You are on page 1of 61


Lecture-1 The American Marketing Association has defined consumer behavior as The dynamic interaction of affect and cognition, behavior, and the environment by which human being product the exchange aspects of their lives. Consumer behaviour refers to the actions and decision processes of people who purchase goods and services for personal consumption. Peter D. Bennett Consumer behaviour refers to the mental and emotional processes and the observable behaviour of consumers during searching for , purchasing and post consumption of a product or service. Engel, Blackwell &Miniard. Types of consumers: PERSONAL AND ORGANISATIONAL CONSUMERS Personal consumer His or her own use/for the household/another member of the household gift for a friend Organizational consumer Profit and non-profit organizations/public sector agencies institutions BUYERS AND USERS (CONSUMERS) can be classified as Purchaser procures or obtains product/service Payer person who provides the money or object of value to obtain the product/service Consumer person that consumes or uses product/service THE INTERDISCIPLINARY SCIENCES IN CONSUMER BEHAVIOUR Psychology Sociology Social psychology Cultural anthropology Economics



Firms Marketing Efforts Product Promotion Price Channels of Distribution

Socio-cultural Environment Family Informal sources Other noncommercial sources Social class Subculture and culture

Consumer Decision Making

Need Recognition Process Prepurchase Search Evaluation of Alternatives Psychological Field Motivation Perception Learning Personality Attitudes


Post-decision behaviour Purchase Trial Repeat Purchase


Post purchase Evaluation


REASONS FOR STUDYING CONSUMER BEHAVIOUR Key information in marketing strategies Market segmentation Target market selection Positioning Product or service decisions Pricing decisions Distribution decisions Promotion decisions Consumer protection and public policy concerns Environmental concerns Shorter product life cycles Growth of services marketing Not-for-profit/social marketing Growth of global marketing

Importance of Consumer behaviour: Ever increasing intensifying competition. More aggressive competitors emerging with greater frequency. Changes basis of competition. Geographic sources of competition are becoming wider. Niche attacks are becoming frequent. Pace of innovation is rapid. Price competition becoming more aggressive Product differentiation is declining.

Nature of Consumer behaviour 1. Consumer behaviour is Dynamic: The feelings, thinking, perceptions and actions of the customer and the society at large keep changing frequently. For example number of working women is on rise and this has changed the concept of shopping. The dynamic nature of the consumer behaviour offers challenges to marketers and the task of creating marketing strategies becomes complex, and exciting. Strategies that work today may not work tomorrow. Strategies adopted in one market may not work in another. The product life cycles are becoming shorter and create additional pressures on marketers to bring innovative products and concepts. The concept value changes from time to time. Mahindra and Mahindra had to come out with Scorpio with the launch of Bolero.


Consumer behaviour involves interactions: Consumer behaviour involves interactions among peoples thinking, feeling, action and the environment. This forces marketers to understand three things: What products and services mean to customers. What influence shopping, purchase, and consumption. What consumers need to do to purchase and consume products and services. Consumer behaviour involves exchange: Consumer behaviour involves exchange between human beings. People give up something of value to others and receive something in return. Much of consumer behaviour involves people giving up money to obtain product and services, that is, exchanges consumers and sellers. The role of marketing in society is to help create exchange by formulating and implementing marketing strategies. Lecture-3



Problem recognition is the first stage in the consumer decision process and occurs whenever the consumer perceives a difference of sufficient magnitude between what is perceived as the desired state of affairs and what is the current state of affairs, enough to arouse and activate the decision process to achieve the desired or ideal state. Marketers develop products and services to help consumers solve problems. They also attempt to help consumers anticipate and recognize problems, sometimes well in advance of their occurrence

The process of problem recognition combines some highly relevant consumer behaviour concepts such as information processing and the motivation process. Types of Consumer Problems and Their Recognition: The problems of which consumers are aware or will become aware shortly are referred as active problems and the ones about which consumers are not at all aware are called inactive problems. It is similar to being aware of a need and having latent needs about which there is no awareness. It is useful to appreciate that there may be several types of problem-recognition processes. Del I. Hawkins, Kenneth A. Coney and Roger J. Best (Consumer Behaviour, 1980) have discussed one such approach. They developed a classification system of situations based on the factors of immediacy of required solution and whether or not the problem was expected

Types of Problem Recognition

Immediacy of solution Expectanc y Of problem Occurrence of Problem expecte d Occurrence of proble m unexpecte d Immediate solution require d Routine Immediate solution not require d Plannin g



Emergency problems are possible but are unexpected and necessarily need immediate solutions. For example, say a consumer meets an accident while on his/her way to office, gets injured and the vehicle is badly damaged. In such an emergency, she/he needs a quick solution to reach hospital's emergency room. Subsequently, she/he may plan to get the vehicle repaired or buy a new one Situations that can Cause Problem Recognition There are quite a large number of situations that can create a discrepancy that influence consumer desires, perceptions of the existing state, or both. These include non-marketing factors and marketer initiated activities that can trigger the process of a consumer's problem recognition. The five of the most common situations are: Depletion of stocks Dissatisfaction with goods in stock Environmental changes Change in financial situation Marketer initiated activities. Approaches to Activating Problem Recognition 1. Generic problem recognition focuses on helping consumers feel a discrepancy that a number of brands within a product category can reduce. Generally, a marketer will use this approach when the problem is either latent or of low importance and one of the following conditions exists. Product is in the early stage of its life cycle. The marketer has very high market share. After problem recognition, consumers' external search tends to be limited. It is a situation of industry-wide cooperative effort.


