatisfied when hearing the first price quote on a car.1. Learning mechanism helps consumers to adapt to a changing environment. knowledge should be implemented. Conditions for learning There are following two conditions: 1) Whatever knowledge is being acquired. Baby” for Diet Pepsi). provide learning experiences that greatly influence the type of lifestyle people seek and the products they consume. and advertising. friends..2. learning is the result of information processing. consumer behavior is largely learned behavior. According to W. 1. 1. Nature of Learning Consumers’ learning is an important component of their behavior. A learned behavior is some type of action or reflex that learns. and interact with others.
One factor that influences the ability to retrieve stored information is the strength of the original learning. This unlearning process is termed extinction and occurs when over time. These attitudes will affect the tendency to purchase various brands.3. because it helps them adapt to their environment. iv) Imagery refers to the images created by words. ii) Reinforcement is anything. Discrimination is learned over time when the same response to two similar but noticeably different stimuli leads to different consequences (reinforcement).4. Very simply. repetition. reinforcement. Thus. iii) Repetition increases the strength and speed of learning. goals. which increases the likelihood that a given response will be repeated in the future. both from the print and the electronic media. Thus. iii) The amount of reward during learning trials is large. Discrimination is learned over time when the same response to two similar but noticeably different stimuli leads to different consequences (reinforcement). The strength of learning is heavily influenced by four factors: importance. a learned response is made to a stimulus but reinforcement does not occur. 3) Stimulus Discrimination: Learning to discriminate between various objects or events is important for consumers. or practice a certain kind of behavior. The stronger the original learning. 2) Stimulus Generalization: Learning to discriminate between various objects or events is important for consumers. ii) The number of previously reinforced trials is large. These words may either be a brand name or a corporate name. the probability of the brand being forgotten by the consumers is very high. 1. Stimuli which the consumer can use to distinguish between various items in their environment are often termed discriminative stimuli. and motives as well as what products satisfy these needs. the more likely person is to learn it. iv) Reward is delayed during the learning process. the less likely the response is to occur. consumers frequently have relevant information stored in memory that firm cannot access when desired. and v) A partial reinforcement schedule occurs during learning. Resistance to extinction also strengthens when: i) Impelling motives are strong. . 1) Extinction: Person can “unlearn” material or behavior that has been previously learned. This means that consumers learn many of their wants. The more likely relevant information will be retrieved when required. 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. Stimuli which the consumer can use to distinguish between various items in their environment are often termed discriminative stimuli. 4) Response Environment: It appears that consumers generally learn more information than they are able to retrieve. That is. .3) Affective Learning: Humans learn to value certain elements of their environment and dislike others. i) Importance refers to the value that the consumer places on the information to be learned. if the advertisements for a particular brand are withdrawn for a considerable period of time. the consumer has engaged in stimulus generalization. because it helps them adapt to their environment. and imagery. 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. The greater the number of non-reinforced trials. Learning also influences consumers’ development of favorable attitudes toward a company and its products. but complete extinction is rare. For example. the more times person is exposed to information.
That is. but capable of providing direction to motivated activity. Elements of Learning Consumers learn in several ways. Consumers can learn to develop successful means of responding to their needs of changing conditions. there are four elements of learning: motivation. The shopping environment is packed with cues. People can identify clothes that are stylish even though they never really think much about clothing styles. it must again be emphasized that the inability to observe responses does not necessarily mean that learning is not taking place. The occurrence of a response is not always observable. Therefore. 1) Motivation: The concept of motivation is important to learning theory. Responses appropriate to a particular situation are learned over time through experience in facing that situation. 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.5. For example. it influences the manner in which consumers respond to a motive. 2) Cues: A cue may be viewed as a weak stimulus not strong enough to arouse consumers. Remember.3. A low-involvement learning situation is one in which the consumer has little or no motivation to process or learn the material. 3) Response: A response may be viewed as a mental or physical activity the consumer makes in reaction to a stimulus situation. A high-involvement learning situation is one in which the consumer is motivated to process or learn the material. and reinforcement. 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. which consumers can use to choose between various response options in a learning situation.3. 1. 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. motivation is based on needs and goals. cues. Because reinforced behavior tends to be repeated. Motivation acts as a spur to learning.and Low-Involvement Situations . Conditions Relevant to High and Low Involvement Strategies. Conditions Relevant to High and Low Involvement Strategies A moment’s reflection will reveal that people learn things in different ways. such as promotions and product colors.1.6. 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. Learning may occur in either a high-involvement or a low-involvement situation. response. Primarily.
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
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
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.
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:
The when the same situation compliments.. likely to be repeated wrinkle and generates several They taste “all right”.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. Behaviors that are positively reinforced will be given more attention.pay attention to the advertising. 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. People tend to be most influenced by models that are attractive. repeatedly available. important. 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.e. 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. A response. object. without without conditioning. purchased.. made parts. i.20: Observation Learning: An Overview i) Attention Processes: People learn from a model only when they recognize and pay attention to its critical features.e. Theory Classical Conditioning Operant Conditioning Iconic Rote Learning . result of closely reading many ever really thinking about Apple shoe advertisements that he or advertisements. This process then demonstrates that the individual can perform the modeled activities. A sport coat made consumer continues to purchase arises in the future. or products. the watching must be converted to doing. and performed more often. or similar in estimation. 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. she finds enjoyable. i. iii) Motor Reproduction Processes: After a person has seen a new behavior by observing the model. 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. learned better. by the same firm is then this brand. iv) Reinforcement Processes: Individuals will be motivated to exhibit the modeled behavior if positive incentives or rewards are provided. plans to use only American.
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. . In recognition tests. high-priced clothing and accessories) than from ads for convenience goods (i. to competitive ads. the extent to which they have read it or seen it and can recall its content. the dual goals of consumer learning are increased market share and brand-loyal consumers. durable items purchased infrequently following an extensive information search). if any. To ensure a high level of comprehension. the product advertised. the consumer’s opportunity and ability to process the information. the consumer is asked whether he or she has read a specific magazine or watched a specific television show. surprisingly.e. very expensive. and to identify which elements. 2) Cognitive Responses to Advertising: Another measure of consumer learning is the degree to which consumers accurately comprehend the intended advertising message. Thus. and which they read most.8. cognitive measures. They are also asked which parts of the ads they noted and read most. After qualifying as having read a given issue of a magazine. A recent study using Starch readership scores demonstrated that consumers received more information from advertisements for shopping products (i. and the attitudinal and behavioral measures of brand loyalty. and any salient points about the product. from ads for search products (i. respondents are presented with the magazine and asked to pointout which ads they noted. A consumer watches the reactions people have to her friend’s new short skirt before deciding to buy one. Pre-tests are used to determine which. the brand. Recognition tests are based on aided recall. and brands with larger market shares have proportionately larger groups of loyal buyers. Various measures of consumer learning: recognition and recall measures. the consumer decides to sweep some baking soda into the carpet. Measures of Consumer Learning For many marketers. An advertiser can gauge the effectiveness of a given ad by comparing its readership recognition scores to similar-sized ads. the consumer is shown an ad and asked whether he or she remembers seeing it and can remember any of its salient points. Noticing an unpleasant aroma in the carpet. and to the company’s own prior ads. and the consumer’s motivation (or level of involvement). elements of an advertising message should be revised before major media expenses are incurred. and their purchase intentions.3. if any should be changed to improve the impact and memorability of future ads. In recall tests. Comprehension is a function of the message characteristics. 1. their resulting attitudes toward the product and the brand.. a consumer decides to substitute white pepper. which they associated with the advertiser.e. low-priced items purchased routinely) and. such as the Starch Readership Service. can recall any ads or commercials seen. many marketers conduct copy testing either before the advertising is actually run in media (called pre-testing) or after it appears (post-testing). it is important for the marketer to measure how effectively consumers have “learned” its message.. These goals are interdependent: Brand-loyal customers provide the basis for a stable and growing market share. A child learns that men do not wear dresses without ever really thinking about it.e. Individuals use thinking to re-structure and recombine existing information to form new associations and concepts. Finding that the store is out of black pepper. Post-tests are used to evaluate the effectiveness of an ad that has already run. 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.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. A number of syndicated research services conduct recognition and recall tests. A consumer believes that baking soda removes odors from the refrigerator. These findings show that marketers may be under-informing consumers when advertising search products. whereas recall tests use unaided recall. and if so.
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. their evoked set). This framework also reflects a correlation among consumer involvement and the cognitive and behavioral dimensions of brand loyalty. and d) Premium loyalty (high attachment to the brand and high repeat purchase). From a consumer’s perspective. on the other hand. ii) Attitudinal Measures: They are concerned with consumers’ overall feelings (i. There is no single definition of this concept. brand equity is the added value bestowed on the product by the brand name. Loyalty programs are generally designed with the intention of forming and maintaining brand loyalty. Brand Equity Brand equity refers to the value inherent in a well-known brand name. leading to a strong brand preference and repeat purchase behavior. An integrated conceptual framework views consumer loyalty as the function of three groups of influences: a) Consumer drivers. leading to repeat purchase. and enhances perceived value. because they do not distinguish the “real” brand-loyal buyer. b) Brand drivers. c) Inertia loyalty (purchasing the brand because of habit and convenience but without any emotional attachment to the brand).9. 1. perceived quality. To cognitive learning theorists. behavioral definitions (such as frequency of purchase or proportion of total purchases) lack precision. For many companies. their most valuable assets are their brand names. Well-known brand names are known as megabrands. and their purchase intentions. They believe that consumers engage in extensive problem-solving behavior involving brand and attribute comparisons. rather than attitude toward the product or brand. evaluation) about the product and the brand. Brand equity facilitates the acceptance of new products and the allocation of preferred shelf space. and c) Social drivers.3. ii) Cognitive Researches: Cognitive researches. A basic issue among researchers is whether to define brand loyalty in terms of consumer behavior or consumer attitudes. These influences produce four types of loyalty: a) No loyalty (no purchase at all and no cognitive attachment to the brand).e. iii) Behavioral Measures: They are based on observable responses to promotional stimuli – purchase behavior.. . emphasize the role of mental processes in building brand loyalty. and premium pricing options..e. b) Covetous loyalty (no purchase but strong attachment and predisposition towards the brand that was developed from the person’s social environment). Often consumers buy from a mix of brands within their acceptable range (i.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.
repeated behavior of preferring one brand of a product from among the several brands available.10. In co-branding. Brand Loyalty The term brand loyalty is used to describe the behavior of repeat purchases. To exemplify this point. and the cost of acquiring new customers goes down. Customers may express high satisfaction levels with a company in a survey.2. which in turn leads to increased market share and greater profits. The action of loyalty is a positive. companies buy. In their published research. Features of Brand Loyalty Following are the essential features of customer loyalty for a brand: 1) It is biased (not random).3. It is a self-reinforcing system in which the company delivers superior value consistently to find and keep highquality customers. and profitability all go up. license) their brand names. customers may be described as being “brand loyal” because they tend to choose a certain brand of soap more often than others. Importance of Brand Loyalty Loyalty leaders are successful because they have designed their entire business systems around brand loyalty. Loyalty is demonstrated by the actions of the customer. and to develop loyalty to the brand name. 4) It exists with respect to one or more alternative brands. Brand equity is important to marketers because it leads to brand loyalty.As brand that has been promoted heavily in the past retains a cumulative level of name recognition. revenues. 1. market share. Suppose a buyer visits a shop in anticipation of selecting a brand or opting for a specific service. brand loyalty becomes evident when choices are made and actions taken by customers. Loyalty in sense is a willful commitment to the brand in view of perceived satisfaction. 1. 1. He would prefer waiting for the brand of his preference. “Brand loyalty implies that consumers bind themselves to products or services as a result of a deep-seated commitment”. to encourage repeat purchase. two brand names are featured on a single product. as well as those that offer good ratings.10. and rent (i. Brand loyalty describes the tendency of a customer to choose one business or product over another for a particular need. the major function of learning theory is to teach consumers that their product is best. knowing that it is easier to buy than to create a brand name with enduring strength. 2) It is a form of behavioral response (act of purchase). In the packaged goods industry. or testimonials. 3) It is expressed over time by some decision-making unit. customers can be very satisfied and still not be loyal. the buyer would prefer not to buy any substitute in case of non-availability of the brand he has specifically opted for. Note the use of the word “choose” though. 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.e.1.3.10. A relatively new strategy among some marketers is co-branding (also called double branding). but satisfaction does not equal loyalty. According to Bloemer and Kasper. Loyalty may be explained further. It uses another product’s brand equity to enhance the primary brand’s equity. Brand equity enables companies to charge a price premium – an additional amount over and above the price of an identical store brand. reviews. 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. they rendered a distinction between repeat purchases and actual brand loyalty. When a company consistently delivers superior value and win brand loyalty. Customer loyalty is very essential for the growth of organization because loyal customer: .3. The economic benefits of high brand loyalty are measurable. Building a highly loyal customer base must be integral to the basic business strategy. To marketers.
10. 2) Customer Service: Go the extra distance and meet customer needs. 5) Customer Incentives: Give customers a reason to return to the business. 1. the customers tend to be committed to the brand. and risk. Building Brand Loyalty Many business firms neglect their loyal customer base in pursuit of new customers. 3) Employee Loyalty: Loyalty works from the top down. Give the benefit of the doubt to the company when something goes wrong. 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. 1.1) 2) 3) 4) 5) Purchase products and services again and again over time. Increase the volume of their purchases and buy beyond traditional purchases. monthly flier.3. extending from committed buyer at one extreme to switcher or indifferent buyer at the other extreme. Levels of Brand Loyalty Brand loyalty is not a dichotomous construct. reach-out to the steady customers. The buying is done on a basis other than brand. It may operate at different levels. a virtually negligible element of attitudinal commitment to the brand is visible.3. It is an affect driven loyalty. 3) Switching-Cost loyal Customers: The third category of buyers is satisfied with the brand. It becomes a vehicle of self expression. or a holiday greeting card. across product-lines. Customers get committed to a brand when the brand achieves personal significance for them. They all signify different shades of behavioral loyalty. newsletter. their efforts toward building brand loyalty will certainly pay-off. However. money. These buyers are switchers and are indifferent to the brand. the owner of a children’s shoe store might offer a card that makes the tenth pair of . 2) Habitual Buyers: The second category of buyers comprises the ones satisfied with the brand (absence of dissatisfaction). These can be called ‘habitual buyers’. This set can be called ‘switching-cost loyal’ customers. like availability or price. In all these categories of customers. The commitment is “an enduring desire to continue the relationship and to work to ensure its continuance”. they will feel positively about their jobs and pass that loyalty along to the customers. For example. Each state implies a different type of brand equity asset and different types of marketing challenges. These buyers have no reason to switch but may actually switch given the stimulations from the competitors. because children outgrow shoes quickly.4. since the cost to attract new customers is significantly more than to maintain their relationship with existing ones. Customers remember being treated well. Refer company’s products and services to others. Five levels of brand loyalty can be distinguished. The strong identification may be based on functionality or images/symbolism that it signifies. Empower employees to make decisions that benefit the customer. The other three are in-between states. People in this category consider a brand as a friend. There are following ten ways of building brand loyalty as: 1) Communicate: Whether it is an e-mail. They tend to have some sort of emotional attachment to the brand. Train the staff to do the same. They identify with the brand. 4) Affect Driven Loyalty Customers: The fourth category of loyalty implies that the buyers like the brand. 4) Employee Training: Train employees in the manner that they like to interact with customers. It happens when buyers perceive it to be a part of them. This category is somewhat safe because they would switch only when competition is able to overcome switching costs for them. 5) Committed Customers: At the next level of loyalty. They are vulnerable and can succumb to benefits offered by the competition. If a company is loyal to its employees. 1) Indifferent Buyers: At the lowest level. a reminder card for a tune-up. the indifferent buyer does not attach any importance to the brand. Become immune to the pull of the competition. though they have switching costs in terms of time.10.
