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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.
aspirations. technological. 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. The starting point for understanding buying behavior is the stimulus − response model of buyer behavior (as shown in figure 10. and promotion. when they buy. sets. Model of Consumer Behavior Consumers make many buying decisions every day. packaging. Today. 8) Rapid Introduction of New Products: Rapid introduction of new product with technological advancement has made the job of studying consumer behavior more imperative. All these inputs enter the buyer’s black-box. and purchase amount. The company that really understands how consumers will respond to different product features. consumers seek value for money. Marketers must figure out what is in the buyer’s black-box. the buyer’s characteristics influence how he or she perceives and reacts to the stimuli. the buyer’s decision process itself affects the buyer’s behavior. Marketers can study actual consumer purchases to find out what they buy. price. and how much. expectations. The consumers’ response indicates that the shift had occurred. where.V. which has two parts. Marketing stimuli consist of the four Ps: product. which are sold and purchased solely on the basis of low price. 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. For instance. The marketer who takes decision regarding brand. how and how much they buy. place. where they are turned into a set of observable buyer responses: product choice.1. the information technologies are changing very fast in personal computer industry. 9) Implementing the “Marketing Concept”: This calls for studying the consumer behavior. on the basis of consumer behavior for promoting sales of the products. and advertising appeals has a great advantage over its competitors.1). Second. lesser price but with superior features. decisions regarding channels of distribution are taken on the basis of consumer behavior. and why they buy. Other stimuli include major forces and events in the buyer’s environment: economic. brand choice. First. 1. etc.3) Decision Regarding Channels of Distribution: The goods. political. needs. problems. which require after-sale service such as T. 7) Consumer Preferences are Changing and becoming highly diversified: This shift has occurred due to availability of more choice now. must have different channels of distribution. must have cheap and economical distribution channels. Thus study of consumer behavior is important to understand the changes.1: Black -box Model of Buying Behavior . dealer choice. and cultural. Thus identification of target market before production becomes essential to deliver the desired customer satisfaction and delight. The marketer wants to understand how the stimuli are changed into responses inside the consumer’s black-box. In case of those articles. prices. 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. Thus. 5) Exploiting Marketing Opportunities: A study of consumer behavior helps the marketers to understand the consumers. gifts etc. purchase timing. This figure shows that marketing and other stimuli enter the consumer’s “black-box” and produce certain responses. as customers needs have to be given priority. Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy where they buy. But learning about the whys of consumer buying behavior is not so easy – the answers are often locked deep within the consumer’s head. 4) Decision Regarding Sales Promotion: A study of consumer behavior is also vital in making decisions regarding sales promotion. This knowledge will be useful to the marketers in exploiting marketing opportunities and meeting the challenges of the market. discount.5. refrigerators etc.
Psychological factors of buyer or consumer behavior includes attitudes. occupation. Learning involves changes in an individual’s behavior arising from experience. These in turn influence buying behavior. beliefs and attitudes. and special diets in the later years. politics. and interprets information inputs to create a meaningful picture of the world. Some needs are biogenic. and how a person responds. where. 3) Learning: When people act. 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. Salesperson should. the prospective buyer will respond in a predictable manner. and food. Other needs are psychogenic. they arise from physiological states of tension such as hunger. Beliefs may be based on knowledge. learning.1. They eat baby food in the early years. Cultural factors exert the broadest and deepest influence. organizes. therefore. 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. 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. Factors influencing Consumer decision making Factors Affecting Consumer Behavior A consumer’s buying behavior is influenced by cultural. Further the tastes. A drive is a strong internal stimulus impelling action. perception. which the salesperson is trying to sell.6. motivations. 1) Motivation: A person has many needs at any given time. Attitudes put them into a frame of mind of liking or disliking an object. A need becomes a motive when it is aroused to a sufficient level of intensity. 1) Age and Stage in the Life Cycle: As a person passes through different stages of his life he needs different set of products. opinion. and psychological factors. Manufacturers are very interested in the beliefs people carry in their heads about their products and services. A motive is a need that is sufficiently pressing to drive the person to act. . People have attitudes toward almost everything: religion. Attitudes lead people to behave in a fairly consistent way toward similar objects.2. 2) Perception: A motivated person is ready to act. economic circumstances.It is assumed that if a sales person applies a stimulus (or sales presentation). they learn. Psychological Factors A person’s buying choices are influenced by four major psychological factors – motivation. Perception is the process by which an individual selects.1.6. and action tendencies toward some object or idea. moving toward or away form it. or faith. people acquire beliefs and attitudes. and reinforcement. understand the psychological aspects in buyer behavior. habits of persons change with age. stimuli. An attitude is a person’s enduring favorable or unfavorable evaluations. and personality and self-concept. social. cues. How the motivated person actually acts is influenced by his or her perception of the situation. These include the buyer’s age and stage in the life cycle. lifestyle.1. However. the prospect may or may not buy the product. thirst. perceptions. Most human behavior is learned.6. and personality of behavior. Personal Factors A buyer’s decisions are also influenced by personal characteristics. responses. emotional feelings. 1. clothes. 4) Beliefs and Attitudes: Through doing and learning. most foods in the growing and mature years.1. Cues are minor stimuli that determine when. they arise from psychological states of tension such as the need for recognition. Learning theorists that learning is produced through the interplay of drives. Taste in clothes. esteem. or belonging. They may or may not carry an emotional charge. 1. discomfort. music. furniture. personal. A belief is a descriptive thought that a person holds about something.
1. and lunchboxes. and social class are particularly important in buying behavior. norms. provided that personality types can be classified accurately and that strong correlations exist between certain personality types and product or brand choices. A blue-collar worker will buy clothes. 1) Culture: Culture is the most fundamental determinant of a person’s wants and behavior. spend able income (level. For example. and occupation may lead quite different lifestyles. 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). throughout our life time. Related to personality is self-concept (or self-image). Marketers of income-sensitive goods pay constant attention to trends in personal income. sociability. individualism. Social Class e) Culture will be adaptive to the needs of the society. 3) Lifestyle: People from the same subculture. external comfort. deference. 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 . b) Culture is acquired from society. borrowing power. dominance. marketers can take steps to redesign. A company president will buy expensive suits. autonomy. Marketers pay close attention to changing life circumstances – divorce. and time pattern). It consists of the learned values. work shoes. Consumption is shaped by the family lifecycle. A lifestyle is the person’s pattern of living in the world as expressed in activities. Marketers try to develop brand images that match the target market’s self-image. Marketers search for relationships between their products and lifestyle groups. freedom. rituals.6. and autonomy. material comfort. savings and assets (including the percentage that is liquid). 2) Occupation and Economic Circumstances: Occupation also influences a person’s consumption pattern. and adaptability. subculture. preferences. which are transmitted through both the language and symbolic features of the society. perceptions. The basic characteristics of a culture are as follows: a) Culture exists to serve the needs of the society.1. d) Culture is transferred from generation to generation with new influences constantly being added to the cultural ‘soup’. remarriage – and their effect on consumption behavior. Personality can be a useful variable in analyzing consumer behavior.and recreation is also age related. we mean distinguishing psychological characters that lead to relatively consistent and enduring responses to environment. 4) Personality and Self-Concept: Each person has a distinct personality that influences buying behavior. dominance. Lifestyle portrays the “whole person” interacting with his or her environment. A child growing up in the United States is exposed to the following values: achievement and success. and large sailboat. humanitarianism and youthfulness. activity. Personality is usually described in terms of such traits as self-confidence. Cultural Factors Culture. and interest rates. If economic indicators point to a recession. For example. defensiveness. debts. Product choice is greatly affected by economic circumstances. Marketers try to identify the occupational groups that have above-average interest in their products and services. and symbols of society. The growing child acquires a set of values. and behaviors through his or her family and other key institutions. widowhood. Some recent work has identified psychological life-cycle stages. c) Culture is learned through interactions with other members of the culture. a computer company might discover that many prospects show high self-confidence.3. and attitude towards spending versus saving. By personality. and re-price their products so they continue to offer value to target customers. a computer manufacturer might find that most computer buyers are achievement-oriented. and opinions. Self concept is the totality of person’s thoughts and feelings with reference to himself or herself as the object. stability. social class. progress. efficiency and practicality. The marketer may then aim the brand more clearly at the achiever lifestyle. interests. country club membership. air travel. savings. reposition.
education. They have a strong drive for success and indulge in shopping for goods that speak of their social status. Social classes are relatively homogenous and enduring divisions in a society.1. These people lead a conservative lifestyle and spend moderately. preferences. wealth. 3) Social Class: Virtually all-human societies exhibit social stratification. and marketers often design products and marketing programs tailored to their needs. Such a group serves as a point of comparison especially for evaluating ones own status. and geographic regions.4. i) Upper Class: This class consists of people who are rich and possess considerable wealth. income. prestige. small business owners. iii) Middle Class: This class consists of white collar workers like middle level and junior executives. a child's normative reference group will be his family. Subcultures include nationalities. viz. 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. “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”. semi-skilled and unskilled laborers in the unorganized sector.g.members. Social class can be subdivided into four categories. d) Social class is continuous rather than concrete. attitudes or behavior. people with large businesses and wealthy corporate executives. iv) Lower Class: This class consists of blue collar workers like factory laborers. status. racial groups. with individuals able to move into a higher social class or drop into a lower class. More frequently. c) Social class is not measured by a single variable but is measured as a weighted function of one’s occupation. ii) Comparative Reference Group: Reference group which will serve as a benchmark for certain specific or narrowly defined attitudes are called comparative reference group. Many subcultures make up important market segments. “Reference group is the type of group that an individual uses as a point of reference in determining his own judgments..6. 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. etc. religions. Social classes have the following characteristics: a) Persons within a given social class tend to behave more alike. interests. ii) Upper Middle Class: This class consists of well-educated people holding top class positions in middle size firms. and behavior. Social Factors In addition to cultural factors. etc. upper middle class. According to Herbert Hyman. or professionals. and social roles and statuses. e. Their families are usually male dominated. middle class and the lower class. Every human being because of his sociable nature prefers to evaluate his abilities and opinion based on the comparison of others abilities and opinions. stratification takes the form of social classes. salespeople. According to Philip Kotler. 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 . For example. Reference groups are of different types. These people are more family oriented and depend on their family for economic and emotional support. b) Social class is hierarchical. a consumer’s behavior is influenced by such social factors as reference groups. family. upper class. beliefs and behavior”.. 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. 1. which are hierarchically ordered and whose members share similar values.
The family is the most important consumer buying organization in society. Marketers are aware of the status symbol potential of products and brands.they are able to evolve on the person's attitudes. wear expensive suits. Buying roles change with evolving consumer lifestyles. In countries where parents live with their grown children. Functions of the Family a) Economic Well-Being: Economic security. b) They influence attitudes and self-concept. Here his behavior will be the opposite or reverse to the norms of the particular reference group. iv) Aspirational Group: An aspirational group is one to which the individual wishes or aspires to belong. intimacy. clubs. providing financial means to its dependents is unquestionably a basic family function. One such reference group is the contractual group. c) They create pressures for conformity that may affect actual product and brand choices. 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. People are significantly influenced by their reference groups in at least three ways: a) Reference groups expose an individual to new behaviors and lifestyles. Marketers are interested in the roles and influence of the husband. dress and grooming standards. support. d) Socialization of Family Members: It encompasses young children and adults. attitudes and behavior. affection. The person’s position in each group can be defined in terms of role and status. These are the groups with which the person interacts and has regular contact. and courage. Family is of two types: a) Family of Orientation: From parents a person acquires an orientation towards religion. . A role consists of the activities that a person is expected to perform. Each role carries a status. Here the person will tend to avoid the group and will adopt values. attitudes and behavior. appropriate manner and speech and the selection of suitable educational and occupational or career goals. interpersonal skills. These generally include moral and religious principles. and on the selection of other entertainment and recreational activities. on reading. b) Emotional Support: Love. Here a person may have membership or face to face contact but he disapproves of the group values. Thus company presidents often drive Mercedes. politics. self worth etc. c) Suitable Family Lifestyles: Another important family function in terms of consumer behavior is the establishment of a suitable lifestyle for the family. People choose products that communicate their role and status in society. Husband-wife involvement varies widely by product category and by stage in the buying process. and children on the purchase of different products and services. and a sales manager has more status than an office clerk. and organizations. 3) Roles and Statuses: A person participates in many groups – family. wife. experience. care. 2) Family: Family members can strongly influence buyer’s behavior. v) Disclaimant Group: Another type of reference group is the disclaimant group. and it has been researched extensively. and the personal and jointly held goals of the spouses determine the importance placed on education or career. and is a central function. and drink Chivas Regal scotch. b) Family of Procreation: This involves a more direct influence on every buying behavior it includes one’s spouse and children. This is a group whose values or behavior does not appeal to the individual. This aspiration acts as a positive influence on that person's attitude and behavior. attitudes and behavior which will be in opposition to that of the group. on television viewing. behavior and values. A Supreme Court justice has more status than a sales manager. Upbringing. The individual may not have a formal membership and also does not have face to face contact but he aspires to be a member. the person totally disapproves. their influence can be substantial.
stimulus or emotion.1. Stanton. iii) Pleasure of Bargaining: Shopping may offer the enjoyment of gaining a lower price through bargaining. ii) Diversion: Shopping can offer a diversion from the routine of daily life and is a form of recreation. induce action or determine choice in the purchase of goods or services”. and product symbols reflecting attitudes and lifestyles. “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. encounters with friends. 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. 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. J. which plays a role in the consumer’s decision to purchase a product/service. Behavior is a goal directed activity. Davar. “Buying motives are those influences or considerations which provide the impulse to buy. Buying Motives of Consumers Motive is the inner urge that moves or prompts a person to some action.S. iv) Sensory Stimulation: Shopping can provide sensory benefits such as looking at and handling merchandise.7. “A motive is an inner urge that moves or prompts a person to action”. iii) Learning about New Trends: Shopping provides consumers with information about trends and movements. listening to the sounds (music). an urge from within. ii) Status and Authority: Shopping may provide an opportunity to attain a feeling of status and power by being waited on. which instills in him a strong desire to have possession of the same. According to R. Motive | Need (Hungry) Goal (preparing/buying) Goods (Food) Behavior Goal achievement (Eating) Motives behind purchase are of two types. or just “people watching”. It is also accepted that a housewife does the grocery shopping for her home. or visiting sales. considerations and impulses. such as mother or housewife. Thus an understanding of buying motives will help the firm to know what are the consumers attitudes. and smelling the scents. 2) Social Motives i) Social Experience: Outside the home shopping can provide opportunities for seeking new acquaintances. Durian. Motive is an effectual desire that prompts one to a definite action.J.1. . a visit to Weekender will reveal the latest trend in casual wear and it is with this motive in mind that many young shoppers visit Weekender. According to W. 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. ‘Motive’ can be a strong desire. For example. a drive. According to D. A buying motive can thus be said to all the desires. feeling. A consumer purchases a particular product or service because of a strong inner feeling or force. It is expected that a woman expecting her first child will shop extensively for baby clothes and other stuff meant for infants. companion shopping. which make them act in a particular way while buying certain goods or services. It becomes a buying motive when the individual seeks satisfaction through the purchase of something”.
Generally. house lady for kitchen provisions. 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. The purchaser or consumer takes his buying decision.2: Buying Process . and head of the family for durable or luxury items. he consults others. he thinks much before taking a decision to purchase it. i. 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. Children (deciders) are the deciders for purchasing the toys. 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.1. The marketer’s task is to study the buying process and its main participants and their role in the buying process. Broadly. what to buy. parents are buyers.1.1. Children are the deciders for buying the toys.e. but purchases are made by the parents. Here Professor is the influencer. how to buy. for some commodities immediately without much consideration such as items of daily use while for some other commodities mainly luxury or durable items. Students are influenced by the advice of the professor while taking a decision to purchase a book.9. 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. Pre purchase Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior Figure 10. 6) User: User is the person who actually uses or consumes the services or products. The need can be triggered by internal stimuli. Buying role of Consumers There are following six different roles of persons. 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. 5) Buyer: The buyer is the person who actually purchase. In the former case one of the person’s normal needs-hunger. when to buy or where to buy. Buyer may be the decider or he may be some other person.. whether to buy. Thus. Consumers Decision Making Process / Buying Process Decision-making is a process of selecting an appropriate option from two or more alternatives. 3) Decider: The decider is a person who ultimately determines any part or whole of the buying decision. 2) Influencer: Influencer is a person who explicitly or implicitly has some influence on the final buying decision of others. the purchaser passes through five distinct stages in taking a decision for purchasing a particular commodity. Image) DecisionMakers (Parents/ Children Communications Targeted at Parents (Nutrition) Purchasers (Parents) Consumers (Children) Information Gatherers (Parents) Various Roles in Family 1. thirst. Sometimes.8.
In the car example.sex-rises to a threshold level and become a drive. they see the consumer as framing judgment largely on a conscious and rational basis. iii) Public Sources: Mass media. salespersons.g. That is. or she watches a television ad for a Hawaiian vacation. examining. The assumption is that favorable attitudes will increase purchase intentions.. iv) Intentions: These measure the probability that attitudes will be acted upon. marketers-dominated sources. At the next level the person may enter active information search: looking for reading material. For example. . neighbors. the probability that the consumer will buy. But most effective information comes from personal sources. Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers. The milder search state is called heightened attention. i) Personal Sources: Family. are the major information sources to which the consumer will turn and the relative influence each will have on the subsequent purchase decision. 3) Evaluation of Alternatives: There is no single evaluation process used by all consumers or by one consumer in all buying situations. ii) The consumer is looking for certain benefit from the product solution. Evaluation may be thought of as a system as depicted in figure 10. physicians often learn of new drugs from commercial sources but turn to other doctors for evaluative information. and personal sources perform a legitimizing or evaluation function. a product possesses various characteristics. There are several decision evaluation processes the most current models of. Evaluative Criteria Beliefs Attitudes Intentions Figure 10. Some basic concepts will help us understand consumer evaluation processes. rating organization. phoning friends and visiting stores to learn about the product of key interest to the marketers. iv) Experiential Sources: Handling. the relevant evaluative criteria may be fuel economy. They can then develop marketing strategies that trigger consumer interest.e. Commercial information normally performs an informing function. e.3: i) Evaluative (Choice) Criteria: These are the dimensions used by consumers to compare or evaluate products or brands.. displays. We can distinguish between two levels of arousal. uses the product. packaging. 2) Pre-purchase Information Search: An aroused consumer will be inclined to search for more information. A person passes a bakery and sees freshly baked bread that stimulates her hunger. acquaintance ii) Commercial Sources: Advertising. dealers. The relative amount and influence of these information sources vary with the product category and the buyer’s characteristics. friends. she admires a neighbor’s new car. roominess. Consumer information sources fall into four groups. i. In the latter case. i) The consumer is trying to satisfy a need. in the consumer’s mind. consumer. At this level a person simply becomes more receptive to information about a product. Generally speaking the consumer receives most of the information about a product from commercial source–that is.3: Evaluation System ii) Beliefs: These are the degrees to which. which see the process as cognitively oriented. Each information sources performs a different function in influencing the buying decision. marketers can identify the most frequent stimuli that spark an interest in a product category. 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. purchase price and reliability. a need is aroused by an external stimulus.
The may take public action by complaining to the company. b) The consumer’s motivation to comply with the other person’s wishes. if it beyond expectations the customer is delighted. and v) Payment-method decision (credit card). i) Post-purchase Satisfaction: What determines whether the buyer will be highly satisfied. They will pay the most attention to attributers that deliver the sought benefit. These feelings signify a difference in whether the customer buys the product again and talks favorably or unfavorably about the product to others. ii) Post-purchase Actions: The consumer’s satisfaction or dissatisfaction with the product will influence subsequent behavior. iv) Timing decision (weekend). Dissatisfied consumer may abandon or return the product. one’s preferred alternative depends on two things: a) The intensity of the other person’s negative attitude towards the consumer’s preferred alternative. If the consumer is satisfied he or she will exhibit a higher probability of purchasing the product again. 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. ii) Vendor decision (dealer 2). 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. However. warning friends (voice option). The attributes of interest to buyers vary by product. The consumer may also form an intention to buy the most preferred brand. The consumer develops a set of brand beliefs about where each brand stands on each attribute. going to a lawyer. Private action includes making a decision to stop buying the product (exit option) or. 4) Purchase Decision: In the evaluation stage. if it meets expectations the customers is satisfied. The marketer’s job does not end when the product is bought. post purchase actions and post purchase product uses. or avoid a purchase decision is heavily influenced by perceived risk. 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. i) The first factor is the attitudes of others. Marketers must monitor post purchase satisfaction.iii) The consumer sees each product as a bundle of attributers with varying abilities of delivering the benefit sought to satisfy this need. ii) The second factor is unanticipated situation factors that may erupt to change the purchase intention. A consumer’s decision to modify. In executing a purchase intention. two factors can intervene between the purchase intention and the purchase decision. the consumer will experience some level of satisfaction or dissatisfaction. or complaining to other groups (such as business private or government agencies). The extent to which another person’s attitude reduces. For example. in buying sugar a consumer gives little thought to the vendor or payment method. In all these case the seller has done a poor job of satisfying the customer. The set of beliefs about a brand makes up the brand image. postpone. the customer is disappointed. 5) Post-purchase Behavior: After purchasing the product. If performance falls short of expectations. . The market for a product can often be segmented according to attributes that are salient to different consumer groups. Consumers vary as to which product attributers they see as most relevant and the importance they attach to each attribute. iii) Quantity decision (one computer). the consumer forms preference among the brand in the choice. They may seek information that confirms its high value. Preferences and even purchase intentions are not completely reliable predictors of purchase behavior. the consumer may make up to five purchase sub decisions: i) A brand decision (brand A). Purchase of everyday product involves fewer decisions and less deliberation.