Selective problem recognition focuses on a discrepancy that only a particular brand can solve. Marketers use this approach to causing problem recognition in an attempt to increase or maintain market share Marketing Strategy and Problem Recognition Activity Analysis Product Analysis Problem Analysis Human Factors Research Emotion Research Marketers also attempt to influence consumers' perceptions about their existing state. For instance, many ads of personal care products adopt this approach. Women do not want to use a soap that dries their skin. They desire to have fresh and smooth skin and the advertisement of Dove soap is designed to generate concern about the existing state of their skin Lecture-4


Nature of Information Search The process of information search refers to what the consumer surveys in her/his environment for appropriate information to make a reasonable purchase decision. Extended decision-making represents a significantly more involving purchase situation. The relative importance of external information search tends to increase in extended decision-making. External information can refer to any of the following: 1. The opinions, beliefs, attitudes, behaviours and feelings of relatives, friends, neighbours and strangers contacted on the Internet. 2. Professional information contained in handouts, pamphlets, articles, magazines, journals, books, the Internet and provided by personal professional contacts. 3. Direct experiences with the product or service through trial, inspection, or observation. 4. Marketer-initiated information included in advertisements, displays, websites and by sales personnel. The Types of Information Consumers Seek A great variety of information of potential interest to consumers exists in the external environment. According to R. Lawson, consumer decision-making requires three types of information:

The Evaluative Criteria : An important objective of internal and external search for information is the determination of appropriate evaluative criteria. Appropriate Alternatives:Once the consumer has established the evaluative criteria, she/he probably starts searching for the appropriate alternative which could be brands or perhaps stores. As a result of internal search or inquiry, the consumer may recall or learn that the available brands of computers include IBM, Compaq, Dell, Wipro, Zenith, Vintron and Apple. Attributes of Alternative:Consumers compare brands in the evoked set to make their choice. This process of evaluation requires consumers to collect information about each brand on each relevant evaluative criterion. In case of computer purchase, the consumer might collect information about the price, processor, memory, graphic card, monitor, accompanying software and warranty etc., for each brand. Marketers are particularly interested in knowing as to how consumers process information about brands in the evoked set. There are two general approaches for evaluation: brand processing or attribute processing.

Consumers' Sources of Information There are five primary sources of information available to consumers: Long-term memory: Stored information based on earlier searches, personal experiences and low-involvement learning. Personal sources: These include family, friends, neighbours and peer groups. Independent sources: Such sources include newspapers, magazines, journals, consumer reports and government agencies. Marketer controlled sources: These include advertising, sales personnel, direct mail etc. Experiential sources: This refers to inspection of products or product trial.
Sources of Information for Purchase Decision-making

Sources of Information Internal External information information

Acquired actively

Acquired passively

Acquired actively Others experiences

Past searches

Personal experience

Low-involvement learning

Personal sources

Independent sources

Marketer controlled

Internet as a Source of Information

It is assumed that every educated person today knows that Internet represents informationcommerce, e-mail and entertainment. The Internet or World Wide Web is a network of computers that is accessible to anyone with a computer, modem, telephone connection and an Internet account. Consumers are also exposed to ads on the Internet while searching for general information or visiting entertainment sites. When clicked, banner ads take consumers to the company or products home page, or to some special advertisement. Expansion of Internet is taking place in terms of its usage Extent of External Information Search Marketers are particularly interested in knowing how much external information search consumers tend to undertake. For relatively low-priced products such as soft drinks, Namkeen, toothpaste, soaps and detergents etc., there may be very little external search just before the purchase. In fact, this would be the case with all purchases involving nominal or limited decision-making. External information search is more likely in case of major purchases such as expensive appliances, professional services and autos etc. Generally, consumers tend to consider more alternatives as the price of the product increases. Based on research studies, consumers have been classified as 1. non-searchers, 2. limited information searchers and 3. extended information searchers. Lecture-5 Cost/Benefit View of External Search Four basic factors influence the perceived benefits and costs of search: Market conditions Product characteristics Consumer characteristics Situational factors. 1. Market Conditions:Characteristics of the marketplace can have a significant influence on external search behaviour. These characteristics include the number of alternatives, price range, distribution outlets and availability of information. If the number of alternatives in terms of products, outlets and brands is more, the consumer is unlikely to undertake more external information search. For example, if there are too many models and brands available in a product category, information overload may discourage consumers' external information search. In response, consumers tend to limit their shopping to a single outlet. In case of monopoly, as was the situation in India more than a decade back in the case of telephones and cooking gas etc., there would be no need to search. Product Characteristics: This refers to product differentiation and range of prices etc. that influence consumers' external search for information. If the product price is high and there is greater differentiation among alternatives, there is likely to be increased external search. Product class influences search efforts. Most consumers seem to enjoy shopping for positive products, such as dresses, cameras, music systems and sports goods etc. Shopping for positive products is viewed as a


positive experience. The primary benefit of negative products is removal of some unpleasant situation. For example, grocery shopping, or getting auto or washing machine repaired is viewed as less pleasant and most consumers hardly enjoy these situations. 3. Consumer Characteristics: Many characteristics of individual consumers influence their perceptions of expected benefits, cost of search and need for a certain degree of external search for information. An individual's satisfying experiences with a brand increases the probability of repeatpurchase of the brand and decreases the possibility of external search on the next purchase occasion. Socio-economic characteristics of consumers such as education, occupation and income influence the degree of external search. Middle-income individuals tend to search more for information than higher or lower levels. Probably because of increased learning, experience and familiarity with product category gained over time, external search decreases with age. Younger people, in new stages of household life cycle, show greater need for external information compared to established households. Highly involved consumers with a product category generally seek information on an ongoing basis. Situational Factors: A number of situational factors can have substantial influence on information search behaviour. If the need is urgent or the available time is very limited, the search behaviour is influenced. D. S. Sundaram and R. D. Taylor have noted that with the decrease of available time to solve a particular problem, the extent of information search also decreases. Consumers lacking physical or emotional energy are unlikely to engage in detailed information search. Pleasant physical surroundings in a store increase consumers' tendency to search for information. Promotions offering special occasion attractive prices decrease information search.


Marketing Strategy Implications 1. Maintenance strategy 2. Disrupt strategy 3. Capture strategy 4. Intercept strategy 5. Preference strategy 6. Acceptance strategy 1. Maintenance Strategy: In case the nature of marketer's brand is such that consumers in the target market purchase it habitually, the most appropriate strategy is to maintain that behaviour. This requires marketer's consistent attention to maintaining product quality, uninterrupted supply of stocks to retailers and reinforcing advertising messages. To protect the product against competitors' disruptive tactics, it is necessary to maintain product development and improvements against strategies such as discounts and coupons etc. Capture Strategy: Generally, consumers consider just a few brands and evaluate them on only few attributes when problem solving involves limited decision-making. The information search tends to be limited to readily available information sources such as local media and point-ofpurchase in store before making a purchase. The marketer's objective should be to capture a large share of consumers' purchases.



Intercept Strategy: Intercept strategy is also related to consumers' limited decision-making approach. If the marketer's brand is not part of the evoked set of target market, the appropriate strategy is to intercept consumers during their information search on the brands in evoked set. Preference Strategy: Preference strategy is appropriate when the brand is part of the evoked set of consumers in the target market and the approach to decision-making involves extensive information search.