As partners and advisors. the organization may go in for a Marketing Audit Program. developing incentive schemes.10. Add other products and/or services that accompany or compliment the products that the regular customers buy regularly. The roles played by loyal customers are those of: 1) The partner. 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. Likewise. new promotion strategy formulation. For the purpose of market identification. Marketing Audit enables to find appropriate markets and also shape the role that the . Need for Loyal Customers Loyal customers are the assets of an organization.3: Process towards Reaching Loyal Customers 1) Market Identification: The market for a brand constitutes the potential customers for the brand. 3) The custodian. Marketing Audit is a purposeful examination of marketing environment. 6) Product Awareness: Know what the steady patrons purchase and keep these items in stock.shoes half price.10.3. 8) Be Flexible: Try to solve customer problems or complaints to the best. Loyal customers serve as their major idea sources. a dentist may give a free cleaning to anyone who has seen him regularly for five years. 1. 5) The change driver. the loyal customers involve themselves in the organization’s regular activities. Be reliable. the less likely it is that salesman will see that customer again. 4) The resource provider. Loyal customers play six important roles. 7) Reliability: If a purchase will arrive on Wednesday.5. a market is to be developed. deliver it on Wednesday. It is a systematic approach to review the activities of marketing functions towards reaching marketing goals. 1. starting with identification of the right market for the product concerned. marketing activities. let customers know immediately and compensate them for their inconvenience. Process for Reaching Loyal Customers The reach of loyal customers involves a sequence of actions. If something goes wrong. 2) The advisor. and its effectiveness. 10) Know their Names: Get to know the names of regular customers or at least recognize their faces. 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. and 6) The experience shaper.6. packages design. When the brand already exists. 9) People over Technology: The harder it is for a customer to speak to a sales man when he/she has a problem. and through each role they contribute effectively towards the betterment of the organization. etc.3. And make sure that staff understands everything they can about the products. Many companies recruit loyal customers in their customer panel and tap their creativity for application in various activities such as new product development.
Nichers confine their operations in a much-limited way. They simply fall in line with the strategies of market leaders. The consumers have started showing highly differential needs. This approach would work as long as the market size is small and easily approachable. Under the mass marketing approach. Market existence depends on the number of loyal customers the organization can develop. and expansion. v) Location. The organization can have its market entry in one of the identified markets. iii) Market Follower: Market follower is the main follower of market leader. iv) Market Nicher: Market nicher is a small player. which refers to considering every individual customer as a market and developing appropriate strategies to satisfy the customer’s need. Industrial . It is likely that many organizations simultaneously pursue multiple strategies so as to have market entry. vii) Type of customers. The organization. Nichers often identify profitable nichers and carry-on their marketing operations. In today’s context. Therefore. market development strategy refers to developing new markets for the current brand of the organization. and xi) Extent of loyalty. For the purpose of market existence and expansion. This approach is because of a number of advantages being associated therewith.organization has to play in the identified market. 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. undifferentiated approach would no longer be relevant and purposeful. ix) Lifestyle. market size has expanded in all respects. as those strategies have registered proven success. Market segmentation therefore refers to grouping of customers on the basis of selected criteria. vi) Volume of purchase. iv) Gender. Those criteria include: i) Age. ii) Marital status. x) Benefit expected. appropriate strategies are to be worked-out towards market existence and market expansion. 2) Segmented and Target Market: From mass marketing. ii) Product Development: Product development strategy is concerned with developing new brands and products for the current market. the marketers have switched over to targeting segmented markets. the marketers consider the whole market as an undifferentiated one and adopt the same marketing mix strategies without any differentiation to attain marketing goals. Having made the market entry. 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. who identifies market niches and operates. the focus is towards customized marketing approach. It also involves development of new products. Market challenger is a close competitor organization to the market leader. existence. ii) Market Challenger: Market challenger challenges the market share of the market leader. viii) Buying habits. Today. iii) Income. iii) Market Development: On these lines. iv) Diversification Strategy: Diversification strategy on the other hand refers to the organization’s attempt to market a line of closely related products. 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. a single.
4) Customers: In a broader sense. ii) Through friends and relatives. who form the foundation of loyal customers. A consumer is one who consumes a product of an organization. iv) Through trade associations. and x) Customers of related products. the consumer. Target market refers to a welldefined set of prospective customers. and the organization can meet those requirements profitably. a careful marketing action plan should therefore be evolved and implemented effectively. v) Advertisements. the buyer refers to the one who buys a product or a service and it is immaterial whether he consumes it or not. iii) Various directories. 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. There are three terms normally used in this context. From among the market segments. ix) Follow-up of the competitor’s customers. return on investments. whose requirements have been identified. Effective prospecting would help in identifying a large number of potential customers in the target market. and therefore the prospect identification could be called as the lifeblood of the entire scope of marketing activities. 5) Loyal Customer Ladder: A customer reaches the status of a loyal customer by passing through a series of stages.marketers and service-marketing organizations have started adopting this approach towards a very effective marketing performance. In the light of the characteristics of the target market. 3) Prospective Customers: In the target market. and not merely the one who ultimately enjoys the benefits of a product or service. viz. From among the prospective customers. vi) Blind telephone calls. the target market would be identified. viii) Cold canvassing. competing forces. This categorization must follow relevant strategies to convert the prospects into customers. future prospects. the organization identifies customer in terms of their purchase intention as most promising prospect to the least promising prospect. etc. In a very strict sense. and so on.4: Loyal Customer Ladder . 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. potential customers would be identified by means of a systematic approach. and it is immaterial whether he is involved in the purchase activity or not. vii) Developing database. Customer is one who repeatedly buy from one source. Selection of target market would be governed by factors such as the organization’s capabilities.. suitable marketing strategies would be evolved. 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. The sequence may be illustrated as: In order to reach the loyal customer. the buyer.
Consumer behavior is habitual because habits are safe and familiar. does not mean marketers have to start from scratch when it comes to interpreting why certain consumers are loyal to certain brands. 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. The new millennium is not just a new beginning. It occurs because the consumer perceives that the brand offers the right product features.7. to re-purchase a brand continually. 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. and encourage them to continue purchasing those products in the future.10. but distinguishes it in a memorable and . The organization must view the product. He would include the present brand also in his preferred set and show interest towards buying this brand.i) Customer by Chance: Thanks to the influence of marketing efforts. Unfortunately. and what type of factors influence these allegiances. or not felt the need for such a product category. v) Customer by Insistence: During the repeat purchase period. the marketer should accept the fact that the customer keeps the brand under evaluation status only. or may have used the competitor brand. He may have a preferred set of brands already. it is a continuation of trends in human behavior that have been following cyclical patterns throughout the country’s history. Influence of brand loyalty on Consumer Behavior In today’s highly competitive environment. the customer is slowly moving towards the status of undivided loyalty to the brand. process. ii) Customer by Occasion: The customer by occasion would be an occasional customer. or by own attempts a prospective customer buys the brand and thereby he becomes the customer by chance. Thus. Brand loyalty is the consumer’s conscious or unconscious decision. his level of preference towards the brand moves upward. many companies are not adept at disseminating a strong. expressed through intention or behavior.3. and reinforce those habits by reminding consumers of the value of their purchase. improving consumer’s loyalty to brands permit marketers to maintain a comfortable and lasting position in the marketplace. 1. The image surrounding a company’s brand is the principal source of its competitive advantage and is therefore a valuable strategic asset. advertisers must break consumer habits. depending on the extent of his need fulfillment and other associated factors. 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. clear message that not only distinguishes their brand from the competitors’. The customer by chance may be a person who previously may not have used the brand. 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. image or level of quality at the right price. iii) Customer by Choice: From the occasional customer. vi) Customer by Loyalty: Reaching of loyal customers requires careful marketing approach and systematic planning and execution of all aspects connected with marketing functions. the customer insists upon the same brand and becomes a customer by insistence. However. At this stage. help them acquire new habits. In order to create brand loyalty. Perhaps these categories of customers’ exhibits divided loyalty status at this stage. and the people behind it from the customers and competitors’ point-ofview and make appropriate marketing decisions.
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. Brands which have integrity inspire trust. It comes when the brand stands for reliability. They relate well with other people who patronize the brand. self-concept. 8) Psychological Bonds: Sometimes. 3) Accessibility: How accessible is the company behind the brand? Accessibility is crucial for the development of strong brand relationships. 2) Consistency: Consistency is absence of variations or deviations. Opportunities for social bonding are much more in service and industrial selling situations..e. Harley-Davidson achieved great success through its HOG (Harley Owners Group) affinity program. 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. 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. The frequent flier programs in airlines or frequent buyer program in the retail or hotel industry are some examples of financial bonding strategy. A brand needs more than identity. Does the brand deliver what it promises to consistently over time? Lack of consistency creates a situation of uncertainty for the customers. The brand does not exhibit opportunistic behavior to exploit its customers. the customer can bank upon the brand’s larger system. where the interface is of long-term duration and involves high risk. The challenge for all brands is to avoid the pitfalls of portraying a muddled or negative image. i. and where both parties come together to form a social dyad. it needs a personality. Issues in Brand Loyalty For building brand loyalty for a particular brand.3. The need for responsiveness is greater in industrial and service exchanges. i. It is this consistency and confidence that helps a brand to forge ties with customers. 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. These rewards come in the form of discounts or financial gains that could be accumulated over time.e. 6) Affinity: Strong brand-customer relationships are formed when customers are able to identify with the brand or the company. but as an overall brand image that defines a company’s philosophies. Just like a person without attention-grabbing characteristics. 9) Financial Bonds: Customer bonds could also be based on economic or financial benefits that a brand seeks to offer to its customers. 1.. and instead. Quite often. who feel vastly re-assured when this happens. firms in auto component industries develop .positive manner. a brand with no personality can easily be passed right over.11. 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. Loyal customers have confidence in the brand they buy. where customer-seller interaction tends to be for long-term duration. a company should view its brand to be not just a product or service. Good companies make themselves available and easily accessible to their customers. It is about a brand’s integrity. A strong symbol or company logo can also help to generate brand loyalty by making it quickly identifiable. This strategy uses financial rewards as the primary weapon to retain customers for longer duration. 7) Social Bonds: Any exchange between individuals first tends to be a social exchange. In times of need. This is especially true for industrial and service brands. Recall the old-time village grocer or miller who interacted with customers personally. In fact. For example. brand-customer relationships could be based on psychological constructs like personality. 10) Structural Bonds: Customer relationships could be based on a physical connection which could be created between buyer’s system and seller’s system. customers’ end goals and needs are truly addressed by the brands. Trust is a major building-block in building brand and customer relationship. Good brands are consistent in their performance – their performance can be predicted with great confidence. and lifestyle. Social bonding is one of the oldest ways of forging relationships. it performs what it promises to do.
3. Meaning and Definition of Brand Equity The concept of brand equity began to be used widely in the 1980s by advertising practitioners. “Brand equity is a set of brand assets and liabilities linked to a brand.structural ties in the form of just-in-time supply system with automobile manufacturers.1. It cannot be assayed like the gold content in a piece of ore. Important academic contributors throughout the 1990s were Aaker. . A variety of opinions exist about brand equity. However. Brand equity is by definition an intangible asset.3.12. or competitive advantage.12. “Brand equity consists of differential attributes underpinning a brand which gives increased value to the firm’s balance sheet”. There is even a coalition devoted to the fostering and preservation of brand equity. Brand equity is the subject of seminars. that brands become a burden. brand equity (or subtracts) value to a firm in the form of price premium. Everyone in the marketing profession agrees that brands can add substantial value. Kapferer. miss the essential point. 1. The brand can be both a value enhancer and a value driller. 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”. According to Biel. The concept of brand equity is based on the idea that a brand has a value greater than the sum of its tangible assets. Srivastava and Shocker. Some of these are as follows: “Brand Equity” refers to “a set of assets and liabilities linked to brand. However. the definition should reflect the role of the brand in the dynamics of consumer choice in a competitive environment. Srivastava and Shocker. a universally accepted brand equity content and meaning as well as measure has not been forthcoming. trade leverage. 1. According to Aaker. Important academic contributors throughout the 1990s were Aaker. It does not exist in nature in the manner that the specific gravity of elements exists as a physical entity. Also. Brand Equity The concept of brand equity began to be used widely in the 1980s by advertising practitioners. These forms of bonding are common in the industrial marketing scenario. According to Chernatony and McDonald. Brands add value. Brand equity is by definition an intangible asset. “Brand equity can be thought of as the additional cash flow achieved by associating a brand with the underlying product or service”. 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”. Kapferer. It is also true. Its measurement depends on how it is defined. Brand equity refers to a “set of assets and liabilities linked to a brand. That definition must have pragmatic value to a marketer of consumer products or services. 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. 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. sometimes. and Keller. Some pharmaceutical firms have developed online communication-based bonds with hospitals. Brands are valued for their equity. In other words. Those who argue that brand equity cannot be measured. It should help to improve marketing effectiveness and efficiency by providing a yardstick with which to evaluate these things. even small retail brands develop structural bonds with their neighborhood customers with online communication systems or even through cable TV ads. of advertising agency presentations and of negotiation by acquirers of companies. 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”. Brand equity can be defined as the stored value built up in a brand for achieving competitive advantage.