They have to educate the prospective buyers to learn about the attributes of the product class. Here the buyers do not give much thought. then they would tend to be monotonous and would provide little pleasure or novelty. Their search for additional information is more like “fine-tuning”. This behavior is adopted for the purchase of low cost. The marketer has to ensure two tasks: i) The marketer must continue to provide satisfaction to the existing customers by maintaining quality. . 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. 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. know the brands and also have a clear preference among the brands. if all purchases were routine.10. Here the marketer’s job is to design a communication programme. etc.. Consumer may also find new uses for the product. Subcultures Buying Habits of Consumers/Levels of Consumer Decision-Making Consumer decision making varies with the types of buying decision. in others. a personal computer. they may search for a small amount of additional information. ii) He must try to attract new customers by making use of sales promotion techniques like point of purchase displays. 3) Habitual Buying Behavior/Routinized Response Behavior: At this level. 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. consumers have some experience with the product category and a well-established set of criteria with which to evaluate the brands they are considering. If they sell or trade the product new product sales will be depressed. On a continuum of effort ranging from very high to very low.iii) Post-purchase Use and Disposal: Marketers should also monitor how buyers use and dispose of the product. On the other hand. The buyers are very well aware of the product class. a tennis racket. and a new car are all very different. they simply review what they already know. or search or take a lot of time to make the purchase. If consumers store the product in a closet. The marketers must understand the information gathering and evaluation activities of the prospective consumers.1. In some situations. However. If all purchase decisions required extensive effort. and also introduce new features to the products. increase his brand comprehension and gain confidence in the brand. they have not fully established preferences concerning a select group of brands. frequently purchased items. The decisions to buy toothpaste. So the buyers have to take very few decisions for the purchase of such type of goods. then consumer decision-making would be an exhausting process that left little time for anything else.4: Types of Buying Behavior 1) Complex Buying Behavior/Extensive Problem Solving: At this level. off-price offers. which will help the buyer to gather more information. the product is probably not very satisfying and word-of-mouth will be not being strong. 1. The products in this class are generally classified as low involvement goods. service and value. they must gather additional brand information to discriminate among the various brands.
deals. No reasonable consumer would trade any significant sum of money for plastic and circuitry. and advertising that presents reasons for trying something new. 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. However. 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. With this in mind. money. Once again. an important orientation or philosophy of many marketing managers. Marketing firms often adopt poor strategies when they do not understand exactly what a product truly is. which may suggest unsatisfied wants and needs. The analysis begins with a study of general market trends. we can ask. The market leader will try to encourage habitual buying behavior by dominating the shelf space. A consumer is not really buying attributes or the physical parts of a product. because they do not understand exactly what they are selling. is this really what the consumer wants? The fact is. . it is seen as a cornerstone of the marketing concept. this function enables the consumer to enjoy the benefits of information availability in a very convenient package. the tangibles include mostly plastic and some integrated circuitry. and sponsoring frequent reminder advertising. a product is potentially valuable bundle of benefits. such as consumers’ lifestyles and income levels. The market leader and the minor brand in this product category have different marketing strategies.1. the marketing communications should aim at supplying information and help the consumer to evaluate and feel good about his/her brand choice. Consider a customer who purchases a kindle. In other words. In fact.their relative importance and the high standing of the marketer’s brand on the more important brand attributes. light product to function as an electronic reader. Consumer Behavior and Marketing Strategy Net Matter When a consumer buys something. coupons. Outcomes like these are valuable and what the customer is ultimately buying. and energy in return for whatever is being sold. A sound understanding of consumer behavior is essential to the long-run success of any marketing program. free samples. here consumers often do a lot of brand switching.11. he or she gives-up resources in the form of time. These are the parts that make-up the product. Theodore Levitt was one of the most famous marketing researchers. What does he or she really get? Well. Challenger firms will encourage variety seeking by offering lower prices. More specific examination involves assessing any unique abilities the company might have in satisfying identified consumer desires. 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. 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. avoiding out-of-stock conditions.
Marketing strategy is conceptually very simple. 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. adding to environmental pollution. Evaluation Providing superior customer value requires the organization to do a better job of anticipating and reacting to customer needs than the competition does. and promotion. Distribution.A variety of recent trends have resulted in many new product offerings for consumer satisfaction. the economic and technological forces Marketing Strategy Product. Promotion. and clothing. For example. and even companionship. image. maintenance. companies sensing consumers’ unmet medical needs have offered coin-operated blood pressure testing machines at shopping centers and other convenient locations. the marketer may decide to concentrate company efforts on serving only one or a few of the identified target-markets. an understanding of consumer behavior is the basis for marketing strategy formulation. securing these benefits requires paying Consumer Decision Process Problem recognition for the car. Unique packaging arrangements (container type and size). companies attuned to the fitness interests of Americans have been quick to offer such new products as exercise bicycles. Price. an organization must provide target customers more value than is provided by its competitors. weight training books. Consider the soft drink market. 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. Consumers’ reactions to this marketing strategy determine the organization’s success or failure. pleasure. insurance. In other cases. and other variations are made for each 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. the Colgate-Palmolive company was able to identify a unique group of consumers in need of a certain type of deodorant soap. In the healthcare field. A series of decisions are made on four major ingredients frequently referred to as the marketing mix-variables – product. 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 . It is the difference Purchase between the total benefits and the total costs that constitutes customer Use value. This can result in a decision to approach each market segment with a unique marketing offering. It begins with an analysis of the market the organization is considering. ii) The “cold bottle” or vending machine segment. This requires a detailed analysis of the organization’s capabilities. place. However. 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. status. major segments of ultimate consumers are distinguished by the type of purchase situation: i) The food store segment. depending on the person and the type of car. An excellent example of this occurred in the bath soap market. owning a car can provide a Firm number of benefits. and they have significant impacts on the larger society in which they occur. these reactions also determine the success of the consumers in meeting their needs. By segmenting consumers according to their lifestyle patterns and personalities. the strengths and weaknesses of competitors. and parking fees. Alternative evaluation and dealing with traffic jams and other frustrations. Here. For example. which includes fast-food outlets. as well Information search as risking injury from an accident. Society including flexible transportation. price. However. gasoline. comfort. and iii) The fountain market. As figure aside indicates. To survive in a competitive environment.
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). often the bottom-line issue is a failure to understand the intended market. A traditional approach to this type of analysis focuses strategic thinking on staying ahead . 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. channel strength. providing better information to marketers. or revised communication plan. and the current and potential customers in the market. general managerial skills. ii) Company: A firm must fully understand its own ability to meet customer needs. and the technological. highly innovative consumers attach more importance to stimulation. Failure to adequately understand one’s own strengths can cause serious problems. This process combines facts (either from primary or secondary research. and so forth. poor performance. Different consumers possess different levels of innovativeness. This entire set of characteristics is often referred to as the total product. All these factors add dimension and insight to the potential success of a plan for a new product or service. brand and product choices. many firms don’t understand how targeted consumers are likely to react to new products. These market segments are described in terms of demographics. price. For example. or firms with similar needs. legal. households. Consumer insight can be defined as an understanding of consumers’ expressed and unspoken needs and realities that affect how they make life. Marketing strategy is formulated in terms of the marketing mix. 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. marketing research abilities. On the basis of the consumer analysis undertaken in this step. wants. 1) Market Analysis: Market analysis is the process of analyzing changing consumer trends. including its financial condition. This involves evaluating all aspects of the firm. IBM’s first attempt to enter the home computer market with the PC Jr. or ineffective communication. media preferences. and so forth. and marketing skills. geographic location. research and development capabilities. brand extension. reputation. As companies turn to consumer feedback for new product guidance and ideas. distribution and services that will provide customers with superior value. and curiosity. characteristics that marketers can use to target product offerings and advertising to specific segments. market and consumer knowledge. or customer information) with intuition. production capabilities. Next. and economic environments. these strengths were not relevant to the household consumer market. marketing strategy is formulated. Marketing skills would include new-product development capabilities. 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). not those of a management team. that is. service capabilities. and expectations. most of the time they fail. advertising abilities. was a failure in part for this reason. company strengths and resources. For example. technological sophistication. Although IBM had an excellent reputation with large business customers and a very strong direct salesforce for serving them. Why is this failure rate so high? The answer is simple and straightforward – a new product must satisfy customers’ needs. Market Analysis Components i) Consumer Insight and Product Development: When marketers attempt to get consumers to buy their products. Although formal analyses might point to product life-cycles. the organization identifies groups of individuals. Marketing strategy seeks to provide the customer with more value than the competition while still producing a profit for the firm. existing product innovation. current and potential competitors.affecting the market. affecting which advertising and positioning strategies will be most effective. resulting in an insight that can lead to a new product. communications. The total product is presented to the target market. iii) Current and Potential Competitors: A thorough market analysis also examines current and potential competitors. it involves determining the product features. sales data. and they must do it better than existing solutions. creativity.
the need for moderately priced. To be viable. a firm cannot develop a sound marketing strategy without anticipating the conditions under which that strategy will be implemented. Logistics and infrastructure across the interiors of Maharashtra and M. but focus instead on using innovation to weaken or make competitors irrelevant in the marketplace. iv) Conditions: The state of the economy. provides a different environment. 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. iv) Selecting an attractive segment(s) to serve. and how will current competitors react? Firms can construct alternative scenarios to anticipate reactions of current competitors and anticipate how firms. and middle-aged couples whose children have left home. i) Product-Related Need Sets: Organization should identify needs of the market and offer a product. and media usage. and the language they use to describe it. might respond with similar products. A market segment is a portion of a larger market whose needs differ somewhat from the larger market. This step generally involves consumer research. though not necessarily competitors at present. In addition. 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. young couples with no . In India. For example. surveys. an existing product. ii) Grouping customers with similar need sets. 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. The development of computers has changed the way many people work and has created new industries. How does a firm accomplish this. 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. government regulations. ii) Customers with Similar Need Sets: The next step is to group consumers with similar need sets. we cannot communicate effectively with our customers if we do not understand the context in which our product is purchased and consumed.of the competition. would require radically different strategies. including focus group interviews. services according to their capabilities may be a reputation. iii) Description of Each Group: Once consumers with similar need sets are identified. each region. Other. With these potential capabilities they should develop such product that satisfy more than one need. how it is thought about by our customers. Tastes and combinations of food products would change significantly across states. more innovative firms pay less attention to matching and beating their rivals. it is necessary to have a complete understanding of the potential customers. iii) Describing each group. cater to a large segment thus proving itself to be economical to the market segment need. These consumers can be grouped into one segment as far as product features and perhaps even product image are concerned despite sharply different demographics. young couples with no children. It could also involve an analysis of current consumption patterns. features. while many young single individuals. Since a market segment has unique needs. It is only with such a complete understanding that we can be sure we have correctly identified the need set. they should be described in terms of their demographics. and product concept tests. a technology. a segment must be larger enough to be served profitably. 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. how easy will it be for competitors to enter the market. the physical environment. Clearly. fun. In order to design an effective marketing program. and technological developments affect consumer needs and expectations as well as company and competitor capabilities. each state. lifestyles.P. sporty automobiles appears to exist in many young single individuals. Thus. or some other skill set. Market segment involves four steps: i) Identifying product related need sets.
but they also may lead to long-term problems for both the consumer and society. often described as the four P’s (product. Salutary products offer practical value. and middle-aged couples whose children have left home may want the same features in an automobile. but they can be harmful in the long-run. b) Salutary Product: These products are good for both consumers and society in the long-run.children. the intensity of the current and anticpirated competition. Consumer research is critically important in developing segmentation strategy as well as formulating the marketing mix. 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. For example. This decision is based on our ability to provide the selected segment(s) with superior customer value at a profit. 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. Plus they help consumers immediately and have long-running benefits. whereas simple. Products can often lead to shortterm consumer satisfaction. these products have the long-run benefit to consumers of losing weight. Such a plan must specify the essential components of the marketing mix. firms decide the most effective outlets through which to sell their products and how best to get them there. . When used correctly. An example might be a faulty appliance. Thus. place. and so forth are important considerations. and promotion). 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. Obviously consumer wants to avoid offering products that are considered deficient. iv) Attractive Segment(s) to serve: Once we are sure we have a thorough understanding of each segment. consumers enjoy cigarettes and alcohol but these products obviously can be harmful to consumer’s health and the health of others. direct selling. but they do not provide pleasure value. we must select our target market – that segment(s) of the larger market on which we will focus our marketing effort. Generally. c) Pleasing Products: These products provide pleasure value to consumers. 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. vehicle air bags have great value but they do not necessarily provide pleasure or entertainment. everyday products might sell better in mass retail outlets. The failure to disclose that a product will not function properly without necessary components is unethical. For example. products fall into four categories pertaining to social responsibility. Where will consumers expect and want to buy this product – through mass retailers. d) Desirable Products: These products deliver high practical value alongwith pleasurable value. In this phase. and both also are affected by the decision process of consumers. price. The pleasing products category is usually the one where ethical issues come-up. ii) Distribution: The second element of the marketing mix is place (or distribution). For example. 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 the cost of providing the superior value. the media required to reach each group and the appropriate language and themes to use with each group would likely differ. electronic retailing. weight-loss products which give consumers immediate results by curbing their appetites. the size and growth of the segment.
use direct mail. For example. salesforce. many times consumers believe that products are promoted in ways that are “too good to be true”. is prohibited by law. An unethical use of pricing is to state that a regular price is a sales price. A firm marketing such items would be wise to communicate directly with these individuals.iii) Price: Price will also have its emotive as well as functional content. Internet) and which specific vehicles (television programs. It is also common for consumers to complain about marketing efforts that lead to overall higher prices. Developing an effective message requires a thorough understanding of the meaning the target audience attaches to words and symbols. specific magazines. 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. recommend the product to others. This practice is actually prohibited by law as well. seek more information about the product. 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. iv) Communications: As marketers use promotion to communicate a product’s value through techniques such as advertising. Price ← Continuous movement → Added value Consumer concerns will pitch backwards and forward between price and added value depending on both functional and emotional concerns. magazines. radio. It is well documented that the relationship between price and perceived value will always interplay in people’s minds when choosing particular products. the behavioral objective for most marketing communications is often much more immediate. . and word-of-mouth marketing. Unfortunately. 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. which is known as the bait-and-switch method. packaging. highest prices charged and greater profits made. sales promotion. Marketing communications include advertising. and symbols should we use to capture attention and produce the desired effect? Marketing messages can range from purely factual statements to pure symbolism. others are focused on channel members or those who influence the target-market members. The best approach depends on the situation at hand. This practice. as well as knowledge of the perception process. 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. feel good about having bought the product. For example. While this may be the ultimate objective. 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. a company that pays millions of dollars for a Super Bowl commercial will often face criticism from consumers and push back on price. and any other signal that the firm provides about itself and its products. which media (television. c) What Message will achieve the Desired Effect on Audience: What words. or a host of other communications effects. 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. pediatric nurses are often asked for advice concerning diapers and other non-medical infant care items. That is. public relations. or rely on consumers to find us on the Internet? If we advertise in mass media. This creates skepticism and a decline in trust toward the promotional message. newspapers. 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. websites. like the product. it may seek to have the audience learn something about the product. pictures.
and become satisfied with the results of the purchase. it is essential that the firm furnish only those services that provide value to the target customers. become aware of the product and its capabilities. A firm that does not explicitly manage its auxiliary services is at a competitive disadvantage. That is. one must have a thorough understanding of the potential consumers’ needs and of their information acquisition processes to succeed at this task. 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. However. Providing services that customers do not value can result in high costs and high prices without a corresponding increase in customer value. pictorial representations. customer satisfaction is a major concern of marketers. Therefore. month. and it must be enough to satisfy their needs. Auxiliary services cost money to provide. Thus. as they produce the revenue necessary for the firm to continue in business. requires that customers continue to believe that your brand meets their needs and offers superior value after they have used it. Sales are likely to occur only if the initial consumer analysis was correct and if the marketing mix matches the consumer decision process. As figure above indicates. and feelings about the product or brand. while free pickup and delivery of the car would be an auxiliary service. . Most marketing firms specify the product position they want their brands to have and measure these positions on an ongoing basis. decide that it is the best available solution. as well as by direct experience with it. creating satisfied customers. proceed to buy it. This image consists of a set of beliefs.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. we would consider car repair to be a product (primary service). c) Customer Satisfaction: Marketers have discovered that it is generally more profitable to maintain existing customers than to replace them with new customers. Therefore. virtually all firms evaluate the success of their marketing programs in terms of sales. You must deliver as much or more value than your customers initially expected. Obviously. and thus future sales. 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. the outcomes of the firm’s marketing strategy are determined by its interaction with the consumer decision process. Service as a separate component of the marketing mix plays critical role in determining market share and relative price in competitive markets. or year? Do consumers seek information shortly before purchasing our product? If so. 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. It is determined by communications about the brand from the firm and other sources. The firm can succeed only if consumers see a need that its product can solve. v) Service: Here. Thus. 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. It does not require purchase or use for it to develop. 4) Consumer Decisions: The consumer decision process intervenes between the marketing strategy (as implemented in the marketing mix) and the outcomes. where? Answering these questions requires knowledge of the decision process used by the target market for this product. convincing consumers that your brand offers superior value is necessary in order to make the initial sale.
Injurious consumption occurs when individuals or groups make consumption decisions that have negative consequences for their long-run well-being. 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. whether or not a purchase is made.2. have a major impact on the economic health of many other countries. they have a major impact on the social welfare of a society 1. including the decision to forgo consumption. and so forth.ii) Individual Outcomes a) Need Satisfaction: The most obvious outcome of the consumption process for an individual. Decisions made in one society. at times they differ. 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. and so forth) are generally made indirectly by consumers’ elected representatives. However. This can range from none (or even negative if a purchase increases the need rather than reduces it) to complete. and wage levels. 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. fulfilling one need affects their ability to fulfill others due to either financial or time constraints. industry growth rates. The types of products and brands purchased influence the balance of payments. Two key processes are involved – the actual need fulfillment and the perceived need fulfillment. Western Europe. particularly large wealthy societies like the United States. alcoholism. MARKET SEGMENTATION . their own and other societies. health care. b) Physical Environment Outcomes: Consumers make decisions that have a major impact on the physical environments of both. and Japan. These decisions have a major impact on the overall quality of life in a society. 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. iii) Society Outcomes a) Economic Outcomes: The cumulative impact of consumers’ purchase decisions. Their decisions on whether to buy or save affect economic growth. 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. For example. we must remain aware that consumer behavior has a dark side. the availability and cost of capital. affects society as well as the individuals involved. To the extent that marketing activities increase or decrease injurious consumption. both developed and developing. employment levels. b) Injurious Consumption: While we tend to focus on the benefits of consumption. The social costs of smoking-induced illnesses. Injurious consumption. c) Social Welfare: Consumer decisions affect the general social welfare of a society. These two processes are closely related and are often identical. and drug abuse are staggering. Decisions concerning how much to spend for private goods (personal purchases) rather than public goods (support for public education. For most consumers.
different in how sensitive they are to price. Knorr-Annapurna and Modern Foods). each solving some problem or catering to some consumer need. Hindustan Lever Limited (HLL) was the largest Fast Moving Consumer Goods (FMCG) Company in India. Rin is aimed at the mid-market segment. or where they live. For example. They are. There are several important reasons why businesses should attempt to segment their markets. Liril. what they wear. which caters to the need of a large segment of population having dandruff. and household care (Vim). ice-cream (Kwality-Walls). and preferences are different and so the products they buy will have to match these. beverages (Brooke Bond. drink. By marketing products that appeal to customers at different stages of their life (“life-cycle”). color cosmetics (Lakme). If the target market is too broad. deodorant (Axe. Bru.In 2004. A lot of research is put in before a marketer segments the market or recognizes a consumer segment. eats. deal in a large variety of products targeted at various consumer segments. Minor brands suffer from lack of scale economies in production and marketing. Gone are the days when one product suited all. In shampoos. In Lakme. and Wheel caters to the lower end of the market. 2) Enhanced Profits for Business: Customers have different disposable income. is a statement of their individuality. In deodorants. therefore. and ii) The cost of communicating to customers becomes too high / unprofitable. Their needs. change their buying patterns. Ponds and Rexona are for women. Lipton). change jobs or get promoted. oral care (Pepsodent and Close-up). while Axe is targeted at men. customers can be encouraged to “trade-up” after being introduced to a particular product with an introductory. While Surf caters to the high-end consumers. By segmenting markets. Elle 18 line of color enamel is targeted at early teens and young adults. the target customer can be reached more often and at lower cost. businesses can often achieve competitive production and marketing costs and become the . food (Kissan. Ponds. there is a strong risk that: i) The key customers are missed. and Wheel). pressures from distributors and limited space on the shelves. 6) Gain Share of the Market Segment: Unless a business has a strong or leading share of a market. Clinic is for healthy hair. fabric wash (Surf. Annapurna atta. By segmenting markets. lower-priced product. Consumers now are much more demanding and the need for products suiting their tastes and preferences has increased. This phenomenon has led marketers to segment markets. The segments where HLL was present included skin care (Fair & Lovely and Ponds). 5) Target Marketing Communications: Businesses need to deliver their marketing message to a relevant customer audience. HLL is a highly consumer-focused company with different brands catering to different consumer segments with different needs and purchasing power. The era of mass markets has now given way to micro-markets with a highly individualistic profile. personal wash (Lifebuoy. 3) Better Opportunities for Growth: Market segmentation can build sales. and Rexona). drive. businesses can raise average prices and subsequently enhance profits. wants. while Sunsilk is targeted as the hair expert for different hair kinds. Rin. especially Clinic AllClear anti-dandruff shampoo. for example they grow older. and Breeze). Most marketers today. Creating separate offers for each segment makes sense and provides customers with a better solution. Through careful segmentation and targeting. a business can retain customers who might otherwise switch to competing products and brands. These are: 1) Better Matching of Customer Needs: Customer needs differ. hair care (Sunsilk and Clinic). This research provides the marketer with the vital information on the basis of which he eventually enters a consumer market with a relevant product. 4) Retain More Customers: Customer circumstances change. it is unlikely to be maximizing its profitability. form families. Lux.
segmentation offers the opportunity for smaller firms to compete with bigger ones. an auto company may identify four broad segments: car buyers who are primarily seeking basic transportation or high performance or luxury of safety.2 B A Market segmentation by Age classes A and B 1. Citibank provides different mixes of banking services in its branches depending on neighborhood demographics. 1. On the basis of these characteristics. typically a small market whose needs are not well served. the segment of heavy smokers includes those who are trying to stop smoking and those who don’t care. According to R. Marketers usually identify niches by dividing a segment into sub segments or by defining a group seeking a distinctive mix of benefits.preferred choice of customers and distributors. 2. For centuries. income and purchasing techniques. In other words. 2 1 3 No market segmentation Complete segmentation Market segmentation of Income classes 1. 2) Niche Marketing: A niche is a more narrowly defined group. buying attitudes. even individual stores).” or “one-to-one marketing”. hobbies. customers having similar qualities are grouped in segments.2. 3) Local Marketing: Target marketing is leading to marketing programs being tailored to the needs and wants of local customer groups (trading areas. According to Philip Kotler.1. They differ in their behavior and buying decisions. geographical location. According to William J. For example. “Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers.” “customized marketing. habits.2. neighborhoods. Figure 7. or buying 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. “Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-market or segments. 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. S. Stanton. “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. Market represents a group of customers having common characteristics but two customers are never common in their nature. “The purpose of market segmentation is to determine difference among them or marketing to them”. According to Philip Kotler.2. where any group can conceivably be selected as a target market to be met with distinct marketing mix”. 3. purchasing power. 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. consumers were served as individuals: the tailor made the suit and the cobbler designed shoes for the individual . For example. Davas. each of which tends to be homogeneous in full significant aspects”.
2. a restaurant known in the South for home-style cooking. Basis of consumer market segmentation can be broadly divided into four broad categories which are shown in figure below. occupation. For example. This decision requires a keen understanding of consumer behavior and careful strategic thinking.2.3. gender.3. . and air-conditioning and heating systems are products with varying appeal. such as a census tract. Consumer goods companies take a regional approach to marketing for four reasons. Miller Lite developed the “Miller Lite True to Texas” marketing program. Basis for Segmenting Consumer Markets Geographic Segmentation Demographic Segmentation Psychographic Segmentation Behavioral Segmentation 1. Some of the demographic variables used are: 1) Age and Life-Cycle Stage: Consumers wants and liabilities change with age. nationality and social class. 1. Climate is commonly used for geographic segmentation because of its dramatic impact on residents’ needs and purchasing behavior. a state-wide campaign targeting Texas beer drinkers. is altering its menu outside its core southern market to reflect local tastes.. 3) Many packaged-goods manufacturers are introducing new regional brands intended to appeal to local preferences. water and snow skis. children. Consumer market can be segmented into various segments by using different basis. clothing. 2) Computerized checkout stations with scanners give retailers an accurate assessment of which brands sell best in their region. Market density means the number of people within a unit of land. Bases for Market Segmentation Companies cannot connect with all customers in large. Snow-blowers. broad. This type of segmentation is quite common in dividing the rural and urban consumer market. adults and old. family size. depending on climate.1. 2) Gender and Sexual Orientation: When God created human being he made Males and Females and gave them distinct survival needs. education. young. A company then needs to identify which market segments it can serve effectively. Demographic variables are the most popular bases for distinguishing customer groups. The geographic location of customers does help the firm in planning its marketing offer. To develop the best marketing plans. generation. managers need to understand what makes each segment unique and different. Demographic Segmentation The next commonly used basis for market segmentation is the demographic characteristics of the market. In demographic segmentation the market is divided into groups on the basis of variable such as age. market density. Customers in upstate New York can order Reuben sandwiches. religion. Geographic segmentation refers to segmenting markets by region of a country or the world.2.3. Geographic Segmentation This is generally the starting point of all market segmentation strategies.2. or diverse markets. But they can divide such markets into groups of consumers or segments with distinct needs and wants. race. Cracker Barrel. family life-cycle. a market can be divided into four parts viz. or climate.1. 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. and those in Texas can get eggs with salsa. 4) A more regional approach allows consumer goods companies to react more quickly to competition. income. market size. which are as follows: 1) Many firms need to find new ways to generate sales because of sluggish and intensely competitive markets. On the basis of age.
