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MBA

(DISTANCE MODE)

DBA 1722 CONSUMER BEHAVIOUR

IV SEMESTER COURSE MATERIAL

Centre for Distance Education
Anna University Chennai Chennai – 600 025

Author Dr. V.J SIVAKUMAR, .J. Dr. V.J. SIVAKUMAR,
Assistant Professor, (Marketing) Department of Management Studies National Institute of Technoloy (REC) Thiruchirapalli - 620 015

Reviewer Ms. Ms. A. Shameem
Professor & Head, Department of Management Studies Aalim Mohamed Salegh College of Engineering, Avadi - IAF, Chennai - 600 037

Editorial Board Dr.T.V.Geetha .T.V Dr.T.V.Geetha
Professor Department of Computer Science and Engineering Anna University Chennai Chennai - 600 025

Dr.H.Peeru .H.Peer Dr.H.P eer u Mohamed
Professor Department of Management Studies Anna University Chennai Chennai - 600 025

Dr.C Chellappan .C. Dr.C. Chella ppan
Professor Department of Computer Science and Engineering Anna University Chennai Chennai - 600 025

Dr.A.K .A.Kannan Dr.A.K annan
Professor Department of Computer Science and Engineering Anna University Chennai Chennai - 600 025

Copyrights Reserved (For Private Circulation only) ii

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Roger J. Kenneth A. Sivakumar Author v . The author gratefully acknowledges the following sources: • • • • • Consumer Behavior by Michael R.J.ACKNOWLEDGEMENT The author has drawn inputs from several sources for the preparation of this course material.V. Convey and Amit Mookerjee .Mc Graw Hill Consumer Behavior by London/ Della Bitta .Mc millan Consumer Bheavior by S.Pearson Education Consumer Behavior by Del I Hawkins. Mowen .Pearson Inspite of at most care taken to prepare the list of references any omission in the list is only accidental and not purposeful. Solomon . to meet the requirements of the syllabus. Best. Ramesh Kumar .Mc Graw Hill Consumer Behavior by John C. Dr.

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ADDITIONAL DIMENSIONS Consumerism – consumer protection – difficulties and challenges in predicting consumer behaviour – online consumer behaviour – organizational and industrial buyer behaviour – consumer behaviour in Indian c contextemerging issues. S. “Consumer behaviour. Biztantra Publication.Schiffman. New Delhi 2002. New Delhi 2005. Thomson Asia (P) Ltd.L. vii . New Delhi 2002. 3. McGraw Hill. Consumer behaviour strategic approach Biztantra. Singapore 2003.”Consumer Behaviour an Indian Perspectives”. “Consumer Behaviour “. Theory and Marketing application”.. 2002. Henry Assael. Leslie Lazar Kanuk. Pearson Education.INTRODUCTION Consumer behaviour – concepts – dimensions of consumer behaviours – application of consumer behaviour knowledge in marketing decisions – approaches to the study of consumer behaviour. 6. 4. 2005.PURCHASE BEHAVIOUR Personal influence and opinion leadership – diffusion of innovations – consumer decision – making process – models of consumer decision process – Nicosia – Howard sheth and Engel –Kollat model – post purchase behaviour – consumer expectation and satisfaction – managing dissonance – consumer loyalty – types of loyalty programmes. 8. David L.CONSUMERS IN THEIR SOCIAL AND CULTURAL Group dynamics and consumer reference groups – Family – Social class cultural and subcultural aspects – cross cultural consumer behaviour.Joseph sirgy. Dominique Xavedel. “ Consumer Behaviour A Managerial Perspective”. Sheth Mittal. New Delhi. Sultan Chand. 7. Albert J Della Bitta. Concepts Applications and cases” vikas publiching house (P) Ltd.Gupta & Sumitra Pal. 2. K.Lindquist and M.CONSUMER DECISION PROCESS AND POST.Srivastava. REFERENCES 1. Ms. UNIT V . . Leon G. UNIT II . “ Consumer Behaviour an Indian Context”.Raju.Loudon. “Shopper.DBA 1722 CONSUMER BEHAVIOUR UNIT I . “Consumer Behaviour “. Goal Gotia Publishing Co. UNIT IV . New Delhi 2004. UNIT III . New Delhi 2001.K.. buyer & consumer Behaviour. Jay D. New Delhi.CONSUMER AS AN INDIVIDUAL Consumer needs and motives – personality and consumer behaviour – consumer perception – learning – consumer attitudes –attitude formation and change – communication and persuasion – self image – life style analysis.

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3.4.1 1.12.1 Maslow’s’ Hierarchy of Needs 2.4.12.1 2.6 1.4 1.10 1.1 Firm outcomes 1.11 1.2 Individual Outcomes 1.3 Society Outcomes SUMMARY REVIEW QUESTIONS 1 2 3 3 4 5 6 7 9 10 13 12 12 16 17 18 18 1.2 1.9 1.8 1.1 The Nature of Motives 2.2 The Role of Motives 2.5 1.3 OVERVIEW LEARNING OBJECTIVES THE NATURE AND ROLE OF MOTIVES 2.12.4 21 21 22 22 23 23 24 24 26 .13 1.3.CONTENTS UNIT I INTRODUCTION 1.2 Mcguire’s Psychological Motives ix 2.3.12 OVERVIEW LEARNING OBJECTIVES CONSUMER DEFINING CONSUMER BEHAVIOR THE NATURE OF CONSUMER BEHAVIOR BEHAVIORAL DIMENSIONS OF MARKETING APPLICATIONS OF CONSUMER BEHAVIOR: MARKET ANALYSIS COMPONENTS APPROACHES TO THE STUDY OF CONSUMER BEHAVIOR MARKETING STRATEGY AND CONSUMER BEHAVIOR CONSUMER DECISIONS OUTCOMES 1.3 Facets of motivation CUSTOMER NEEDS 2.3 1.14 UNIT II CONSUMER AS AN INDIVIDUAL 2.2 2.7 1.

3.7.3.4.6 2.3 Reference Groups 3.2 Sociological Variables Affecting Families and Households 3.1 Exposure 2.3.4.4.3 OVERVIEW LEARNING OBJECTIVES WHAT IS A GROUP? 3.3.3.4 Family Life Cycles x 3.5 29 30 31 32 38 40 40 41 43 44 46 50 53 57 58 60 UNIT III COSUMERS IN THEIR SOCIAL AND CULTURAL SETTINGS 3.6 Reference Group Impact on Product and Brand Choice 3.11 2.9 2.13 2.7 2.14 Murray’s List of Psychogenic Needs Needs identified by Marketing Scholars Sheth. Newman and Gross have proposed that individual choice behavior stems from five needs: CUSTOMER EMOTIONS PERSONALITY AND CONSUMER BEHAVIOR CONSUMER PERCEPTION 2.7 Benefits of the Reference Group Appeal THE FAMILY 3.4.3 Functions of the Family 3.12 2.7.1 Structural Variables Affecting Families and Households 3.3.7.4.8 2.3.5 Factors that Affect Reference Group Influence 3.2 Consumer-Relevant Groups 3.4 61 61 62 62 63 65 67 67 69 70 70 72 72 72 74 .4.4.3 Interpretation LEARNING CONSUMER ATTITUDES COMMUNICATION AND PERSUATION PSYCHOGRAPHICS HAVE THREE COMPONENTS VALS SUMMARY REVIEW QUESTIONS 2.1 3.1 Types of Groups 3.10 2.5 2.4 Types of Reference Groups 3.2.4 2.2 Attention 2.3 2.2 3.

13 Cultural Variations & Non-Verbal Communication SUMMARY REVIEW QUESTIONS 77 80 82 83 83 84 84 85 85 87 87 90 92 93 93 93 95 95 96 99 100 UNIT IV CONSUMER DECISION PROCESS AND POST.5.4.2 4.3 4.MEANING 3.4 Cultural Influences 3.5.6.10 Cross-Cultural Consumer Analysis 3.6.5 4.9 Problems in Cross Cultural marketing 3.12 Strategic Implications 3.6.6.6.7 Cross Cultural Consumer Behavior 3.2 Impact of social class CULTURE .6.8 3.7 4.7 3.6 Family Marketing SOCIAL CLASS 3.6.2 Types of Culture 3.5 3.6 3.1 Characteristics of Social Classes 3.PURCHASE BEHAVIOUR 4.3.3 Hofstede’s Five Dimensions of Culture 3.6.4 4.1 Characteristics of Culture 3.6.6.8 Characteristic features of a firm going global 3.5.11 Tangible Benefits of Global Brand Building 3.6.6.1 4.6 4.8 OVERVIEW LEARNING OBJECTIVES OPINION LEADERSHIP DYNAMICS OF OPINION LEADERSHIP MOTIVATION BEHIND OPINION LEADERSHIP TYPES OF OPINION LEADERS COMPARISON OF OPINION LEADERS AND SURROGATE BUYER IDENTIFYING AN OPINION LEADER 101 101 102 102 103 104 106 107 xi .5 Family Decision-Making 3.6.6 Subcultures and Consumer Behavior 3.5 Variation In Cultural Values 3.

1 5.33 TACTICS ADOPTED BY MARKETERS TO GENERATE A BUZZ PROGRAMMES DESIGNED TO STIMULATE OPINION LEADERSHIP THE DIFFUSION CONCEPT ELEMENTS TO THE DIFFUSION OF INNOVATION INNOVATION TYPES OF INNOVATION CONSUMER RESISTANCE TO INNOVATION COMMUNICATION BARRIERS TO ADOPTION AND MARKETING STRATEGIES TO OVERCOME THEM TIME ADOPTION PROCESS STAGES IN ADOPTION PROCESS ADOPTERS RATE OF ADOPTION CONSUMER DECISION MAKING PROCESS CONSUMER DECISION MAKING – THE COMPLEX APPROACH CONSUMER BEHAVIOUR AND MARKETING IMPLICATIONS CONSUMER BEHAVIOUR MODELS POST PURCHASE CONSUMDER BEHAVIOUR CONSUMER LOYALTY TYPES OF LOYALTY PROGRAMMES HOW LOYALTY CAN BE IMPLEMENTED SUMMARY REVIEW QUESTIONS 108 109 110 111 111 112 113 114 117 118 119 120 120 122 122 125 126 128 139 142 143 148 150 152 UNIT V ADDITIONAL DIMENSIONS 5.19 4.16 4.12 4.22 4.28 4.11 4.27 4.2 5.23 4.32 4.14 4.3 5.20 4.21 4.24 4.26 4.31 4.29 4.10 4.17 4.18 4.13 4.4.30 4.5 OVERVIEW LEARNING OBJECTIVES INTRODUCTION COMPONENTS OF CONSUMERISM THE CONSUMER PROTECTION ACT 1986 xii 155 155 156 157 161 .25 4.9 4.4 5.

5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22

CONSUMER RIGHTS PROTECTION OF CONSUMER RIGHTS METHODS OF CONSUMER PROTECTION DIFFICULTIES AND CHALLENGES OF PREDICTING CONSUMER BEHAVIOUR ONLINE CONSUMER BEHVIOUR ORGANISATIONAL AND INDUSTRIAL BUYER BEHAVIOUR PARTICIPANTS IN INDUSTRIAL MARKETING DIFFERENCES IN ORGANIZATIONAL MARKETS DIFFERENCES IN ORGANIZATIONAL TRANSACTIONS CONSUMER BEHAVIOUR VS ORGANISATIONAL BUYING BUY CLASSES BUYING CENTER CONSUMER BEHAVIOUR IN INDIA CONTEXT – EMERGING ISSUES CHARACTERISTICS OF THE INDIAN CONSUMER BEHAVIOR CHANGING TRENDS IN INDIAN CONSMER BEHAVIOR SUMMARY REVIEW QUESTIONS

164 164 165 166 167 169 171 171 172 173 174 176 177 179 183 184 187

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UNIT I

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INTRODUCTION
1.1 OVERVIEW The fundamental basis of the marketing concept involves the matching of the skills and resources of the organization, profit or non-profit related, to the needs of the customer. Marketing management relies on an understanding of how customers make decisions and their likely reactions to the different elements of the marketing mix. In this context, consumer behavior not only refers to the physical activity of purchasing but also to relate pre-purchase and post-purchase activities. Loudon and Della Bitta (1993) define consumer behavior as ‘the decision process and physical activity individuals engage in when evaluating, acquiring, using, and disposing of goods and services’. One of the most useful applied distinctions in consumer behavior is between consumer behavior studied from a micro perspective and a macro perspective. At the micro-level, the focus is very much on the reaction of the individual consumer with applications that are relevant to advertising managers, salespeople, or product designers of individual firms or organizations. At the macro-level, consumer behavior involves the study of the influence of consumption on the economic and social conditions within society. The anticipation and forecasting of consumer behavior at that level can be used for organizational planning and product development, as well as formulation of public policy to improve the efficiency of the market system. Research in consumer behavior allied to the study of marketing basically stems from the 1950s. Economists had a developed series of models explaining consumer choice in terms changing utilities, or demand preferences, according to variations in price, income and quantity supplied. This approach has been relatively un influential within the marketing literature compare with the application of behavioral science concepts taken from psychology and sociology. The entries on psychology and sociology show how concepts such as learning, motivation, perception, attitude and social groups have been applied to help our understanding of every element of the marketing mix. This entry primarily seeks to give an overview of consumer decision making and show how those concepts listed above may be integrated to give an understanding of the role they play in explaining decision processes of consumers. However, before considering that material in detail, it is useful to reflect on
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some aspects of the history of consumer research in marketing in order to appreciate the variety of approaches and the overall complexity of the subject. This historical review is not intended as a comprehensive treatise on the development of consumer behavior but rather a framework to understand how the subject has arrived at its current status and content. It also helps to provide a platform from which to consider future developments in consumer behavior later in the entry. In the 1950s and through the mid-1960s much of consumer behavior research involved the evaluation of consumer characteristics for market segmentation. It was at this time that consumer behavior researchers investigated the application of personality theories and classifications of motives taken from psychology, and the family life-cycle and social class taken from sociology. These were applied with very different degrees of success in crosssectional studies of markets in order to explain variations in consumer demand for many different classes of products, and also for different choices of brands. Important contributions from this period, which are illustrative of some of the research and are still commonly referred to in the literature and in teaching consumer behavior, include Koponen (1960), Tucker and Painter (1961), Evans (1959), Haire (1950), Dichter (1964), Martineau (1958), Coleman (1960), Levy (1966), Wells and Gubar (1966), and Barton (1955). One of the studies from that period which has had a very profound influence on consumer behavior and marketing is Rogers’ work on the diffusion of innovations (1959, 1962). He segmented the potential market for a new product according to the time of adoption and developed a five stage classification within which to describe potential customers - innovators, early adopters, the early majority, the late majority and laggards. Another important facet of Rogers’ work was his characterization of the adoption process. During consumers’ adoption of innovations, Rogers described the individual as moving through the following series of stages in their decision to purchase: 1. Awareness; 2. interest; 3. evaluation; 4. Trial; and 5. Adoption. This was one of the first attempts to describe a sequential process which illustrated the stages of the consumer decision and, as will be seen in later discussion. 1.2 LEARNING OBJECTIVES After studying this unit, you should understand • • About the consumer The concept and the historical review of Consumer Behavior

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• • • • •

The Nature and Dimensions of Consumer Behavior The Applications of Consumer Behavior knowledge in marketing decisions The Components for Marketing Analysis About the Segmentation of Market and the steps involved in it Approaches to the study of Consumer Behavior

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1.3 CONSUMER Consumer is a broad term and any person who uses a product or service or deals with it can be called a consumer. It is not necessary that the person should be a buyer of the product or service. The term consumer should not be confused with the word ‘customer’ which has the limited meaning of usually denoting a person who contracts to buy the product. For example, if you are selling tea-dust, you may have just one customer in the Manager of a cafeteria. On the other hand all the persons who drink tea in the cafeteria are your consumers. Consumers are classified into two categories. They are ‘personal consumers’ and ‘institutional consumers’. Personal consumers are those individuals and households who themselves consume goods or services. Institutional consumers on the other hand are businesses, organizations and groups that buy and consume goods and services during the course of their operations. 1.4 DEFINING CONSUMER BEHAVIOR 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”. Technically, consumer behavior is defined as, “the dynamic interaction of affect and cognition, behavior and environmental events by which human beings conduct the exchange aspects of their lives”. One “official” definition of consumer behavior is “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.” Although it is not necessary to memorize this definition, it brings up some useful points: • Behavior occurs either for the individual, or in the context of a group (e.g., friends’ influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use). Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from
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may have serious repercussions for the national health and economy. Viewing consumer behavior in a broad context. factors affecting individuals in their daily lives also influence their purchase activities. the consumer decision process is activated. That is. It does not contain sufficient detail to predict particular behaviors. or garbage piling up at landfills) this is also an area of interest. it is actually a subset of human behavior. family. Many of these situations will cause us to consider a purchase. many of which require consumption decisions to satisfy. Individuals develop self-concepts and subsequent lifestyles based on a variety of internal (mainly psychological and physical) and external (mainly sociological and demographic) influences. values. and memory) and external factors (such as our culture. It is a conceptual model. Our decision and even the process of making it. we must present it in a relatively simple. it does reflect our beliefs about the general nature of consumer behavior. Each of us has a view of ourselves (self-concept). For example. organic. Our view of ourselves and the way we try to live results in desires and needs that we bring to the multitude of situations we encounter daily. friends. motor oil being sent into sewage systems to save the recycling fee. or aggressive marketing of easy credit. no conscious. however. A quick analysis of your own behavior and that of your friends will reveal the fallacy of this perception. disorganized.1 is the model that we use to capture the general structure and process of consumer behavior and to organize this text.. is both conceptually should and intuitively appealing. The impact of consumer behavior on society is also of relevance. Consumer behavior involves services and ideas as well as tangible products. These self-concepts and lifestyles produce needs and desires. and we try to live in a particular manner given our resources (lifestyle). and circular. 4 ANNA UNIVERSITY CHENNAI . Unfortunately. age. Our view of ourselves and the way we try to live are determined by internal factors (such as our personality.5 THE NATURE OF CONSUMER BEHAVIOR Figure 1. linear manner due to the limitations of written communications. while simple. and subculture).DBA 1722 NOTES • • product disposal (e.g. aggressive marketing of high fat foods. emotions. This model. As individuals encounter relevant situations. This process and the experiences and acquisitions it produces in turn influence the consumers’ selfconcept and lifestyle by affecting their internal and external characteristics. will cause learning and may affect many other internal and external factors that will change or reinforce our current self concept and lifestyle. Consumer behavior is frequently complex. 1.

A section of 5 ANNA UNIVERSITY CHENNAI . Jeans and the brands which exist in this category are an example of this impact. Shampoos and creams. 1. Even in such a category. Shifts in psychographic and lifestyle changes have given rise to new eating habits (fast foods. an innovative marketer has come up with an ethnic brand (Ruf and Tuf) by applying the principles of consumer behavior. Westernization has impacted the selection of product categories and brands. In today’s world of competitive offerings. Several interesting trends can be expected in the new millennium. diversity of consumer preferences and proliferation of brands. Leisure and luxury markets have boomed in the recent times.CONSUMER BEHAVIOUR NOTES Figure.1 The Nature of Consumer Behavior 1. eat-outs and food socials). consumer behavior has become extremely important for marketing decisionsbe it marketing mix elements. which only the elite could afford a decade back are today marketed in sachets across the country.6 BEHAVIORAL DIMENSIONS OF MARKETING Marketing has been developed as a discipline only in the past few decades in India. segmentation changes or exploring new dimensions in consumer behavior in a changing environment.

which focused much more on the buyer and the immediate antecedents and consequences of the purchasing process.what the consumer buys. Consumer behavior links these four aspects to enable a marketer to formulate marketing strategies. This view will lead us to examine indirect influences on consumption decisions as well as consequences that involve more than the purchaser and seller. secure. The field of consumer behavior is the study of individuals. Consumer behavior deals with the psychological process of decision making by consumers in a social context which also exerts group pressures on them. use. (decision-making process) interaction of the consumer with several groups like friends. may give rise to products like refrigerated glove apartments and cup holders in cars and perhaps. This behavior. These factors govern the individual thinking process (like motivation.7 APPLICATIONS OF CONSUMER BEHAVIOR: Marketing Strategy All marketing strategies and tactics are based on explicit or implicit beliefs about consumer behavior. is motivated by a need to own the category and the particular brand (based on functional and emotional benefits) and buy the brand from an outlet. Consumer behavior provides the “behavioral fit” to marketing mix elements which need to be changed from time to time by marketers. or organizations and the processes they use to select. yoghurts in tubes. It can greatly reduce the odds of bad decisions. how he buys. Social marketing 6 ANNA UNIVERSITY CHENNAI . The basic elements of consumer behavior. This trend. services. decision-making steps involved in buying. Social Marketing Is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole. when and where he buys and how much he buys is understood by the interaction of different factors associated with consumer behavior. in turn. personality. This view of consumer behavior is broader than the traditional one. has fast caught up in the developed world. family and colleagues (group-oriented concepts and selection of the brand and outlet depending on price and features and emotional appeal (marketing mix elements in a given environment). experiences or ideas to satisfy needs and the impacts that these processes have on the consumer and society. Thus knowledge of consumer behavior can be an important competitive advantage. Decisions based on explicit assumptions and sound theory and research are more likely to be successful than are decisions based solely on implicit intuition. groups. called grazing. For example a consumer buying a brand of two-wheelers. 1. This buying behavior involves several psychological factors. perception and attitude).DBA 1722 NOTES consumers may eat while driving. and dispose of products.

to enhance support of charities. to increase the percentage of children receiving their vaccinations in a timely manner. to reduce drug use. and to support many other important causes. as citizens. knowledge of consumer behavior can enhance our understanding of our environment and ourselves. including work or sleep (both of which also involve consumption). it is important that consumers accurately understand the strategies and tactics being used. There are many issues where the appropriate ethical action for marketers is not clear-cut. It has done so by enacting laws and regulations that prohibit or require specific marketing actions. the success of nonprofit groups. effective purchasing behavior and reasoned business ethics. to reduce behaviors potentially leading to AIDS. Therefore. Informed Individuals Most economically developed societies are legitimately referred to as consumption societies. they also occur in the content of many television shows in the products that are used in movies. It affects the life of individuals. your family and your friends. important activity. physical. Regulatory Policy Marketing is a highly visible. Regulating marketing activities requires the same level of understanding and the extensive knowledge of the consumer behavior as does managing marketing programs. It is equally important that all of us. and technological environment in which these elements will interact. However. Literally thousands of firms are spending millions of dollars to influence you. product features. understand the consumer behavior basis of these strategies so that we can set appropriate limits on them when required.8 MARKET ANALYSIS COMPONENTS Market analysis requires a thorough understanding of the organization’s own capabilities. Just as commercial marketing strategy. to encourage environmentally sound behaviours such as recycling. These influence attempts occur in ads. Given the magnitude of these direct and indirect influence attempts. and in the materials presented to children in schools. sales pitches. 1. and store environments. NOTES 7 ANNA UNIVERSITY CHENNAI . Most individuals in these societies spend more time engaged in consumption than in any other activity. and the profits of businesses. and the economic. society has declared that other marketing actions are clearly inappropriate. Our consideration of the regulation of marketing practices will separate regulations designed to protect children from those designed to protect adults.CONSUMER BEHAVIOUR has been used in attempts to reduce smoking. successful social marketing strategy requires a sound understanding of consumer behavior. However. the capabilities of current and future competitors. packages. Such an understanding is essential for sound citizenship. the consumption process of potential customers.

technological sophistication. market and consumer knowledge and so forth. 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. IBM’s first attempt to enter the home computer market with the PC Jr. and introduce a new product)? 4. channel strength. This involves evaluating all aspects of the firm. these strengths were not relevant to the household consumer market. If we are successful. increase advertising. the physical environment. and technological developments affect consumer needs and expectations as well as company and competitors capabilities. Although IBM had an excellent reputation with large business customer and a very strong direct sales force for serving them.DBA 1722 NOTES The Consumers It is not possible of anticipate and react to customers needs and desires without a complete understanding of consumer behavior. the following questions must be answered: 1. production capabilities. Failure to adequately. Marketing skills would include new product development capabilities. In addition. which have the capability (financial resources. for any significant marketing action. research and development capabilities. advertising abilities. including its financial condition general managerial skills. reputation. marketing strengths) to respond? 3. service capabilities. The Company A firm must fully understand its own ability to meet customer needs. This requires the same level of knowledge of a firm’s key competitors that is required of one’s own firm. marketing research abilities. 8 ANNA UNIVERSITY CHENNAI . government regulations. understand one’s own strengths can cause serious problems. was a failure in part for this reason. Of those firms that are injured. Discovering customer’s current needs is a complex process but it can often be accomplished by marketing research. and marketing skills. Is our strategy (planned action) robust enough to withstand the likely actions of our competitors or do we need additional contingency plans? The Conditions The state of the economy. How are they likely to respond (reduce prices. The Competitors It is not possible to consistently do a better job of meeting customer needs than the competition without a thorough understanding of the competition’s capabilities and strategies. which firms will be hurt (lose sales or sales opportunities)? 2.

for example). A market segment is a portion of a larger market whose needs differ somewhat from the larger market. This approach has also been described as mass marketing.P would require radically different strategies. presents a standard product that differs little if any from competition. With this approach. more homogeneous segments. the closer the total product can be to 9 NOTES ANNA UNIVERSITY CHENNAI . a number sufficient for profitable operations are expected to be attracted. each region. makes heavy use of mass promotion. The development of computers has changed the way many people work and has creat5ed new industries. In India. each state. To be viable.9 APPROACHES TO THE STUDY OF CONSUMER BEHAVIOR Marketers may approach target markets in their aggregate and heterogeneous form or as smaller. Market aggregation. Clearly a firm cannot develop a sound marketing strategy without anticipating the conditions under which that strategy will be implemented. and attempts to distinguish the product as being superior. undifferentiated marketing. and product differentiation. The reasoning behind market aggregation is that although consumers may differ. provides a different environment. a firm that develops a total product focused solely on the needs of that segment will be able to meet that segment’s desires better than a firm whose product or service attempts to meet the needs of multiple segments. b) Market Segmentation Perhaps the most important marketing decision a firm makes is the selection of one or more market segments on which to focus. Since a market segment has unique needs. in effect. Although the marketer recognizes that not everyone will buy the product. each individual or household has unique needs for most products (a preferred color combination. Logistics and infrastructure across the interiors of Maharashtra and M. The smaller the segment. 1. By so doing it seeks to have demand conform to what manufacturers are willing to supply. that little if any subdivision of market is applied. a segment must be large enough to be served profitably. therefore. Tastes and combinations of food products would change significantly across states. they are sufficiently alike to approach as a homogeneous grouping for the product under consideration. a firm would produce a single product and offer it to all consumers with a single marketing program. To some extent.CONSUMER BEHAVIOUR 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. a) Market Aggregation A market aggregation strategy means.

communications. comfort. and services provided to the target market. The Product A Product is anything a consumer acquires or might acquire to meet a perceived need. It is the difference between the total benefits and the total costs that constitutes customer value. Thus. Customer value is the difference between all the benefits derived from a total product and all the costs and risks of acquiring those benefits. price. the smaller the segment. image. Consumers are generally buying need satisfaction. flexible manufacturing and customized media are making it increasingly cost effective to develop products and communications for small segments or even individual consumers. “in the factory we make cosmetics. as well as risking injury from an accident. we will now examine marketing strategy in more depth. owning a car can provide a number of benefits. adding to environmental pollution. The marketing mix is the product. insurance. the more it costs to serve the segment. and parking fees. in the store we sell 10 ANNA UNIVERSITY CHENNAI . a tailor-made suit costs more than a mass-produced suit. including flexible transportation. Historically. Selecting an attractive segment to serve 1. Since customer value is delivered by the marketing strategy.DBA 1722 NOTES that segment’s desires. or effects of marketing strategy. status. For example. However. Providing superior customer value requires the organization to do a better job of anticipating and reacting to customer needs than the competition does. pleasure. the firm must develop its general marketing strategy as it evaluates potential target markets. However. To survive in a competitive environment. gasoline. securing these benefits requires paying for the car. distribution.10 MARKETING STRATEGY AND CONSUMER BEHAVIOR Since all four of the applications of consumer behavior described above focus on the development. an organization must provide target customers more value than is provided by its competitors. As the former head of Revlon said. It is the combination of these elements that meets customer needs and provides customer value. regulation. Identifying product-related need sets 2. Describing each group 4. Marketing strategy is basically the answer to the question: How will we provide superior customer value to our target market? The answer to this question requires the formulation of a consistent marketing mix. Group customers with similar need sets 3. depending on the person and the type car. not physical product attributes. and dealing with traffic jams and other frustrations. maintenance. Market segmentation involves four steps: 1. and even companionship.

A few years ago. even enhanced freshness are not the principal criteria for success if what those people seek is “a break today. Consider the Chinese computer market.CONSUMER BEHAVIOUR hope. products must meet the needs of the target market better than the competition does. should the communications be aimed at the children or the parents or both? The answer depends on the target market and varies by country. consumers don’t purchase quarter-inch drill bits but the ability to create quarter-inch holes. using the Internet. It’s giving a wide range of people the experience of a reliable break from fatigue. grown-up responsibility. Often it is necessary to determine who within the target market should receive the marketing message. the behavioral objective for most marketing communications is often much more NOTES • 11 ANNA UNIVERSITY CHENNAI . Over 15. others are focused on channel members or those who influence the target-market members. and organizing home finances. Thus. many of these will not succeed. exactly. the sales force.” Thus. Communications Marketing communications include advertising. Obviously. do we want to communicate? While most messages are aimed at the target-market members. These include tutorials on such topics as using the computer. an automobile is a product. stress.” These insights have been translated into bundling software products for first-time buyers (most of the market) into its computers.” We use the term product to refer to physical products and primary or core services. Today. fewer calories. it dominates all competitors. Consider one analyst’s description of McDonald’s product. or more conveniently. A firm marketing such items would be wise to communicate directly with these individuals. packaging. How? According to its general manager. More variety. cheaper.000 new products and new versions of existing products are introduced to supermarkets alone each year. Federal Express lost much of its overnight letter delivery business not to UPS or Airborne but to fax machines and the Internet because they could meet the same consumer needs faster. What affect do we want our 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. “We have much more insight into the needs of Chinese customer. To be successful. a state-owned companyLegend-appeared headed for oblivion as China opened its market to Western firms. and any other signal that the firm provides about itself and its products. For example pediatric nurses are often asked for advice concerning diapers and other nonmedical infant care items. as is a transmission overhaul or a ride in a taxi. An effective communications strategy requires answers to the following questions: • With whom. For a children’s breakfast cereal. public relations. While this may be the ultimate objective. The source of McDonald’s pre-eminence is neither hamburgers nor fast-food service.

What means and media should we use 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. Internet) and which specific vehicles (television programs. feel good about having bought the product. newspapers. specific magazines. A product priced “too low” might be perceived as having low quality. where? Answering these questions requires knowledge of the decision process used by the target market for this product. This is a desirable feature to some consumers. price sometimes serves as a signal of quality. Owning expensive items also provides information about the owner. radio. magazines. month. one can rent or lease the product such as a video). or rely on consumers to find us on the Internet? If we advertise in mass media. the cost of owning/using an automobile includes insurance. gasoline. or a host of other communications effects. Consumer cost is everything the consumer must surrender in order to receive the benefits of owning/using the product. maintenance. as well as knowledge of the perception process. seek more information about the product. However. Developing an effective message requires a thorough understanding of the meanings the target audience attaches to words and symbols. • • Price Price is the amount of money one must pay to obtain the right to use the product. The best approach depends on the situation at hand. When should we communicate with the target audience? Should we concentrate our communications near the time that purchases tend to be made or evenly throughout the week.DBA 1722 NOTES • immediate. If nothing else. use direct mail. limited usage rights (i. Economists often assume that lower prices for the same product will result in more sales than higher prices. 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. time and discomfort while shopping for the car. and perhaps even discomfort 12 ANNA UNIVERSITY CHENNAI . One can buy ownership of a product or. As described earlier. That is. setting a price requires a thorough understanding of the symbolic role that price plays for the product and target market in question. or year? Do consumers seek information shortly before purchasing our product? If so. it indicates that the owner can afford the expensive item. license fees. like the product. pictures. What message will achieve the desired effect on our audience? What words. Therefore. websites.e. and symbols should we use to capture attention and produce the desired effect? Marketing messages can range from purely factual statements to pure symbolism. it may seek to have the audience learn something about the product. finance charges. recommend the product to others. which media (television. for many products. It is important to note that the price of a product is not the same as the cost of the product to the customer..

. is essential t success. Focus groups and product concept tests revealed strong consumer acceptance.11 CONSUMER DECISIONS The consumer decision process intervenes between the marketing strategy (as implemented in the marketing mix) and the outcomes. Distribution Distribution. Although many texts do not treat service as a separate component of the marketing mix. the total cost to the customer decreases while the revenue to the marketer stays the same or even increases. the fairly serious adult rider that these bikes targeted demands individual sales attention by knowledgeable salespeople. Providing services that customers do not value can result in high costs and high prices without a corresponding increase in customer value. car repairs. having the product available where target customers can buy it. we do because of the critical role it plays in determining market share and relative price in competitive markets. it is essential that the firm furnish only those services that provide value to the target customers.CONSUMER BEHAVIOUR about increasing pollution. the outcomes of the firm’s marketing strategy are with determined by its interaction with the consumer decision process. Here. as the following example shows: Huffy corp. while free pickup and delivery of the car would be an auxiliary service. service refers to auxiliary or peripheral activities that ate performed to enhance the primary product or service. 1. Therefore. As Huffy’s president said: “It was a $5 million mistake. Part of this consideration is the risk perceived by the consumer in investing in the product. not at mass retailers. If successful. and medical treatments. we would consider car repair to be a product (primary service). Obviously. Unfortunately. A firm that does not explicitly manage its auxiliary services is at a competitive disadvantage. did careful research before launching a new bicycle called cross Sport. Huffy quickly launched the $159Cross Sport through its strong mass distribution channels such as Kmart and Toys “R” Us. That is. Such salespeople are found at specially bike shops. become 13 NOTES ANNA UNIVERSITY CHENNAI . good channel decisions require a sound knowledge of where target customers shop for the product in question. a $700 million bicycle manufacturer. in addition to the purchase price. Auxiliary services cost money to provide. Thus. One of the ways firms seek to provide customer value is to reduce the nonprice costs of owning or operating a product. Only in rare cases will customers go to much trouble to secure a particular brand. The new bike was a cross between a mountain bike and the traditional thin-framed 10-speed bicycle.” Service Earlier. we defined product to include primary or core services such as haircuts. The firm can succeed only if consumers see a need that its product can solve.

and holding this meaning in what is termed ‘short-term memory’. deriving meaning from these stimuli. A significant part of this entire text is devoted an understanding of the consumer decision process. Figure. The alternative-evaluation phase. Satisfaction will affect the consumer’s beliefs about the brand. When such comparison leads to favorable evaluations. Any informational stimuli are subject to information-processing activities which the consumer uses to derive meaning from stimuli. It occurs when the consumer is activated by awareness of a sufficient difference between their actual state of affairs and their concept of the ideal situation. or how to evaluate them. One such outcome is satisfaction as a result of direct experience in using the brand. If an internal search does not provide sufficient information about products. This process involves allocating attention to available stimuli.DBA 1722 NOTES aware of the product and its capabilities. including advertisements. the consumer continues with a more involved external search for information. and comments from friends. This result in exposure to numerous informational inputs called stimuli. post purchase experiences result in feedback to the problem-recognition stage. a purchasing process usually follows strong purchase intentions. which can arise from a variety of sources. This process involves a series of selections. These can generate a heightened desire for additional information and influence subsequent problem recognition. the consumer is likely to develop a purchase intention toward that alternative receiving the most favorable evaluation.2 Consumer Purchase Decision Process The process may be viewed as starting when the consumer engages in problem recognition. printed product reviews. proceed to it. Other outcomes are dissatisfaction and post sale doubt. involves comparing the information gained in the search process for alternative products and brands to the product judging criteria or standards the consumer has developed. 14 ANNA UNIVERSITY CHENNAI . The consumer’s purchase then leads to various outcomes. where it can be retained briefly to allow further processing. From the above figure. and become satisfied with the results of the purchase. 1. decide that it is the best available solution. including the type of retail outlet as well as the specific brand or service to use. In both cases.

Convincing consumers that your brand offers superior value is necessary in order to make the initial sale. and it must be enough to satisfy their needs. However. Retaining current customers requires that they be satisfied with their purchase and use of the product. as they produce the revenue necessary for the firm to continue in business.12 OUTCOMES 1. Thus customer satisfaction is a major concern of marketers. one must have a thorough understanding of the potential consumers’ needs and of their information acquisition process to succeed at this task. virtually all firms evaluate the success of their marketing programs in terms of sales. Obviously. as well as by direct experience with it. sales are likely to occur only if the initial consumer analysis was correct and if the marketing mix matches the consumer decision process. Sales Sales are a critical outcome. You must deliver as much or more value than your customers initially expected. This requires an even greater understanding of consumer behavior Honda’s recent efforts in this are described below: Honda had the factory workers who actually assemble the cars as well as marketing mangers conduct telephone interviews with over 47.000 Accord owners. 15 NOTES ANNA UNIVERSITY CHENNAI .1 Firm outcomes Product position The most basic outcome for a firm of a marketing strategy is its product position-an image of the product or brand in the customer’s mind relative to competing products and brands. creating satisfied customer. pictorial representations. Customer Satisfaction Marketers have discovered that it is generally more profitable to maintain existing customers than to replace them with new customers. The interviews sought to determine customer satisfaction levels with all aspects of the Accord as well as ideas for improvements.CONSUMER BEHAVIOUR 1. Therefore. and feelings about the product or brand. It is determined by communications about the brand from the firm and other sources. The interviews were conducted by those who would have to make any necessary changes. and thus future sales. requires that customers continue to believe that your brand meets their needs and offers superior value after they have used it. Most marketing firms specify the product position they want their brands to have and measure these positions on an ongoing basis. 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. As we have seen. This image consists lf a set of beliefs. It does not require purchase or use for it to develop.12.

readily available credit. The result is often financial distress. aggressive merchandising result in a level of expenditures that cannot be sustained by their income. snacks with high sugar or fat content. and inadequate resources for proper child care.2 Individual Outcomes Need Satisfaction The most obvious outcome of the consumption process for an individual. Some of these people. delayed or bypassed medical or dental care. whether or not a purchase is made. or even homelessness. These two might take a food supplement because they believe it is enhancing their health while in reality it could have no direct health effects or even negative effects. and their families. as is the consumption of alcoholic beverages.12. which has caused devastating financial consequences for some. family stress. Companies are not the only entities that promote potentially harmful products. is some level of satisfaction of the need that initiated the consumption process. For most consumers. 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. Injurious consumption occurs when individuals or groups made consumption decisions that have negative consequences for their long-run well-being. For other consumers. in turn are then harmed by this consumption. This can range from none (or even negative if a purchase increases the need rather than reduces it) to complete. and widespread. unrelenting advertising. Injurious Consumption While we tend to focus on the benefits of consumption. One objective of government regulation and a frequent goal of consumer groups is to ensure that consumers can adequately judge the extent to which products are meeting their needs... we must remain aware that consumer behavior has a dark side. bankruptcy. 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 after retirement. Two key processes are involved-the actual need fulfillment and the perceived need fulfillment. Cigarette consumption is encouraged by hundreds of millions of dollars in marketing expenditures. The following quote indicates the magnitude of the problem: 16 ANNA UNIVERSITY CHENNAI . Most states in the United States now promote state-sponsored gambling. For example. These expenditures cause some people to consume these products or to consume ore of them.DBA 1722 NOTES 1. and other potentially harmful products. fulfilling one need affects their ability to fulfill others due to either financial or time constraints.

employment levels. The types of products and brands purchased influence the balance of payments. and consumer demand consists of the decisions you and I and our families and our friends make! 17 NOTES ANNA UNIVERSITY CHENNAI . A recession 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. However. Physical Environment outcomes Consumers make decision that have a major impact on the physical environments of both their own and other societies. Thus. Western Europe. It also appears to produce health problems for many consumers. Consumers smoked and chewed tobacco long before mass media or advertising as we know it existed. both developed and developing.3 Society Outcomes Economic Outcomes The cumulative impact of consumers’ purchase decisions. 1. and wage levels. and an inefficient use of grain. While these are issues we should be concerned with and we will address throughout this text. water. The decisions of people in most developed and in many developing economies to consume meat as a primary source of protein result in the clearing of rain forests for grazing land. these resources are being used because of consumer demand. including the decision to forgo consumption.12. Decisions made in one society. may also be part of the cure. Their decisions on whether to buy or save affect economic growth. is a major determinant of the state of a given country’s economy. as we will see shortly. though marketing activities based on knowledge of consumer behavior undoubtedly exacerbate some forms of injurious consumption. The destruction of the rain forests and other critical habitat areas receives substantial negative publicity.CONSUMER BEHAVIOUR Every year over 10 million American consumers suffer financial losses from their addiction to gambling… There are currently 10 million alcoholics and 80 million cigarette smokers in the United States… Every year 25. industry growth rates. the pollution of many watersheds due to large-scale feedlots. and illegal drug consumption continues to grow worldwide despite the absence of large scale marketing. The cumulative effect of American consumers decisions to rely on relatively large private cars rather than mass transit in significant air pollution in American cities as well as the consumption of nonrenewable resources from other countries. particularly large wealthy societies like the United States. the availability and cost of capital.000 people die as a result of alcohol related traffic accidents… All of these disturbing and disturbed between behaviors result from consumption gone wrong. and energy to produce protein. and so forth. they are not the sole cause and. and Japan have a major impact on the economic health of many other countries. we should also note that alcohol consumption seems to have arisen simultaneously with civilization and evidence of gambling is nearly as old. or at least advertising.

However. And the consumer attributes were discussed with the framework of market segmentation – i.14 REVIEW QUESTIONS Review the activities undertaken by marketing oriented firms and show the relevance of consumer behavior to each activity. the same authors conclude: “Although these problems appear daunting. as described above. These decisions have a major impact on the overall quality of life in n a society. The social costs of smoking-induced illnesses. parks.” Thus. they are all problems that are solvable through altruistic [social] marketing.DBA 1722 NOTES Social Welfare Consumer decisions affect the general social welfare of a society. Decisions concerning how much to spend for private goods (personal purchases) rather than public goods (support for public education.13 SUMMARY This unit serves as an introduction to the field of consumer behavior. and so forth) are generally made indirectly by consumers’ elected representatives. 1. A sound understanding of consumer behavior is essential to the longrun success of any marketing program.e. List out the pitfalls a marketer may encounter by ignoring the study of consumer behavior. health care. 1. the firm must develop its general marketing strategy as it evaluates potential target markets. marketing and consumer behavior can both aggravate and reduce serious social problems. and drug abuse are staggering. they have a major impact on the social welfare of a society.. Therefore we recognize that in certain situations consumers will purchase products and services for use by other individuals. How is the study of consumer behavior important in the following situations? 18 ANNA UNIVERSITY CHENNAI . Injurious consumption. alcoholism. And this unit ends with the consumer decision process intervenes between the marketing strategy (as implemented in the marketing mix) and the outcomes. A clearer understanding should be gained about whom of consumer behavior – that consumers are people of widely varying characteristics. affects society as well as the individuals involved. Since customer value is delivered by the marketing strategy. After several orienting discussion centers on defining consumer behavior and describing the focus and text uses for studying it to view consumer behavior as the decision process. To the extent that marketing activities increase or decrease injurious consumption. an approach to selecting groups of homogeneous consumers as targets for marketing activity.