Brand equity definitions more or less converge on some crucial points. 2) The customer. Brands strength lies in this intervening variable. Value Creation by Brand Equity A brand adds value in a number of ways. But the most crucial link between the input and output is the consumer – the consumer’s mental framework.3. At the heart of brand equity is customer equity – an unwavering customer franchise which stands by the brand. A brand’s equity is valuable to customers because: i) It helps customers in information processing. It is the fundamental core/block. three types of leanings seem visible: 1) The brand. The brand perception or image is the key driver of brand pull and push.3. 1.According to Keller. 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 monetization of these that is called financial worth or value that is added by the brand. All these are outcomes. For example. processing. The best way of integrating these different views is by conceptualizing the brand equity in terms of the inputthroughput-output model.12. 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. According to Aaker. “Brand equity is defined in terms of marketing effects uniquely attributable to the brands. In the absence of a brand. and ‘demystify’ (clarify) the concept of brand equity. which would not have been occurred if the same product or service did not have the brand name”. interpret. “Brand equity creates value both for the marketer and the customer”. certain outcomes result from the marketing of a product or service because of its brand name. It is this which leads to financial benefits and reduced costs. 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. A powerful brand symbolizes a loyal customer base. At the most fundamental level. The product and its attributes – both tangible and intangible – are the inputs to the equity model. Brands are taken by customers as chunks of information which are easily decoded (drawn meaning thereof) and . The advantages of brand equity direct academic and managerial attention to its measurement and management.3. The value that a brand generates is not self-generated. It simplifies this process.2. achieving equity is impossible. There are similarities beneath apparent divergence in thoughts. which can be explained as follows: 1) Value to Customers: Brand equity assets can enhance or decrease value for customers. or the willingness to pay more for a brand.1: Conceptualizing Brand Equity 1. and storing information about products and brands. It is generated through the discriminating response that customers exhibit in favor of a brand. However. It is the brand which is the basis of equity or value. A brand is useful in aiding customers in interpreting. to be more precise. It is the consumer’s knowledge structure. and 3) The financial value.12. The marketing literature is laden with works which explore. different views guide what the brand equity exactly is. or image or perceptions that a customer has about the brand that drive the outcomes.
It considerably reduces chaos possibilities that may occur in the absence of branding. 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’. One feels more confident in purchasing a brand (imagine buying an unbranded product. ‘Dettol’ has so strongly entrenched itself with ‘antiseptic’ that other competitors are just not able to make a dent in its market. brand equity is a provider of competitive advantage. 2) Value to Marketer: Brand equity also plays a critical role in enhancing value for the marketer. 1. Two questions often arise regarding brands – ‘What makes a brand strong?’ and ‘How to build a strong brand?’ To answer these questions. etc. Brand equity holds immense potential to create economic value for the markets. Johnson & Johnson’s ‘Savlon’ is hardly able to compete in the market. Brands transform customer experience. retaining a customer is much less costly than retention when a product is unbranded. This model incorporates theoretical advances and managerial practices in understanding and influencing consumer behavior. most firms now rely on brand extensions to achieve growth rather than launch new brands. and less costly. Although useful perspectives concerning brand equity have been put forth. vi) Finally. shelf space. Once these become proprietary to a brand. For example. Brand equity is an implicit assurance of success. iii) Brand equity allows a firm to charge premium.3. ii) Brand equity dimensions allow a firm to have greater customer loyalty. The same may be true for ‘Fair & Lovely’ in the fairness cream market. That is. In fact. Similarly. Therefore. it may partially happen due to lack of brand loyalty and preference. It happens because of familiarity with a brand. Brand equity makes growth easier for the firms. In fact. measured. For example. For example. Keller’s Approach of Brand Equity Keller talked about customer-based brand equity as brand equity is seen from the perspective of the consumer. iii) The final value to the customer comes in the form of usage satisfaction. iv) Brand equity provides great opportunities for growth. Brand stands for consistency and assurance. Brands can build equity occupying positions and attribute associations in a preemptive fashion. It imposes barriers on the entry of competitors. a customer may willingly support a brand in spite of greater sacrifice that needs to be made. For example. It can only be done once it is understood what drives brand equity. Trade partners’ exhibit skepticism in dealing with a brand without equity because of the uncertainties it brings along with it. ii) A brand’s assets enhance customer confidence in the purchase decision. satisfaction from drinking Nescafe is different from drinking an unbranded coffee. 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.12. It provides guarantee of promised delivery. The customers can exhibit preference and commitment to a brand only. and managed. introduces the Customer-Based Brand Equity (CBBE) 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. v) Brand equity is a good source of achieving leverage in distribution channels. like tooth paste). protection.4. A brand blocks entry of rivals in a customer’s mind on the same turf. The brand associations and quality move the product beyond its ‘thingness’ boundary enveloping it with images that customers value and identify with. easy. brands with premium pricing are the ones which enjoy strong equity in the market. The advantages listed above make compelling reasons in favor of creation. channels welcome brands with equity and give access to point of purchase displays. Familiarity creates confidence. other brands are at a disadvantage. It is easier to get access in the distribution chain when the brand has equity. and enhancement of equity of a brand. A greater number of loyal customers in the basket automatically reduce the expenditures that need to be incurred in maintaining a customer base. . It is how the value is added. the CBBE model provides a unique point of view as to what brand equity is and how it should be built.stored in a proper order (classification).
“Customer-based brand equity is defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. 1. brand knowledge is the key to creating brand equity. feelings.. 1. Any type of information can be stored in the memory network. would then be based on price. images.13. actions in response to a sales promotion. seen. Thus. and heard about the brand as a result of their experiences. 3) Consumer Response to Marketing: The differential response by consumers that makes-up the brand equity is reflected in perceptions. because it creates the differential effect that drives brand equity.13: Brand Knowledge . most likely. 2) Brand Knowledge: These differences in response are a result of consumers’ knowledge and experience of the brand.5. 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. brand knowledge can be characterized in terms of two components as shown in figure 6.12.6. Aaker’s Approach of Brand Equity Brand Knowledge From the perspective of the CBBE model. In other words. then. “the power of a brand lies in what resides in the minds of customers”. Thus. There are three ingredients to this definition: 1) Differential Effect: Brand equity arises from differences in consumer response. On the other hand. although strongly influenced by the marketing activity of the firm.. brand knowledge is conceptualized here as consisting of a brand node in memory with a variety of associations linked to it. or contextual in nature. is an insightful way to represent how brand knowledge exists in consumer memory. less sensitive to price increases and withdrawal of advertising support or more willing to seek the brand in a new distribution channel.g. If no differences occur. recall of copy points from an ad. and opinions become linked to the brand. then the brand name product is essentially a commodity. Consistent with the associative network memory model. or evaluations of a proposed brand extension). abstract. when the product is attributed to a fictitious name or is unnamed). a brand with positive customer-based brand equity might result in consumers being more accepting of a brand extension. perceptions. Competition. visual.g. including information that is verbal. 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. What marketers need. An influential model of memory developed by psychologists is helpful in that regard. felt.3.The basic premise of the CBBE model is that the power of a brand lies in what customers have learned.3. choice of a brand. preferences.” 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 equity ultimately depends on what resides in the minds of consumers.12. beliefs. and behavior related to all aspects of the marketing (e. 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. 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. In particular.
water resist. Besides marketer-controlled sources of information.g. performance. symbolic (prestige. Associations will vary in the strength of their connection to the brand node. etc. usage etc). or quality. on the other hand. when consumers go to a shop. brand recognition may be more important because the product will be present. completeness. Attitude has three component as cognitive (knowledge perception that a person has about a brand). unique. Attribute association can be product-related (safe. packaging. etc. functions. Outside the shop or in any situation where the brand is not present. part of selected group. or wherever. place. from information communicated about the brand from the firm or other sources (e. humorous. There are basically three types of brand associations as: a) Attribute Association: These descriptive features which are used to characterize a product or service.. brand associations can also be created in a variety of other ways: by direct experience. at home (when making a consumption choice). affective (emotion and feelings that someone has towards a brand). consumers must seek the brand and therefore be able to retrieve it from memory when appropriate. and unique associations to the brand in memory. 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... The all association discussed above are required to be favorable. This realization has important implications for building brand equity. brand recognition requires that consumers can correctly discriminate the brand as having been seen or heard before. 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. user.). powerful. brand recall is critical for service and online brands. and finally co-native component (behavioral or action-oriented. and uniqueness of brand associations.g. For this reason. The definition of customer-based brand equity does not distinguish between the source of brand associations and the manner in which they are formed. e. Benefit association can be functional (speeds faster. and by assumptions or inferences from the brand itself (e. country. its name or logo) or from the identification of the brand with a company. and strong in their nature. intension to behave in certain manner. etc. The more deeply a person thinks about product information and relates it to existing . Benefit associations are suggestions as to what a product or service can do for them. 2) Brand Image i) Brand Association: A positive brand image is created by marketing campaigns that link strong.g. 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. channel of distribution or some particular person. magazine reviews or other media) and word-of-mouth.) and can be non-product-related (price. all that matters is the resulting favorability. strength. favorable. For example. or event. and quantity. thrill. likelihood to buy the brand). the needs fulfilled by the category or a purchase or usage situation as a cue. of that processing. It determines buying decisions. For example.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. b) Benefit Association: Consumer less interested in product attributes but more interested in its benefits. etc. 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). For example. In other words.). experiential (adventure. Strength is a function of both the amount. c) Attitude Association: Attitude is an important psychological construct. brand recall requires that consumers correctly generate the brand from memory when given a relevant cue. it is probably more important that the consumer be able to recall the brand from memory. if decisions are made in the shop. So. of processing that information receives as well as the nature.).
12. 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. effective. 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. such as user type or usage situation. iii) Favorability of Brand Associations: Favorable associations for a brand are those associations that are desirable to consumers and are successfully highly convenient. the rugged Western image of Marlboro cigarettes).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 . in many categories. may more easily create unique associations (e. In fact. trademarks. brand equity provides (or negatively subtracts) values to a firm in the form of price premium.3. 1. In terms of desirability. The brand’s assets can be categorized in five groups.. trade leverage or competitive advantage. they may be based on product-related or non-product-related attributes or benefits. efficient. non-product-related attributes. reliable.brand knowledge.7. the stronger the resulting brand associations. Aaker’s approach of brand equity is represented in figure 6. 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. Aaker’s Approach of Brand Equity To understand the dynamics of brand. Aaker provides a framework called equity.g. colorful. Two factors facilitating such strength of association are the relevance of the information and the consistency with which this information is presented over time. Furthermore. 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”. and so forth.14. Aaker illustrates the influence of these factors on brand equity and its contribution to the customer and the manufacturer or owner firm. 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. These differences may be communicated explicitly by making direct comparisons with competitors or may be highlighted implicitly. and so on. channel relationships. Brand equity refers to a “set of assets and liabilities linked to a brand. In other words.
If a brand is moved up or down. Understand and resist organizational biases toward changing the identity. for each. Remember that an image is how you are perceived. take care to manage the integrity of the resulting brand identity. Especially note areas where the brand identity and positioning and communication objectives are not reflected in the perceptions of the brand. and Arrow guarantees ‘shirt engineering’ and perfection to the shirts it sells. and markets. 10) Invest in Brands: Continue investing in brands even when the financial goals are not being met. the name Haldiram’s brings with it an assurance of quality and authenticity of taste to what are otherwise simple snacks. Modify the identity as needed for different market segments and products. and Sharma. Five dimensions were identified by Lasser. and especially brand associations. Know how endorser brands will provide credibility. 8) Tracking Brand Equity: Track brand equity over time. Relative Superiority Approach of Brand Equity Brand equity is the relative superiority of a brand over the others. Know their roles.12.” Brands add perceived superiority by bringing in all that they stand for. 9) Brand Responsibility: Have someone in charge of the brand who will create the identity and positions and coordinate the execution over organizational units. Identify the core identity. Beware when a brand is being used in a business where it is not the cornerstone. 5) Consistency over Time: Have as a goal a consistent identity. including brand awareness. and execution over time. “Brand equity may be defined as the enhancement in perceived utility and desirability that a brand name confers on a product. It is the customer’s perception of the overall superiority of a product carrying that brand name compared with other brands. media. 2) Value Proposition: Know the value proposition for each brand that has a driver role. Consider emotional and symbolic benefits as well as functional benefits. and execution. Use sub-brands to clarify and modify. and an identity is how you aspire to be perceived.12. Exploit branded features and services. perceived quality. Mittal.1. Have or develop silver bullets to help support brand identities and positions. develop an identity and specify how that identity will be different in disparate product contexts. Consider the perspective of the brand-as-person. position. 1. and metaphors that work. Aaker’s Guidelines for Building Strong Brands 1) Brand Identity: Have an identity for each brand. 4) Execution: Execute the communication program so that it not only is on target with the identity and position but achieves brilliance and durability. have a brand position that will provide clear guidance to those implementing a communication program. Brandas-organization and brand-as-symbol. For example. These are as follows: . Identify range brands and. as well as the brand-as-product. 6) Brand System: Make sure the brands in the portfolio are consistent and synergistic. imagery. brand loyalty.3.8. Singer lends heritage and expertise to sewing machines. Brands bring alongwith them a set of associations. 3) Brand Position: For each brand.3. Have specific communication objectives.9. Understand the customer/brand relationship. Know the strategic brands. Maintain symbols. 7) Brand Leverage: Extend brands and develop co-branding programs only if the brand identity will be both used and reinforced. Recall that a position is the part of the identity that is actively communicated. position. Generate alternatives and consider options beyond media advertising.