3. the questionnaire items included in a psychographics study are selected in view of the unique characteristics of the product category. psychographics refers to information about consumers’ attitudes. 4) Beliefs: This is one of the parameters of segmentation used by marketers to sell products. 5) Social Class: It has a strong influence on preference in cars. each of the customers may have a different attitude towards risk-taking and new product and stores. It is behavioral concept enabling us to grasp and predict buyer behavior. They endow their products with brand personality that corresponds to consumer personalities. with similar education and income. People according to their situation and bringing up develop their own beliefs. sophisticated practitioners eventually realized that demographic information tells only part of the story about consumers’ buying preferences and purchase behaviors. income level. Life style reflects the overall manner in which persons live and spend time and money. at a basic level. 6) Family Size: The size of the family affects the amount and size of purchases. In this scenario the customers will behave differently in terms of wants as per their income. Core values go much deeper than behavior or attitude and determine. 8) Educational Level: The academic standard segments people with same income i. And their purchase behaviors are greatly influenced by their beliefs. In India it is as diverse as from few hundred rupees a month to millions a month. 7) Occupation: Various occupations can influence the buying behavior. and lifestyles as they relate to buying behavior in a particular product category. 4) Income: Income varies along the population in any country. 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. 2) Personality: Marketers have used personality variables to segment markets. Psychographic Segmentation Often it has been seen that two consumers with the same demographic characteristics may act in an entirely different manner.3. 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. belief systems that underlie consumer attitudes and behavior. and race/ethnicity. 1. Many Companies design products and services for specific social classes. with a similar ability to buy into their different likelihood to buy. 9) Religion: Religious rituals. Marketers for many years based their targeting decisions almost exclusively on their audiences’ demographic characteristics – considerations such as the market’s age group. Numerous marketing research firms conduct psychographic studies for individual clients. The consumption pattern of a big-sized joint family differs from a small-sized nucleus family. clothing. An unmarried bachelor prefers to enjoy life and his purchase behavior will show more of food and entertainment and less of furniture. gender. traditions and cultures also differentiate and segment the market. These studies are typically customized to the client’s specific product category.e. For example. reading habits etc. their purchase behavior. This is because of the following psychographic variables: 1) Life Styles: Life style concept is also considered as another important variable determining buyer behavior. Life style concept has interdisciplinary approach as it involves sociology. But a married person will purchase house and the furniture. culture. i. Marketers who segment by values believe that by appealing to people’s inner selves it is possible to influence their outer-selves. Life style concept as a basis for segmentation is quite reasonable and desirable. It is important to place the role of psychographic targeting in context of demographics. the form of targeting that historically preceded it and which now is practiced in conjunction with psychographics. . psychology and demography. However.3) Marital Status: Life style of a person depends on whether he is married or not. people’s choices and desires over the long term. from the same profession. leisure activities.e. People in sales and people in academic training will have different purchase behavior. values. home furnishings. motivations. In other words. 3) Values: Some marketers segment by core values. In general. people develop religious beliefs as per the religion they follow.2.
and beliefs. Brand Managers can purchase “off-the-shelf” psychographic data from services that develop psychographic profiles of people independently of any particular product or service. However. income. explore. it must have a proper size. Profits are the backbone of any organization. profits must be ensured. VALS segments. They look for products which are durable. The eight segments also differ in their resources and orientations. and have high self-esteem. attitude. and decision-making. and competition. Marketers also are on the look-out for new media that can reach the audience with minimum waste. Each of these segments has a distinctive lifestyle. but the segment must also grow in size. on the top are the people with abundant resources. This study was made on American people. authority and image is important to them. role. They live conventional lives. circulation. and express themselves in a variety of ways. they are satisfied and mature people who are well-educated. They also favor established products and show their success around. have value and function properly. Work provides them with a sense of duty. 4) Achievers: They are also placed high in the Maslow’s hierarchy of needs and are career and work-oriented.3. They are practical consumers and conservative. beliefs. The demographic characteristics like. conventional people. with their needs. occupation. and in government.3: Values and Lifestyle Segments (VALS) Action Experienc er Maker Believer Minimal resources For a segment to be worthwhile. This classification is based on Maslow’s hierarchy of needs. They have wide interests and are concerned with social issues and are open to change. lifestyle. consists of eight general psychographic segments as shown in figure 7. This divides the consumer into three general groups or segments. They make their dreams come true. marital status can easily be identified. The target segment has to be profitable. They have taste and are leaders in business. They develop. They are active. and responsibility. 3) Actualizers: They have abundant resources and are sophisticated in their taste and habits. It must be stable. enough number of people in the segment to make it feasible. it is more difficult to identify psychographic characteristics of attitudes. The segment must also be accessible. etc. Abundant resources Principle Fulfilled Status Actualize r Achiever Striver Struggler Figure 7. so that the people belonging to a segment not only remain there. They prefer leisure at home. psychological resources and in self-confidence. The figure shows their characteristics as well.e. sex education. people at the bottom lack in education. social resources. benefits. This can be done by VALS segmentation. One of the best known of these is SRI Consulting Business Intelligence’s (SRIC-BI’s) VALS system. 1) Fulfilled: As the name suggests. interests. They are workaholics. They have modest resources sufficient to meet their needs. By catering to a segment. knowledge. 2) Believers: They are in the principle-oriented category. religion. .In addition to psychographic studies that are customized to a client’s particular needs. Besides money and physical resources. The segment should be such that profits can be gained. They use established brands. age. At the bottom are the people with minimal resources and. material rewards and prestige. so that the marketer is able to reach the segment in an economical way. value order. They can be reached through various media. The resources. They are conservative and predictable. They are conservative. and are ready to increase their knowledge. They are well-informed about the world. i. strong faiths. possessed by those at the bottom are very little and as move upwards the resources increase..
They have enough resources and experiment in new ventures. There are unaware buyers. vital. 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. Independence Day. The basic function of a car is transportation. They are people engaged in construction work and work with their hands and in the industry. A company can consider critical life events to see whether they are accompanied by certain needs. recently Kellogg’s has attempted to change the image of cereals to that of an ‘any time’ snack. Education is low. 6) Stragglers: These are poor people. Marketers often try to change customer perception of the best time to consumer a product by promoting alternative uses for a product. 1. those who will positively buy the product. pick-up trucks and. Winning moments etc. all that helps them in practical work. Anniversary. usage rate. They are low in economic.4. buyers are at different stages of readiness. or durability. user status. There can be 2 types of occasions: i) Regular: Like Holi. They have construction skills and value self-sufficiency. young. In contrast. or use a product or when they get the idea to buy. They represent a modest market and are loyal to their favorite brands. where a customer may buy for just knowing the time. outdoor recreation and social activities. Republic Day etc. and rebellious. music. but orange growers have promoted drinking orange juice as a cool and refreshing drink at other times of the day. They buy tools. Many marketers believe that behavioral variables – occasions. Buyers can be classified according to the benefits they seek. attitude towards. They are avid consumers and spend much on entertainment. Occasion segmentation helps boost product usage. Their chief concern is to fulfill their primary needs of physiological security and safety needs. the marketer identifies benefits that a customer looks for when buying a product. For example. This pattern of behavior changes. They are despairing and. impulsive. They see success with money. purchase a product. At any given time. some consumers may only purchase flowers. They like to be stylish. wine or boxes of chocolates for celebrating birthdays or Christmas. and attitude – are the best starting points for consulting market segments. purchase a product or use a product. 8) Makers: They are in the action-oriented category. This has been a very effective method of segmenting the market for watches. clothing. use of. Behavioral Segmentation In behavioral segmentation. enthusiastic.3. but have a low income as they are striving to find a secure place in life. They are concerned about the opinion of others. or as a gift/ an accessory/ a dress item/ a jewellery item. sports. videos. Buyer ‘readiness’ or preparedness is one of the important variable used for segmenting the market. suspicious of new ideas. loyalty status.5) Strivers: They are a status-oriented category. etc. They wish to be upwardly mobile and strive for more. and psychological resources. Diwali. According to the occasions buyers develop a need. whereas other consumers may buy these products on a weekly basis. rather than simply a breakfast meal. people who are interested and are desirous to buy and lastly. 2) Benefits: Here. Let us explain them with the choice of cars: . or response to a product. struggling for existence. Another example of occasional segmentation is orange juice which is most often consumed at breakfast. people who are aware but not interested. Eid. food. The benefits can be of four types.2. Makers experience the work by working on it. benefits. without strong social bonds. They indulge in exercise. as they are enthusiastic to new ideas. buyers are divided into groups on the basis of their knowledge of. 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. But people prefer different cars because they seek different benefits. Let us take the example of a car. movies. It can help firms expand product usage. They are politically conservative. ii) Special: Marriage. they buy stuff which helps them in achieving their purpose. social. 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. low skilled. buyers-readiness stage. have a low status in society. For example. 7) Experiencers: They are action-oriented.
For example. the models etc. 4) Quantity Consumed/Usage Rate: The quantity consumed at any given time has also been the basis for segmenting the beverages (tea. people who are interested and are desirous to buy and lastly. v) Desired: These are the people who have gathered detailed knowledge.e. These various stages are: i) Unaware: People not following technology trend and completely unaware about its improvement and new innovations. At any given time. probably have taken a trial. iv) Specially: People can be adventurous and sporty in purchase decisions for car and they would prefer Ferari etc. ii) Potential Users: This is the category where the usage rate is expected to be highest. ii) Aware: People who have seen the advertisements but do not have enough knowledge about the technology. 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. For example. politicians mostly use Hindustan Motors Ambassador bulletproof car. . In our example fashionable teenager. iii) Informed: These people get information from friends. 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. they use it very frequently. people who are aware but not interested. Let us explain the category of user with an example of a product say Deodorant.i) Quality: There are people for whom the quality matters most in any purchase. There are unaware buyers. The differentiation between them is based on the benchmark quantity defined by the marketer for each segment. In case of cosmetics an average housewife who is not very fashion conscious is a light user of the cosmetics. ii) Medium: The fashion-conscious teenagers are the medium users of cosmetics i. the following market segments are visible: i) Light: These are the categories of the users who are very infrequent users. iv) Interested: People who have information and hence are variety-seekers. Celebrities in entertainment world. relatives who are users or technical people. 5) Buyer-Readiness Stage: Another variable used for segmenting the market is buyer ‘readiness’ or preparedness to buy the product. the teenagers first deodorant used may be in his college days. So when they buy cars they buy Mercedes Benz. corporate people are the potential users of deodorant. Skoda Octavia. 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. breweries. ii) Service: At times people buy things to avail some specific service. 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. but may lack money to purchase the product. 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. A market consists of people in different stages of readiness to buy a product. colleagues. These people look for the economy in every purchase. a fashion conscious lady or a regular corporate and nowadays because of fall in its price students also are the regular users. At this stage more than quality or price the service that the product can give matters more. need cosmetics on a regular basis. iii) First time Users: The users who use it for the first time. those who will positively buy the product. and cigarette markets. as it is the most important part of their profession. Accordingly. buyers are at different stages of readiness. soft drinks. coffee). iv) Regular User: A corporate big-wig always in big party or conference.
. They would prefer to purchase with cash after thinking over the need for purchase. Ponds and Anchor white. Newspaper readers. ii) Fluoride Segment: This group of buyers constituted above 15% of the market. For example. This consists of brands like Colgate. Hostile: People at times become very much irritated either by salespeople calling or meeting anytime. a housewife who buys lux. Promise. giving false promise or by the service provided. cinthol. which affect their consumption pattern also. 6) Loyalty Status (Competition Related): Consumers have varying degrees of loyalty to specific brands. ii) Positive: They are serious but mobile people who need to buy suddenly at any time. there are some hidden costs which are not clarified by the salesperson during selling 1. in her nine shopping expeditions will be considered as a soft core loyal. They may switch for a variety or for a special deal. the segment sizes were as follows: i) Cosmetic Segment: This segment occupies 83% of the market. 7) Attitude: People have different attitudes towards different aspects of life. cinthol. Hence the marketing decision makers have taken this as a parameter to segment the population. They definitely need credit cards. where each brand emphasizes on the natural or herbal constituents in it. iii) Indifferent: There are some people who are technology averse with systematic purchasing pattern. They may not carry cash all the time but suddenly decide to buy something. hygiene and special protection of the teeth. iii) Split Loyals: Consumers who shift their loyalty from one brand to other and isolate between it. 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. Five attitude groups can be found in a market. As per the 1988 data. For example. 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. lux. These are the customers for whom brand switching is as easy as changing a shirt. The marketer needs to watch such customers and motivate them to shift to the hard core loyalty segment. Colgate Active Salt and Close-up Maxfresh were first introduced and today this new segment is facing intense competition. iv) Negative: People can be spendthrifts who fear of loosing money or misusing it. Cibaca. These brands mostly emphasize on freshness. cleanliness. cinthol. lux. iii) Herbal Segment: This segment has captured barely 2% of the market. The popular brands are Neem. brands like Forhans.2. Cibaca Top. They would never ever go for a credit card. Market Segmentation of Some Consumer Markets 1) Toothpaste Market: The toothpaste market in India can be divided into five segments. They do not prove to be potential users of credit cards. Here. iv) Switchers: Switchers are those customers who never stick to a brand. Babool. Pepsodent after its launch found some customers of Colgate switching between the two brands.4. and Colgate Fluoride project an element of gum-care. foam. For example. Vicco. Pepsodent. lux. and pears. iv) New Segment: In 2007. and overall dental care.vi) Intended to Buy: People who have the knowledge. stores and other entities. has the purchasing capacity and desire and are ready to buy. cigarette smokers and tea drinkers are some customer groups where such hard-core loyalties are commonly visible. in case of credit cards. pears. ii) Soft Core Loyals: Those who are loyal to two or three brands in a product group are called soft-core loyals. in a credit card market they can be distinguished as follows: i) Enthusiastic: These are people having tendency of impulsive purchase. Dabur etc. . Close-up.
the segment consisting of brands like Lifebuoy and Lux. iv) Rural Buyers: Are primarily concerned about maneuverability through rough terrain. Santoor and Rexona. Dove. psychographics. and 30% of the market in terms of value. 2) Analysis Stage: After collecting the data. psychographic. b) Brand awareness and rating of different brands. The Lifebuoy soap brand is the single largest band selling annually ` 4. This segment caters to by and large urban territories. The objective of this questionnaire is to collect data on: a) Attributes sought in a product and their priority ratings. 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. Fa. i) Focus group discussions and in-depth interviews with a view to get an insight into consumer motivation. soaps are priced reasonably. This is the main reason why they opt for heavier motorcycles (175 cc or above). 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. attitudes and behavior.2. 3) Profiling Stage: In this stage each cluster is profiled in terms of demographic.000 million.4. 1) Size. media habits.4. attitudes. viz.2. e) Demographics. Cluster analysis is now used to cluster customers into maximally different groups. 1. iii) Low Income Group: Prefer mopeds primarily because they provide individual mobility at the lowest possible cost. This is used to identify factors that differentiate customer groups. Factors Influencing Segmentation Factors Influencing Segmentation Size. it is analyzed using factor analysis. 3) Soap Market: Price is the major basis for segmenting the toilet soap market. Bajaj’s Pulsar. Dettol. 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 . Tarun and Nirma Chemicals. The marketer can give each segment a name based on a dominant distinguishing characteristics. 1992 and there were more than 70 brands. Accordingly. their prices have increased. In this category. 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. 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. c) Product usage patterns. and consumption habits. For example.2. The popular segment may further be subdivided by price again. Hero Honda’s Ambition. and media habits of sample respondents. Vigil. Brands include Breeze. iii) Premium Segment: High-priced soaps account for roughly 13% of the market in terms of quantity. with equal emphasis on strategies to target the rural population. Liril and pears. Lux. 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. and ii) Based on this insight developing a questionnaire which is administered to a sample group of consumers.000 crore). The total size of the premium soap market was ` 350 crore in January.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. 1. But over the years. d) Customer attitudes towards the generic product or product category itself. known as the ‘discount segment’. Cinthol Lime.1. The leading brands and companies in the premium segment are. ii) Economy Segment: It consists of brands like Hamam. and Margo and Mysore Sandal. behavior.
The seller can adjust his thrust to attract the maximum number of customers by various publicity media and appeals. Competitive Strategy of Firm: Competitive strategy of a firm also has an influence on segmentation. tastes and expectations of the consumers of different segments so that precise and clear decisions can be taken to harness marketing opportunities. bundles. 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 strategy of approach can be readjusted accordingly to push the sales on the basis of marketing research. Thai. behavior. who may not notice ads carefully. It is possible to satisfy a variety of customer needs with a limited product range by using different forms. whilst others have a more complex product mix making it much harder. potatoes. Organizations that choose to segment the consumers and focus on target markets are more successful in highly competitive environments. 6) Minimizing Aggregation Risk: By dividing the market and designing specific marketing mix to each segment. For example. incentives and promotional activities. for example.). An example of this might be the change that has happened with the traditional English pub. petrol. all at prices that match their targeted customer’s expectations. French and American to be eaten as a snack. the use of personal selling is better marketing tool. In the place where the sales opportunities are limited. bread. policies and programmes. Nature of Market: Nature of market also influences the segmentation decision. financial services. the Ford Motor Co. for instance. The greater the selection on offer the more consumers will demand choice and the greater will be the need for tight segmentation. In the region where response of the customers is poor. fashion clothes. at lunch time or as a full three or four course dinner. programmes and strategies for different markets based on rivals’ strategies. 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. 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. in case of highly mobile customers. servers. large businesses. This helps in adopting different policies. which is defined as the risk of not being able to satisfy customer needs with one marketing mix to all segments. In the past a pub might have offered a choice of two different beers and a salad sandwich or a sausage roll. policies and strategies of competitors in all the segments. Resources of company also determine the extent of segmentation. as company having moderate resources will have limited segmentation whereas company having substantial resources will have broad segmentation. . Type of Product and Market: Some companies have a simple product portfolio that lends itself to easy segmentation. printers etc. public/state organizations). notebooks. For example. small businesses. 4) Fighting Competition Effectively: The segmentation helps the producers to face the competition of competitors effectively by making a deep study of the products. segmentation reduces the risk of aggregation. but by customer groups (privates. does not organize its website by product groups (desktops. catering and hospitality services. habits. Segmentation strategies differ according to market such as segmentation strategies differ in competitive market from non – competitive market.2.2) 3) 4) 5) 6) resources it has available will dictate to a great extent how it segments its market.3. industrial cleaning products. 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. it is no use allocating a huge budget there. 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. The computer manufacturer Dell. 1.4. 3) Allocation of Marketing Budget: It is on the basis of market segmentation that marketing budget is adjusted for a particular region or locality. for example. 5) Understanding and Meeting the Needs of Consumers: It helps the marketer to fully understand the needs. Life Cycle Stage: Lifecycle stage of a product also affects segmentation decisions. Now many pubs offer a choice of over 20 different beers and food as diverse as Italian.
the fixation of times in memory so that they can be recalled or organized. 2) Buyers often choose from a repertoire or a list of acceptable brands. Hence segmentation does not mean that those within a segment buy only in that segment. 4) The markets examined by them were not heavily segmented as the differences between brands were too insignificant to matter. 1. Such a targeted communications allows stressing those criteria that are most relevant for each particular segment (e. 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. 3) The various brands may be indistinguishable in product form yet differ widely in market share.3. “Learning is a relatively permanent change in behavior that occurs as a result of prior experience”. Thus. 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. they can safely rely on each others’ discrimination.4. It strengthens the brand and ensures profitability. as at such stage. 11) Higher Market Shares: In contrast to an undifferentiated marketing strategy. From marketing point of view the marketer has to develop different marketing mixes for different segments. organizations can create their own 'niche products' and thus attract additional customer groups. According to E. Hilgard. which can then be satisfied through unique product or promotional offerings. marketing activities can be targeted at highly attractive market segments in the beginning.2. CONSUMER LEARNING 1. reliability vs. particularly the building of a new series of complex coordinated motor response. From production point of view.7) Targeted Marketing: Targeted marketing plans for particular segments allow to individually approach customer groups that otherwise would look out for specialized niche players. segmentation supports the development of niche strategies. This is because the same buyer may buy products in different segments of the market for different family members. learning can be defined as a relatively permanent change in behavior as a result of prior experiences. Given the fact that people alternate between the brands of their list. 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. the process of acquiring insight into situation”.g. or for different occasions or for a change etc. no concept of differentiation among products is needed to explain market success. it would be incorrect to presume and believe that a brand can be successfully positioned to appeal to a very narrow segment. . the producer producing in mass quantities is much cheaper than making variety of products. 9) Filling Gaps: Segmentation can help in finding out the unfilled gaps in a market. organizations have better chances to increase their market shares in the overall market. Thus.3. 1. R. customers and companies can conveniently settle down with each other. prestige). 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. Hence. Limitations of Market Segmentation The major limitations of market segmentation are as follows: 1) Markets are not made up of segments with different wants because buyers of one brand buy other brands as well.4. 5) Market segmentation can be an expensive process for both the producer and the marketer. channel partners and customers. Market leadership in selected segments improves the competitive position of the whole organization in its relationship with suppliers. Moreover when segmentation attains higher levels of sophistication and perfection. the favorable modification of response tendencies consequent upon previous experience. On that basis. price vs.1. By segmenting markets.
consumer behavior is largely learned behavior. i. The learned behavior is a conditioned response to a stimulus through either voluntary or unvoluntary intent. Nature of Learning Consumers’ learning is an important component of their behavior. and feelings through learning. Culture and social class through such institutions as schools and religious organizations.3. According to W.3. Baby” for Diet Pepsi).3. behaviors. learning is the result of information processing.3. it can be said that change in behavior indicates that learning has taken place and that learning is a change in behavior. tastes.2. knowledge should be implemented. For example tying r shoes is a learned behavior crying is not. 1. Genetic constraints may limit what can be learned. all healthy humans learn to walk. Types of Learned Behavior 1) Physical Behavior: Generally.e. as when a problem is recognized and information is acquired about products which might solve the problem.1. Consequently.. Learning is any change in the content or organization of long-term memory or behavior. knowledge of learning principles can be useful in understanding how consumers’ wants and motives are acquired and how their tastes are developed. friends. and rather it should be permanent. it should not be temporary. provide learning experiences that greatly influence the type of lifestyle people seek and the products they consume. and interact with others.2.3. slogans (“got the right one. preferences. and also it can be conditioned. Thus. . These may take the forms of learning to act dissatisfied when hearing the first price quote on a car. As consumers. Consumer learning can occur unintentionally and this type of learning can strongly influence the behavior of consumers. 2) Change should last for a considerable period of time. mass media. symbolic meanings. 1.3. and signs (Mc Donald’s Golden Arches). as well as family. Learning is essential to the consumption process.3. values. talk. Learning mechanism helps consumers to adapt to a changing environment. For example.. Symbols also allow marketers to communicate with consumers through such vehicles as brand names (Kodak and Sony). 1. In fact. McGehee. A learned behavior is some type of action or reflex that learns. we learn many physical behavior patterns useful in responding to a variety of situation faced in everyday life. there's a motivating factor behind it.e. Conditions for learning There are following two conditions: 1) Whatever knowledge is being acquired. 1. or learning to read closely the fine print in purchase contracts. and advertising. It is adaptive modification of behavior by experience. 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. it should be reflected in the behavior. Learning certainly occurs intentionally. People acquire most of their attitudes.Ironically. we also learn methods of responding to various purchase situations. i. respond as a result of experience in a manner different from the way he formerly behaved”. “Learning has taken place if an individual behaves reacts. 2) Symbolic Learning and Problems Solving: People learn symbolic meanings that enable highly efficient communication through the development of languages.
but complete extinction is rare. the probability of the brand being forgotten by the consumers is very high. iii) The amount of reward during learning trials is large. or practice a certain kind of behavior. That is. 1. the more likely person is to learn it. if the advertisements for a particular brand are withdrawn for a considerable period of time. Very simply. iv) Reward is delayed during the learning process. . iii) Repetition increases the strength and speed of learning. Characteristics of Learning 1) Strength of Learning: What is required to bring about a strong and long-lasting learned response? Advertisements of most brands hammer into the customer the benefits and qualities of their respective brands so that the customer does not forget them.3. Stimuli which the consumer can use to distinguish between various items in their environment are often termed discriminative stimuli. The more likely relevant information will be retrieved when required. 1) Extinction: Person can “unlearn” material or behavior that has been previously learned. The stronger the original learning. because it helps them adapt to their environment. ii) Reinforcement is anything. and imagery.3) Affective Learning: Humans learn to value certain elements of their environment and dislike others. . the less likely the response is to occur. These words may either be a brand name or a corporate name. Thus. and v) A partial reinforcement schedule occurs during learning. The greater the number of non-reinforced trials. Discrimination is learned over time when the same response to two similar but noticeably different stimuli leads to different consequences (reinforcement). a learned response is made to a stimulus but reinforcement does not occur. ii) The number of previously reinforced trials is large. One factor that influences the ability to retrieve stored information is the strength of the original learning. Resistance to extinction also strengthens when: i) Impelling motives are strong. This unlearning process is termed extinction and occurs when over time. repetition. Thus. goals. The strength of learning is heavily influenced by four factors: importance. both from the print and the electronic media. 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. which increases the likelihood that a given response will be repeated in the future. iv) Imagery refers to the images created by words. Stimuli which the consumer can use to distinguish between various items in their environment are often termed discriminative stimuli. the more times person is exposed to information. 2) Stimulus Generalization: Learning to discriminate between various objects or events is important for consumers. and motives as well as what products satisfy these needs. consumers frequently have relevant information stored in memory that firm cannot access when desired.4. 4) Response Environment: It appears that consumers generally learn more information than they are able to retrieve. the consumer has engaged in stimulus generalization. reinforcement. This means that consumers learn many of their wants. Learning also influences consumers’ development of favorable attitudes toward a company and its products. 3) Stimulus Discrimination: Learning to discriminate between various objects or events is important for consumers. These attitudes will affect the tendency to purchase various brands. because it helps them adapt to their environment. For example. Discrimination is learned over time when the same response to two similar but noticeably different stimuli leads to different consequences (reinforcement). i) Importance refers to the value that the consumer places on the information to be learned.