NOTES Relate one of your experiences where post purchase outcomes significantly influenced your future purchase behavior.CONSUMER BEHAVIOUR a) b) c) In an economy where there is surplus production capacity. How does the concept of market aggregation differ from market segmentation? What are the benefits and costs of market segmentation? 19 ANNA UNIVERSITY CHENNAI . In an intensely competitive situation relating to a product marketed by several companies with their products being nearly identical. In an economy where there are limited disposable incomes of the consumers and low purchasing powers.

DBA 1722 NOTES 20 ANNA UNIVERSITY CHENNAI .

Thus. Therefore. minor. and reasoned business ethics. Marketing stimuli have meaning only as individuals interpret them. The fairness of a price increase is interpreted on the basis of the consumer’s inferred motive for the increase. you should understand About the consumer needs and motivational process The Personality and consumer perception How consumers learn across a variety of situations The Consumer attitudes and change The Communication and persuasion of consumer About Self image and life style analysis of consumer 21 ANNA UNIVERSITY CHENNAI . Such an understanding is essential for sound citizenship. and sound or unsound mind.1 OVERVIEW The term ‘individual’ means a human being or a single person. married or unmarried. The traditional viewpoint has been to define consumer strictly in terms of economic goods and services. Individuals are not passive interpreters of marketing and other messages but actively assign meaning based on their needs.2 LEARNING OBJECTIVES After studying this unit. Likewise. The term “consumer” more generally refers to anyone engaging in any of the activities. 2. So any study of consumer behavior would be incomplete if it treated only one consumer role. desires. This position holds that consumer is a potential purchaser of products and services offered for sale. consumers interpret movie critics’ reviews in light of their knowledge about the critic and his or her biases and preferences. Most economically developed societies are legitimately referred to as consumption societies. The individual may be major.CONSUMER BEHAVIOUR UNIT II NOTES CONSUMER AS AN INDIVIDUAL 2. Information about competing brands is often inaccurately interpreted to favor a preferred brand. expectations. and experiences. Most individuals in these societies spend more time engaged in consumption than in any other activity. consumers’ interpretations of negative publicity depend on their prior commitment to the brand involved. effective purchasing behavior. including work or sleep (both of which also involve consumption). knowledge of consumer behavior can enhance our understanding of our environment and ourselves.

Or a person with a car breakdown will deliberate alternative ways of getting to the destination. This definition implies that motives involve two major components: 1.S. Autonomic (physiological) or emotive arousal can elicit the relevant behavior directly. A mechanism to arouse bodily energy. soldiers being held in China has aroused negative feelings towards Chinese products in the United States. the slight of a bear will automatically (i.1 The Nature of Motives A number of writers have drawn distinctions between motives and other related concepts such as needs. automatically) make you flee. and drives. For example. wants. Emotive feelings are aroused when we buy products that are made in our home country versus foreign countries.3 THE NATURE AND ROLE OF MOTIVES 2. The arousal component activates general tension or restlessness but does not provide direction for release of this energy.e. Various concepts have been offered to explain how motives exert their directional influences on consumers. The arousal leads a person to act (i. thirst. That is. For our present purposes these distinctions are not very helpful and will be avoided. the onset of a new project causes cognitive arousal.DBA 1722 NOTES 2. to behavior). 22 ANNA UNIVERSITY CHENNAI . This view also held that behavior instrumental in satisfying a need would become associated with it and have a higher likelihood of occurring in future situations involving the same need arousal... Later it was stressed that basic needs (hunger.e. In business. These feelings are magnified when there are tensions between the home country and a foreign country. for example. Earlier views held that inborn instincts beyond the individual’s control provided the direction for behavior. The directive aspect of motives focuses such aroused energy toward some goal in the individual’s environment. and the like) impelled people toward action. when our hunger is aroused. For example. A force that provides direction to that bodily energy. a person seeking a way out of a commitment will identify and deliberate available options. and there is a request for proposals that are scanned and deliberated upon. Cognitive arousal also would elicit behavior by generally only after further cognitive activity to figure out possible goal-directed behaviors. and seeing something funny may sees in the mail an express mail envelope. his or her automatic response is to open that envelope first.3. we are usually directed toward particular foods. 2. the recent case of U. It might be compared to the generally random thrashing about that newborn babies often show. We will view a motive as an inner state that mobilizes bodily energy and directs it in selective fashion toward goals usually located in the external environment.

and psychographics Whatever the direction of motivation.3. evaluating the relative usefulness of products in terms of these goals. and how people process information. achievement. for a car buyer strongly influenced by the convenience motive.2 The Role of Motives The role of motives is to arouse and direct the behavior of consumers.3. it manifests in three facets: needs. evaluation.3 Facets of motivation: Needs. a cognitive orientation has gained in popularity. They serve to guide behavior in a general way across a wide variety of decisions and activities. Directing Other Influences At a more fundamental level. emotions. people often view products of services as a means by which they can satisfy their motives. For this reason. 2. In their directive role. consumers often go one step further and think of products as their actual goals. It emphasizes the role of mental processes such as planning. and they 23 NOTES ANNA UNIVERSITY CHENNAI . Included among basic strivings are very general goals such as safety. features such as electronic speed control and automatic driver-seat adjustments would become more important choice criteria than would styling or mileage. The arousal component activates bodily energy so that it can be used for mental and physical activity. and goal selection in directing behavior. This suggests that consumers have a very active role in selecting their goals. affiliation. For example. This also results in directional influences on behavior. Influencing Choice Criteria Motives also guide consumers in developing criteria for evaluating products. motives have several important functions for guiding behavior. which in turn regulates how we interpret and respond to our environment. Emotions. 2.CONSUMER BEHAVIOUR These somewhat simplistic views of motivation have been found lacking because they imply that people are impelled by various forces and have very little conscious control over the direction of their own actions. personality. motives affect the individual determinants of perception. and consciously orchestrating their behavior in terms of these products. Needs are gaps between the desired and the current state. attitudes. Identifying Goal Objects Although there are exceptions. without realizing that they actually represent ways of satisfying motives. Thus. motives influence information processing. or other desired states which consumers seek to achieve. and psychographics. learning. Defining Basic Strivings Motives influence consumers to develop and identify their basic strivings. In fact.

thirst) 2. these needs remain perpetually less than adequately met so that they never rise to higher-level needs. but most contemporary books on marketing do. purchase and use of guns is on the rise in major urban centers to ensure personal safety. (i. 24 ANNA UNIVERSITY CHENNAI . Physiological needs (hunger. For many. only the first two needs in Maslow’s hierarchy would be needs while the last three are wants. Ditcher’s consumption needs. many of the differences in what customers use and buy are due to physiological differences. and its deprivation provides the drive. other safety concerns relate to automobile safety with regard to health as consumers develop a germ phobia. he or she regresses back to lower-level needs should these needs become unsatisfied again. Maslow does not distinguish between needs and wants. purchase. safety and security needs are responsible for many people’s fear of flying. Personal safety is a motive as old as survival itself. physiological differences due to genetics. At the next level. realization) A person progresses to higher-level needs if the lower-level needs are satisfied. The desired state provides the goal-object. Belongingness and love needs (Social needs) 4. Murray’s psychogenic needs. Esteem and ego needs (self-esteem. and various marketing scholars’ list of customer needs. recognition. clothing and shelter.DBA 1722 NOTES lend themselves more readily to cognitive consciousness and appraisal. protection) 3. Psychologies and consumer researchers have suggested various categories of needs. race. gender and age). 2. Among the most relevant to marketers are Maslow’s need hierarchy. and for buying insurance against various uncertainties of life. such as those below the poverty line. Psychographics combine behaviors driven by both needs and emotions. Emotions are more autonomic and engender more personal experience. According to this distinction. Safety and security needs (Security. Furthermore. status) 5. Maslow’s Needs for household customers Physiological needs lead customers to strive for. 2.4. for example. and in modern times.1 Maslow’s’ Hierarchy of Needs According to psychologist Abraham Maslow. Maslow’s hierarchy of needs consists of (from lowest to higher): 1. and use food. Higher-level needs are dormant until lower-level needs are satisfied. human needs and wants are arranged in a hierarchy..4 CUSTOMER NEEDS The concept of needs and wants is closely aligned to the concept of motivation. Need for self-actualization (Self-development.e. Likewise.

Finally. This can be visualized at two levels. Maslow’s needs for business customers Like customers in household markets. in a cosmic sense. the kind of car you choose to drive. reflects who we are. NOTES 25 ANNA UNIVERSITY CHENNAI . such as taking an adult-education course or tenaciously pursuing a skill toward perfection. at least three resources: money. Beyond impressing others. and a sense of belonging. the designer logos on the clothes you wear. and esteem needs are satisfied. according to Eastern philosophy. and we even buy and give gifts to ourselves because we feel we deserve them. and raw materials and equipment. elevators need to be inspected and maintained for safe operations. This self actualization motive is what is behind a person engaging.that is. In office buildings. in our judgment. all vendors must assure ad abide by data security requirements. In department of Defense contracts. for example. Indeed. Many products. safety and security are key concerns in government and business buying. social. akin to physiological needs of the individual. we drive a car that. We also buy products and services we deem fitting of our esteem. people begin to explore and extend the bounds of their potential. flowers and other kinds of gifts. As an enterprise. once these physiological. affection. and suppliers of raw materials and equipment are catering to the survival needs of the business enterprise. like in competitive sports. for example. meet one’s creator. what school you send your youngster to. and the places you vacation are at least in part determined by how you peer and significant others will look upon these choices. to become what one was supposed to be.CONSUMER BEHAVIOUR Social motives of belongingness and love are evident when customers want to buy products that are well regarded by others so that the use of those products brings the customers’ peer approval. for example. Banks and venture capitalists who supply cash. business customer as an enterprise and business customer as individuals working in firms. the safety features are of paramount importance when city governments procure vehicles for their police forces. Security needs for business firms translate into insurance against loss of property and assets and against liabilities that may arise in various business transactions. recruitment agencies who supply employees. are bought specifically to promote relationships between individuals. The kind of neighborhood you choose to live in. business firms need. customers in the business markets experience Maslow’s hierarchy of needs. we visit stores where we are treated with respect. seek self-actualization. we all work hard to gain success in our individual sphere of activity and to acquire the qualities others consider desirable and virtuous so that we may win our own and others’ esteem. in self-improvement activities. employees. Next. or even doing meditation to. for their physical survival. such as greeting cards. First consider business as an enterprise.

businesses need to buy. Next. many products are bought simply to satisfy a person’s belongingness and esteem needs. 2.4. corporate jets.DBA 1722 NOTES Belongingness for business enterprises refers to recognition by peer organizations and being admitted to formal or informal memberships groups of other similar organizations. tightly controlled quality in raw materials. they want to feel secure that it is a wise decision and be assured that the product or service will perform well and to the specifications. or to be certified and recertified by formal certification agencies are examples of an enterprise’s sense of belonging. the kind of hotel one chooses on business travel. and pay for a range of products and services-for example. to belong to the Better Bureau. Finally. to be listed on the stock exchange. and often he or she is at risk of being perceived as being incompetent should an unwise purchase decision be made. self-actualization reflects a person’s personal value system and affects what he or she buys and whom he or she buys from-for example. to be recognized as a leading contender in the field. Thus to belong to Fortune 500 or to Silicon Valley. striving to become what they want to be. Thus. and Benetton as the social consciousness company. such as winning the Malcolm BAL ridge award or obtaining the AACSB accreditation by a business school (American Assembly of Colleges and schools in business). training for its employees. such as 3M as the innovative company. Qualifying to belong to a group of enterprises or to attain certain status and awards. or reengineering services. This system helps markets isolate motives likely to be involved in various consumption situations. Whatever they want to buy. for example corporate membership in country clubs. Levi Strauss as the Diversity Company. Ben & Jerry’s as the environmental company. self-actualization is seen in business firms. Firms that have these and similar other business firms as their customers must themselves reflect these values and deal in ways that further or help the customer companies to actualize their selves. McGuire developed a classification system that organizes these various theories into 16 categories. business customers are likely to buy from someone they feel secure in dealing with. use.2 Mcguire’s Psychological Motives Maslow presented a hierarchical set of five basic motives. and other researchers have proposed hundreds of additional. Finally. buying from local or minority suppliers. and even the location and address of business premises. Each of McGuire’s 16 motives and their implications for marketing are briefly described in the following sections: 26 ANNA UNIVERSITY CHENNAI . Now consider business customers as individuals working in organizations. very specific motives. Esteem comes partly from being recognized by various bodies but also partly from one’s own sense of accomplishment. Whoever is making the purchase decision for the organization is held accountable for it.

opinions. 3. Impressions. So they establish categories or mental partitions that allow them to process large quantities of information. Often making a major purchase is not consistent with the need to save money. Need for Attribution: This set of motives deals without need to determine who or what causes the things that happen to us. or to purchase a different brand with desirable features not in the purchased brand. COGNITIVE GROWTH MOTIVES 5. Understanding the need for consistency is also important for structuring advertising messages and developing attitude change strategies. to make other purchases. All individuals in all cultures have this need at some level. One reason is to avoid being categorized in the over $10. and so forth.CONSUMER BEHAVIOUR COGNITIVE PRESERVATION MOTIVES 1. This inconsistency motivates the individual to reduce it. Need for Consistency: A basic desire is to have all facets or parts of oneself consistent with each other. This approach to understanding the reasons consumers assign particular meanings to the behaviors of others has been used primarily for analyzing consumer reactions to promotional messages (in terms of credibility). Need to Categorize: People have a need to categorize and organize the vast array of information and experiences they encounter in a meaningful yet manageable way. similar advice given by a friend would likely be attributed to a desire to be helpful and might therefore be accepted. Do we attribute the cause of a favorable or unfavorable outcome to ourselves or to some outside force? The fact that consumers need to attribute cause underlies an area of research known as attribution theory. When consumers attribute a sales motive to advice given by a salesperson or advertising message. they tend to discount the advice. $19.95. Cognitive dissonance is a common motive of this type. $20.95. Many firms price items at $9. In contrast. Consumers have a need for internal consistency. or $50 group. Need forAutonomy: The need for independence and individuality is a characteristic of the American culture. and so forth. Prices are often categorized such that different prices connote different categories of goods. Need for Objectification: These motives reflect needs for observable cues or symbols that enable people to infer what they feel and know. Automobiles over $20000 and automobiles under $20000 may elicit two different meanings because of information categorized on the basis of price level. Americans are taught that it is proper and even essential to express and fulfill this 27 NOTES ANNA UNIVERSITY CHENNAI .95. so they are reluctant to accept information that disagrees with existing beliefs. and attitudes are subtly established by viewing one’s own behavior and that of others and drawing inferences as to what one feels and thinks. feelings. views of others. behaviors. This is so critical that companies such as Anheuser-Busch use clothing consulting firms to tailor clothes for executives that are consistent with the firm’s desired image. $49. clothing plays an important role in presenting the subtle meaning of a desired image and consumer lifestyle. In many instances. 2. These facets include attitudes. 4. self-images.

The need for stimulation is curvilinear and changes over time. or individuality themes. and so forth. etiquette. In order to effectively manage tension and stress. lifestyle options. This motive propels people to prefer mass media such as movies. 11. In contrast. When one’s identity is threatened. The purchase of many products such as clothing and automobiles allows consumers to express an identity to others.DBA 1722 NOTES need. Utilitarian Need: These theories view the consumer as a problem solver who approaches situations as opportunities to acquire useful information or new skills. because these products have symbolic or expressive meanings. Owning or using products and services that are unique is one way consumers express their autonomy. Marketers have responded to this motive by developing limited editions of products and providing wide variety and customization options. Likewise. Such variety-seeking behavior may be a prime reason for brand switching and some so-called impulse purchasing. Behaviors are changed and the results are monitored in terms of movement toward the desired end state. which include the purchase and use of goods. 6. Need for Expression: This motive deals with the need to express one’s identity to others. whereas individuals in stable environments become bored and desire change. the hero and heroine get together. 10. people are motivated to seek ways to reduce arousal. uniqueness. Thus. the person is motivated to protect his or her self-concept and utilize defensive behaviors and attitudes. and other unique products reflects the need. antiques. 8. the purchase of the latest in skiwear may reflect much more than a desire to remain warm while skiing. This has obvious implications for advertising messages. and books with outcomes that match their view of how the world should work (the good guys win. AFFECTIVE PRESERVATION MOTIVES 9. original art. in countries such as Japan. individuals experiencing rapid change generally become satiated and desire stability. Thus. People feel the need to let others know who and what they are by their actions. many products are advertised and positioned with independence. a consumer watching a situation comedy on television not only is being entertained but is learning clothing styles. Technological Need: Consumers are pattern matchers who have images of desired outcomes or end states to which they compare their current situation. Need for Ego Defense: The need to defend one’s identity or ego is another important motive. In addition. Many 28 ANNA UNIVERSITY CHENNAI . salespeople. consumers may approach ads. fulfillment of this need is discouraged. and other marketing stimuli as a source of learning for future decisions as well as for the current one. That is. The increasing popularity of handmade craft goods. Need for Tension Reduction: People encounter situations in their daily lives that create uncomfortable levels of stress. Need for Stimulation: People often seek variety and difference out of a need for stimulation. television programs. and so forth). 7. while fulfillment of the need for affiliation is more socially acceptable. Recreational products and activities are often promoted in terms of tension relief.

Need for Reinforcement: People are often motivated to act in certain ways because they were rewarded for behaving that way in similar situations in the past. fiancée. Marketers utilize this motive by showing desirable types of individuals using their brands. A consumer who feels insecure may rely on well-known brands for socially visible products to avoid any chance of making a socially incorrect purchase. admiration. 14.” AFFECTIVE GROWTH MOTIVES 13.4. The need for assertion underlies numerous ads. One gains pleasure from adding new. and dominance. Important to them are power. Murray’s List of Psychogenic Needs Psychologist Henry Murray proposed a list of 12 primary (or viscerogenic) and 28 secondary (or psychogenic) human needs. and artwork) are frequently sold on the basis of the amount and type of reinforcement that will be received. Need for Identification: The need for identification results in the consumer playing various roles. Keepsake Diamonds exploits this motive with an advertisement that states. Products designed to be used in public situations (clothing. Modeling is a major means by which children learn to become consumers. satisfying roles and by increasing the significance of roles already adopted. bookstore employee. 12.CONSUMER BEHAVIOUR products can provide ego defense. Group membership is a critical part of most consumers’ lives. 2. They then state that this person owns a Rolex. Marketers encourage consumers to assume new roles (become a skateboarder) and position products as critical for certain roles (“No working mother should be without one”). Marketers frequently use such affiliation-based themes as “Your kids will love you for it” in advertisements. The tendency to model explains some of the conformity that occurs within reference groups.3. 16. furniture. sorority member. For example. Need forAffiliation: Affiliation is the need to develop mutually helpful and satisfying relationships with others. Need for Modeling: The need for modeling reflects a tendency to base behavior on that of others. This is the basis for operant learning as described in the previous chapter. Need for Assertion: Many people are competitive achievers who seek success. A person may play the role of college student. “Enter a room and you are immediately surrounded by friends sharing your excitement. The list of needs is: NOTES 29 ANNA UNIVERSITY CHENNAI . accomplishment. and many others. and esteem. and many consumer decisions are based on the need to maintain satisfying relationships with others. some Rolex ads devote most of their copy to a description of very successful people such as Picabo Street or Monica Kristensen. 15. It relates to altruism and seeking acceptance and affection in interpersonal relations.

aversive (to avert 30 ANNA UNIVERSITY CHENNAI . he believed that unconscious motives play a significant role in people’s consumption decisions. A strong believer in Freud’s theory of personality.g. Autonomy: To be independent and free to act according to impulse. playing opinion leaders) Ernest Dichter’s Consumption Motives Ernest Dichter was psychoanalyst trained in Vienna in the early part of the century. Aggressively demanding attention in service establishments) 3. Gloves Listening to and calling in talk shows White bread. Dominance: To direct the behavior of others (e. wearing unconventional clothing) 2. (e. (e. crystals 2. interpret. he identified a set of motives/needs that underlie an individual’s consumption of diverse products. Consumer researcher Geraldine Fennel identified consumer motives for product use based on use-situation-for example. Needs identified by Marketing Scholars Working more directly on marketing problems and reflecting specifically on an individual’s behavior in the marketplace. Exposition: To give information and explain. irresponsible.g. List of Consumption Motives are: Mastery over environment Status Rewards Individuality Social acceptance Love and affection Security Masculinity Femininity Eroticism Desalination Moral Purity/cleanliness Magic-mystery Kitchen appliances Scotch Gifts to oneself Foreign cars Companionship Giving children toys Full drawer of neatly ironed shirts Toy guns Decorating Sweets. to be unattached.g.4. Nurturance: To give sympathy and to feed.g. Based on in-depth interviews with consumers for some 200-plus products. and lecture.DBA 1722 NOTES 1. help. and protect the needy. several marketing scholars have identified and proposed their own classification of needs. to ask questions. (e. Impulse buying. Cognizance: To explore. to defy convention. to seek knowledge (e.g. bathing Religious rituals. visiting museums.4. wearing high-fashion clothing) 4. learning about new technology and products) 5.

3. and to preserve clean air and water in the environment..Ahtola has described utilitarian and hedonic consumer attitudes toward products. Similarly. for example. Social – A product or service satisfies the social need through its association selected demographic. 3.e. 1. 31 NOTES ANNA UNIVERSITY CHENNAI . Newman and Gross have proposed that individual choice behavior stems from five needs: 1. Influence over other – The need to feel one’s impact on others’ consumption decisions. Sheth. 2. watching a TV news program. an emergency car repairs on an out-of town trip). Material comfort – The need to consume a large and/or luxurious supply of material possessions.4. 2. love. soaps for cleansing and medicines for alleviating physical ailments). 4. have applied the classification to consumers’ transportation choice. These classifications are valuable to study because they have been used in a number of consumer studies. reviewing the entire literature on consumer needs consumer researcher Janice Hanna has proposed as list of seven consumer needs. Physical safety – The need to consume products so as to avoid harm or danger in their use.g. 4. Material Security – The need to consume an adequate supply of material possessions. such as joy. Finally. distinguishing it from the more utilitarian consumption. to people’s voting behavior. buying and reading a newspaper. Sheth and his colleagues. 5. successful people). Functional – A product or service satisfies its physical or functional purpose (for example. science.5.CONSUMER BEHAVIOUR an adverse situation) or positive (to gain a reward) product-use situation. 7.g. Personal growth – The need to consume products in order to be or become one’s own unique self. or cultural-ethnic segments of society (e. Situational – Certain products or services satisfy needs that are situational or contingent upon the time and place (for example. Epistemic – the product or service satisfies the human need to know or learn something new (e. Recognition from others – The need to consume products in order to be acknowledged by others as having gained a high status in his or her community. 6. or purchasing an encyclopedia or books on history. Acceptance by others – The need to consume products in order to be associated with a significant other or a special reference group. and to an individual’s smoking behavior. wearing a polo brand of shirt to identify with upper-income. or respect that a person experiences upon receiving a gift. 2. Consumer researcher Morris Holbrook has discussed the hedonic (i. socioeconomic. Emotional – The product or service satisfies this need by creating the appropriate feelings and emotions. and commerce). 5. pleasure seeking) consumption motive. marketing professor Olli T.

In fact. there are unique behaviors characteristically associated with different emotions: fear triggers. joy. Table 2. jealousy. and (5) enhanced blood sugar level. it is not surprising that researchers have attempted to categorize emotions into manageable clusters. anger. These subjectively determined feelings are the essence of emotion. joy. Specific emotions reflect various combinations and levels of these three dimensions.1 Nature of Emotions Types of Emotion If asked. and so forth. Grief. you could doubtless name numerous emotions and your friends could name others that did not appear on your list. fleeing responses. While the behaviors vary across individuals and within individuals across time and situations. Figure 2.5 CUSTOMER EMOTIONS Needs and emotions are closely related. (2) increased perspiration. and sadness are most frequently a response to a set of external events. 32 ANNA UNIVERSITY CHENNAI . Emotions are accompanied by physiological changes. Some characteristic changes are (1) eye pupil dilation. and dominance (PAD) – underlie all emotions. emotions involve subjective feelings. arousal. anger triggers striking out. and indicators or items that can be used to measure each emotion. (3) more rapid breathing. Anger. However. grief triggers crying. Some researchers have suggested that three basic dimensions – pleasure. Thus. and fear feel very different to us. we can also initiate emotional reactions by internal processes such as imagery. Emotions also have associated behaviors. it is the feeling component we generally refer to when we think of emotions. Athletes frequently use imagery to “psych” themselves into a desired emotional state. Finally. Emotions are generally triggered by environmental events. (4) increased heart rate and blood pressure.DBA 1722 NOTES 2.1 lists the three primary PAD dimensions. a variety of emotions or emotional categories associated with each dimension.

such as hunger pangs or a headache. NOTES A model of Emotion Although a number of psychologists have tried to explain emotions. the experience of emotion depends on two factors. Marketer can adapt or respond to customer emotions by (1) designing the stimulus and (2) aiding the meaning appraisal. we recognize that the initial stimulus can come from the external environment as well as from the inside of the organism. Emotions and Emotional Indicators. According to psychologist Stanley Schachter.CONSUMER BEHAVIOUR Table 2. the most contemporary theory is Schachter’s two factor theory.1 Emotional Dimensions. The first intervention takes the form of making 33 ANNA UNIVERSITY CHENNAI . automatic arousal and its cognitive interpretation. In this model. or meaning analysis.

and they appear and disappear frequently and readily. and delighted gloomy. intimidated Hostile. and depressed. moods are important for marketers to understand.” How do you feel at the moment? Fear Anger Joy Sadness Acceptance Disgust Anticipation Surprise : : : : : : : : threatened. They are easy to induce. amused or bored. trusting disgusted. irritated Happy. confused. Moods affect our behavior of the moment in general and our response to the marketing activities to which we might be exposed at the time. recalling some past incident or fantasizing about some event. such as in attaching symbolism to products or services in advertising or in explaining certain aspects of the marker offering or certain deviations from the expected marketplace events or outcomes. positive attempts to help a customer’s meaning appraisal process might include a physician explaining treatment procedures to a patient or a serer explaining why there is a delay in serving food at a restaurant. curious Puzzled. pensive mood or careless mood. startled WINDOW ON RESEARCH Customer Moods Moods are simply emotion s felt less intensely. For this reason. Offended. Moods are induced by external stimuli as well as internally by autistic thinking that is. annoyed. For example. Scales to Measure Plutchik’s Eight Emotions Plutchik’s emotions can be measured by rating the following triads of an adjectives. unpleasant alert. They are pervasive in that we are always in some kind of mood-happy mood or sad mood. frightened. they are also short-lived. ranging from “not at all” to “very strongly. cheerful. each rated on a five-point scale. accepted. attentive. The second takes the form of communication. irritated or pleased. sad. Among the marketing stimuli that can induce positive or negative moods are: • • • • The ambience of the store or service delivery facility The demeanor of the salesperson The sensory features pf the product The tone and manner of advertising 34 ANNA UNIVERSITY CHENNAI . helped.DBA 1722 NOTES product or service designs to fit appropriate consumption emotions.

free gifts. the customer may feel frustration at having wasted the time).” In a brand-learning task. Marketers on the Internet attempt to overcome their inability to actually bring the customer into the store by creating the mood or ambience within the web site. However there is one stream of research that states that positive mood reduces the processing of stimulus information. recall those advertisements more that had created positive moods. Brand name recall is s pre requisite for the choice of the brand and recall depends on the process by which the brand was first encoded into memory. they found that being in a positive mood helps consumers to cluster the brands that they are exposed to. Mood affects the strategies used to process information by consumers. Researchers Lee and Sternthal state that two factors important in the encoding process are brand rehearsal – “how frequently and recently the brand has been exposed in the memory as a member of a particular category”-and relational elaboration-”the process by which consumers link the brands to the specific categories they belong to. thus increasing the number of brands recalled compared to when they are in a natural mood. and several other strategies to induce positive moods in consumers to enable a more positive evaluation of a brand extension. They show that a positive mood influences the perceptions of similarity between the brand extensions. and positive mood enhances evaluation of brand extensions by influencing these determinants. customers have also been found to linger longer in positive mood environments. and Romeo on the effect of positive mood on brand extension evaluations. and feel more positive toward brands based on advertising that created feelings of warmth. and there is another that states that positive mood enhances the learning of brand names better in comparison to a neutral mood. Both of these factors are important determinants of extension evaluations. 35 ANNA UNIVERSITY CHENNAI .. Corroborating this finding is the research study by Barone.CONSUMER BEHAVIOUR • The content of the message itself from a salesperson or in the advertisement whether it frustrates or fulfils one’s goals in attending to that message (e. if the salesperson is not knowledgeable or if the advertisement is vain. a positive mood helps them recall more categories and more brands as members of these categories. point-of-sale material. NOTES Mood states have consequences in terms of favorable or unfavorable customer response to marketer efforts. Miniard.g. thereby influencing choice. by the categories they belong to when the respondents are asked to recall as many brands as possible after this exposure. In research studies done by consumer researchers. Thus. celebrity endorsements. This might include the incorporation of store colors and background music aimed at creating a favorable mood in the customer. marketers could use advertising.

DBA 1722 NOTES Hedonic consumption. vacationing attending a business convention. celebrating silver wedding anniversary. They want to keep in touch with friends and develop relationships with peers. dating. Thus. chain saws. smell their aroma. and bubble baths and such activities as sports.reading poetry. visiting relatives. music concerts. entertaining a business customer in a game of golf. While detergents. using perfume and colognes. playing sports. insurance policies. hedonic consumption is the use of products and services that give pleasure through the sense. relaxing in a Jacuzzi or sauna. Aesthetic pleasure. taking a course in Greek history. we love them. attending office Christmas parties. making or receiving long-distance social calls. seeking Emotional value Emotions and moods drive a host of consumption behaviors. It is interesting to note tat while American teenagers are enamored by the newness and hedonic vale of technological gadgets. Emotional experience – Watching movies or soap operas on TV. dancing. This describes customers’ relationships with a select few products that are consumed with interest. such products and services as perfumes/colognes. we enjoy them. Hedonic consumption refers to the use of products or services for the sake of intrinsic enjoyment rather than to solve some problem in the physical environment. and amusement parks are used or engaged in purely for the emotional or hedonic values they provide. or activity. and they consider devices such as computers and cell phones to be a means to achieving this end. We like them. Here are some examples: • Sensory pleasure – taking a bubble bath. movies. attending class reunion. investment portfolios. feel their texture. enjoying strobe lights in a discotheque. 36 ANNA UNIVERSITY CHENNAI . lawn mowers. service. and computers are purchased and used for some utilitarian/functional end-states. They look at technology as a means to an end. sending gifts. receiving gifts. landscaping the corporate office building. having original works of art in the corporate offices. The “end” they are interested in is social connectivity. wearing exciting colors in clothing. pausing to savor their taste. We introduced the concept of emotional value as a discretionary value. or hear their sound. European teenagers are concerned with their functional utility. microwave ovens. taking a roller coaster ride. Fun and enjoyment – video games arcade. choosing office décor. diamonds. • • • • Deep involvement One special case of hedonic consumption is deep involvement in a product. theater. visiting an art gallery. More specifically. celebrating winning a major business contract from a highly coveted client. heteronyms refers to sensory pleasure. that help create fantasies and that give emotional arousal.

and members participate in a wide range of activities. and. First.e. we want to be using them whenever possible. defined as the degree of interest. and weighing them vis-à-vis her own needs. still others. computer jocks. Harley-Davidson motorcycle owners. Finally. product. she takes the one in her kitchen for granted. Thus. they seek constant information about products and services. can be viewed as having two forms: enduring involvement and situational involvement. they want to spend more time in related activities. In contrast.CONSUMER BEHAVIOUR Everyone has a favorite activity. car buffs. Celia Fernandez is not much interested in dishwashers. Some of us are fashion experts. Deep involvement affects customer behavior in a number of ways. can act as opinion leaders. deeply involved customers can act as lead users for new products. they try products in innovative ways and. fashions. NOTES 37 ANNA UNIVERSITY CHENNAI . she became extremely interested (i. Consider for example. Furthermore.. thus.. We are eager to get to know these products (e. a major infrastructure project in a company is an object of high situational involvement. Third. But the last time she was buying one. she is enduringly involved in gardening and in garden-related products. we get excited whenever the topic comes up. taking considerable interest in them and enjoying them. such as when buying a product or when consuming something in the presence of an important client or friend. of course. thus are sources of new-product ideas. Second. deliberating over various options. The fanatic loyalty that favored IBM at one time but now favors the Apple Mac shows the deep involvement that these users have for the product. Fourth. a favorite product. Enduring involvement is the degree of interest a customer feels in a product or service on an ongoing basis. involved) in dishwashers. This relationship we develop as users with selected products and services is called deep involvement. In contrast. and maximizing the lifetime value of its customers would be a matter of enduring involvement. including charity work. It is easier to build more extended relationships with these customers. they consume a greater quantity of the product and also buy related products. situational involvement is the degree of interest in a specific situation or on a specific occasion. attempting to learn about them. there is a Harley Owners Club (HOG). or service to a customer. others. Involvement. In a business context.g. Fifth. The extreme form of enduring involvement is deep involvement. a favorite brand. they are less price sensitive for that product and are willing to spend well. It can be defined as a customer’s extreme interest in a product or service on an ongoing basis. Involvement is a general term that can be defined as the degree of personal relevance of an object. involvement is a matter of degree-how relevant or how central a product is. deeply involved consumers are knowledgeable about the product or service and. and computers) and find out everything there is to know. cars.

They do not suggest that other traits do not exist or are not important. consumption-related behaviors. and vanity. Psychographics are characteristics of individuals that describe them in terms of their psychological and behavioral makeup-how people occupy themselves (behavior) and what psychological factors underlie that activity pattern. drives customer behavior toward buying golf equipment or doing whatever is needed to implement that particular psychographic.6 PERSONALITY AND CONSUMER BEHAVIOR While motivations are the energizing and directing force that makes consumer behavior purposeful and goal directed. you might say that one of your friends is fairly aggressive. locus of control. rather. It is defined as an individual’s pursuit of differentness relative to others that is 38 ANNA UNIVERSITY CHENNAI . all have two common assumptions: (1) all individuals have internal characteristics or traits. These characteristic ways of responding to a wide range of situations should. in our case. While there are many personality theories. Another single-trait theory of use to marketers is termed consumers’ need for uniqueness. “What is your dad like?” it is unlikely that you would describe him in terms of demographics. They are manifestation of an individual’s underlying motivations. say. and the need for cognitive closure. Some examples of single-trait theories that have been shown to be relevant to marketing are those that deal with neuroticism. affect intensity. consumer conformity. What you have described are the behaviors your friend has exhibited over time across a variety of situations. and they. in turn. This psychographic. person’s need to seek affiliation or peer approval makes him or her engage. define them. in going to theaters or playing golf. you would probably use a combination of physical features and personality characteristics. 2. Single-trait theories emphasize one personality trait as being particularly relevant to understanding a particular set of behaviors. the personality of the consumer guides and directs the behavior chosen to accomplish goals is different situations. If someone asked you. Most of these theories state that the traits or characteristics are inherited or formed at an early age and are relatively unchanging over the years. Personality is an individual’s characteristic response tendencies across similar situations. of course. For example. they study a single trait for its relevance to a set of behaviors. outgoing. and witty. the third facet of motivation is psychographics. trait anxiety. For example. competitive. seeking. thus becomes part of his or her psychographics. also include responses to marketing strategies. it becomes motivational. Theater going or playing golf. sensation. We can easily describe the personalities of our family members and friends. Instead. and (2) there are consistent and measurable differences between individuals on those characteristics. self-monitoring. in turn.DBA 1722 NOTES Psychographics Along with needs and emotions.

It affects what consumers own and value. Table 2.” Consider one consumer’s explanation of why she did not purchase the conservative clothing she felt was most suitable for their work: 39 ANNA UNIVERSITY CHENNAI . a multitrait personality theory specifies several traits that in combination capture a substantial portion of the personality of the individual. a timid person might drive a powerful car. The multitrait theory used most commonly by marketers is the Five-Factor Model of personality. utilization. In contrast to a single-trait theory. this person might feel less timid and more powerful. and how they use it.2 lists the five traits and some of their manifestations. Such a strategy helps preserve the uniqueness of the product and enhances the distinctiveness and status of those who own it. The concepts fit with the increasingly common marketing practice of deliberate scarcity – producing less of an item than the predicted demand. This theory identifies five basic traits that are formed by genetics and early learning. another timid person might forgo a powerful or flashy car because “it’s just not me. Table 2. Thus. These core traits interact and manifest themselves in behaviors triggered by situations. While driving the car. and disposition of consumer goods for the purpose of developing and enhancing one’s personal and social identity.2 The Five-Factor Model of Personality NOTES The Use of Personality in Marketing Practice Often consumers use products to bolster an area of their personality. However. why they own it.CONSUMER BEHAVIOUR achieved through the acquisition.

7. Immediate goals could involve seeking stimuli such as a television program for amusement or a website to assist in a purchase decision. Yet one normally watches only one television station at a time.1. even if you were “not paying attention” and did not notice the commercial. see billboards and display ads.7 CONSUMER PERCEPTION Information processing is a series of activities by which stimuli are perceived. and stored. These goals may be immediate or long range. Exposure Exposure occurs when a stimulus comes within range of our sensory receptor nerves. and so forth. reads one magazine.DBA 1722 NOTES Figure 2. What determines which stimuli an individual will be exposed to? Generally. For an individual to be exposed to a stimulus requires only that the stimulus be placed within the person’s relevant environment. attention. 40 ANNA UNIVERSITY CHENNAI . people are also exposed to a large number of stimuli on a more or less random basis during their daily activities. newspaper. innumerable magazines. thousands of radio stations. An individual’s goals and the types of information needed to achieve those goals are a function of that person’s existing and desired lifestyle and such short-term motives as hunger or curiosity. 2. While driving. obtaining a degree. An individual can be exposed to only a minuscule fraction of the available stimuli. people seek information that they think will help them achieve their goals. transformed into information. and memory. becoming a better marketing manager. Of course. or book at a time. and an exponentially increasing number of websites. and so on that they did not purposefully seek out. The first three of these constitute perception. they may hear commercials. interpretation. That is. or all three. you have been exposed to a television commercial if it aired while you were in the room.2 Dimensions of Brand Personality 2. Long-range goals might involve studying this text in hopes of passing the next exam. A useful information-processing model having four major steps or stages: exposure. There are now hundreds of television channels.

Zipping occurs when one fast-forwards through a commercial on a prerecorded program. males do use the remote more than women for zapping.7. and the resulting sensations go to the brain for processing. Zapping involves switching channels when a commercial appears. People are constantly exposed to thousands of times more stimuli than they can process. If you shift your concentration to your feet. zapping. They have been found to positively affect brand recall.000 commercials per week. 75 percent of recent Internet users had visited a company’s home page. A second shift in concentration to sounds will probably produce awareness of a number of background noises. Therefore. and active shoppers are more likely to view infomercials than are other consumers. However. you will most likely become aware of the pressure being exerted by your shoes. as consumers encounter them while seeking other information or entertainment. This suggests that they may have significant indirect effects through their impact on word-of-mouth communications. NOTES 41 ANNA UNIVERSITY CHENNAI . sometimes they actively seek them out. More impressive is the positive response consumers have to infomercials – program-length commercials (often 30 minutes). you are attending to these words. The study also found that half of those using the Internet sometimes click on banner ads for additional information. 2. Banner ads are the dominant form of advertising on the Internet. generally with an 800 number and/or Web address through which to order the product or request additional written information. primarily to obtain product information. opinion leaders. and purchase intentions. Exposure to these ads is generally involuntary.CONSUMER BEHAVIOUR The impact of the active. Each television network shows 6. One study found that early adopters. self-selecting nature of exposure can be seen in the zipping. consumers have to be selective in attending to marketing as well as to other messages. and muting very simple. Eighty-five percent of these sought out a website because they saw or heard about it in a mass media ad.2. Many viewers look forward to the commercials developed for the Super Bowl. and muting of television commercials. attitudes. The nearly universal presence of remote controls makes zipping. And yes. changing channels during the show. In one survey. and channel surfing. What determines or influences attention? At this moment. Although consumers often avoid commercials. zapping. Muting is turning the sound off during commercial breaks. Attention Attention occurs when the stimulus activates one or more sensory receptor nerves. no matter how hard you are concentrating on this text. a loud scream or a sudden hand on your shoulder would probably get your attention. These stimuli are available all the time but are not processed until a deliberate effort is made to do so. and radio stations air many more.