The problem is. features. create an attractive whole. it is not easy to keep in perspective all the parts that affect the whole. 2) Brand Stays Relevant: In strong brands. customers feel attached to the brand they use. Brand identifications is based on its ability to strike a chord with what they are psychologically and what they want to be. Gillette pours millions of dollars into R&D to ensure that its razor blades are as technologically advanced as possible. few managers are able to step back and assess their brand’s particular strengths and weaknesses objectively. and they therefore charge too little or too much. a brand report card could be constructed. warm).10. in implementing its value-pricing strategy for the Cascade automatic-dishwashing detergent brand. Those intangibles include “user imagery” (the type of person who uses the brand). and many other tangible and intangible factors. the strongest brands stay on the leading edge in the product arena and tweak their intangibles to fit the times. In 1983. in all types of industries. Then while on vacation in Italy. But if pressed. Procter & Gamble made a cost-cutting change in its formulation that had an adverse effect on the . Many managers are woefully unaware of how price can and should relate to what customers think of a product. Brand Report Card Building and properly managing brand equity has become a priority for companies of all sizes. 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. On the basis of the attributes shared by the world’s topmost brands. 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. and the type of relationship it seeks to build with its customers (committed. The culture grabbed him. Customers identify with what a brand represents in terms of its symbolism and imagery. and the people behind the brand can be relied upon. costs. Sometimes. design. from strong brand equity flow customer loyalty and profits. brand equity is tied both to the actual quality of the product or service and to various intangible factors. 3) Pricing Strategy is Based on Consumers’ Perceptions of Value: The right blend of product quality. That is. was inspired by the romance and the sense of community he felt in Italian coffee bars and coffee houses. and prices is very difficult to achieve but well worth the effort. seasonal). A brand’s trustworthiness is based on beliefs that a brand would not compromise on quality. consider Starbucks . Most have a good sense of one or two areas in which their brand may excel or may need help.12. and he saw an opportunity. Howard Schultz. 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. in all types of markets. 2) Social Image: What is the social image of the brand? That is. After all. When one is immersed in the day-to-day management of a brand. For example. “usage imagery” (the type of situations in which the brand is used). rugged). what is ratio between what is received and what is sacrificed? 4) Trustworthiness: It is the customer’s faith in the brand. 1. Without losing sight of their core strengths. the whole is not even something that customers know or can say they want. casual. Starbucks was a small Seattle-area coffee retailer. the type of personality the brand portrays (sincere. 5) Identification: It is identification of customers with the brand. In some cases.3. together with the brand’s image. competent. it would always take care of a customer’s interests.It is not just a cup of coffee. For example. many (understandably) would find it difficult even to identify all of the factors they should be considering. the service. the feeling that the brand tries to elicit in customers (purposeful. The rewards of having a strong brand are clear. exciting.1) Performance: This aspect of equity focuses on the operational aspect of the brand. now Starbucks chairman. For example. They enjoy their association with it.
For example. In response. with its well-known shift to an “Everyday Low Pricing” (EDLP) strategy. Managers of the strongest brands also appreciate the specific roles that different marketing activities can play in building brand equity. 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. brand acts as an umbrella. attitudes. which sells licensed Coke merchandise) and interactive media (the company’s website. 4) Brand is Properly Positioned: Brands that are well-positioned occupy particular niches in consumers’ minds. then it should also be clear whether any given action will dovetail nicely with the brand or create friction. the Mercedes-Benz and Sony brands hold clear advantages in product superiority and match competitors’ level of service. the recent effort focused on the return of the popular contour bottle. 7) Brand makes Use of and Coordinates a Full Repertoire of Marketing Activities to Build Equity: At its most basic level. Saturn and Nordstrom lead their respective packs in service and hold their own in quality. promotions (e. symbols. 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. such as enhancing or reinforcing consumer awareness of the brand or its image and helping to protect the brand both competitively and legally. and so on. and different brands within a company hold different powers. They also include direct response (the Coca-Cola catalog. By continuity. third brand name might nest one level below the family brand and appeal to boys or be used for one type of product. For example.. games. The lesson to P&G and others is that value pricing should not be adopted at the expense of essential brand-building activities.e. a brand is made-up of all the marketing elements that can be trademarked – logos. By contrast. signage. slogans. in the fiscal year after Procter & Gamble switched to EDLP (during which it also worked very hard to streamline operations and lower costs). they create and maintain different brands for different market segments. Single product lines are often sold under different brand names. As a result. beliefs. it can be dangerous to try to cover too much ground with one brand or to overlap two brands in the same portfolio. 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. A second brand name under that umbrella might be targeted at the family market. At the same time. Strong brands mix and match these elements to perform a number of brand-related functions. managers are able to make decisions regarding the brand with confidence. whether created intentionally by the company or not. For example. In fact. Lever Brothers quickly countered attacking Cascade’s core equity of producing “virtually spotless” dishes out of the dishwasher. . each brand should have its own boundaries.product’s performance under certain – albeit somewhat a typical – water conditions. They are similar to and different from competing brands in certain reliably identifiable ways. i. Procter & Gamble did successfully align its prices with consumer perceptions of its products’ value while maintaining acceptable profit levels. the company reported its highest profit margins in 21 years. 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. though.. These include media advertising (such as the global “Always Coca-Cola” campaign). and a virtual look at the World of Coca-Cola museum in Atlanta). all the different perceptions. 6) Brand Portfolio and Hierarchy make Sense: Most companies do not have only one brand. and behaviors customers associate with their brand. or companywide. packaging. P&G immediately returned to the brand’s old formulation.). the brand Coca Cola makes excellent use of many kinds of marketing activities. 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. If it is clear what customers like and do not like about a brand and what core associations are linked to the brand. which offers. among other things. The corporate.g. Calvin Klein and Harley-Davidson excel at providing compelling user and usage imagery while offering adequate or even strong performance.
McDonald’s with Disney. the more differentiated the better. of exactly what the brand does and could mean to consumers (called a “brand exploratory”). An overwhelming focus on future sales can become a distraction for brands. David Aaker summarizes them well as perceived quality. 3) Brand Associations: Organizations are discovering the benefits of Perceived Quality Name Awareness Other Proprietary Assets associating their brand with other images. It is also important to see how that same picture looks to customers. name awareness. 4) Brand Loyalty: The most often forgotten driver in building brand equity is brand loyalty.11. and especially other Figure 2.e.2. The old saying.. favorable. Too often. 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. icons. brand loyalty. relatively undifferentiated among brand choices) and characterized by lack of outstanding service or quality. 1. Drivers of Brand Equity There are many ways for a brand to communicate its benefits.2. On any given day.2 brands. set as a priority to be perceived first and foremost as a “friend” to the consumers. Genuine brands. Starbucks associated with Marriott. Brand associations can be very helpful to consumers in their processing of information about a brand. In Managing Brand Equity.3. 1) Perceived Quality: There is no question that perceived quality is essential. because they are buying their way to loyalty through what might be referred to as brand bribery. through focus groups and other consumer research.9) Brand is given Proper Support and that Support is Sustained Over the Long-Run: Brand equity must be carefully constructed. A firm foundation for brand equity requires that consumers have the proper depth and breadth of awareness and strong. Regardless of how one chooses to rate perceived quality. it consists of a detailed internal description of exactly how the brand has been marketed (called a “brand inventory”) and a thorough external investigation. How does a brand create absolute loyalty? The key is to exceed customers’ expectations and pleasantly surprise them whenever possible. Power and Associates Satisfaction Research. Two prime examples are large domestic airlines and supermarket chains. Frequent flyer and customer loyalty programs are tools some brands utilize in an attempt to lock customers into future purchases. a brand will likely have customers in each of the four primary loyalty segments outlined in figure 2. Brand bribery exists when a particular industry becomes perceived as a commodity (i. however. as evidenced by the tremendous attention given to the Baldrige Awards for quality management and the J. however. Nike with Michael Jordan. and other proprietary assets. Typically. brand associations. These are the drivers of brand equity. “you can tell a person by the company she keeps” applies here. exhibit little loyalty. and they are outlined in figure 2. 5) Other Proprietary Assets: One of the common misperceptions is that the way to build loyalty is to focus on future sales. Customers can be characterized by a variety of loyalty descriptions. 2) Name Awareness: or familiarity is also a driver of overall brand Brand Drivers Brand Associations Brand Equity Brand Loyalty equity. Many brands in these industries have . There is nothing like a satisfied customer to tell a brand’s story and influence others. 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. and become vulnerable to extinction. ultimately it is only as good as the consumer perceives it. and unique associations with the brand in their memory. and unique attributes can be very helpful as well when consumers must sift through the clutter of choices that exists in today’s marketplace. 10) Company Monitors Sources of Brand Equity: Strong brands generally make good and frequent use of indepth brand audits and ongoing brand-tracking studies. Other proprietary assets such as patents. and Intel uses a distinctive audible tone to help consumers relate to their brands’ products and services. Brand audits are particularly useful when they are scheduled on a periodic basis. trademarks. Awareness’s without differentiation produces well-known commodity brand names that can become marginally profit-able.D.12. A brand audit is an exercise designed to assess the health of a given brand.
fine print. For example. LG monitors and mobiles. 5) Customer Opinion: Always look for customer opinion because they know the best and worst about the product. It is one of the way to build brand equity is. such as St. to “borrow” it. Proper market research allows the company to launch a right brand for the right segment. Organization should take care of the customer to maintain the value of brand in the marketplace.13. Consumers become very unhappy when they can’t use their benefits (such as free airline tickets or coupons) because of restrictions.3. That is. create brand equity by linking the brand to other information in memory that conveys meaning to consumers (see figure 4. Insurance companies are all too eager to learn who’s purchasing which medications. 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.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. 2) Quality: New product must incorporate quality ingredient because first impression is the last impression. 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. 1. Rewarding customer loyalty is a wonderful strategy. 1. privacy concerns can also become a concern for consumers. and over-the-counter vitamins or health supplements. For example. Regarding supermarkets. 4) Brand Extension: To polish the brand. Dettol soap and shampoo. perceived quality.3. in effect. Promotion and personal relation increase brand equity.12. alcoholic beverages. or changes in the rules.2): Ingredients Company Alliances Extensions Employees Other Brands Country of Origin People Brand Places Endorsers Things Third-Party Endorsements Causes Channels Events Figure 4. It is endowed with awareness. John’s wort. Brand bribery can backfire if customers feel that the “deal” may not really be a bargain or that the process is a hassle.12. Lux soap and shampoo. associations. and brand loyalty. The customer purchasing the product always willing to get more than the value he paid for the product. 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. Brand Leverage A brand is a very prominent asset owned by an organization. bring some new products and services under the umbrella of same brand name. An organization can leverage brand to grow bigger and better.2: Secondary Sources of Brand Knowledge . but it should not be the only reason customers return. Procter and Gamble ask for the customer idea for their product through their customer portal. 3) Marketing Mix: The proper use of marketing mix adds value in the brand marketing.
or it could sponsor a surfing competition or even the entire Association of Surfing Professionals (ASP) World Tour. as they are aware that a strong brand always improves the value to its shareholders.These “secondary” brand associations can link the brand to sources. assume Burton – makers of snowboards as well as ski boots. Companies generally try to leverage on the brand equity of established brands for other new products. Lux. There are countless such examples where companies use their existing brands to enter new product opportunities. 6) Burton could secure and publicize favorable ratings from third-party sources such as Surfer or Surfing magazine. 3) Burton could also sell through popular surf shops in the hope that its credibility would “rub-off” on the Dominator brand. spokespeople (through endorsements). For example. 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. 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). bindings. Research conducted by McKinsey on the connection between brand strength and corporate performance on around 130 consumer companies.9 per cent above the industry average while weaker brands stayed behind the industry average by 3. Kingfisher’s brand name was used by the UB Group to enter the airline business. clothing. found that strong brands on an average generated Total Returns to Shareholders (TRS) of 1. or any other aspects of the marketing program. or some other third-party sources (through awards or reviews). The fairness cream market in India is growing enormously at the rate of 25% per annum compared to the overall . Godrej’s Fairglow soap brand was extended to its fairness cream. 5) Burton could find one or more top professional surfers to endorse the surfboard. 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. as well as to other brands (through ingredient or cobranding). Thus. but such a geographical location would seem to have little relevance to surfing. Marketers resort to this method so that consumers will perceive the new brand as having some of the characteristics of the existing brand. and to channels of distribution (through channel strategy). Leveraging is capitalizing on the existing brand name to move into other product opportunities. Burton could build equity by linking the brand to these other entities. In creating the marketing program to support the new Dominator surfboard. and its profits. calling it “Dominator by Burton”. sporting or cultural events (through sponsorship). to countries or other geographical regions (through identification of product origin). 2) Burton could rely on its rural New England origins. used its brand name to move into the liquid soap and shampoo market. For example. 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. Companies always focus on leveraging on brand value for new products and further improving the value of already existing products. such as the company itself (through branding strategies). its brand name. characters (through licensing).1 per cent. independent of the associations created by the surfboard itself. and outerwear – decided to introduce a new surfboard called “The Dominator”.
. Cultural.3. however. Thus. drive a German car. To the extent that the brand is linked to another existing brand. the country or geographic location from which it is seen as originating may also become linked to the brand and generate secondary associations. In particular. Leveraging a co-ordination brand may not always be useful. 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. Nokia) or a specific product brand (e. Many countries have become known for expertise in certain product categories or for conveying a particular type of image. which became a huge success. symbols..14. depending on the awareness and image involved.g. 1.g. as with options 2 and 3. iii) Combine an existing and new brand. and so forth. a co-ordination or family brand can be a source of much brand equity. As noted by many. HLL later leveraged on the brand equity of Fair & Lovely cream and introduced Fair & Lovely fairness soap in March 2001. Thus. 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.cosmetic market growth rate of just 15% per annum. 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. ii) Adopt or modify an existing brand. Subsequently. Existing brands may be related to the co-ordination brand (e. 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. Godrej introduced Fair Glow soap and later leveraged on the brand equity of the soap to introduce Fair Glow cream. then knowledge about the other brand may also become linked to the brand. many players entered the fairness cream market. Three main branding options exist for a new product: i) Create a new brand. 2) Country of Origin and other Geographic Areas: Besides the company that makes the product.. listen to a Japanese compact disc player. 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. Nokia 8290 digital phone) and may involve names. a consumer from anywhere in the world may choose to wear Italian suits. exercise in American athletic shoes. logos. 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. In 2000. or drink English beer.
such as a bottle of Coke with McDonald’s burgers. This process accelerated as movies and later television became a staple of American business. TGI Friday's frozen appetizers. A prerequisite for this strategy is that the ingredient has to be of essential. they stand tall in the market. iii) Complementary branding involves the marketing of two brands together to encourage co- consumption or co-purchases. Retailers create these associations through the products and brands they stock. a basic ingredient of the product is mentioned next to the actual products name. differentiating and high quality. in its outlets and ensures more exposure and visibility to Coke. Co-branding can take three forms: i) Ingredient Branding: In this form. companies were willing to pay a royalty on net sales of their products to rent the product of an established brand name. and so forth. Coke in combination with McDonald’s also increases the brand image of the two complementary brands. Instead of spending untold millions to create a new brand. this strategy also leads to improving the brand image and should motivate customers to become loyal to these brands. A very good example is Jet Airways-Citibank Credit Cards. the means by which they sell them. both in the area of patents and trademarks. Moreover. Mickey Mouse's popularity in the 1930s and 1940s resulted in an explosion of toys. which can be exchanged later for some other service benefits like discounts in the value of tickets or gifts. yes. 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. McDonald’s thus restricts the availability of Coca-Cola’s rival. where both brands are well established in their respective segments. quality of service. Both are leaders in their segments and have now come together to enhance their market share with their combined efforts. for an agreed period of time. Licensing is used by brand owners to extend a trademark or character onto products of a completely different nature. Burger King t-shirts and even ghastly Good Humor Halloween costumes became commonplace. Apart from offering discounts. Brand licensing is well-established business. United. pricing and credit policy. as the name suggests. When they use the Citibank credit card to book a Jet Airways ticket. and so on. Customers also gain by using the facility. The rise of brand licensing did not begin until much later. within an agreed territory. Pepsi. Because of associations to product assortment. as companies realized they could make real dollars renting out their equity to manufacturers. Brand extensions later made the brand licensing marketplace much more lucrative. 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. Dodge power tools. . costs such as advertising and communications can be shared. Trademark licensing has a rich history in American business. Breyers yogurt. 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. none of which were manufactured by the Walt Disney Company. retailers have their own brand images in consumers’ minds. 4) Co-Branding: In co-branding strategy. The advantages are that both brands can benefit from the symbiotic effects of combining two strong brands. ii) Co-operative branding is the joint venture of two or more brands to form a new product or service. Each helps the other in improving the awareness of the other brand. they accumulate credit points. when corporations found that consumers would actually pay money for products with the logos of their favorite brands on them. largely beginning with the rise of mass entertainment such as the movies. books. many retailers aggressively advertise and promote directly to customers. To more directly shape their image.3) Channels of Distribution: Channels of distribution can directly affect the equity of the brands they sell by the supporting actions that they take. many desktop manufacturers use the ‘Intel Inside’ mark along with their brand names to benefit from the image of Intel chips. For example. None of these companies can individually make a dent in the market. comics and later television. McDonalds play food. and consumer products with the lovable rodent's likeness on them. 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.