Remember.1.6.and Low-Involvement Situations . and reinforcement. That is. Conditions Relevant to High and Low Involvement Strategies A moment’s reflection will reveal that people learn things in different ways. People can identify clothes that are stylish even though they never really think much about clothing styles. Learning may occur in either a high-involvement or a low-involvement situation. but capable of providing direction to motivated activity. A low-involvement learning situation is one in which the consumer has little or no motivation to process or learn the material.3. it influences the manner in which consumers respond to a motive. it must again be emphasized that the inability to observe responses does not necessarily mean that learning is not taking place. motivation is based on needs and goals. Primarily. Figure shows the two general situations and the two specific learning theories that are as follows: Situation Learning approach Specific learning theory Classical Learning approach Situation Conditioning HighInvolvement Learning Situation Operant Conditioning LowInvolvement Learning Situation Iconic Rote Cognitive Vicarious/ Modeling Cognitive Reasoning/ Analogy Commonly used Occasionally used Learning Theories in High. such as promotions and product colors.3. The occurrence of a response is not always observable. 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. For example. 2) Cues: A cue may be viewed as a weak stimulus not strong enough to arouse consumers. Elements of Learning Consumers learn in several ways.5. 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. cues. A high-involvement learning situation is one in which the consumer is motivated to process or learn the material. Motivation acts as a spur to learning. The shopping environment is packed with cues. 1. Conditions Relevant to High and Low Involvement Strategies. 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. 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. response. which consumers can use to choose between various response options in a learning situation. there are four elements of learning: motivation. Consumers can learn to develop successful means of responding to their needs of changing conditions. 3) Response: A response may be viewed as a mental or physical activity the consumer makes in reaction to a stimulus situation. Because reinforced behavior tends to be repeated. Therefore.
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:
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. learned better. Theory Classical Conditioning Operant Conditioning Iconic Rote Learning .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. result of closely reading many ever really thinking about Apple shoe advertisements that he or advertisements. likely to be repeated wrinkle and generates several They taste “all right”. The when the same situation compliments. i. she finds enjoyable. This process then demonstrates that the individual can perform the modeled activities. People tend to be most influenced by models that are attractive. repeatedly available. 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.pay attention to the advertising.e. A sport coat made consumer continues to purchase arises in the future.e. made parts. plans to use only American. important. 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. 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. purchased. and performed more often. i. iv) Reinforcement Processes: Individuals will be motivated to exhibit the modeled behavior if positive incentives or rewards are provided. object.. the watching must be converted to doing. by the same firm is then this brand. without without conditioning. A response. 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. Behaviors that are positively reinforced will be given more attention.20: Observation Learning: An Overview i) Attention Processes: People learn from a model only when they recognize and pay attention to its critical features. or products.. or similar in estimation. iii) Motor Reproduction Processes: After a person has seen a new behavior by observing the model.
and any salient points about the product. and which they read most. high-priced clothing and accessories) than from ads for convenience goods (i. Measures of Consumer Learning For many marketers. the consumer decides to sweep some baking soda into the carpet. They are also asked which parts of the ads they noted and read most. Noticing an unpleasant aroma in the carpet. the dual goals of consumer learning are increased market share and brand-loyal consumers. Pre-tests are used to determine which. and to the company’s own prior ads. A recent study using Starch readership scores demonstrated that consumers received more information from advertisements for shopping products (i.e.8. the consumer is shown an ad and asked whether he or she remembers seeing it and can remember any of its salient points. A child learns that men do not wear dresses without ever really thinking about it. which evaluates the effectiveness of magazine advertisements. After qualifying as having read a given issue of a magazine. Comprehension is a function of the message characteristics. surprisingly. 2) Cognitive Responses to Advertising: Another measure of consumer learning is the degree to which consumers accurately comprehend the intended advertising message. the product advertised. the consumer is asked whether he or she has read a specific magazine or watched a specific television show. low-priced items purchased routinely) and. and the consumer’s motivation (or level of involvement).. and brands with larger market shares have proportionately larger groups of loyal buyers. can recall any ads or commercials seen. the extent to which they have read it or seen it and can recall its content. whereas recall tests use unaided recall. 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. 1. if any. Thus. and the attitudinal and behavioral measures of brand loyalty. In recognition tests. from ads for search products (i. such as the Starch Readership Service. A number of syndicated research services conduct recognition and recall tests. In recall tests. their resulting attitudes toward the product and the brand. elements of an advertising message should be revised before major media expenses are incurred. To ensure a high level of comprehension. which they associated with the advertiser. Finding that the store is out of black pepper. if any should be changed to improve the impact and memorability of future ads. cognitive measures. Recognition tests are based on aided recall. A consumer watches the reactions people have to her friend’s new short skirt before deciding to buy one. the brand. to competitive ads. the consumer’s opportunity and ability to process the information. very expensive. and to identify which elements. These goals are interdependent: Brand-loyal customers provide the basis for a stable and growing market share. Various measures of consumer learning: recognition and recall measures.e. . many marketers conduct copy testing either before the advertising is actually run in media (called pre-testing) or after it appears (post-testing). These findings show that marketers may be under-informing consumers when advertising search products. Post-tests are used to evaluate the effectiveness of an ad that has already run. durable items purchased infrequently following an extensive information search).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.e. and their purchase intentions. a consumer decides to substitute white pepper. Individuals use thinking to re-structure and recombine existing information to form new associations and concepts. it is important for the marketer to measure how effectively consumers have “learned” its message. 1) Recognition and Recall Measures: Recognition and recall tests are conducted to determine whether consumers remember seeing an ad. respondents are presented with the magazine and asked to pointout which ads they noted. An advertiser can gauge the effectiveness of a given ad by comparing its readership recognition scores to similar-sized ads..3. and if so. A consumer believes that baking soda removes odors from the refrigerator..
i) Behavioral Scientists: Behavioral scientists who favor the theory of instrumental conditioning believe that brand loyalty results from an initial product trial that is reinforced through satisfaction. c) Inertia loyalty (purchasing the brand because of habit and convenience but without any emotional attachment to the brand). their evoked set). b) Covetous loyalty (no purchase but strong attachment and predisposition towards the brand that was developed from the person’s social environment). These influences produce four types of loyalty: a) No loyalty (no purchase at all and no cognitive attachment to the brand).3. They believe that consumers engage in extensive problem-solving behavior involving brand and attribute comparisons.e. leading to a strong brand preference and repeat purchase behavior.e. From a consumer’s perspective. evaluation) about the product and the brand. and enhances perceived value.. Often consumers buy from a mix of brands within their acceptable range (i. rather than attitude toward the product or brand. To cognitive learning theorists. b) Brand drivers. Well-known brand names are known as megabrands. Loyalty programs are generally designed with the intention of forming and maintaining brand loyalty. ii) Attitudinal Measures: They are concerned with consumers’ overall feelings (i. and premium pricing options. emphasize the role of mental processes in building brand loyalty. For many companies. There is no single definition of this concept. their most valuable assets are their brand names. An integrated conceptual framework views consumer loyalty as the function of three groups of influences: a) Consumer drivers.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. and their purchase intentions. perceived quality. and d) Premium loyalty (high attachment to the brand and high repeat purchase). behavioral definitions (such as frequency of purchase or proportion of total purchases) lack precision. brand equity is the added value bestowed on the product by the brand name. ii) Cognitive Researches: Cognitive researches. A basic issue among researchers is whether to define brand loyalty in terms of consumer behavior or consumer attitudes. and c) Social drivers. This framework also reflects a correlation among consumer involvement and the cognitive and behavioral dimensions of brand loyalty. on the other hand. Brand Equity Brand equity refers to the value inherent in a well-known brand name. iii) Behavioral Measures: They are based on observable responses to promotional stimuli – purchase behavior.. because they do not distinguish the “real” brand-loyal buyer. leading to repeat purchase.9. Brand equity facilitates the acceptance of new products and the allocation of preferred shelf space. 1. .
The action of loyalty is a positive.10. reviews. companies buy. 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. Customers may express high satisfaction levels with a company in a survey.10. 1.3. In their published research. which in turn leads to increased market share and greater profits.e. brand loyalty becomes evident when choices are made and actions taken by customers. to encourage repeat purchase.2. repeated behavior of preferring one brand of a product from among the several brands available. customers can be very satisfied and still not be loyal. knowing that it is easier to buy than to create a brand name with enduring strength. Brand equity enables companies to charge a price premium – an additional amount over and above the price of an identical store brand. Importance of Brand Loyalty Loyalty leaders are successful because they have designed their entire business systems around brand loyalty. and the cost of acquiring new customers goes down. but satisfaction does not equal loyalty. they rendered a distinction between repeat purchases and actual brand loyalty. 1. According to Bloemer and Kasper. revenues. and profitability all go up.10. 1. To exemplify this point. 2) It is a form of behavioral response (act of purchase). It uses another product’s brand equity to enhance the primary brand’s equity. sell.. Loyalty may be explained further. Brand loyalty describes the tendency of a customer to choose one business or product over another for a particular need. It is a self-reinforcing system in which the company delivers superior value consistently to find and keep highquality customers. When a company consistently delivers superior value and win brand loyalty. Note the use of the word “choose” though. Loyalty is demonstrated by the actions of the customer. and rent (i. the major function of learning theory is to teach consumers that their product is best. 5) It is a function of psychological process. Building a highly loyal customer base must be integral to the basic business strategy. customers may be described as being “brand loyal” because they tend to choose a certain brand of soap more often than others. A relatively new strategy among some marketers is co-branding (also called double branding). two brand names are featured on a single product. as well as those that offer good ratings. Suppose a buyer visits a shop in anticipation of selecting a brand or opting for a specific service. To marketers. Brand equity is important to marketers because it leads to brand loyalty.3. Customer loyalty can be defined as the strength of the relationship between an individual’s relative attitude and repeat patronage with a supplier. or testimonials. He would prefer waiting for the brand of his preference.1. In co-branding. 3) It is expressed over time by some decision-making unit. In the packaged goods industry. Features of Brand Loyalty Following are the essential features of customer loyalty for a brand: 1) It is biased (not random).As brand that has been promoted heavily in the past retains a cumulative level of name recognition. Brand Loyalty The term brand loyalty is used to describe the behavior of repeat purchases. and to develop loyalty to the brand name.3. The economic benefits of high brand loyalty are measurable. market share. 4) It exists with respect to one or more alternative brands. Customer loyalty is very essential for the growth of organization because loyal customer: . license) their brand names. “Brand loyalty implies that consumers bind themselves to products or services as a result of a deep-seated commitment”. the buyer would prefer not to buy any substitute in case of non-availability of the brand he has specifically opted for. Loyalty in sense is a willful commitment to the brand in view of perceived satisfaction.
a reminder card for a tune-up. This set can be called ‘switching-cost loyal’ customers. extending from committed buyer at one extreme to switcher or indifferent buyer at the other extreme. There are following ten ways of building brand loyalty as: 1) Communicate: Whether it is an e-mail. Each state implies a different type of brand equity asset and different types of marketing challenges. 5) Committed Customers: At the next level of loyalty. Empower employees to make decisions that benefit the customer. The buying is done on a basis other than brand. 3) Employee Loyalty: Loyalty works from the top down. 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. They tend to have some sort of emotional attachment to the brand. their efforts toward building brand loyalty will certainly pay-off. For example. 1) Indifferent Buyers: At the lowest level. They identify with the brand. 4) Employee Training: Train employees in the manner that they like to interact with customers. The strong identification may be based on functionality or images/symbolism that it signifies. Levels of Brand Loyalty Brand loyalty is not a dichotomous construct. monthly flier. though they have switching costs in terms of time. If a company is loyal to its employees. or a holiday greeting card.3. They all signify different shades of behavioral loyalty.3. 3) Switching-Cost loyal Customers: The third category of buyers is satisfied with the brand. across product-lines. These can be called ‘habitual buyers’.1) 2) 3) 4) 5) Purchase products and services again and again over time. It may operate at different levels. The other three are in-between states.4.10. 5) Customer Incentives: Give customers a reason to return to the business. because children outgrow shoes quickly. Customers remember being treated well. the customers tend to be committed to the brand. 1. they will feel positively about their jobs and pass that loyalty along to the customers. a virtually negligible element of attitudinal commitment to the brand is visible. However. newsletter. since the cost to attract new customers is significantly more than to maintain their relationship with existing ones. Five levels of brand loyalty can be distinguished. reach-out to the steady customers. Increase the volume of their purchases and buy beyond traditional purchases. 2) Customer Service: Go the extra distance and meet customer needs. Train the staff to do the same. and risk. money. the owner of a children’s shoe store might offer a card that makes the tenth pair of .10. Building Brand Loyalty Many business firms neglect their loyal customer base in pursuit of new customers. In all these categories of customers. Customers get committed to a brand when the brand achieves personal significance for them. Become immune to the pull of the competition. 1. The commitment is “an enduring desire to continue the relationship and to work to ensure its continuance”. 4) Affect Driven Loyalty Customers: The fourth category of loyalty implies that the buyers like the brand. Give the benefit of the doubt to the company when something goes wrong. Refer company’s products and services to others. 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. They are vulnerable and can succumb to benefits offered by the competition. These buyers have no reason to switch but may actually switch given the stimulations from the competitors. It is an affect driven loyalty.3. 2) Habitual Buyers: The second category of buyers comprises the ones satisfied with the brand (absence of dissatisfaction). like availability or price. the indifferent buyer does not attach any importance to the brand. People in this category consider a brand as a friend. These buyers are switchers and are indifferent to the brand. It becomes a vehicle of self expression.
marketing activities. 6) Product Awareness: Know what the steady patrons purchase and keep these items in stock.5.shoes half price. The roles played by loyal customers are those of: 1) The partner. For the purpose of market identification. 10) Know their Names: Get to know the names of regular customers or at least recognize their faces. 1.10.3: Process towards Reaching Loyal Customers 1) Market Identification: The market for a brand constitutes the potential customers for the brand. 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. It is a systematic approach to review the activities of marketing functions towards reaching marketing goals.10. the less likely it is that salesman will see that customer again. and its effectiveness. packages design. developing incentive schemes. Marketing Audit enables to find appropriate markets and also shape the role that the . 8) Be Flexible: Try to solve customer problems or complaints to the best. 1. Process for Reaching Loyal Customers The reach of loyal customers involves a sequence of actions. The sequence has been illustrated as below: Identification of Prospects Categorization of Prospects Conversion of Prospects into Customers Conversion of Customers to Loyal Customers Figure 4. 2) The advisor. starting with identification of the right market for the product concerned. a market is to be developed. etc. and 6) The experience shaper. Many companies recruit loyal customers in their customer panel and tap their creativity for application in various activities such as new product development. 3) The custodian. new promotion strategy formulation. a dentist may give a free cleaning to anyone who has seen him regularly for five years.3. If something goes wrong. Be reliable. and through each role they contribute effectively towards the betterment of the organization. deliver it on Wednesday. the loyal customers involve themselves in the organization’s regular activities. And make sure that staff understands everything they can about the products. let customers know immediately and compensate them for their inconvenience. Loyal customers serve as their major idea sources. As partners and advisors. 4) The resource provider.6. Add other products and/or services that accompany or compliment the products that the regular customers buy regularly. 5) The change driver. Marketing Audit is a purposeful examination of marketing environment. 7) Reliability: If a purchase will arrive on Wednesday.3. When the brand already exists. the organization may go in for a Marketing Audit Program. Need for Loyal Customers Loyal customers are the assets of an organization. Loyal customers play six important roles. Likewise. 9) People over Technology: The harder it is for a customer to speak to a sales man when he/she has a problem.
iv) Market Nicher: Market nicher is a small player. 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. Nichers often identify profitable nichers and carry-on their marketing operations. Market existence depends on the number of loyal customers the organization can develop. It is likely that many organizations simultaneously pursue multiple strategies so as to have market entry. as those strategies have registered proven success. existence. It also involves development of new products. which refers to considering every individual customer as a market and developing appropriate strategies to satisfy the customer’s need. Market challenger is a close competitor organization to the market leader. viii) Buying habits. who identifies market niches and operates. iii) Income. the marketers consider the whole market as an undifferentiated one and adopt the same marketing mix strategies without any differentiation to attain marketing goals. market development strategy refers to developing new markets for the current brand of the organization. Nichers confine their operations in a much-limited way. The consumers have started showing highly differential needs. market size has expanded in all respects. undifferentiated approach would no longer be relevant and purposeful. the focus is towards customized marketing approach. iv) Diversification Strategy: Diversification strategy on the other hand refers to the organization’s attempt to market a line of closely related products. 2) Segmented and Target Market: From mass marketing. iv) Gender. 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. In today’s context. x) Benefit expected. Today. vii) Type of customers. vi) Volume of purchase. Having made the market entry. They simply fall in line with the strategies of market leaders. 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. Those criteria include: i) Age. v) Location. Industrial . The organization can have its market entry in one of the identified markets. ix) Lifestyle. appropriate strategies are to be worked-out towards market existence and market expansion. The organization. Market segmentation therefore refers to grouping of customers on the basis of selected criteria. Therefore. ii) Market Challenger: Market challenger challenges the market share of the market leader.organization has to play in the identified market. a single. This approach would work as long as the market size is small and easily approachable. ii) Marital status. For the purpose of market existence and expansion. and expansion. Under the mass marketing approach. 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. and xi) Extent of loyalty. iii) Market Follower: Market follower is the main follower of market leader. iii) Market Development: On these lines. This approach is because of a number of advantages being associated therewith.
v) Advertisements. iii) Various directories. and so on. potential customers would be identified by means of a systematic approach. the consumer. and not merely the one who ultimately enjoys the benefits of a product or service. 4) Customers: In a broader sense. From among the prospective customers. The sequence may be illustrated as: In order to reach the loyal customer. 5) Loyal Customer Ladder: A customer reaches the status of a loyal customer by passing through a series of stages. 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. competing forces. vii) Developing database. Effective prospecting would help in identifying a large number of potential customers in the target market. who form the foundation of loyal customers.4: Loyal Customer Ladder . suitable marketing strategies would be evolved.marketers and service-marketing organizations have started adopting this approach towards a very effective marketing performance. Selection of target market would be governed by factors such as the organization’s capabilities. iv) Through trade associations. and it is immaterial whether he is involved in the purchase activity or not. In the light of the characteristics of the target market. 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. This categorization must follow relevant strategies to convert the prospects into customers.. Customer is one who repeatedly buy from one source. return on investments. viz. In a very strict sense. the buyer refers to the one who buys a product or a service and it is immaterial whether he consumes it or not. Target market refers to a welldefined set of prospective customers. the buyer. the organization identifies customer in terms of their purchase intention as most promising prospect to the least promising prospect. A consumer is one who consumes a product of an organization. and x) Customers of related products. 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 organization can meet those requirements profitably. and therefore the prospect identification could be called as the lifeblood of the entire scope of marketing activities. etc. 3) Prospective Customers: In the target market. vi) Blind telephone calls. ii) Through friends and relatives. whose requirements have been identified. There are three terms normally used in this context. future prospects. From among the market segments. ix) Follow-up of the competitor’s customers. viii) Cold canvassing. a careful marketing action plan should therefore be evolved and implemented effectively. the target market would be identified. and the customer.
or not felt the need for such a product category.i) Customer by Chance: Thanks to the influence of marketing efforts. In order to create brand loyalty. does not mean marketers have to start from scratch when it comes to interpreting why certain consumers are loyal to certain brands. The casual choice he made by chance will help him towards arriving at a further decision to continue or discontinue the purchase he made. ii) Customer by Occasion: The customer by occasion would be an occasional customer. Unfortunately.10. advertisers must break consumer habits. The image surrounding a company’s brand is the principal source of its competitive advantage and is therefore a valuable strategic asset. and reinforce those habits by reminding consumers of the value of their purchase. Consumer behavior is habitual because habits are safe and familiar. Thus. and encourage them to continue purchasing those products in the future. Brand loyalty is the consumer’s conscious or unconscious decision. and the people behind it from the customers and competitors’ point-ofview and make appropriate marketing decisions. The organization must view the product.7. image or level of quality at the right price. and what type of factors influence these allegiances. Influence of brand loyalty on Consumer Behavior In today’s highly competitive environment. 1. 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. He would include the present brand also in his preferred set and show interest towards buying this brand. iv) Customer by Repetition: His choice of the present brand gets repeated and this would mean that the customer reaches the stage of customer by repetition. process. clear message that not only distinguishes their brand from the competitors’. many companies are not adept at disseminating a strong.3. his level of preference towards the brand moves upward. improving consumer’s loyalty to brands permit marketers to maintain a comfortable and lasting position in the marketplace. However. or may have used the competitor brand. help them acquire new habits. or by own attempts a prospective customer buys the brand and thereby he becomes the customer by chance. He may have a preferred set of brands already. the customer is slowly moving towards the status of undivided loyalty to the brand. iii) Customer by Choice: From the occasional customer. expressed through intention or behavior. to re-purchase a brand continually. the customer insists upon the same brand and becomes a customer by insistence. Perhaps these categories of customers’ exhibits divided loyalty status at this stage. It occurs because the consumer perceives that the brand offers the right product features. vi) Customer by Loyalty: Reaching of loyal customers requires careful marketing approach and systematic planning and execution of all aspects connected with marketing functions. v) Customer by Insistence: During the repeat purchase period. it is a continuation of trends in human behavior that have been following cyclical patterns throughout the country’s history. the marketer should accept the fact that the customer keeps the brand under evaluation status only. Just because we have entered a new era. The customer by chance may be a person who previously may not have used the brand. 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. depending on the extent of his need fulfillment and other associated factors. but distinguishes it in a memorable and . At this stage.