Acceptance Strategy: This strategy focuses on the situation when the target consumers do not search for information about the marketer's brand. The basic objective of the marketer is to move the brand in the evoked set of consumers, rather than try to "sell" the brand.


Choice Based on Attitude vs. Attributes Consumers are likely to use any of the two approaches. S. P. Mantell and F. R. Kardes found that attitude based choice involved the use of general attitudes, impressions, beliefs, intuition, or heuristics. Consumers do not make attribute-by-attribute comparisons at the time of purchase. Instead they may base their decision on a combination of these. A common approach would be to form overall preferences based on attitude-based processing about brands. Affective Choice (feeling-based choice) The purchase decision of certain products is primarily based on effective choice or what we call feelingbased purchases. For example, a young girl goes to a ready-to-wear clothing store to buy a dress she would wear for the annual college dinner. She examines several dresses, tries a few and finally decides that in one particular dress she looks pretty attractive. For example, the ad of Springwel mattress is aimed at stimulating consumers to anticipate feelings that the consumption experience will produce and base their choice on these anticipated feelings. Consumer Choices A large number of research studies on consumer decision-making assume that consumers make carefully calculated rational choices. Each alternative to a problem solution set is viewed to have a value to the consumer that depends only on the attributes of the alternative. An emerging view is that consumers construct many choices as the decision is made. All consumers have a limited capacity for information processing referred as bounded rationality.

Consumers often state their goals or purchase outcomes in specific terms such as "the car with best fuel efficiency," or "the most comfortable jogging shoe." These purchase goals are apparently focused on maximising the accuracy of the decision by describing the desired outcomes. Another important metagoal consumers often have is to minimise negative emotions when making the decision. Consumer choices that involve a conflict between important goals such as safety versus performance in making a purchase decision for a car can trigger negative emotions. According to R. Dhar and S. M. Nowlis, one approach consumers adopt to face this type of decision situation is to avoid or delay the decision. Nature of Evaluative Criteria Consumers' evaluative criteria refer to various dimensions; features, characteristics and benefits that a consumer desires to solve a certain problem. For example, a consumer's evaluative criteria for a laptop computer may include processor speed, operating system, memory, graphics, sound, display, software included, cost and warranty etc. Accuracy of Consumer Judgement of Evaluative Criteria If a consumer decides to buy a laptop computer, she/he is likely to make direct comparisons of brand attributes such as price, processor, memory and display clarity etc. However, these comparative judgements that the consumer makes might not be completely accurate. For example, a Pentium processor and an Apple's G4 processor are not the same. A Pentium 1.8 GHz processor does not mean that it is faster than G4 power processor 1.25 GHz. The consumer may not be able to make direct comparisons of quality. Instead, he might rely on price or brand name to indicate quality. Even though the average consumer is unlikely to be adequately trained to make comparative evaluations of brands based on complex evaluative criteria, yet most consumers frequently make such judgements. Decision Rules It is necessary to make it clear that the choice rules discussed here are not completely precise representations of consumer decisions as they often make choices that appear to be non-conscious or involving low-effort mental processes. However, the discussed rules help us increase our understanding of how consumers make decisions. There are two approaches to making decisions: Non-compensatory decision rules Compensatory decision rules Conjunctive Decision Rule Following this rule, the consumer establishes minimum levels of acceptability for each evaluative criterion (brand attributes) and selects one or more brands that surpass these minimum performance levels. In effect, each evaluative criterion important to the consumer will have a cut off point.

Disjunctive Decision Rule Consumers use disjunctive rules when they establish a minimum acceptable performance level that each brand must meet. That is, all brands that meet or exceed the minimum performance standard for any key attribute are viewed as acceptable. The decision rule will then be to choose the brand that beats others by the maximum margin with regard to criterion selected Elimination-by-aspects Decision Rule In this approach to decision-making, attributes are first listed in terms of their importance and a cut off point for each criterion is established. First of all, the brands are evaluated on the most important criterion and the ones that do not exceed the cut off point are dropped from further consideration. In case two or more brands exceed the cut off point, the second most important criterion is compared on these brands. The process continues until only one brand emerges as meeting all the criteria. Lexicographic Decision Rule In the lexicographic decision approach, consumers rank the criteria in order of importance and select the brand that outperforms others on the most important attribute. If a tie develops among two or more brands on this attribute, they are evaluated on the second most important attribute. The process of attribute evaluation continues until only one option emerges as the winner, outperforming all others. In case of lexicographic rule, the highest ranked attribute often may reveal something about the consumer's shopping orientation. For example, the consumer's "buy the best" approach might indicate that the consumer places more value on quality. This rule is similar to elimination-by-aspects approach except that it seeks maximum performance at each stage unlike elimination-by-aspects process, which seeks satisfactory performance at each stage of evaluation. Lecture-7 OUTLET SELECTION AND PURCHASE At present, only high-income households are indulging in on line shopping. Forrester Research (J. L. McQuivey et al., "On-Line Retail Strategies," The Forrester Report, November 1998) has indicated three categories of products and services based on their purchase characteristics relative to Internet shopping: 1. Convenience Products 2. Researched Items 3. Replenishment Products It is possible that consumers might make a laptop computer decision at the retail outlet. The following conditions are likely to influence brand choice: 1. When consumer is highly store loyal 2. When brand loyalty is low 3. When brand information is inadequate