Isolation: Isolation is separating a stimulus object from other objects. 42 ANNA UNIVERSITY CHENNAI . The use of ‘white space’ (placing a brief message in the center of an otherwise blank or white advertisement) is based on this principle. format: Catalog merchants wishing to display multiple items per page often create an environment in which the competition for attention across items reduces attention to all of the items. Ads that differ from the type of ad consumers expect for a product category often motivate more attention than ads that are more typical for the product category. Likewise. Position: Position refers to the placement of an object in a person’s visual field. However. all consumers have limited capacities to process information. The position of text and illustrations within a print ad has a significant influence on which will be attended to first and how much attention each will receive. 7. 3. information quantity. with brightly colored and moving items being more noticeable. Thus. Thus. Objects placed near the center of the visual field are more likely to be noticed than those near the edge of the field. with proper arrangement and formatting. 6. Size and Intensity: Larger stimuli are more likely to be noticed than smaller ones. Contrast/Expectations: Consumers pay more attention to stimuli that contrast with their background than to stimuli that blend with it. STIMULUS FACTORS 1.DBA 1722 NOTES Of course. However. the individual and the situation. A brightly colored package is more apt to receive attention than a dull package. Interestingness: What one is interested in is generally an individual characteristic. a large banner ad is more likely to be noticed than a small one. Attention is determined by these three factors: The stimulus. Information Quantity: A final stimulus factor. relates more to the total stimulus field than to any particular item in that field. this competition for attention can be reduced and sales improved. attention always occurs within the context of situation. 4. consumers seeking a business from the Yellow Pages attended to more than 90 percent of the quarter-page ads but only a quarter of the small listings. 5. 2. Although there is substantial variation among individuals. there are characteristics of the message itself that cause ads to interest a large percentage of population. advertisements on the right-hand page receive more attention than those on the left. Color and Movement: Both color and movement serve to attract attention. whereas nonboarders would not. In one study. as it surrounding a key part of a radio commercial with a brief moment of silence. banner ads with dynamic animation attract more attention than similar ads without dynamic animation. 8. The same individual may devote different levels of attention to the same stimulus in different situations. Snowboarders would be likely to attend to ads related to that activity. This is a primary reason why consumer goods manufacturers compete fiercely for eye-level space in grocery stores.

as does the situation in which we find ourselves. A firm may introduce a high-quality new brand at a lower price than existing brands because the firm has a more efficient production or marketing process. country of origin. and the store in which it is sold. if consumers interpret this lower price to mean lower quality. not the advertisement. SITUATIONAL FACTORS Situational factors include stimuli in the environment other than the focal stimulus (i. Like cognitive interpretation. influences our interpretation.7.. such as time pressures or a crowded store. there are ‘normal’ (within-culture) emotional responses to many stimuli. the audience is attending to the medium because of the program or editorial content. Interpretation Interpretation is the assignment of meaning to sensations. In fact. It is a function of the gestalt. the individual. It is the individual’s interpretation. However. Cognitive Interpretation It is a process whereby stimuli are placed into existing categories of meaning.3. Likewise there are also individual variations to this response. and the situation. 43 NOTES ANNA UNIVERSITY CHENNAI .CONSUMER BEHAVIOUR INDIVIDUAL FACTORS Individual factors are characteristics of the individual. the new brand will not be successful regardless of the objective reality. our beliefs about a product are influenced by our beliefs about the capabilities and social responsibility of the company that produces it as well as its price. Consumers confronting new products or brands often assign them to emotional as well as cognitive categories. Program involvement: In general. The more radically ‘new’ a new product is (a discontinuous innovation). The interpretation of a ‘sale’ sign on a brand depends on how many other brands are on sale as well as the past history of sales for the brand.e. the ad or package) and temporary characteristics of the individual that are induced by the environment. becoming a sales manager) and short-term needs (hunger). The addition of new information to existing categories also alters those categories and their relationships with other categories. including the context in which it occurs. as we saw earlier. Interest is a reflection of overall lifestyle as well as a result of long-term goals and plans (e. Interest and need are the primary individual characteristics that influence attention.g. This is an interactive process. formed by the characteristics of the stimulus. Thus. Affective Interpretation: It is the emotional or feeling response triggered by a stimulus such as an ad. not objective reality that influences behavior. or pattern. the more difficult it is to place into an existing category or knowledge structure. 2. For example. many individuals actively avoid commercials by zapping them. the entire message.

preferences symbolic meanings. Low-involvement learning: It is one which the consumer has little or no motivation to process or learn the material. People acquire most of their attitudes.8. as well as family. learning is the result of information processing. mass media. provide learning experiences that greatly influence the type of lifestyle people seek and the products they consume. There are two basic form of conditioned learning – Classical and Operant. and advertising. Culture and social class. For example. one learns that they go together (or do not go together). through such institutions as schools and religious organizations. tastes. The word conditioning has a negative connotation to many of people and brings forth images of robot like humans. Learning is essential to the consumption process. Thus. values. Learning is any change in the content or organization of long-term memory or behavior.DBA 1722 NOTES 2. LEARNING UNDER CONDITIONS OF HIGH AND LOW INVOLVEMENT A moment’s reflection will reveal that people learn things in different ways. This is most common in low-involvement situations. However. A consumer whose television program is interrupted by a commercial for a product he or she doesn’t currently use or feel a desire for generall has little motivation to learn the material presented in the commercial. focused attention. an individual reading Laptop Buyer’s Guide prior to purchasing a computer is probably highly motivated to learn relevant material dealing with the various computer brands. and feelings through learning. High-involvement learning: It is one which the consumer is motivated to process or learn the material. Preparing for an exam generally involves intense. conditioned learning simply means that through exposure to some stimulus and a corresponding response. friends. behaviors. However most learning is of a much different nature. Most people know who is playing in the World Series each year even if they don’t care for baseball because they hear about it frequently. consumer behavior is largely learned behavior. CONDITIONING Conditioning refers to learning based on association of a stimulus (information) and response (behavior or feeling). It is likely that many consumers devote little or no focused attention to the advertisement since cigarette 44 ANNA UNIVERSITY CHENNAI . The outcome of these efforts is rewarded with a grade. LEARNING Learning is the term used to describe the processes by which memory and behavior are changed as a result of conscious and nonconscious information processing. Classical Conditioning: The process of using an established relationship between a stimulus and response to bring about the learning of the same response to a different stimulus is called classical conditioning. In fact.

Reasoning/Analogy: The most complex form of cognitive learning is reasoning. a great deal of marketing strategy is aimed at securing an initial trial. COGNITIVE LEARNING Cognitive learning encompasses all the mental activities of humans as they work to solve problems or cope with situations. they can observe the outcomes of others’ behaviors and adjust their own accordingly. individuals engage in creative thinking to restructure and recombine existing information as well as new information to form new associations and concepts. special price discounts on new products. Three types of cognitive learning are important to marketers. Through iconic rote learning. creative problem solving. Vicarious Learning/Modeling: It is not necessary for consumers to directly experience a reward or punishment to learn.CONSUMER BEHAVIOUR ads are low-involvement messages even for most smokers. NOTES 45 ANNA UNIVERSITY CHENNAI . Information from a credible source that contradicts one’s existing beliefs will often trigger reasoning. after a sufficient number of low-involvement ‘scanning’ or ‘glances at’ the advertisement. or an affective response. differs from classical conditioning primarily in the role and timing of reinforcement. It is important to note that what is learned is generally not information but emotion. Instead. or operant conditioning. Operant conditioning often involves the actual usage of the product. Similarly. attitudes. It involves learning ideas. including analogical reasoning. Analogical learning occurs when a consumer uses an existing knowledge base to understand a new situation or object. and learn relationships without direct experience or reinforcement. consumers may form beliefs about the characteristics or attributes of products without being aware of the source of the information. and contests all represent rewards offered to consumers to try a particular product or brand. they can use imagery to anticipate the outcome of various courses of action. Thus. In reasoning. If they try the brand under these conditions and like it (reinforcement). Free samples (at home or in the store). Numerous repetitions of a simple message that occur as the consumer scans the environment may result in the essence of the message being learned. Iconic Rote Learning: Learning the association between two or more concepts in the absence of conditioning is known as iconic rote learning. solve problems. and facts that contribute to our ability to reason. It can range from very simple information acquisition to complex. This is known as vicarious learning or modeling. Operant Conditioning: Instrumental learning. A substantial amount of lowinvolvement learning involves iconic rote learning. the association may be formed. they are likely to take the next step and purchase it in the future. However. concepts.

emotional. It represents the person’s understanding of an object or event at its simplest level. affective (emotional) states. Thus consumers who value nature and the environment are likely to develop attitudes about products and activities that are consistent with that value. television program. For example. and so forth. 46 ANNA UNIVERSITY CHENNAI . Knowledge function: Some attitudes swerve primarily as a means of organizing beliefs about objects or activities such as brands and shopping.9. These attitudes may be accurate or inaccurate with respect to objective reality. It is a learned predisposition to respond in a consistently favorable or unfavorable manner with respect to a given object. and to purchase and use ‘green’ products. for example) or returned to a more permanent storage facility such as the hard drive. Attitude serve four key functions for individuals: 1. permanent storage. or product. but the attitude will often determine subsequent behaviors rather than that reality.DBA 1722 NOTES MEMORY Memory is the total accumulation of prior learning experiences. or altered. CONSUMER ATTITUDES An attitude is an enduring organization of motivational. an attitude is the way one thinks. In fact. Short-term memory has a limited capacity to store information and sensations. and acts toward some aspect of his or her environment such as a retail store. perceptual. Instead. Value-expressive function: Other attitudes are formed and serve to express an individual’s central values and self-concept. It is more like a file in a computer system that is currently in use. processes. 2. it is not used for storage in the usual sense of that term. 2. It can store numerous types of information such as concepts. Long-term Memory is viewed as an unlimited. After the processing is complete.’ This consumer would be likely to purchase the least expensive or most convenient brand. a consumer’s attitude toward cola drinks may be ‘they all taste the same. People also have explicit memory (memory of specific events or objects) and implicit memory (generalized memory about events or objects). the reconfigured information is transferred to another system (printed. feels. augmented. In fact. it is often referred to as working memory. It consists of two interrelated components: short-term and long-term memory. Active files are used to hold information while it is being analyzed. Thus. Marketers are particularly interested in semantic memory. These consumers are likely to express support for environment protection initiatives. to recycle. and cognitive processes with respect to some aspect of our environment. These are not distinct physiological entities. decision rules. which is the basic knowledge and feelings an individual has about a concept. short-term memory is that portion of total memory that is currently activated or in use.

dandruff shampoo. For most attitude objects. It also raises ethical questions concerning how firms use this knowledge. Cognitive Component: Cognitive component consists of a consumer’s belief about an object. Or individuals who feel threatened in social situations may form favorable attitudes toward products and brands that promise success or at least safety in such situations. Attitudes are formed as the result of all the influences we have been describing in the previous chapters. A consumer who states ‘I like Diet Coke’ or “Diet Coke is a terrible soda” is expressing the results of an emotional or affective evaluation of the product. ATTITUDE COMPONENTS It is useful to consider attitudes as having three components: cognitive (beliefs). and mouthwash. for example. People tend to form favorable attitudes toward objectives and activities that are rewarding and negative attitudes toward those that are not. Ego-defensive function: People form and use attitudes to defend their egos and self-images against threats and shortcomings. and they represent an important influence on an individual’s lifestyle.CONSUMER BEHAVIOUR 3. Diet Coke or to recommend it or other brands to friends would reflect the behavioral component of an attitude. high gas mileage. The more positive beliefs associated with a brand. 4. Utilitarian function: This function is based on operant conditioning. Behavioral Component: The behavioral concept of an attitude is one’s tendency to respond in a certain manner toward an object or activity. ATTITUDE CHANGE STRATEGIES The managers can form and change attitudes toward products and brands. A series of decisions to purchase or not purchase. and behavioral (response tendencies). The overall evaluation may be simply a vague. people have a number of beliefs. attractive styling. and reliable performance are generally viewed as positive beliefs. general feeling developed without cognitive information or beliefs about the product. and the easier it is for the individual to recall the beliefs. Products promoted as very macho may be viewed favorably by men who are insecure in their masculinity. These individuals would be likely to have favorable attitudes toward popular brands and styles of clothes and use personal care products such as deodorants. Many beliefs about attributes are evaluative in nature. the more positive each belief is. Marketers frequently promise rewards in advertising and conduct extensive product testing to be sure the products are indeed rewarding. Affective Component: Feelings or emotional reactions to an object represent the affective component of an attitude. Actual behaviors reflect these intentions as they are modified by the situation in which the behavior will occur. In addition to ethical 47 NOTES ANNA UNIVERSITY CHENNAI . Affective (feelings). the more favorable the overall cognitive component is presumed to be.

Thus.perhaps your school. such as pictorial ads that allow quick association to the key attribute with the brand. individual and situational characteristics interact with the communication features to determine effectiveness. as with all aspects of consumer behavior. peripheral route situations generally require limited information. which may change with the situation) and decision motivations are key determinants of how information is processed and attitudes are changed. we describe communication techniques that enhance attitude change. There are individual differences in how easily individuals will shift attitudes. the belief component appears to be in place but the behavior component is not. In general. Think of something you feel strongly about . factual and logical information can be used in high-involvement. or a disliked behavior such as chewing tobacco. Consumers tend to avoid messages that are counter to their attitude. 48 ANNA UNIVERSITY CHENNAI .DBA 1722 NOTES issues. COMMUNICATION CHARACTERISTICS THAT INFLUENCE ATTITUDE FORMATION AND CHANGE In this. Attitudes that are strongly held are more difficult to change than are those that are weakly held. more detailed. it poses difficult challenges to regulators who want to limit the ability of firms to develop favorable attitudes toward products whose consumption may prove harmful to some portion of the population. Challenge organizations faces when attempting to reduce smoking is that many smokers know the habit is harmful to their health but postpones quitting or are unable to quit. your favorite sports team or band. it would be difficult. It must be emphasized that. High involvement results in a central route to attitude change by which consumers deliberately and consciously examine and precede those message elements that they believe are relevant to a meaningful and logical evaluation of the brand. The Elaboration likelihood model (ELM) is a theory about how attitudes are formed and changed under varying conditions of involvement. The ELM suggests that vastly different communications strategies are required to communicate effectively with consumers highly involved with the product compared with consumers with little product involvement. INDIVIDUAL AND SITUATIONAL CHARACTERISTICS THAT INFLUENCE ATTITUDE CHANGE Attitude change is determined by the individual and the situation as well as the activities of the firm or social agency. Low-involvement. What would be required to change your attitude about this item or activity? Clearly. The ELM suggests that brand involvement (the degree of personal relevance of the brand. Some people are more stubborn or closed-minded or less subject to social influence than are others. Marketers and other ultimately want to change behaviors or response tendencies. central route situations.

many consumers doubt their trustworthiness because it might be to their advantage to mislead the consumer. Most of us would consider our good friends trustworthy on most matters. However. Although sales personnel and advertisers often have ample knowledge. First. That is. A visible use of celebrity endorsers in recent years has been the mustache campaign for milk. Celebrity sources may enhance attitude change for a variety of reasons. the nature of the appeal used affects attitude formation and change. This is referred to as source credibility. consumers may associate known characteristics of the celebrity with attributes of the product that coincide with their own needs or desires. an unidentifiable person (a ‘typical’ home-maker). Source Credibility: Influencing attitudes is easier when the target market views the source of the message as highly credible. A source that has no apparent reason other than to provide complete. and accurate information would generally be considered trustworthy. they may attract more attention to the advertisement than would non celebrities. unsafe driving. As with all aspects of attitude change. Source credibility appears to be composed of two basic dimensions: trustworthiness and expertise. appeal characteristics interact with the consumer and the situation to influence attitudes. The source of message is important because consumers respond differently to the same message delivered by different sources. objective. Fear Appeals: Fear appeals use the threat of negative (unpleasant) consequences if attitudes or behaviors are not altered. Celebrity sources: Celebrities are widely used in advertising. It often works in much the same manner as using a celebrity endorser. or an inanimate figure such as a cartoon character. Sponsorship: A company providing financial support for an event such as the Olympics or a concert is one of the most rapidly growing marketing activities. they may be viewed as more credible than non celebrities. NOTES 49 ANNA UNIVERSITY CHENNAI . bad breath. a company or organization. Second. or inadequate coffee) are also used in advertising. and so forth). Finally. Third. consumers may identify with or desire to emulate the celebrity. and evidence indicates that their use may increase a firm’s value. Appeal Characteristics As you would expect. but social fears (disapproval of one’s peers for incorrect clothing. Fear appeals have been studied primarily in terms of physical fear (physical harm from smoking. our friends might not have the knowledge necessary to be credible in a certain area. the characteristics of the sponsored event may become associated with the sponsoring organization.CONSUMER BEHAVIOUR Source Characteristics The source of a communication can be an identifiable person.

They are also liked more than neutral ads and produce more positive attitudes toward the product. for molding consumer behavior. Persuasion is the subtle part of communication that will encourage continued favorable behavior of existing consumers and convert potential consumers into customers. Their overall effectiveness is generally increased when the humor relates to the product or brand in a meaningful way and is viewed as appropriate for the product by the target audience. Non-verbal Components: Pictures. These are one-sided messages. often rely primarily or exclusively on nonverbal content to arouse an emotional response. Emotional ads such as those that arouse feelings of warmth trigger a physiological reaction. music. marketers generally present only the benefits of their product without mentioning any negative characteristics it might possess or any advantages a competitor might have. is a must for any company. 2. to keep and expand the base. is counterintuitive. Ads built around humor appear to increase attention to and liking of the ad. Positive versus Negative Framing: Message framing refers to presenting one of two equivalent value outcomes either in positive or gain terms (positive framing) or in negative or loss terms (negative framing). Describing (framing) ground beef as ’98 percent fat free’ would be positive framing. Communication and persuasion are important tool in the hands of the marketers used by them to create a customer base large enough to generate profitability. 50 ANNA UNIVERSITY CHENNAI . since only one point of view is expressed. whereas describing it as ‘2 percent fat’ would be negative framing. surrealism. and other nonverbal cues are also effective in attitude change. described earlier. Emotional ads are designed primarily to elicit a positive affective response rather than provide information or arguments. and most marketers are reluctant to try such an approach. However two-sided messages are generally more effective than one-sided messages in changing a strongly held attitude. to keep existing business and develop it for further new business. Message Structure Characteristics One-sided versus Two-sided Messages: In advertisements and sales presentations.10 COMMUNICATION AND PERSUATION Communication with existing and potential consumers. Emotional Appeals: Emotional or feeling ads are being used with increasing frequency.DBA 1722 NOTES Humorous Appeals: At almost the opposite end of the spectrum from fear appeals are humorous appeals. Nonverbal ad content can also affect cognitions about a product. The idea of a two-sided message. Emotional ads. presenting both good and bad points.

Therefore. print tele / electronic means and broadcast. Direct marketing by means of mailing of letter and catalogues. New products are always costly. develop dialogue and achieve interaction. COMMUNICATION MIX Today the concept of communication mix is equally important for a company to achieve the most effective communication. Advertising in one or several mass media available like Print/Radio/TV/Internet. telephone. 3. 2. Advertised goods are costly because customers pay for the advertisements. consumers form their own assumptions and these assumptions solidify into beliefs and myths. fax. A big company’s products are costlier per se and its consumer is made to pay for the high overheads of the company. which may include a variety of incentives. Face to face (vis-à-vis) meetings and interactions between sales force and customers. Some Marketplace Beliefs and Myths Develop Due to Insufficient Communication Where there is insufficient communication. Some examples particularly encountered in the developing world are the following: Price and Quality are directly related and therefore a low-priced product cannot have good quality. Large quantities of a same product presented in economy packages are always economical. Stores Channel A large amount of purchases takes place at stores. Whatever may be the direct communication attempted by the manufacturer. Synthetic products are lower in quality than those made of natural materials. it is worthwhile 51 NOTES ANNA UNIVERSITY CHENNAI . The following are the elements from among which choices are to be made by the marketer in arriving at the most appropriate communications mix. If you wait sufficiently the prices will come down. 5. or e-mail. 1. It is where the purchase ‘happens’. If the seller is losing (clearance sale. 4. Receiving feedback and learning from it is also a part of communication.CONSUMER BEHAVIOUR Communication can be defined as the transmission of information and message to consumer via the media or personal contact. mail. stores is the place where the consumer is present to receive it again. Sales promotion. closing down sale etc. Publicity and Public relations exercises to project a general favorable image of the company or the product to consumers at large. to stimulate trial purchases and to establish dialogue with the consumers.) it must be a good bargain. to convey information.

education etc. Some examples of the beliefs are New stores offer lower prices. In a store too. which are conveniently placed near the exit of the store. each one is influenced by the attitude exhibited by the other visitors. A discounted sale is a good bargain. In the benefits route the communication focuses on one or more of the following: Economy of price Guarantees Value for money Economy in maintenance 52 ANNA UNIVERSITY CHENNAI . Shoppers too have their pet beliefs and marketers have to address these.DBA 1722 NOTES to examine the consumer’s behavior vis-à-vis his stock and obtain clues for addressing him there with effective communication. If you buy a highly advertised product you pay for the advertisement and it is the label you get not the quality The advertisement is for keeping in touch with the customer and to inform. Communication and the consumer profile The profile of the consumer exhibits among other things ‘exposure to media’ and ‘values’. It is comparable to the situation of audience watching a stage performance or a sports event. Depending on these the marketer can decide on the selection of media for communication and the strategy for appeal in the communication. the duty of a responsible manufacturer. income. of the consumer will also help in formulating the message about the benefit of the product. They may stick to a stores but while shopping do think about other stores. Strategies It is worthwhile to examine the actual strategies available to the marketer for making benefit appeals and emotional appeals. In fact. Shopper’s Beliefs to be addressed by communication Shoppers choose their store mainly from convenience point of view. The impulse actions in a store are like picking up what other shopper ahead has picked up or buying products. Prices are higher in very large and modern stores. the other particulars in the consumer profile like the age. The there are the noticeable impulse actions. Stores Environment The purchase situation of the consumer is influenced to a certain extent by the environment of the point of purchase.

For example. Values are end-states of life. Being well respected 9. than do the values in Rokeach Value Survey. Excitement 6.11. and they consume a lot of alcohol. backpacking. PSYCHOGRAPHICS HAVE THREE COMPONENTS. dancing. honesty). Sense of accomplishment 7. For this purpose. People who value a warm relationship with others tend to give gifts to others for no reason at all.CONSUMER BEHAVIOUR Technical features Expert endorsement 2. Rokeach developed these lists of values for understanding human psychology. peace and happiness) whereas instrumental values are the means or behavioral standards by which we pursue these goals (e. Kahle argues that the nine values in LOV relate more closely to the values of life’s major roles. Those who value fun and enjoyment especially like sing. parenting. leisure.g. and camping. Security 4. consumer researcher Lynn Kahle and his associates developed a List of Values (LOV). such as marriage.. VALUES. Consumer’s researchers felt a need for values more directly relevant to everyday consumer behavior. hiking. In a number of studies. the goals one lives for. and LOV adds values of fun and excitement. Fun and enjoyment 8. you are thinking about your values. Sense of belonging 5. LOV has been found to be well related to consumer activities. Warm relationships with others. Terminal values are the goals we seek in life (e. NOTES 53 ANNA UNIVERSITY CHENNAI . work. AND LIFESTYLES Values When you think about what is important to you in life. Self-respect 2. except that Maslow includes physiological needs. and daily consumption. consumer researcher Sharon Beatty and her associates found that people who value a sense of belonging especially like group activities.. consisting of nine terminal values: 1. Self-fulfillment 3. This list of values corresponds well to the needs in Maslow’s hierarchy.g. SELF-CONCEPT. Psychologist Milton Rokeach has identified two groups of these: terminal and instrumental.

the product or service features make sense only because they serve some more fundamental needs (such as the needs in Maslow’s hierarchy) or values (as in the List of Values). or employees who are promoted to executive cadre change their wardrobe to include suits. when consumers buy an automobile. it is possible to identify the match or gaps between consumers’ self-concept and their perceptions of the personality 54 ANNA UNIVERSITY CHENNAI . comfort. then obtaining the consumer’s perceptions of a brand on the same traits. If we go one step further. or driving thrill is important to consumers so that they can overcome the physical distance barrier. Marketers can apply the principle of self-concept by obtaining a self-concept profile of customers in terms of selected personality traits. They are identified by a research technique called laddering. for example one wants to be a successful writer or an engineer or a Wall Street financial executive. then. or escape to a more desirable place. the self-concept pertains to the kind of material life they want to live. self extension and personalizing rituals. Identifying. Ultimately. From these two profiles. they are not buying simply 5. the self-concept pertains to their intellectual and /or career accomplishments. rather. the self-concept includes an idea of what the person currently is and what he or she would like to become. they buy benefits. Thus. or they want a car with acceleration from 0 to 60 miles per hour in 7 seconds versus 10 seconds to experience the driving thrill. The self-concepts influence a person’s consumption deeply. transportation. Means-end chains are simply linkages between the product’s physical features and customers’ fundamental needs and values. This is called self-concept. For many. Furthermore. in which potential customers are asked repeatedly in iterative sequence. business students who are about to enter the corporate world start dressing more seriously in their senior year. This linking is an accomplished by drawing means-end chains. these two concepts are respectively called actual self and ideal self. They want a car with ergonomic seats because they want their body to feel comfortable. Rather they are buying transportation. the connections between product or service features on the one hand and customers’ fundamental needs and values on the other is important if marketers are to design features that would offer value to customers. “Why is that feature important to you?” Self-Concept Everyone has a self-image of who he or she is.000 pounds of sheet metal. for people live their self concepts in large measure by what they consume.DBA 1722 NOTES Linking Product Attributes to Customer Values One of the basic tenets of marketing has been that customers don’t buy products or services. For example. The consuming as Integration metaphor describes how consumers are able to integrate their self-concepts and objects through a variety of consumption rituals. or master the machine. For some.

nonworking mother of two children. payer. the buyer could have the self-concept of being a convenience seeker or service seeker or of being very time conscious. of course. and buyer.” Finally. Thelma is a home-and family-oriented. She likes to go out rather than stay at home and dislikes household chores. fashion-oriented. Self-Concept as Users. in contrast. very detached) user. have a self-concept. single mother of a five-year old. If the gaps are significant. is a very outgoing. the marketer may want to make changes to the product or to marketing communication about the product. spend most of her time at home. career-oriented. Lifestyle Determinants • Demographics • Subculture • Social class • Motives • Personality • Emotions • Values • Household life cycle • Culture • Past experiences Life Style How we live Activities Interests Likes/dislikes Attitudes Consumption Expectations Feelings Impact on behavior Purchases • How • When • Where • What • With Whom Consumption • Where • With whom • How • When • What NOTES • • • • • • • Figure 2. politically active. Businesses. nonreligious. Candice. Benetton’s self-concept can be described as a clothing company for the young that promotes social issues. others view their essence to be in communications wherever and in whatever form it may exist. and entertain relatives and friends over the weekend. too. psychographics describes us in terms of lifestyles. traditional. a user could have the self-concept of a very discerning connoisseur user or a very involved (or alternatively. or of having the attitude of “money is no object to me. Some think of themselves as a company at the forefront of technology. Consider two consumers with very different lifestyles. For example. still others define their essence as innovation. She likes to cook. religious. these customers have very different customer behaviors as well.CONSUMER BEHAVIOUR of the brand. Lifestyle Along with what we think of ourselves and what we value. Basically. corporate self-concepts are expressed in mission statements. Illustratively. But they also have a self-concept of themselves in their specific roles of user. or the way we live. Given different lifestyles. educated. payers and Buyers Individuals have their self-concepts as individuals in general.3 Lifestyle and the Consumption Process 55 ANNA UNIVERSITY CHENNAI . They payer could have the self-concept of being thrifty for financially prudent.

adds credence when they meet with top executives of their client organizations.DBA 1722 NOTES Lifestyles are determined by (a) a customer’s personal characteristics. How do consumers live their lifestyles? How else but by doing activities that inevitably entails marketplace exchange and choices. packing lunch for work). age. In shopping at these stores. A professor is encouraged to wear semi-formal clothing at school campuses while an investment banker is likely to wear suits. and Laura Ashley. the consumer is projecting these lifestyles on his or her purchases. come consumers are extremely frugal in their consumption of goods and services.” Even in business. The frugal are not found to use coupons more often than regular customers. and with each different store the expectation is completely different. Candice is a frequent visitor to the fashion boutiques while Thelma buys all of her own and family’s clothing at a department store. 56 ANNA UNIVERSITY CHENNAI .” Empirical research shows that the frugal are less susceptible to interpersonal influence. Thelma obviously eats out less but buys more of the food items from the market than does Candice. namely.” Beyond buying it also affects customer as users since the frugal are more resourceful in using products and services (for example-timing. Catering to different lifestyles of consumers are lifestyle retail brands like Gap. “Frugality is unidimensional consumer lifestyle trait characterized by the degree to which consumers are both restrained in a acquiring and resourcefully using economic goods and services to achieve long-term goals. Benetton. showers. institutions and reference groups. and more price and value conscious. casual lifestyle” and the Polo/Ralph Lauren experience is the realm of “an exclusive gentleman’s club and the country house. namely.” while the Gap represents a “classic American. genetics. thereby. less materialistic. Candice uses babysitting services more than Thelma does. less compulsive in buying. These three sets of factors together influence the pattern of our activities-how we spend time and money. Some companies like IBM and Anderson Consulting ask their employees and consultants to dress conservatively in dark suits and white shirts that make them look older than their real age and. frugality affects customer decisions about “whether to buy” and “what to buy. Candice also uses dry-cleaning services more while Thelma buys laundry detergents more. Laura Ashley represents “gentile English country lifestyle. For instance. and (c) needs and emotions. (b) his or her personal context. Because commercial products play a major role in customers’ enactment of their lifestyles. and personality. and software professionals are likely to be dressed in business casuals. race. Their basic retail propositions is augmented with a set of added values that have symbolic value and meaning for the lifestyles of a specific consumer group. and personal worth. including store atmospherics. culture. gender. clothing can signify lifestyles. lifestyles can explain customer behavior significantly.

considered to have relatively similar lifestyles. gardening. and experiences that provide satisfaction and give shape.s. That scheme used two dimensions for its conceptual foundation: (1) Maslow’s hierarchy-the theory that people rise from physiological. 2. and (2) Riesman’s social character Theory that a person is either inner directed or outer directed. whereas outer-directed persons are concerned with others’ opinion of them.CONSUMER BEHAVIOUR Psychographics as AIO Profiles The appeal of Psychographics in marketing from the outset has been its quantifiabilitylike demographics. to safety. substance. people pursue and acquire products. self-concepts. to self-esteem. introduced in 1978. it’s important to understand for us as students of consumer psychology. however. VALS One of the most psychographic profiling schemes is called VALS. psychographics were derived based on quantitative measures. who are. To analyze and interpret data from measures based on AIO statements.12. to self-actualization motivations. based on the identities they seek and implement via market place behaviors. recreational travel (42 percent versus 32 percent). and attending sporting events. and opinions. photography. Inc. called psychographic profiles. respectively. its first version groups the entire U. researchers present a series of statements about possible activities. They found that leisure time activities of study’s online buyers were not much different from the average household. Inner-directed persons are more independent minded. and group together people with similar responses. interests. Developed by SRI International. and character to their identities. In an attempt to profile online shoppers. Ernst & Young charted their psychographic profile. At the bottom of the VALS hierarchy are survivors and sustainers. To measure psychographics (i. and family-time pursuits (57 percent versus 50 percent). Values.. Online shoppers are. the original scheme. values and self-concepts. similar to all households in volunteer activities. deriving one’s code of conduct respectively from oneself or from others. and lifestyles). Population into nine groups. the elderly poor and unemployed youth. researchers. Belongers is the next group. A smaller percentage of online shoppers watched television (61 percent) compared to 65 percent of average households.. Respondents indicate their agreement or disagreement with these statements. These groups. the largest of the nine 57 NOTES ANNA UNIVERSITY CHENNAI . Some differences were visible in movie attendance (37 percent of online shoppers go to movies frequently or regularly compared to 26 percent of the average household).e. to social belonging. These profiles are excellent indications of how people are thinking and where they are going with their lives. services. According to SRI. gourmet cooking. Even though this scheme has been replaced by a new VAL’s system with an eight-segment classification. can then be described using certain AIO profiles. performing arts attendance (25 percent versus 17 percent).

The Societal Conscious is concerned about and works for larger.DBA 1722 NOTES groups and comprising middle-aged. identification. I-am-me’s are teenagers with rebellion against the established ways as their principal motto. 58 ANNA UNIVERSITY CHENNAI . like individuals. ego defense. Experiential are big on experiencing all the sensory and recreational experiences life has to offer-mountaineering. Along with the Belongers. desired outcomes. and societal conscious. at the same time. and modeling. and racial harmony. The personality of a consumer guides and directs the behavior chosen to accomplish goals in different situations. utility. middle class. travel.13 SUMMARY Consumer motivations are energizing forces that activate behavior and provide purpose and direction to that behavior. people selectively attend to those stimuli that physically attract or personally interest them. experiential. Because of the amount of stimuli they are exposed to. Emulators don’t have as much money or success. Perception consists of those activities by which an individual acquires and assigns meaning to stimuli. objectification. This occurs when a stimulus comes within range of one of an individual’s primary sensory receptors. outer-directed Americans. Achievers are the most affluent. and consumers tend to prefer products with brand personalities that are pleasing to them. successful professionals and business people. societal issues. affiliation. Finally the group at the top is the Integrated. Perception begins with exposure. expressive. In contrast. but they try to emulate the lifestyles of Achievers. two other outer-directed groups are called Emulators and Achievers. have personalities. There are numerous motivation theories. stimulation. a small group that has gained material well-being and success in the material world and is. bungee-jumping. reinforcement. Attention occurs when the stimulus activates one or more of the sensory receptors and the resulting sensations go into the brain for processing. world peace. categorization. but all have two common assumptions: (1) individuals have internal characteristics or traits. I-am-me’s. On the other side are three inner-directed segments. autonomy. Consumers also prefer advertising messages that portray their own or a desired personality. 2. assertion. sports. There are many personality theories. working for larger issues or in jobs that give some intrinsic meaning to life rather than merely fame and wealth. skiing. McGuire developed a more detailed set of motives – the needs for consistency. Brands. and (2) there are consistent differences between individuals on these characteristics or traits that can be measured. attribution. Maslow’s need hierarchy states that basic motives must be minimally satisfied before more advanced motives are activated. tension reduction. such as the environment. and so on.

attitudes influence. Attempts to change affect generally rely on classical conditioning. conditioning and cognition. Change strategies focusing on behavior rely more on operant conditioning. and so forth. Two basic types of learning. the way one defines his – or herself. Attitudes. availability. Low-involvement learning occurs when an individual is paying only limited or indirect attention to an advertisement or other message. and act toward some aspect of their environment. cognition. Strivers. Results of all the factors discussed so far in the text. There are four types of self concept: actual self concept. as well as reflect. and ideal self-concept. behavior. developed by SRIC-BI. It is a function of one’s inherent individual characteristics that have been shaped through social interaction as the person moves through his or her life cycle. and for new-product development strategies. values. information goes directly into shortterm memory for problem solving or elaboration where two basic activities occur – elaborative activities and maintenance rehearsal. particularly the cognitive component. Attitude change strategies can focus on affect. are used by consumers. and Strugglers. Experiences. Makers. The self-concept. Long-term memory is information from previous information processing that has been stored for future use. Marketing managers therefore are very interested in the nature of consumer learning. private self-concept. Believers. The VALS system. such as benefit segmentation. social self-concept. performance. Memory is the result of learning. preference. Learning is defined as any change in the content or organization of long-term memory or behavior. Consumer must learn almost everything related to being a consumer – product existence. Self-concept is one’s belief and feelings about oneself. Lifestyle can be defined simply as how one lives. Attitude can be defined as the way people think. or some combination. including the possessions one uses to define oneself. Fulfilled. Achievers. An individual’s self-concept. is termed the extended self.CONSUMER BEHAVIOUR Interpretation is the assignment of meaning to stimuli that have been attended to. divides the United States into eight groups – Actualizes. It is how an individual expresses his or her self-concept in actions. Interpretation is a function of individual as well as stimulus and situation characteristics. High-involvement learning occurs when an individual is motivated to acquire the information. NOTES 59 ANNA UNIVERSITY CHENNAI . are the basis for market segmentation strategies. feel. the lifestyle individuals pursue. Changing cognitions usually involves information processing and cognitive learning. Most commonly. typically includes some of the person’s possessions.

Which attitude component would you focus on? Why? What type of appeal would you use? Why? Is your self-concept predominantly independent or interdependent? Why? Does VALS make sense to you? What do you like or dislike about it? 60 ANNA UNIVERSITY CHENNAI . what regulations. Do Marketers create needs? Do they create demand? What ethical issues are relevant? Suppose you wanted to form highly negative attitudes toward smoking among college students. Place each in one of the core traits.14 Review Questions Given that smoking scenes in movies increase the positive image and intention to smoke among youth. if any. should apply to this? How would you teach teenagers an eating script that involved consistently washing one’s hands first? Is low-involvement learning really widespread? Which products are most affected by low-involvement learning? How could Maslow’s motive hierarchy be used to develop marketing strategy for the following: • • • Habitat for Humanity Neutrogena’s lipsticks Listerine mouthwash List all the emotions you can think of.DBA 1722 NOTES 2.

you should understand The basic concepts of social involvement and group dynamics. Like almost all behavior.2 LEARNING OBJECTIVES After studying this unit. products.CONSUMER BEHAVIOUR UNIT III NOTES COSUMERS IN THEIR SOCIAL AND CULTURAL 3. likes and dislikes and adopt different behavior patterns while making purchase decisions. Many factors affect how we. an individual’s social relationships are of. art. music. we all have different tastes. The study of culture encompasses all aspects of a society such as its religion. as individuals and as societies. Everyday of our life we are buying and consuming an incredible variety of goods and services. For example. a person might become a volunteer ambulance driver to satisfy a need for community recognition. etc. and consume.1 OVERVIEW Everybody in this world is a consumer. Emphasize the role of reference groups in influencing consumer behavior. live. and help explain how groups of consumers behave. A Family and its types 61 ANNA UNIVERSITY CHENNAI . customs. 3. people tend to be involved with others on a rather constant basis. work patterns. Another person might join a computer club in an effort to find compatible friends to satisfy social needs. However. traditions. buy. language. technology. laws. A third person might join a health food cooperative to obtain the benefits of group buying power. ethnicity. and social class influence how individual consumers buy and use products. knowledge. With the exception of those very few people who can be classified as hermits. The Social Class and its impact on consumer decisions.ten motivated by the expectation that they will help in the satisfaction of specific needs. Culture is an extremely critical and all pervasive influence in our life. External influences such as culture. Identify other social and societal groupings that influence consumer buying processes. These are just a few of the almost infinite number of reasons why people involve themselves with others.

more formal group. 3. specific roles and authority levels (a president. then these others constitute a secondary group for that person. Primary versus Secondary Groups If a person interacts on a regular basis with other individuals (with members of his or her family. or does not consider their opinions to be important. it can be seen that the critical distinctions between primary and secondary groups are the frequency with which the individual interacts with them and. such as a neighborhood. 2. a formal membership list). and the group’s purpose are clearly defined. 1. From this definition. Within the broad scope of this definition are both an intimate “group” of two neighbors who informally attend a fashion show together and a larger. the extent to which the group structure. treasurer. Formal versus Informal Groups Another useful way to classify groups is by the extent of their formality. 3. if it consists. and secretary). formal versus informal groups. The local chapter of the American Red Cross. and membership versus symbolic groups.DBA 1722 NOTES Family life cycle and its implications on consumer behavior Family roles and consumption patterns & relationships and family marketing The various influences on culture.1 Types of Groups To simplify our discussion. and specific goals (to support a political candidate. would be classified as a formal group. with neighbours. large versus small groups. improve their children’s education. say. with elected officers and members who meet regularly to discuss topics of civic interest. If a group has a highly defined structure (e. that is. On the other hand. or three co-workers who. then it would be classified as a formal group. then these individuals can be considered as a primary group for that person. 62 ANNA UNIVERSITY CHENNAI . of four women who were in the same college sorority and who meet for dinner once a month. sub-cultures and its influences The environmental variations and cultural values. we will consider four different types of group classification: primary versus secondary groups. if a person interacts only occasionally with such others. see each other frequently then it is considered an informal group. or with co-workers whose opinions are valued).3. increase the knowledge or skills of members).. Explain the cross-cultural influences on consumer behavior.g. On the other hand.3 WHAT IS A GROUP? A group may be defined as two or more people who interact to accomplish some goals. the importance of the groups to the individual. with their spouses. the members’ roles. if a group is more loosely defined.

with its numerous subordinate divisions. a group in which an individual is not likely to receive membership. is considered a symbolic group.CONSUMER BEHAVIOUR 3. each staff member of a college newspaper is likely to know all the other members and be aware of their duties and interests within the group. The family’s importance in this regard is due to the frequency of contact that the individual has with other family members and that the family has a greater extent of influence on the establishment of a wide range of values. despite acting like a member by adopting the group’s values. and thus a more compelling. influence on consumer behavior. attitudes. since such groups are more likely to influence the consumption behavior of group members. Large versus Small Groups It is often desirable to distinguish between groups in terms of their size or complexity. and city chapters. In contrast. A membership group is a group to which a person either belongs or would qualify for membership. A large group might be thought of as one in which a single member is not likely to know more than a few of the group’s members personally. and behavior. For example. and the American Bar Association. the group of women with whom a young homemaker plays golf weekly or with whom she hopes to play golf when an opening occurs would be considered. In summary. In the realm of consumer behavior. for her. For example. Membership versus Symbolic Groups Another useful way to classify groups is by membership versus symbolic groups. 3. with its many state.3. a membership group. Clearly. members of a small group are likely to know every member personally and to be aware of every member’s specific role or activities in the group. attitudes. Examples of large groups include such complex organizations as General Motors. NOTES 63 ANNA UNIVERSITY CHENNAI . primary membership groups are of the great interest to marketers because they exert the greatest potential influence on consumer purchase decisions.2 Consumer Relevant Groups To more fully comprehend the kind of impact that specific groups have on individuals. Friendship groups. or be fully aware of the specific roles or activities of more than a limited number of other group members. we will examine six basic consumer-relevant groups: the Family. informal. Shopping groups. we can say that small. county. actual membership groups offer a more direct. In contrast. Consumer action groups and Work groups. Formal social groups. 4. The Family An individual’s family is the most important group to influence his or her consumer decisions. and behavior. we are principally concerned with the study of small groups.

In addition. the membership list of a men’s club would be of interest to local men. meeting “important” people (e. Membership in a formal social group may influence a consumer’s behavior in several ways. Formal Social Groups In contrast to the relative intimacy of friendship groups. The research found that shopping parties of at least three persons deviated more from their original purchase plans (they bought either more or less than originally planned) than did either single shoppers or twoparty groups. security. Some members may copy the. The study also found that shopping groups tended to cover more territory in 64 ANNA UNIVERSITY CHENNAI . consumption behavior of other members whom they admire. or stores. People like to shop with others who they feel have more experience with or knowledge about a desired product or service. usually unstructured and lack specific authority levels. it is friends who are most likely to influence the individual’s purchase decisions. or simply to pass the time. it reduces the risk that a purchase decision will be socially unacceptable.DBA 1722 NOTES Friendship Groups Friendship groups are informal groups because they are. Shopping with others also provides an element of social fun to an often boring but necessary task. In terms of relative influence. For example. and opportunities to discuss problems that an individual may be reluctant to discuss with members of his or her own family. Seeking and maintaining friendships is a basic drive of most people. However. For example. Insurance agents. such groups are of interest to marketers. Shopping Groups Two or more people who shop together-whether for food. formal social groups are more remote and serve a different function for the individual. one study of the in-store behavior of shoppers revealed some differences between group and individual shopping. A person joins a formal social group to fulfill such specific goals as making new friends.g. services. Relatively few marketing or consumer behavior studies have examined the nature of shopping groups. after an individual’s family. Such groups are often offshoots of family or friendship groups. Friendships are also a sign of maturity and independence. tax accountants. for they represent a breaking away from the family and the forming of social ties with the outside world.. can be called a shopping group. or promoting a specific cause. automobile agents. Consumers are more likely to seek information from those friends they feel have values or outlooks similar to their own. members of such groups have frequent opportunity to informally discuss products. for career advancement). Friends fulfill a wide range of needs: they provide companionship. Because members of a formal social group often consume certain products together. for clothing.