1.. 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. Loyal customers have confidence in the brand they buy. Just like a person without attention-grabbing characteristics. A strong symbol or company logo can also help to generate brand loyalty by making it quickly identifiable. self-concept. Does the brand deliver what it promises to consistently over time? Lack of consistency creates a situation of uncertainty for the customers. 9) Financial Bonds: Customer bonds could also be based on economic or financial benefits that a brand seeks to offer to its customers. who feel vastly re-assured when this happens. It is this consistency and confidence that helps a brand to forge ties with customers. Trust is a major building-block in building brand and customer relationship.e. For example. This is especially true for industrial and service brands.. 3) Accessibility: How accessible is the company behind the brand? Accessibility is crucial for the development of strong brand relationships. Good brands are consistent in their performance – their performance can be predicted with great confidence. 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. Opportunities for social bonding are much more in service and industrial selling situations. 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. 8) Psychological Bonds: Sometimes. where customer-seller interaction tends to be for long-term duration. 2) Consistency: Consistency is absence of variations or deviations. It comes when the brand stands for reliability. and where both parties come together to form a social dyad. 6) Affinity: Strong brand-customer relationships are formed when customers are able to identify with the brand or the company. The brand does not exhibit opportunistic behavior to exploit its customers. a company should view its brand to be not just a product or service. i.3. a brand with no personality can easily be passed right over. 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. In fact. customers’ end goals and needs are truly addressed by the brands. A brand needs more than identity. Harley-Davidson achieved great success through its HOG (Harley Owners Group) affinity program. Social bonding is one of the oldest ways of forging relationships. Issues in Brand Loyalty For building brand loyalty for a particular brand.positive manner. 10) Structural Bonds: Customer relationships could be based on a physical connection which could be created between buyer’s system and seller’s system. The frequent flier programs in airlines or frequent buyer program in the retail or hotel industry are some examples of financial bonding strategy. They relate well with other people who patronize the brand. Quite often. but as an overall brand image that defines a company’s philosophies. It is about a brand’s integrity. 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. In times of need. it performs what it promises to do. i. 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. Brands which have integrity inspire trust. These rewards come in the form of discounts or financial gains that could be accumulated over time. The need for responsiveness is greater in industrial and service exchanges.11. the customer can bank upon the brand’s larger system. Recall the old-time village grocer or miller who interacted with customers personally. and lifestyle.e. firms in auto component industries develop . brand-customer relationships could be based on psychological constructs like personality. it needs a personality. The challenge for all brands is to avoid the pitfalls of portraying a muddled or negative image. and instead. where the interface is of long-term duration and involves high risk. Good companies make themselves available and easily accessible to their customers.
Also. Its measurement depends on how it is defined. Those who argue that brand equity cannot be measured. It does not exist in nature in the manner that the specific gravity of elements exists as a physical entity. According to Biel. of advertising agency presentations and of negotiation by acquirers of companies.1. a universally accepted brand equity content and meaning as well as measure has not been forthcoming. Some pharmaceutical firms have developed online communication-based bonds with hospitals. 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”. Brand equity is by definition an intangible asset. Srivastava and Shocker. A variety of opinions exist about brand equity. Kapferer. Brands are valued for their equity. In other words. 1. Everyone in the marketing profession agrees that brands can add substantial value. sometimes. trade leverage. “Brand equity consists of differential attributes underpinning a brand which gives increased value to the firm’s balance sheet”. Meaning and Definition of Brand Equity The concept of brand equity began to be used widely in the 1980s by advertising practitioners. 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”. Important academic contributors throughout the 1990s were Aaker. It cannot be assayed like the gold content in a piece of ore. even small retail brands develop structural bonds with their neighborhood customers with online communication systems or even through cable TV ads. that brands become a burden.12. Srivastava and Shocker. Some of these are as follows: “Brand Equity” refers to “a set of assets and liabilities linked to brand. However. Brands add value.structural ties in the form of just-in-time supply system with automobile manufacturers.3. 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. miss the essential point. It should help to improve marketing effectiveness and efficiency by providing a yardstick with which to evaluate these things. Important academic contributors throughout the 1990s were Aaker. Brand equity refers to a “set of assets and liabilities linked to a brand. 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.12. 1. According to Aaker. brand equity (or subtracts) value to a firm in the form of price premium. Brand equity is by definition an intangible asset. and Keller. There is even a coalition devoted to the fostering and preservation of brand equity. the definition should reflect the role of the brand in the dynamics of consumer choice in a competitive environment. or competitive advantage. Brand equity can be defined as the stored value built up in a brand for achieving competitive advantage. According to Chernatony and McDonald. . The concept of brand equity is based on the idea that a brand has a value greater than the sum of its tangible assets. However. It is also true. “Brand equity can be thought of as the additional cash flow achieved by associating a brand with the underlying product or service”.3. 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 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. Kapferer. That definition must have pragmatic value to a marketer of consumer products or services. The brand can be both a value enhancer and a value driller. Brand equity is the subject of seminars. These forms of bonding are common in the industrial marketing scenario.
“Brand equity is defined in terms of marketing effects uniquely attributable to the brands. achieving equity is impossible. The product and its attributes – both tangible and intangible – are the inputs to the equity model.2. Value Creation by Brand Equity A brand adds value in a number of ways.3. 2) The customer. and storing information about products and brands. three types of leanings seem visible: 1) The brand. or image or perceptions that a customer has about the brand that drive the outcomes.3. At the heart of brand equity is customer equity – an unwavering customer franchise which stands by the brand.According to Keller. It is the brand which is the basis of equity or value. But the most crucial link between the input and output is the consumer – the consumer’s mental framework. It is generated through the discriminating response that customers exhibit in favor of a brand. 1. The best way of integrating these different views is by conceptualizing the brand equity in terms of the inputthroughput-output model. Brands are taken by customers as chunks of information which are easily decoded (drawn meaning thereof) and . which would not have been occurred if the same product or service did not have the brand name”. A brand’s equity is valuable to customers because: i) It helps customers in information processing. and 3) The financial value. The value that a brand generates is not self-generated. “Brand equity creates value both for the marketer and the customer”.12. certain outcomes result from the marketing of a product or service because of its brand name. According to Aaker.3. The brand perception or image is the key driver of brand pull and push. Brand equity definitions more or less converge on some crucial points. It is monetization of these that is called financial worth or value that is added by the brand. There are similarities beneath apparent divergence in thoughts. A powerful brand symbolizes a loyal customer base. to be more precise. It is the consumer’s knowledge structure. different views guide what the brand equity exactly is. It is the fundamental core/block. and ‘demystify’ (clarify) the concept of brand equity. The advantages of brand equity direct academic and managerial attention to its measurement and management. All these are outcomes.12. For example. interpret. which can be explained as follows: 1) Value to Customers: Brand equity assets can enhance or decrease value for customers. 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. Brands strength lies in this intervening variable. However. A brand is useful in aiding customers in interpreting. The marketing literature is laden with works which explore. In the absence of a brand. It is this which leads to financial benefits and reduced costs. processing. 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. 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 2.1: Conceptualizing Brand Equity 1. At the most fundamental level. or the willingness to pay more for a brand. It simplifies this process.
Trade partners’ exhibit skepticism in dealing with a brand without equity because of the uncertainties it brings along with it. One feels more confident in purchasing a brand (imagine buying an unbranded product. Although useful perspectives concerning brand equity have been put forth. etc. the CBBE model provides a unique point of view as to what brand equity is and how it should be built. Brands can build equity occupying positions and attribute associations in a preemptive fashion. iii) Brand equity allows a firm to charge premium. That is. It can only be done once it is understood what drives brand equity. ii) A brand’s assets enhance customer confidence in the purchase decision.12. easy. a customer may willingly support a brand in spite of greater sacrifice that needs to be made. Brand equity is an implicit assurance of success. Two questions often arise regarding brands – ‘What makes a brand strong?’ and ‘How to build a strong brand?’ To answer these questions. For example. It happens because of familiarity with a brand. it may partially happen due to lack of brand loyalty and preference.4.3. 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. Brands transform customer experience. It provides guarantee of promised delivery. Similarly. Brand equity holds immense potential to create economic value for the markets. The brand associations and quality move the product beyond its ‘thingness’ boundary enveloping it with images that customers value and identify with. In fact. Once these become proprietary to a brand. iv) Brand equity provides great opportunities for growth. A firm benefits from the equity in the following ways: i) The effectiveness and efficiency of marketing programs is increased by brand equity assets. shelf space. and less costly. It considerably reduces chaos possibilities that may occur in the absence of branding. vi) Finally. RCI has grown into many product categories by relying on the brand equity of ‘Dettol’. launching of a new product with extension may be much simpler. A greater number of loyal customers in the basket automatically reduce the expenditures that need to be incurred in maintaining a customer base. This model incorporates theoretical advances and managerial practices in understanding and influencing consumer behavior. For example. 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. In fact. and managed. iii) The final value to the customer comes in the form of usage satisfaction. Keller’s Approach of Brand Equity Keller talked about customer-based brand equity as brand equity is seen from the perspective of the consumer. A brand blocks entry of rivals in a customer’s mind on the same turf. like tooth paste). channels welcome brands with equity and give access to point of purchase displays. Johnson & Johnson’s ‘Savlon’ is hardly able to compete in the market. brand equity is a provider of competitive advantage. The advantages listed above make compelling reasons in favor of creation. Brand stands for consistency and assurance. . v) Brand equity is a good source of achieving leverage in distribution channels. and enhancement of equity of a brand. Brand equity makes growth easier for the firms. The customers can exhibit preference and commitment to a brand only. For example. It is how the value is added. introduces the Customer-Based Brand Equity (CBBE) Model. It is easier to get access in the distribution chain when the brand has equity. most firms now rely on brand extensions to achieve growth rather than launch new brands. other brands are at a disadvantage. 1. 2) Value to Marketer: Brand equity also plays a critical role in enhancing value for the marketer. retaining a customer is much less costly than retention when a product is unbranded. Therefore.stored in a proper order (classification). brands with premium pricing are the ones which enjoy strong equity in the market. Familiarity creates confidence. For example. ‘Dettol’ has so strongly entrenched itself with ‘antiseptic’ that other competitors are just not able to make a dent in its market. measured. protection. It imposes barriers on the entry of competitors. satisfaction from drinking Nescafe is different from drinking an unbranded coffee.
images.12. 3) Consumer Response to Marketing: The differential response by consumers that makes-up the brand equity is reflected in perceptions. actions in response to a sales promotion. brand equity ultimately depends on what resides in the minds of consumers. Any type of information can be stored in the memory network. and opinions become linked to the brand. when the product is attributed to a fictitious name or is unnamed).The basic premise of the CBBE model is that the power of a brand lies in what customers have learned. and heard about the brand as a result of their experiences. 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. preferences.12. because it creates the differential effect that drives brand equity. 2) Brand Knowledge: These differences in response are a result of consumers’ knowledge and experience of the brand. would then be based on price. There are three ingredients to this definition: 1) Differential Effect: Brand equity arises from differences in consumer response. Competition. Consistent with the associative network memory model.g. brand knowledge is conceptualized here as consisting of a brand node in memory with a variety of associations linked to it. 1. 1. An influential model of memory developed by psychologists is helpful in that regard.13. or contextual in nature.3. “the power of a brand lies in what resides in the minds of customers”.6. Thus. most likely. although strongly influenced by the marketing activity of the firm. On the other hand..13: Brand Knowledge .” 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. What marketers need.g. including information that is verbal. visual. a brand with positive customer-based brand equity might result in consumers being more accepting of a brand extension. perceptions. recall of copy points from an ad. and behavior related to all aspects of the marketing (e. then. brand knowledge is the key to creating brand equity. If no differences occur. In particular. beliefs. Thus. then the brand name product is essentially a commodity. 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. is an insightful way to represent how brand knowledge exists in consumer memory. In other words. Aaker’s Approach of Brand Equity Brand Knowledge From the perspective of the CBBE model. “Customer-based brand equity is defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. or evaluations of a proposed brand extension). choice of a brand. 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. 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 6.3. abstract. brand knowledge can be characterized in terms of two components as shown in figure 6. felt.5. feelings.. seen. less sensitive to price increases and withdrawal of advertising support or more willing to seek the brand in a new distribution channel.
country. experiential (adventure. For example. all that matters is the resulting favorability. brand recognition may be more important because the product will be present. likelihood to buy the brand). The more deeply a person thinks about product information and relates it to existing . and by assumptions or inferences from the brand itself (e. etc. or wherever.g. Associations will vary in the strength of their connection to the brand node. and finally co-native component (behavioral or action-oriented. powerful. unique... etc. The all association discussed above are required to be favorable. 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. and strong in their nature.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. the needs fulfilled by the category or a purchase or usage situation as a cue. etc. or event. For example. water resist. The definition of customer-based brand equity does not distinguish between the source of brand associations and the manner in which they are formed. of that processing. For example. functions. brand associations can also be created in a variety of other ways: by direct experience. c) Attitude Association: Attitude is an important psychological construct. There are basically three types of brand associations as: a) Attribute Association: These descriptive features which are used to characterize a product or service.). of processing that information receives as well as the nature.). from information communicated about the brand from the firm or other sources (e. brand recall requires that consumers correctly generate the brand from memory when given a relevant cue. and quantity. if decisions are made in the shop.) and can be non-product-related (price. it is probably more important that the consumer be able to recall the brand from memory. brand recognition requires that consumers can correctly discriminate the brand as having been seen or heard before. Attitude has three component as cognitive (knowledge perception that a person has about a brand). brand recall is critical for service and online brands. user. e. when consumers go to a shop. on the other hand. symbolic (prestige. and uniqueness of brand associations. Attribute association can be product-related (safe. 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.g. humorous. 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. Benefit association can be functional (speeds faster. or quality. Besides marketer-controlled sources of information.g. thrill. This realization has important implications for building brand equity. and unique associations to the brand in memory. completeness.. packaging. It determines buying decisions. at home (when making a consumption choice). favorable. Outside the shop or in any situation where the brand is not present.). So. 2) Brand Image i) Brand Association: A positive brand image is created by marketing campaigns that link strong. part of selected group. affective (emotion and feelings that someone has towards a brand). b) Benefit Association: Consumer less interested in product attributes but more interested in its benefits. performance. magazine reviews or other media) and word-of-mouth. 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). consumers must seek the brand and therefore be able to retrieve it from memory when appropriate. etc. channel of distribution or some particular person. In other words. For this reason. Strength is a function of both the amount. strength. intension to behave in certain manner. its name or logo) or from the identification of the brand with a company. place. Benefit associations are suggestions as to what a product or service can do for them. usage etc).
may more easily create unique associations (e. Brand equity refers to a “set of assets and liabilities linked to a brand. efficient. effective.3. and so forth. In terms of desirability. brand equity provides (or negatively subtracts) values to a firm in the form of price premium.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 .brand knowledge.12. colorful..g. 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. and so on. Furthermore. 1. they may be based on product-related or non-product-related attributes or benefits. 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”. the stronger the resulting brand associations. Aaker’s Approach of Brand Equity To understand the dynamics of brand. In fact. Aaker provides a framework called equity. 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. the rugged Western image of Marlboro cigarettes). The brand’s assets can be categorized in five groups. Two factors facilitating such strength of association are the relevance of the information and the consistency with which this information is presented over time. trade leverage or competitive advantage. trademarks. reliable. 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. 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. In other words. such as user type or usage situation.7.14. in many categories. non-product-related attributes. iii) Favorability of Brand Associations: Favorable associations for a brand are those associations that are desirable to consumers and are successfully highly convenient. Aaker’s approach of brand equity is represented in figure 6. channel relationships. Aaker illustrates the influence of these factors on brand equity and its contribution to the customer and the manufacturer or owner firm. These differences may be communicated explicitly by making direct comparisons with competitors or may be highlighted implicitly.
“Brand equity may be defined as the enhancement in perceived utility and desirability that a brand name confers on a product. and execution over time. and markets. and Arrow guarantees ‘shirt engineering’ and perfection to the shirts it sells. take care to manage the integrity of the resulting brand identity. Modify the identity as needed for different market segments and products. including brand awareness. Five dimensions were identified by Lasser. 2) Value Proposition: Know the value proposition for each brand that has a driver role. and an identity is how you aspire to be perceived. These are as follows: .” Brands add perceived superiority by bringing in all that they stand for. Know how endorser brands will provide credibility. Beware when a brand is being used in a business where it is not the cornerstone.12. develop an identity and specify how that identity will be different in disparate product contexts. 8) Tracking Brand Equity: Track brand equity over time. and especially brand associations. 10) Invest in Brands: Continue investing in brands even when the financial goals are not being met.9. 1. Brandas-organization and brand-as-symbol. Aaker’s Guidelines for Building Strong Brands 1) Brand Identity: Have an identity for each brand. media. 5) Consistency over Time: Have as a goal a consistent identity. perceived quality. Consider the perspective of the brand-as-person. have a brand position that will provide clear guidance to those implementing a communication program. Maintain symbols. brand loyalty. imagery. Remember that an image is how you are perceived. and execution. Consider emotional and symbolic benefits as well as functional benefits. position. Relative Superiority Approach of Brand Equity Brand equity is the relative superiority of a brand over the others. Generate alternatives and consider options beyond media advertising. Have specific communication objectives. Brands bring alongwith them a set of associations. Know the strategic brands.3. Identify range brands and. 7) Brand Leverage: Extend brands and develop co-branding programs only if the brand identity will be both used and reinforced. Use sub-brands to clarify and modify. Mittal. 6) Brand System: Make sure the brands in the portfolio are consistent and synergistic. Understand the customer/brand relationship. and metaphors that work. 9) Brand Responsibility: Have someone in charge of the brand who will create the identity and positions and coordinate the execution over organizational units. Understand and resist organizational biases toward changing the identity. Have or develop silver bullets to help support brand identities and positions. Singer lends heritage and expertise to sewing machines. Know their roles. Recall that a position is the part of the identity that is actively communicated. Identify the core identity. the name Haldiram’s brings with it an assurance of quality and authenticity of taste to what are otherwise simple snacks. For example.3. position. Especially note areas where the brand identity and positioning and communication objectives are not reflected in the perceptions of the brand. and Sharma. 4) Execution: Execute the communication program so that it not only is on target with the identity and position but achieves brilliance and durability.12. It is the customer’s perception of the overall superiority of a product carrying that brand name compared with other brands. for each. If a brand is moved up or down.8.1. Exploit branded features and services. 3) Brand Position: For each brand. as well as the brand-as-product.
Brand Report Card Building and properly managing brand equity has become a priority for companies of all sizes. the feeling that the brand tries to elicit in customers (purposeful. 1. in implementing its value-pricing strategy for the Cascade automatic-dishwashing detergent brand. That is. it would always take care of a customer’s interests. and he saw an opportunity. now Starbucks chairman. But if pressed. For example. the strongest brands stay on the leading edge in the product arena and tweak their intangibles to fit the times. 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.1) Performance: This aspect of equity focuses on the operational aspect of the brand. Most have a good sense of one or two areas in which their brand may excel or may need help. casual. customers feel attached to the brand they use. “usage imagery” (the type of situations in which the brand is used). 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. together with the brand’s image. and many other tangible and intangible factors. 3) Pricing Strategy is Based on Consumers’ Perceptions of Value: The right blend of product quality. what is ratio between what is received and what is sacrificed? 4) Trustworthiness: It is the customer’s faith in the brand. it is not easy to keep in perspective all the parts that affect the whole. few managers are able to step back and assess their brand’s particular strengths and weaknesses objectively. The rewards of having a strong brand are clear. Customers identify with what a brand represents in terms of its symbolism and imagery. In 1983. the type of personality the brand portrays (sincere. and prices is very difficult to achieve but well worth the effort. was inspired by the romance and the sense of community he felt in Italian coffee bars and coffee houses. from strong brand equity flow customer loyalty and profits. 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. Many managers are woefully unaware of how price can and should relate to what customers think of a product. 2) Brand Stays Relevant: In strong brands. Brand identifications is based on its ability to strike a chord with what they are psychologically and what they want to be. design. brand equity is tied both to the actual quality of the product or service and to various intangible factors. warm). costs. Those intangibles include “user imagery” (the type of person who uses the brand). many (understandably) would find it difficult even to identify all of the factors they should be considering. rugged). and the type of relationship it seeks to build with its customers (committed. the service. a brand report card could be constructed. features. the whole is not even something that customers know or can say they want. Howard Schultz. Then while on vacation in Italy. In some cases. Without losing sight of their core strengths. On the basis of the attributes shared by the world’s topmost brands. The problem is. They enjoy their association with it. competent. in all types of industries. and they therefore charge too little or too much. Starbucks was a small Seattle-area coffee retailer. and the people behind the brand can be relied upon. For example. Sometimes.3. 5) Identification: It is identification of customers with the brand. create an attractive whole. Gillette pours millions of dollars into R&D to ensure that its razor blades are as technologically advanced as possible.12. For example. in all types of markets. Procter & Gamble made a cost-cutting change in its formulation that had an adverse effect on the . consider Starbucks .10. After all.It is not just a cup of coffee. When one is immersed in the day-to-day management of a brand. The culture grabbed him. A brand’s trustworthiness is based on beliefs that a brand would not compromise on quality. 2) Social Image: What is the social image of the brand? That is. exciting. seasonal).