Outlet Selection: Except for a very small percentage, the vast majority of sales take place in stores and this trend will continue, though technological advances promise exciting changes in non-store retailing in the future Outlet Image: Whether a consumer chooses a specific retail outlet before or after brand choice, she/he evaluates alternative outlets based on predetermined evaluative criteria. The retail outlets may be thought of as having "personalities." Retailer Brands: Traditionally, retail stores carried only manufacturers' brands. In the current retail store scenario, some stores carry their own brands supposedly as low-price alternatives to expensive national or international brands. Shoppers' Stop, for example, carries its own store brands. Such brands become an important attribute of an outlet and also provide attractive margins for such outlets. Retail (local) Advertising: Retailers' advertising objectives focus on communicating to consumers "buy at this store." Besides their store attributes, they particularly focus on sale prices to attract consumers. More store traffic leads to increased sales because many consumers purchase additional items other than those that are advertised. This is referred to as spillover sales. Research studies show that price is frequently not the main reason consumers select a retail outlet. Location of Outlet and Size: Retail outlet location has an obvious impact on store patronage and consumers' outlet choice often depends on its location. If the differences in other attributes are not significant, consumers generally will choose the store that is closest. Similarly, the size of the store is also an important factor that influences consumers' outlet choice. Consumers tend to prefer larger stores compared to smaller ones with cramped spaces. Consumer Attributes and Outlet Selection: For convenience items or minor shopping goods, consumers are unwilling to travel very far. However, for high-involvement purchases, consumers do not mind travelling to distant shopping areas. Distance is not relevant for Internet retailers but ease of searching the site is. Risk Perception in Store Choice 1. If non-traditional stores sell products with either high economic or social risk, there is need to reassure consumers to minimise risk. The store may reduce risk by adopting a policy of "full refund and no questions asked IF consumer is not satisfied," guarantee of 100 percent satisfaction and toll-free customer service telephones with trained personnel. Word-of-mouth communication from satisfied customers reinforces such store advertised policies. 2. Non-traditional retailers, such as Internet, need brand-name products in product categories perceived as entailing high risk. 3. Traditional outlets have an image advantage and should generally carry product categories perceived as involving high-risk. Low-risk items can be used to maintain overall assortment. 4. Retail outlets can minimise economic risks through warranties or return policies. Social risks are difficult to reduce. Known brands, knowledgeable sales staff and guarantees of satisfaction can help reduce social risks.

Lecture-8 Consumer Shopping Orientation: There are two distinct approaches to classifying consumer shopping orientation: Psycho graphics-based orientations describe seven types: Inactive shoppers Active shoppers Service shoppers Traditional shoppers Dedicated fringe shoppers Price shoppers Transitional shoppers Using projective research techniques to ascertain the ways that college students shop has identified motivation-based shopping orientations. Six shopping orientations have been uncovered: Chameleons Collectors/gatherers Foragers Hibernants Predators Scavengers In-store Influences on Brand Selection: A number of factors present within the retail outlet environment often stimulate additional information processing and ultimately influence the final purchase. As a result of this, it is not uncommon for consumers to visit a retail outlet with the intention of buying a certain brand and actually buy a different brand than planned and purchase some additional products as well. The fact that consumers often make unplanned or impulse purchases has led to considerable interest in this aspect. The Point-of-Purchase Advertising Institute has defined five different types of purchases: Specifically planned Generally planned Substitute Unplanned In-store decisions Point-of-purchase (POP) Displays Howard Stumpf reported that 2,473 supermarket shoppers were interviewed and 38 percent of the respondents had purchased at least one item or brand they had never before bought. The reason given for this first-time purchase was that the product was displayed.

A study by The Point-of-Purchase Advertising Institute (Awareness, Decision, Purchase, 1961) of 5,215 shoppers in supermarkets, variety stores, liquor stores, hardware stores and service stations reported that one-third had purchased at least one of the displayed items It is clear that POP displays have a significant influence on consumers' in-store purchase behaviour. The sales impact of displays varies widely by product type and location and between brands within a product category; there is generally a strong increase in sales. Discounts and Deals: Price discounts and other promotional deals that offer same-for-less or more-for the-same are generally associated with POP displays and evidence suggests that in- store price reductions influence brand decisions. Increase in sales comes from four sources in response to price deals: Those consumers, who do not normally visit the store announcing a price deal, may come to buy the brand. Current brand users may buy in advance of their anticipated needs. Ready availability in excess often leads to increased consumption of the brand. Those consumers, who otherwise use competing brands, may switch to the brand available at reduced price. A percentage of such brand-switching consumers may become regular users of the brand. Non-product category buyers may buy the brand because it is now a better value to substitute product.

Retail Outlet Atmosphere: The layout, fixtures, lighting, colours, sounds, odours and the dress and behaviour of its personnel affect a retail store's atmosphere. An uncontrollable yet important component of store atmosphere is the number of customers present in the store, their characteristics and behaviour. The outlet atmosphere produces a significant effect on customers' mood and their willingness to visit and shop around in the store. The atmosphere also influences consumers' assessment of the quality of the store and the store-image they form. As a result of positive mood induced by store atmosphere, consumers are more satisfied and this increases their willingness to visit the store again. This may help in building store loyalty. Out-of-stock Situation: When a retail outlet is temporarily 'out of stock' for a particular brand, this influences a consumer's purchase decision. The consumer has then to decide whether to visit another store and buy the same brand, switch brands, or delay the purchase and buy the selected brand after sometime from the same retail store, or just drop the idea of buying. Such a situation of temporary nonavailability may also influence consumer's attitude and verbal behavior.
Physical Conditions Store Atmosphere components Layout, Equipment, Colours, Furnishings, Space. Ambient conditions Temperature, Air quality, Noise, Music, Odour. Social conditions Customer characteristics, Number of Sales personnel Characteristics. Symbols used Signs, Dcor, Point-ofdisplays.

Sales personnel Individual characteristics Career objectives, Training, Personal situation, Social class, Stage in HLC.

Consumers Lifestyle, Shopping orientation, Stage in household lifecycle, Situation.

Sales personnel Mood, Effort, Response Commitment, Attitude, Knowledge, Skill.

Consumers Enjoyment, Time in store, Items examined, Information acquired, Purchase. Satisfaction.

Sales Personnel: Sales personnel are considered one of the most important in-store factors that influence consumers. This influence can be understood in terms of exchange theory, which emphasizes that every interaction involves an exchange of values. Each participant gives something to the other and hopes to receive something in return. The salesperson, for example, might offer expertise about the product to make the consumer's choice easier. Or the customer may be reassured