3. cause-specific consumer action groups. A special type of shopping group is the in-home shopping group. to attend a “party” devoted to the marketing of a specific line of products. Work Groups The sheer amount of time that people spend at their jobs. Members of informal work groups may influence the consumption behavior of other members during coffee or lunch breaks or after-hours meetings. Consumer Action Groups A particular kind of consumer group-a consumer action group.has emerged in response to the consumerist movement. or a group of irate community members who unite to block the entrance of a fast-food outlet into their middle-class neighborhood. provides ample opportunity for work groups to serve as a major influence on the consumption behavior of members. frequently more than thirtyfive hours per week. It also provides some insight into methods that Groups can be used to effect desired changes in consumer behavior. which typically consists of a group of women who gather together in the home of a friend. This type of consumer group has become increasingly visible since the 1960s and has been able to influence product design and marketing practices of both manufacturers and retailers. This basic concept provides a valuable perspective for understanding the impact of other people on an individual’s consumption beliefs. 65 NOTES ANNA UNIVERSITY CHENNAI . and thus had more opportunity to see and examine merchandise and to make unplanned purchases. Consumer action groups can be divided into two broad categories: those that organize to correct a specific consumer abuse and then disband.CONSUMER BEHAVIOUR the store than individuals shopping alone. The formal work group consists of those individuals who work together as a team. Furthermore. 3.3. The undecided guests often overcome a reluctance to buy when they see their friends make positive purchase decisions. are examples of temporary. Reference Groups Reference groups are groups that serve as a frame of reference for individuals in their purchase decisions. some of the guests may feel obliged to buy because they are guests in the home of the sponsoring hostess. Both the formal work group and the informal friendship/work group have the potential for influencing consumer behavior. The in-home party approach provides marketers with an opportunity to demonstrate the features of their products simultaneously to a group of potential customers. and behavior. Their direct and sustained work relationship offers substantial opportunity for one or more members to influence the consumer-related attitudes and activities of other team members. more pervasive. A group of tenants who band together to dramatize their dissatisfaction with the quality of service provided by their landlord. attitudes. and those that organize to address broader. problem areas and operate over an extended or indefinite period of time.

Broadening the Reference Group Concept Like many other concepts borrowed from the behavioral sciences.. which is likely to play an important role in molding the child’s general consumer values and behavior (e. their choice of home furnishings and cars. Normative reference groups influence the development of a basic code of behavior. rock stars. or even a nation. the group can be symbolic: prosperous business people. an ethnic group.g. However. comparative reference groups influence the expression of specific consumer attitudes and behavior. which foods to select for good nutrition. It is likely that the specific influences of comparative reference groups are to some measure dependent upon the basic values and behavior patterns established early in a person’s development by normative reference groups. and sports heroes). a community. sports heroes. The usefulness of this concept is enhanced by the fact that it places no restrictions on group size or membership. A comparative reference group might be a neighboring family whose lifestyle appears to be admirable and worthy of imitation (the way they maintain their home. family and close friends). the concept has gradually broadened to include either direct and indirect individual or group influences. Both normative and comparative reference groups are important. the number and types of vacations they take). what constitutes “good” value). appropriate ways to dress for specific occasions.. 66 ANNA UNIVERSITY CHENNAI . or TV personalities. An example of a child’s normative reference group is the immediate family.. reference groups were narrowly defined to include only those groups with which a person interacted on a direct basis (e. Reference groups that serve as benchmarks for specific or narrowly defined attitudes or behavior are called comparative reference groups. nor does it require that consumers identify with a tangible group (i. how and where to shop. a profession. political leaders. such as movie stars.g. the meaning of reference group has changed over the years. Indirect reference groups consist of those individuals or groups with whom a person does not have direct face-toface contact. or behavior. Referents that a person might use in evaluating his or her own general or specific attitudes or behavior vary from an individual to several family members to a broader kinship. from a voluntary association to a social class.e.DBA 1722 NOTES What is a Reference Group? A reference group is any person or group that serves as a point of companion (or reference) for an individual in the formation of either general or specific values. attitudes. As originally employed. Reference groups that influence general values or behavior are called normative reference groups.

attitudes. Thus the person tends to adopt attitudes and behavior that are in opposition to the norms of the group. Ram believes that continuing his education to obtain an MBA will enhance his career opportunities. of which he is vice-president. Four types of reference groups that emerge from a cross-classification of these factors: contactual groups. these former students serve as an avoidance group. An avoidance group is a group in which a person does not hold membership and does not have face-to-face contact and disapproves of the group’s values. the recent editorials (endorsed by most of the staff) urging students to adopt a more conservative political philosophy run counter to his own views. attitudes. Thus a contactual group has a positive influence on an individual’s attitudes or behavior. The school’s Advertising Club. a senior majoring in advertising at the state university in the southwestern United States. but wants to be a member. attitudes. aspirational groups. NOTES 67 ANNA UNIVERSITY CHENNAI . Still further. This section discusses how and why some of these factors operate to influence consumer behavior.3. although he enjoys his position as a reporter on the university’s newspaper. Thus ‘the person tends to adopt attitudes and behavior that are in opposition to those of the group.3. A disclaimant group is a group in which a person holds membership or has faceto-face contact but disapproves of the group’s values. Thus it serves as a positive influence on that person’s attitudes or behavior. 3. 2. and behavior.5 Factors that Affect Reference Group Influence The degree of influence that a reference group exerts on an individual’s behavior usually depends on the nature of the individual and the product and on specific social factors. serves as one of Ram’s contractual groups. Consider Ram. Thus the newspaper staff is currently a disclaimant group. An aspirational group is a group in which a person does not hold membership and does not have face-to-face contact. and behavior. Finally. and behavior. 1. A contactual group is a group in which a person holds membership or has regular face-to-face contact and of whose values. and avoidance groups. attitudes.4 Types of Reference Groups Reference groups can be classified in terms of a person’s membership or degree of involvement with the group and in terms of the positive or negative influences they have on his or her values. Ram personally knows a number of students who have quit college during their final year.CONSUMER BEHAVIOUR 3. and standards he or she approves. It is clear that individuals who hold the MBA degree serve as an aspirational group for him. 3. disclaimant groups. 4.

they are likely to be persuaded by those they consider to be trustworthy and knowledgeable.g. and does not expect to have access to objective information about it (e. he may seek the advice of friends or imitate the behavior of others by taking her to a restaurant he knows is frequented by physicians whom he admires. On the other hand. is less likely to be influenced by the advice or example of others. For example. She may conform to the dress code of her office by wearing conservative business suits by day and drastically alter her mode of dress after work by wearing more conspicuous. Information and Experience An individual who has firsthand experience with a product or service. depending on her place and role. However. and behavior of an individual at different points in time or under different circum.. If he has neither personal experience nor information he regards as valid. attitudes.DBA 1722 NOTES 1. a person who believes that relevant. they are likely to adopt their product. power groups are not likely to cause attitude change. he may take her to a restaurant that he knows from experience to be good or to one that has been highly recommended by the local newspaper’s Dining-Out Guide. of others. when consumers are concerned with obtaining accurate information about the performance or quality of a product or service. a person who has little or no firsthand experience with a product or service. Different reference groups may influence the beliefs. is more likely to seek out the advice or example of others. or who offer them status or other benefits. That is.stances. the dress habits of a young female attorney may vary. Credibility. or powerful can induce consumer attitude and behavior change. 68 ANNA UNIVERSITY CHENNAI . When consumers are primarily concerned with the acceptance or approval of others they like. they are more likely to be persuaded by sources with high credibility. Research on imitative behavior provides some interesting insights on how insufficient experience or information concerning a product makes consumers more susceptible to the influence either positive or negative. For example. unlike other reference groups that consumers follow either because they are credible or because they are attractive. Individuals may conform to the behavior of a powerful person or group but are not likely to experience a change in their own attitudes. with whom they identify. if a medical school student wants to impress his new girl-friend. and Power of the Reference Group A reference group that is perceived as credible. flamboyant styles.form to the norms of that person or group in order to avoid ridicule or punishment. 2. When consumers are primarily concerned with the power that a person or group can exert over them. attractive. they might choose products or services that con. advertising may be misleading or deceptive). Attractiveness. or can easily obtain full information about it. brand. or other behavioral characteristics. For example.

reference groups influence only the product category decision. laundry soaps) are less likely to be purchased with a reference group in mind. In other cases. NOTES 69 ANNA UNIVERSITY CHENNAI . 3. Products that are less conspicuous (canned fruits. along with an initial classification of a small number of product categories. these products are called product-minus. and that will stand out and be noticed (e. Legitimize an individual’s decision to use the same products as the group. Reference Groups and Consumer Conformity Marketers are particularly interested in the ability of reference groups to change consumer attitudes and behavior (i. to encourage conformity). 4. The success of a brand of status running shoes like Reebok is aided by the fact that it is relatively easy to spot a person wearing them-given the distinctive flag symbol on the side of each shoe. 2. in some cases. A visually conspicuous product is one that can be seen and identified by others. reference groups influence the brand (or type) decision. Such products are called product plus.6. Provide the individual with the opportunity to compare his or her own thinking with the attitudes and behavior of the group. Products that are especially conspicuous and status-revealing (a new automobile. Influence the individual to adopt attitudes and behavior that are consistent with the norms of the group. Even if a product is not visually conspicuous. Such products are called product-plus. The ability of reference groups to influence consumer conformity is demonstrated by the results of a classic experiment designed to compare the effects. Reference Group Impact on Product and Brand Choice In some cases. Inform or make the individual aware of a specific product or brand. Finally. a luxury item or novelty product). brand-plus items. In still other cases. reference groups influence neither the product category nor the brand decision. brand minus items. reference groups may influence both a person’s product category and brand (or type) choices. To be capable of such influence. it may be verbally conspicuous it may be highly interesting or it may be easily described to others. a reference group must 1. The idea of classifying products and brands into four groups in terms of the suitability of a reference group appeal was first suggested in the mid-1950s. brandminus items..3. brand-Plus items. and for some products. home furniture) are most likely to be purchased with an eye to the reactions of relevant others.e.CONSUMER BEHAVIOUR 3. fashion clothing. 3. These products are called productminus..g. Conspicuousness of the Product The potential influence of a reference group varies according to how visually or verbally conspicuous a product is to others.

Household 70 ANNA UNIVERSITY CHENNAI .4 THE FAMILY The importance of the family or household unit in consumer behavior arises for two reasons: 1. “If he says it works. Benefits of the Reference Group Appeal Reference group appeals have two principal benefits for the advertiser: they increase brand awareness and they serve to reduce perceived risk.” 3.3. Many products are purchased by a family unit. “People just like me are using that product. This gives the advertiser a competitive advantage in gaining audience attention. Individuals’ buying decisions may be heavily influenced by other family members. Reduced Perceived Risk The use of one or more reference group appeals may also serve to lower the consumer’s perceived risk in purchasing a specific product. where the personality employed is generally well known to the relevant target segment.” Expert: When consumers are concerned about the technical aspects of a product. How families or households make purchase decisions depends on the roles of the various family members in the purchase. 2. “She wouldn’t do a commercial for that product if she didn’t believe it was really good. Celebrities tend to draw attention to the product through their own popularity. 2.DBA 1722 NOTES 3. they are likely to be influenced by a common man endorsement or testimonial. and influence of products. consumption. For eg. The example set by the endorser or testimonial-giver may demonstrate to the consumer that uncertainty about the product purchase is unwarranted: Following are examples of how reference group appeals serve to lower the consumer’s perceived risk. Increased Brand Awareness Reference group appeals provide the advertiser with the opportunity to gain and retain the attention of prospective consumers with greater ease and effectiveness than is possible with many other types of promotional campaigns.7. particularly on television where there are so many brief and similar commercial announcements. This is particularly true of the celebrity form of reference group appeal.” Common Man: When consumers are worried about how a product will affect them personally. then it really must work. For eg. For eg. Celebrity: Consumers who admire a particular celebrity often have the following reactions to the celebrity’s endorsement or testimonial. they welcome the comments of an acknowledged or apparent expert. 1.

whereas personal care items. the other family members play an important role in the purchase. friends living together. The term household is becoming a more important unit of analysis for marketers because of the rapid growth in nontraditional families and non-family households. What is a Family? A family is a group of two or more persons related by blood. uncles and aunts. on the other hand. The family into which one is born is called the family of orientation. such as grandparents. or adoption who reside together. who occupy a housing unit. There are significant differences between the terms household and family even though they are sometimes used interchangeably. and parents-in-law. both related and unrelated. marriage. Visits to shopping malls often involve multiple family members buying clothing and accessories. something with a heavy dose of influence by family memberschildren may buy clothing paid for and approved of by parents.CONSUMER BEHAVIOUR products like food and soaps may be purchased by a person but consumed by many. whereas the one established by marriage is the family of procreation. 71 NOTES ANNA UNIVERSITY CHENNAI . perhaps with involvement from children or other member of the extended family. and same sex couples. are often purchased by both spouses. Just because of being mother for two young children. The nuclear family is the immediate group of father. persons of Opposite Sex Sharing Living Quarters. Among non-family households. It does not mean that her decisions are not influenced by the preferences and power of other family members. For example. marketers should consider the consumption circumstances and the family structure before deciding on specific communicate on or advertising methods to attract their segment. might be purchased by an individual family member for his or her own consumption. such as cosmetics or shaving cream. Regardless of how many family members are present when items are being purchased. It is important to distinguish between these terms when examining data. it is her responsibility for buying food for the family and act as an individual in the market. plus other relatives. the individuals who constitute a family might be described as members of the most basic social group who live together and interact to satisfy their personal and mutual needs. The extended family is the nuclear family. The remaining non-family households include those consisting of elderly people living with non-family members. and child(ren) living together. In a more dynamic sense. What is a Household? The term household is used to describe all person. cousins. whereas teenagers may influence the clothing purchase of a parent. the great majority consist of people living alone. Homes and cars. mother. Although marketing communications are usually directed to individuals.

Understanding whether family members are satisfied with family purchase requires communication within the family. Sociological Variables Affecting Families and Households Marketers can understand family and household decisions better by examining the sociological dimensions of how families make consumer decisions. including travel.4. 72 ANNA UNIVERSITY CHENNAI . Communication is a facilitating dimension. supportive comments) enable family members to share their changing needs as they relate to cohesion and adaptability. For example. Functions of the Family Four basic functions provided by the family are particularly relevant to a discussion of consumer behavior.4. in Japan. role relationships.4. To determine how the family makes its purchase decisions and how the family affects the future purchase behavior of its members. Negative communication skills (such as double messages. criticism) minimize the ability to share feelings. (2) Emotional support. homes. and communication. marital status. double binds. Children increase family demand for clothing. food. high-tech companies have formed a consortium to standardize technology that has been developed to monitor and manage households. Cohesion reflects a sense of connectedness to or separateness from other family members. consumer analysts have enormous interest in whether families have children and how many they have. Adaptability measures the ability of a family to change its power structure. and employment status.2. and relationship rules in response to situational and developmental stress. critical to movement on the other two dimensions. adaptability. while they decrease demand for many discretionary items. presence of children. It measures how close to each other family members feel on an emotional level. Three sociological variables that help explain how family’s function includes cohesion. and (4) Family-member socialization. reflective listening. and adult clothing. higher-priced restaurants. Other structural changes affect the types of products that are manufactured. medical care. For example. it is useful to understand the functions provided and the roles played by family members to fulfill their consumption needs.1 Structural Variables Affecting Families and Households Structural variables include the age of the head of household or family. Positive communication skills (such as empathy. The degree of adaptability shows how well a family can meet the challenges presented by changing situations. Cohesion is the emotional bonding between family members. These include (1) Economic well-being. 3. furniture. 3.3. and education. (3) Suitable family lifestyles.DBA 1722 NOTES 3. thereby restricting movement in the dimensions of cohesion and adaptability.

Socialization skills (manners. Marketers often target parents looking for assistance in the task of socializing preadolescent children. Today.CONSUMER BEHAVIOUR (1) Economic Well-Being Providing financial means to its dependents is unquestionably a basic family function. greatly influence consumption patterns. and the selection of suitable educational and occupational or career goals. is a central family function. appropriate manners and speech. and intimacy) to its members is an important basic function of the contemporary family. an increased emphasis is placed on the notion of “quality time”. many educational and psychological centers are available that are designed to assist parents who want to help their children improve their learning and communication skills. Their parents are still expected to provide for their needs. especially young children. this process consists of imparting to children the basic value and modes of behavior consistent with the culture. (3) Suitable Family Lifestyles Another important family function in terms of consumer behavior is the establishment of a suitable lifestyle for the family. In large part. Also. even if some teenage children work. values. or generally. Realizing the scarcity of quality family time. they rarely assist the family financially. These generally include moral and religious principles. In fulfilling this function. How the family divides its responsibilities for providing economic well-being has changed considerably during the past 25 years. The economic role of children has changed. and has created a market for convenience products and fast-food restaurants. Hotels feature a variety of weekend packages targeted to couples and their children. 73 NOTES ANNA UNIVERSITY CHENNAI . For instance. with both parents working. interpersonal skills. dress and grooming standard. But some of them get enough pocket money to decide their consumption of discretionary items. rather than the “quantity of time” spent with children and other family members. The traditional roles of husband as economic provider and wife as homemaker and child rearer are still valid. greeting-card companies have been marketing cards especially for parent to give to their children. goals. To make it easier for working parents to show their love affection and support for their children. including the allocation of time. in most communities. For example. affection. and other qualities) are imparted to a child directly through instruction and indirectly through observation of the behavior of parents and older siblings. (2) Emotional Support The provision of emotional nourishment (including love. the family provides support and encouragement and assists its members in coping with personal or social problems. (4) Socialization of Children and Other Family Members The socialization of family members. the increase in the number of married women working outside the home has reduced the time they have available for household chores. better adjust to their environments. Family lifestyle commitments.

and retire. Single burdens staying alone) Parenthood (young married just attained parenthood ) Post parenthood (growing children or grown up children) Better off financially.1 Consumer Activities Occurring in Various Life Cycles Stages in Family Economic Life Cycle Circumstances Earning reasonable good Bachelorhood salary. retired people. not able to save more Financial position improved with wife working. though home purchases at peak. probability of home ownership on the higher side) Likely Buying Behaviour Buy. less liquid assets. However. or with friends. diapers. Basic kitchen equipment basic furniture.4. The concept may need to be changed to household life cycle (HLC) or consumer life cycle (CLC) in the future to reflect changes in society. these consumers usually don’t have many financial obligations and don’t feel the need to save for their futures or retirement. furnishings for first residences away from home. Income though good. lose a spouse. car. vacations. Table 3. along with consumer behaviors associated with each stage. 74 ANNA UNIVERSITY CHENNAI . vacation with friends Buys baby food. This process historically has been called the family life cycle (FLC). or they may co-habitate with partners in this stage. Interested in vacation packages. have children. Seeks more of At times drastic cut in attention. But consumers don’t necessarily have to pass through all these stages-thy can skip multiple stages. affection and income is likely security conscious Young Singles Young singles may live alone.1. fashions. Family Life Cycles Families pass through a series of stages that change them over time. These stages are described in Table 3. food away from home. alcoholic beverages. recreation. with their nuclear families. no financial (Young. not Buy more medicinal products and other products like the interested in spending. Although earnings tend to be relatively low. two wheeler. chest & cough medicines Dissolution (retired & lone surviving spouse) Concentrates on home improvements. toys. leave home.DBA 1722 NOTES 3. Family Life Cycle Characteristics The traditional FLC describes family patterns as consumers marry. Many of them find themselves spending as much as they make on cars. and magazines. we will use the term FLC to show how the life cycle affects consumer behavior. Buy more tasteful furniture. home appliances. and other products.4.

and other leisure activities. clothing. purchases furniture and furnishings for the child. Full Nest II In this stage. Families also spend more on computers in this stage. These requirements reduce families’ ability to save. their financial position usually continues to improve because the primary wage earner’s income rises. the youngest child has reached school age. the employed spouse’s income has improved.CONSUMER BEHAVIOUR Newly Married Couples Newly married couples without children are usually better off financially than they were when they were single. these couples are more likely to be dual-wage earners. Full Nest III As the family grows older and parents enter their min-40s. sleds. and the husband and wife are often dissatisfied with their financial position. the financial position of the family may be tighter than other instances. and entertainment than others in their age range. and skates. NOTES 75 ANNA UNIVERSITY CHENNAI . These families tend to spend a substantial amount of their incomes on cars. and a computer. the family’s financial position usually improves. buying additional PCs for their older children. and decide if one parent will stay to care for the child or if they will both work and buy daycare services. but the family finds itself consuming more and in larger quantities. sports equipment. buys some luxury appliances. Consumption patterns continue to be heavily influenced by the children. parents begin to change their roles in the family. since they often have two incomes available to spend on one household. Not only do they have fewer expenses. clothing. travel. and the children earn from occasional and parttime employment. and spends money on education. making it easier for them to retire earlier if they save appropriately. the second wage earner is receiving a higher salary. They also have the highest purchase rate and highest average purchases of durable good (particularly furniture and appliances) and appear to be more susceptible to advertising. Full Nest I With the arrival of the first child. vacations. Consequently. and purchase new items such as baby food. families are likely to move into their first home. bicycles. The family typically replaces some worn pieces of furniture. Depending on where children go to college and how many are seeking higher education. music lessons. In this stage. since the family tends to buy large-sized packages of food and cleaning suppliers. No Kids Couples who marry and do not have children are likely to have more disposable income to spend on charities. Married. toys.

they can afford to buy a wide range of products. their income may not be as high. exercising. and services. either group of which may or may not have children living in the household. Retired Solitary Survivor Retired solitary survivors follow the same general consumption patterns as solitary survivors. centering on such items as medical appliances and health. sickness care. Empty Nest II But this time. since there is no second income on which to rely as they get older. Many continue working part time to supplement their retirement and keep them socially involved. Depending on how much they have been able to save throughout their lifetimes. The children have left home and are financially independent allowing the family to save more. or never married (because they prefer to live independently or because they co-habitate with partners). and security based on their lifestyle choices. travel. vacations. with income spent on health care. But many of these families continue to be active and in good health. In this stage discretionary income is spent on what the couple wants rather than on what the children need. they spend on home improvements. affection. If the surviving spouse has worked outside the home in the past. food away from home. travel entertainment. Empty Nest I At this stage. sports utility vehicles. and medicines. and product for their grand children. Therefore. This group now has more available income to spend on travel and leisure but feels the pressure to save for the future. Expenditures become health oriented. Solitary Survivor Solitary survivors be either employed or not employed. but they often add 76 ANNA UNIVERSITY CHENNAI . the family is most satisfied with its financial position. however. may be single again (ending married status because of divorce or death of a spouse). Marketers use the descriptions of these FLC stages when analyzing marketing and communication strategies for products and services. and some may choose to remarry. age 40 or older. and volunteering. the income earners have retired. These individuals have special needs for attention. Those who are not employed are often on fixed incomes and may move in with friends to share housing expenses and companionship. usually resulting in a reduction in income and disposable income.DBA 1722 NOTES Older Singles Single. luxury items. he or she usually continues employment or goes back to work to live on earned income (rather than saving) and remain socially active. allowing them to spend time traveling. Expenditures for clothing and food usually decline in this stage..

performance. Family Decision-Marking Families use products even though individuals usually buy them. Children. although the children may be important as influencers and users. a housewife comes across a new variety of juice that she buys for the family. and who should buy them is a complicated process involving a variety or roles and actors. Both multiple roles and multiple actors are normal. Individual Roles in Family Purchases Family consumption decisions involve at least five definable roles. In our dynamic society. While shopping in the market. toys. walking the dog must be carried out by one or more family members. which may be assumed by spouses.CONSUMER BEHAVIOUR additional information about consumer markets to analyze their needs. and develop consumer-specific marketing strategies. Family Roles For a family to function as a cohesive unit. clothing. how and when products are used. Her decision to purchase does not directly involve the influence of other family members. Expressive roles involve supporting other family members in the decision making process and expressing the family’s aesthetic or emotional needs. family-related roles are constantly changing. remembering that different family members will assume different roles depending on the situation and product. roles or tasks-such as doing the laundry. are users of cereals. or other members of a household. including upholding family norms. One or both of the parents may be the decider and the buyer. furniture 77 NOTES ANNA UNIVERSITY CHENNAI . involve financial. She is the decider. and many other products but may not be the buyers. setting the dinner table. which retail outlet to use. In case of products such as television. etc. music systems.2. children. Key Family Consumption Roles The roles played by the different family members will vary from product to product. Instrumental roles. Role Behavior Families and other groups exhibit what sociologist Talcott Parsons called instrumental and expressive role behaviors. identify niches. car.5. buyer. taking out the garbage. and other functions performed by group members. Determining what products should be bought. also known as functional or economic roles. but she may or may not be the preparer and is not the only user. Marketers need to communicate with consumers assuming each of these roles. preparing meals. for example. 3.

Preparers: Those family members who transform or prepare the product into the form in which it is actually consumed. thereby influencing his father’s decision in favor of his preferred brand. 2. 2. 6. 5. Users: Those family members who use or consume a particular product or service. Six influence strategies for resolving husband/wife consumption-related conflicts have been identified: 1. lentils. which are consumed by all the family members. oil and other ingredients. 4. All family members may use the car. The housewife may prepare the family meal using raw vegetables. Maintainers: Family member(s) who service or repair the product so that it will provide continued satisfaction. Expert: At attempt by a spouse to use his or her superior information about decision alternatives to influence the other spouse.DBA 1722 NOTES or any other product which is likely to be used by some or all the family members. Buyers: Those family members who actually buy a particular product or service. A look at these roles provides further insight into how family members act in their various consumptionrelated roles: 1. The housewife tells her family about the new eatery that has opened in the neighborhood and her favorable description about it influences her husband and teenaged children. The teenaged son who wants a racing bicycle. spices. and listen to the stereo music system 7. Influencers: Those family members who provide information and advice and thus influence the purchase. Gatekeepers: Those family members who control the flow of information about a product/service thus influencing the decisions of other family members. A housewife may be the person who actually buys all the foodstuffs. 8. watch the television. There are eight distinct roles in the family decision-making process. 3. Legitimacy: An attempt by a spouse to influence the other spouse on the basis of position in the household. Deciders: Family members who have the power to unilaterally or jointly decide whether or not to buy a product or service. Influencing Spouses and Resolving Consumer Conflicts When making consumer decisions. the purchase decision is likely to be joint or group decision. may withhold from his father much of the relevant information on all brands except the one that he fancies. Disposers: Family member(s) who initiate or carry out the disposal or discontinuation of a particular product or service. husbands and wives commonly attempt to influence each other to arrive at what they feel to be the best outcome. rations and toiletries. 78 ANNA UNIVERSITY CHENNAI . The husband and wife may jointly decide about the purchase of a new refrigerator.

more than half indicated that they influenced family purchase decisions. while girls of that age spend most of their money on clothing. The teen market can be segmented in terms of lifestyle groups. For instance. cosmetics. Such segmentation framework has value for marketers who wish to focus their marketing efforts on a particular subgroup of teens. Reward: An attempt by a spouse to influence the behavior of the other spouse by offering a reward. stereo equipment. Boys between the ages of 16 and 19 spend most of their money on movies.CONSUMER BEHAVIOUR 3. Older children are likely to participate more directly in family consumption activities. In observing shoppers in a supermarket. Other research indicates that children play relatively important roles when it comes to initiating interest in a new computer and in the actual purchase decision. Teenagers and Post teens A significant number of teenagers have discretionary spending in terms of spending patterns. and fragrances. Bargaining: An attempt by a spouse to secure influence now that will be exchanged with the other spouse at some future date. Emotional: An attempt by spouse to use an emotion-laden reaction to influence the other spouse’s behavior. 79 NOTES ANNA UNIVERSITY CHENNAI . dating. such as choice of vacations. High school students (those in grades 7 through 12) are most interested in sports and fitness. The parent-child relationship. laundry detergents) for which they see ads on TV. In a study of children aged 6 to 14. we all have experienced occasions on which different restaurants to visit. and clothing.. children attempt to influence their parents to make a purchase (to yield). young children attempt to influence family decisions as soon as they possess the basic communication skills needed to interact with other family members (“Buy me a cookie”. it is quite evident that children attempt to influence their parents to make purchases of special interest (e. can be viewed as an influence versus yield situation. Figure below presents a four-category segmentation schema of the teenage market. vehicle expenses.g. These are only a few examples of the almost endless possibilities of potential family consumption conflicts that might need to be resolved. These influence strategies tend to be used by either husbands or wives when they find themselves in disagreement or in conflict with the other spouse regarding specific consumer decision. Impression: Any persuasive attempts by one spouse to influence the behavior of the other. or go on a different type of family vacation. 6. and home computers. Children As any parent knows. 4. “I want a Barbie doll”.). entertainment. Specifically. “Let’s eat at McDonald’s”. see different movies. as it relates to consumer behavior. 5.

The family marketing model. Family Marketing Family marketing focuses on the relationships between family members based on the roles they assume. But less optimistic and less likely to plan to attend college than the Social Driven.1. They are optimistic and plan to attend college. sports influence their self-image ad what they buy. represents nine cells describing various purchaser-consumer relationships. and the least comfortable in social situation. They are comfortable in Social and solitary situations.4. selfconscious. whereas some have more than one consumer. Family marketing identifies scenarios where some purchase might have more than one decision maker. the future. Slightly more males than females: withdrawn.6. Slightly more females than males responsible teens. marketers can advertise and position products differently according to their purchaser-consumer relationships.DBA 1722 NOTES 1 2 Table 3. active. and spend the least. Depending on where in the matrix various products fall.2 Lifestyle segmentation of the teen marker Segment Name Socially Driven Versatile Participant Key characteristics Primarily female: active and extroverted. They are less optimistic about. 80 ANNA UNIVERSITY CHENNAI . including the relationship between purchaser and family consumer and between purchaser and purchase decision maker. 3 Passive introverts 4 Sports Oriented 3. and greatly interested in participating in and watching sports. as see in Figure 3. Primarily males: outgoing.

By understanding 81 ANNA UNIVERSITY CHENNAI . What can we assume? Although these answers may not identify all essential relationships marketers should consider. men’s leisure clothing. Who’s buying for whom? 2. refrigerators. which creates a relationship between individuals and products based on the role each individual has in the influence or purchase of products. 1. the trend has been to focus on marketing to the family as a single unit.1 The Family Marketing Model The family purchase decision-making process can be complex. and luggage. Who wants what when? 5. and living room furniture. but answering the following questions helps identify different purchaser-consumer relationships. televisions. Autonomic decision-making tends to be present in decisions about categories that include women’s jewelry. the appeal to families arose from the restaurant industry’s desire to grow sales and profits. In the restaurant industry. What’s the plot for the purchase? 4. Admittedly. Who are the principal characters? 3. they do identify a family marketing plan. indoor paint and wallpaper. Influences on the Decision Process How do husbands and wives perceive their relative influence on decision making across the decision stages? And what does this mean for marketers? Joint decisions tend to be made about vacations.CONSUMER BEHAVIOUR NOTES Figure 3.

husband and wife decisions are increasingly made jointly. But. we go by this framework. insurance. Influence of employment In the past. Influence of Gender As the gender gap narrows. a range of social positions. Influence by Decision Stage Spouses exert different degrees if influence when passing through the different stages of the decision-making process. especially for products with a long planning cycle. Prior studies showed that decisions regarding these products were usually reported as wife or husband dominant. Although traditional buying roles still apply. Thus. contemporary couples are not inclined to shift traditional joint buying responsibilities to only one spouse. Movement is most pronounced for refrigerators. Vacations are perhaps the most democratic of a family’s purchase decisions. marketers can being to determine which aspects of specific product to advertise to different household members and which media will reach the influential family member. children’s education.DBA 1722 NOTES where on this “map” the decisions to buy particular products fall. Qualls studied family decisions concerning vacations. on which each member of society can be place. family autos. upholstered living room furniture. but they are willing to shop jointly for major items. husbands in dual-income marriages may be willing to stop at the grocery store to pick up a few items. and working wives may drop the family car at the service station for an oil change. with 80 percent of children’s education and housing decisions made jointly. automobiles. Qualls found overwhelmingly that joint decisions are now the norm for these products. This movement from information search to final decision may be minimal in the case of many low-involvement goods but more pronounced for goods that are risky or have high involvement for the family. i. marketers were able to refer to the traditional role structure categories to determine which family member was most likely to purchase a specific product. and carpets or rugs. 3. 82 ANNA UNIVERSITY CHENNAI .. SOCIAL CLASS Social class is more of a continuum. Increasing resources of women and shift toward egalitarianism are producing more joint decision-making in product and service categories of perceived high risk. However. Separate campaigns may be timed to coincide with specialized interests. social researchers have divided this continuum into a small number of specific classes.e.5. and savings. housing. social class is used to assign individuals or families to a social-class category.

labour class or clerks etc. Social class is continuous rather than concrete. customs and activities Marketing response to customers of different economic means Marketing to the low-income consumer 83 ANNA UNIVERSITY CHENNAI . Social class is not measured by a single variable but is measured as a weighted function of one’s occupation. income. and no education or minimum education. executives or middle level managers of companies.No Status. prestige. For example. with a good background of education. Impact of social class Provides a sense of identity Imposes a set of ‘normative’ behaviors Classes share values.5. Value & prestige enjoyed 1 Low Social Class Lower Class Factors affecting social class NOTES 2 Medium 3 High Lower level occupation with no authority. Social class is hierarchical 3. working in a very senior position or a person born into a rich family.1.’ Table 3. 3. drawing handsome Class salary. possessions. with individuals able to move into a higher social class or drop into a lower class. Characteristics of Social Classes The main characteristics of Social class 1. education. 4. For example. Higher Authoritative person. or postgraduates executives’ class managers of companies with authority. drawing handsome salary of which certain amount can be saved and invested. Middle Graduates. so that members of each class have relatively the same status and the members of all other classes have either more or less status.2. less income.5. etc. wealth. 3. status. Persons within a given social class tend to behave more alike 2. very often professionally qualified.3 Factors showing social class differences Factors responsible for social stratification S.CONSUMER BEHAVIOUR Social class can be defined as ‘The division of members of a society into a hierarchy of distinct status classes.

3. Howard and Sheth have defined culture as “A selective. reside and travel. customs and all other habits acquired by man as a member of society. Multiple cultures are nested hierarchically. Culture also determines what is acceptable with product advertising. morale. you have been taught that you need to study to be successful and happy in life. a set of behavioral pattern”. Culture is learned through the following three ways: 1. respect for age and seniority. Culture regulates society –Norms. Culture is adaptive. belief. culture consists of traditional ideas and in particular the values. friends. manmade way of responding to experience. Some changes in our culture: 84 ANNA UNIVERSITY CHENNAI .6. CULTURE .MEANING For the purpose of studying consumer behavior. But in our culture today. art. time scarcity is a growing problem. which implies a change in meals. education. or by watching TV and film actors in action. For instance.6. Informal learning: we learn by imitating the behavior of our parents. 3. 2. Formal learning: parents and elders teach children the proper way to behave. standards of behavior. Technical learning: instructions are given about the specific method by which certain things to done such as painting. This learning may influence your response both as a student and individual towards education.1. Culture determines what people wear. Culture is environmental. values. values and customs that serve to guide and direct the consumer behavior of all members of that society. attitudes. culture can be defined as the sum total of learned beliefs. dancing. rewards and punishments. It includes knowledge. Culture makes life more efficient All members follow same norms. Characteristics of Culture Culture is learned. An accepted concept about culture is that includes a set of learned beliefs. singing etc. eat. habits and forms of behavior that are shared by a society and are transmitted from generation to generation within that society. law.DBA 1722 NOTES Some marketers ambivalent as not perceived as long-term customers constitutes a substantial group Target with value-oriented strategies 3. Thus. which are attached to these ideas. Cultural values in India are good health.

good health and smart appearance are on premium today.4 below depicts the attitudinal and behavioral differences associated with individualism and collectivism. 2. Education: People in our society today wish to acquire relevant education and skills that would help improve their career prospects. frozen food etc. 3. customs. Individualism versus collectivism ( Pursuit of self. or the collectivity that prevails in society. Pressure cookers. food processors. Even exclusive shops are retailing designer clothes.CONSUMER BEHAVIOUR 1.2. however. Physical appearance: Today. religion.3. common to everyone Popular culture: The culture of the masses with norms of mass appeal Subculture: The culture of a group within the larger society. gender.6. This is evident from the fact that so many professional. and still they cannot seem to meet the demand. Convenience: as more and more women are joining the work force there is an increasing demand for products that help lighten and relieve the daily household chores. 1. physical fitness. products they buy and use. Slimming centers and beauty parlors are mushrooming in all major cities of the country. and they are helpful in identifying environmentally sensitive segments of the market. Cosmetics for both women and men are being sold in increasing numbers. Table 3. Marketers. to understanding macro cultures and how they affect consumer behavior. career oriented educational centers are coming up. We are spending more money than ever before on acquiring products such as air-conditioners. This is reflected in the soaring sale of Washing machines.6. Types of Culture National culture: The culture prevalent in a nation. which adds to our physical comfort as well as status. and make life more convenient. are giving more attention. 3. Group identification based on nationality of origin. region. 4. cars CD players etc. Corporate culture: The company’s values. purchasing processes. myths and heroes 3. etc. microwaves. These dimensions serve as a foundation for characterizing. age. 85 NOTES ANNA UNIVERSITY CHENNAI .or group interest ) Individualism describes the relationship between an individual and fellow individuals. and the organisations from which they purchase. Materialism: There is a very definite shift in the people’s cultural value from spiritualism towards materialism. race. Mixer grinders. Hofstede’s Five Dimensions of Culture Culture has a profound impact on the way consumers perceive themselves. As a specific instance count the number of institutions offering courses and training in computers that has opened in your city. comparing and contrasting specific national cultures. Hofstede found five dimensions of culture that are common among 66 countries. rituals.

. and the ways people of unequal status work together.g.g..4 Individualism versus Collectivism Self Construal Role of others Values Motivational drives Behavior Individualism (E. For instance. concern for the environment and championing the underdog are associated with a culture’s femininity. Japan. personal traits Self-evaluation e. 3. 4. individuality Focus differentiation. 5. relatively greater need to unique Reflective of personal preferences and needs Collectivism (E. respect for achievement. assertiveness. Hong Kong. needs of close others 2.g. 86 ANNA UNIVERSITY CHENNAI . United States. Some societies need well defined rules or rituals to guide behavior.DBA 1722 NOTES Table 3. Canada Etc) Defined by internal attributes. whereas others are tolerant of deviant ideas and behavior. standards of social comparison. relationships with others define self and affect personal preferences. relationships Focus on similarity. sources of appraisal regarding self. Masculinity/femininity (Segregation of male and female roles in society) This factor determines the extent to which societies hold values traditionally regarded as predominantly masculine or feminine. family and friends Self-definition e. Power distance ( Social inequality and submission to authority) Power distance reflects the degree to which a society accepts inequality in power at different levels in organisations and institutions. It can affect preferences for centralization of authority. and the acquisition of money and material possessions are identified with masculinity. India) Defined by important others.. Australia.g. Emphasis on connectedness. Emphasis on separateness. and nurturing.. Abstract versus associative thinking Creation of value in products based on cause/effect logic or association among events without a logical link. acceptance of differential rewards. relatively greater need to blend in Influenced by preferences. Uncertainty avoidance ( Tolerance/avoidance of ambiguity ) Uncertainty avoidance concerns the different ways in which societies react to the uncertainties and ambiguities inherent in life.

etc. It gives rise to following questions which affect consumer behavior. Coca Cola is sold allover the world.6. clothing styles and fashions. Variation In Cultural Values There are three broad forms of cultural values as shown in the following figure. Norms are derived from cultural values.6. etc. war. Changes take place due to rapid technologies. Culture is acquired. marketers and managers must understand the existing culture as well as the changing culture and culture of the country where the goods are to be marketed. morals. This acts as a detriment to business in those countries. to meet the needs of the customers. Cultural Influences Culture is that complex whole which includes knowledge. One feels. he is adopting a cross-cultural behavior and there are crosscultural influences as well. It is all pervasive and is present everywhere. (ii) Many countries are very traditional and do not like women displayed on the products. Norms are the boundaries that culture sets on the behavior. It can be acquired from the family. and is not static.4. If the society values collective activity. In case of emergency. Culture influences the pattern of living. and thinks like the other members of the same culture. belief. 3. 87 NOTES ANNA UNIVERSITY CHENNAI . Culture forms a boundary within which an individual thinks and acts. Other Oriented Values This shows the relationship between individuals and the society. law. The relationship influences marketing practices. of consumption. the dress we wear and any other patterns of behavior. Major companies have adapted themselves to international culture and are accepted globally. behaves. because it did not fit in the local refrigerator. of decision-making by individuals. gives the marketers a chance to improve the product. Procter & Gamble and other companies give cross-cultural training to their employees. Culture keeps changing slowly over time.CONSUMER BEHAVIOUR 3. family norms. packing. from the region or from all that has been around us while we were growing up and learning the ways of the world. or natural calamities. art. behavior norms. Culture outlines many business norms. How we greet people. decisions will be taken in a group. mobile phones. Most individuals obey norms because it is natural to obey them. many companies have difficulty in pushing their products for example. which are widely told beliefs that specify what is desirable and what is not. how close one should stand to others while conducting business.5. By making cross-cultural mistakes. Material culture influences technology and how it brings cultural changes like use of telephones. customs and any other capabilities and habits acquired by humans as members of society. I. The nature of cultural influences is such that we are seldom aware of them. (i) Coca Cola had to withdraw its 2 litres bottle from Spain. When one thinks and acts beyond these boundaries.

There is scope for the sale of beauty creams. new products. Adult/ child theme: Is family life concentrated round children or adults? What role do children play in decision-making? Masculine/ Feminine: Whether the society is male dominant or women dominant or balanced. insecticides. In many countries a romantic theme is more successful. and chooses quality goods and established brand names and high prices items. where rewards and prestige is based on an individual’s performance. Environment Oriented Values Cleanliness: If a culture lays too much stress on cleanliness. Thailand and most Arabic countries. II. 88 ANNA UNIVERSITY CHENNAI . Japan. American society is youth oriented and Korean is age oriented. deodorants. there is less scope for new products. less importance is given to brand names. soaps. This is achieved by forming alliances with others. etc. The marketers adopt strategies accordingly. Indonesia. washing powder. consumers are looking for modern methods. Security oriented societies have little chances of development and innovation. In some societies which are upwardly mobile. Performance/ status: A status oriented society cares for higher standards of living. new advertising themes and new channels of distribution. For developing new entrepreneurs risk taking is a must. This is true for the United States. In performance oriented societies. new models and new techniques. vacuum cleaner. and old traditional products are in greater demand. Malaysia.DBA 1722 NOTES Individual/ collective: Whether individual initiation has more value than collective activity? Romantic orientation: This depicts whether the communication is more effective which emphasizes courtship or otherwise. Tradition/ change: Traditional oriented societies stick to the old product and resist innovation or new techniques. Risk taking/ security: An individual who is in a secure position and takes a risk can be either considered venturesome or foolhardy. Singapore. In western countries. Youth/ age: Are prestige roles assigned to younger or older members of the society. Competitive/ Cooperation: Whether competition leads to success. In traditional societies. It leads to new product development. Products which function equally well and may not be big brand names are used. Decisions are taken by mature people in Korea. a lot of emphasis is placed on this aspect and perfumes and deodorants are widely used. Germans do not give the same amount of emphasis to brand names. This depends on the culture of the society.