smell. 7) Sporting. Employees might feel proud of having the celebrity endorsing their company.g. taste etc. The critical question in the study of perception is why the same universe is viewed differently by different persons? The answer is the perception. But the only thing that builds a brand in the mind of the consumer is PR and word-of-mouth generated by an idea. Using a celebrity is also not a replacement for brand PR. A brand may seem more likable or perhaps even trustworthy or expert by virtue of becoming linked to an event. hearing.4. According to S. Endorsements from leading magazines (e. But too many times brands use the wrong celebrities. and smelling”. The PR attention generated by a celebrity does not build your brand.. and without believability a celebrity endorsement is worthless.6) Celebrity Endorsement: Celebrity endorsements remain a popular tool for marketers. organized and interpreted to make it meaningful to us. American Dental Association). 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). Consumers might be more apt to watch your ad if it has a celebrity. Robbins. or Other Events: Events have their own set of associations that may become linked to a sponsoring brand under certain conditions.4. “Perception includes all those processes by which an individual receives information about his environment – seeing..1.g. 8) Third-Party Sources: Finally. A celebrity is not a replacement for an idea.g. and experts (e.. Customers might be more apt to participate in events when a celebrity involved. The $40 million General Motors reportedly paid Tiger for his 5-year contract ending in 2009 is not money well spent. “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”. 1. Perception is the process through which the information from outside environment is selected.P. “Perception may be defined as a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment”. According to Joseph Reitz. feeling. Cultural. Different people perceive the universe differently. PC magazine). film critic Roger Ebert) can obviously improve perceptions of and attitudes toward brands. CONSUMER PERCEPTION 1. For example. tasting. The main means by which an event can transfer associations is on the basis of various dimensions of credibility. 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. Third-party sources can also have an effect at a more local level. Having a celebrity endorse your brand can be helpful for a well-known brand in need of maintaining attention for its brand and category. Celebrities are most helpful because they can star in advertising campaigns and participate in company events. Meaning and Definition of Perception Human beings are constantly attacked by numerous sensory stimulations including noise. received. organizations (e. People might talk about the celebrity but that rarely translates into much for the brand. A brand without a focus will never find the correct celebrity to match the brand. . Perception is the process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment According to Kolasa. Tiger Woods endorsing the Buick brand makes no sense at all. The bottom line is that the only thing that makes a brand successful is owning a word in the mind. sight. Too many companies use a celebrity in an attempt to establish credibility with consumers. There is just no believability that Tiger is dying to drive a Buick.
The stimulation coming to these organs may be through action. The messages or incoming stimuli are recognized before they are transmitted into behavior. The stimuli that are paid attention depend purely on the people’s selection capacity and the intensity of stimuli. touch of the product and people.4. organizes it. ears. odor. However. and obtains meaning from it. The perception starts with the awareness of these stimuli.2. i. Stimuli Overt Environment Physical. nose.15: Components of Perception 1) Stimuli: The receipt of information is the stimulus which results in sensation. . 2) Attention: Stimuli are selectively attended to by people.4.. The manner in which a person perceives the environment affects his behavior. Taking employees to the attention stage is essential in an organization for making them behave in a systematic and required order. thoughts. etc. Components of Perception Perception is a process of sensory organs. Perception is a two-phase activity. The mind gets information through the five sense organs. receiving stimuli and translating the stimuli into action.1. sensory and neural mechanisms are affected and the message receiver becomes involved in understanding the stimuli.. During the attention process. Thus. These senses are influenced by a larger number of stimuli which may be action. taste. Recognizing these stimuli takes place only after paying attention to them. hearing. and the manner in which they interpret it to obtain the understanding of the situation. The physical senses used by people are vision. oral communication. tongue and skin. viz. 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. Some of the stimuli are reacted to while others are ignored without being paid any attention. the eyes. 2) Cognitive or Psychological Process: Perception is a basic cognitive or psychological process. touch. 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. smell and taste. Intuitions and hunches are known as the sixth sense. 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. information. 3) Recognition: After paying attention to the stimuli. consideration and feelings.e. or feelings are triggered by the perception of their surroundings. These messages are then translated into action and behavior. how they organize this information. 1.3. the employees try to recognize whether the stimuli are worth realizing. people's actions. Knowledge and behavior depend on senses and their stimulation. emotions. written messages.
absolute threshold. We can feel the energy in the pulsating music played at a disco. Specifically.before the stage of translation. Factors influencing the selective process may be external as well as internal. They confront these stimuli. How one responds to a stimulus received by any of the five senses is called sensation. a fast tempo creates a more rapid traffic flow. interpret them and behave according to their background and understanding. but when performance is equal to expectation. Marketing Implications Fast music. stimuli. organizational structure. In the above example. High performers become a source of stimuli and motivation to other employees. The type of music being played in a retail outlet can have an interesting effect on shopping behavior. 6) Performance: Proper behavior leads to higher performance. reaction or other behavior. They not only try to leave a mark on the consumer’s mind. 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. If the performance is more than the expectation. 4) Translation: The stimuli are evaluated before being converted into action or behavior. . For example. And perception is how person understand a sensation and co-relate it with his needs and personality. they also try to provide him with cues to perceive the product in a specific way. As person enter a bakery. in contrast.. The recognition process is dependent on mental acceptability. He has immediately translated the stimulus into an appropriate action. It is a response to change in sensory inputs.e. tends to energize. The conversion is translation. social systems and characteristics of the perceiver. the thundering light in the Rin detergent ad may lead the consumer to expect that kind of cleaning for his clothes.4.4. the stimuli must be recognized by the individual. A performance-reward relationship is established to motivate people. it results in satisfaction. slow music can be soothing. Employees confronted with stimuli select only a few stimuli of their choice and leave other stimuli unattended and unrecognized. The behavior of employees depends on perception which is visible in the form of action. and subliminal perception. like that played at aerobics classes. the car driver after recognizing the stimuli uses the clutch and brake to stop the car. notice and register them in their minds. However. The perception process is purely mental before it is converted into action. These are discussed in the following sections: 1) Sensation 2) Absolute Threshold 3) Just. differential threshold. when a person come across a beautiful ad of a Mercedes Benz ‘E-class’ on the center spread of a magazine. people are delighted. The evaluation process is translation. 5) Behavior: Behavior is the outcome of the cognitive process.noticeable-difference 4) Subliminal Perception 1) Sensation When a person is exposed to any of the marketing stimuli or an ad. 1. i. 7) Satisfaction: High performance gives more satisfaction. Several stimuli are observed everyday by individuals. their first reaction will probably be one of admiration. 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). For example. The behavioral termination of perception may be overt or covert. the first reflex that is initiated in him is known as sensation. Elements of Perception The elements of perception are sensation. Marketers try to advertise their products in such a way that they will appeal to the consumer’s senses. It is an overt and covert response. may smell the mouth-watering aroma of freshly baked cakes. a fast tempo is more desirable in restaurants because consumers will eat faster. The level of satisfaction is calculated with the difference in performance and expectation.
consumers’ sensory receptors will not be activated and the stimulus will not be consciously perceived. and ii) So that product improvements (e. A better strategy would have been to introduce several successive versions of the polish. the consumers will notice the price change.g. Suppose you are driving on the highway and a billboard is in the distance. but an amount relative to the intensity of the first stimulus.e. or lower price) are very apparent to consumers without being wastefully extravagant (i. Before that point.000 or more.thereby allowing greater turnover and higher sales. ii) Hindustan Unilever increases the price of a 1. 3) Just. the greater the additional intensity needed for the second stimulus to be perceived as different. larger size. each version with a shine that lasts longer than . 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.. they are at or just above the JND). 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. or the Just Noticeable Difference (the JND).53 CB by Majumdar] Application of Just. i) JND for a car model may exist at a level of `10. So only when the price is changed by `10. Thus if images or words in a commercial are too small or the sound level is too low. Consumers here may perceive these as a significant change in the prices of these two brands. By doing so. reductions in product size or quality.. Weber’s law. remain below the JND).g. Likeable and familiar music can induce good moods. packaging.noticeable-difference The minimal difference that can be detected between two similar stimuli is called the differential threshold.000. Marketers use the concept of JND for product pricing. as it has come to be known.e. or increases in product price) are not readily discernible to the public (i. 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. Page no. For Example. the billboard is below the absolute threshold and not sufficiently intense to be seen.noticeable-difference to Consumer Behavior Book Matter [Book Code: 22. A nineteenth-century German scientist named Ernst Weber discovered that the JND between two stimuli was not an absolute amount. and promotion decisions. improved or updated packaging.5kg package of Surf Excel Blue detergent from `110 to `120 or. states that the stronger the initial stimulus. According to Weber’s law.. Music can also affect moods.. For example. the absolute threshold is the amount of intensity needed to detect a difference between something and nothing. the company decreased its sales revenue.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. in an apparent misunderstanding of the JND.14. 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. The absolute threshold is that point at which you can first see the billboard. In other words. say. some years ago. the price of a 100gram pack of Lux toilet soap is raised to `21 from `18. Just.
People with different needs usually experience different stimuli. some people claim that marketers are brainwashing consumers and attempting to manipulate them. This perception is perhaps fostered by the availability of self-help tapes with subliminal messages that claim to help consumers stop smoking. Reportedly. lose weight. Although advertising agencies deny using such stimuli. Marketers decrease the product quantity included in the packages. the reductions in quantity were below most consumers’ JND for these products. They usually make a number of small changes. marketers very much want to meet or exceed the consumer’s differential threshold. Less than the JND is wasted effort because the improvement will not be perceived. e. 1. when it comes to price increases..4.5 ounces to 13. However. PepsiCo reduced the weight of one snack food bag from 14. With pre-attentive processing attention is directed at something other than the stimulus. Betty Crocker. The manufacturer of Huggies reduced the number of diapers in a package from 240 to 228 (and continued pricing it at $31. i. The self-concept plays an important role in perceptual selectivity. On the other hand. each message is shown on the screen for only a fraction of a second. Factors Influencing Perception Individuals may look at the same thing. A number of factors operate to shape and sometimes distort perception. while leaving the prices unchanged – thus.5 ounces (and maintained the price at $3.29). with pre-attentive processing the stimulus is fully present – if a person shift attention and look directly at the ad or billboard. 4) Subliminal Perception The concept of the perceptual threshold is important for another phenomenon – subliminal perception. each carefully designed to fall below the JND. These people also believe that ads containing these stimuli are effective. less than the JND is desirable because consumers are unlikely to notice it. but perceive it differently. Similarly people with different needs select different items to remember or respond to. has been updated seven times from 1936 to 1996. ii) Self-concept: The way a person views the world depends a great deal on the self-concept or image he has about himself. and feel more relaxed. they want consumers to readily perceive any improvements made in the original product.5.. Marketers often want to update their existing package designs without losing the ready recognition of consumers. and our perception of them is called subliminal perception. Also. 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”. Stimuli like these.the previous version (and at or slightly above the JND) and offered at a higher price (but a price. increasing the per unit price. For example. the person can easily see it. In contrast. Marketing Implications The question of whether stimuli presented subliminally affect consumers’ responses has generated considerable controversy in the marketing field. These factors include: 1) Characteristics of the Perceiver (Internal Factors) i) Needs and Motives: People’s perception is determined by their inner needs. subliminal stimuli are presented so quickly or are so degraded that the very act of perceiving them is difficult.99). in effect. presented below the threshold level of awareness. subliminal exposure to these messages influenced viewers’ purchase of Coke and popcorn. more than the JND is wasteful because it reduces the level of repeat sales. Suppose a person sitting at a movie and is exposed to messages like “Eat popcorn” and “Drink Coke”. It can be thought . i.e.. at a magazine article instead of an ad in person’s peripheral vision. When it comes to product improvements. With subliminal perception attention is directed squarely at the stimulus. are called subliminal messages. Subliminal perception is different from pre-attentive processing. lower than the JND). and the original popcorn-Coke study has been discredited. so short a time that you are not consciously aware of them. the General Mills symbol.e.g. so that consumers will perceive minimal difference between succeeding versions. A need is a feeling of tension or discomfort when one thinks he is missing something or requires something.
he is likely to perceive the same situation differently than if he is elated. if sentences are underlined. Repetition increases our sensitivity and alertness to the stimulus. or any number of situational factors. a technical manager may expect ignorance about the technical feature of a product from the non-technical people. Elements in the surrounding environment influence our perception. The time at which an object or event is seen can influence attention. Thus. iii) Beliefs: A person’s beliefs have profound influence on his perception. as can location. In the organizational setting. Thus. The individual normally censors stimulus inputs to avoid disturbance of his existing beliefs. 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. ii) Intensity: High intensity increases the chances of selection. a fact is conceived not on what it is but what a person believes it to be. vi) Expectations: Expectations affect what a person perceives. Thus. . iv) Status: Perception is also influenced by the status of the perceiver. greater the frequency with which a sensory stimulus is presented. the greater the chances we select it for attention. iv) Past Experience: A person's past experiences mould the way he perceives the current situation. If the message is bright. light. Expectations are related with the state of anticipation of particular behavior from a person. heat.of as an internal form of attention-getting and is largely based on the individual's complex psychological make-up. It establishes dominance and enhances perceptual selection. The contrast principle states that external stimuli that stand out against the background or which are not what are expected will receive better attention. Size attracts the attention of an individual. 3) Characteristics of the Situation: The context in which we see objects or events is important. v) Contrast: Stimuli that contrast with the surrounding environment are more likely to be attention catching than the stimuli that blend in. expectations affect people’s perception. If a person is depressed. the more likely it will be noticed. High status people can exert greater influence on perception of an employee than low status people. v) Current Psychological State: The emotional and psychological states of an individual are likely to influence how things are perceived. A contrasting effect can be caused by color/size or any other factor that is unusual. it gets more attention than in normal case. If a person has been betrayed by a couple of friends in the past.16: Factors that Influence Perception 2) Characteristics of the Target or Perceived (External Factors) i) Size: The bigger the size of the perceived stimulus. The greater the intensity of stimulus. the higher is the probability that it is perceived. iii) Frequency: Repeated external stimulus is more attention-attracting than a single time. he would tend to distrust any new friendship that he might be in the process of developing.