because the salesperson is likeable; his tastes are similar and he is perceived as someone who can be trusted. Purchase: Once the consumer has chosen a brand and selected a retail outlet, she/he takes the final step of completing the transaction. Traditionally, this would involve offering the cash to acquire the rights to the product. In developed and many developing countries, credit often plays an important role in completing the purchase transaction. Lecture-9 POST PURCHASE DECISION Post-purchase Dissonance:Cognitive dissonance occurs as a result of some discrepancy between a consumer's prior evaluation and the purchase decision. The dissonance theory was derived from two basic principles: (1) dissonance is unpleasant and will motivate the person to reduce it and (2) individuals experiencing dissonance will avoid situations that produce more dissonance. Postpurchase dissonance is most likely to occur when more than one alternative was attractive and a relatively permanent and difficult decision had to be made. The doubt or anxiety resulting from such a decision is termed as post-purchase dissonance. The probability that a consumer will experience dissonance and the magnitude of such dissonance, is a function of the following factors: The degree of irrevocability of the decision The importance of decision to the consumer The difficulty of choosing among the alternatives The individual's tendency to experience anxiety The consumers may use one or more of the following approaches to minimising the dissonance: Increase the desirability of the brand purchased Decrease the desirability of alternatives not selected Decrease the importance of the purchase decision Return the product before using it. Purchase Evaluation and Satisfaction/Dissatisfaction:Consumers' post-purchase evaluation process is influenced by the purchase process itself, post-purchase dissonance, product use and disposal of product/package. These are potential influencing factors and all purchases are not necessarily influenced by all these four factors. Consumers may evaluate each aspect of the purchase decision process right from the stage of information search to ultimately the product performance. The satisfaction with one aspect such as product performance may be affected by the degree of satisfaction with other factors such as price or behaviour of the salesperson. In case of nominal or

limited decisions, a consumer gets involved in active evaluation only if some component, such as an obvious product malfunction, directs attention to the purchase decision. Satisfaction with a purchase is basically a function of the initial performance level expectations and perceived performance relative to those expectations
Level of expectation Perceived performance relative to expectation More than expected Same as expected Worse than expected Below minimum desired performance Satisfaction* Non-satisfaction** Dissatisfaction Above minimum desired performance

Satisfaction/Commitment Satisfaction Dissatisfaction

Satisfaction/Dissatisfaction Determinants:Research studies indicate that there are several determinants that seem to influence satisfaction/dissatisfaction and include demographic variables, personality variables and consumer expectations etc. The importance of instrumental or symbolic performance varies by product category and across consumer groups. Research studies focusing on clothing items indicate that clothing seems to perform five valuable functions: Protection from environment Aesthetic and sensuous satisfaction Enhancement of sexual attraction Indicator of status Extension of self-image.

Lecture-10 Dissatisfaction Responses:Jagdip Singh found that disconfirmation is mediated by consumers' desire to understand why products fail. Such attribution processing (trying to learn the causes of failure) by consumers can lead to a particular type of emotional reaction. For instance, if consumers perceive that the problem was preventable by the marketer, they may get angry. Implications for Marketers:To meet consumer expectations, marketers need to focus on (1) creating reasonable expectations among consumers through appropriate promotional efforts and (2) ensure consistency in product quality so that whatever expectations are created among consumers through marketing communications are fulfilled. As consumers tend to express their dissatisfaction more vigorously, this may result in loss of sales not only to unhappy consumers but to their friends as well. It is advantageous for the concerned firm if the dissatisfied consumer directly communicates with the firm and to no one else about her/his unhappiness with the product. This offers the firm an opportunity to handle the problem quickly and decrease the chance of negative word-of-mouth communications. Research shows that consumers whose complaints are resolved to their satisfaction are comparatively more satisfied than consumers who had no complaints and were actually satisfied with the product. Satisfaction, Repeat Purchase and Customer Loyalty:Many multinational and domestic firms have responded positively to increased competition by focusing their efforts on producing satisfied customers rather than aiming for short-term sales results. At any point in time, the total number of buyers of any brand includes a percentage of satisfied customers. While many of these satisfied customers switch brands, satisfied customers are more likely to repeat purchase the brand than customers who are dissatisfied. Repeat purchasers continue to patronise the same brand without developing any kind of emotional attachment to it A firm has to specify its objectives for a particular market segment before developing the marketing strategy. Several objectives can be considered: To attract new users to the product category. Encourage current customers to use more. Encourage customers to become repeat buyers. Encouraging brand loyalty among current customers. To capture competitor's current customers. To encouraging brand switching among marginal customers. Relationship marketing focuses on developing an ongoing and profitable relationship with a company's customers. There are five important elements of relationship marketing: Developing a core product or service around which to build customer relationship. Customising the relationship according to the needs of the individual customer. Augmenting the core product or service with extra benefits. Pricing the product or the service in a manner that would encourage loyalty.

Internal marketing to employees so that they will perform well for customers. Product Disposal:Disposal of the product or its container may occur before, during, or after product use. In India, many state governments have banned the use of certain types of plastic bags. Huge loads of product packages are disposed of every day in the form of containers. These containers are thrown away as garbage, used in some way by consumers, or recycled. For example, Canon, Epson and some others boldly mention on the package that it is made from recycled material.


Get rid of it

Keep it

Throw away

Trade in

Sell it

Give away




New use



ROLE OF INVOLVEMENT Involvement Theory Traits of person, such as needs, importance, interest, values and unique experiences. The characteristics of the stimulus, such as differentiation of alternatives, communications media and message content. Situational factors, such as purchase or use occasion for a particular product.
Involvement variables Consumer factors: Interests Needs Importance Values Product or message factor Product different iation Communication - source Content of comm Possible results of involvement Evoking of counter-arguments to advertisements Ad effectiveness to induce purchase Relative importance of product class Perceived differences in product attributes Particular brand preference Influence of price on choice Amount of information Search Time spent evaluating alternatives Type of decision rule Used in choice

Involvement with

Advertisements Products or services Purchase decisions

nication Purchase factors: Situationaloccasion - Use occasion

Involvement Variables A number of variables are believed to precede involvement and influence its nature and extent. These variables are believed to be the sources that interact with each other to precipitate the level of - involvement at any consumers Opportunity to process particular time and situation. - Ability to process. The variables related to person refer to personal needs, values, interests and experiences etc.
Involvement variables - Person - Stimulus/object - Situational Involvement Response properties factors MODERATING VARIABLES - Intensity - Direction - Persistence - Search - Information processing - Decision/persuasion


Moderating Factors Many conditions may be present to limit the influence of involvement variables. For example, a consumer is contemplating the purchase of a cellular phone and the commercial she/he is watching would be quite interesting to her/him. Suddenly, somebody noisily knocks on the door and this distracts her/his attention from the advertisement, or the consumer may not possess much knowledge about a particular product and fail to understand some of the information contained in ads. This would limit the evaluation of alternative brands in a satisfactory manner. Such situations may limit the opportunity and the ability to process the information and influence the level of involvement.