CONSUMER BEHAVIOUR Problem solving/fatalist: A society can be optimistic and have a problem solving attitude or. and a lot of emphasis is on being material minded. Nature: There are differences in attitude over nature and its preservation. III. Postponed gratification/ immediate gratification: Should one save for the rainy day or live for the day? Sacrifice the present for the future. be inactive and depend on fate. Cars are used for transportation. Hard work/leisure: This has marketing implications on labor saving products and instant foods. Instrumental materialism is common in the United States of America. Terminal materialism. Some countries give great importance to stop environmental pollution and to recycling of products. Material/ non-material: In many societies money is given more importance. Some societies value hard work and consider it as a fuller life. This has marketing implications on the registering of complaints when consumers are dissatisfied with the purchase of the products. Consumers stress on packing materials that are recyclable and environment friendly. Self-Oriented Values Active/passive: Whether a physically active approach to life is valued more highly than a less active orientation. where everybody is involved in work. NOTES 89 ANNA UNIVERSITY CHENNAI . where as Japanese advertisements are mostly dominating terminal materialism. Cultural differences play art important role in this type of materialism. which is the acquisition of things to enable one to do something or achieve something. others enjoy the present and spend lavishly. whereas credit cards are very popular in America and other countries having a different cultural orientation. leisure and relationships get precedence over being materialistic. or live only for the day? Some countries like The Netherlands and Germany consider buying against credit cards as living beyond one’s means. is the requisition of materialism for the sake of owing it rather than for use-Art is acquired for owing it. While in many societies things like comfort. and removes these doubts to a great extent. They also use ingredients in the products which are not harmful in any way. Some societies save for tomorrow. Instrumental materialism. some prefer cash to debt. women are also taking an active part in all activities. Materialism can be of two types. People like to possess things of material value which would help them to bring efficiency. An active approach leads to taking action all the time and not doing anything. Advertising plays an important part and gives guidance to the consumer. Companies like P&G. Colgate-Palmolive captured a great extent of the market by offering products which are less harmful to the environment. In many countries. Others adopt labour saving devices and instant foods to have more leisure time at their disposal. This makes the society a highly active one.

middle aged. so the Polaroid camera which gives instant photographs can be purchased and pictures can be taken by the family members without their women being exposed to the developers in a photo lab. black. values and customs that set them apart from other members of the same society. ethnic. Regional. Many marketers are now becoming multicultural in their marketing activities by trying to appeal to a variety of cultures 90 ANNA UNIVERSITY CHENNAI . placing strong value on the family and the group. and do not want their women to be seen in public or be exposed. take everything seriously? This is an. Secondly. teacher. middle. A subculture is an identifiable distinct. Humour/ serious: Should we take life lightly and laugh it off on certain issues or. religious beliefs and values can influence consumer. Islam Race: Asian. food. and population trends will dramatically alter the demographic profile of the country in the next 50 years. In spite of its diversity. Muslim cultures are very conservative.6. Advertising personnel selling techniques and promotion may revolve around these themes and the way the appeal for a product is to be made in various cultures. white Age: young. lower Geographic regions: South India. North-eastern India 1. elderly Sex: Male. business Social class: upper. Sub-culture categories are: Nationality: Indian. and being strongly brand loyal. cultural group.DBA 1722 NOTES Sexual gratification/Abstinence: Some traditional societies curb their desires.other aspect of culture. beyond a certain requirement. and Religious Influences on Consumer Behavior The three major aspects of culture that have important effects on consumer behavior are regional. marketing strategies can be developed for this group. Female Occupation: Farmer. Ethnic. Subcultures and Consumer Behavior Culture can be divided into subcultures. 3. and religious differences. and marketing strategy can sometimes be tailored specifically to these regions. Pakistan Religion: Hinduism. The very diverse Asian American subculture is described as young and having higher socioeconomic status. while following the dominant cultural values of the overall society also has its own belief. Srilanka. consumption patterns may differ in various regions of India and the world. Firstly. which. drinks or sex. our country has a number of different ethnic groups. Finally.6.

and user). The affect of gender differences on consumer behavior is examined next. Gender is consistent throughout lifetime. and Household Influences on Consumer Behavior Among the four major age groups. Fewer children.g. or synchronic. and men are becoming more sensitive and caring. Baby boomers grew up in a very dynamic and fast-changing world. They are learned through the processes of socialization and acculturation. Psychographics: Values. buyer. 2. influencer. depending on the situation husband. with some values being viewed as more important than others. The proportion of nontraditional households has increased due to factors such as 1. Personality. The somewhat disillusioned Generation X consists of smart and cynical consumers who can easily see through obvious marketing attempts. Also.CONSUMER BEHAVIOUR at the same time. Our values exist in an organized value system. Gender shows different consumption patterns and perceptions of consumption situations – E. Values are enduring beliefs about things that are important. Teens. 4. information processing. 3. wife-dominant. Increased divorce. decider. Some are regarded as terminal values and reflect desired end states that guide behavior across many different 91 NOTES ANNA UNIVERSITY CHENNAI . men and women can differ in terms of traits. autonomic. influencing customer values and preferences. who need to establish an identity. Households play a key role in consumer behavior. and this has affected their values for individualism and freedom. Dual-career families. Although the diversity of the Indian melting pot may be unique. Second. decision styles. The 50 and older segment can be divided into two groups-the young again and the gray market. are the consumers of tomorrow and have an increasing influence on family decisions. 3. Gender. Later marriages. Cohabitation. 2. Sex roles are changing. there are many important ethnic groups in other areas of the world. husbands and wives vary in their influence in the decision process. First. and 5. Neither group likes to be thought of as old. Women are becoming more professional and independent. and Lifestyles The roles of psychographics in affecting consumer behavior are detailed below. Households also exert an important influence on acquisition and consumption patterns. and consumption patterns. household members can play different roles in the decision process (gatekeeper.dominant. the wedding ceremony. Age.

The newer VALS2 identifies eight segments of consumers who are similar in their resources and self-orientations. Finally. family and children. interests. 2. These lifestyles can provide some additional insight into consumers’ consumption patterns. extroversion. and stability. Marketers also measure lifestyles. 4. compliant. and personal dispositions that make people different from one another. Western cultures tend to place a relatively high value on material goods. which attempt to identify a set of personality characteristics that describe and differentiate individuals. Trait theories.DBA 1722 NOTES situations. youth. and opinions).6. work and play. social and cultural aspects of foreign consumers they wish to target. such as introversion. some marketing researchers use Psychographic techniques that involve all of these factors to predict consumer behavior. Behavioral approaches. and technology. Instrumental values are those needed to achieve these desired end states. One of the most well known Psychographic tools is the Values and Lifestyle Survey (VALS). which propose that personality is shaped by an individual’s interpretation of life events. hedonism. 3. Domainspecific values are those that are relevant within a given sphere of activity. Phenomenological approaches.” A company can enter a foreign market as a Domestic exporter Foreign importer Foreign government-solicit the firm to sell abroad 92 ANNA UNIVERSITY CHENNAI . which sees personality arising from unconscious internal struggles within the mind at key stages of development. Approaches to the study of personality include 1. or aggressive). This will facilitate marketers to understand the psychological. Marketers use tools like value segmentation to identify consumer groups with common values. which are patterns of behavior (or activities. and 5.g. Personality consists of the distinctive patterns of behaviors. qualities. the home. which view an individual’s personality in terms of past rewards and punishments. health. 3.7.. tendencies. detached. Social-psychological theories. which focus on how individuals act in social situations (e. The psychoanalytic approach. so as to design effective marketing strategies for each of the specific national markets involved. Cross Cultural Consumer Behavior Cross cultural marketing: Objectives and Policies Cross-cultural marketing is defined as “the effort to determine to what extent the consumers of two or more nations are similar or different.

values and customs of a specific country are different 3. Problems related to promotion/marketing communication: e. Characteristic features of a firm going global: 1. P & G used this to sell soap 3.6. Problems related to selection of distribution channels: in Japan. Problems related to pricing: the marketer has to adjust his pricing policies according to the local economic conditions and customs. Similarities and differences among people A major objective of cross-cultural consumer analysis is to determine how consumers in two or more societies are similar and how they are different.10. Problems in Cross Cultural marketing 1. Cross-Cultural Consumer Analysis To determine whether and how to enter a foreign market. Cost and differentiation advantages 3. social. Access to marketing/manufacturing bases across global borders 4.6. Problems related to product selection: The marketer going for cross cultural marketing has to select the customers/ market not on the basis of the superficial similarities of age or income.9.8. Ariel in the middle east and also Pepsi 3. 2. and cultural characteristics of the foreign consumers they wish to target. appropriate strategies Devise individualized marketing strategy if cultural beliefs. we need to conduct some form of cross-cultural consumer analysis. Cross-cultural consumer analysis can be defined as the effort to determine to what extent the consumers of two or more nations are similar or different. High market share in the domestic market 2.6. so that they can design effective marketing strategies for the specific national Markets involved. 4. NOTES 93 ANNA UNIVERSITY CHENNAI . but by using the real motivating factors that prompt them to accept or reject products. Advantageous economies of scale 3.CONSUMER BEHAVIOUR The firm’s objectives could be: To determine how consumers in two or more societies are similar/different and devise suitable. Product/technology clout 6. Availability of resources and capability to absorb huge losses 5. Such analysis can provide marketers with an understanding of the psychological.g.

standardized marketing strategies are becoming more and more feasible. For instance. packaged. important · Ambiguous · General · Hold back emotions in public · Process-oriented · Make a long story short · Nonverbal communication important · Interested in who is speaking American Culture traits · Diverse · Fight for one’s beliefs/positions · Individualistic · Clear-cut · Specific · Display emotions in public · Result oriented · Make a short story long · Verbal communication important · Interested in what is spoken Some of us may argue as markets are becoming more and more similar. 2.5 Japanese and American cultural traits difference Alternative Multinational Strategies Japanese Culture Traits · Homogenous · Harmony to be valid and preserved · Group. and positioned in exactly the same way regardless of the country in which they are sold. Using national borders as a segmentation strategy would mean to use relatively different local or specific marketing strategies for members of distinctive cultures or countries. Table 3. Sony sells its Walkman in this fashion. Adaptive Global Marketing: In contrast to the above. not individual. Whether to use shared needs and values as a segmentation strategy or to use national borders as a segmentation strategy? Shared needs and values would mean to appeal to consumers in different countries in terms of their common needs.DBA 1722 NOTES Table 3. which tries to localize its advertising to consumers in each of the cross-cultural markets in which it operates. 94 ANNA UNIVERSITY CHENNAI . A very good example here would be that of McDonald’s. values. and goals. Favoring a World Brand: A lot of companies have created world brand products that are manufactured.6 Alternative Global Marketing Strategies 1. some other organisations imbibe a strategy that adapts their advertising messages to the specific values of particular cultures. But. some more would argue back that differences between consumers of various nations are far too great to permit a standardized marketing strategy.

whilst others find it more profitable to adapt and adjust according to specific conditions in various markets. Phillip Morris bought Kraft from General Foods in 1991 for $13 billion.6. more than three times its book value.CONSUMER BEHAVIOUR 3. a brand which is entrenched in the consumer’s mind is very difficult to dislodge. Global brand building builds entry barriers. Human beings as a species love status quo. Coca-Cola paid $60 million to acquire Thumbs-Up from Parle. Some companies pursue strategies based upon the identification of common elements among countries. Strong global brands always account for more stable businesses. A strong brand needs lower and lower levels of incremental investment to sustain itself over time. They merely bought business with very powerful brand equities and therefore paid more than the net worth of the businesses.11. Strategic Implications There is an assumption that the world is becoming homogenised.6. There are five basic propositions that a global brand manager has to take note of while developing strategy at the global level. 3. Sony and Philips in the CTV wars. yet national and sub-regional cultures do exist. Many marketers operate in global markets with a strategy still rooted in the domestic market. As long as there is a distinct value attached to your offering. Tangible Benefits of Global Brand Building Global brand building drastically reduces marketing investments. the consumer will always be willing to pay more for it. NOTES 95 ANNA UNIVERSITY CHENNAI . Global brand building increases cash flow efficiency: Global brand building also increases value of the business due to the international presence. finance or human resources. This makes global branding a tough challenge and one that is handled differently from organisation to organisation. Global brand building commands a premium. Neither buyer had any lacunae in manufacturing. The strategy needs to embrace the opportunities and the costs of working in multiple countries. Given the huge difference in business volumes. That is the same reason why a brand such as BPL at a higher cost beat the stuffing out of companies such as Akai. What will allow one to compete and win in a strange country? Are the product and the brand in particular needed in another culture? Only careful consideration of these questions will create the right platform for a global branding strategy. Therefore. The marketer has to look for his competitive advantage outside the country of origin.12. the pressure of the bottom-line is much higher for an un established player. A new and unknown player will have to spend two to four times more than the market leader to achieve the same share of mind. That is the only reason why an unknown brand called Titan could command a substantial premium over HMT.

others make people wait for a long time.DBA 1722 NOTES 3. What view individuals and societies take of time makes them different. Some can be classified under monochromic culture and others in polychromic culture. Cultural Variations & Non Verbal Communication. These are: a) Use of time b) Use of space c) Friendship d) Agreements e) Things f) Symbols g) Etiquette Time Time is a resource which is distributed equally amongst everybody. In a culture we have many variations in non-verbal communications. Table 3. Some of the important differences between monochromic a polychromic culture are give in the table below. There are some variables in non-verbal communication. 96 ANNA UNIVERSITY CHENNAI .6 Differences between Monochronic and Polychronic Culture The meaning of time may be different in different cultures. Each culture assigns a meaning to non-verbal signs utilised by it. Some people take time in making decisions according to the importance of decisions. Some insist on coming to the point directly in business transactions and are well prepared. Every person has the same amount of time at his disposal.6. Some keep appointments by the minute.13.

Others are secretive about it. Good personal relationship and feelings matter most in a long term agreement. 4. Japanese have their discount stores on the upper floor. the bigger the office space and so on. Symbols and Colors Different countries attach different meanings to symbols. Some cultures and individuals maintain a fair distance while transacting. The gifts can be big or small. Things include products as well as gifts given in certain business and social situations. Colors have different interpretations. triangles. Friendship Friendship plays an important role in business transactions. others co-mingle easily.CONSUMER BEHAVIOUR Space Space may be related to prestige rather than the need. because of both social and geographical mobility. and blue with the male in the US. An appropriate product in the form of a gift is to be carefully chosen. by giving it in front of others. but friendship and kinship are also given a lot of importance. making money is secondary. etc. Agreements All business when transacted is done under some agreements. Some want to transact business only with those whom they get along and. like 13. personal trust leads to cooperation and a lot of transaction can take place between parties. etc. Most people enter into an agreement. Things Different cultures attach different meaning to things. These agreements may be written or just on an understanding between the two parties. This depends on the practices followed in that particular country. Americans have the offices of executives on the top floor and tend to separate the office of subordinates. Symbols can be flowers. They can be given openly or presented privately. Some want to make a show of the gift. and others not so lucky. or even unlucky. NOTES 97 ANNA UNIVERSITY CHENNAI . The higher the office. Some numbers are considered lucky. Some cultures like Indian or Latin Americans have lasting relationships that endure for a long time and so does the business. pictures and animals. numbers and colors. where signing a contract is just a mere formality. Personal ties. Pink is associated with a female. Verbal commitments are also binding in some cultures. and drop them easily as well. Social contacts developed by parties gain priority over technical specifications. Americans make friends easily. Americans maintain a fair distance while interacting with associates. Arabs stand very close to each other. whereas it is just the opposite in Holland.

Homosexuality in Brazil. Morocco. which means no. whereas. Yellow: Sign of death in Mexico. Eating with the fork in the right hand and the left hand kept under the table is quite common in America. Red: Color for brides and children in India. Germany and positive in Denmark. purity and peace in the United States. non-verbal communication must also be recognized and understood so that there is less misinterpretation. positive in Columbia. Sweden. Deer: Speed. 13: Unlucky in many countries including India. USA. Packing in 4s is avoided. As people recognize verbal languages. Some behavior may be rude or abusive in one culture and quite acceptable in other cultures. they act accordingly. Purple: Associated with death in many Latin American countries. Owl: Wisdom in the United States. These non-verbal communications in different countries or different languages have a direct bearing on the marketing activity and must be taken care of. Rumania and Argentina. the fork should be in the left hand and the right hand holding the knife or spoon. happiness. celebrations in many countries including India. Symbol of Numbers 7: Lucky in India.DBA 1722 NOTES A list of colors and their interpretations is given below: White: Symbol of mourning or death in the Far East. Similarly. Sign of masculinity in the UK and France. there are many different habits and ways of doing things socially that affect the making of advertisement. In Japan it is considered impolite to say no directly to a business offer. India. sitting with legs crossed or sitting in a manner that shows the sole of a shoe. bad luck in India. 4: Symbol of death in Japan. The exchange of business cards in Japan is essential. e.g. Etiquette These are accepted norms of behavior. grace in the United States. In a similar manner. negative in Nigeria. Nicaragua and Czechoslovakia. White lilies: Suggestion of death in England. Blue: Symbolises feminity in Holland and masculinity in the United States. and indicates the level of your status in your business. The advertisement of the communication we want to give should be appropriate and match with the culture of the country. 98 ANNA UNIVERSITY CHENNAI . etc. They put it differently. in European culture. Triangle: Negative in Hong Kong and Taiwan. infidelity in France. by saying it is very difficult.

The household life cycle is the classification of the household into stages through which it passes over time based on the age and marital status of the adults and the presence and age of children. Differences in verbal communication systems are immediately obvious across cultures and must be taken into account by marketers wishing to do business in those cultures. The household is the basic purchasing and consuming unit and is. environment. however. and certainly more difficult to recognize are nonverbal communication systems. law. and self. Cultural values are classified into three categories: other. therefore of treat importance to marketing managers of most products. other do not. those with limited interpersonal contact are called secondary groups. symbols. masculine/feminine. space. diversity/uniformity. Some groups require membership. and you/age. competitive/cooperative. SUMMARY A group in its broadest sense includes two or more individuals who share a set of norms values or beliefs and have certain implicit or explicit relationships such that their behaviors are interdependent. Normative influence happens when an individual conforms to group expectations to gain approval or avoid disapproval. friendship. Informational influence occurs when individuals simply acquire information shared by group members. It includes almost everything that influences an individual’s thought processes and behaviors. extended/limited family. who decides. Identification influence exists when an individual identifies with the group norms as a part of his or her self-concept and identity. Family decision making involves consideration of questions such as who buys. customs. Other oriented values reflect a society’s view of the appropriate relationships between individuals and groups within that society. and any other capabilities acquired by humans as members of society. morals. Group influence varies across situations.CONSUMER BEHAVIOUR 3. Family decision making is complex and involves emotion and interpersonal relations as well as product evaluation and acquisition. NOTES 99 ANNA UNIVERSITY CHENNAI . The household life cycle is a valuable marketing tool because members within each stage or category face similar consumption problem. things.7. beliefs. Relevant values of this nature include individual/collective. art. and who uses. Groups that have frequent personal contact are called primary groups. Major examples of nonverbal communication variables that affect marketers are time. Thus they represent potential market segments. and etiquette. Family households also are the primary mechanism whereby cultural and social-class values and behavior patterns are passed on to the next generation. Culture is defined as the complex whole that includes knowledge. agreement. Probably more important.

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3.8 REVIEW QUESTIONS What reference groups would be relevant to the decision to purchase the product or activity (based on students on your campus)? Describe two groups which you belong. For each, give two examples of instances when the group has exerted (a) informational, (b) normative. Describe a consumption subculture to which you belong. How does it affect your consumption behavior? How do marketers attempt to influence your behavior with respect to this subculture? How would the marketing strategies for the following differ by stage of the HLC? (Assume each stage is the target market) • Health Club • Life Insurance • Energy drink Pick two stages in the household life cycle. Describe how your marketing strategy for the following would differ depending on which group was your primary target market. • Sports car • Mouthwash • Italian Restaurant Why should we study foreign cultures if we do not plan to engage in international or export marketing? Is a country’s culture more likely to be reflected in its art museums or its television commercials? Why? Why do non-verbal communication systems vary across cultures? To what extent do you think teenagers are truly becoming a single, global culture? What are the marketing implications of the differences in the masculine/feminine orientation across countries?

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CONSUMER DECISION PROCESS AND POST PURCHASE BEHAVIOUR
4.1 OVERVIEW There are many people around us whom we perceive as experts in one thing or the other. We seek advice from them in their respective area of expertise. Such people are known as Opinion Leaders and people seeking advice from opinion leaders and known as opinion seekers. A family friend who knows a lot about cars and also runs a garage can prove to be a better source of information when a bike is to be purchased than a close friend who is very knowledgeable about computers. Therefore, opinion leadership is a social word- of- mouth communication between the opinion giver and opinion seeker. Sometimes, the recipient of the information from the opinion leader may not be an active seeker, but only a receiver of such information in regularly discussion. Such a person is known as an opinion receiver. Word of out or interpersonal communication implies sharing information through direct communication between people. It can be fact to face, over the hone, via the net or through mails. 4.2 LEARNING OBJECTIVES After studying this unit, you should understand • • • • • • • • • The dynamics of Opinion Leadership Identify an Opinion Leader Understand communication and opinion leadership Understand the concept of diffusion and Innovation Understand the different types of innovations Understand the factors affecting innovation adoption Understand post purchase consumer behaviour and models Understand post purchase dissonance Understand the concept of consumer loyalty and types of loyalty programmes

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4.3 OPINION LEADERSHIP What is opinion Leadership? Opinion Leadership is the process by which one person (opinion leader) informally influences the actions or attitudes of others, who may be opinion seekers or merely opinion recipients. The definition of opinion leadership emphasises on informal influence. This informal flow of opinion related influence between two or more people is referred to wordof-mouth communication. Benefits of word-of-mouth

There are three situations in which opinion leadership takes place: • • • When an individual actively seeks advice from others When an individual voluntarily provides information to others When information is generated in the course of normal interaction of a group

4.4 DYNAMICS OF OPINION LEADERSHIP • c

Credibility Opinion seekers regard opinion leaders as trustworthy and a credible source of information pertaining to a particular product or brand – the opinion leaders have no hidden commercial motives, like cash rewards, in promoting a brand. Also opinion seekers seek their help in decision-making because they have expertise or usage experience with a product or brand, which considerably reduces the perceived risk of the opinion seeker. The information given by the opinion leader can be either positive or negative, based on personal experience, and this further strengthens their credibility. Information and Advice Opinion leaders are a source for product or brand specific information as well as advice. They might just share casual information about a certain product that they have
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used, they might even aggressively advice o0pinion seekers whether to buy it o not. The information passed can be related to which product or brand to purchase and from where. Category-specific Opinion leaders can have expertise in one product category, but can reverse the role to opinion seekers in case of another product category in which they are not knowledgeable. A person known for his/her cooking talent may be an expert in the ‘what’ and ‘how’ of packed edible food products, spices, food nutrition, etc, but when he or she has to buy a bike, is more likely to seek information from another person whom he/she regards as knowledgeable about bikes. Therefore, an opinion leader in one product may be an opinion seeker in another product. Two-way communication Opinion leadership phenomena are face-to-face communication between opinion givers and opinion seekers. Both parties communicate with their respective experience with each other. Some scholars, thus, believe that the difference between opinion giver and opinion seekers is somewhat artificial as the person who is knowledgeable about a certain product and gives related advice to opinion seekers, is also most likely to listen to others’ comments regarding the product. 4.5 MOTIVATION BEHIND OPINION LEADERSHIP The opinion leadership process happens due to the following underlying motives of both parties – the opinion leader and opinion seeker and receiver. Opinion Leader There are four main motives behind the role of opinion leader – self involvement, product involvement, social involvement and message involvement. Self involvement: Giving advice to others provides big gratification to the opinion leaders in terms of the attention they receive. Also, since they can display heir expertise and experience in the subject mater, it makes them feel superior o others in terms of knowledge. The role of the opinion leader also involves good feeling of helping others take a decision and increasing the knowledge of opinion seekers and receivers. Sometimes, the motive behind opinion leadership could be to reduce post-purchase dissatisfaction with a product or brand. In such cases, the opinion leader will propagate the advantages of the product, thereby trying to reassure himself that his purchase decision was right. For example, unable to make up his mind on which brand of refrigerator to buy, Mr. Sampath sought the advice of others, and ended up buying an expensive brand. After the purchase, he began to feel a little dissatisfied with the choice he made. However, he gave a favourable picture of the brand to others, just o reassure himself that he had made he right choice.
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and influence on the purchase decision of the opinion receiver and/or opinion seeker. It also reduces the task of searching for information through other sources. There are some special types of opinion leaders. They are socially active and generally have more influence over the people in same age group and social circle as theirs. 4. as in the case of product involvement. are called innovative consumers. Social involvement: Social involvement opinion leaders like o share their product expertise with people in general as an expression of bonding. 104 ANNA UNIVERSITY CHENNAI . etc. Sometimes opinion is sought with the sole purpose of buying a product to win the approval of an opinion leader. The information transmitted would be positive if they are satisfied with the product or brand and negative. Message involvement: With an increasing number of advertisements being targeted at consumers these advertisements often become the topic of discussion. the opinion leader does not feel the urge to talk about the product/brand due to positive or negative experience. Opinion leaders. who do adopt a product early in its life cycle. surrogate buyers and purchase pals. market mavens. advertisements and slogans are the basis of group discussions. They are generally self-confident (which makes them quite convincing to opinion seekers). They may or may not be he users of the product and/or brand that they recommend to others. the interaction with an opinion leader provides a lot of new and/or existing product knowledge as well as information related to their purchase. Activity and have the capability of influencing others. if they are dissatisfied with it. wiling to try new products and also to talk about these products to others. Such conversations often use poplar slogans like Surf’s “Dhoondhte reh jaoge” or Maggi Noodles “bus 2 minute. use.” Opinion Seeker and Receiver The main motive for an opinion seeker is looking for information is o reduce the perceived risk associated with the product purchase.DBA 1722 NOTES Product involvement: Product involvement opinion leaders may feel the necessity to talk to others (opinion receivers) about the product if it is eie4hter too good or too bad. in general. Opinion leaders can be of varying types based on their knowledge. It is important to note that in this case. For the opinion receiver. In case of message-involvement. Opinion leaders are also mostly likely to be opinion seekers in the product category in which they have high involvement. like generalised opinion leaders. are people who have expertise in one subject/product.6 TYPES OF OPINION LEADERS Opinion leaders.

which outlets to visit for which product. The reasons for hiring a surrogate buyer can range from personal reasons like high perceived risk. wardrobe consultants. rather than product involvement of the normal opinion leaders. Usually. product and brand information available. the new outlet in town. etc. 105 ANNA UNIVERSITY CHENNAI . opinion leaders are knowledgeable about one product category and have high involvement in some related areas. Figure Depicting the Profile of an Opinion Leader NOTES Surrogate buyer Surrogate buyer is he tem used for the professionals hired by actual purchasers to filet he huge amount of store. interior designers. evaluate the product options available and make recommendations. what new products/brands are in the market. They are people who actively seek market information which they feel may be useful fro friends and relatives and are a great source of information like – which place offers the best deals. all kinds of consumer durable products. where there are discounts at that time of the year. Surrogate buyers play a wide variety of roles like tax consultants. lack of time. they also make transactions on behalf of their employer. etc. stock brokers. books. Sometimes. lack of expertise or product knowledge. Market Maven Market mavens belong to a special category of opinion leaders who have market involvement.CONSUMER BEHAVIOUR Generalised Opinion Leader Generalised Opinion Leaders re maters of various subjects (say. or low interest in shopping to environmental issue like limited product availability.) and are very hard to find. etc.

Thus the choice of purchase pals depend on the relationship they have with the individual and the type of purchase they make. prices and products. especially in a high involvement expensive product. the risk of social ridicule (say while shopping for one’s wedding dress). 1. Purchase pals are considered to be quality influential opinion leaders at the point of purchase (in store) in consumer decisions.7 COMPARISON OF OPINION LEADERS AND SURROGATE BUYER S. better bargaining skills and better knowledge of outlets. Weak tie purchase pals are generally non-family members and they are preferred while making purchase of 106 ANNA UNIVERSITY CHENNAI . less effort in option screening and evaluation 6. therefore. The major benefit of purchase pals is that they help reduce the stress and anxiety an individual experiences while make a purchase. The other benefit is information support they provide like better product knowledge. Opinion Leader No. No hidden motive of commercial gain Limited accountability. 5. therefore. expert in in may related areas. Purchase pals Purchase pals are people who accompany an individual on shopping trips. Strong tie purchase pals are generally family members and close friend who are preferred when shopping for products which have high social risk. Usually more than one opinion Usually.DBA 1722 NOTES 4. Information can be active or passively exchanged 3. only one surrogate buyer leader can be consulted is consulted due to cost of consultation involved Same person can be opinion leader Usually. Usually. Informal relationship with end-user of information 2. They can have two types of relationships with the individual they accompany – either a strong tie relationship or a weak tie relationship.. greater effort in option screening and evaluation 4. more socially active than end-user and belongs to the same age and social group Surrogate Buyer Formal (occupational) relationship with end-user of information Active information exchange Not necessarily more socially active than end-user and usually does not belongs to the same age and social group Gets compensated for his/her services High accountability. product/service category one 7. i.e. The strong tie purchase pals provide moral support and help the individual choose products that suit his or her taste.

he multiple question approach is preferred as it is more reliable. Socio-Metric Method This method focuses on measurement of the group network and product or brand. It measures the individual’s self perception of his/her ability o influence others.CONSUMER BEHAVIOUR products which have high perceived functional risk.e. it is expensive and difficult to conduct due to the time involved in tracking the whole network of opinion leaders and receivers. The informant may or may not be a member of that group. Objective Method In this method. The major limitation of this method is that respondents can give biased answers. Generally. 4. based interpersonal communication within a group. Another point to note is that anyone giving advice is not considered as an opinion leader rather opinion leader is a person whose advice is regarded highly amongst the seekers and is followed too.i. Self Designating Method This is a frequently used opinion leader identification method used by marketers. The responses are cross checked with the individuals named by the respondents. In this method. socio-metric method. Although. for example a teacher who knows the students within the class who are regarded highly by fellow students. Still more difficult in measuring their impact on the opinion seekers. is asked to identify potential opinion leaders with respect to a specific product category. some individuals act as opinion leaders with respect to a product and the impact of resultant word-of-mouth communication on the sales of the product is traced 107 NOTES ANNA UNIVERSITY CHENNAI . a person who is a keen observer of the concerned group. There are several techniques that are used to identify opinion leaders – self designating method. it is quite inexpensive and less time consuming than other methods. risk of non-performance (say. .. it is generally difficult to identify a key informant. key informant method and objective method. an expensive electronic gadget).8 IDENTIFYING AN OPINION LEADER Opinion leaders are easier to define than to find. thus giving authentic results Although this method is precise. Key Informant Method In this method. who can catch the attention of the entire segment. Moreover. Respondents are asked to identify people to whom they have provided information regarding the product/brand and/or people from whom they have received product related information. the circle of influence of opinion leaders is generally small compared to celebrity endorsers. individuals are asked to answer singe or multiple questions about themselves. a key informant.

Creating a Buzz A buzz has been described as explosive self-generating demand by the consumers. say for that limited edition car or a one-day sale by a store.S. etc. Being in the category top lists helps create tremendous interest in the product and quick rise in sales. Nurture the grass roots by encouraging community feeling associated with a brand or product. • • • • • 108 ANNA UNIVERSITY CHENNAI . Hidden Dragon – marketed by Sony Entertainment carefully planned the audience for the initial screening. insurance. electronics. such as a special invitation to select socialites and student groups to the opening of a multiplex and then tracking down their influence on others. at least partially. Companies can cleverly devise tactics to make even low visibility products the talk of the town. the top 10 best selling fiction and non-fiction books. say like launching a limited edition of a classic car model. Celebrity endorsements does not necessarily mean advertisements featuring celebrities. This method is quite useful in measuring the impact of word-of-mouth on a new product trial. 4. etc. Marketers often rely much more on mass media advertising to attract potential consumers. Marketers can even employ the channel constraint to create buzz. which gives product exclusivity. Also mapping the spread of word-ofmouth can be difficult. etc) using the product in highly visible social events. Exploiting the icons by making use of celebrity endorsements.DBA 1722 NOTES and measured. etc. sports icons. This made the foreign movie a huge success in the U. The most noted top 10 movies of the week. This method measures an individual’s influence on others in a controlled environment but it needs a carefully established design for the experiment.9 TACTICS ADOPTED BY MARKETERS TO GENERATE A BUZZ Some of the tactics adopted by marketers to generate a buzz are: • Influencing the opinion leaders. Rationing the supply by releasing limited edition of a product. Entertainment and fashion products are usually more affected by a buzz than products related to finance. say inviting socialites. but celebrities (movie stars. popular TV stars. Be it the success of movies like Matrix or buzz or consumer hype generated by positive word-of-mouth interaction can play a vital role in the success of a product. It is important to note that imitations of product can cash in on the buzz effect created by a new product if they know when to lunch their counter product against the original. the top 10 business schools. A large number of target consumers are affected by the power of the buzz. The movie Crouching Tiger. talk shows. popular columnists and celebrities to an initial movie screening.

governmental agency. frequently in the form of rumors that are untrue. when a dissatisfied consumer decides to post his or her story on a bulletin board for all to see. displaying an 800 number prominently on their products’ labels.10 PROGRAMMES DESIGNED TO STIMULATE OPINION LEADERSHIP Advertising and promotional programmes designed to persuade consumers to “tell your friends how much you like our product” are one way in which marketers encourage consumer discussions of their products or services. Word-of-Mouth May Be Uncontrollable Informal communication is difficult to control. or religious cult.CONSUMER BEHAVIOUR 4. Creation of Opinion Leaders Marketing strategists agree that promotional efforts would be significantly improved if they could segment their markets into opinion leaders and opinion receivers 109 ANNA UNIVERSITY CHENNAI . can sweep through the marketplace to the detriment of a product. A particularly challenging form of “negative” word-of-mouth can be generated today over the Internet. The product contained an unwholesome or culturally unacceptable Ingredient. NOTES Some marketers have used toll-free telephone numbers in an attempt to head off negative word-of-mouth. Negative comments. The objective of a promotional strategy of stimulation is to run advertisements or a direct marketing programme that is sufficiently interesting and informative to provoke consumers into discussing the benefits of the product with others. Indeed. Advertisements Simulating Opinion Leadership A firm’s advertisements can also be designed to simulate product discussions by portraying people in the act of informal communication. The product included a cancer-causing element or agent. The product functioned as an undesirable depressant or stimulant. a study by the White House Office of Consumer Affairs found that 90 percent or more of unhappy customers would not do business again with the company that is the source of their dissatisfaction. Each dissatisfied customer will share his or her grievance with at least nine other people. Some common rumor themes are: • • • • • • The product was produced under unsanitary conditions. The firm was owned or influenced by an unfriendly or misguided foreign country. and 13 percent of unhappy customers will tell more than 20 people about the negative experience.

Innovation diffusion research has attempted to explain the variables that influence how and why users adopt a new information medium. for example. Opinion leaders exert influence on audience behaviour via their personal contact. (2) early adopters. early adopters making up for 13. Diffusion of innovation theory predicts that media as well as interpersonal contacts provide information and influence opinion and judgment.5%). informal conversation) to members of the target market over a period of time In other words. Diffusion is “the process by which an innovation is communicated through certain channels over time among the members of the social system. sales people. such as the Internet.5% a short time later. The nature of networks and the roles opinion leaders play in them determine the likelihood that the innovation will be adopted. An innovation is “an idea. and (5) laggards. very little innovators adopt the innovation in the beginning (2. or object that is perceived to be new by an individual or other unit of 110 ANNA UNIVERSITY CHENNAI . E. and at what rate new ideas and technology spread through cultures. dressing styles like the blue jeans and so on Diffusion of innovation explains how an innovation reaches the consumer and reasons for its acceptance or rejection by them. Five adopter categories are: (1) innovators. diffusion (or communication) through the social system. Rogers (1995) argued that it consists of four stages: invention. Diffusion of innovations is the process by which acceptance of an innovation (new products or new service or new idea) is spread by communication (mass media. why. Studying how innovation occurs.DBA 1722 NOTES 4. Adoption is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product. These categories follow a standard deviation-curve. the early majority 34%. (3) early majority. to the acceptance of new technological products like the wristwatch and the personal computer.” Diffusion is a macro process concerned with the spread of a new product an innovation from its source to the consuming public. practice.M. the study of the diffusion of innovation is the study of how. music styles like opera. therefore explains the ways in which an innovation reaches a wide consumer base. (4) late majority. time and consequences. Diffusion is the “process by which an innovation is communicated through certain channels over a period of time among the members of a social system”. It applies. The diffusion process. the late majority 34% and after some time finally the laggards make up for 16%. The information flows through networks. foods like tomato sauce.11 THE DIFFUSION CONCEPT According to Rogers “Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system. but additional intermediaries called change agents and gatekeepers are also included in the process of diffusion.

Firm-oriented definitions: A firm oriented approach treats the newness of a product from the perspective of the company producing or marketing it.CONSUMER BEHAVIOUR adoption”.13 INNOVATION Various approaches which have been taken to define a new product or a new service include: a.Any item. Source: Rogers (1995) 4. They are: • • • • Innovation . When the product is “new” to the firm it is considered to be new. 111 ANNA UNIVERSITY CHENNAI . or process that is viewed to be new by the consumer Communication – the process of the new idea traveling from one person to another or from one channel to the individual.” 4.12 ELEMENTS TO THE DIFFUSION OF INNOVATION There are four main elements to the diffusion of innovations. “Communication is a process in which participants create and share information with one another to reach a mutual understanding. thought. Social System – the group of individuals that together complete a specific goal (adoption) Time – how long it takes for the group to adopt an innovation as well as the rate of adoption for individual NOTES Conceptual Model Diffusion of Innovation Model.

A product will no be considered an innovation until and unless it is perceived to be new. Market oriented definitions: Judges the newness of a product in terms of how much exposure consumers have to the new product. Consumer oriented definitions: A new product is any product that a potential consumer judges to be new. or object perceived as new by an individual or other unit of adoption. New product can be an improved version of an existing product (Microsoft Windows Millennium in place of Windows 97) or an entirely new product category (mobile telephony). thought. E. discontinuous innovations requiring consumers to adopt new behaviour patterns e.g.g. Internet c. rather than a totally new product. The product might be perceived new by (i) the company launching the product (ii) the market or (iii) the individual consumer. CD players. may be new for the company. The process (build to order computers) product (cell phones with camera) channels (online gift sites). Product oriented definitions: Product-oriented approach focuses on the features inherent in the product itself and on the effects these features. An innovation “is an idea..DBA 1722 NOTES b..g. but may or may not be perceived as new by the final consumer. Three types of product innovations could be Continuous innovation having the least disruptive influence on established patterns involving the introduction of a modified product. dynamically continuous innovation which may involve the creation of a new product or the modification of an existing product e. or process that is new to a certain area but not necessarily to the world. practice. an innovation is an item. 4. TV. All new products introduced in the market may not be innovative. 112 ANNA UNIVERSITY CHENNAI . When studying the diffusion of innovations it is important to understand that you are not just looking at the spread of an innovation through a society but rather the spread of different kinds of innovations through a society.” The key words here are perception and new. The definitions could be: • • A product id considered new if it has been purchased by a relatively small (fixed) percentage of the potential market..14 TYPES OF INNOVATION There are three main types of innovations that are diffused in different ways. latest version of Microsoft Office. A product is considered new if it has been in the market for a relatively short (specified) period of time. d. disposable diapers. As stated earlier. customer experiences (designing own car) etc. fax machines. • cy be harmful to the diffusion process.

113 ANNA UNIVERSITY CHENNAI . 4.16 CONSUMER RESISTANCE TO INNOVATION Not all innovations that are introduced to the market become successful. more rapid the adoption) the perceived risk (the lower the perceived risk. marketing effort (correct market segmentation and commercial channels) need fulfillment/problem solving (the more obvious the problem solved by the innovation.CONSUMER BEHAVIOUR 4. The lack of adoption in case of a cosmetic is adoption not because of consumer resistance.15 ATTRIBUTES OF INNOVATION NOTES Other factors affecting adoption are the type of social system (modern or traditional) type of decision (individual or group). but due to the failure of the company to meet consumers’ perception of newness. the higher the probability of faster adoption). Innovation resistance is “the resistance offered by the consumer to an innovation either because it poses potential changes from a satisfactory status quo or because I conflict with their belief structure” The resistance to innovation will increase if the relative advantage.