response disposition. expectations.4. values and needs. people select only some. and they interpret such stimuli (they give meaning to them) subjectively in accordance with their personal needs. The combination of these two very different kinds of inputs produces for each human being a very private. organization and interpretation resulting into behavioral responses or action like opinion. the individuals will not be able to consider all available information necessary to initiate behavior. Various external and internal factors influence our process of stimuli selection. expectations.6. The sensory world is made up of an almost infinite number of discrete sensations that are constantly and subtly changing. This explains why no two people see the world in precisely the same way. Individuals are very selective as to which stimuli they “recognize”.There are lot of stimuli in the environment to which different meanings are given. they subconsciously organize the stimuli they do recognize according to widely held psychological principles. Because each person is a unique individual. However. the other type of input is provided by individuals themselves in the form of certain pre-dispositions (expectations.4.6. All the remaining stimuli must compete for attention.1.2. very personal picture of the world. 1) Sensory Activation: First process known as. perception is the result of two different kinds of inputs that interact to form the personal pictures – the perceptions – that each individual experiences. Out of all these stimuli. neither of these consequences tends to occur. needs. “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. One type of input is physical stimuli from the outside environment. For example. 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.1. it follows that each individual’s perceptions are also unique. response salience and perceptual defense as given below: . 2) Sensory Adaptation: Second process known as. intensive stimulation “bounces off” most individuals. and learning) based on previous experience. because perception is not a function of sensory input alone.4. The aspects of perception – the selection. with unique experiences. wants. Internal or Personal Factors in Perceptual Selection The internal factors relate to the perceiver and include such factors as learning and motivation. The mechanism involves selection. These factors are self concept.2. beliefs.1. and interpretation of stimuli are: 1. and experiences. organization. 1. motives. Process of Perception An individual perceive things differently with respect to other individual . Otherwise. Rather. desires. Perceptual Selection There are a variety and a multitude of stimuli confronting us everyday affecting all our senses.6. These stimuli are the input given to start with the process of perception. bright or loud enough to activate our senses. buying etc. and expectations.6. According to the principles of sensation. 1. Perceptual Inputs and Perceptual Mechanism Human beings are constantly bombarded with stimuli during every minute and every hour of everyday.4. Without this ability of selection.1. a new home owner near an airport might be excessively bothered by the noise. This selectivity is enhanced by two related processes. 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. Thus many objects or stimuli are stopped from entering our perceptual system by the above two processes. 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. “sensory adaptation” relates to human being ability to tune out certain stimuli to which he has been continuously exposed. inner needs. who subconsciously block (adapt to) a heavy bombardment of stimuli.
expectations and values filters perception and may be lasting and difficult to change. repetition. or dim light. people with different needs select different items to remember or respond to. They select only that aspects which they find match with their characteristics.6. This factor is shown below: 2) Intensity: The intensity principle of attention states that the more intense the external stimulus is. This concept plays an internal role in perceptual selectivity. They may even perceive other factors to be present that are not a part of the stimulus situation. commercials on televisions are slightly louder than the regular programmes. weak odor. The individual normally censors stimulus inputs to avoid disturbance of his existing beliefs.1) Self-Concept: The way a person views the world depends a great deal on the concept or image he has about himself.4. strong odor or bright light is noticed more as compared to a soft sound. a fact is conceived not on what it is but what a person believes it to be. motion and order as given below: 1) Size: The larger the size of the object. It can be thought of as an internal form of attention-getting and is largely based on the individual’s complex psychological makeup. 2) Beliefs: A person’s beliefs have profound influence on his perception. Though such expectations may change because of direct contact. advertising companies use large billboards and signs that capture the perceiver’s attention. the more likely that it will be noticed. People’s own characteristics affect the characteristics which they are likely to see in others. a particular problem in an organization may be viewed as a marketing problem by marketing personnel. For example. Thus. but by the person’s own cognitive predispositions. a person will perceive the things with which he is familiar. We are most likely to notice things that stand out because of their size relative to other things in that area. Thus. and expectations may fall near actual but a mental set about beliefs. 5) Response Disposition: Response disposition refers to a person’s tendency to perceive familiar stimuli rather than unfamiliar ones. A loud sound. External Factors in Perceptual Selection External factors relate to the characteristics of objects or people that activate our senses and thus get our attention. Knowing oneself makes it easier to see others accurately. They are trained to look at the situation from one point of view only. a basketball player. such as “DANGER” written in .2. It indicates that type of response salience which people have affects their perception. more than seven feet tall will stand out in a crowd. Even in the organizational setting. intensity. Expectations are related with the state of anticipation of a particular behavior from a person. Some of these external factors are size. This is referred to as ‘maintenance of cognitive consistency’. People with different needs usually experience different stimuli. 3) Expectations: Expectations affect what a person perceives. 1. 6) Response Salience: Response salience is the set of dispositions which are determined not by the familiarity of the stimulus situations. The reason for this phenomenon lies in the background of the people for which they are trained. For example. Thus. a technical manager may expect ignorance about the technical features of a product from non-technical people. and human relations problem by personnel people. 3) Contrast: If an object in some way contrasts with its surroundings. it is more noticeable. 4) Inner Needs: People’s perception is determined by their inner needs. or union officials use rough language. not from other points of view.2. we also become aware of the objects that are smaller in size than their surroundings. 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. contrast. For this reason. 7) Perceptual Defense: Perception defense refers to the screening of those elements which create conflict and threatening situation in people. the more likely it is to be perceived. a control problem by accounting people. Conversely. Similarly.1. Such expectations may affect the perception. expectations affect people’s perception. novelty and familiarity. based on the intensity principle. a warning sign in a plant. Thus. For example.
A person rarely perceives the extent of color. 7) Order: The order in which the objects or stimuli are presented is an important factor influencing selective attention. 1. Factors Affecting Perceptual Organization 1) Figure and Ground: Figure-Ground principle is generally considered to be the most basic form of perceptual organization. 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. You do not try to understand what the white spaces in the middle of black letters could mean. the letter M will be more often remembered than other letters. receives the most attention. 6) Motion: Motion principle states that a moving object draws more attention as compared to a stationary object. the first piece of information among many pieces received. In the following diagram. Instead he perceives organized patterns. The principle of similarity is exemplified when objects of similar shape.3. A manager who interviews twenty women and one man for a job would remember the man first because of contrast. Sometimes.3. Advertisers use this principle in their advertising by designing signs which incorporate moving parts. commercials on televisions (moving ones) get more attention than print media. In the following illustration. Marketing managers and advertisers use this principle in order to get the customers’ attention. 4) Repetition: A repeated message is more likely to be perceived than a single message. communication in familiar jargons attracts more attention. Perceptual Organisation Perceptual Organization emphasizes on the subsequent activities that take place in the perceptual process after a stimulus is received. if we perceive objects or people with similar characteristics. 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. light or sound associated with objects. 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. Some of the factors underlying his grouping are: i) Similarity: The principle of similarity states that the greater the similarity of the stimuli. For example. repetition increases our sensitivity or alertness to the stimulus”. Work instructions that are repeated tend to be received better. the greater the tendency to perceive them as a common group. stimuli and identifiable whole objects. New objects or events in a familiar setting.6. Similarly. According to Morgan and King. the shaded square would be noticed first because of its contrast with other squares. For example. as you read this page.6. For example. “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. you see white as the background and black as the letters or words to be read. In addition. a writer of a communication may intentionally build up to a major point by proceeding through several smaller and less important points. in job rotation. or familiar objects or events in new setting draw better attention. size or color tend to be grouped together. when workers’ jobs are changed from time to time. 2) Perceptual Grouping: Grouping is the tendency to curb individual stimuli into meaningful patterns. the most important piece is left to the end in order to heighten the curiosity and perceptive attention. if all visitors to a plant .black against a yellow background would be noticed more quickly because of the contrast factor. For example. For example. they become more attentive to their new jobs as compared to the previous ones. 1.4.1. 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. For example. thus making the other pieces of information less significant.4. Sometimes. For instance.
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. on the whole. The following figure demonstrates the proximity principle. because it does not fit with the overall impression. in the following figure the sections of the figures are not complete. The person’s perceptual process will close the gaps that are unfilled from sensory input. This concept gives a person a sense of stability in this changing world. a hard worker. iv) Continuity: Continuity is closely related to closure. For example.are required to wear white hats while the supervisors wear blue hats. three. the manager will tend to ignore it. 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. 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. whereas the continuity principle says that a person will tend to perceive continuous lines of pattern. 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. only some people in the group may be inefficient.g. 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. the top of a glass bottle is seen as circular whether we view it from the side or from the top. honest. But there is a difference. Closure supplies missing stimuli. sincere. The ten squares in the figure are seen as pairs of two. the world would be very chaotic and disorganized for the individual. if a manger perceives a worker. This principle permits the individuals to have some constancy or stability in a tremendously variable and highly complex world. . 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 workers can identify all the white hats as the group of visitors. Only the obvious patterns or relationships will be perceived. For example. Because of this type of perception. The continuity may lead to inflexible or non creative thinking on the part of the organizational participants. even when some parts of the object are missing. For example. if he behaves in a contradictory way sometimes (which is a kind of a gap. 3) Perceptual Constancy: Constancy is one of the more sophisticated forms of perceptual organization. then even. that he has about the worker. then the entire group will be considered responsible even though. If constancy were not at work. 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. 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 pat on the back. manager will tend to interpret their behavior according to this mental set. Indeed. a manager may have developed a general belief that workers are lazy. perceptual defense may play a very important role in understanding union-management and supervisor-subordinate relationship. While meeting a group of workers. If someone has a favorable attitude towards a person. without checking whether their opinions or attitudes were accurate in the first instance or not. perception is essentially giving meaning to the various data received and interpreted 1. The word ‘stereotype’ has been used to indicate a generally favorable or unfavorable opinion a person holds for a particular group of people. attitudes.1. Stereotyping is necessary for economy of perception. But stereotypes also lead to prejudices about various groups of people. which influence perception and interpretation of data. his subsequent perceptions of the same person are influenced by this attitude.4. shape and color of objects would change as the worker moved about and it would make the job almost impossible. Accordingly. 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. objects. 2) Stereotyping When people form opinions about a particular class of objects or persons and act according to such opinions. the manger already has a mental or perceptual set. a new policy. mistakes made by the latter may be condoned or the interpretation may give the latter the benefit of . It gives meaning and value to simple stimuli. Perception is said to have taken place only after the data are interpreted. and want to get all the advantages from an organization without giving their best to it. For example.iii) Color Constancy: Color constancy implies that familiar objects are perceived to be of the same color in varied conditions. The organizational structure and culture provide the primary context in which workers and managers do their perceiving. In such a case. 4) Perceptual Context: The highest and most sophisticated form of organization is ‘perceptual context’. Manager’s subsequent perceptions will be influenced by this set. 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. The owner of a red car sees it as red in the bright sunlight as well as in dim twilight. situations and other persons in the environment. Another manager – having different beliefs. 3) Halo Effect In the halo effect the person develops an opinion or attitude towards a single person or object.6. it is called stereotyping. Without perceptual constancy the size.6.] 5) Perceptual Defense: Closely related to perceptual context is the perceptual defense. the perceiver interprets the data in various ways. just as a worker perceives another worker as being more honest than a manager. A person may build a defense against stimuli or situational events in a particular context that are personally or culturally unacceptable or threatening. a verbal order.4. Interpretation/Perceptual Interpretation After the data have been received and organized. For example. For example. if a manager has a good impression about a particular subordinates (a positive halo effect). managers perceive a manager as being more honest than a worker. and opinions – may have a different interpretation of the same phenomenon.1. events. These general opinions or attitudes a person has constitute the perceptual set.4. The role of expectations (the so-called ‘Pygmalion effect’) can thus be explained by the concept of the perceptual set. For example. a raised eye brow or a suggestion takes on special meaning when placed in the context of the work organization. 1. shirk work. Most studies verify the existence of a perceptual defense mechanism.4.
6) Selective Perception People selectively interpret what they see on the basis of their interests. a memo. Rusty Halo or Horns effects) those mistakes may be perceptually exaggerated as irresponsible behavior. when done by another employee. experience and attitudes. showing that it is taking positive steps in the direction of resolving conflicts or is doing something useful for the organization.doubt. the manager may find such data in conflict with a preconceived opinion that the union is by and large negative in its approach. 7) Projection Attributing one’s own characteristics to other people. Further. performance appraisal must not be based on half-cooked or incomplete information. You are more likely to notice cars like your own. they do take on meaning and value for the perceiver. or why some people may be reprimanded by their boss for doing something that. For example. When observing other who actually are like them. 4) Perceptual Defense Perceptual defense is used by the perceiver to deal with conflicting messages and data. The visual stimuli by themselves are meaningless. For example. these observers are quite accurate—not because they perceptive but because they always judge people as being similar to themselves. but it may be inferred that he is sincere towards his duties. 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. background. it is known as attribution. When similar mistakes are made by another person about whom the manager has an unfavorable opinion (Negative Halo effect. fellow employees and others must also be taken into consideration. if a manager gets data from a union on strike. goes unnoticed. 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. 9) Inference There is a tendency on the part of some people to judge others on limited information. they are naturally correct. Thus. we engage in selective perception. Only when the doodles are placed in a verbal context. Thus. 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. the recipient uses perceptual defense to deal with this phenomenon. or a pat on the back takes on special meaning and value when placed in the context of a work situation. an employee might be sitting at his desk throughout the working hours without doing anything. a new policy. a suggestion. Perception is distorted sometimes by the efforts of the perceiver to attribute a causal explanation to an outcome. If we are honest and trustworthy. There is a tendency for the individuals to attribute their own behavior to situational factors. the manager may tend to interpret even feedback information received according to the preconceived impression. a verbal order. In the above case. . but explain the behavior of others by their personal dispositions. So when they do find someone who is like them. the productivity and the behavior of the concerned employee towards customers. If the data a person receives threaten beliefs already held. so we take it for granted that other people are equally honest and trustworthy. The organizational culture and structure provide the primary context in which workers and managers do their perceiving. as a result of the halo effect. 10) Attribution When people give cause and effect explanation to the observed behavior. Since we can’t observe everything going on about us. a raised eyebrow.