Lecture-12 UNIT II CONSUMER MOTIVATION Motivation is said to be the driving force within individuals produced by a state of tension caused by unfulfilled needs and wants. Individuals strive to reduce this tension through appropriate behaviour that they expect will satisfy their needs

Unfulfilled Needs, Wants and Desires

Felt Tension


Appropriate Behaviour

Goal or Need Fulfillmen t

Cognitive Processes Tensio n Reduction

Needs Need has been defined as a felt state of deprivation of some basic satisfaction. Every person has needs. Some of these needs are basic to sustaining life and are born with individuals. These basic needs are also called physiological needs or biogenic needs and include the needs for air, water, food, shelter, sleep, clothing, and sex. Physiological needs are primary needs or motives because they are essential to survival. Acquired needs are learnt needs that we acquire as a result of being brought up in a culture and society. Needs may also be classified even more basically utilitarian or hedonic. Goals Human behaviour is goal-oriented. Marketers are particularly interested in consumers goal-oriented behaviour that concerns product, service or brand choice. To satisfy any specific need there are a number of solutions or goals. For example, to satisfy hunger any type of food is good enough but the individual consumers goal may be a chicken roast. The goal selection depends on an individuals personal experiences, physical capacity and prevailing cultural norms and values and whether the goal object is accessible. Without needs there are no goals. Needs and goals are interdependent and neither can exist without the other.

Classifying Motives Several schemes of classifying motives have been suggested which group motives on the basis of one unique characteristic of interest. One such scheme distinguishes physiological versus psychogenic motives. Physiological motives are concerned with satisfying biological needs of the individual such as hunger, thirst and safety etc. and psychogenic motives focus on satisfying psychological needs such as achievement, affection, or status etc. One important characteristic of psychological motives is that they are learned. These acquired or secondary motives exert very powerful influence on people. Motives have also been classified as positive versus negative. Positive motives attract consumers towards desired goals, while negative motives direct them to avoid unpleasant consequences. For example, fear can induce consumers into buying water purifiers. Needs and Goals are Dynamic The nature of needs and goals is not static; they keep on recurring, changing and growing as a result of an individuals changing physical condition, environment, experiences, learning and social interactions. Some important reasons why motivated behaviour never comes to an end include the following: Needs are never satisfied completely or permanently New needs emerge New needs emerge Substitute goals are formed Lecture-13 Motivational Conflict: Motivational conflicts can take one of the three principal forms. Approach Approach Conflict: This type of conflict occurs when a consumer is faced with two desirable alternatives, such as either to buy a good music system or a computer. Approach Avoidance Conflict: This type of conflict occurs when a consumer is facing a purchase choice that has both positive and negative consequences. Avoidance Avoidance Conflict: This involves deciding between two or more alternatives that are perceived as undesirable. Such situations are somewhat stable and consumers tend to vacillate between the undesirable choices. Motivational Intensity: Motivational intensity represents how strongly individuals are motivated to satisfy a particular need. Sometimes, the need to satisfy a particular motive may be very strong and at other times the intensity may be only modest. As the deprivation of need increases, need recognition becomes more acute and motivational intensity becomes stronger. Motivational intensity also depends on the felt needs importance and needs perceived as most important by an individual are pursued more vigorously. For instance, if a person is kept awake for three or four days at a stretch, she/he will experience greater sense of urgency to get sleep. Motivational intensity will also depend on an individuals involvement in some object or behaviour of great personal relevance that is perceived to satisfy important needs. For example, individuals motivated to be attractive to opposite sex, will be more involved with products and services perceived as satisfying this need compared to those who are not much motivated about being attractive to the opposite sex.

Frustration and Defence Mechanisms Some more common forms of individual reaction to frustration can be of the following type: Aggression Rationalisation Regression Withdrawal Projection Autism Identification 8. Repression Needs and Goals may Vary Among Individuals Our behaviour as consumers is often focused on satisfying more than one need at the same time. Usually there is one predominant need that triggers the behaviour. It is not possible to accurately identify the motives by observing behaviour. People striving to satisfy different needs may choose the same goals or people with same needs may seek different goals. Consider, for example, three people with ego needs. Each of them may seek fulfillment in different ways. One becomes a professor, the second becomes a pianist and the third becomes active in civil defence. Motive Arousal Physiological Arousal: Deprivation of any bodily need such as food, water and other life sustaining necessities activates the need. Most of the physiological cues are involuntary and often arouse some related needs. For example, a person may heat up water to take a bath and may also make a note to buy a geyser. Emotional Arousal: Sometimes latent needs are stimulated because a person gets involved in thinking or daydreaming about them. For example, a young man who wants to become a cricket player may identify with Sachin Tendulkar and use products endorsed by him commercially. Cognitive Arousal: Sometimes just random thoughts may stimulate arousal of needs. An ad home away from home may remind a person of home and he may suddenly become aware of his need to call his wife or children. Situational Arousal: A certain situation confronting a consumer may also trigger arousal. This can occur when the situation attracts attention to an existing bodily condition. For example, seeing an ad of Coca-Cola or a display suddenly makes one aware of being thirsty. The need would have been present but was not strong enough to trigger arousal.

Lecture-14 Systems of Needs

Most authorities agree about specific physiological needs but there is marked disagreement about specific psychogenic or secondary needs. Henry Murray (1938) prepared a list of 28 psychogenic motives. He believed that everyone has the same basic set of needs. What differs among individuals is that they attach different priority and ranking to these needs. Some important psychogenic motives pointed out by Murray include acquisition, achievement, recognition and exhibition, which are believed to play an important role in consumer behaviour. Maslows Hierarchy of Needs The hierarchy of needs proposed by Abraham H. Maslow is perhaps the best known and is good guide to general behaviour. Maslow classified needs into five groupings, ranking in order of importance from low-level (biogenic) needs to higher-level (psychogenic) needs and suggested the degree to which each would influence human behaviour.