Both these approaches to churn out profitable innovations can also play an important role in identification of the innovation’s limitations and alternative uses. Say if the cause is the even though performance is better than earlier models. If there is resistance to a modified innovation. Apart from 114 ANNA UNIVERSITY CHENNAI . thus increasing its changes of success. If a new kind of computer mouse is being resisted. and very active resistance (innovation perceived as unsuitable and can result in anti-adoption drive) and exists across product classes from IT to consumer durables to medicines. trialability and operability are perceived as slow and complexity is perceived as high by consumers. the company can modify the innovated products to make it more acceptable to the consumer. 4.17 COMMUNICATION It was first thought that the communication process of the diffusion of innovations was only a one-step process. the design or shape of the mouse makes the user uncomfortable. The modification will have to be based on the cause of the resistance. Compunction proves a platform through which information flows. Innovation resistance is greater in the case of discontinuous innovations which greatly disrupt the consumers’ beliefs and past experience. This not only reduces the probability of resistance but also increase s the potential market as the company focuses on the alternative use. the marketer will have to enquire about the causes. work together to devise profitable innovations while some other companies rely on the feedback given by their consumers. from the mass media channels to the individual with little or no interaction between the individuals. One more attribute of innovation – flexibility or capacity for modification – becomes very important if there is consumer resistance to an innovation. There are two types of communication flows – marketers to consumers (through mass media and sales person) and among consumers (though word of mouth and opinion leaders). the marketer will need to modify the design and then re-launch the model for the consumers’ adoption or rejection. active resistance (perceived risk is high and tendency to postpone adoption).DBA 1722 NOTES compatibility. An innovation intended for a particular market segment instead finds acceptance with some other market group. In this approach. This obviously is not the case. In this case. The resistance can vary in degree – inertia (disinclined to adopt). some individuals pass along their influence as well as their knowledge to other individuals. a lead team comprising of managers and technical staff. Sometimes the failure of an innovation due to factors like narrow target market) also forces company to search for alternative uses of the innovation. To counter the problem of consumer resistance to innovation many innovating companies like 3M use the lead user approach. Not only do individuals communicate with each other.

but the important idea to arrive at is that no matter how many steps are involved there will always be a two-step exchange of knowledge/influence at any given step during the diffusion process. etc. A social system is “a set of interrelated unit ha are engaged in joint problem solving to accomplish a common goal. TV shows. and game shows. Opinion leaders are individuals in a social system that others come to for information and guidance. PC World. housewives are all examples of a social system. doctors. • Selective perception It refers to the idea that an individual will view new ideas in relation to their old ones. consumer shows and exhibitions.3M. (www. Now the process takes us through mass media channels to opinion leaders then to the individuals.” Communities of farmers. product related magazines and journals (Dataquest.indiacr. and company logs on apparel. beauty pageants. • Selective exposure NOTES Selective exposure refers to the idea that an individual will be more susceptible to channels of communication. etc. company websites (www. This two-step flow of communication is probably not complete as well. the idea of personal influence comes into play.CONSUMER BEHAVIOUR these traditional channels of information for consumers. A more practical way of stating personal influence is peer pressure. bags. other sources available are product dedicated websites. All he members of a 115 ANNA UNIVERSITY CHENNAI . With the addition of steps to the communication process. Looking at the three different types of selectivity shows why personal influence can be a stronger factor in the diffusion process than mass media. have also become major sources of information to consumers and are a rich source of brand building exercise for companies.). national level awards. With the understanding of opinion leaders in society it is clear to see that the original one-step process invalid. dedicated to innovations (Asian Sky Shop) and Sponsored TV programmes. Personal influence refers to any communication between two individuals where one individual creates a change in consumer behaviour in the other. • Selective retention It refers to the idea that an individual will mainly remember a new idea if directly relates to their own situation or remedy a specific problem.com). Social Systems Social interaction is an important need for all and this is why we live in a social system with people sharing similar values and believe. that already agree with their current attitudes and feelings (a democrat will listen to democratic media and not republican so they will never hear the other side).com).

.e. According to Rogers traditional norms are characterised by: • • • • • A less developed or complex technology Low levels of literacy and education Little communication between the social system and outsiders Lack of economic rationality One-dimensional in adapting and viewing others According to Rogers modern norms are characterised by: • • • • • A developed technology with complex jobs Strong importance placed on education Acceptance of free thought and new ideas Strong preparation and high importance on economic considerations Ability to see and understand other peoples situations Not only does modern system accept and adapt to innovation faster and easier than traditional system but the individual is more likely to be innovative in thinking and doing in a modern society.DBA 1722 NOTES social system have their own social and cultural environment in which they interact with each other.g. The social hierarchy and communication network within a social system determine the direction of diffusion (upward. established behavioural patterns of he members of the social system are also a determinant in the adoption of an innovation. MNCs have received a great 116 ANNA UNIVERSITY CHENNAI .. The social norms i. opinion leaders. within a social system provides the marketers the basis for planning the introduction of the innovation in the social system. opinion seekers) and communication network (sub-groupings of similar kind of people). downward or across) and rate of adoption. As free world trade is being emphasised. Each social system has a social hierarchy (e. The identification of social hierarchy and communication network.

18 BARRIERS TO ADOPTION AND MARKETING STRATEGIES TO OVERCOME THEM NOTES 117 ANNA UNIVERSITY CHENNAI . 4.CONSUMER BEHAVIOUR boost and now the marketer’s target market segment is not necessarily restricted to consumer within one county.

Sneha took 3 weeks to buy the model while Anita took 12 weeks. to truly understand the diffusion of innovations.19 TIME Time is an extremely important element of the diffusion process. the adopters are classified from innovators to laggards. If the home theatre system was adopted by the target market in 52 weeks. If the industry categorisation of adopters is time of purchase after the launch – innovators (8 weeks) early adopters (8 – 16 weeks) early majority (16 – 36 weeks). create a unique brand image and make fun of negative images. late majority (36 – 52 weeks) and laggards (over 52 eels) then Sneha is an innovator while Anita is an early adopter. Consumer’s innovativeness Based on time of adoption by a consumer.5 weeks. Rate of Adoption The speed with which an innovator spreads within the social system. The whole time taken for adoption was different. Like biology. and viceversa. The more the time taken the slower the adoption. one has to understand the adoption process of the individual consumer.DBA 1722 NOTES Image barrier (Stereotyped image of origins of an innovation) A non-fat ice-cream from Reliance group may be a big shocking to Indian consumers initially A well known brand name. In medical school when students are learning about the human body they first have to understand it at a cellular level. As stated earlier. Relevance of time in Diffusion of Innovation Area of Relevance Adoption Process How time Affects The average time taken from initial awareness to adoption or rejection by a consumer Example Sneha and Anita are neighbours who have bough home theatre systems at different points of time but both had seen the launch ad first in the newspaper on the same date. The average time taken here is 7. the difference between the diffusion process and the adoption process is the “who”. 4. then we can say that the speed of the adoption of home theatre system is faster than that of surround sound TV. 118 ANNA UNIVERSITY CHENNAI . The diffusion process deals with people or groups while the adoption process focuses on the individual person. Time has a bearing on: • • • The adoption process Innovativeness of the consumers and The innovation rate of adoption. while the surround sound TV took 100 weeks.

Here the person decides to invest time and energy into finding out more about the innovation. Here the individual physically gives the innovation a chance by trying it out for a limited basis. The third stage is evaluation. Others feel that for a person to become aware. NOTES 119 ANNA UNIVERSITY CHENNAI . The first stage of the adoption process is awareness. Here the individual uses information that they have gathered in the interest and evaluation stages and with the outcome of the trial stage decides to adopt the innovation. This decision to reject the innovation after agreeing to adopt it is called discontinuance. At this stage the innovation is introduced to the person but there is no true knowledge of the product. The final stage is the adoption stage. not to decide whether to adopt. idea. Keep in mind that these stages occur in all fields where adoption of innovation occurs. The interest stage is purely to gather knowledge. Here the person firsts begins to make a decision about the innovation. There is. If the innovation has a negative connotation to the individual they may seek the advice and knowledge of their peers. How could I use it? Do I really need it? Would it be to my advantage if I had it? These are all question the consumers ask themselves during the evaluation stage. Because of this lack of information the person does not feel the need to run out and find out more information. What they are looking to find out during this trial stage is how the innovation can fit into their needs and desires. the innovation must fill a particular need in their life for them to notice. however. After the individual adopts the innovation they may decide to reject it for whatever reason. At this point the person feels good about the innovation but does not really know how or if it can be useful in their own life. At this point in the adoption process the individual not only adopts the innovation but embraces it for the future. The awareness stage merely sets the groundwork for the following stages. much less consider consuming it. Then if the innovation appears to be positive for their life they will try it out. It is argued that a person often stumbles upon the innovation on accident during the awareness stage it will provide little incentive to get more information. another possible stage to adoption process.20 ADOPTION PROCESS To realise how an innovation diffuses through a society you must first understand how one person adopts an innovation. or service. Research proves that most people will not adopt an innovation without personally testing it first to see if it really “works”. The second stage is interest. The process can be broken down into five stages. The adoption process is the steps a consumer take as they accept a new product.CONSUMER BEHAVIOUR 4. This leads into the next stage called the trial stage.

4. Although this is not one of the four main elements of the diffusion of innovation it does have importance to the process.22 ADOPTERS Now it is time to turn our attention to the adopters’ side of the diffusion process. It is important to note that when there are a larger number of people who have an influence on the purchase decision. Like the innovations side. An example of this for everyone who ever attended high school is fads. the adoption period is longer.DBA 1722 NOTES 4. It is very clear that people adopt innovations at different times and for different reasons. which help us understand who they are and how they consume.21 STAGES IN ADOPTION PROCESS The length of time taken by a consumer from first exposure to adoption is called the adoption or innovation-decision period. there are certain characteristics that break adopters down into categories. 120 ANNA UNIVERSITY CHENNAI .

this gives a good general breakdown of adopters of innovations. This group also contains thirty-four percent. There are five main categories of adopters. Late Majority They jump on right after the average person. They are the smallest in size of only two and half percent. They are the ones who put themselves up in front. They are skeptical of all new ideas and frequently by the time they adopt an innovation there is a new one already beginning to take its place. Also it is important to note that not everyone is involved. They generally take a long time to fully adopt an innovation. but do accept an innovation before the average person. They are more in-tuned with the past than the future. Their education and income are limited and they are not willing to take a chance unless the majority has already fully adopted the innovation. They are highly educated and wealthy like the innovators but are more visible and respected among their peers. more and more people adopt the fad until the majority is included. When a fad starts to become popular. not everyone is immediately involved. Generally they are well educated and have a high income to absorb a mistake. like the innovators and early adopters. They enjoy the rush of taking a risk but they also are willing to accept the consequences of failure. Only a few people adopt the fad in the beginning. Early Majority They constitute thirty-four percent of adopters. Reasons for the late majority to adopt are either economic or peer pressure but are constantly weary. Complete adoption is not required for the diffusion process to work. Innovators These are the risk takers. These five categories have developed through years of research and observation in the diffusion process in many different fields. They are above average in education and income but are followers in their social groups. Their educations are small and generally laggards are socially surrounded by other laggards. NOTES 121 ANNA UNIVERSITY CHENNAI . Early adopters play a key role in the adoption process determining the time an innovation will be adopted by others and to what extent. As time goes by. Although there are exceptions in each group. Because of this reason they are the best target market for new innovations. Laggards This is the final adoption group and it consists of the final sixteen percent. each group affects the following group. They do not take the risk of being the first to adopt.CONSUMER BEHAVIOUR Although fads are not necessarily innovations it is a good example to begin to see the idea of adopters. Early Adopters This group are the next thirteen and a half percent. The point to be made with this example is not only do people adopt a fad at different a time.

moderately moving and high moving). It becomes a drive. the focus is very much on the reactions of the individual consumers with applications that 122 ANNA UNIVERSITY CHENNAI . moderate and high) with the type of innovation (discontinuous. Consumer begins search for information. There is an inverse relationship between the rate of adoption and type of innovation. The consumer decision making process involves series of related and sequential stages of activities. Therefore. to the needs of the customer. profit or non-profit related. Marketing management relies on an understanding of how customers make decisions and their likely reactions to the different elements of the marketing mix in this context. moving.23 RATE OF ADOPTION The rate of adoption is the speed with which an innovation spreads within the social system (target market). Then buyer evaluates the post purchase behaviour to know the level of satisfaction. The figure given below shows the varying rates of diffusion of innovation. Loudon and Della Bitta define consumer behaviour as “the decision process and physical activity individuals engage in when evaluating. consumer behaviour not only refers to the physical activity of purchasing but also to related pre[purchase and post-purchase activities. say a highly discontinuous innovation will tend to have a slower adoption rte and a longer adoption period. 4.24 CONSUMER DECISION MAKING PROCESS The most important environment in which firms operate is their customer environment because the basic belief of marketing oriented company – that the customer is the centre around which the business revolves. using and disposing of goods and services”. dynamically continuous. The process begins with the discovery and recognition of an unsatisfied need or want. At the micro-level. The fundamental basis for marketing concept involves the matching of the skills and resources of the organisation. marketing people need to understand the processes that their customers go through when making decision. This search gives rise to various alternatives and finally the purchase decision is made. and continuous innovation) and the product category (slow. One of the most useful applied distinctions in consumer behaviour is between consumer behaviour studied from a micro perspective and a macro perspective. while a continuous innovation will tend to have a faster adoption rate and a shorter adoption period. acquiring. The rate of adoption can vary (low.DBA 1722 NOTES 4.

It was at this time that consumer behaviour researchers investigated the application of personality theories and classification of motives taken from psychology and the family life-cycle and social class taken from sociology. The anticipation and forecasting of consumer behaviour at that level can be used for organisational planning and product development. Evaluation 4. Rogers described the individual as moving through the following series of stages in their decision to purchase: 1. These were applied with very different degrees of success in cross-sectional studies of markets in order to explain variations in consumer demand for many different classes of products and also for different choices of brands. A period from mid 1960s through to the end of the 1970s which was dominated by the development of knowledge on consumer decision making 3. The collective behaviour of consumers influences our total quality of life. Awareness 2. 123 NOTES ANNA UNIVERSITY CHENNAI . early adopters. Interest 3. One of the studies from that period which had a very profound influence on consumer behaviour and marketing is Rogers’ work on the diffusion of innovations. salespeople. During consumers’ adoption of innovations. A segmentation era. At the macro-level. Adoption This was one of the first attempts to describe a sequential process which illustrated the stages of the consumed decision. or product designers of individual firms or organisations. as well as formation of public policy to improve the efficiency of the market system. Reflecting on the literature in consumer behaviour allied closely to marketing. the later majority and laggards.CONSUMER BEHAVIOUR are relevant to advertising mangers. He segmented the potential market for a new product according to the time of adoption and developed a five stage classification within which to describe potential customers – innovation. the early majority. In the 1950s and through to the mid 1960s much of consumer behaviour research involved the evaluation of consumer characteristics for market segmentation. it is possible to distinguish here approximate phases f development: 1. Trial 5. Another important facet of Rogers’ work was his characterisation of the adoption process. primarily associated with the work before the mid-1960s 2. as will be seen in the later discussions. A period of diversification and enrichment in the 1980s and 1990s. The steps described by Rogers are typical of the framework that has been used to underpin the models of consumer decision making. directing the demand and supply of products and services. consumer behaviour involves the study of the influence of consumption on the economic and social conditions within society.

Although husband/wife influence had been investigated earlier. In the area of market segmentation. Kollat and Blackwell model was one of a series to be developed in the late 1960s and early 1970s. consumer behaviour researchers have expanded their focus to consider phenomena such as shoplifting. 124 ANNA UNIVERSITY CHENNAI . Retrospectively it is possible to view their development as an outgrowth of disillusionment with personality and other variables as a good basis for market segmentation. the dominant paradigm of the 1970s is seen to be one borrowed from cognitive approaches t psychology. The work placed the investigation of family decision making into a parallel context with individual decision making based around the type of sequence described by Rogers.DBA 1722 NOTES In 1968 Engel. interests and opinions of consumers. Bettman provide another substantial offering with his information processing model of consumer decision making. Factor and cluster analysis techniques enabled this pot pourri of information to be refined into apparently stable and meaningful portraits of consumer groups. Other particularly important contributions ere offered by Howard and Sheth. The development of mainframe computers and canned packages of multivariate techniques enabled consumer behaviour researchers and marketers to adopt what has been called a ‘backward’ approach to market segmentation. Taking an historical perspective on this period. Nicosa and towards the end of the 1970s. Gradually the scope of consumer behaviour has expanded as other social and economic trends have developed that affect marketers. there has been the evolution of an alternative ‘low involvement’ approach to consumer decision making with a different set and sequences of stages to that outlined by Rogers. and the foundation of consumer psychographics and lifestyles as segmentation techniques. the most important developments of this period were the related concepts of psychographics and lifestyles. For example. Two of the other important developments in the 1970s were the emergence of work on the family as a decision-making unit. The latest period of development and enrichment is primarily reflected in the consumer behaviour research of the 1980s and 1990s. it is probably difficult to under-emphasise the importance of developments in attitude theory as applied to thinking and research in consumer behaviour. the effect of homelessness on consumption and compulsive buying. consumer behaviour researchers have placed an increased emphasis on the role o affective as opposed to cognitive influences. the 1970s saw major developments in that area. The recognition of children in the family decision process and the nature of consumer socialisation also developed during this period. Looking back. Second. First. Using huge questionnaires they were able to collect large quantities of data representation the activities. Also emerging through the 1980s were two major and related contributions to theories of how consumers make decisions. Since that time some particularly strong challenges have been made to this approach.

CONSUMER BEHAVIOUR

4.25 CONSUMER DECISION MAKING – THE COMPLEX APPROACH The complex approach primarily reflects the early cognitive based theories of the subject starting with this approach we can give a general overview of consumed decision making which can be adapted to take more recent variations into account. A good way to appreciate the overall complexities of consumer decision making is to review one of the comprehensive models that have been proposed. One of the most popular and enduring of these models is that offered by Engel, Blackwell and Miniard. As indicated above, the basis for this model was first proposed by Engel, Kollat and Blackwell in 1968 and it has been regularly revised and updated to account for new evidence about the behaviour of consumers. It should be noted that evaluation on scientific criteria (e.g., explanations, predictions, generality and heuristic power) have not always been kind to these types co comprehensive models of the consumer decision making process. Consumer Decision Rules These are generally referred to as information processing strategies. These are procedures that help consumers to evaluate various options and reduce the risk of making complex decisions by providing the guidelines. Decision rules have been broadly classified into two categories: 1. Compensatory Decision Rules: Consumers evaluate brand or model in terms of each attribute and compute a weighted score for each brand. The computed score reflects the brand’s relative merit as a potential purchase choice. The assumption is that consumer will select the brand that scores highest among alternative brands. The unique feature of this rule is that it balances the positive evaluation of a brand on one attribute to balance out a negative evaluation on some other attribute. For example, positive attribute like high fuel efficiency is balanced with the negative evaluation of high maintenance cost. 2. Non-compensatory Decision Rules: In contrast to the above rule non-compensatory rules do not allow consumers to balance positive evaluation of a brand on one attribute against negative evaluation on some other attribute. There are three types of non-compensatory rules. They are: Conjunctive Decision Rule: In conjunctive decision rule the consumer establishes a different, minimally acceptable level as a cut off point for each attribute. In this the option is eliminated for further consideration if a specific brand or model falls below the cut off point on any attribute. Disjunctive Rule: It is the ‘mirror image’ of conjunctive rule. Here the consumer establishes a separate minimally acceptable cut off level for each attribute. In this case if an option meets or exceeds the cut off establishes for any one attribute it is accepted.

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Lexicographic Decision Rule: In this rule the consumer initially ranks the attributes in terms of perceived relevance or importance. Later he compares different alternatives in terms of the single attribute that is considered most important. On this top ranked alternative, regardless of the score on any other attribute, if one option scores sufficiently high it is selected and the process ends. Levels of Consumer Decision Making The consumer decision making process is complex with varying degree. All purchase decisions do not require extensive effort. On continuum of effort ranging from very high to very low, it can be distinguished into three specific levels of consumer decision making: 1. Extensive Problem Solving ( EPS ) 2. Limited Problem Solving ( LPS ) 3. Routine Problem Solving ( RPS ) Extensive Problem Solving ( EPS): When consumers buy a new or unfamiliar product it usually involves the need to obtain substantial information and a long time to choose. They must form the concept of a new product category and determine the criteria to be used in choosing the product or brand. Limited Problem Solving (LPS): Sometimes consumers are familiar with both product category and various brands in that category, but they have not fully established brand preferences. They search for additional information helped them to discriminate among various brands. Routine Problem Solving (RPS): When consumers have already purchased a product or brand, they require little or no information to choose the product. Consumers involve in habitual and automatic purchases 4.26 CONSUMER BEHAVIOUR AND MARKETING IMPLICATIONS The basic belief of marketing-oriented company is that the customer is the hub around which the business revolves. Therefore, understanding what makes people in general buy and what makes your customer in particular buy is a vital part of business success. Market itself means – customer, around whom all marketing strategies are formulated and implemented. In order to meet competition at the market place, the marketing managers are using various methods to add value to the final product which will reach the hands of the consumers. It means in ever changing marketing environment, there is a growing concern or awareness among marketers to go for a careful study of the consumer behaviour around which all marketing activities are made. Following are the key marketing implications of consumer behaviour.
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Consumer Behaviour and Marketing Strategies Understanding the consumer behaviour is the basic for marketing strategy formulation. Consumers’ reaction to this strategy determines the organisation success or failure. In this competitive environment Organisations can survive only by offering more customer value - difference between all the benefits derived from a total product and all the costs of acquiring those benefits – than competitors. Providing superior customer value requires the organisation to do a better job of anticipating and reacting to the customer needs than the competitor. Marketing strategy is basically the answer to the question: How will company provide superior customer value to its target market? The answer to this question requires formulation of marketing - mix – product, price, place and promotion - strategies. The right combination of these elements meets customer expectation and provides customer value. For example, marketer of a bike must know the customers performance expectations, desired service, Price willing to pay, information he seeks and after-sales service to provide superior customer value. Consumer Behaviour and Market Segmentation The most important marketing decision a firm makes is the selection of one or more segments to focus their marketing effort. Marketers do not create segments but they find it in the market place. Market segmentation is the study of market place in order to discover viable group of consumers who are homogeneous in their approach in selecting and using goods or services. Since market segment has unique needs, a firm that develops a product focusing solely on the needs of that segment will be able to meet the target group desire and provides more customer value than competitor. For example, right segment for ‘Femina’ magazine is educated urban women. The success of this magazine depends on their understanding of the urban woman. Consumer Behaviour and Product Positioning Product positioning is placing the product, service, company, or shop in the mind of consumer or target group. Through positioning marketers seek the right fit between a product and desired customer benefits. The right positioning means understanding the consumer perception process in general and perception of company’s product in particular. For example, Samsung brand is perceived as premium brand by few customers and valuedriven brand by others in the market, but marketer must find out what makes their target market to perceive differently and position it accordingly. Consumer Behaviour and Marketing Research Studying consumer behaviour enables marketing researchers to predict how consumers will react to promotional messages and to understand why they make the purchase decision
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they do. Marketers realised that if they know more about the consumer decision making criteria, they can design marketing strategies and promotional messages that will influence consumers more effectively. The importance of consumer behaviour made marketers to think of a separate branch in marketing research - Consumer research, to deal exclusively for consumer related issues. The current focus of consumer research is on study of underlying needs and motives in taking purchase decisions, consumer learning process and attitude formation process. Consumer Behaviour and Non-Profit and Societal Marketing A sound knowledge of consumer behaviour can help the organisations that sell ideas and concepts of social relevance. Institutions that promote family planning, AIDS free society, governmental agencies, religion orders and universities also appeal to the public for their support in order to satisfy some want or need in society. The knowledge about potential contributors, what motivate their generosity, how these motives can be effectively appealed is useful for the organisations involved in these activities. Consumer Behaviour and Governmental Decision Making To major areas where consumer behaviour study helps government is in policy making on various services, and in designing consumer protection legislation. The knowledge of people’s attitudes, beliefs, perceptions and habits provides adequate understanding of consumers 4.27 CONSUMER BEHAVIOUR MODELS A model is very often referred to as an abstract representation of a process or relationship. We tend to hold various models in our minds, which allow us to make sense of the world, and also help to predict the likely course of events. To put it simply, models help us in the development of theories, understanding complex relationships, and providing the framework for discussions and research work. In this section we shall make efforts to examine the various models having relevance to the consumer decision process. The primary concern is to use the models to understand consumer behaviour. Consumer behaviourists as well as marketers are interested in understanding how and why certain decisions are made. Consumer Decision-Making Since the 1960s, the study of consumer behaviour has focused largely upon consumer decision-making processes. Influenced by cognitive psychology, a number of so-called modal models (or “box-and-arrow” models) have been proposed, presenting the various stages the consumer goes through when choosing a product to buy or store to shop in, presented in a flow-chart format (e.g. Nicosia, 1966; Engel et al., 1995). A rather stylised summary of these modal models might look something like this
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with very common or repeat purchases. To the right of the diagram. all hypothesize the same linear decision-making process. particular stages (e. events encountered at one stage may cause the consumer to revert to a previous stage. At any stage in the process. may be automatised) because the information required is already available in memory. makes his or her choice and purchases the product. each having its own particular strengths and weaknesses. There are two main problems with modal models such as this when it comes to their usefulness to the marketer. the “box-and-arrow” approach is rather descriptive. we can see that the decision process begins with the consumer recognising that he or she needs or wants to buy an item. It tells us the decision-making stages the customer negotiates. none of the options available may prove satisfactory and the consumer may therefore decide to reassess the initial need and begin the process again for a completely different alternative solution. which may influence the decision-making process at any stage. This category would include a whole array of variables. Attention is then devoted to the task in hand and information gathered. The diagram is a summary of the models available which. Firstly.the extent to which a purchase is deemed successful or unsuccessful will feed back to influence future purchase decisions. during evaluation. There is no one single universally accepted model. however complex they may appear. crowding and the opinions of significant others. information search) may be passed through without conscious attention being applied (i.g. note how the decision process doesn’t end with purchase . but tells us very little about 129 ANNA UNIVERSITY CHENNAI .particular models being stronger than others for specific types of shopping. we see environmental factors. ranging from exposure to advertising and promotional materials through to store atmosphere. Conversely. The consumer evaluates the options available.CONSUMER BEHAVIOUR NOTES In the left-hand column above. In a way. for example. this is probably a reflection of the many different consumer motivations highlighted above .e. Finally.

Blackwell and Miniard Engel. Note how the environment is merely “lumped together” to the right of the diagram. the location of the environment box separate to the decision-making process gives the impression of the environment as simply being something “out there”.). this seems woefully inadequate. prevailing socio-economic conditions. Consumer Decision Making Models Types of consumer behaviour models: Simple models • • • • • Black Box models Personal variable models Personal Variable/Post Purchase Satisfaction model Comprehensive models Engel. recognising that the individual is part of the environment. divorced from the individual shopper. Kollat and Blackwell 130 ANNA UNIVERSITY CHENNAI .DBA 1722 NOTES how the marketer can actually influence these stages to make his or her product/service the preferred option. interacting with environmental factors and influencing each other. The reality. When we consider all of the factors this encompasses (store location. advertising. Moreover. The second weakness of this approach is closely related to the first. layout. etc. is that consumers are a part of the environment. of course. this revised model locates the decision-making process within the environment box. A more accurate model of consumer decision-making would probably locate the environment “box” as follows: As you can see.

Information search 3. The model is split into four key fields: 1. include its descriptive content. In this case the level refers to the level of complexity . Black box models focus solely on inputs and outputs and do not consider internal variables. Simple black box models are based on identifiable observable and measurable variables. Evaluate alternatives 4. however they are unable to predict or explain behaviour. information search. thereby deciding whether to progress forward to the next stage of the process. One of the most cited models is that of the ‘Black Box’. its brevity that it has never been fully tested and is now considered historical. Motivation and recognition of need 2. The model attempted to demonstrate how the company influences the consumer through its promotional and advertising activities. They suggest that a given stimulus will prompt a particular response. often referred to as need recognition. The dependence on the two search modes will vary in relation to the need recognised and the individual situation. within this processing centre. memory. is individual to every consumer. criticisms have been raised about this model. Outcomes Motivation. goals and expectations are considered.so a low level model would be a relatively simple representation of the phenomenon while a high level model of the same event would be much more complex and detailed and include more variables. developed a model to explain consumer behaviour and highlighted five stages of the decision making process: 1. medium or high level models. Search takes two forms internal and external. The source of a message to the consumers attitude 2. Over time more comprehensives models have been proposed. The act of purchase 4. Purchase 5. Engel et al. Although 131 ANNA UNIVERSITY CHENNAI . Storage and the use of the purchased product.CONSUMER BEHAVIOUR • • Howard-Sheth Nicosia NOTES Perhaps the most useful set of categories is that of low. However. individual influences and environmental factors. information stored in the memory. Consumers will consider the gap between the ideal state and the current perceived state. and focuses on the three key determinants. One of the earliest decision making models is the 1966 Nicosia Model. The search for and evaluation of alternatives 3.

then consumers are likely to get more involved in the decision making process. Consumers can try to ignore this. Obviously university choice is one of the most important decisions that needs to be made in a students life with extensive decision making taking place. Being a rational man he will make his purchase decisions with the intention of maximising the utility/benefits. with work and exams and eventually get overloaded with information. It is likely that potential students base their evaluation on a limited number of key criteria as opposed to looking at whole university offerings. This will then reduce the alternatives to the most suitable options available. Economic model is based on certain predictions of buying behaviour (a) price effectlesser the price of the product. Economic model: Economic model of consumer behaviour is one-dimensional. Alternative evaluation will also be affected by individual differences. with the extreme level of involvement necessary to make a university choice it is likely that an external search would be used. For instance in an academic decision the issue of A level exam grades is likely to play an important role. such as motivation. Outcome can either be satisfaction or dissatisfaction. This means that buying decisions of a person are governed by the concept of utility. Models of Consumer Behaviour 1.DBA 1722 NOTES information search is primarily conducted internally. the search is likely to be quite extensive. consumers are not always rational and do not consider all the alternatives. However. belief. attitudes and intentions are considered. When satisfaction is prevalent then the recognised need has been met and satisfied. Research has suggested that students make university decisions on incomplete information. When evaluating alternatives. more will be the quantity purchased (income effect). buyer decision making process vary with the type of decision. This is likely as students are busy. or concentrate on the good points of the decision made to try and reduce the dissatisfied feeling. if there are widely different alternatives from which to choose from. Furthermore. where a significant level of effort is put into identifying key criteria and moving through the decision making process. This is supported by another research which reports that. However. as educational choice is generally a one-off. At the final purchase stage new factors may change the initial decision. lesser will be the quantity of the original product bought (substitution effect) (c) More the purchasing power. 132 ANNA UNIVERSITY CHENNAI . if this is not the case postpurchase cognitive dissonance may occur where different attitudes have to be weighed up as part of a decision. the more buyer deliberation. and the negative features of the chosen alternative start to be apparent. so stop searching. and that the more complex the decision. this then causes dissatisfaction. attitudes and knowledge as well as environmental influences. more will be the quantity purchased (b) Lesser the price of the substitute product. It could be suggested that when students enter the university decision making process they adopt a satisfying approach. change the decision made. Furthermore.

3. Since he is living in a society. Marketers have been using this approach to generate ideas for developing productdesign. (a) ‘id’ which is the source of all psychic energy which drives us as action (b) ‘super ego’ which is the internal representation of what is approved by the society (c) ‘ego’ which is the conscious directing ‘id’ impulses to find gratification in a socially acceptable manner. For example. He is playing many roles as a part of various formal and informal associations or organisations i. as a family member. as a member of a professional forum and as an active member of an informal cultural organisation. as an employee of a firm. features. A drive or internal stimulus which when directed towards a drive-reducing object becomes a motive. The various products or service will act as a stimulus to satisfy drives. viz.e. The essential stages of the decision process are diagrammed in sequence down NOTES 133 ANNA UNIVERSITY CHENNAI . gets influenced by it and in turn also influences it in its path of development. the model is arranged in four columns.CONSUMER BEHAVIOUR 2. According to him human behaviour or personality for that matter is the outcome of three components. They argued that living beings were influenced by both innate needs such as the primary needs of hunger. Sigmund Freud developed this theory. 4. This means that buyers will be influenced by symbolic factors in buying a product. As can be seen.. shelter and learned needs like fear & guilt. Engel. Learning model: Classical psychologists have been interested in the formation and satisfaction of needs and tastes. thirst. from the figure given on the next page. Thus we can say that human behaviour is directed by a complex set of deep-seated motives. The sociological model: According to this model the individual buyer is a part of the institution called society.. Psychoanalytical model: This model is based on the work of psychologists who were concerned with personality. advertising and other promotional techniques. which after consumption will reduce the drive and provide and provide satisfaction. Blackwell and Miniard model does offer is a comprehensive illustration of the variables influencing consumers and an appreciation of the flexible and dynamic nature of the consumer decision-making process. if you are a hungry you will be driven towards food. Motivational research has been involved in investing motives of consumer behaviour so as to develop suitable marketing implications accordingly. Blackwell and Miniard Model What the Engel. They were of the view that human needs and motives operated at the conscious as well as subconscious levels.

purchase and satisfaction or dissatisfaction outcomes. Starting from need recognition.DBA 1722 NOTES the third column. This second column depicts the processes of perception and learning which govern the acquisition and retention of information and line with the need recognition and information search phases of the decision. and of particular relevance to marketers are the elements of the promotional mix that form the market dominated stimuli and which feed into the information processing part of the model in column two. Column one is concerned with the innovation environment fro the decision. the consumer is seen to move through search processes to evaluation of alternatives. Other psychological variables are defined 134 ANNA UNIVERSITY CHENNAI . These five stages reflect the same inherent hierarchy underling Roger’s sequence of adoption outline earlier.

There are three types of information cues which influence the potential consumers’ decagons making process – cues related to the physical attributes of the product (significative cues). Understanding how these variables impact on the decision process provides a basic rationale for their importance to market segmentation strategies. perception. attitudes. Howard-Sheth Model Another of the important early contributions to consumer decision making was made by John Howard in 1963. The final column lists the influencing variables which impact on the consumer decision.CONSUMER BEHAVIOUR in the alternative evaluation stage. which play a role in influencing consumer behaviour. This model serves two purposes: • • It indicates how complex the whole question of consumer behaviour is. 135 ANNA UNIVERSITY CHENNAI . and information provided by the potential consumers’ social circle (social cues). etc. It provides the framework for including various concepts like learning. NOTES Inputs: These are the stimuli (information cues) which affect the potential consumers’ choices.. The Howard-Sheth model of buying behaviour attempts to explain the complexity of the consumer decision making process in case of incomplete information. and the model makes he central place of attitudes absolutely explicit since it can be equated to preferences governing behaviour intentions and subsequent purchases. the verbal and non-verbal elements of product/brand marketing message (symbolic cues).

DBA 1722 NOTES Information Sources Commercial Noncommercial Personal social a) Salesmen b) Service personal a) Family b) Reference groups c) Social class Impersonal a) Product (Significative) b) Advertising (Symbolic) a) Print med (New Stories) b) Independent testing such as consumer reports Perceptual Constructs These variables are concerned with processing done by the potential consumers with respect to al the information available to them. Although the Howard-Sheth model of buyer behaviour is quite helpful in understanding consumer decision-making. Exogenous or external Variables: This theory also includes a number of variables. consumers’ buying intentions. consumers’ confidence in his/her ability to make a knowledgeable choice. it fails to clearly define all the aspect of the model. awareness of product/ brand attributes (brand comprehension). etc. These learning constructs are – objectives of purchase (motives). Consumers may not mentally register all the information available (attention). consumer will process this attended information with their own reference point leading to bias (perceptual bias). criteria for evaluation of product / brand (choice criteria). Moreover. Consumers may actively seek information (overt search) but all the information meaning may not be clear to them (stimulus ambiguity). and post purchase feedback (satisfaction). Moreover. Because of his interactions with various groups and society. which are not explained but have a bearing on some or all of the constructs discussed above and indirectly influences the output or consumer response. • Social and organisational setting: Man is basically a social animal. attitude towards product/brand. they look to each other for guidance regarding what to buy. this model is quite complex and difficult to understand. how to buy/dress. purchase. Output This is the final consumer decision making process which is actually followed by the consumers after processing the information. Learning Constructs The perceptual constructs will influence the learning constructs which have direct linkages with the product itself. 136 ANNA UNIVERSITY CHENNAI .

Area 2: This area is related to the search and evaluation undertaken by the consumer of the advertised product and also to verify if other alternatives are variable. which will be acceptable to the Social class to which it belongs Culture: refers to the shared. He tried to explain buyer behaviour by establishing a link between the organisation and its prospective consumer. with a decision to buy the product or else the reverse may occur. the individual will be engaged in a behaviour. Certain attributes may develop sometimes depending upon the way the message is received by the consumer. an expert in consumer motivation and behaviour has developed this in 1966. The Nicosia model divides the above activity explanation into four basic areas: Area 1: Field one has two sub areas-the consumer attributes and the firms attributes. Based on the situation. with stimuli as the input to the system and the human behaviour as an output of the system. So the pattern of buyer behaviour will be based on a pattern of behaviour shared in a specific subset of a larger culture-a subculture trait.CONSUMER BEHAVIOUR • Social class: In order to conform to the norms of the social class to which he/she belongs. 137 ANNA UNIVERSITY CHENNAI . Here the messages from the company initially influence the predisposition of the consumer towards the product and service. If this step satisfies the consumer. Francesco Nicosia. NOTES • • • The Nicosia Model The buyer behaviour model is taken from the marketing mans point of view. etc. the consumer will have a certain attitude towards the product. The newly developed attribute becomes the input for area 2. The advertising message from the company will reach the consumers attributes. It is also called systems model as the human is analysed as a system. values. If the above step motivates to buy the product / service. somewhat consistent pattern of behaviour of a group of people. it becomes the input for the third area. Purchasing power/ Financial status: The money/income available for purchasing goods and services during some specific time period also plays a role in influencing the consumption pattern and thereby his buying behaviour. Each culture has a set of beliefs. Area 3: This area explains as how the consumer actually buys the product. This may result in a search for the product or an evaluation of the product attributes by the consumer. it may result in a positive response.

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Area 4: This is related to the uses of the purchase items. This can also be used as an out put to receive feedback on sales results to the firm. Thus models of buyer behaviour are generally based on certain factors internal to the consumer e.g., learning, personality, attitudes and perceptions. The external factors may be in the form of group, cultural and inter-personal influences and effects advertising and communications. The action of individuals is the result of both internal / external factors and interactions to the consumer decision making processes. The modern concepts of the buying behaviour state that the behaviour is the result of interaction between people centered factors and situation centered factors. The marketer is expected to be aware of the person centered factors such as buyer motivation, learning, perceptions, attitudes, values and beliefs. Similarly, marketers must be aware of social environment and internal personal interactions influencing the buyer behaviour. Outside Variables • • • • • • Personality Social Class Financial Status and Trial Culture Importance of Purchase Time Pressure

The heterogeneity among people across the world makes understanding consumer buying behaviour an intricate and challenging task. Product motives and patronage motives play a crucial role in consumer purchases. Like individuals organisations also make many buying decisions. The major factors that distinguish it from consumer decision are Market structure and Demand, Buyer characteristics, and Decision process and buying patterns. The degree of involvement has a lot of impact on search of information, Information processing, and Transmission of information. The various models of consumer involvement help marketers to study purchase behaviour across product segments. Consumers usually go through five stages in arriving at a purchase decision. In the first stage, the customer identifies an unsatisfied need. In the second stage consumer collect information about the product and brands. In a third stage, the consumer evaluates all the alternatives with the help of available information. Later in stage four, the customer makes a purchase decision. And finally in the fifth stage, consumer experiences post-purchase satisfaction or dissatisfaction. Organisational buyer has different decision making criteria. Decision making rules – Compensatory and Non-compensatory – simplify the complex nature of decision making to consumers. Understanding consumer behaviour is the basis of the formulation of marketing strategies. Consumer behaviour studies help in designing
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effective marketing strategies like, Marketing-mix Strategy, Market Segmentation Strategy, Product Positioning Strategy, and Marketing Research. As consumer behaviour is very complex to understand, consumer models aid marketer to put their effort to understand in right direction. The models – Economic. Learning, Psychoanalytic, sociological, Howard-Sheth and Nicosia enables marketers to understand and predict consumer behaviour in the market place. 4.28 POST PURCHASE CONSUMDER BEHAVIOUR After making the purchase, the consumer sometimes experiences post purchase dissonance, which may even lead to nonuse and subsequent exchange or return of the product. In case the consumer decides to use the product (or keep it, even when he/she does not use it due to lack of any exchange or return policies) it is usually followed by the product being disposed off. Post-purchase evaluation is followed by satisfaction, nonsatisfaction or dissatisfaction. In case of dissatisfaction, consumer may take action that can vary from waning family and friends against the product to taking legal action. Consumer’s post-purchase dissonance Dissonance is “a psychologically uncomfortable state” and post-purchase dissonance is the state of anxiety the consumer experience after making a purchase, generally it is the result of difficult purchase decisions. It is important to note that in case the alternative being considered for purchase are perfect substitute for each other, no post-purchase dissonance will occur after purchasing any one of such alternatives. However, in the absence of perfect substitutes, some amount of post-purchase dissonance is unavoidable. In case, all the alternatives are desirable, consumers might experience strong negative emotions while making a choice, which may result in postponing or completely dropping the purchase A high level of post purchase dissonance can result if: • • • • It is difficult for the consumer to arrive at the purchase decision because of the importance of the decision and/or the number of alternatives available All the alternatives being considered are almost equally desirably by the consumer The decision cannot be undone, i.e., the purchase does not entail any exchange, refund, guarantee, etc. The product/brand is new I the market and /or belongs to a less known marketer.

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Consumers are also likely to regret it if they miss out on a better alternative say, in terms of performance, prices, etc. Consumers can compare the benefits derived from different alternatives in two ways – through upward comparison (comparing actual outcome to a better outcome) and through downward comparison (comparing actual outcomes to a worse outcome). Research has also suggested that the degree of regret is negatively related to the degree of satisfaction. As the degree of regret for making a particular decision increases, the degree of satisfaction with the results o the decision (in this case, the product/ brand choice) decreases. In case of upward comparison, consumers feel regretful about their decisions, and thus, less satisfied. A stock market investor, for example, who has, the choice of buying shares of company A, company B and company C, decides to buy shares of company A. If after buying he shares, the price of the shares of company B and C increase sharply while that of company A increases only marginally, the investor is likely to be less satisfied with his decision. Research has also indicated that consumers’ decisions are often guided by the urge to reduce the feeling of regret with their decisions instead of increasing the value attained from a product.