This is called self-fulfilling prophecy. he tend to twist or avoid that which is an unpalatable threat to his ego. Shopper’s Stop. Consumers react to advertisements. Retailers. The consumer forms a perception about the store. which refers to the reception and interpretation of external stimuli by an individual. prices. Point-of-purchase displays also attract attention to sale and newly launched items. packages and so on according to their motives. People give their attention largely to those things which are novel.4. In many cases it has been found that people try to validate their perceptions of reality (or expected performance) when those perceptions are faulty. He then act in a defensive manner and distort or even totally shut out what is actually occurring. Therefore.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. Store interiors (of Ebony. Consumer behavior is process of learning of which perception is only the beginning. or from which they derive satisfaction of needs and wants. Thus.7.) are designed with frequently sought-out items being separated so that the average consumers will travel through more of the store. as a result. etc. Stores are designed with highly visible shelves and overhead signs to make locating items as easy as possible. interesting. therefore. Shelf position and amount of shelf space influence on which items and brands are given more attention. distortion is due to defense mechanisms that operate when one encounters data or receives information that is incongruent with one’s self-concept. and advertising combine to form the meaning of store image assigned. Thus. they are not likely to let him down. . Without attention being given to a stimulus. layout. He often tend to distort reality when it is unfavorable to us. begins with the process of sensation and is a selective mental operation. external building characteristics. A study of perception is useful in the following areas: 1) Retail Strategy: Most retail environments contain a vast array of information. point-of-purchase displays. This increases total exposure. 11) Distortions Distortion occurs when a person twist and manipulate events either consciously or unconsciously. Perceptions of stores (store images). an understanding of the perception of information is an essential guide to marketing strategy. use exposure very effectively. etc. retailers need to be concerned about information overload. Hence. if a manager expects good results from his people. The total mix of in-store information cues (brands available. 2) Brand Name and Logo Development: Brand names are important for both consumer and industrial products. products.). Consumers perceive several types of risk in the purchase of many products. some bias in perception may creep in. Retailers must ensure that consumers do not become frustrated and minimize their in-store information processing. In other words. expectations become reality. attitudes and social situation and each individual’s perception of these marketing mix elements is unique to him or her. little perception will take place. brands and advertising messages may vary significantly from one part of a company’s market to another. 1. Managers should take active steps to reduce this perceived risk as a normal part of any marketing strategy. For example. because it threatens our self-image. Perception and Marketing Strategy Perception. 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. Information is the primary raw material the marketer works with while influencing consumers. 12) Self-fulfilling Prophecy Based on expectations. It is a known fact that consumers cannot process all the information.
Besides how a product and service is presented (its logo) is also equally important. the brand name “Compaq” for a computer was created in such a fashion. 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. Suppose that marketer is responsible for developing a campaign designed to increase the number of users for a liquid ‘toilet cleaner’. money and effort in developing a right kind of logo for all their company products. it is obvious that name selection influences how consumers interpret product features. in appropriate media. The topic may range from using celebrities endorsing the virtues of the product or using health and cleanliness as a major plank. For example. what he does depends on the target market. The unique spelling attracts attention and also gives “a scientific” impression. care should be taken to ensure that the target audience interprets the message in the advertisement correctly. marketers have the difficult task of trying to communicate with them at times when their interest level is low and non-existent. This is essentially a low involvement product. and the situation. While using stimulus characteristics. animated cartoons to attract attention to the advertisement. 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 market is interested in. and the electronic. Consumers are not always actively interested in a product. Products such as carbonated drinks and detergents. Since. attention does not pose much of a problem. If the target market is interested in the product category. Even television advertisers are concerned about where within the commercial break their ad appears and the interest level aroused by the program. To a large extent. the product. print. For example. it is difficult to reach consumers at exactly this point. 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. A marketer should make effort to attract attention to a package or advertisements. Consumers of these kinds of product will search for media where relevant information is available. For Compaq. while ‘paq’ means small. For products like these. the marketer must find media the target market is interested in and place their advertising messages in those media. 3) Media Strategy: The fact that the exposure process is selective rather than random is the underlying basis for effective media strategies. For some products and target markets (fashion items and accessories and heavy users of these items). there is a particular column devoted to queries on skin/beauty care. and ii) Convey meaning. Under such circumstances. Once consumers are exposed to the message. While advertising in magazines. and in that particular brand. . Interest in a product tends to arise only when the need for the product arises. advertisers insist that their ads appear opposite certain articles and columns.There are companies which use linguistics and computers to create names that convey the appropriate meaning for products. in a magazine like Femina. Interest in this product arises only when the need for the same surfaces. and ii) To tie the message to a topic. This is the reason why companies devote so much of time. For other products and target markets. they will most likely attend to it sometimes it is the other way round. Advertises of Synergie Eye Contour Gel take care to place their ads opposite this column to get maximum reader interest. 4) Advertisement and Package Design: Advertisements and packages must perform two critical tasks: i) Capture attention. two strategies appear reasonable: i) To utilize stimulus characteristics such as full-page ads bright colors. It was originally to be called – “Gateway”. From this. consumers are highly involved with the product and will go to considerable lengths to secure product relevant information. ‘com’ means computer and communications. Advertising is also concerned about the placement of their advertisements. consumers have limited involvement with the product category. For example.
When a person hear an advertisement. you probably are not aware that cars outside are making noise. An individual at different times may perceive the same item in a number of ways. A firm’s ability to establish and maintain satisfying customer relationship requires an understanding of buying behavior. Here. For example. personality and self-concept. If you are concentrating on this paragraph. where. An individual’s current set of needs affects selective exposure. Buying behavior is the decision processes and acts of people involved in buying. The selective nature of perception. It is concluded with a discussion of social influences that affect buying behavior. iv) Memory: It must be stored in memory in a manner that will allow retrieval under the proper circumstances. see a friend. and culture and sub-cultures. smell polluted air or water. and opinion leaders. 1.Partly determine people’s general behavior and thus. hearing.8. Person select some input and ignore others because do not have the ability to be conscious of all inputs at one time. 3) By gaining a better understanding of the factors that affect buying behavior. Information inputs are sensations received through sight. Consumer buying behavior is influenced by the perception also which is psychological influence. they do not reach your awareness until they are pointed-out. those who purchase products for personal or household use and not for business purposes. 2) In the marketing concept stresses that a firm should create a marketing mix that satisfies customers. that the room light is on. on seeing an . and touch. Marketers attempt to understand buying behavior for several reasons. go great efforts to understand their customers’ needs and gain a better grasp of customers’ buying behavior. reference groups. perception is a three-step process. Consumer buying behavior refers to the buying behavior of ultimate consumers. receive’s information inputs. It is not by random chance that many fast-food commercials are aired near mealtimes. Although one receives numerous pieces of information at once. family. influence their behavior as consumers. when. psychological influences are considered on purchasing decisions – perception. marketers are in a better position to predict how consumers will respond to marketing strategies. only few reach one’s awareness. Even through these perception processes operate internally. Different people perceive the same thing at the same time in different ways. organizing. Marketers strategies make use perceptual processes to gain and retain customer. learning attitudes. 1) Buyers’ reactions to a firm’s marketing strategy have a great impact on the firm’s success. iii) Interpretation: It must be properly interpreted. or touch a product.4. taste. and how consumers buy. Customers are more likely to turn in to these advertisements at these times. they are very much affected by social forces outside the individual. As the definition indicates. Perception is the process of selecting. and using products. marketers must examine the main influences on what. This phenomenon is sometimes called selective exposure because an individual select which inputs will reach awareness. Even though you receive these inputs. smell. Information inputs that relate to one’s strongest needs at a given time are more likely to be selected to reach awareness. or that you are touching this page.ii) Attention: It must be attended to by the consumer. motives. it occurs when a person receives information inconsistent with personal feelings or beliefs. social classes. To find-out what satisfies buyers. and lifestyles. and interpreting information inputs to produce meaning. 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. including roles. Perception Process and Buying behavior Marketers at successful organizations like McDonald’s.
that are particularly relevant to the study of consumer behavior. For example. sounds or statements in its advertisements. an individual must mentally organize and integrate new information with what is already stored in memory. 2) Selective Retention: In selective retention. a buyer may block-out a salesperson’s presentation.14. Thus. For example. To produce meaning. Interpretation. Third. Consumer Imagery Book Matter [Book Code: 22. is the assignment of meaning to what has been organized. an organization may suffer a sales decline. 4) Perceived price. prices. A person bases interpretation on what he or she expects or what is familiar. called closure. and manufacturers. One method. 6) Price/quality relationship. they often try to influence them through information.4. on the basis of their consistency (congruence) with their personal pictures of themselves.111. 2) Product repositioning. Page no. when Smucker’s re-designed its packaging. Although marketers cannot control buyers’ perceptions. they also wanted a classic look so that customers would perceive their products to be the familiar ones they had been buying for years. 8) Manufacturer’s image. 7) Retail store image. 3) Positioning of services. retail stores.9. For example. and . a customer might infer that 65 per cent of users have more cavities. a manufacturer that changes a product or its package faces a major problem.advertisement promoting a disliked brand. In an attempt to draw attention to its brand. a viewer may distort the information to make it more consistent with prior views. After hearing a sales presentation and leaving a store. Information inputs that reach awareness are not received in an organized form. familiar product or package. a consumer’s perceptual process may operate such that a seller’s information never reaches that person. Unless a product or package change is accompanied by a promotional program that makes people aware of the change. 1. Products and brands have symbolic value for individuals. who evaluate them. a person remembers information inputs that support personal feelings and beliefs and forgets inputs that do not. they may not recognize the new one. the third step in the perceptual process. marketers told designers that although they wanted a more contemporary package design. First. Several problems may arise from such attempts. 5) Perceived quality. The second step in the process of perception is perceptual organization. For this reason. When people are looking for the old. however. People use several methods to organize. occurs when a person mentally fills in missing elements in a pattern or statement. Consumers’ perceive images of products brands. it can be said that perceptual process influences buying behavior of consumer which should be intelligently used by marketers. Second. a buyer who perceives information inputs to be inconsistent with prior beliefs is likely to forget the information quickly. when a toothpaste producer advertises that “35 per cent of the people who use this toothpaste have fewer cavities”. an advertiser will capitalize on closure by using incomplete images. or images. services. CB By Majumdar] Consumers have a number of enduring perceptions. a buyer may receive a seller’s information but perceive it differently than was intended. Consumer’s imagery is concerned with: 1) Product positioning. product quality. This distortion substantially lessens the effect of the advertisement on the individual. a customer may forget many selling points if they contradict personal beliefs.
its positioning. It compliments the company’s segmentation strategy and selection of target markets. For a light beer. 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. Product positioning is the essence of the marketing mix. The Kodak Company offers cameras ranging from 6 megapixels to 14 megapixels for the non-professional camera buyer. while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices. Only college students may participate with their campus e-mail IDs. As products become more complex and the marketplace more crowded. Product Positioning The way a product is perceived or positioned by a consumer is probably more important than what it actually is. Managing product positioning requires that marketer . when segmenting the market for digital cameras. companies have relied on product attributes such as resolution quality to define market segments and develop appropriate products.4. 3) By User: Facebook is a social networking site used exclusively by college students. 4) By Product or Service Class: Margarine competes as an alternative to butter. 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. consumers rely more on the product’s image and claimed benefits than on its actual attributes in making purchase decisions. a distinctive product image is most important. it might be that it tastes great or that it is less filling. Ford and Chevy need not apply. it might be the mint taste or tartar control Important product attributes like taste are useful segmentation tools because they are easy to identify. 2) By Use or.e. Application: The users of Apple computers can design and use graphics more easily than with Windows or UNIX.1. while butter provides better taste and wholesome ingredients.9) Perceived risk. but also very difficult to create and maintain.9. Positioning can change due the counter measures taken at the competition. It converges what the meaning of the product is and how it can fulfill the consumer needs. Positioning Strategies The major positioning strategies are: 1) By Attribute or Benefit: This is the most frequently used positioning strategy. 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. In today’s highly competitive marketplace.. The core of effective positioning is a unique position that the product occupies in the mind of the consumer. For example. Positioning is more important to the ultimate success of a product than are its actual characteristics. Tiffany wants us to believe that their diamonds are of the highest quality. i. more sophisticated cohort. although products that are poorly made will not succeed in the long run on the basis of image alone. Apple positions its computers based on how the computer will be used. 6) By Price or Quality: Tiffany and Costco both sell diamonds. Facebook is too cool for MySpace and serves a smaller. Margarine is positioned as a lower cost and healthier alternative to butter. 1. Positioning is what the customer believes and not what the provider wants them to believe. For toothpaste. 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. Successful positioning is based on consumer’s reality and familiarity.