a trading post for collectors of Coke memorabilia. 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. in the fiscal year after Procter & Gamble switched to EDLP (during which it also worked very hard to streamline operations and lower costs). These include media advertising (such as the global “Always Coca-Cola” campaign). 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. a brand is made-up of all the marketing elements that can be trademarked – logos. symbols.e. managers are able to make decisions regarding the brand with confidence. the company reported its highest profit margins in 21 years. or companywide. Lever Brothers quickly countered attacking Cascade’s core equity of producing “virtually spotless” dishes out of the dishwasher. 4) Brand is Properly Positioned: Brands that are well-positioned occupy particular niches in consumers’ minds. . i. which offers. attitudes. 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. and behaviors customers associate with their brand. 7) Brand makes Use of and Coordinates a Full Repertoire of Marketing Activities to Build Equity: At its most basic level. Procter & Gamble did successfully align its prices with consumer perceptions of its products’ value while maintaining acceptable profit levels. they create and maintain different brands for different market segments. promotions (e.g.). The corporate. and different brands within a company hold different powers. such as enhancing or reinforcing consumer awareness of the brand or its image and helping to protect the brand both competitively and legally. Calvin Klein and Harley-Davidson excel at providing compelling user and usage imagery while offering adequate or even strong performance. though. In fact. then it should also be clear whether any given action will dovetail nicely with the brand or create friction. which sells licensed Coke merchandise) and interactive media (the company’s website. among other things. all the different perceptions. For example. At the same time. By continuity. it can be dangerous to try to cover too much ground with one brand or to overlap two brands in the same portfolio. each brand should have its own boundaries. For example. games. By contrast. 6) Brand Portfolio and Hierarchy make Sense: Most companies do not have only one brand. Saturn and Nordstrom lead their respective packs in service and hold their own in quality.. They are similar to and different from competing brands in certain reliably identifiable ways. slogans. They also include direct response (the Coca-Cola catalog. brand acts as an umbrella. 8) Brand’s Managers Understand what the Brand Means to Consumers: Managers of strong brands appreciate the totality of their brand’s image. and sponsorship (its extensive involvement with the Olympics). P&G immediately returned to the brand’s old formulation. third brand name might nest one level below the family brand and appeal to boys or be used for one type of product. 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. For example.. Single product lines are often sold under different brand names. packaging. As a result. with its well-known shift to an “Everyday Low Pricing” (EDLP) strategy. signage. In response. the brand Coca Cola makes excellent use of many kinds of marketing activities.product’s performance under certain – albeit somewhat a typical – water conditions. whether created intentionally by the company or not. and a virtual look at the World of Coca-Cola museum in Atlanta). the Mercedes-Benz and Sony brands hold clear advantages in product superiority and match competitors’ level of service. beliefs. Managers of the strongest brands also appreciate the specific roles that different marketing activities can play in building brand equity. A second brand name under that umbrella might be targeted at the family market. and so on. Strong brands mix and match these elements to perform a number of brand-related functions. If it is clear what customers like and do not like about a brand and what core associations are linked to the brand. the recent effort focused on the return of the popular contour bottle. The lesson to P&G and others is that value pricing should not be adopted at the expense of essential brand-building activities.
and other proprietary assets. An overwhelming focus on future sales can become a distraction for brands. Other proprietary assets such as patents. 10) Company Monitors Sources of Brand Equity: Strong brands generally make good and frequent use of indepth brand audits and ongoing brand-tracking studies. Too often. Power and Associates Satisfaction Research. however.D. Awareness’s without differentiation produces well-known commodity brand names that can become marginally profit-able. set as a priority to be perceived first and foremost as a “friend” to the consumers. favorable. icons. 4) Brand Loyalty: The most often forgotten driver in building brand equity is brand loyalty.2. It is critical for managers holding the reins of a brand portfolio to get a clear picture of the products and services being offered and how they are being marketed and branded. 1. Brand audits are particularly useful when they are scheduled on a periodic basis.9) Brand is given Proper Support and that Support is Sustained Over the Long-Run: Brand equity must be carefully constructed. and especially other Figure 2.11. however. “you can tell a person by the company she keeps” applies here. 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. On any given day.2 brands. 3) Brand Associations: Organizations are discovering the benefits of Perceived Quality Name Awareness Other Proprietary Assets associating their brand with other images. trademarks. a brand will likely have customers in each of the four primary loyalty segments outlined in figure 2. It is also important to see how that same picture looks to customers.. Nike with Michael Jordan. 5) Other Proprietary Assets: One of the common misperceptions is that the way to build loyalty is to focus on future sales. through focus groups and other consumer research. The old saying. relatively undifferentiated among brand choices) and characterized by lack of outstanding service or quality.2. Brand associations can be very helpful to consumers in their processing of information about a brand. because they are buying their way to loyalty through what might be referred to as brand bribery.12.e. McDonald’s with Disney. In Managing Brand Equity. and unique attributes can be very helpful as well when consumers must sift through the clutter of choices that exists in today’s marketplace. How does a brand create absolute loyalty? The key is to exceed customers’ expectations and pleasantly surprise them whenever possible. Genuine brands. Typically. as evidenced by the tremendous attention given to the Baldrige Awards for quality management and the J. Frequent flyer and customer loyalty programs are tools some brands utilize in an attempt to lock customers into future purchases. Many brands in these industries have . Brand bribery exists when a particular industry becomes perceived as a commodity (i. Regardless of how one chooses to rate perceived quality.3. Customers can be characterized by a variety of loyalty descriptions. These are the drivers of brand equity. and Intel uses a distinctive audible tone to help consumers relate to their brands’ products and services. brand associations. name awareness. David Aaker summarizes them well as perceived quality. There is nothing like a satisfied customer to tell a brand’s story and influence others. it consists of a detailed internal description of exactly how the brand has been marketed (called a “brand inventory”) and a thorough external investigation. 1) Perceived Quality: There is no question that perceived quality is essential. Two prime examples are large domestic airlines and supermarket chains. the more differentiated the better. and unique associations with the brand in their memory. exhibit little loyalty. A brand audit is an exercise designed to assess the health of a given brand. ultimately it is only as good as the consumer perceives it. Starbucks associated with Marriott. 2) Name Awareness: or familiarity is also a driver of overall brand Brand Drivers Brand Associations Brand Equity Brand Loyalty equity. of exactly what the brand does and could mean to consumers (called a “brand exploratory”). and become vulnerable to extinction. A firm foundation for brand equity requires that consumers have the proper depth and breadth of awareness and strong. and they are outlined in figure 2. brand loyalty. Drivers of Brand Equity There are many ways for a brand to communicate its benefits.
Dettol soap and shampoo. Proper market research allows the company to launch a right brand for the right segment. but it should not be the only reason customers return.12.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. John’s wort. such as St. 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. Lux soap and shampoo. It is endowed with awareness. For example. 1. Brand Leverage A brand is a very prominent asset owned by an organization. and brand loyalty. Regarding supermarkets. LG monitors and mobiles. 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. 5) Customer Opinion: Always look for customer opinion because they know the best and worst about the product. Insurance companies are all too eager to learn who’s purchasing which medications.13. privacy concerns can also become a concern for consumers. alcoholic beverages.3.2: Secondary Sources of Brand Knowledge . It is one of the way to build brand equity is. or changes in the rules.12. Promotion and personal relation increase brand equity. The customer purchasing the product always willing to get more than the value he paid for the product. 3) Marketing Mix: The proper use of marketing mix adds value in the brand marketing. associations. Rewarding customer loyalty is a wonderful strategy. Procter and Gamble ask for the customer idea for their product through their customer portal. An organization can leverage brand to grow bigger and better.2): Ingredients Company Alliances Extensions Employees Other Brands Country of Origin People Brand Places Endorsers Things Third-Party Endorsements Causes Channels Events Figure 4. 1. bring some new products and services under the umbrella of same brand name. Brand bribery can backfire if customers feel that the “deal” may not really be a bargain or that the process is a hassle.3. That is. perceived quality. fine print. 2) Quality: New product must incorporate quality ingredient because first impression is the last impression. Consumers become very unhappy when they can’t use their benefits (such as free airline tickets or coupons) because of restrictions. create brand equity by linking the brand to other information in memory that conveys meaning to consumers (see figure 4. in effect. 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. Organization should take care of the customer to maintain the value of brand in the marketplace. For example. and over-the-counter vitamins or health supplements. 4) Brand Extension: To polish the brand. to “borrow” it.
and its profits. 6) Burton could secure and publicize favorable ratings from third-party sources such as Surfer or Surfing magazine. For example. as well as to other brands (through ingredient or cobranding).1 per cent. or it could sponsor a surfing competition or even the entire Association of Surfing Professionals (ASP) World Tour. 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. 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. calling it “Dominator by Burton”. sporting or cultural events (through sponsorship). 2) Burton could rely on its rural New England origins. or any other aspects of the marketing program. 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. used its brand name to move into the liquid soap and shampoo market. Research conducted by McKinsey on the connection between brand strength and corporate performance on around 130 consumer companies. Companies generally try to leverage on the brand equity of established brands for other new products. 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. but such a geographical location would seem to have little relevance to surfing. clothing. Marketers resort to this method so that consumers will perceive the new brand as having some of the characteristics of the existing brand. independent of the associations created by the surfboard itself. as they are aware that a strong brand always improves the value to its shareholders. assume Burton – makers of snowboards as well as ski boots. and to channels of distribution (through channel strategy). its brand name. and outerwear – decided to introduce a new surfboard called “The Dominator”. found that strong brands on an average generated Total Returns to Shareholders (TRS) of 1. The fairness cream market in India is growing enormously at the rate of 25% per annum compared to the overall . Burton could build equity by linking the brand to these other entities.9 per cent above the industry average while weaker brands stayed behind the industry average by 3.These “secondary” brand associations can link the brand to sources. There are countless such examples where companies use their existing brands to enter new product opportunities. For example. Companies always focus on leveraging on brand value for new products and further improving the value of already existing products. spokespeople (through endorsements). Godrej’s Fairglow soap brand was extended to its fairness cream. In creating the marketing program to support the new Dominator surfboard. 3) Burton could also sell through popular surf shops in the hope that its credibility would “rub-off” on the Dominator brand. to countries or other geographical regions (through identification of product origin). such as the company itself (through branding strategies). Kingfisher’s brand name was used by the UB Group to enter the airline business. or some other third-party sources (through awards or reviews). characters (through licensing). Leveraging is capitalizing on the existing brand name to move into other product opportunities. 5) Burton could find one or more top professional surfers to endorse the surfboard. Thus. Lux.
Three main branding options exist for a new product: i) Create a new brand. Subsequently. however. 1. the country or geographic location from which it is seen as originating may also become linked to the brand and generate secondary associations. To the extent that the brand is linked to another existing brand. as with options 2 and 3. 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. symbols. a consumer from anywhere in the world may choose to wear Italian suits. listen to a Japanese compact disc player. the world is becoming a “cultural bazaar” where consumers can pick and choose brands originating in different countries based on their beliefs about the quality of certain types of products from certain countries or the image that these brands or products communicate. As noted by many.14. 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. Nokia 8290 digital phone) and may involve names. HLL later leveraged on the brand equity of Fair & Lovely cream and introduced Fair & Lovely fairness soap in March 2001.. Nokia) or a specific product brand (e. .. which became a huge success. and so forth. Cultural. many players entered the fairness cream market. Leveraging a co-ordination brand may not always be useful. logos.3. then knowledge about the other brand may also become linked to the brand. 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. Thus. 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. 2) Country of Origin and other Geographic Areas: Besides the company that makes the product. iii) Combine an existing and new brand.g. a co-ordination or family brand can be a source of much brand equity. In particular. exercise in American athletic shoes. or Other Events Third-Party Sources Country of Origin and other Geographic Areas 1) Company: The branding strategies adopted by the company that makes a product or offers a service are an important determinant of the strength of association from the brand to the company and any other existing brands. Existing brands may be related to the co-ordination brand (e. depending on the awareness and image involved. drive a German car. Godrej introduced Fair Glow soap and later leveraged on the brand equity of the soap to introduce Fair Glow cream. or drink English beer. Many countries have become known for expertise in certain product categories or for conveying a particular type of image.cosmetic market growth rate of just 15% per annum. In 2000.g. Thus. ii) Adopt or modify an existing brand.
. This process accelerated as movies and later television became a staple of American business. The advantages are that both brands can benefit from the symbiotic effects of combining two strong brands. quality of service. A prerequisite for this strategy is that the ingredient has to be of essential. many desktop manufacturers use the ‘Intel Inside’ mark along with their brand names to benefit from the image of Intel chips. Trademark licensing has a rich history in American business. Burger King t-shirts and even ghastly Good Humor Halloween costumes became commonplace. iii) Complementary branding involves the marketing of two brands together to encourage co- consumption or co-purchases. Both are leaders in their segments and have now come together to enhance their market share with their combined efforts. 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. for an agreed period of time. pricing and credit policy. Pepsi. Licensing is used by brand owners to extend a trademark or character onto products of a completely different nature. When they use the Citibank credit card to book a Jet Airways ticket. in its outlets and ensures more exposure and visibility to Coke. ii) Co-operative branding is the joint venture of two or more brands to form a new product or service. Breyers yogurt. the means by which they sell them. as the name suggests. Each helps the other in improving the awareness of the other brand. as companies realized they could make real dollars renting out their equity to manufacturers. TGI Friday's frozen appetizers. 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. a basic ingredient of the product is mentioned next to the actual products name. retailers have their own brand images in consumers’ minds. companies were willing to pay a royalty on net sales of their products to rent the product of an established brand name. Retail stores can indirectly affect the brand equity of the products they sell by influencing the nature of associations that are inferred about these products on the basis of the associations linked to the retail stores in the minds of consumers. both in the area of patents and trademarks.3) Channels of Distribution: Channels of distribution can directly affect the equity of the brands they sell by the supporting actions that they take. United. Brand extensions later made the brand licensing marketplace much more lucrative. this strategy also leads to improving the brand image and should motivate customers to become loyal to these brands. To more directly shape their image. Customers also gain by using the facility. and consumer products with the lovable rodent's likeness on them. Moreover. and so on. Mickey Mouse's popularity in the 1930s and 1940s resulted in an explosion of toys. none of which were manufactured by the Walt Disney Company. they accumulate credit points. 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. many retailers aggressively advertise and promote directly to customers. The rise of brand licensing did not begin until much later. 4) Co-Branding: In co-branding strategy. books. None of these companies can individually make a dent in the market. Dodge power tools. comics and later television. and so forth. they stand tall in the market. yes. A very good example is Jet Airways-Citibank Credit Cards. differentiating and high quality. Brand licensing is well-established business. Co-branding can take three forms: i) Ingredient Branding: In this form. 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. within an agreed territory. largely beginning with the rise of mass entertainment such as the movies. McDonald’s thus restricts the availability of Coca-Cola’s rival. Apart from offering discounts. Retailers create these associations through the products and brands they stock. such as a bottle of Coke with McDonald’s burgers. McDonalds play food. where both brands are well established in their respective segments. For example. costs such as advertising and communications can be shared. Because of associations to product assortment. when corporations found that consumers would actually pay money for products with the logos of their favorite brands on them. which can be exchanged later for some other service benefits like discounts in the value of tickets or gifts.
P. . Cultural. received. Employees might feel proud of having the celebrity endorsing their company. The main means by which an event can transfer associations is on the basis of various dimensions of credibility. Different people perceive the universe differently. tasting. People might talk about the celebrity but that rarely translates into much for the brand. The PR attention generated by a celebrity does not build your brand. organized and interpreted to make it meaningful to us. 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. Using a celebrity is also not a replacement for brand PR. Perception is the process through which the information from outside environment is selected. smell. But the only thing that builds a brand in the mind of the consumer is PR and word-of-mouth generated by an idea. There is just no believability that Tiger is dying to drive a Buick.g. “Perception may be defined as a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment”.4. American Dental Association). A brand may seem more likable or perhaps even trustworthy or expert by virtue of becoming linked to an event. CONSUMER PERCEPTION 1. According to Joseph Reitz. “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”. film critic Roger Ebert) can obviously improve perceptions of and attitudes toward brands. hearing. Consumers might be more apt to watch your ad if it has a celebrity. The $40 million General Motors reportedly paid Tiger for his 5-year contract ending in 2009 is not money well spent.4.. Robbins. According to S. 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). and experts (e.g. 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 too many times brands use the wrong celebrities. Tiger Woods endorsing the Buick brand makes no sense at all.g. Third-party sources can also have an effect at a more local level. “Perception includes all those processes by which an individual receives information about his environment – seeing. 7) Sporting. Customers might be more apt to participate in events when a celebrity involved. Celebrities are most helpful because they can star in advertising campaigns and participate in company events. Endorsements from leading magazines (e.. The bottom line is that the only thing that makes a brand successful is owning a word in the mind. PC magazine). and smelling”.1. Having a celebrity endorse your brand can be helpful for a well-known brand in need of maintaining attention for its brand and category.. A celebrity is not a replacement for an idea. 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. Too many companies use a celebrity in an attempt to establish credibility with consumers. and without believability a celebrity endorsement is worthless. Meaning and Definition of Perception Human beings are constantly attacked by numerous sensory stimulations including noise. organizations (e. 1. taste etc. or Other Events: Events have their own set of associations that may become linked to a sponsoring brand under certain conditions. For example.6) Celebrity Endorsement: Celebrity endorsements remain a popular tool for marketers. feeling. sight. 8) Third-Party Sources: Finally.
touch of the product and people. Stimuli Overt Environment Physical. people's actions. Recognizing these stimuli takes place only after paying attention to them. organizes it. i. Perception is a two-phase activity.4.3.. These senses are influenced by a larger number of stimuli which may be action. the eyes. The physical senses used by people are vision. hearing. information. The stimulation coming to these organs may be through action. The perception starts with the awareness of these stimuli. touch. These messages are then translated into action and behavior.1. Some of the stimuli are reacted to while others are ignored without being paid any attention. taste. Knowledge and behavior depend on senses and their stimulation. tongue and skin..15: Components of Perception 1) Stimuli: The receipt of information is the stimulus which results in sensation. ears. receiving stimuli and translating the stimuli into action. Thus. the employees try to recognize whether the stimuli are worth realizing. sensory and neural mechanisms are affected and the message receiver becomes involved in understanding the stimuli.e. consideration and feelings. how they organize this information. 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.4. Intuitions and hunches are known as the sixth sense. 2) Attention: Stimuli are selectively attended to by people. viz. and the manner in which they interpret it to obtain the understanding of the situation. oral communication. etc. The messages or incoming stimuli are recognized before they are transmitted into behavior. nose. Components of Perception Perception is a process of sensory organs. The mind gets information through the five sense organs. The manner in which a person perceives the environment affects his behavior.2. and obtains meaning from it. smell and taste. 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. . or feelings are triggered by the perception of their surroundings. 2) Cognitive or Psychological Process: Perception is a basic cognitive or psychological process. emotions. During the attention process. 1. 3) Recognition: After paying attention to the stimuli. written messages. However. The stimuli that are paid attention depend purely on the people’s selection capacity and the intensity of stimuli. odor. Taking employees to the attention stage is essential in an organization for making them behave in a systematic and required order. 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. thoughts.
differential threshold. 7) Satisfaction: High performance gives more satisfaction. absolute threshold. 5) Behavior: Behavior is the outcome of the cognitive process. In the above example. For example. Factors influencing the selective process may be external as well as internal. If the performance is more than the expectation. Several stimuli are observed everyday by individuals. the stimuli must be recognized by the individual. The evaluation process is translation. i. They confront these stimuli.noticeable-difference 4) Subliminal Perception 1) Sensation When a person is exposed to any of the marketing stimuli or an ad. interpret them and behave according to their background and understanding. people are delighted. . The perception process is purely mental before it is converted into action. For example.. However. Specifically.before the stage of translation. The level of satisfaction is calculated with the difference in performance and expectation. The conversion is translation. And perception is how person understand a sensation and co-relate it with his needs and personality. when a person come across a beautiful ad of a Mercedes Benz ‘E-class’ on the center spread of a magazine.4.e. Marketing Implications Fast music. It is an overt and covert response. The type of music being played in a retail outlet can have an interesting effect on shopping behavior. social systems and characteristics of the perceiver. As person enter a bakery. It is a response to change in sensory inputs. may smell the mouth-watering aroma of freshly baked cakes. a fast tempo creates a more rapid traffic flow. a fast tempo is more desirable in restaurants because consumers will eat faster. The behavior of employees depends on perception which is visible in the form of action. 6) Performance: Proper behavior leads to higher performance. organizational structure. He has immediately translated the stimulus into an appropriate action. but when performance is equal to expectation. tends to energize. They not only try to leave a mark on the consumer’s mind. 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). The recognition process is dependent on mental acceptability. 1. and subliminal perception. reaction or other behavior. 4) Translation: The stimuli are evaluated before being converted into action or behavior. stimuli. High performers become a source of stimuli and motivation to other employees. We can feel the energy in the pulsating music played at a disco. Employees confronted with stimuli select only a few stimuli of their choice and leave other stimuli unattended and unrecognized. like that played at aerobics classes. Elements of Perception The elements of perception are sensation. The behavioral termination of perception may be overt or covert. in contrast. These are discussed in the following sections: 1) Sensation 2) Absolute Threshold 3) Just. notice and register them in their minds. 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. it results in satisfaction. their first reaction will probably be one of admiration. How one responds to a stimulus received by any of the five senses is called sensation. the thundering light in the Rin detergent ad may lead the consumer to expect that kind of cleaning for his clothes. A performance-reward relationship is established to motivate people. they also try to provide him with cues to perceive the product in a specific way. the car driver after recognizing the stimuli uses the clutch and brake to stop the car. Marketers try to advertise their products in such a way that they will appeal to the consumer’s senses. slow music can be soothing. the first reflex that is initiated in him is known as sensation.4.
53 CB by Majumdar] Application of Just.14. the price of a 100gram pack of Lux toilet soap is raised to `21 from `18. the absolute threshold is the amount of intensity needed to detect a difference between something and nothing. So only when the price is changed by `10. Music can also affect moods. A nineteenth-century German scientist named Ernst Weber discovered that the JND between two stimuli was not an absolute amount. larger size.e. Page no. Marketers use the concept of JND for product pricing. For Example. packaging.000 or more. the company decreased its sales revenue. Weber’s law. each version with a shine that lasts longer than .thereby allowing greater turnover and higher sales. 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. Thus if images or words in a commercial are too small or the sound level is too low. but an amount relative to the intensity of the first stimulus.noticeable-difference The minimal difference that can be detected between two similar stimuli is called the differential threshold. and ii) So that product improvements (e. 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. ii) Hindustan Unilever increases the price of a 1. The absolute threshold is that point at which you can first see the billboard.. 3) Just. Before that point. 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.000. some years ago. consumers’ sensory receptors will not be activated and the stimulus will not be consciously perceived. reductions in product size or quality.5kg package of Surf Excel Blue detergent from `110 to `120 or.. A better strategy would have been to introduce several successive versions of the polish. By doing so. 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. improved or updated packaging. and promotion decisions.e.g. Just. the greater the additional intensity needed for the second stimulus to be perceived as different. the consumers will notice the price change. or increases in product price) are not readily discernible to the public (i. as it has come to be known.. say..noticeable-difference to Consumer Behavior Book Matter [Book Code: 22. remain below the JND). Suppose you are driving on the highway and a billboard is in the distance. states that the stronger the initial stimulus.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. According to Weber’s law. Consumers here may perceive these as a significant change in the prices of these two brands. they are at or just above the JND). the billboard is below the absolute threshold and not sufficiently intense to be seen. Likeable and familiar music can induce good moods.g. In other words. i) JND for a car model may exist at a level of `10. or the Just Noticeable Difference (the JND). or lower price) are very apparent to consumers without being wastefully extravagant (i. For example.