Evaluation of Maslows Need Hierarchy Theory The five need-levels are generic enough to cover most human needs. The major problem with need hierarchy theory is that research does not generally validate the theory. It is not at all possible to measure accurately how satisfied one need is before the next higher-level need becomes active. Despite criticisms, Malows theory is widely used by marketers to understand how various products or services fit into the plans, goals and lives of potential consumers. It is used to develop suitable advertising appeals, enabling marketers to focus on a need level that is shared by large number of audience in the target market. McGuires Comprehensive Scheme of Psychological Motives William J. McGuire presented a more comprehensive list of 16 motive categories. He first divides motivation into four main categories based on two criteria: Cognitive & affective motivation. Preservation & growth motivation. Cognitive Preservation Motives 1. Consistency-Need (active, internal): This need focuses on maintaining a consistent and coherent view of oneself and the world. These aspects include beliefs, attitudes, behaviours, opinions, self-images, and view of others etc. 2. Attribution-Need (active, external): This need focuses on understanding and inferring causes for various occurrences. Humans have a tendency to attribute causes of success to self and unfavourable outcomes to some outside causes or forces. 3. Categorisation-Need (passive, internal): Consumers have a need to categorise complex information in order to organise and understand it easily. There is too much information and almost every day we are exposed to new experiences, so we have need to establish distinct categories that facilitate processing large amounts of information. 4. Objectification-Need (passive, external): Motives of this category focus on observable stimuli or symbols that helps people to draw conclusions about what they feel and know. We establish impressions, feelings, and attitudes by observing our own and others behaviour to draw inferences what one feels and thinks. Cognitive Growth Motives Autonomy-Need (active, internal): The need for independence and individuality is viewed as an important characteristic in many cultures around the world. People seek individuality and personal growth through self-actualisation and development of distinct identity. One way of expressing this need for autonomy is that consumers acquire or possess products that are considered as unique in some way. Stimulation-Need (active, external): This need focuses on seeking stimulation through new events circumstances, or exploration. Consumers indulge into variety seeking just for the sake of change and brand switching to satisfy this need.

Matching-Need (passive, internal): People are motivated to create mental images of ideal situations according to their perceptions and on an ongoing basis match (compare) their perceptions of actual situations to these ideals. Utilitarian-Need (passive, external): This type of motivation focuses on the need to make use of different sources of information in the external environment for ones advantage. Affective Preservation Motives Tension-Reduction Need (active, internal): People are faced with various situations in their daily lives when their needs are not fulfilled, causing undesirable stress and tension. Self-expression Need (active, external): This need deals with projecting ones identity to others so that others know who they are, what type of products they use and make a statement about their lifestyle. Ego Defence-Need (passive, internal): It is another important motive and concerns the need to protect oneself from social embarrassment and other threats to self-concept. Reinforcement-Need (passive, external): People often experience strong motive to behave in certain manner because that behaviour brought rewards in similar situations in the past. Affective Growth Motives Assertion-Need (active, internal): This need leads one to compete, achieve success, power, and admiration. For those having this motivation dominance, accomplishment and success are important. Affiliation-Need (active, external): People seek acceptance, affection, and warm personal relationships with others. Group membership is important to most people in their lives and to fulfil this need they observe group norms including purchase decisions. Identification-Need (passive, internal): This motive drives people to adopt new identities and roles to increase ones self-concept. Modelling-Need (passive, external): Modelling is major learning method by which children learn to become consumers. Children imitate the behaviour of elders and learning takes place. Freuds Theory of Motivation Sigmund Freuds psychoanalytic theory has had a strong influence on the development of modern psychology and on explanations of motivation and personality and has been used to study consumer motivations. Motivation researchers conduct in-depth interviews with a few dozen consumers to explore unconscious motives. They also use projective techniques such as word association tests, sentence completion tests and picture interpretation etc. Lecture-15

PERSONALITY AND SELF CONCEPT In the context of application to marketing, three distinct properties of personality appear to be of central importance: Personality is used to account for differences between individuals rather than the similarity. However, all individuals may not differ in every respect. Many individuals tend to be similar in terms of single personality traits. Personality is generally believed to be consistent and enduring over time and tends to carry to a variety of situations. Knowing this, marketers attempt to influence specific consumer responses by appealing to relevant personality traits. Despite the fact that personality tends to be consistent and enduring, it may change due to major life events such as marriage, birth, death in family, changes in economic circumstances and the process of ageing. Self-concept (self-image) Theory Self-concept is defined as the totality of the individuals thoughts and feelings having reference to herself/ himself as an object. Self-concept theory is related to ego and super-ego, which are the two important concepts of psychoanalytic theory. Two important principles govern the self-concept theory the desire to achieve self-consistency and the desire to enhance ones self-esteem. There are three levels Actual Self Ideal Self Consumption and Extended Self Psychoanalytic Theory Freuds psychoanalytic theory proposes that every individuals personality is the result of childhood conflicts. These conflicts are derived from three fundamental components of personality: Id, Ego and Superego. According to the theory, the id (or libido) is the source of an individuals strong basic drives and urges such as hunger, sex, aggression and self-preservation. The id operates on what is called the pleasure principle, that is, to seek immediate pleasure and avoid pain. The id is entirely unconscious and not fully capable of dealing with objective reality. Many of its impulses are not acceptable to the values of organised society. A newborn babys behaviour, for example, is governed totally by the id. There are several themes based on psychoanalytic theory, which are sometimes used by marketers in attempting to influence consumers such as fantasy, wish fulfillment, aggression and escape from lifes pressures (perfume, hair dye, skincare products, dresses, farm houses and motorcycles are some examples of product categories).

Social/Cultural (Neo-Freudian) Theory Freuds understanding of personality focused mainly on observations of emotionally disturbed people. They believed that social and cultural variables, rather than biological drives, are more important in the development of an individuals personality. These social theorists, also referred as neo-Freudian school, viewed individuals as striving to win over the feelings of inferiority and searching for ways to gain love, security and relationships. Carl Jung identified a number of personality types, such as sensing-thinking, sensing-feeling, intuiting-thinking and intuitive-feeling etc. 1. Sensing-thinking Personality 2. Sensing-feeling Personality 3. Intuiting-thinking Personality 4. Intuiting-feeling Personality Trait Theory The trait theory states that human personality is composed of a set of traits that describe general response patterns. The concept is that traits are general and relatively stable characteristics of personality that influence behavioural tendencies. The concept can be summed up in three assumptions: Behavioural tendencies in individuals are relatively stable. A limited number of traits are common to most individuals. They differ only in the degree to which they have these tendencies. These traits and their relative degree when identified and measured, are useful in characterising individual personalities. .