Now McDonald’s offers sit-down family restaurants with an emphasis on value at lower prices.2. generally. comparable to the Ford Thunderbird. the marketer may be forced to re-position it in response to market events. For example.4. they see it in terms of a map or grid that clusters like product of brands together. was successfully re-positioned as a mid-sized car. and shakes. Consumer parked the car and went to the window to order and pickup very-low-priced burgers. if researchers were interested in soft drinks. Another reason to re-position a product or service is to satisfy changing consumer preferences. Typically. All of the outlet designs were the same. Attribute ratings are then subjected to various statistical techniques and a perceptual map can be extracted. fries.9. playing up brand attributes that had previously been ignored. such as a competitor cutting into the brand’s market share or too many competitors stressing the same attribute. likely attributes used in the analysis would include sweetness. Perceptual mapping is based on the belief that when consumers think of a product category. The maps provide a research tool to assess how multiple products in a category are positioned. how the attributes relating to the product are seen in the customers’ eyes and whether there are any product “gaps” in the market. and is impossible to achieve overnight. price. marketers re-position products. On the map. rather than trying to meet the lower prices of high-quality privatelabel competition. often with a fun place for the kids to play.know the customer and that he understand the competition. The Mercury Cougar. in response to changes in the market environment. By understanding the perceptual maps of consumers in targeted segments. carbonation. similar brands are . 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. however. asking people to rate products across multiple product attributes. products or brands that consumers consider similar share like benefits and attributes. The growth of the fast-food chain McDonald’s can also be viewed from the perspective of repositioning. fruitiness. Researchers create perceptual maps by surveying members of the target market. Re-positioning involves reeducating the consumer about changes in important product. McDonald’s restaurants. Subjectivity Perceptual Mapping Prevention Selectivity Expectation Past Experience Influences on Perceptual Mapping Measuring consumer perceptions is an important part of positioning. were part of a chain similar to the Hot ‘N’ Now Hamburgers. 1. this is the job of market research not just what the entrepreneur thinks is true. marketers can see where their products fit with others in the market. Here. the segment targeted as well as the image of the car changed. Checkers or Rally’s of today. etc. and/or promotional or personal selling benefits. Repositioning is difficult to achieve effectively. Product Re-Positioning From time to time. consumer’s resists change. some premium brand marketers have repositioned their brands to justify their higher prices. first introduced as a small sporty car. Perceptual Mapping Marketers use a method called perceptual mapping to position products against competitors. 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. Once the image of a product is established in the consumer’s mind. distribution. lightness. when first opened.
plotted close together. One study.. Perceptions of price unfairness affect consumers’ perceptions of product value and. consider the perception of price fairness. 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. 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.4. Blank spaces on perceptual maps indicate gaps in the market.. For example. and dissimilar brands are plotted far apart. packaged hotel soaps and shampoos.9. restaurant matchbooks. Marriott’s Hotels and Resorts brand claims to provide customers with “superior service and genuine care”. 1.”) in an ad offering a lower sales price. if a magazine publisher wants to introduce a new magazine to Generation Y. Perceived Price/Price Image How a consumer perceives a price – as high. Gaps typically indicate: 1) A true opportunity in the market that marketer might be able to pursue. (There are many examples of products invented to fill these types of gaps. Thus. Internal . frequent flyers. 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. Thus. Because services are intangible. the Renaissance Hotels and Resorts brand provides “distinctive decor. and the Fairfield Inn provides rooms and suites at “prices that will make customers smile”. there is some evidence that customers do pay attention to the prices paid by other customers (such as senior citizens. service marketers face several unique problems in positioning and promoting their offerings. ultimately. the Residence Inn is designed for extended stays. Different formats used in sales advertisements have differing impacts. Positioning of Services Compared with manufacturing firms. as fair – has a strong influence on both purchase intentions and purchase satisfaction. and 3) A combination of attributes that is impossible to deliver to the consumer without the development of new technology. and a variety of other specialty items. Many service companies feature real service employees in their ads (as tangible cues) and some use peoplefocused themes to differentiate themselves. However. For example. imaginative experiences and delights its customers’ senses”. affinity club members). 2) A combination of attributes that nobody actually needs or wants. and that the differential pricing strategies used by some marketers are perceived as unfair by customers not eligible for the special prices. A reference price is any price that a consumer uses as a basis for comparison in judging another price. focused on the special challenges of service industries in pricing intangible products. Internal reference prices are those prices (or price ranges) retrieved by the consumer from memory. proposed three types of pricing strategies based on the customer’s perception of the value provided by the purchase: satisfaction-based pricing.4. and mouse-pads on laptop computers). 1. image becomes a key factor in differentiating a service from its competition. to persuade the consumer that the product advertised is a really good buy. These include delivery vehicles painted in distinct colors.9.4. their willingness to patronize a store or a service. and efficiency pricing. 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. Many service marketers have developed strategies to provide customers with visual images and tangible reminders of their service offerings.3. the marketing objective is to enable the consumer to link a specific image with a specific brand name. Many service companies market several versions of their service to different market segments by using a differentiated positioning strategy. as low. the Courtyard brand provides “essential services and amenities to business travelers”. 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. Reference Prices Products advertised as “on sale” tend to create enhanced customer perceptions of savings and value. An advertiser generally uses a higher external reference price (“sold elsewhere at. relationship pricing. based on consumer reference prices. they must be careful to avoid perceptual confusion among their customers. which is why there is not competitor there. Reference prices can be external or internal. such as air pump athletic shoes and shoes with shocks. lightweight cell-phones.
however.9. The downside of service standardization is the loss of customized services. 2) Perceived Quality of Services: It is more difficult for consumers to evaluate the quality of services than the quality of products. in waitperson service. they note the quality of the office and examining room furnishings.67. In evaluating a doctor’s services. there is little opportunity to correct it. they use extrinsic characteristics to judge quality.6. Some of these cues are intrinsic to the product or service. in food. Because the actual quality of services can vary from day to day.. 1. and then consumed. all contribute to the consumer’s overall evaluation of the quality of a doctor’s services.9. CB by Majumdar] .4. which many consumers value. To overcome the fact that consumers are unable to compare competing services side-by-side as they do with competing products. because that enables them to justify their product decisions (either positive or negative) as being “rational” or “objective” product choices.. as well as in the believability of any advertised reference price. marketers try to standardize their services in order to provide consistency of quality. the pleasantness of the receptionist. Either singly or together.e. even in classes taught by the same professor). and they are simultaneously produced and consumed.68.reference prices play a major role in consumers’ evaluations and perceptions of value of an advertised (external) price deal. flavor.4. then sold. consumers rely on surrogate cues (i. Some marketers try to change demand patterns in order to distribute the service more equally over time. Without special effort by the service provider to ensure consistency of services during peak hours. the flavor of ice cream or cake) to judge product quality. 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. page no. Whereas a defective product is likely to be detected by factory quality control inspectors before it ever reaches the consumer. because both the customer and the service provider are hurried and under stress. from service employee to service employee. and from customer to customer (e. In some cases. consumers’ internal reference prices change.g. More often than not. others are extrinsic. Consumers like to believe that they base their evaluations of product quality on intrinsic cues. the interactive quality of services often declines. a defective haircut is difficult to correct. 1. 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. consumers use physical characteristics (e. such as size.. which are first produced. color. extrinsic cues) to evaluate service quality. just as the negative impression caused by an abrupt or careless waiter is difficult to correct. This is true because of certain distinctive characteristics of services: They are intangible.g. However.. they are variable they are perishable. During peak demand hours. Unlike products.5.g.14. For example. in haircuts. most services are first sold and then produced and consumed simultaneously. e. and the professionalism of the nurse. service image is likely to decline. Price/Quality Relationship Book Matter [Book Code:22. an inferior service is consumed as it is being produced: thus. the number (and source) of framed degrees on the wall. or aroma.
Elevators. Outlet image.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. the retail outlet image is wrong for Consumer. and symbols and colors. products with lower prices maybe interpreted as reduced quality. If person feel there is a good match between the image of an outlet and person own self-image. and credit policies. advertising. Something about the place is not what Consumer expected or is not quite right. ease of merchandise return. delivery service. styling or fashion. Social-class appeal. Different functional attributes suit different types of customers and different shopping situations. preferring speed and ease in shopping. For whatever reasons. may also include store layout. store layout. Marketers understand that. shopping ease. Although some enjoy the wide selection of a store like Office Depot. One study suggested that consumers using a price/quality relationship are actually relying on a well-known (and. at times. Consumer stop dead in his tracks. more expensive) brand name as an indicator of quality without actually relying directly on price per se. and Consumer turn around and leave. Service in general. warranties. Psychological attributes are a little more difficult to identify and compare across outlets. location convenience. lighting. the lighting. 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. 1. and so on. A number of research studies have found that consumers rely on price as an indicator of product quality. rest rooms. such as performance and durability. selection or assortment. whether of a retail store. They include such subjective considerations as a sense of belonging. a feeling of warmth or friendliness or a feeling of excitement. At the same time. Consumer have not shopped there before. Merchandise Service Clientele Physical Facilities Convenience Promotion Table 3-10: Image Attributes at Retail Stores Quality. that consumers attribute different qualities to identical products that carry different price tags. Sales promotions. Because price is so often considered an indicator of quality. 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. guarantees. self-image congruency (fit between self-image and store image). a catalog. 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.4. 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. and that such consumer characteristics as age and income affect the perception of value.7. price ranges. salesclerk service. they rely less on the price and brand name as indicators of quality than while they evaluate the product’s prestige and symbolic value. Functional attributes include merchandise selection. phone ordering. displays. Perhaps it is the combination of all these that makes Consumer feet uneasy. find it overwhelming and would rather go to a small office supply retailer or order from a catalog. merchandise offered as part of the service. Outlet image results from a mix of functional and psychological attributes. Retail Store Image Consumer walks into a department store with several purchases in mind.9. and parking access. General convenience. and pricing. hence. others. some product advertisements deliberately emphasize a high price to underscore the marketers’ claims of quality. the merchandise. and other factors that can be measured to some degree and used to compare one outlet objectively with its competitors. a home shopping network. As Consumer walk into the store. a retailer’s home page on the web or even a flea market. aisle placement and width. It could be the layout. . person is more likely to shop there. when consumers evaluate more concrete attributes of a product. air conditioning. credit policies. in service situations. has a great deal to do with why consumers choose to shop there. and carpeting and architecture. the clerks or even the other shoppers. and store personnel. presence of self-service.
Consumer behavior is motivated to reduce risk. their pricing strategies. frequency of price advantage) as having lower prices overall than competing stores that offer larger discounts on a smaller number of products (i.9. The type of product the consumer wishes to buy influences his or her selection of a retail outlet. which suggests that positive perceptions toward pioneer brands lead to positive purchase intentions. Regardless of what she actually pays for the dress she selects (regular price or marked-down price). Thus. but it tends to be higher: 1) When little information is available about the offering. using or deposing of an offering. As perceived risk increases. music. 2) When the offering is new. the extent to which the consumer is uncertain about the personal consequences of buying. high-fashion image.4.. and product assortments. Consumers are more likely to pay attention to and carefully process marketing communications when perceived risk is high. frequent advertising that presents large numbers of price specials reinforces consumer beliefs about the competitiveness of a store’s prices. 1. These images stem from their design and physical environment. customers’ feelings of warmth.. consumers tend to collect more information and evaluate it carefully. perceived risk is high. when it is tempting to hold frequent large sales covering many items. 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. In times of heavy competition. he will buy it and use it when he is having fun with his friends and to him. Consumers choose brands perceived as similar to their own actual. A consumer wishing to buy an elegant dress for a special occasion may go to a store with an elegant. Thus. 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.e. and situational-ideal-social images. or ease. social. 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.Store Atmosphere Institutional Factors Post-transaction Satisfaction Atmosphere of congeniality.e. There is a positive correlation between pioneer brand image and an individual’s ideal self-image. This finding has important implications for retailers’ positioning strategies. magnitude of price advantage).4. If negative outcomes are likely or positive outcomes are unlikely. and lighting. decor. Perceived Risk Dowling and Staelin defined risk as a consumer’s perceptions of the uncertainty and adverse consequences of engaging in an activity. brand will be worth what it costs. if a consumer believes that using the brand is fun. and reliability. 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. However. ideal. such as Saks Fifth Avenue. reputation. 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. Another factor of consumers’ motivation to process information about a product or brand is perceived risk. ideal-social. Merchandise in use and returns and adjustments policies. Perceived risk can be associated with any product or service. conversely. acceptance. so long as he perceives it as fun.9. and . 3) When the offering has a high price. she will probably perceive its quality to be high. 1. Conservative versus modern projection of the store. Manufacturers’ Image Consumer imagery extends beyond perceived price and store image to the producers themselves. the consumer’s evaluation of a product often is influenced by the knowledge of where it was bought.8. such strategies may result in an unwanted change in store image. When consumers intend to buy a product or a service.9.
self-confidence or ego? 4) Social Risk: If I buy Product X. and the culture. this type of risk is termed product-category perceived risk. such as smoking or drug use. product choices) to a few safe alternatives.14. psychological risk. Risk that is not perceived – no matter how real or how dangerous – will not influence consumer behavior. An individual’s perception of risk varies with product categories. will owning it in any way damage my self-image. The amount of risk perceived depends on the specific consumer.g. Perceived risk is defined as the uncertainty that consumers face when they cannot foresee the consequences of their purchase decisions. 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. physical risk.69. It should be stressed that consumers are influenced by risks that they perceive.9. the consumer perceives some degree of “risk” in making a purchase decision. the situation. will it actually deliver the benefits it promises? 2) Financial Risk: If I buy Product X. consumers are likely to perceive a higher degree of risk (e.4) When the offering is low priced Consumers must constantly make decisions regarding what products or services to buy and where to buy them.1. the product.3. CB by Majumdar] 1.9. financial risk. others tend to perceive little risk. time risk) in the purchase of a plasma television set than in the purchase of an automobile.4. They would rather exclude some perfectly good alternatives than chance a poor selection. will other people think less of me because I made a socially unacceptable choice? 5) Physiological Risk: If I buy Product X.g.2. adolescents who engage in high-risk consumption activities. For example. Variation of Perception of Risk Consumer perception of risk varies. This definition highlights two relevant dimensions of perceived risk: uncertainty and consequences.. obviously have lower perceived risk than those who do not engage in high-risk activities. The major types of risks that consumers perceive when making product decisions include functional risk.9. Risk Reduction Strategies Book Matter [Book Code: 22.9. Researchers have also identified product-specific perceived risk . Low-risk perceivers have been described as broad categorizers because they tend to make their choices from a much wider range of alternatives.9. The following are common types of risk: 1) Functional or Performance Risk: If I buy Product X. financial risk. Page no. whether or not such risks actually exist.4. is there potential for physical harm because I selected a product of inferior quality. 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. will this result in additional purchases of other goods or services as a direct result of having selected this item? 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.4. functional risk.9. Because the outcomes (or consequences) of such decisions are often uncertain. depending on the person. and time risk. 1. High-risk perceivers are often described as narrow categorizers because they limit their choices (e. For example. Some consumers tend to perceive high degrees of risk in various consumption situations. social risk. The degree of risk that consumers perceive and their own tolerance for risk taking are factors that influence their purchase strategies.. Types of Perceived Risk Every purchase decision involves some level of risk.
3) Financial Risk: Financial risk is the risk that the product will not be worth its cost. . including the following: 1) Buy the brand whose advertising has endorsements or testimonials from typical consumers. 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. 1. and rely on its reputation. How Consumers’ Handle Risk/Dealing with Perceived Risk Consumers develop various strategies to relieve perceived risk.The types of perceived risk are: 1) Functional Risk: Functional risk is the risk that the product will not perform as expected. 6) Buy the brand that has been tested and approved by a branch of the government.4. 3) Buy a major. 7) Buy the most expensive and elaborate model of the product. 2) Buy the brand that the consumer has used before and has found satisfactory.9.4. 5) Psychological Risk: Psychological risk is the risk that a poor product choice will bruise the consumer’s ego. 5) Buy the brand offering a money-back guarantee with the product. 4) Social Risk: Social risk is the risk that a poor product choice may result in social embarrassment.9. well-known brand. from a celebrity. or from an expert on the product. 4) Buy the brand that has been tested and approved by a private testing company. 2) Physical Risk: Physical risk is the risk to self and others that the product may pose.
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