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Post-purchase dissonance can be highly discomforting for the consumers and obviously, consumers will try to minimise it. To reduce post-purchase dissonance, consumers can even decide to return the product or exchange it for something which they are more confident about. While experiencing post-purchase dissonance, consumers become extremely aware of the product information, they even actively look for it. Marketers can use this increased receptiveness for product information to address the recent purchases, to reduce their dissonance and increase their level of satisfaction by sending thank you notes, such as “Thanks for choosing us as a part of your family. We are sure that it is the start of a strong relationship between us. We hope to satisfy you in all relevant ways. We would appreciate if you can help us know how we can serve you better.” Sometimes, the purchase of some products induces ‘consumption guilty’ among consumers. An obese woman, for example, may like not eat oily food and sweets, but may feel guilty about doing so, due to concern over her weight. While targeting such consumer, marketers of these products can focus on reducing the guilt associated with the consumption by say, introducing lower calorie versions of the products. An example is Diet Pepsi. Product Usage Some amount of post-purchase dissonance is always associated with all purchases. However, in the case of extended decision-making, the level of post-purchase dissonance is higher than in the case of habitual or limited decision-making. After a consumer buys a product he/she may choose to use it or not use it. The reasons for both are as follows: When product is used Even though there is certainty of some post-purchase dissonance, this does not stop mot consumers from suing the product. However, the knowledge of how consumers make use of the product is important for marketers. It is important to note here that consumers do not always use the products as the marketers intended them to be used. Product usage knowledge is, therefore quite fruitful for marketers, as new uses for the old product can drive up sales and increase the consumer base. The various other uses of the product, other than what the marketer originally intended it for can also add to the value of the product or the consumers. Many food product companies, for example, invite consumers to write about new ways of using their products. This they do by way of organising recipe contests, etc, which not only create consumers and brand interaction, but also provide marketers with new methods of suing their products. Unintended product usage can also give marketers new product ideas. Colgate-Palmolive, for example, discovered that many women in Columbia were using remains of soap bars to make utensil

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in simpler terms. this is not always the case. Loyalty helps build relationships. which the daughter does not particularly like. because is low priced). 1955) and “share of market” which was later referred to as 142 ANNA UNIVERSITY CHENNAI . Two separate loyalty concepts evolved. Research has suggested that price discounts are a very common reason for consumers ending up buying something that they just do not use later. now known as Axion. The purchase of a microwave oven. However. might have been for cooking purpose. which was related to the measurement perspective taken by the researcher. it was in practice since many centuries.DBA 1722 NOTES cleaning paste. commitment. namely. 1944. The concept of’ loyalty ‘is not a new concept. It is highly likely that non-used products will have less repurchases and purchasers may even dissuade others from buying the non-used product. for example. It is important to note here that product nonuse does not include none use to lifecycle changes (say. When product is not used There are many instances of consumers buying products for their use. be it he ‘cyclic machine’ or the fancy dress somehow just was not appealing after the very first use. emotional bonding. a reliance on a particular brand or company even though numerous satisfactory alternatives may exist. the school uniform) or (and) undesirable gifts. by suggesting new ways or occasion of use) instead of directing all their resources at only making consumers purchase their products. as we have seen. Marketers therefore should also focus on encouraging consumption (say. mutual exchange. Trust. bicycle purchased for a school student in his lat year may not be sued when the boy is in college) and forced purchase (say. “brand preference” (Guest. It requires that companies view customers as people first and consumers second.29 CONSUMER LOYALTY Loyalty is. This gave them idea for developing a new utensils cleaning product. In its earliest days loyalty was proposed as a uni-dimensional construct. but failing to use them. fulfillment of promises. In past. 4. ethical practices. say a mother buying a dress for her daughter. Today marketers are trying to capture market share and profits with the help of a loyal customer base. but consumers may end up using it as an expensive food heating device. Product nonuse refers to the purchased product not being used at all or being used for a very short duration. Marketers often perceive a product purchased as a product consumer. personalisation and customer orientation have been reported to be the key elements in the relationship building process The concept of loyalty first appeared in the 1940s. ancient Roman Empire had often used the concept of loyalty for their army.

word of mouth behaviours may be encouraged through reward programmes while attitudinal loyalty may be encouraged through emotive advertising. Special rates are offered by Indian Airlines or Jet Airways. This two-dimensional concept has since been combined and referred to as composite loyalty. Over time. the main criterion being flying frequency on basic room tariffs at tie-up hotels.30 TYPES OF LOYALTY PROGRAMMES Loyalty in Airline industry: Nearly every airline has a point reward system. The composite definition of loyalty considers that loyalty should always comprise favourable attitudes. Nearly 30 years after loyalty first appeared in the academic literature. This feeling of loyalty tends to imply that a person feels an obligation to stay with a brand in good and bad times. For example. researchers proposed that loyalty may be more complex and that it may comprise both attitudinal and behavioural aspects. So customers would really remain loyal to an airline which assures safety. intentions and repeat-purchase (see Jacoby and Chestnut. Loyalty evolves and that there are stages of loyalty. Marketers can activate different loyal states or qualities in different ways. managers must adapt from improving value per se to measuring and managing relationships and brands directly.CONSUMER BEHAVIOUR attitudinal loyalty and behavioural loyalty respectively. People fly on those airlines where the brand experience is unique. Loyalty is the key to the longevity of any brand and one type of loyalty. and that customer’s have a different mix of loyalty qualities or states. The Taj hotel group has tied up with prominent 143 NOTES ANNA UNIVERSITY CHENNAI . However. namely word of mouth has recently been correlated with company growth. Loyalty intentions are a function of perceived value early in the life cycle. The system itself is no longer a differentiator. As the concept of loyalty is dynamic. In a personal sense loyalty is a feeling or an attitude of devoted attachment and affection. The Indian airlines industry is no exception to loyalty programme. The programmes should be mutually beneficial to both parties as they have access to each other’s database. managers need to study how these intentions evolve through different phases of a brand life cycle. From the introduction to the growth stage of a life cycle. Providing customers with perceived value or satisfaction is widely recognised as a means of improving loyalty intentions and actual retention. It is possible that each and every customer has loyalty qualities or states in varying degrees. Passengers flying certain airlines get special privileges on specific trips and at certain hotels. efficient and pleasing service and recognition of their preferences. more affective attitudes toward the brand and the relationship with the company come to mediate the effects of value on intentions. research demonstrates that these relationships are potentially complex and dynamic and that the drivers of intentions change and evolve over time 4.

Virgin-Atlantic. the cellular company that operates in the Chennai and Tamil Nadu circles. India’s premier telecom service provider has launched its ‘Smart PCO Loyalty Programme 2006-07. Hutchison Essar to deliver m-coupons. All these players are following different schemes for their subscribers and doing up selling & cross selling activities. State and national government warn the general public regarding the natural calamities by tieing up with different service provider through SMS. AIRCEL. a one-year programme for its PCA operators. Bajaj Pulsar bikes and home theatres. Indica Xeta. Loyalty in Telecom Industry Telecom and energy services pre-deregulation are examples of repeat customer business driven by lack of choice. BSNL have different schemes for loyalty. Domino’s Pizza. has launched an SMSbased facility where its subscribers can get acupressure tips for various ailments Called ‘MobiHealth. customers eagerly seek out alternatives if they’re not satisfied with their current provider. were given away as prizes. Apart from earning miles. When new choices became available. which can be cashed across 40 retail outlets such as Barista. Hutch. Prizes were given away by noted film star Sneha to felicitate the winners.DBA 1722 NOTES international airlines like British Airways. to provide members of their frequent flyer programmes with a host of special benefits. members will earn between 250 and 500 miles on their respective frequent flyer programme. Thenumber of miles earned varies as per the hotel they stay in. Tata Indicom. Lifestyle and Kaya Skin Clinic.5 million till 2006. The announcement coincided with honoring the loyal PCO operators for 2005-06. members of the frequent flyer programmes will also enjoy special discounts (including room discounts between 10 to 15 per cent on printed tariff) room upgrades and value add-ons whenever they stay at a Taj hotel. Hero Honda CD 100 and gold coins worth Rs 1. each time they stay at a participating Taj hotel. Maruti 800. This programme is aimed at building loyalty and trust among the existing Tata Indicom operators. but also for their parents. Likewise reliance India. Emirates and Sri Lankan Airways. 144 ANNA UNIVERSITY CHENNAI . It has tied up recently with two more airline frequent flyer programmes – Singapore Airlines’ Kris Flyer programme and Delta Airlines’ Sky Miles programme.’ the service provides tips for various ailments ranging from the common cold to obesity . The Smart PCO Loyalty Programme 2006-07 has been christened as ‘Smart PCOCricket Kudhukolam Loyalty Programme 2006-07’ where the operator who has a PCO with STD or CCB (coin collection box) connections is eligible for entry. Total number of subscribers 129. while appreciating and commending their commitment and performance. In India also now different board exam results are going to be declared by SMS and it makes the path smoother not only for students. Bajaj Pulsar.000 are the other prizes to be won by the Tata Indicom loyalists. all totally worth Rs 60 lakh. Whosoever achieved the minimum level of norms prescribed by the organisation has been assured of a prize with the highest performer winning an all-paid trip to the World Cup Cricket tournament in the Caribbean Islands in March 2007. IDEA.00. For starters.

effective way to reach a major cross-section of the country’s population. Mobile phones. among others. and also function as free platform tickets. the reward points earned on this card through other retail purchases can also be used to buy train tickets. the name and address files were matched. About 30 per cent of the totals of 10. From the database.in’. This card has some other benefits such as the waiver of membership fees of Shubhyatra and 1. conservative savers and profligate risk takers. Moreover.managed by Indian Railways Catering and Tourism Corporation (IRCTC). The organisation is offering regular train travellers reward points on train travel. Users of this service get their tickets at their door step without any hassle and earn reward points on their travel and use them to buy a ticket in those very segments. personal accident insurance of up to Rs 10 lakh. IRCTC has tied up with about 17 banks through which passengers can pay while booking their tickets through the internet. the files were cleaned and the data enhanced. flexi-payment options through equal monthly instalments. Natural customer segments and attributes such as time with bank and whether a single or multi-product holder were identified. The value of micromarketing was recently demonstrated by one financial institution.irctc. provided the tickets are booked through the Indian Railways’ Web site for internet booking . cross-sell propensity models and pre-approving applications. which would be executed through SBI Cards. called Shubhyatra and the co-branded SBI Railway Card. Airtel has joined with Enpocket.co. The Shubhyatra card can be used to acquire loyalty points for all bookings irrespective of the bank used for making payments. Loyalty in Indian Railway Department The Indian Railways is turning customer savvy. A 1994 study by showed that a 5 per cent increase in retention rate brought a 30 per cent increase in profits to a bank’s retail chain. The points are awarded for all categories of AC travel with the exception of AC III tier. Indian Railways has launched its first ever loyalty programme. and. Loyalty in banking industry The importance of maximising customer lifetime value is widely recognised. SMS etc. a global leader in intelligent mobile marketing. booking Railway tickets through various unconventional modes like.CONSUMER BEHAVIOUR Similarly.000 tickets sold every day through IRCTC on an average are in those AC categories that could earn reward points. Television contest and radio mirchi contest are addition to this telecom loyalty scheme. It pioneered the online rail ticket booking in India through its website ’www. Among other normal credit card benefits. a mail NOTES 145 ANNA UNIVERSITY CHENNAI . for instance. Customer clusters were then formed. the same increase in retention rate caused an 85 per cent increase in bank deposit profits and a 75 per cent increase in credit card profits.8 per cent surcharge on ticket bookings. to give advertisers a convenient. After considering recent behavioural patterns..

detailed programme design must be deeply rooted in a thorough analysis of consumer spending patterns and behaviours. what percentage of customers is buying only once? Twice? Three or more times? What percentage of revenue does each of these segments represent? 146 ANNA UNIVERSITY CHENNAI . HPCL. the market is in a very early stage of evolution.UTI. ICICI bank has tied up with Airtel for mobile money facility. While there has been a great deal of attention on loyalty technology and practices in recent times. ICICI Bank. Further. Retail chain also collaborate with banking card for example the loyalty card of Vishal mega mart with SBI card. Lifestyle and MakeMyTrip. To increase point accumulation pace further.30% Apart from the high-level corporate objectives. I-mint – India’s largest Coalition Loyalty I-mint is India’s first and truly national coalition loyalty and consumer rewards programme. Indian firms were either unaware. I-mint allow consumers to reap benefits through the largest ecosystem of business partners on a single rewards platform. The usual response rate of 2 per cent rose to 20 per cent. or unconvinced about the benefits and applicability of CRM. For example. where India’s leading brands Airtel. More specifically. The annual growth rate for the CRM Software market in India varies between 25. The programme offers opportunity to earn points from more than one partner on each transaction. Coalition loyalty programmes have been a success in other parts of the world. another exciting proposition of i-mint is its rewards catalogue. then the loyalty programme’s sole objective may be to drive the second purchase. City bank and Public banks go for up-selling and cross selling of their respective services for retention of existing customers. marketers should understand customer data along the following dimensions: By frequency: How often are customers making repeat purchases? In a 12 month period.DBA 1722 NOTES shot offering a loan was sent out.com have joined hands to be available over 20 cities and at 20. the number of loans booked was five times higher than usual and the company’s market share for that product grew by six per cent. The top Indian banks like ICICI .HDFC . if 90% of customers only make one purchase. customers can aggregate and transfer points within family members. in order to guide programme strategy. Indian Airlines. Shoppers and consumers will get an opportunity to avail over 300 exciting rewards from partners as well as from other merchants. across various categories and at all point levels. Standard Charted. ‘Shop while you earn’ is now possible with i-mint. These companies have taken into account all the needs and aspirations of an Indian consumer and have created a quality product to suit all lifestyles. SBI Card has a joint venture with GE money for becoming the second largest credit card player in the country by crossing 3 million card mark through innovative products. This analysis provides loyalty programme designers with a sense of which customer behaviours they will be able to and will want to influence.000 select i-mint outlets in first year of august 2006.

CONSUMER BEHAVIOUR By revenue: How concentrated is revenue in the top customer tier? What percentage of total revenue does the top 10% represent? The top 25%? By engagement: How do customers segment by non-transactional engagement activities. marketers have the critical data they need to design successful loyalty programmes. This. NOTES 147 ANNA UNIVERSITY CHENNAI . marketers should match their customer purchase frequency behaviour. Overall. the greater the frequency of customer purchases within a year the further out the programme threshold should be set. in effect. to the corresponding loyalty programme objective and design. such as posting reviews or to blogs or subscribing to a company newsletter? Which of these activities are indicative of higher member value (in terms of increased revenue and/or decreased costs)? Armed with analysis across these three dimensions. minimises the erosion of margin while allocating reward funds to drive customers toward higher total customer spend levels. Pick a Programme Based on Purchase Frequency Using the table below. ranging from low to high frequency.

DBA 1722 NOTES 4. The share – of –Wallet or of spending that each customer gives. Useful demographic information 148 ANNA UNIVERSITY CHENNAI . The demographic information vary from B2B to B2C in the following manner.31 HOW LOYALTY CAN BE IMPLEMENTED In order to implement the loyalty programme in an organisation. Demographic information. including: • • • • Purchase records and history Costs associated with servicing each customer. one needs to follow five steps listed below: Step 1: Observation This is the stage of accumulating all information possible about customers from many disparate sources.

At the same time it provides a convenient metric by which customers can be segmented for the next step. Step 3: Selection After using the inertial CLV the customers are differentiated into three customer types like the Desired Customers.CONSUMER BEHAVIOUR Step2: Calculating inertial CLV (Customer lifetime value) Determining contribution to profit from each customer (projected purchases minus anticipated costs of serving). reducing servicing costs and moving them to low. Improving financial condition of the company by increasing share.share Breakeven Customers. Breakeven Customers and costly Customers.share costly customer’s share of spending and by advancing them to high. The strategies followed in this stage are as:• Improving companies financial gains by reducing servicing cost for low-share – costly customers and moving them to the status of low-share break-even customers. Improving financial condition of the company by increasing the share of spending of low-share Desired Customers and evolving them into high-share Desired Customers. otherwise it may affect the bottom line. It is called as inertial CLV as the figure represents the current status.share Desired Customers. Divest the low-share Costly customers and low-share Breakeven Customers whose purchasing behaviour can not be improved. Improving financial condition of the company by controlling offers for lowshare Break-even customers. Improving financial condition of the company by increasing low. So there has to be good balance between these three categories of customers to maintain a good financial health of the organisation. The ratio of costly customer should not be more than 15% in the organisation. NOTES • • • • • • • • • • • • • 149 ANNA UNIVERSITY CHENNAI . Step 4: Prioritisation In this stage company should divide each of these three customer groups in to pairs like low share of spending and high share of spending and determine which customers to focus for developmental efforts after knowing their share of current spending.of – spending and controlling servicing cost of low-share Break-even customers and advancing them to high-share Desired Customers.

The definition of opinion leadership emphasises on informal influence. One can wonder. 4. price and convenience constitute value equity. the company that issued the card can offer rewards for repeated business: for instance. This way. who may be opinion seekers or merely opinion recipients. points can be rewarded for every Rs. So the loyalty card is used to track repeat transactions of a card holder. but still there are some leveraging tool which must be taken into consideration like Brand equity. relationship Equity and satisfaction. constitute brand equity.. its communications. the buyer is linked to the transaction at the swipe of his card. how “loyal” a customer is if he must be “bribed” for repeat business. its associations with community events etc. 100 spent. So what is a loyalty card? A loyalty card is a plastic card with a magnetic strip at the back. so the card issuer can reward him or her for the repeat business. When the buyer has collected enough points. Various types of loyalty programmes comprise relationship equity and satisfaction with the brand make up satisfaction – these are the leveraging tools.DBA 1722 NOTES Step 5: Leveraging In the above each strategy requires moving as many customers as possible from one status to another. Similarly perceptions about quality. or a small chip at the front of the card. value equity. however. Now every transaction of a buyer is known.. Attitudes of customers towards brand.32 SUMMARY • Opinion Leadership is the process by which one person (opinion leader) informally influences the actions or attitudes of others. The magnetic strip or chip contains information that is used to identify the buyer at every transaction. This informal flow of opinion related influence between two or more people is There are three situations in which opinion leadership takes place: (i) When an individual actively seeks advice from others (ii) When an individual voluntarily provides information to others and (iii) When information is generated in the course of normal interaction of a group There are three situations in which opinion leadership takes place (i) When an individual actively seeks advice from others (ii) When an individual voluntarily 150 ANNA UNIVERSITY CHENNAI • • . The company needs to find the deficits vis-a-vis its competitor to determine how to leverage each of the equity in its favour? What is a Loyalty Card? Many loyalty programmes utilise a so-called “Loyalty card”. these can be traded in for real gifts.

sales people. compatibility. Diffusion of innovations is the process by which acceptance of an innovation (new products or new service or new idea) is spread by communication (mass media. Adoption is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product. Early Majority.CONSUMER BEHAVIOUR provides information to others (iii) When information is generated in the course of normal interaction of a group • Opinion leaders are easier to define than to find. There are several techniques that are used to identify opinion leaders – self designating method. who can catch the attention of the entire segment. thought. or process that is viewed to be new by the consumer. Still more difficult in measuring their impact on the opinion seekers. Social System – the group of individuals that together complete a specific goal (adoption) and Time – how long it takes for the group to adopt an innovation as well as the rate of adoption for individual Various approaches which have been taken to define a new product or a new service include: Firm-oriented definitions (ii) Product oriented definitions (iii) Market oriented definitions (iv) Consumer oriented definitions The attributes of innovation are relative advantage. the circle of influence of opinion leaders is generally small compared to celebrity endorsers. socio-metric method. informal conversation) to members of the target market over a period of time There are four main elements to the diffusion of innovations. The rate of adoption is as shown below : NOTES • • • • • • • • 151 ANNA UNIVERSITY CHENNAI . trialability and (v) Observability / communicability There are five main categories of adopters. Communication – the process of the new idea traveling from one person to another or from one channel to the individual.” Diffusion is a macro process concerned with the spread of a new product an innovation from its source to the consuming public.Any item. key informant method and objective method. Late Majority and Laggards .. Moreover. Early Adopters. They are Innovators. They are: Innovation . complexity. Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system.

What are the characteristics of an opinion leader? 4. a reliance on a particular brand or company even though numerous satisfactory alternatives may exist. it can be distinguished into three specific levels of consumer decision making: Extensive Problem Solving ( EPS ). Howard-Sheth and Nicosia Dissonance is “a psychologically uncomfortable state” and post-purchase dissonance is the state of anxiety the consumer experience after making a purchase. It is important to note that in case the alternative being considered for purchase are perfect substitute for each other. The consumer decision making process is complex with varying degree. All purchase decisions do not require extensive effort. Kollat and Blackwell. some amount of post-purchase dissonance is unavoidable. mutual exchange. etc. Loyalty is. which may result in postponing or completely dropping the purchase A high level of post purchase dissonance can result if (i) it is difficult for the consumer to arrive at the purchase decision because of the importance of the decision and/or the number of alternatives available (ii) all the alternatives being considered are almost equally desirably by the consumer (iii) the decision cannot be undone. Distinguish between opinion leaders and opinion seekers] 3. emotional bonding.. fulfillment of promises. 5. all the alternatives are desirable. guarantee. i. the purchase does not entail any exchange. Explain Opinion leadership. in simpler terms. ethical practices. (iv) the product/brand is new I the market and /or belongs to a less known marketer. no post-purchase dissonance will occur after purchasing any one of such alternatives. However. consumers might experience strong negative emotions while making a choice. Blackwell and Miniard. On continuum of effort ranging from very high to very low. In case. personalisation and customer orientation have been reported to be the key elements in the relationship building process • • • • 4. Comprehensive models which include Engel. Give an account of the profile of opinion leaders. Trust.e. generally it is the result of difficult purchase decisions. Limited Problem Solving ( LPS ) and Routine Problem Solving ( RPS ) Types of consumer behaviour models are Simple models which include Black Box models Personal variable models and Personal Variable/Post Purchase Satisfaction model. Loyalty helps build relationships.33 REVIEW QUESTIONS Short Questions 1. ?Engel. in the absence of perfect substitutes.DBA 1722 NOTES • • The most important environment in which firms operate is their customer environment influences. Why is an opinion leader a more important source of product information than an advertisement for the same product? 152 ANNA UNIVERSITY CHENNAI . commitment. refund. It requires that companies view customers as people first and consumers second. 2.

Discuss the market strategies due to diffusion and innovation 13. 10. Illustrate your answer with suitable examples 10. Describe the various elements in the process of diffusion. 5. 11. Explain the various models of consumer decision making 6. 9. Justify the statement-”The evaluation of marketing concept from mere Selling concept to Consumer-oriented marketing has resulted in buyer behaviour becoming an independent discipline. Long Questions 1. 12. Mention the barriers to adoption and identify marketing strategies to overcome the same. Explain the different categories of adopters together with the rate of their adoption. Explain the nature of consumer behaviour 2. What is meant by consumer loyalty? 15. 7. What is a motive indicate the various roles it play in influencing Purchase behaviour? 4. Describe about the frequency and overlap of opinions in information flow. Mention the different types of innovations 7. Explain the influence of product characteristics on diffusion. Mention the need to analyse post purchase consumer behaviour from a marketer’s perspective NOTES 153 ANNA UNIVERSITY CHENNAI . How do opinion leadership does define the marketing strategy of a firm? 8. How can a consumer arrive at a decision? Explain various stages in it. Explain the various categories of adopters of products.” 3.CONSUMER BEHAVIOUR 6. 9. Explain the factors affecting innovation adoption 8. give examples of programmes designed to increase consumer loyalty. What do you mean by consumer dissonance? 14. Explain diffusion of innovations.

DBA 1722 NOTES 154 ANNA UNIVERSITY CHENNAI .

In the era of open markets buyer and seller came face to face. the personal relation between the buyer and the seller was one of the major factors in their relations. 1986 Understand Consumer rights and the methods of consumer protection Know the remedies available for an aggrieved consumer Understand consumer disputes redressal agencies Understand difficulties and challenges of predicting consumer behaviour Understand the concept of online consumer behviour Understand the concept of organisational and industrial buyer behavior 155 ANNA UNIVERSITY CHENNAI . But with the growth of trade and its globalization the rule no more holds true. Further on account of complex structure of the modern goods. 5. It was assumed that he would use all care and skill while entering into transaction.CONSUMER BEHAVIOUR UNIT V NOTES ADDITIONAL DIMENSIONS 5. it is only the producer / seller who can assure the quality of goods.2 LEARNING OBJECTIVES After reading this chapter you should be table to: • • • • • • • • • • Understand the concept of consumerism and its components Understand the concept of consumer protection Know the objectives of UN guidelines for Consumer Protection Understand the objectives of the Consumer Protection Act.1 OVERVIEW In the good olden days the principle of Caveat emptor’. In addition. The maxim relieved the seller of the obligation to make disclosure about the quality of the product. buyer thoroughly examined them and then purchased them. which meant buyer beware governed the relationship between seller and the buyer. It is now impossible for the buyer to examine the goods before hand and most of the transactions are concluded by correspondence. seller exhibited his goods.

has assumed greater importance and relevance. In present situation. competent leadership. He is doing us a favour by giving an opportunity to serve him. methods or standards of manufacturers. Mahatma Gandhi. testing facilities. protection against unsafe products. the father of nation. access to variety of goods at competitive prices.3 INTRODUCTION With manufacturing activity becoming more organized. Consumerism is all about protection of the interests of the consumers.DBA 1722 NOTES • • • • Understand the differences in organizational markets Understand the differences between consumer behaviour vs organisational buying Understand the concept of buy classes Understand the concept of buying centre 5. As a result buyer is being misled. attached great importance to what he described as the “poor consumer”. and adequate quasi-judicial machinery. We are not doing a favour to a consumer by giving him an opportunity. According to McMillan Dictionary (1985) “Consumerism is concerned with protecting consumers from all organisations with which there is exchanged relationship. He is not an interruption to our work. business. No one has told them about their rights . price. such regulation maybe institutional. price control mechanism. It is a social movement. consumer education etc. The providers of goods and services have been reluctant to give due consideration to consumer interest protection. It encompasses the set of activities of government. What consumerism lacks here is education and information resources. independent organisations and concerned consumers that are designed to protect the rights of consumers”. the producers / sellers are becoming stronger and organised whereas the buyers are still weak and unorganized. In the age of revolutionized information technology and with the emergence of e-commerce related innovations the consumers are further deprived to a great extent.to be informed about product quality. thanks to the sellers market and the government monopoly in most services. consumer protection. Consumerism is a recent and universal phenomenon. “Consumerism is a movement or policies aimed at regulating the products or services. statutory or embodied in a voluntary code occupied by a particular industry or it may result more indirectly from the influence of consumer organisations” 156 ANNA UNIVERSITY CHENNAI . The Chamber’s Dictionary (1993) defines Consumerism as the protection of the interests of the buyers of goods and services against defective or dangerous goods etc. duped and deceived day in and day out.” In spite of these views consumerism is still in its infancy in our country. though as old as consumer exploitation. Consumer awareness is low due to the apathy and lack of education among the masses. who according to him should be the principal beneficiary of the consumer movement. He said “A Consumer is the most important visitor on our premises. He is not dependent on us we are on him. sellers and advertisers in the interest of buyers. he is the purpose of it.

The success of consumerism lies in the realisation of the business that there is no substitute for voluntary self-regulations. The transition will be from a predominantly “sellers market” to a “buyers market” where the choice exercised by the consumer will be influenced by the level of consumer awareness achieved. First and foremost is self-protection by consumers. Consumers’ satisfaction will benefit not only business but government and society as well. Little attention from the business will not only serve consumers interest but will also benefit them. government and civil society to enhance consumers’ satisfaction and social welfare which will in turn benefit all of them and finally make the society a better place to live in. in-fact a social movement seeking to protect the rights of consumers in relation to the producers of goods and providers of services. Some businesses in India have come together to adopt a code of conduct for regulating their own activities. moral and economic pressure on producers and providers in some of the developed countries. raise voice against exploitation and seek redressal of his grievances. legal. Consumer is the focal point of any business. So consumerism should not be considered as consumers’ war against business. thanks to the economic reforms ushered in and the several agreements signed under the World Trade Organisation. Regulation of business through legislation is one of the important means of protecting the consumers. 5. In-fact consumerism today is an all-pervasive term meaning nothing more than people’s search for getting better value for their money. Consumers’ consciousness determines the effectiveness of consumerism. Consumerism” is likely to dominate the Indian market.CONSUMER BEHAVIOUR As commonly understood consumerism refers to wide range of activities of government business and independent organisations designed to protect rights of the consumers. It is the duty of the consumer to identify his rights and to protect them. business. The players 157 NOTES ANNA UNIVERSITY CHENNAI . Consumerism is a process through which the consumers seek redress. This objective can be achieved in a reasonable time frame only when all concerned act together and play their role. Consumerism has over the time developed into a sound force designed to aid and protect the consumer by exerting. Voluntary Consumer Organisations engaged in organising consumers and encouraging them to safeguard their interests is another important element of consumer movement.4 COMPONENTS OF CONSUMERISM There are various components of consumerism. It is a collective consciousness on the part of consumers. Consumer Protection By “consumerism” we mean the process of realising the rights of the consumer as envisaged in the Consumer Protection Act (1986) and ensuring right standards for the goods and services for which one makes a payment. restitution and remedy for their dissatisfaction and frustration with the help of their all organised or unorganised efforts and activities. It is. Consumer must be aware of his rights.

the law-makers and those in charge of implementation of the laws and rules. It is heartening to note that the regulatory bodies like the Telecom Regulatory Authority of India (TRAI) have given importance to the interests of consumers and this has been publicly declared as one of the main objectives. the consumer courts. the regulatory authorities for goods and services in a competitive economy. The next millennium will witness a high degree of consumer awareness and the concepts of “comparative costs”. illegal and unilateral declaration has to be viewed in the light of the practice in developed countries where the seller declares. will not come under the Act. For such cases the government has developed the concept of “Citizen’s Charter”. The question to be considered is what can the Government do to improve the position? The Government wears three hats to deal with cases of three different categories. Statistics relating to Kerala and Bihar will justify this. the Standing Committee of Parliament on Health said Government hospitals should be brought under the purview of the Consumer Court. The second area is where the services/ utilities are provided and charged either by the government department or the agencies under its control. However. The first one is dealing with the ministries and departments of government. the purpose will not be achieved. An analysis of the data from the consumer courts in different States shows that there is a direct relationship between literacy and consumer awareness.slowly but steadily . industry and service providers. This unethical. organisations representing trade. At present. The general reaction of the consumer to this is: what happens if what is stated in the Citizen Charter is not adhered to? Unless and until this is clarified. “In case you are not fully satisfied with our product. All government departments dealing with the public are to publish a “Citizen’s Charter” clearly indicating the services offered and the procedure to be followed. you can bring the same to us within a month for either replacement or return of your money. we had pointed out the latest ruling of the Supreme Court which lays down that the Consumer Protection Act will apply only when the consumer pays for the goods and services and on this count the government hospital. “consumer preference/ resistance/ abstinence” and “consumer choice” will become vital aspects of the economy. the responsibility fixed and those held accountable are dealt with.and the momentum has increased considerably since the establishment of consumer courts and due to the efforts of a number of consumer organisations and the media. Recently. things are changing . To this. This programme is in its incipient stage and has a long way to go to achieve the desired levels of consumer satisfaction.DBA 1722 NOTES are the consumers represented by different voluntary non-government consumer organisations. where the services are not charged on the consumer. the government.” This will clearly indicate the level of consumer consciousness. All the information has to be made available in a single window. 158 ANNA UNIVERSITY CHENNAI . a number of regulatory authorities have been constituted and the country is entering a new regime of “regulatory economies” in the services sector.

where all concerned are agreeable. the case of exploitation of consumers is increasing. The consumer has to be aware of his rights and play a key role. It is not to be construed that the entire business sector is keen on exploiting the consumers. when it was felt that the quality of bottled water purchased by the consumer has to be ensured by fixing standards. We must find a way out to save the consumers from the unscrupulous functioning of Non-banking finance companies. encourage consumer education. These are established business firms which really care for consumer satisfaction. training and research and administer the infrastructural need of the consumer courts . Voluntary bodies like the Fair Business Practices Forum are functioning effectively and are quick in removing the grievances of the consumers. transport and water supply. The process of getting statutory notification in the interest of the consumer in this case. This method is working in the case of bottled water. It is not easy to get adequate budget allocations for obvious reasons. Similarly in the area of “investor protection” in spite of several steps taken by the regulatory authorities such as the Reserve Bank of India and the Securities and Exchange Board of India. The third category is the protection of consumers from the private sector dealing with goods and services. the consumers today are going through a number of problems not knowing how to get their grievances redressed. The number of cases relating to these sectors is increasing in the consumer courts. their own reputation and goodwill. For example. that water is not “food” as per the provisions in the Food Adulteration Act. it came out that even though it is necessary and desirable. under the existing laws it cannot be done. The success of “consumerism” is a strong function of consumer awareness and the assistance the movement 159 NOTES ANNA UNIVERSITY CHENNAI . It is gratifying to note that action has been initiated in this direction and there is every reason to hope that the future will be better. power. The best way appears to be to work out methods by which the Central Consumer Welfare Fund is augmented and a similar fund is set up at State level also. These can go a long way in reducing the number of cases in the consumer courts. government and the consumer organisations.then it should have enough funds. It must be possible for the government to take steps to see that the areas of grievances are identified and remedial steps taken through proper systematisation of procedure and working style. In such a situation the only answer is to prevail upon the manufacturers to go for voluntary ISI (Indian Standards Institution) certification. If the Government is to take a pro-active role in increasing consumer awareness. is likely to take 12 to 18 months.CONSUMER BEHAVIOUR In the field of telecom. This is an area of grave concern and requires concerted action by the regulators. There are a number of areas where the procedure has to be made simple and consumer-friendly. The Ministry of Law pointed out and rightly so. thanks to the cooperation of producers and the clear preference expressed by the active consumer groups.

N. guidelines for consumer protection are meant to achieve the following objectives: a) To assist countries in achieving or maintaining adequate protection for their population as consumers. encouragement from the developed countries and the pro-active role played by the Government.N. A recent survey has revealed that a number of consumers in the urban as well as rural areas are not very much aware of the consumer movement and the rights of the consumers. recognition. 1962. It is interesting to note that in spite of U. f) To further international cooperation in the field of consumer protection.S. information. A sub-continent like India with regional imbalances and diversity of languages requires not one but several Ralph Nadars. President John F. every consumer in his own interest has to realise his role and importance in the right perspective. b) To facilitate production and distribution patterns responsive to the needs and desires of consumers. guidelines and the Consumer Protection Act. It is very often stated “Customer is sovereign 160 ANNA UNIVERSITY CHENNAI . It is in this context that it is considered relevant to quote the objectives adopted by the General Assembly of United Nations in 1985.DBA 1722 NOTES gets from the government. However this annual ritual observation does not appear to have produced the desired results. In a competitive economic environment the consumer has to exercise his choice either in favour of or against the goods and services. It will be useful if voluntary consumer organisations take up this role and make way for the realisation of the objectives of the U. Each citizen in a democracy derives his power at the time of elections and exercises it through the ballot. the consumer in India still does not get his due. In the next millennium. He should realise his importance and prepare himself to exercise his rights with responsibility. declaring four basic consumer rights (choice. e) To facilitate the development of independent consumer groups. The U. Even the great Hanuman required someone older and wiser to remind him of his potential strength. His choice is going to be vital and final. It is time that he wakes up and realises his rights. safety and the right to be heard). d) To assist countries in curbing abusive business practices by all enterprises at the national and international levels which adversely affect consumers.N. Kennedy in the historic declaration in Congress on March 15. c) To encourage high levels of ethical conduct for those engaged in the production and distribution of goods and services to consumers. The consumer movement got a boost and moral support from the late U. g) To encourage the development of market conditions which provide consumers with greater choice at lower prices. March 15 every year is celebrated as World Consumer Rights Day. Subsequently.

How the act was enacted? The act was passed in Lok Sabha on 9th December. transport.1986 and Rajya Sabha on 10th December. In order to protect the consumers from exploitation and to save them from adulterated and substandard goods and deficient services the Consumer Protection Act came into force on 15th April. Similarly the consumers in society get a position in the market depending upon what they do or do not do. entertainment have been made available to the consumers. The main object of these bodies is to provide speedy and simple redressal to consumer disputes. housing construction. After all the dictum in democracy is. 1986 and it applies to the whole of India except the State of Jammu and Kashmir. It is agreed on all hands that “consumer empowerment” in India has a long way to go. financing. insurance. 1986 and was published in the Gazette of India on 26th December. of specific nature and also to impose penalties for non compliance of the orders given by such bodies. Objective of the Act The Consumer Protection Act 1986 is a social welfare legislation which was enacted as a result of widespread consumer protection movement. These quasi judicial bodies have to observe the principles of natural justice and have been empowered to give reliefs.5 THE CONSUMER PROTECTION ACT 1986 An act to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of consumer councils and other authorities for the settlement of consumer disputes and for matters connected therewith. NOTES 161 ANNA UNIVERSITY CHENNAI .CONSUMER BEHAVIOUR and consumer is the King. why do we have the Consumer Protection Act? Why is there a need for protecting the King? Should it not be rightly called “Consumer Sovereignty Act”? It is for the consumers to decide. the citizens get a government they deserve. 1986. 5. The main object of the legislature in the enactment of this act is to provide for the better protection of the interests of the consumer and to make provisions for establishment of consumer councils and other authorities for settlement of consumer disputes and matter therewith connected. state and central levels. It is one of the benevolent pieces of legislation intended to protect the consumers at large from exploitation. In order to promote and protect the rights and interests of consumers. 1986 and assented by the President of India on 24th December.” If that is really so. Industrial development in the field of manufactured goods has led to the influx of various consumer goods into the Indian market to cater to the needs of the consumers and a variety of services such as banking. quasi judicial machinery is sought to be set up at district.

District Consumer Disputes Redressal Forums At the lowest level are the District Forums and these are established in each District and have jurisdiction to entertain complaints where the value of goods or services and the 162 ANNA UNIVERSITY CHENNAI .Consumer courts as per value / area of claim. The Consumer courts are 3 tiered. Payment of compensation for any loss or injury suffered by the consumer. to the ‘State Commission’ between Rs . consumer activists. Invariably. and third at national level known as ‘National Commission’. and not to repeat it. Return of price paid by the consumer. adulteration. However. the government has attempted to safeguard consumer’s interests through legislations and the CPA 1986 is considered as the most progressive statute for consumer protection. if any. Discontinue the restrictive. Interestingly. consumer awareness through consumer education and actions by the government. 1. Procedural simplicity and speedy and inexpensive redressal of consumer grievances as contained in the CPA are really unique and have few parallels in the world. consumers are a vulnerable lot for exploitation. 20 lakhs and Rs. 100 lakhs. there is provision for appeals against the orders of a particular redressal forum by the aggrieved party before the next higher echelon and even from the findings of the National Commission before the Supreme Court. black marketing. and to the National Commission for more than Rs. airlines. A complaint is to be made to the district forum of the concerned district where the value of goods and services and compensation. 100 lakhs. Replacement of defective goods with new goods of similar description which shall be free from any defect. Instances like overcharging. water supply. lack of proper services in trains. Jurisdiction . 20 lakhs. or unfair trade practice. more so in a developing country with the prevalence of mass poverty and illiteracy. The Consumer Production Act provides for a three tier system of redressal agencies: one at district level known as District Forum. Provide for adequate cost to the aggrieved party. etc are not uncommon here.where to file complaint . and associations are needed the most to make consumer protection movement a success in the country. second at state level known as ‘State Commission’.DBA 1722 NOTES The Act provides following remedies to an aggrieved consumer: • • • • • • • Removal of defects in goods or deficiency in service. profiteering. Implementation of the Act reveals that interests of consumers are better protected than ever before. Withdraw the hazardous goods from being offered for sale and not to offer them for sale. is up to Rs. telecommunication. India too is no exception to it. From time to time.

It also makes provisions for appointment of Chairman & other official and non-official members of the said council. Any person aggrieved by the order of the National Commission can resort to the Supreme Court as the last remedy. It also lays down the objects of the said councils.20.5.00.000 (ONE CRORE). Any person aggrieved by an order of the District forum may appeal to the State commission & an order of the State commission can be challenged before the National Commission. MAHARASTRA AND KARNATAKA 2. Consumer Protection Council & District Consumer Protection Council respectively. 26 and 27. 18-A. State commission & National commission. National Consumer Disputes Redressal Commission The National Consumer Disputes Redressal Commission has jurisdiction to entertain complaints where the value of the goods or services and compensation if any claimed exceeds Rs. The State Government is authorized by the Act to establish by notification. Where the cause of action arises. claimed does not exceed Rs. NOTES 163 ANNA UNIVERSITY CHENNAI . ADDRESSES: STATEWISE 3.00. Consumer Disputes Redressal Agencies This part of the Act contains 22 sections i.6. It also makes provisions regarding the composition. 00.e. Carries on his business or works for gain or c. claimed exceeds Rs.1. 00. Sections 9 to18.000 (TWENTY LAKHS). State & District levels to be known as “Central Consumer Protection Council”.7 & 8 of the Act makes provision for the establishment of Consumer Protection Councils. “State Commission” and “National Commission”.20. This part provides for establishment of consumer disputes redressal forum at district level. procedure to be followed by the District forum. The opposite party resides or b. 25. councils at the Central.CONSUMER BEHAVIOUR compensation if any. 24-.00. Consumer Protection Councils Sections 4. and a complaint can be filed in a District Forum within the local limits of which a.000 (ONE CRORE). ADDRESSES: DELHI. state level and central levels known as “District Forum”.000 (TWENTY LAKHS) but does not exceed Rs.00. 24-A. jurisdiction. 19 to 23. State Consumer Disputes Redressal Commission The State Consumer Disputes Redress Commission is established in each state and these have jurisdiction to entertain complaints where the value of goods or services and the compensation if any.1.

But. He is not an interruption to our work. 5. of late. purity.. Mahatma Gandhi said. the forums have the power to condone the delay in preferring appeals within such time limit if sufficient cause is shown for not filing the appeal within the prescribed time limit. misleading advertisements. Consumers need protection due to the following reasons: 1. price and standards of goods. Right to Choose: The right to be assured access to a variety of products at competitive prices.DBA 1722 NOTES It also provides for a limitation period for preferring appeals to the State Commission. unfortunately cheating by way of overcharging. Right to Education: The right to be educated about rights of a consumer.e. quantity. Right to Information: The right to be informed about the quality. 164 ANNA UNIVERSITY CHENNAI . 2. State Commission and National Commission and penalties to be levied under the Act. In this context. the economy virtually collapses. we are on him. They do not understand their rights. Illiteracy and Ignorance: Consumers in India are mostly illiterate and ignorant.6 CONSUMER RIGHTS 1.7 PROTECTION OF CONSUMER RIGHTS Consumer protection means safeguarding the rights and interests of consumers. freedom of choice. It includes all the measures aimed at protecting the rights and interests of consumers. without any pressure to impose a sale. However. Right to Safety: The right to be protected against goods which are hazardous to life and property. he is the purpose of it. National Commission and Supreme Court. it is the duty of the government to confer some rights on consumers to safeguard their interests. 4. 5. black marketing. It also makes provisions regarding enforcement of the orders of the District forum. 5. 3. 6. He is doing us a favour by giving us opportunity to serve him. etc has become the common practice of greedy sellers and manufacturers to make unreasonable profits. We are not doing a favour to a consumer by giving him an opportunity. Right to Seek Redressal: The right to get relief against unfair trade practice or exploitation. What is “sufficient cause” will depend on the facts and circumstances of every particular case. “A consumer is the most important visitor on our premises. A system is required to protect them from unscrupulous businessmen. He is not dependent on us. Right to be Heard: The right to be heard and assured that consumer interests will receive due consideration at appropriate forums. District forum. Consumers play a vital role in the economic system of a nation because in the absence of effective demand that emanates from them. State Commission or National Commission shall not entertain any appeal filed after expiry of 2 years from the date on which the cause of action has arisen. i.

sell only when they meet the needs of consumers. He should educate himself and know his rights. It is very difficult for an ordinary consumer to distinguish between a genuine product and its imitation. 6.8 METHODS OF CONSUMER PROTECTION There are four main methods of protecting the interests of consumers: 1. If business does not protect consumers’ interests. inferior and substandard goods and poor service. safety and utility of products. 8. Goods will. 2. 5. 7. 5. He should not allow unscrupulous businessmen to cheat him. Spurious Goods: There is increasing supply of duplicate products. NOTES 165 ANNA UNIVERSITY CHENNAI . Government intervention and regulatory measures will grow to curb unfair trade practices. A mechanism is needed to prevent misleading advertisements. Malpractices of Businessmen: Fraudulent. In the long run. Deceptive Advertising: Some businessmen give misleading information about quality. 3. Certain measures are required to protect the consumers against such malpractices. Trusteeship: Businessmen are trustees of the society’s wealth. unethical and monopolistic trade practices on the part of businessmen lead to exploitation of consumers. Consumers are misled by false advertisement and do not know the real quality of advertised goods. Trade associations and chambers of commerce can check unfair trade practices used by some businessmen. Therefore. 4. Consumers often get defective. They are at the mercy of businessmen. Freedom of Enterprise: Businessmen must ensure satisfaction of consumers. Consumers’Associations: Consumers should form voluntary associations. Business Self-regulation: The business community itself can help in achieving consumer protection and satisfaction through self -discipline. producers and traders are organized and powerful. They can take organized action and put pressure on businessmen to adopt fair trade practices. On the other hand. Businessmen can regulate their own behaviour and actions by adopting higher ethical standards. It is necessary to protect consumers from such exploitation by ensuring compliance with prescribed norms of quality and safety. Unorganised Consumers: In India consumers are widely dispersed and are not united. These associations can educate and awaken consumers. in the long run.CONSUMER BEHAVIOUR 2. Legitimacy for Existence: Business exists to satisfy the needs and desires of consumers. 3. Goods are produced with the purpose of selling them. they should use this wealth for the benefit of people. Consumer Self-help: Every consumer must be alert as self-help is the best help. survival and growth of business is not possible without the support and goodwill of consumers.