It can be thought . Also. ii) Self-concept: The way a person views the world depends a great deal on the self-concept or image he has about himself. Less than the JND is wasted effort because the improvement will not be perceived. less than the JND is desirable because consumers are unlikely to notice it.. lose weight. With subliminal perception attention is directed squarely at the stimulus. 1.e.the previous version (and at or slightly above the JND) and offered at a higher price (but a price.. the person can easily see it. lower than the JND). the General Mills symbol. the reductions in quantity were below most consumers’ JND for these products. more than the JND is wasteful because it reduces the level of repeat sales. They usually make a number of small changes. increasing the per unit price. For example. marketers very much want to meet or exceed the consumer’s differential threshold. presented below the threshold level of awareness. Similarly people with different needs select different items to remember or respond to. i. and feel more relaxed. A number of factors operate to shape and sometimes distort perception. 4) Subliminal Perception The concept of the perceptual threshold is important for another phenomenon – subliminal perception.29). With pre-attentive processing attention is directed at something other than the stimulus. subliminal stimuli are presented so quickly or are so degraded that the very act of perceiving them is difficult.5 ounces (and maintained the price at $3. The manufacturer of Huggies reduced the number of diapers in a package from 240 to 228 (and continued pricing it at $31. However.99). so that consumers will perceive minimal difference between succeeding versions. when it comes to price increases. These factors include: 1) Characteristics of the Perceiver (Internal Factors) i) Needs and Motives: People’s perception is determined by their inner needs. Marketing Implications The question of whether stimuli presented subliminally affect consumers’ responses has generated considerable controversy in the marketing field.e. Suppose a person sitting at a movie and is exposed to messages like “Eat popcorn” and “Drink Coke”. A need is a feeling of tension or discomfort when one thinks he is missing something or requires something. In contrast. each message is shown on the screen for only a fraction of a second. at a magazine article instead of an ad in person’s peripheral vision. i. so short a time that you are not consciously aware of them.4. Subliminal perception is different from pre-attentive processing. This perception is perhaps fostered by the availability of self-help tapes with subliminal messages that claim to help consumers stop smoking. 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”. they want consumers to readily perceive any improvements made in the original product. On the other hand. but perceive it differently. The self-concept plays an important role in perceptual selectivity.g. When it comes to product improvements. Although advertising agencies deny using such stimuli. and the original popcorn-Coke study has been discredited. e. Reportedly. has been updated seven times from 1936 to 1996. and our perception of them is called subliminal perception.5 ounces to 13. in effect. subliminal exposure to these messages influenced viewers’ purchase of Coke and popcorn. Marketers often want to update their existing package designs without losing the ready recognition of consumers. PepsiCo reduced the weight of one snack food bag from 14. while leaving the prices unchanged – thus. Stimuli like these. each carefully designed to fall below the JND. with pre-attentive processing the stimulus is fully present – if a person shift attention and look directly at the ad or billboard. These people also believe that ads containing these stimuli are effective. some people claim that marketers are brainwashing consumers and attempting to manipulate them..5. Marketers decrease the product quantity included in the packages. People with different needs usually experience different stimuli. are called subliminal messages. Betty Crocker. Factors Influencing Perception Individuals may look at the same thing.
iv) Status: Perception is also influenced by the status of the perceiver. Thus. the more likely it will be noticed. High status people can exert greater influence on perception of an employee than low status people. vi) Expectations: Expectations affect what a person perceives. The individual normally censors stimulus inputs to avoid disturbance of his existing beliefs. Repetition increases our sensitivity and alertness to the stimulus. The contrast principle states that external stimuli that stand out against the background or which are not what are expected will receive better attention. the higher is the probability that it is perceived. ii) Intensity: High intensity increases the chances of selection. iv) Past Experience: A person's past experiences mould the way he perceives the current situation. expectations affect people’s perception. iii) Beliefs: A person’s beliefs have profound influence on his perception. light. A contrasting effect can be caused by color/size or any other factor that is unusual. If a person has been betrayed by a couple of friends in the past. Thus.16: Factors that Influence Perception 2) Characteristics of the Target or Perceived (External Factors) i) Size: The bigger the size of the perceived stimulus. greater the frequency with which a sensory stimulus is presented. 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. a technical manager may expect ignorance about the technical feature of a product from the non-technical people. the greater the chances we select it for attention. v) Current Psychological State: The emotional and psychological states of an individual are likely to influence how things are perceived. Expectations are related with the state of anticipation of particular behavior from a person. he is likely to perceive the same situation differently than if he is elated. heat. It establishes dominance and enhances perceptual selection. The greater the intensity of stimulus. a fact is conceived not on what it is but what a person believes it to be.of as an internal form of attention-getting and is largely based on the individual's complex psychological make-up. iii) Frequency: Repeated external stimulus is more attention-attracting than a single time. if sentences are underlined. it gets more attention than in normal case. as can location. Size attracts the attention of an individual. Elements in the surrounding environment influence our perception. If the message is bright. v) Contrast: Stimuli that contrast with the surrounding environment are more likely to be attention catching than the stimuli that blend in. The time at which an object or event is seen can influence attention. In the organizational setting. 3) Characteristics of the Situation: The context in which we see objects or events is important. Thus. If a person is depressed. . he would tend to distrust any new friendship that he might be in the process of developing. or any number of situational factors.
buying etc. Internal or Personal Factors in Perceptual Selection The internal factors relate to the perceiver and include such factors as learning and motivation. This explains why no two people see the world in precisely the same way. expectations. and they interpret such stimuli (they give meaning to them) subjectively in accordance with their personal needs. and expectations. However. intensive stimulation “bounces off” most individuals. people select only some. 2) Sensory Adaptation: Second process known as. very personal picture of the world. because perception is not a function of sensory input alone. and experiences. 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.4. The aspects of perception – the selection. These factors are self concept. “sensory adaptation” relates to human being ability to tune out certain stimuli to which he has been continuously exposed. and interpretation of stimuli are: 1. The sensory world is made up of an almost infinite number of discrete sensations that are constantly and subtly changing. 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. inner needs. who subconsciously block (adapt to) a heavy bombardment of stimuli. response salience and perceptual defense as given below: . motives. 1. This selectivity is enhanced by two related processes. neither of these consequences tends to occur.1. For example.6.2. Individuals are very selective as to which stimuli they “recognize”. Thus many objects or stimuli are stopped from entering our perceptual system by the above two processes. the other type of input is provided by individuals themselves in the form of certain pre-dispositions (expectations. values and needs. Out of all these stimuli.6. Various external and internal factors influence our process of stimuli selection. expectations.4. 1) Sensory Activation: First process known as.1. Perceptual Selection There are a variety and a multitude of stimuli confronting us everyday affecting all our senses. desires. Without this ability of selection. One type of input is physical stimuli from the outside environment.1.There are lot of stimuli in the environment to which different meanings are given. According to the principles of sensation. response disposition. 1. Rather. it follows that each individual’s perceptions are also unique. they subconsciously organize the stimuli they do recognize according to widely held psychological principles. Perceptual Inputs and Perceptual Mechanism Human beings are constantly bombarded with stimuli during every minute and every hour of everyday.4. Because each person is a unique individual. Otherwise. The combination of these two very different kinds of inputs produces for each human being a very private. the billions of different stimuli to which human being are constantly exposed might serve to confuse and keep perpetually disoriented in a constantly changing environment.6. Process of Perception An individual perceive things differently with respect to other individual . with unique experiences. and learning) based on previous experience.6. 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. These stimuli are the input given to start with the process of perception. All the remaining stimuli must compete for attention. wants. “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. perception is the result of two different kinds of inputs that interact to form the personal pictures – the perceptions – that each individual experiences. beliefs.4. a new home owner near an airport might be excessively bothered by the noise.1.2. bright or loud enough to activate our senses. organization. The mechanism involves selection. needs.
or dim light. It can be thought of as an internal form of attention-getting and is largely based on the individual’s complex psychological makeup. Such expectations may affect the perception. a warning sign in a plant. intensity.1. a basketball player. a fact is conceived not on what it is but what a person believes it to be. Though such expectations may change because of direct contact. a person will perceive the things with which he is familiar. the more likely it is to be perceived. weak odor. but by the person’s own cognitive predispositions. 1. For example. the more likely that it will be noticed. 3) Contrast: If an object in some way contrasts with its surroundings. strong odor or bright light is noticed more as compared to a soft sound. advertising companies use large billboards and signs that capture the perceiver’s attention. Even in the organizational setting. They select only that aspects which they find match with their characteristics. People’s own characteristics affect the characteristics which they are likely to see in others. novelty and familiarity. commercials on televisions are slightly louder than the regular programmes. 4) Inner Needs: People’s perception is determined by their inner needs. They are trained to look at the situation from one point of view only.2. a technical manager may expect ignorance about the technical features of a product from non-technical people. 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. People with different needs usually experience different stimuli. or union officials use rough language. 2) Beliefs: A person’s beliefs have profound influence on his perception. Conversely. Some of these external factors are size. For example. it is more noticeable. 7) Perceptual Defense: Perception defense refers to the screening of those elements which create conflict and threatening situation in people.6. based on the intensity principle. The individual normally censors stimulus inputs to avoid disturbance of his existing beliefs. Thus. motion and order as given below: 1) Size: The larger the size of the object. This concept plays an internal role in perceptual selectivity. repetition. The reason for this phenomenon lies in the background of the people for which they are trained. Thus. This factor is shown below: 2) Intensity: The intensity principle of attention states that the more intense the external stimulus is.2.4. It indicates that type of response salience which people have affects their perception. External Factors in Perceptual Selection External factors relate to the characteristics of objects or people that activate our senses and thus get our attention. contrast. We are most likely to notice things that stand out because of their size relative to other things in that area. Thus. Thus. 3) Expectations: Expectations affect what a person perceives. expectations and values filters perception and may be lasting and difficult to change. Expectations are related with the state of anticipation of a particular behavior from a person. This is referred to as ‘maintenance of cognitive consistency’. not from other points of view. A loud sound. and human relations problem by personnel people. For example. such as “DANGER” written in . Similarly. expectations affect people’s perception. people with different needs select different items to remember or respond to. For this reason. 6) Response Salience: Response salience is the set of dispositions which are determined not by the familiarity of the stimulus situations. a control problem by accounting people. The need is a feeling of tension or discomfort when one thinks he is missing something or when he feels he has not quite closed a gap in his knowledge. more than seven feet tall will stand out in a crowd. They may even perceive other factors to be present that are not a part of the stimulus situation. Knowing oneself makes it easier to see others accurately. a particular problem in an organization may be viewed as a marketing problem by marketing personnel. we also become aware of the objects that are smaller in size than their surroundings.1) Self-Concept: The way a person views the world depends a great deal on the concept or image he has about himself.
For example. M M M B M P M M G M M M M M M M M M A O 5) Novelty and Familiarity: Novelty and familiarity principle states that either a novel or a familiar external situation can serve as attention-getter. New objects or events in a familiar setting. thus making the other pieces of information less significant. Some of the factors underlying his grouping are: i) Similarity: The principle of similarity states that the greater the similarity of the stimuli. In the following illustration. the shaded square would be noticed first because of its contrast with other squares. communication in familiar jargons attracts more attention. You do not try to understand what the white spaces in the middle of black letters could mean. For example. receives the most attention. repetition increases our sensitivity or alertness to the stimulus”. Sometimes.4. A manager who interviews twenty women and one man for a job would remember the man first because of contrast.4. Perceptual Organisation Perceptual Organization emphasizes on the subsequent activities that take place in the perceptual process after a stimulus is received.black against a yellow background would be noticed more quickly because of the contrast factor. in job rotation. if we perceive objects or people with similar characteristics.6. a writer of a communication may intentionally build up to a major point by proceeding through several smaller and less important points. Marketing managers and advertisers use this principle in order to get the customers’ attention. you see white as the background and black as the letters or words to be read. the most important piece is left to the end in order to heighten the curiosity and perceptive attention. 7) Order: The order in which the objects or stimuli are presented is an important factor influencing selective attention. 6) Motion: Motion principle states that a moving object draws more attention as compared to a stationary object. 1. stimuli and identifiable whole objects.1. the greater the tendency to perceive them as a common group.3. 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. Sometimes. Instead he perceives organized patterns. A person rarely perceives the extent of color. 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. The principle of similarity is exemplified when objects of similar shape. For example. as you read this page. they become more attentive to their new jobs as compared to the previous ones. or familiar objects or events in new setting draw better attention. Work instructions that are repeated tend to be received better. Similarly. For example. 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. when workers’ jobs are changed from time to time.6. For instance. For example. commercials on televisions (moving ones) get more attention than print media. Advertisers use this principle in their advertising by designing signs which incorporate moving parts. light or sound associated with objects. 2) Perceptual Grouping: Grouping is the tendency to curb individual stimuli into meaningful patterns. the letter M will be more often remembered than other letters. the first piece of information among many pieces received.3. “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. Factors Affecting Perceptual Organization 1) Figure and Ground: Figure-Ground principle is generally considered to be the most basic form of perceptual organization. if all visitors to a plant . size or color tend to be grouped together. For example. In the following diagram. 4) Repetition: A repeated message is more likely to be perceived than a single message. In addition. According to Morgan and King. 1.
even when some parts of the object are missing. the world would be very chaotic and disorganized for the individual. This principle permits the individuals to have some constancy or stability in a tremendously variable and highly complex world. The ten squares in the figure are seen as pairs of two. three. then even. For example. sincere. several people working on a machine will be considered as a single group so that if the productivity on that particular machine is low. Closure supplies missing stimuli. Only the obvious patterns or relationships will be perceived. a hard worker. then the entire group will be considered responsible even though. the top of a glass bottle is seen as circular whether we view it from the side or from the top. iv) Continuity: Continuity is closely related to closure. 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. 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. whereas the continuity principle says that a person will tend to perceive continuous lines of pattern. on the whole.are required to wear white hats while the supervisors wear blue hats. if a manger perceives a worker. The following figure demonstrates the proximity principle. 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 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. the manager will tend to ignore it. 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. For example. Because of this type of perception.g. because it does not fit with the overall impression. If constancy were not at work. only some people in the group may be inefficient. if he behaves in a contradictory way sometimes (which is a kind of a gap. For example. . The continuity may lead to inflexible or non creative thinking on the part of the organizational participants. the workers can identify all the white hats as the group of visitors. honest. But there is a difference. in the following figure the sections of the figures are not complete. 3) Perceptual Constancy: Constancy is one of the more sophisticated forms of perceptual organization. but being familiar with the shapes we tend to close the gaps and perceive it as a whole: Speaking from the point of view of an organization. ii) 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. that he has about the worker. 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.
a verbal order. a pat on the back.] 5) Perceptual Defense: Closely related to perceptual context is the perceptual defense. If someone has a favorable attitude towards a person. Manager’s subsequent perceptions will be influenced by this set. Indeed. attitudes. A person may build a defense against stimuli or situational events in a particular context that are personally or culturally unacceptable or threatening. Stereotyping is necessary for economy of perception. 2) Stereotyping When people form opinions about a particular class of objects or persons and act according to such opinions. shape and color of objects would change as the worker moved about and it would make the job almost impossible.6.4. 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. For example. and opinions – may have a different interpretation of the same phenomenon. For example. But stereotypes also lead to prejudices about various groups of people. These general opinions or attitudes a person has constitute the perceptual set. The word ‘stereotype’ has been used to indicate a generally favorable or unfavorable opinion a person holds for a particular group of people. The organizational structure and culture provide the primary context in which workers and managers do their perceiving. managers perceive a manager as being more honest than a worker. It gives meaning and value to simple stimuli. situations and other persons in the environment. For example. While meeting a group of workers. his subsequent perceptions of the same person are influenced by this attitude. Another manager – having different beliefs.1. the manger already has a mental or perceptual set. Accordingly. mistakes made by the latter may be condoned or the interpretation may give the latter the benefit of . perception is essentially giving meaning to the various data received and interpreted 1. a new policy. 3) Halo Effect In the halo effect the person develops an opinion or attitude towards a single person or object. a raised eye brow or a suggestion takes on special meaning when placed in the context of the work organization. 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. Perception is said to have taken place only after the data are interpreted. if a manager has a good impression about a particular subordinates (a positive halo effect).4. events. For example. a manager may have developed a general belief that workers are lazy. 1. manager will tend to interpret their behavior according to this mental set. Most studies verify the existence of a perceptual defense mechanism. perceptual defense may play a very important role in understanding union-management and supervisor-subordinate relationship.iii) Color Constancy: Color constancy implies that familiar objects are perceived to be of the same color in varied conditions. and want to get all the advantages from an organization without giving their best to it. The owner of a red car sees it as red in the bright sunlight as well as in dim twilight. which influence perception and interpretation of data.4. 4) Perceptual Context: The highest and most sophisticated form of organization is ‘perceptual context’.1. without checking whether their opinions or attitudes were accurate in the first instance or not. just as a worker perceives another worker as being more honest than a manager. shirk work. The role of expectations (the so-called ‘Pygmalion effect’) can thus be explained by the concept of the perceptual set. the perceiver interprets the data in various ways. Interpretation/Perceptual Interpretation After the data have been received and organized. it is called stereotyping.6. Without perceptual constancy the size. In such a case.4.
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. 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. 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 organizational culture and structure provide the primary context in which workers and managers do their perceiving. Thus. You are more likely to notice cars like your own. a new policy. Further. they do take on meaning and value for the perceiver. 9) Inference There is a tendency on the part of some people to judge others on limited information. If the data a person receives threaten beliefs already held. performance appraisal must not be based on half-cooked or incomplete information. background. when done by another employee. fellow employees and others must also be taken into consideration. an employee might be sitting at his desk throughout the working hours without doing anything. the manager may tend to interpret even feedback information received according to the preconceived impression. In the above case. these observers are quite accurate—not because they perceptive but because they always judge people as being similar to themselves. So when they do find someone who is like them. as a result of the halo effect. . If we are honest and trustworthy. 7) Projection Attributing one’s own characteristics to other people. the manager may find such data in conflict with a preconceived opinion that the union is by and large negative in its approach. When similar mistakes are made by another person about whom the manager has an unfavorable opinion (Negative Halo effect. they are naturally correct. a verbal order. Perception is distorted sometimes by the efforts of the perceiver to attribute a causal explanation to an outcome. we engage in selective perception. 10) Attribution When people give cause and effect explanation to the observed behavior. experience and attitudes. the productivity and the behavior of the concerned employee towards customers. For example. When observing other who actually are like them. Thus. it is known as attribution. showing that it is taking positive steps in the direction of resolving conflicts or is doing something useful for the organization. a suggestion. or why some people may be reprimanded by their boss for doing something that. goes unnoticed. There is a tendency for the individuals to attribute their own behavior to situational factors. Only when the doodles are placed in a verbal context. The visual stimuli by themselves are meaningless. For example. a raised eyebrow. a memo. 4) Perceptual Defense Perceptual defense is used by the perceiver to deal with conflicting messages and data. Since we can’t observe everything going on about us. but explain the behavior of others by their personal dispositions. or a pat on the back takes on special meaning and value when placed in the context of a work situation. 6) Selective Perception People selectively interpret what they see on the basis of their interests. Rusty Halo or Horns effects) those mistakes may be perceptually exaggerated as irresponsible behavior. so we take it for granted that other people are equally honest and trustworthy. if a manager gets data from a union on strike. but it may be inferred that he is sincere towards his duties. the recipient uses perceptual defense to deal with this phenomenon.doubt.
Information is the primary raw material the marketer works with while influencing consumers. products. Without attention being given to a stimulus. Thus. and advertising combine to form the meaning of store image assigned. Retailers. . 12) Self-fulfilling Prophecy Based on expectations. therefore. People give their attention largely to those things which are novel. It is a known fact that consumers cannot process all the information. because it threatens our self-image. Consumers perceive several types of risk in the purchase of many products. prices. Point-of-purchase displays also attract attention to sale and newly launched items. brands and advertising messages may vary significantly from one part of a company’s market to another.). or from which they derive satisfaction of needs and wants. Consumers react to advertisements. A study of perception is useful in the following areas: 1) Retail Strategy: Most retail environments contain a vast array of information. This is called self-fulfilling prophecy. The total mix of in-store information cues (brands available. Stores are designed with highly visible shelves and overhead signs to make locating items as easy as possible. Perception and Marketing Strategy Perception. point-of-purchase displays. external building characteristics.) are designed with frequently sought-out items being separated so that the average consumers will travel through more of the store.7. begins with the process of sensation and is a selective mental operation. attitudes and social situation and each individual’s perception of these marketing mix elements is unique to him or her. He often tend to distort reality when it is unfavorable to us. etc. as a result. layout. Consumer behavior is process of learning of which perception is only the beginning. 1. Hence.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. The consumer forms a perception about the store. if a manager expects good results from his people.4. retailers need to be concerned about information overload. distortion is due to defense mechanisms that operate when one encounters data or receives information that is incongruent with one’s self-concept. 2) Brand Name and Logo Development: Brand names are important for both consumer and industrial products. Shopper’s Stop. an understanding of the perception of information is an essential guide to marketing strategy. In other words. 11) Distortions Distortion occurs when a person twist and manipulate events either consciously or unconsciously. expectations become reality. Shelf position and amount of shelf space influence on which items and brands are given more attention. This increases total exposure. Thus. Managers should take active steps to reduce this perceived risk as a normal part of any marketing strategy. For example. In many cases it has been found that people try to validate their perceptions of reality (or expected performance) when those perceptions are faulty. use exposure very effectively. 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. Store interiors (of Ebony. Perceptions of stores (store images). some bias in perception may creep in. little perception will take place. they are not likely to let him down. which refers to the reception and interpretation of external stimuli by an individual. he tend to twist or avoid that which is an unpalatable threat to his ego. Retailers must ensure that consumers do not become frustrated and minimize their in-store information processing. He then act in a defensive manner and distort or even totally shut out what is actually occurring. packages and so on according to their motives. interesting. etc. Therefore.
the market is interested in. 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. Interest in a product tends to arise only when the need for the product arises. Since.There are companies which use linguistics and computers to create names that convey the appropriate meaning for products. Even television advertisers are concerned about where within the commercial break their ad appears and the interest level aroused by the program. For some products and target markets (fashion items and accessories and heavy users of these items). and the situation. two strategies appear reasonable: i) To utilize stimulus characteristics such as full-page ads bright colors. This is essentially a low involvement product. in a magazine like Femina. A marketer should make effort to attract attention to a package or advertisements. and ii) Convey meaning. Advertises of Synergie Eye Contour Gel take care to place their ads opposite this column to get maximum reader interest. while ‘paq’ means small. there is a particular column devoted to queries on skin/beauty care. print. Products such as carbonated drinks and detergents. For example. in appropriate media. marketers have the difficult task of trying to communicate with them at times when their interest level is low and non-existent. It was originally to be called – “Gateway”. Suppose that marketer is responsible for developing a campaign designed to increase the number of users for a liquid ‘toilet cleaner’. it is obvious that name selection influences how consumers interpret product features. and the electronic. If the target market is interested in the product category. To a large extent. Consumers of these kinds of product will search for media where relevant information is available. and in that particular brand. For Compaq. 3) Media Strategy: The fact that the exposure process is selective rather than random is the underlying basis for effective media strategies. Under such circumstances. 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. . the marketer must find media the target market is interested in and place their advertising messages in those media. Besides how a product and service is presented (its logo) is also equally important. From this. advertisers insist that their ads appear opposite certain articles and columns. This is the reason why companies devote so much of time. animated cartoons to attract attention to the advertisement. care should be taken to ensure that the target audience interprets the message in the advertisement correctly. money and effort in developing a right kind of logo for all their company products. and ii) To tie the message to a topic. The unique spelling attracts attention and also gives “a scientific” impression. Consumers are not always actively interested in a product. While using stimulus characteristics. 4) Advertisement and Package Design: Advertisements and packages must perform two critical tasks: i) Capture attention. Once consumers are exposed to the message. the product. For example. what he does depends on the target market. For other products and target markets. consumers have limited involvement with the product category. The topic may range from using celebrities endorsing the virtues of the product or using health and cleanliness as a major plank. Advertising is also concerned about the placement of their advertisements. Marketers determine the media to which consumers in the target market are most frequently exposed and then place their advertising messages in those media. consumers are highly involved with the product and will go to considerable lengths to secure product relevant information. ‘com’ means computer and communications. it is difficult to reach consumers at exactly this point. While advertising in magazines. attention does not pose much of a problem. they will most likely attend to it sometimes it is the other way round. For example. the brand name “Compaq” for a computer was created in such a fashion. For products like these. Interest in this product arises only when the need for the same surfaces.
or that you are touching this page. It is not by random chance that many fast-food commercials are aired near mealtimes. see a friend. marketers are in a better position to predict how consumers will respond to marketing strategies. Marketers attempt to understand buying behavior for several reasons.Partly determine people’s general behavior and thus. when. Buying behavior is the decision processes and acts of people involved in buying. reference groups. Perception is the process of selecting. As the definition indicates. and how consumers buy. Consumer buying behavior is influenced by the perception also which is psychological influence. 3) By gaining a better understanding of the factors that affect buying behavior. Consumer buying behavior refers to the buying behavior of ultimate consumers. organizing. Even though you receive these inputs. 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. The selective nature of perception. hearing. and interpreting information inputs to produce meaning. Person select some input and ignore others because do not have the ability to be conscious of all inputs at one time. iv) Memory: It must be stored in memory in a manner that will allow retrieval under the proper circumstances. social classes. and culture and sub-cultures. iii) Interpretation: It must be properly interpreted. Even through these perception processes operate internally. Perception Process and Buying behavior Marketers at successful organizations like McDonald’s. including roles. on seeing an . Information inputs are sensations received through sight. those who purchase products for personal or household use and not for business purposes. For example. taste.ii) Attention: It must be attended to by the consumer. 1. go great efforts to understand their customers’ needs and gain a better grasp of customers’ buying behavior. An individual’s current set of needs affects selective exposure. you probably are not aware that cars outside are making noise. motives. influence their behavior as consumers. learning attitudes. 1) Buyers’ reactions to a firm’s marketing strategy have a great impact on the firm’s success. family. they do not reach your awareness until they are pointed-out. personality and self-concept. or touch a product. they are very much affected by social forces outside the individual. and lifestyles. Customers are more likely to turn in to these advertisements at these times. Different people perceive the same thing at the same time in different ways. This phenomenon is sometimes called selective exposure because an individual select which inputs will reach awareness. An individual at different times may perceive the same item in a number of ways. only few reach one’s awareness. If you are concentrating on this paragraph. Although one receives numerous pieces of information at once. marketers must examine the main influences on what. and opinion leaders. where. and touch.4. and using products. Marketers strategies make use perceptual processes to gain and retain customer. A firm’s ability to establish and maintain satisfying customer relationship requires an understanding of buying behavior. Information inputs that relate to one’s strongest needs at a given time are more likely to be selected to reach awareness. smell polluted air or water. To find-out what satisfies buyers. 2) In the marketing concept stresses that a firm should create a marketing mix that satisfies customers. that the room light is on. Here. smell. It is concluded with a discussion of social influences that affect buying behavior. it occurs when a person receives information inconsistent with personal feelings or beliefs. When a person hear an advertisement. psychological influences are considered on purchasing decisions – perception. perception is a three-step process. receive’s information inputs.8.