DBA 1722 NOTES 4. 166 ANNA UNIVERSITY CHENNAI . How they buy? When and where they buy? Why they buy? How they respond to marketing stimuli. Consumer behavior is the procedure throughout the final purchaser makes buy assessments.9 DIFFICULTIES AND CHALLENGES OF PREDICTING CONSUMER BEHAVIOUR Basic objective of the studying consumer behavior is that the firm needs to know who buys their product. 1954 which aims to check adulteration in food items and eatables. The Prevention of Food Adulteration Act. Government Regulations: The State can ensure consumer protection through legislative. The Standards of Weights and Measures Act. 1976 which seeks to ensure safety and quality in the manufacture of electrical appliances. Those actions directly involved in obtaining. Because they study consumer behavior what is Consumer Behavior about? How. and implement marketing strategies to satisfy the customers. services. 1955 which aims to regulate and control the production. use. purchase. or dispose of products. including the decision processes that precede and follow those actions. The Household Electrical Appliances (Quality Control) Order. Government of India has enacted several laws to protect the interests and rights of consumers. What is Disposable income and what is Discretionary income what is the stage of family life cycle stage because these all these factors influence the consumer behaviors which are very important to the marketers. 1996). The laws enacted by the Government must be strictly enforced by the executive. consuming and disposing of products and services. thus the economic viability of the firm. which are to be known to the companies so that they can design. Consumers determine the sales and profits of a firm by their purchase decisions. 1956 which aims at ensuring that consumers get the right weight and measurement in products. 1986 which seeks to provide speedy and inexpensive redressal to the grievances of consumers. why. 5. Consumer behavior examines mental and emotional processes in addition to the physical activities. or experiences to satisfy needs and desires (Solomon. The Consumer Protection Act. 1940 which seeks to ensure purity and quality in drugs and cosmetics. ideas. supply and distribution and prices of essential commodities. The Drugs and Cosmetics Act. Some of these laws are as follows: • • • • • • The Essential Commodities Act. where and when consumers make purchase decisions? Considers who influences the decisions? What is Consumer Behavior about? All these are important questions. This can be defined as Consumer Behavior Defined as of the processes involved when individuals or groups select. executive and judicial actions.

or aggressive marketing of easy credit. or garbage piling up at landfills) this is also an area of interest.. feel. In order to be profitable. Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome. may have serious repercussions for the national health and economy. it brings up some useful points: • Behavior occurs either for the individual.. and dispose of products. experiences. media). then hold and in the end maintain its clientele. NOTES One “official” definition of consumer behavior is “The study of individuals.” Although it is not necessary to memorize this definition.10 ONLINE CONSUMER BEHVIOUR Every business has one thing in common i. groups.g. services. The psychology of how the consumer is influenced by his or her environment (e. motor oil being sent into sewage systems to save the recycling fee. brands..g. For example. friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use). The impact of consumer behavior on society is also of relevance. culture. Customer support service is the 167 ANNA UNIVERSITY CHENNAI . and How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. secure. or in the context of a group (e. family. signs. Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. and select between different alternatives (e. • • • However it should be remembered that doing the above is difficulty given the fact that many psychological factors are at play and no two individuals think and act in the same way. aggressive marketing of high fat foods.g. it depends on “customers” to be successful. The behavior of consumers while shopping or making other marketing decisions. How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer. Since many environmental problems result from product disposal (e. use. or ideas to satisfy needs and the impacts that these processes have on the consumer and society. Product use is often of great interest to the marketer. reason.g. Consumer behavior involves services and ideas as well as tangible products. businesses need to first attract.e. or organizations and the processes they use to select. 5. Customers make or break some business.CONSUMER BEHAVIOUR The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how • • • • • • The psychology of how consumers think. products).. because this may influence how a product is best positioned or how we can encourage increased consumption.

concerns or comments in detail. most convenient and a must for any online business regardless of its nature.DBA 1722 NOTES department which looks into these all important tasks of making sure that your customers do not go elsewhere. You provide them with your e-mail address so they can write their complaints. Staff should be fully capable of managing angry customers because the word of mouth spreads faster in cyber world. Telephone Helpline Large businesses all over the world depend on telephone help lines as their primary source to provide 24 hours support to their customers. click on the live chat icon and a new chat window will open. which will be replied by the business representative accordingly. One area which becomes crucial in online business is Customer Support Service. Live Chat More and more businesses are now providing “Live Chat” option for their customers. One can fill your website with as many details. you can choose all three or any of them. Customers are not required to log into some specific messenger or anything like that. where they can type their message. They don’t need to wait for business hours and it gives the business and the customers. this can be very effective if you are able to afford such service. Customer Support in Online Business: The basic principles remain the same in both online and offline businesses but priorities do change. FAQs. Also this is the most express response your customer can get from you. This method is a little bit costly and not really necessary for small businesses. 168 ANNA UNIVERSITY CHENNAI . and still the customers will be willing to communicate with the company representative before they make some purchase. descriptions. a chance to explain their position in a detailed manner. Mostly three types of supports are used for online consumers. specifications and instructions as you want. However. Not to mention its importance in dealing with the after sale queries. • • • Email Support Live Chat Telephone Helpline E-mail Support The most widely used. There are many free services available at internet to facilitate you in providing this feature to your customers. All they need to do is.

etc. organizational factors. group factors. A firm purchases goods under three situations. A buying center involves people from across the departments of the firm to make the buying decisions for the firm. Managements have realized that a good procurement department helps in the growth of the company and increases the profits considerably. then the contract is awarded to the vendors.11 ORGANISATIONAL AND INDUSTRIAL BUYER BEHAVIOUR Procurement is a function that is gaining in importance.CONSUMER BEHAVIOUR 5. then the buying process continues with the search for vendors followed by qualifying them. the buyer takes a ‘make or buy decision’. Vendor rating is performed to appraise vendors from time to time with respect to the products supplied and services rendered. The vendors are also regularly monitored for their performance. The second situation is straight re-buy. The vendors are then requested to send in their proposals and quotations relating to the purchase requirement. The procurement function has both task-oriented objectives and nontask objectives. Value analysis is used in the firm to assess the value of the product to be purchased and consequently to take ‘make or buy’ decisions. Payment and delivery terms are finalized and an order routine is mutually agreed upon. Vendor evaluation helps in choosing the right vendor. delivery. The buying center is influenced by the individual and group factors. And the last situation is modified re-buy. NOTES 169 ANNA UNIVERSITY CHENNAI . the firm buys a totally new product or an existing product for the first time. This involves extensive information and supplier search. quality. There are different factors that influence organizational buying behavior such as environmental factors. It helps the firm to reduce unnecessary costs in the purchase of the product or materials. In a new task. Hence the decisions taken by the buying center will bear these influences. and individual factors. Here the firm purchases the same material from the same supplier without any alterations in the contract. While evaluating the quotations. it is done on the parameters of price. If the decision is to buy. At this point. If a particular vendor’s quotations are up to the buyer’s expectations. The buying decision process starts with identifying the buying needs. It involves modifications in the form of change in supplier. and is usually governed by a clearly articulated purchase policy. the buyer may revisit the ‘make or buy decision’ if the vendor quotations do not meet requirements. and service. followed by identifying the product characteristics. change in terms of the contract.

it had to be distributed at the times and in the quantities that the buyer needed. The part had to be designed such that it met the needs of the buyer. Final (or ultimate) consumers normally purchase for: Personal. There are 170 ANNA UNIVERSITY CHENNAI . or Household use Industrial/organizational markets Let us now look at the various participants and types of players in the Industrial markets: • Producer • • • • • • • • • • • • • • • Manufacturers Service producers Wholesalers Retailers Federal State County Local Charitable Educational Community Other non-business Reseller Government Institutional Let us take the example of a telephone. Each one of those component parts had to be sold to the telephone manufacturer. think about the hundreds of components that are used in producing it. Usage in operating the organization.DBA 1722 NOTES What do organizations purchase for? Organizational consumers purchase for: • • • • • • Further production. Family. it had to be promoted in a way to make the buyer aware that it was available. and all of this had to be done in such a way that the part could be produced and delivered at a competitive price. and/or Resale to other consumers Whereas.

Government & its enterprises etc) Households Government Family of business and industrial users Exporters NOTES 5. etc. ordering slightly less than what they actually believe 171 ANNA UNIVERSITY CHENNAI • . then so too will be the demand for washing machine motors and for the bearings that are used in them. How is it that this manufacturer makes buying decisions that are similar in nature to household buyers? How is it that this manufacturer makes buying decisions that are different in nature from those of household buyers? 5. and demand for washing machines is down. wires. and such that are marketed before the telephone is itself finally produced. then the demand for your products (bushings) is derived from final consumer demand for washing machines. screws. Household purchasers almost always purchase finished goods for personal consumption. Wholesalers. printer and photocopier paper. raw materials. paints. It must purchase computers. they might be conservative in placing new orders with wholesalers. marketed. and semi-finished goods. Demand is derived from that of final consumers. there will probably not be a one to one correspondence between these. glues. in seeing their orders decline. consumers purchase products for personal consumption. or final. If the economy is poor. might also be conservative in placing orders to manufacturers. Multiplier effect / accelerator principle: However. Purchase equipment. services to mow the lawn.CONSUMER BEHAVIOUR hundreds of parts. If you own a machine shop that makes bushings that are used in washing machine motors.12 PARTICIPANTS IN INDUSTRIAL MARKETING Extractive Industries Manufacturing Industries Consuming and user industries or units Mining and Construction Forestry Agriculture Fisheries Farming Manufacturer selling to other manufacturers (includes importers middlemen. or resale. If retailers find that demand for washing machines is declining. Household. operations.13 DIFFERENCES IN ORGANIZATIONAL MARKETS We know that Organizational markets are different in nature from household consumer markets. desks and chairs. This manufacturer must also purchase supplies that are not part of the product but are used in running the manufacturing operation. Let us see how they are different! • • • Use goods for further production. perhaps ordering slightly less than what they actually believe demand to be. and sold to a final household consumer.

5. The ideals of a cozy. An organizational purchaser is more likely to set specifications regarding processor speed. and the motor manufacturers might conservatively order slightly fewer bushings than they actually expect to need. Often lease equipment and space. purchasing agents are specialists are professional specialists at finding what their employer needs. memory. For example. even if a second supplier has higher prices for otherwise similar terms and conditions. either up or down. however. than the changes in demand at the final consumer end of the supply chain.14 DIFFERENCES IN ORGANIZATIONAL TRANSACTIONS • Buying specialists are often used. A household purchaser might select a particular model of desktop computer for no other reason than it has a pleasing color. seeing their orders decline. you might be using a desktop computer at work. services. hard drive size. the decision to buy might have been made by your department manager. often requires selling to several entities within the buying center. Competition in organizational markets comes not only from suppliers of similar goods and services. • Can make items themselves. then it can choose to make those products itself. trusting relationship that has been promised with strategic alliances in the popular business literature does not always work if it leaves one party vulnerable as a sole supplier or buyer. This makes organizational markets. Demand for your bushings might experience wider swings. but the decision as to what specifications were needed might have been set by someone in the computer department. you would probably prefer to own your own car. or delivery. bids taken by someone in the purchasing department. It is often desirable to have a long-term relationship with more than one supplier. and wealth. and home. any negative stereotypes of salesperson behavior probably would not be appropriate in dealing with professional buyers. and such before taking bids on price. Whatever stereotypes you might have from experiences with salespeople in consumer sales.DBA 1722 NOTES demand to be. Often use multiple buying responsibilities. very volatile. If problems in quality or delivery are experienced with a supplier. status. These are things that represent personal expression. might order slightly fewer motors. especially if you produce some of the small parts at the beginning of the supply chain. Your objectives as a business 172 ANNA UNIVERSITY CHENNAI • • • • . furniture. and the final authorization made by the company president. It is usually seen that organizations often employ people who are professional purchasing agents. production can still be maintained if the second supplier can be used to replace the first. A household purchaser is often the sole decision maker. Just as sales agents are professional specialists at finding organizations that need the products that their employer produces. Making a sale to an organization. but can come from supplier’s goods. As a household consumer. Often use multiple suppliers. Manufacturers. More likely to require exact specifications.

Closer examination of the evidence. raw materials. There are other contrasts. Household consumers (especially those of us in urban settings) are more likely to accept as final a price that is placed on a product in a retail setting or to accept a price that is given to us by a service provider. This can often necessitate a completely different sales approach. You might prefer to lease public warehouse space to provide the flexibility to change locations when the market demands. however.e. and price. etc. As a business manager. some authors argue that buying goods on behalf of one’s employers makes buyers more caution and rational than when purchasing consumer goods privately. however. the setting is within the firm. So. suggests the differences are almost exclusively related to price and very small anyway. factors not relevant in consumer marketing. but they are by no means always universal .15 CONSUMER BEHAVIOUR VS ORGANISATIONAL BUYING In contrast to consumers.a single employee feeling poorly motivated towards his/her job on one day. say. and transportation 173 ANNA UNIVERSITY CHENNAI . however. more knowledgeable than the average consumer purchaser. personal consumption versus business usage. levels of authority. NOTES 5. organisational buyers represent those “buying goods and services on behalf of an organisation for the purpose of the furtherance of organisational objectives”. may well be far less cautious than on other days when all is well in the workplace! The most obvious difference between consumer and organisational buying is that the underlying motivation is different. the organisational purchaser will be a trained professional. Technical/Commercial Knowledge: Usually. for example. are very different. however:Setting for Buying: For consumers. Contact with Buyers/Distribution Channels: Organisational markets are usually more geographically concentrated than consumer markets. Factors such as proximity to available labour. the buying unit is within the household. it is important to caution against over stressing the differences. • More frequently employ competitive bidding and negotiation. be aware that there can be differences. Before highlighting some of the differences between the two. delivery. and so on. whereas for the organisational buyer. your employer is more likely to require that you accept. to lease trucks so that you can leave the problems of maintenance and disposition to someone else. i. For instance. three bids for a service or to negotiate various terms and conditions associated with product specifications.CONSUMER BEHAVIOUR manager. This means that the industrial marketer targeting the organisational buyer must take account of factors such as buying procedures.

Both companies want to sell to each other. A software company producing a package for an insurance company. the greater the need for information and the larger the number of participants in the buying centre. there can be far fewer potential customers. The greater the cost or perceived risks related to the purchase. terms or suppliers as when managers of the company believe that such a change will enhance quality or reduce cost. 174 ANNA UNIVERSITY CHENNAI .16 BUY CLASSES 1. etc. Reciprocal Demand: Sometimes. Modified Rebuy The buyer wants to replace a product the organisation uses.e.DBA 1722 NOTES facilities often dictate an industry’s location. 5. with a knock-on effect throughout the buying chain as each chain member adjusts it’s buying patterns accordingly. affecting each other’s eventual buying decisions to a varying degree. Usually industrial buying is seen not as single events. 2. but as organisational decisionmaking processes where multiple individuals decide on a purchase. a couple. New Tasks The first-time buyer seeks a wide variety of information to explore alternative purchasing solutions to his organisational problem. This can mean differences in both the number of people marketing communications must attempt to convince and that quite different decisions might emerge as a result of group dynamics than might initially be anticipated on the basis of individual discussions. compared to consumer markets. In organisational buying. a great many people can be involved in the purchasing process. a family. Derived Demand: Organisational buyers often continually adjust their buying decisions on the basis of projected sales figures. i. prices. the number of people involved in the decision-making process can be very small. these variables mean that the industrial marketer must normally maintain far more direct and personal contact with his or her potential clients. an individual. The result can be a sort of “pendulum effect”. Taken together. Their framework consists of a matrix of buy classes and buy phases. buying more units when forecast sales are higher. for instance. however. In addition. might also purchase its insurance services from what is effectively one of its own customers. Number of Decision-Makers: In consumer purchasing. a buyer can also be a seller at the same time. The decision making may involve plans to modify the product specifications.

knowledge and situational needs as well. the relationship between the seller and buyer can develop into a longer term engagement. 8. Description of the characteristics of the item and the quantity needed. 2. distinct but interrelated phases 1. The buyer retains the supplier as long as the level of satisfaction with the delivery. 4. 3.CONSUMER BEHAVIOUR In such circumstances. Selection of an order routine. quality and price is maintained. 5. Recognition of the organisational problem or need. 3. social. Search for and qualification of potential sources. Faris and Wind divided the buyer purchase process into eight sequential. Based on field research. These components should be addressed in meetings in order to obtain commitment. New suppliers are considered only when these conditions change. The model 175 NOTES ANNA UNIVERSITY CHENNAI . A sales person must be aware that a buyer not only has functional needs. The purchase can be a one-time transaction of a repetitive nature. Need gaps create the motive behind any purchase. Evaluation of the proposals and selection of suppliers. When there are multiple deliveries. the process of ‘creeping commitment’ occurs and reduces the likelihood of new suppliers gaining access to the buying situation. The relationship needs to be developed during phases 3 to 7. Performance feedback and evaluation. Determination of the characteristics of the item and the quantity needed. Assessing the buyer’s needs and determining gaps between the current and desired situation is important. Acquisition and analysis of proposals. The relationship between the buyer and seller is initiated in phases 1 and 2. Robinson. The buying process can vary from highly formalised to an approximation depending on the nature of the buying organisation. the buying centre proved to require fewer participants and allow for a quicker decision process than in a new task buy class. Buyer loyalty and customer satisfaction are primarily determined by the sales activities during this last phase. Buyers need assistance in forming realistic perceptions of both the current and the desired situation. Straight Rebuy The buyer routinely reorders a product with no modifications. 7. the size of the deal and the buying situation. During the performance feedback and evaluation phase. but psychological. 6. As buy phases are completed. the supplier and buyer must agree on an order routine. The challenge for the new supplier is to offer better conditions or draw the buyer’s attention to greater benefits than in the current offering.

A salesperson would not call on you if you had no influence over what product was purchased. if you and your co-workers submit numerous complaints about missing or problematic features of the new replacements. the office manager was consulted with regard to features or specifications to set in the purchase of new typewriters. • • 176 ANNA UNIVERSITY CHENNAI . some middle manager. Additionally. A user is the end consumer of a product. and therefore has ultimate decision authority. that decision-making authority does not necessarily mean that this person exerts any influence on what is purchased. however. whether or not you even wanted it. It helps sales personnel deliver the correct message at the right time. but who nonetheless might have some influence over the purchase and consumption process. This requires that the marketer is aware of the needs of the various constituencies involved in making decisions. • Users: If you are a secretary. the salesperson might be faced with a very expensive customer service problem to solve. you might have had the experience of arriving to work one day to find a new typewriter on your desk. Influencers: Perhaps in this case. Deciders: In this case. the following questions must be answered: • • • • Is this combination of situation and phase relevant? Which organisation members influence this purchase decision? What are the used performance indicators? What are the information sources? 5. However.a special trick is to get the influencer to write a specification list that happens to match the seller’s product features! An influencer is someone who has influence over what is purchased. there can be constituencies in an organization who do not have decision-making authority. Suppliers need to fill out this matrix for their firm’s specific situation. whatever specifications s/he requests could be used without change in making the purchase. Although the office manager might have no decision-making authority with regard to the purchase. might have made the decision as to when and what to purchase. but might otherwise merely sign some requisitions without question or involvement. A salesperson might need to be aware of these influencers . ignorant of the needs of secretaries. Note. A decider is someone who ultimately has authority if or what to purchase. The point of this statement is that the marketer or seller must be aware of how it is that decisions are made and often must focus some or all efforts at whomever it is that makes decisions in the organization.DBA 1722 NOTES explains the likely interaction between buyer and seller activities given the purchase needs of an organisation.17 BUYING CENTER Recall that there are often multiple decision makers involved in organizational purchases. For each cell in the matrix (buy situation and buy phase). The company president might be the only person who signs all purchase requisitions.

The new lifestyle trends are altering the fabric of Indian society and also modifying its social and financial behaviour. Indians have made their mark in the fields of information technology. is often to maintain good. whether or not they have purchased in the past. They can also be helpful in passing messages from the salesperson to members of the organization. With the globalisation of the job market. A sales agent for an office equipment supply house might help an organization to decide what brand of typewriters would be best. trained human power. A buyer is someone who arranges the transaction. Some books use the term Decision Making Unit to describe the notion of the buying center. but that organization could then allow the purchasing agent to find the best deal on that brand. and office hours of key members of a buying center in an organization. then. Shift in Consumer Tastes The shift in tastes and preferences of Indian consumers from traditional and conservative looking product lines to more varied. The emerging flat world is bringing about a confluence of cultures and new lifestyles across India.18 CONSUMER BEHAVIOUR IN INDIA CONTEXT – EMERGING ISSUES India has come to be known as a nation producing value-enhanced. A gatekeeper could include anyone in the organization who can control the flow of information. A responsibility of salespeople.there is no such department in any organization! 5. telephone numbers.CONSUMER BEHAVIOUR • Buyers: The final purchase transaction might be left to a purchasing agent who otherwise has no involvement in decision-making. and long-term relationships with the purchasing agents in prospective buying organizations. the domestic service e sector itself is witnessing robust growth. An initiator would be a person who initiates the idea or a purchase. superior. trusting. The prospective buyer’s secretaries can be helpful in providing names. and some additionally include the entity of initiator. Gatekeepers: Why do salespeople often give secretaries little gifts of chocolates or flowers or an occasional free lunch? A secretary can be nice or nasty in passing information in either direction. pure sciences and economics. modern and liberal assortment of commodities can be attributed to some social and economic trends indicated below: 177 ANNA UNIVERSITY CHENNAI . demand and acceptance of Indian skills worldwide has opened up opportunities for new jobs within the country. biotechnology. and the best deal with regard to price might come from a competing office supply house. particularly back office operations of multinational corporations. Furthermore. NOTES • Note that the idea of the Buying Center is conceptual .

distribution channels and communication media specially to address those needs. There is a growing inclination to provide quality education for children. Also. With television and the Internet extending their reach to rural India. There is a need to understand the consumer behaviour and needs of rural India and develop products. However. Increase in the number of working women and a growing awareness among women to carve a career while managing a family. which acts as a major impediment for women acquiring basic education and social skills. fatigue or work pressures.DBA 1722 NOTES • • • • Joint households making way for nuclear families. With joint families disintegrating. the social and financial responsibilities of the household have to be shared by husband and wife in the nuclear family. Gender discrimination Career opportunities and better education have offered women greater financial and emotional freedom. this is leveling the playing field at home. especially in upper income groups. Increased mobility. That natural protection now needs to be replaced by financial planning to protect families from economic shock and ensure steady incomes to manage old age needs. but with increased urbanisation. values are now self-acquired. especially for career advancement. health. gender discrimination persists in major sections of the society. the parent-centred family has changed its orbit and become child-centred. The joint family was a protection against untoward incidents. There is an increasing trend in literacy and education levels. this change in social standing of women is evident more in urban India. Technology has taken the place of grandparents and mothers as custodians and teachers of culture. 178 ANNA UNIVERSITY CHENNAI . attributed to increased incomes. Increasing tendency to spend on fashion. education and more importantly ’self’. Rural India’s needs Technology has also made a significant impact on the lives of consumers. societal factors and independence from parental pressures. cultural values used to be imparted to children by grandparents. For most families. fitness. Overridden by guilt over protracted absence. people are better informed and their aspirations have changed. The emerging trends are more pronounced in metropolitan cities because of the availability of a broader range and better quality of products and services there.

They prefer to shop in specialty stores. They are always looking for something different. They look for durability and functionality but at the same time is also image conscious. It will be a new India where women and children will claim more importance. They are traditional in their outlook. the role of history and tradition in shaping the Indian consumer behavior is quite unique. go to clubs on weekends. luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market. they seek a lot of information before making any purchase. one sees traditional products along side modern products. spend more time with family than in partying and focus more on savings than spending. They go for high value. Product which communicate feelings and emotions gel with the Indian consumers. Apart from psychology and economics. cautious in their approach towards purchases. These values are far more dominant that values of ambition and achievement. Perhaps. where rural folks will be more demanding and where products and service offerings will be tailored to suit this new set of consumers. They are the darlings of exclusive establishments. NOTES 179 ANNA UNIVERSITY CHENNAI . extends to the extended family and friends as well.19 CHARACTERISTICS OF THE INDIAN CONSUMER BEHAVIOR The Indian consumers are noted for the high degree of value orientation. The conservative segment is the reflection of the true Indian culture. Such orientation to value has labeled Indians as one of the most discerning consumers in the world. This orientation in fact. Different Segments of Indian Consumers The Socialites Socialites belong to the upper class. Indian consumers are also associated with values of nurturing. Slow in decision making.CONSUMER BEHAVIOUR The changing face of Indian society is bringing with it new challenges and opportunities. Even. Brands with identities that support family values tend to be popular and accepted easily in the Indian market. hair oils and tooth powder existing with shampoos and toothpaste. only in India. For example. care and affection. Socialites are also very branding conscious and would go only for the best known in the market. Indian consumers have a high degree of family orientation. and spend a good amount on luxury goods. The Conservatives The Conservatives belong to the middle class. exclusive products. 5.

Most premium brands are relevant to them.DBA 1722 NOTES They prefer high value consumer products. They aspire. There are joint families as well as nuclear families in this category. Some single earning households are of first generation entrepreneurs. who have been rich for a long time. but often have to settle for the more affordable one. They buy many durables and are status conscious. They consume services greatly. proving herself to be equally good. These habits in turn affect their purchasing habits where they are trying to go for the middle and upper middle level priced products. They crave for exclusivity in what they buy. she is rubbing shoulders with men. which has seen a tremendous growth in the late nineties. They own multiple cars and houses. if not better. The Super Rich are mainly professionals and devoted to consumerism. Some rich farmers. The Obscenely Rich They are first-generation entrepreneurs who have made it big. Some of them in this category are Double Income No Kids (DINK) households. 180 ANNA UNIVERSITY CHENNAI . They aspire to social status and power. Today. therefore. backgrounds are distinctly middle class. The Working Women The working woman segment is the one. belong to this category. Across the category. The Super Rich There are less DINK families here than in the rich category. Working women have their own mind in decision to purchase the products that appeal to them. This segment has opened the floodgates for the Indian retailers. There are some DINK households of middle-level executives. The Ultra Rich There is no typical profile of the ultra-rich. A variety of people belong to this category. Some of them are techies. The Sheer Rich They do not have a homogenous profile. India’s Rich India’s rich can be categorized into five major categories as follows: The Rich These people are upwardly mobile. They are just equivalent to the rich in the developed countries. They spend more on leisure and entertainment-activities than on future looking investments. to attain the super-rich status. The working woman today has grown out of her long-standing image of being the homemaker.

16 billion. Indian consumers are now more aware and discerning.shopping. As a result.reliablegreetings.ebay.in www. CDs/VCDs/DVDs. the spill over effect of the growing urban middle class is also felt in the rural areas. and are knowledgeable about technology. The Indian rural market has been growing at 3-4% per annum. as a result of the increasing literacy in the country.com NOTES 181 ANNA UNIVERSITY CHENNAI . it is becoming an important market place for fast moving consumer goods as well as consumer durables. specially in the Indian cities. Increasing Awareness of Indian Consumers Over the years. clothes.25 billion by 2010 from the present US$ 11. The popular online shops in consumer include: • • • • www. magazines.com www.rediff. there is a significant increase of consumer awareness among the Indians. exposure to the west. medicine and educational material. cassettes. products and the market and are beginning to demand benefits beyond just availability of a range of products that came from ‘trusted’ manufacturers. The consumer also seeks to purchase from a place where his/her feedback is more valued. adding more than 1 million new consumers every year and now accounts for close to 50% of the volume consumption of fast-moving consumer goods (FMCG) in India. Marketing Strategies Online Marketing Currently. the products Indian consumers are buying through online are greeting cards. This awareness has made the Indian consumers seek more and more reliable sources for purchases such as organized retail chains that have a corporate background and where the accountability is more pronounced. Today more and more consumers are selective on the quality of the products/services. books. The market size of the fast moving consumer goods sector is projected to more than double to US$ 23. satellite television.CONSUMER BEHAVIOUR Rural Consumer About three quarters of the Indian population are in the rural areas and with the growing middle class.shopping.com www. foreign magazines and newspapers. The Indian consumers are price sensitive and prefer to buy value for money products.expomarkets.

celebrities are being increasingly used in marketing communication by marketers to lend personality to their products. refrigerators. washing machines. When people see their favoured reference group members or celebrities in the advertisements. the advertisements that celebrities endorse also achieve high recall rates. In India especially. It is not surprising therefore that using celebrities in advertisements has become common practice. However. consumers are likely to take cues from well established retail outlets hoping that these outlets carry quality products. he or she is more likely to accept what the celebrity says about the advertised product and therefore will develop more positive feelings toward the advertisement and the brand itself. Consumers like advertisements more if they are admirers of the celebrities in the advertisements. TVs. Celebrities create headlines. in the absence of well known brands in selected product range. In the midst of the advertisement clutter. With the visual media becoming more popular the use of celebrities in the TV media has increased. Freebies are consumer products given free of charge as gifts to purchases of selected products above a certain value. Famous celebrities are able to attract attention and retain attention by their mere presence in the advertisements. Freebies Indian consumer buying behaviour is influenced by freebies. In India. detergent. Their activities and movements are being closely watched and imitated. and ready made clothes are some of the product categories in which freebies are given to Indian consumers. What they endorse sell like hot cakes. When a consumer likes the celebrity in the advertisement. Freebies generally comprise tooth paste. Quality Oriented Outlets Indian consumers looking for quality choose expensive brands as they feel that price is an indicator of quality. Celebrities may also help reposition products. cooking oil etc. soaps. they pay more attention to them.DBA 1722 NOTES Celebrity Influence This is an important tool which is able to influence Indian consumer buying behaviour. Indians always love their heroes and heroines. 182 ANNA UNIVERSITY CHENNAI . it is not difficult to look for the reasons as to why companies are increasingly using celebrities. Products with sagging sales needs some boosting and in this Indian celebrities can help by way of they endorsing the product concerned.

rather than frequent visits to the neighbourhood market/store/vendor. they take less pain in traditional method of cooking and cleaning. There is an increase in positive attitude towards western trends. Trendy Lifestyles The current urban middle and upper class Indian consumer buying behaviour to a large extent has western influence.CONSUMER BEHAVIOUR Eco-Friendly Products The environmental awareness in India has started affecting marketing of products based upon their eco-friendliness. thus. The future key for marketing could be to select more ethical and ecological responsible products and packaging. 5. The popular growing shopping trend among urbanities is purchasing from super markets to hyper stores. There is now an exponential growth of western trend reaching the Indian consumer by way of the media and Indians working abroad. • • • • • • • Beverages Packed food Ready to eat food Pre-cooked food Canned food Personal care products Audio/video products 183 ANNA UNIVERSITY CHENNAI . Indian consumers are likely to buy environmentally responsible products and packs. In general.20 CHANGING TRENDS IN INDIAN CONSUMER BEHAVIOUR • Bulk Purchasing NOTES Urbanisation is taking place in India at a dramatic pace and is influencing the life style and buying behaviour of the consumers. Bulk purchases from hyper stores seems to be the trend these days with purchasing becoming more of a once-a-week affair. which is also convenient for consumers. The working urbanites are depending more on fast and ready-to-serve food. The Indian consumer has become much more open-minded and experimental in his/her perspective. Foreign brands have gained wide consumer acceptance in India. balancing environmental concerns with commercial considerations. Consumers in India are taking lead in prompting manufacturers to adopt technologies to produce eco-friendly products. they include items such as.

many new product offerings have entered the Indian market and product variety has also increased manifold. Indian consumers have also developed lifestyles which have emerged from changing attitudes and mind sets. • Buyers’ Market In The Making The sellers’ market is slowly moving towards becoming the buyers’ market.07 per cent in 1992-93 to 44. Similarly spending on transport and communication has grown at 13. Consumerism is all about protection of the interests of the consumers. Chinese. there have been sharp ups and downs.71 per cent. for example.8 per cent in 2002-03. Foreign made furniture is well accepted by the Indian consumers.5 per cent to 8. Consumer expenditure has been in tandem with the annual GDP growth. watches. eateries. exposure to western influences and a need for self-gratification. India’s economic liberalization policies were initiated in 1991. they now have a choice of foreign products vis-à-vis the local products. Indian consumers have always preferred foreign goods and with the liberalization. hi-tech products are a few instances which reflect these changes. • Consumer Spending Behaviour The way Indian consumers are spending their money on various items has changed in recent years. 5. Beauty parlours in cities. The share being spent on the basis (food and beverages) has fallen from 54.5 per cent of total expenditure over the same period. While the Compound Annual Growth Rate (CAGR) in total consumer spending has been around 12 per cent a year over the past decade. medical and healthcare spending has increased from 3. Malaysian. Consumerism is a movement or policies aimed at regulating the products or services.2 per cent. It is a social movement. Import licensing restrictions are being eliminated and tariffs significantly reduced and this has led to large range of consumer goods made available in India. designer wear.21 SUMMARY • Consumerism is a recent and universal phenomenon.DBA 1722 NOTES • • • • • Garment and apparel Footwear Sportswear Toys Gift items Foreign brands vie increasingly with domestic brands for the growing market in India. Italian furniture are growing in popularity in India. a compound growth rate of 19. methods or 184 ANNA UNIVERSITY CHENNAI . Since. Other items have increased in importance.

guidelines for consumer protection are meant to achieve the following objectives: (a) to assist countries in achieving or maintaining adequate protection for their population as consumers. The Act provides following remedies to an aggrieved consumer: (a) removal of defects in goods or deficiency in service (b) replacement of defective goods with new goods of similar description which shall be free from any defect (c) return of price paid by the consumer (d) payment of compensation for any loss or injury suffered by the consumer (e) discontinue the restrictive. and to the National Commission for more than Rs. 20 lakhs.N. The main object of the legislature in the enactment of this act is to provide for the better protection of the interests of the consumer and to make provisions for establishment of consumer councils and other authorities for settlement of consumer disputes and matter therewith connected The act was passed in Lok Sabha on 9th December. (g) to encourage the development of market conditions which provide consumers with greater choice at lower prices. such regulation maybe institutional. to the ‘State Commission’ between Rs . statutory or embodied in a voluntary code occupied by a particular industry or it may result more indirectly from the influence of consumer organizations.1986 and Rajya Sabha on 10th December. Interestingly. and third at national level known as ‘National Commission’. • The U. 1986 and was published in the Gazette of India on 26th December. if any. A complaint is to be made to the district forum of the concerned district where the value of goods and services and compensation. or unfair trade practice. there is provision for appeals against the orders of a particular redressal forum by the aggrieved party before the 185 NOTES • • • • • ANNA UNIVERSITY CHENNAI . sellers and advertisers in the interest of buyers. The Consumer Protection Act 1986 is a social welfare legislation which was enacted as a result of widespread consumer protection movement. (c) to encourage high levels of ethical conduct for those engaged in the production and distribution of goods and services to consumers. second at state level known as ‘State Commission’. 1986 and it applies to the whole of India except the State of Jammu and Kashmir. 100 lakhs. (e) to facilitate the development of independent consumer groups. (d) to assist countries in curbing abusive business practices by all enterprises at the national and international levels which adversely affect consumers. In order to protect the consumers from exploitation and to save them from adulterated and substandard goods and deficient services the Consumer Protection Act came into force on 15th April. 100 lakhs. 20 lakhs and Rs. The Consumer Production Act provides for a three tier system of redressal agencies: one at district level known as District Forum. 1986 and assented by the President of India on 24th December. (b) to facilitate production and distribution patterns responsive to the needs and desires of consumers. 1986. is up to Rs.CONSUMER BEHAVIOUR standards of manufacturers. (f) to further international cooperation in the field of consumer protection. and not to repeat it (f) withdraw the hazardous goods from being offered for sale and not to offer them for sale (g) provide for adequate cost to the aggrieved party.

1976 which seeks to ensure safety and quality in the manufacture of electrical appliances and The Consumer Protection Act. Consumer protection means safeguarding the rights and interests of consumers. At this point. 1956 which aims at ensuring that consumers get the right weight and measurement in products. you can choose all three or any of them which include Email Support. The Drugs and Cosmetics Act. The consumer rights include (i) right to safety (b) right to information (iii) right to choose (iv) right to be heard (v) right to seek redressal (vi) right to education. the behavior of consumers while shopping or making other marketing decisions. 1940 which seeks to ensure purity and quality in drugs and cosmetics. Government of India has enacted several laws to protect the interests and rights of consumers. and select between different alternatives (e. media). 1986 which seeks to provide speedy and inexpensive redressal to the grievances of consumers..g. the buyer takes a ‘make or buy decision’. The Standards of Weights and Measures Act. The laws enacted by the Government must be strictly enforced by the executive. family.. the psychology of how the consumer is influenced by his or her environment (e. reason. signs. 1955 which aims to regulate and control the production. followed by identifying the product characteristics. 1954 which aims to check adulteration in food items and eatables. and how marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how the psychology of how consumers think. The industrial or organizational buying decision process starts with identifying the buying needs. If the decision is to buy. limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome. Mostly three types of supports are used for online consumers. The Prevention of Food Adulteration Act.g. products). feel. It includes all the measures aimed at protecting the rights and interests of consumers. Some of these laws are: The Essential Commodities Act. executive and judicial actions. The Household Electrical Appliances (Quality Control) Order. Consumers need protection due to the following reasons: (i) illiteracy and ignorance (ii) unorganised consumers (iii) spurious goods (iv) deceptive advertising (v) malpractices of businessmen (vi) freedom of enterprise (vii) legitimacy for existence (viii) trusteeship There are four main methods of protecting the interests of consumers: (i) Business self-regulation (ii) consumer self-help (iii) consumers’ associations (iv) Government Regulations The State can ensure consumer protection through legislative. Live Chat and Telephone Helpline. then the buying 186 ANNA UNIVERSITY CHENNAI • • • • • . culture.DBA 1722 NOTES • • next higher echelon and even from the findings of the National Commission before the Supreme Court. supply and distribution and prices of essential commodities. brands. how consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer.

The popular growing shopping trend among urbanities is purchasing from super markets to hyper stores. but as organisational decisionmaking processes where multiple individuals decide on a purchase. What are the objectives of UN guidelines for consumer protection? 5. What is the work of consumer protection councils? 8. What are the various consumer disputes redressal agencies? 9. The working urbanites are depending more on fast and ready-to-serve food. and/or resale to other consumers • Organisational buyers often continually adjust their buying decisions on the basis of projected sales figures. What are the components of consumerism? 3. This requires that the marketer is aware of the needs of the various constituencies involved in making decisions. The vendors are then requested to send in their proposals and quotations relating to the purchase requirement. What is meant by consumer protection? 4. What are the different types of consumer rights? 10. What are the three tiers of the consumer courts with respect to consumer protection? 7. What do you mean by online consumer behaviour? 187 ANNA UNIVERSITY CHENNAI . with a knock-on effect throughout the buying chain as each chain member adjusts it’s buying patterns accordingly. Bulk purchases from hyper stores seems to be the trend these days with purchasing becoming more of a once-a-week affair. usage in operating the organization. buying more units when forecast sales are higher.CONSUMER BEHAVIOUR process continues with the search for vendors followed by qualifying them. there can be constituencies in an organization who do not have decision-making authority. What is the objective of the consumer protection act. rather than frequent visits to the neighbourhood market/store/vendor. What are the different methods of consumer protection? 12. they take less pain in traditional method of cooking and cleaning. 1986? 6. The result can be a sort of “pendulum effect”. NOTES • • • 5. Usually industrial buying is seen not as single events. modified rebuy and straight rebuy.22 REVIEW QUESTIONS Short questions 1. Often multiple decision makers are involved in organizational purchases. Urbanisation is taking place in India at a dramatic pace and is influencing the life style and buying behaviour of the consumers. Organizational consumers purchase for further production . Additionally. but who nonetheless might have some influence over the purchase and consumption process. Define consumerism 2. What is meant by protection of consumer rights? 11. Their framework consists of a matrix of buy classes and buy phases which are new task.

What are the differences between organisational and consumer marketing? 16. 7. What is meant by a buying centre? Long Questions 1. Mention the participants in the industrial markets scenario 15. Explain the differences between consumer and industrial marketing. What are the rights and redressal mechanism available for a consumer in India? 3. 4. Why is predicting consumer behaviour considered to be a difficult task? 6. Explain the applicability of the Indian Consumer Act. Explain the trends in Indian consumer behaviour together with reasons for the same. Why is organizational buying considered to be more complex than consumer buying? 9. What are the different buy classes? 17. 2. Mention the different types of supports which could be used for understanding online consumer behavior. Mention the different segments of Indian consumers 10. 188 ANNA UNIVERSITY CHENNAI . 1986.DBA 1722 NOTES 13. Explain the different methods available for Consumer Protection. Where do you think there is more scope for personal selling? 8. Write a detailed note on Consumerism in India. What is your opinion on the effectiveness of the same as far as the Indian experience is concerned? 5. What is meant by Organisational and industrial buyer behaviour? 14.

CONSUMER BEHAVIOUR NOTES NOTES 189 ANNA UNIVERSITY CHENNAI .

DBA 1722 NOTES NOTES 190 ANNA UNIVERSITY CHENNAI .