A person bases interpretation on what he or she expects or what is familiar. Although marketers cannot control buyers’ perceptions. a buyer may receive a seller’s information but perceive it differently than was intended. For this reason. a buyer may block-out a salesperson’s presentation. Consumer’s imagery is concerned with: 1) Product positioning. that are particularly relevant to the study of consumer behavior. when a toothpaste producer advertises that “35 per cent of the people who use this toothpaste have fewer cavities”. 4) Perceived price. an individual must mentally organize and integrate new information with what is already stored in memory. 6) Price/quality relationship. it can be said that perceptual process influences buying behavior of consumer which should be intelligently used by marketers. Thus. For example. and manufacturers. To produce meaning. a buyer who perceives information inputs to be inconsistent with prior beliefs is likely to forget the information quickly. an advertiser will capitalize on closure by using incomplete images. sounds or statements in its advertisements. Products and brands have symbolic value for individuals. After hearing a sales presentation and leaving a store. 3) Positioning of services. an organization may suffer a sales decline. on the basis of their consistency (congruence) with their personal pictures of themselves.9. Page no. 7) Retail store image. In an attempt to draw attention to its brand. prices. CB By Majumdar] Consumers have a number of enduring perceptions. People use several methods to organize. product quality. occurs when a person mentally fills in missing elements in a pattern or statement. The second step in the process of perception is perceptual organization. Third. a consumer’s perceptual process may operate such that a seller’s information never reaches that person. a customer may forget many selling points if they contradict personal beliefs. a person remembers information inputs that support personal feelings and beliefs and forgets inputs that do not. Several problems may arise from such attempts.111. and . however. Consumers’ perceive images of products brands. they also wanted a classic look so that customers would perceive their products to be the familiar ones they had been buying for years. This distortion substantially lessens the effect of the advertisement on the individual. is the assignment of meaning to what has been organized. who evaluate them. Consumer Imagery Book Matter [Book Code: 22. when Smucker’s re-designed its packaging. For example.advertisement promoting a disliked brand. a manufacturer that changes a product or its package faces a major problem. retail stores. services. called closure. For example.4. familiar product or package. First. 2) Selective Retention: In selective retention. Information inputs that reach awareness are not received in an organized form. Interpretation. 5) Perceived quality. One method. 2) Product repositioning. 8) Manufacturer’s image. 1. the third step in the perceptual process. Unless a product or package change is accompanied by a promotional program that makes people aware of the change.14. marketers told designers that although they wanted a more contemporary package design. they often try to influence them through information. they may not recognize the new one. When people are looking for the old. a viewer may distort the information to make it more consistent with prior views. Second. a customer might infer that 65 per cent of users have more cavities. or images.
It compliments the company’s segmentation strategy and selection of target markets. The Kodak Company offers cameras ranging from 6 megapixels to 14 megapixels for the non-professional camera buyer. it might be the mint taste or tartar control Important product attributes like taste are useful segmentation tools because they are easy to identify.9) Perceived risk. It converges what the meaning of the product is and how it can fulfill the consumer needs. but also very difficult to create and maintain. Ford and Chevy need not apply. companies have relied on product attributes such as resolution quality to define market segments and develop appropriate products. i. Facebook is too cool for MySpace and serves a smaller. it might be that it tastes great or that it is less filling. while Costco tells us that diamonds are diamonds and that only a chump will pay Tiffany prices. Positioning Strategies The major positioning strategies are: 1) By Attribute or Benefit: This is the most frequently used positioning strategy. Positioning is more important to the ultimate success of a product than are its actual characteristics. For toothpaste. 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. For example.1. 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. As products become more complex and the marketplace more crowded. For a light beer. Managing product positioning requires that marketer . Positioning can change due the counter measures taken at the competition. Positioning is what the customer believes and not what the provider wants them to believe. while butter provides better taste and wholesome ingredients. Apple positions its computers based on how the computer will be used. Successful positioning is based on consumer’s reality and familiarity. Product positioning is the essence of the marketing mix. more sophisticated cohort. its positioning. when segmenting the market for digital cameras. 1. Margarine is positioned as a lower cost and healthier 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. Application: The users of Apple computers can design and use graphics more easily than with Windows or UNIX. 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. Only college students may participate with their campus e-mail IDs.e. 2) By Use or. consumers rely more on the product’s image and claimed benefits than on its actual attributes in making purchase decisions. The core of effective positioning is a unique position that the product occupies in the mind of the consumer.4. Tiffany wants us to believe that their diamonds are of the highest quality. In today’s highly competitive marketplace. Product Positioning The way a product is perceived or positioned by a consumer is probably more important than what it actually is. 3) By User: Facebook is a social networking site used exclusively by college students.9. a distinctive product image is most important. 4) By Product or Service Class: Margarine competes as an alternative to butter.. 6) By Price or Quality: Tiffany and Costco both sell diamonds. although products that are poorly made will not succeed in the long run on the basis of image alone.
9. first introduced as a small sporty car. For example. Attribute ratings are then subjected to various statistical techniques and a perceptual map can be extracted. often with a fun place for the kids to play. marketers re-position products. consumer’s resists change. similar brands are . For example. 1. fruitiness. Product Re-Positioning From time to time. distribution. price. how the attributes relating to the product are seen in the customers’ eyes and whether there are any product “gaps” in the market. The growth of the fast-food chain McDonald’s can also be viewed from the perspective of repositioning. they see it in terms of a map or grid that clusters like product of brands together. Re-positioning involves reeducating the consumer about changes in important product. some premium brand marketers have repositioned their brands to justify their higher prices. Here. Repositioning is difficult to achieve effectively. when first opened. The Mercury Cougar. likely attributes used in the analysis would include sweetness. By understanding the perceptual maps of consumers in targeted segments. On the map.know the customer and that he understand the competition. comparable to the Ford Thunderbird. and shakes. generally. and is impossible to achieve overnight. Perceptual mapping is based on the belief that when consumers think of a product category. products or brands that consumers consider similar share like benefits and attributes. carbonation. Researchers create perceptual maps by surveying members of the target market.2. Typically. 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. was successfully re-positioned as a mid-sized car. McDonald’s restaurants. Subjectivity Perceptual Mapping Prevention Selectivity Expectation Past Experience Influences on Perceptual Mapping Measuring consumer perceptions is an important part of positioning. however. and/or promotional or personal selling benefits. 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. Now McDonald’s offers sit-down family restaurants with an emphasis on value at lower prices. rather than trying to meet the lower prices of high-quality privatelabel competition. the segment targeted as well as the image of the car changed. Another reason to re-position a product or service is to satisfy changing consumer preferences. the marketer may be forced to re-position it in response to market events. Checkers or Rally’s of today. Perceptual Mapping Marketers use a method called perceptual mapping to position products against competitors. 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. fries. marketers can see where their products fit with others in the market. this is the job of market research not just what the entrepreneur thinks is true. etc. lightness. asking people to rate products across multiple product attributes. Once the image of a product is established in the consumer’s mind. in response to changes in the market environment. The maps provide a research tool to assess how multiple products in a category are positioned. All of the outlet designs were the same. Consumer parked the car and went to the window to order and pickup very-low-priced burgers. if researchers were interested in soft drinks. were part of a chain similar to the Hot ‘N’ Now Hamburgers.4.
Many service companies market several versions of their service to different market segments by using a differentiated positioning strategy.. Thus. 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. based on consumer reference prices. For example. as low. image becomes a key factor in differentiating a service from its competition. the Renaissance Hotels and Resorts brand provides “distinctive decor.plotted close together. Internal . Gaps typically indicate: 1) A true opportunity in the market that marketer might be able to pursue. Thus. affinity club members). restaurant matchbooks.9. For example. their willingness to patronize a store or a service. to persuade the consumer that the product advertised is a really good buy. Because services are intangible. and that the differential pricing strategies used by some marketers are perceived as unfair by customers not eligible for the special prices. they must be careful to avoid perceptual confusion among their customers.4. 1. Reference prices can be external or internal. which is why there is not competitor there. as fair – has a strong influence on both purchase intentions and purchase satisfaction. if a magazine publisher wants to introduce a new magazine to Generation Y. (There are many examples of products invented to fill these types of gaps. Many service companies feature real service employees in their ads (as tangible cues) and some use peoplefocused themes to differentiate themselves. imaginative experiences and delights its customers’ senses”. Marriott’s Hotels and Resorts brand claims to provide customers with “superior service and genuine care”.. and a variety of other specialty items. Blank spaces on perceptual maps indicate gaps in the market. 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. Different formats used in sales advertisements have differing impacts. the Residence Inn is designed for extended stays. These include delivery vehicles painted in distinct colors. and 3) A combination of attributes that is impossible to deliver to the consumer without the development of new technology.9. the Courtyard brand provides “essential services and amenities to business travelers”. 1. relationship pricing. and the Fairfield Inn provides rooms and suites at “prices that will make customers smile”.”) in an ad offering a lower sales price. A reference price is any price that a consumer uses as a basis for comparison in judging another price. packaged hotel soaps and shampoos. One study. such as air pump athletic shoes and shoes with shocks. 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. and dissimilar brands are plotted far apart.4. For example. consider the perception of price fairness. 2) A combination of attributes that nobody actually needs or wants. lightweight cell-phones.3. However. there is some evidence that customers do pay attention to the prices paid by other customers (such as senior citizens. and mouse-pads on laptop computers). ultimately. 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. focused on the special challenges of service industries in pricing intangible products. service marketers face several unique problems in positioning and promoting their offerings. An advertiser generally uses a higher external reference price (“sold elsewhere at. 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. Perceived Price/Price Image How a consumer perceives a price – as high. frequent flyers. and efficiency pricing. Positioning of Services Compared with manufacturing firms. the marketing objective is to enable the consumer to link a specific image with a specific brand name.4. Many service marketers have developed strategies to provide customers with visual images and tangible reminders of their service offerings. Perceptions of price unfairness affect consumers’ perceptions of product value and. 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.
5. Whereas a defective product is likely to be detected by factory quality control inspectors before it ever reaches the consumer..g.. in food. and the professionalism of the nurse. consumers rely on surrogate cues (i. others are extrinsic. Consumers like to believe that they base their evaluations of product quality on intrinsic cues. This is true because of certain distinctive characteristics of services: They are intangible. then sold. they are variable they are perishable. In some cases.4. a defective haircut is difficult to correct. and from customer to customer (e.6. there is little opportunity to correct it. an inferior service is consumed as it is being produced: thus. extrinsic cues) to evaluate service quality. Price/Quality Relationship Book Matter [Book Code:22. the interactive quality of services often declines. color. Either singly or together. Unlike products. the pleasantness of the receptionist. in haircuts. For example. or aroma. Some marketers try to change demand patterns in order to distribute the service more equally over time.g.4. the number (and source) of framed degrees on the wall. page no. Some of these cues are intrinsic to the product or service. they note the quality of the office and examining room furnishings. 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.e. because both the customer and the service provider are hurried and under stress. because that enables them to justify their product decisions (either positive or negative) as being “rational” or “objective” product choices. consumers use physical characteristics (e. CB by Majumdar] . The downside of service standardization is the loss of customized services.67. consumers’ internal reference prices change. Perceived Quality NET MATTER Consumers often judge the quality of a product or service on the basis of a variety of informational cues that they associate with the product. which are first produced. To overcome the fact that consumers are unable to compare competing services side-by-side as they do with competing products.g. Without special effort by the service provider to ensure consistency of services during peak hours. just as the negative impression caused by an abrupt or careless waiter is difficult to correct.9. flavor. However. 1. which many consumers value. most services are first sold and then produced and consumed simultaneously. Because the actual quality of services can vary from day to day.68. 2) Perceived Quality of Services: It is more difficult for consumers to evaluate the quality of services than the quality of products. however. as well as in the believability of any advertised reference price.14. In evaluating a doctor’s services. 1. the flavor of ice cream or cake) to judge product quality. in waitperson service. During peak demand hours. they use extrinsic characteristics to judge quality. and then consumed. from service employee to service employee. even in classes taught by the same professor).9. all contribute to the consumer’s overall evaluation of the quality of a doctor’s services. and they are simultaneously produced and consumed. More often than not. e. service image is likely to decline. such as size.reference prices play a major role in consumers’ evaluations and perceptions of value of an advertised (external) price deal... marketers try to standardize their services in order to provide consistency of quality.
the clerks or even the other shoppers. location convenience. and carpeting and architecture. Sales promotions. hence. when consumers evaluate more concrete attributes of a product. delivery service. in service situations. the lighting.7. merchandise offered as part of the service. price ranges. others. has a great deal to do with why consumers choose to shop there. whether of a retail store. Consumer have not shopped there before. Perhaps it is the combination of all these that makes Consumer feet uneasy. styling or fashion. Different functional attributes suit different types of customers and different shopping situations. They include such subjective considerations as a sense of belonging. If person feel there is a good match between the image of an outlet and person own self-image. a home shopping network. some product advertisements deliberately emphasize a high price to underscore the marketers’ claims of quality. Service in general. credit policies. lighting. ease of merchandise return. and parking access. For whatever reasons.4. more expensive) brand name as an indicator of quality without actually relying directly on price per se.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. advertising. 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. a retailer’s home page on the web or even a flea market. 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. 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. One study suggested that consumers using a price/quality relationship are actually relying on a well-known (and. Outlet image. displays. It could be the layout. 1. person is more likely to shop there. Elevators. a feeling of warmth or friendliness or a feeling of excitement. presence of self-service. Social-class appeal. As Consumer walk into the store. salesclerk service. the retail outlet image is wrong for Consumer. phone ordering. Something about the place is not what Consumer expected or is not quite right. Merchandise Service Clientele Physical Facilities Convenience Promotion Table 3-10: Image Attributes at Retail Stores Quality. the merchandise. . General convenience. such as performance and durability. and pricing.9. and Consumer turn around and leave. Outlet image results from a mix of functional and psychological attributes. Because price is so often considered an indicator of quality. aisle placement and width. air conditioning. rest rooms. and that such consumer characteristics as age and income affect the perception of value. Retail Store Image Consumer walks into a department store with several purchases in mind. A number of research studies have found that consumers rely on price as an indicator of product quality. guarantees. warranties. Consumer stop dead in his tracks. 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. they rely less on the price and brand name as indicators of quality than while they evaluate the product’s prestige and symbolic value. products with lower prices maybe interpreted as reduced quality. and symbols and colors. store layout. that consumers attribute different qualities to identical products that carry different price tags. at times. Marketers understand that. Although some enjoy the wide selection of a store like Office Depot. selection or assortment. a catalog. and credit policies. Functional attributes include merchandise selection. find it overwhelming and would rather go to a small office supply retailer or order from a catalog. Psychological attributes are a little more difficult to identify and compare across outlets. preferring speed and ease in shopping. self-image congruency (fit between self-image and store image). At the same time. and other factors that can be measured to some degree and used to compare one outlet objectively with its competitors. and store personnel. and so on. may also include store layout. shopping ease.
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.8. decor. when it is tempting to hold frequent large sales covering many items. Perceived risk can be associated with any product or service. Consumer behavior is motivated to reduce risk.Store Atmosphere Institutional Factors Post-transaction Satisfaction Atmosphere of congeniality. ideal-social. consumers tend to collect more information and evaluate it carefully. Conservative versus modern projection of the store. using or deposing of an offering.9. high-fashion image. 2) When the offering is new. There is a positive correlation between pioneer brand image and an individual’s ideal self-image. or ease. such strategies may result in an unwanted change in store image.4. their pricing strategies. Perceived Risk Dowling and Staelin defined risk as a consumer’s perceptions of the uncertainty and adverse consequences of engaging in an activity. Consumers are more likely to pay attention to and carefully process marketing communications when perceived risk is high. If negative outcomes are likely or positive outcomes are unlikely. and product assortments. When consumers intend to buy a product or a service. 1. Manufacturers’ Image Consumer imagery extends beyond perceived price and store image to the producers themselves. In times of heavy competition.e. frequent advertising that presents large numbers of price specials reinforces consumer beliefs about the competitiveness of a store’s prices.. such as Saks Fifth Avenue. conversely. This finding has important implications for retailers’ positioning strategies. 1. acceptance. she will probably perceive its quality to be high. Merchandise in use and returns and adjustments policies. and reliability. Thus. 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.9. 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. magnitude of price advantage). and . 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. A consumer wishing to buy an elegant dress for a special occasion may go to a store with an elegant. frequency of price advantage) as having lower prices overall than competing stores that offer larger discounts on a smaller number of products (i. which suggests that positive perceptions toward pioneer brands lead to positive purchase intentions. brand will be worth what it costs.4. social. if a consumer believes that using the brand is fun. perceived risk is high.e. but it tends to be higher: 1) When little information is available about the offering.. The type of product the consumer wishes to buy influences his or her selection of a retail outlet. the consumer’s evaluation of a product often is influenced by the knowledge of where it was bought. music. Consumers choose brands perceived as similar to their own actual. customers’ feelings of warmth. However. so long as he perceives it as fun. These images stem from their design and physical environment. and situational-ideal-social images. As perceived risk increases.9. he will buy it and use it when he is having fun with his friends and to him. Thus. 3) When the offering has a high price. ideal. the extent to which the consumer is uncertain about the personal consequences of buying. Another factor of consumers’ motivation to process information about a product or brand is perceived risk. Manufacturers who enjoy a favorable image generally find that their new products are accepted more readily than those of manufacturers who have a less favorable or even a “neutral” image. and lighting. reputation. Regardless of what she actually pays for the dress she selects (regular price or marked-down price).
physical risk. whether or not such risks actually exist.9. For example.14. product choices) to a few safe alternatives.9. is there potential for physical harm because I selected a product of inferior quality. time risk) in the purchase of a plasma television set than in the purchase of an automobile. There are several types of risk that can discourage consumers from either making a choice or delaying the purchase decision.4.4) When the offering is low priced Consumers must constantly make decisions regarding what products or services to buy and where to buy them. will this result in additional purchases of other goods or services as a direct result of having selected this item? 1. They would rather exclude some perfectly good alternatives than chance a poor selection. Risk that is not perceived – no matter how real or how dangerous – will not influence consumer behavior. this type of risk is termed product-category perceived risk. 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.g. The major types of risks that consumers perceive when making product decisions include functional risk. The amount of risk perceived depends on the specific consumer. such as smoking or drug use. functional risk.3.1.4. Types of Perceived Risk Every purchase decision involves some level of risk. Variation of Perception of Risk Consumer perception of risk varies. obviously have lower perceived risk than those who do not engage in high-risk activities.9.9. Perceived risk is defined as the uncertainty that consumers face when they cannot foresee the consequences of their purchase decisions. Researchers have also identified product-specific perceived risk . For example. 1. the situation. the product. consumers are likely to perceive a higher degree of risk (e. psychological risk.9.g. the consumer perceives some degree of “risk” in making a purchase decision. It should be stressed that consumers are influenced by risks that they perceive. will owning it in any way damage my self-image.. The degree of risk that consumers perceive and their own tolerance for risk taking are factors that influence their purchase strategies. will other people think less of me because I made a socially unacceptable choice? 5) Physiological Risk: If I buy Product X. Because the outcomes (or consequences) of such decisions are often uncertain. financial risk. self-confidence or ego? 4) Social Risk: If I buy Product X. social risk. and the culture. Low-risk perceivers have been described as broad categorizers because they tend to make their choices from a much wider range of alternatives.69.2. depending on the person. others tend to perceive little risk. The following are common types of risk: 1) Functional or Performance Risk: If I buy Product X. Page no..9. This definition highlights two relevant dimensions of perceived risk: uncertainty and consequences. CB by Majumdar] 1. financial risk. Risk Reduction Strategies Book Matter [Book Code: 22. and time risk. High-risk perceivers are often described as narrow categorizers because they limit their choices (e. Some consumers tend to perceive high degrees of risk in various consumption situations. 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 it actually deliver the benefits it promises? 2) Financial Risk: If I buy Product X.4. 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. adolescents who engage in high-risk consumption activities. An individual’s perception of risk varies with product categories.
from a celebrity.9. 2) Buy the brand that the consumer has used before and has found satisfactory. How Consumers’ Handle Risk/Dealing with Perceived Risk Consumers develop various strategies to relieve perceived risk. 7) Buy the most expensive and elaborate model of the product.4.9.4. 1. including the following: 1) Buy the brand whose advertising has endorsements or testimonials from typical consumers. . 5) Psychological Risk: Psychological risk is the risk that a poor product choice will bruise the consumer’s ego. 3) Financial Risk: Financial risk is the risk that the product will not be worth its cost. 2) Physical Risk: Physical risk is the risk to self and others that the product may pose. 6) Buy the brand that has been tested and approved by a branch of the government. 4) Buy the brand that has been tested and approved by a private testing company. well-known brand. 4) Social Risk: Social risk is the risk that a poor product choice may result in social embarrassment. 5) Buy the brand offering a money-back guarantee with the product. or from an expert on the product. 3) Buy a major. and rely on its reputation. 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.The types of perceived risk are: 1) Functional Risk: Functional risk is the risk that the product will not perform as expected.
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