Facet s - Downto earth Honest Wholesome Cheerful Darin g Spirite d Imaginativ e - Up to date Reliable Intelligent Successful Upper class Charmi n Outdoorsy Tough

Traits - -oriented Down to earth, Family , Small town. Honest, Sincere, Real. Wholesome, Original. Cheerful, Sentimental, Friendly. Daring, Trendy, Exciting. Spirited, Cool, Young. Imaginative, Unique. - Up to date, Independent, Contemporary. Reliable, Hard working, Secure. Intelligent, Technical, Corporate. Successful, Leader, Confident. Upper class, Glamorous, Good looking. Charming, Feminine, Smooth. Outdoorsy, Masculine, Western.
Type Tough, Rugged. of decision rule Used in choice

1. Sincerity

2. Excitement

Competenc 3. e

4. Sophistication

5. Ruggedness

Lecture-16 CONSUMER PERCEPTION AND ATTENTION Information processing involves a series of activities by which stimuli are recognised, perceived, transformed into meaningful information and stored in memory Sensation (Exposure to Stimuli) Sensation is the immediate and direct response of sense organs to simple stimuli such as an advertisement, a brand name, or a package etc. Exposure only requires presence of a stimulus within an individuals relevant environment. Sensitivity to stimuli varies among individuals and depends on the quality of sensory receptors. Sensation for a stimulus depends on differentiation of input. A relatively static and unchanging environment provides little or no sensation even though the sensory input is strong.

Absolute Threshold Absolute threshold refers to the lowest level at which an individual can experience a sensation. At this point, an individual can detect a difference between something and nothing and this point would be that individuals absolute threshold for that stimulus.. Absolute threshold for sound in case of these two individuals would be different. Many individuals ability to discriminate sensory characteristics such as taste, smell, hearing, or feel is small. The senses are likely to become increasingly dull under conditions of constant stimulation and the absolute threshold increases.

Differential Threshold Differential threshold is the smallest detectable difference between two values of the same stimulus. This is also referred to as j.n.d (just noticeable difference). To measure the differential threshold for a stimulus, one commonly changes its intensity in very small amounts. An individuals threshold exists when she/he first notices that the stimulus has changed. The difference between this value and the starting value is the just noticeable difference. Webers Law states that stronger the initial stimulus, greater the additional intensity needed for the second stimulus to be perceived as different. The difference in price may become noticeable if the increase were to be one thousand rupees or more. Marketers use Webers law to predict how consumers will respond to differences between marketing variables or changes in these variables. Attention Attention occurs when one or more stimuli activate one or more sensory receptor nerves and the resulting sensations reach the brain for further processing. Human beings are constantly exposed to numerous stimuli every minute of the day. This heavy intensity of stimulation to which we are exposed should serve to confuse us totally but it does not. The reason is that perception is not a function of sensory input alone. An important principle of perception is that raw sensory input alone does not elicit or explain the coherent picture of the world that most adults possess. Perception is the outcome of interaction of physical stimuli from external environment and an individuals expectations, motives and learning based on earlier experiences. The interaction of these two types of very different stimuli creates, for an individual, a very private and personal picture of the world. Since every individual is unique because of needs, wants, desires, expectations and experiences, no two people perceive the world precisely the same way. Perceptual Selection Human beings, subconsciously, are quite selective in their perception. Everyday we look at so many things, ignore others and do not even notice many others. We really perceive only a very small fraction of stimuli to which we are exposed. One or more factors related to experience and motives affect consumers selective exposure and selective attention at a given time and can increase or decrease the probability that a certain stimulus will be perceived.

Stimulus Factors There are numerous marketing-related stimuli that affect consumers perception, such as type of product, physical characteristics, packaging, colour, brand name, advertisement, claims, endorser, size of ad, position of ad or time of commercial etc. The product and its components such as package, contents and physical properties etc. are primary or intrinsic stimuli, while marketing communications developed to influence consumer behaviour are secondary or extrinsic stimuli. In general, stimuli that stand out against their background capture immediate attention. Novel stimuli achieve this through unique images, shapes, sounds and colours. For example, in many print ads, there is lots of white space and just a few words, or the opening scene of a commercial is without a sound. These are attempts at differentiation and often merit the attention of consumers. Expectations People generally see what they expect to see and this expectation is based on familiarity and previous experience. Consumers often perceive products and product attributes according to their expectations. It is also true that in many instances stimuli that are in sharp contrast to expectations attract more attention than those that meet our expectation. Motives Selective Exposure Selective Attention Adaptation Perceptual Vigilance and Defence Perceptual Blocking Perceptual Organisation All the selected stimuli from the environment are not experienced as separate and discrete sensations. Individuals tend to organise these sensations into a coherent pattern and perceive them as unified wholes. The specific principles underlying perceptual organisation are sometimes referred as Gestalt psychology. Gestalt is a German word and means pattern or configuration. Three most basic principles of perceptual organisation focus on figure and ground relationships, grouping and closure. Figure and Ground This is one of the most basic and automatic organisational processes that perceivers use. People have a tendency to organise their perceptions into figure and ground relationship. In order to be noticed, stimuli must contrast with their environment. The common line separating the figure and the ground is perceived as belonging to the figure and not to the ground. This gives greater definition to the figure. Grouping

Individuals have an inherent tendency to grouping or chunking a variety of information or items close to each other in time or space and form a unified picture. The tendency to group stimuli may result as a consequence of proximity, similarity, or continuity. When an object is associated with another because of its closeness to that object. Closure Individuals have a need for closure and fulfil it by organising their perceptions in a manner that leads to forming a complete picture. In the event that they are exposed to a pattern of stimuli, which in their view is incomplete, they tend to perceive it as complete by filling in the missing pieces. This phenomenon may be the result of conscious or subconscious efforts. Because of this need for closure, individuals experience tension when some task is incomplete and a feeling of satisfaction and relief develops with its completion. Interpretation of Stimuli As the old saying goes, a person sees what he/she expects to see, Interpretation of stimuli by individuals is based on their earlier experiences, plausible explanations they can assign, their motives, beliefs and interests at the time of perception. For a number of reasons, stimuli can often be weak or strong and may prove to be quite ambiguous to individuals. A number of factors influence individuals that may distort their perceptions, such as physical appearances, stereotyping stimuli, irrelevant stimuli, first impressions, jumping to conclusions and halo effect etc. Physical Appearance Stereotyping Stimuli Irrelevant Stimuli First Impression Jumping to Conclusions Halo Effect Images are Important to Consumers An image is a total perception of something that individuals form by processing all the information they are exposed to over time. Research indicates that consumers develop enduring perceptions or images about brands, prices, stores and companies. They believe correspond to or agree with their self-images and avoid buying products that do not fit their self-images. Consumers also tend to buy from those outlets that seem to be consistent with their self-image. Many large retail stores and chains in India have started focusing on the need to build their identity to attract certain classes of consumers and create store loyalty among them . Price Perceptions The company in 1989 reverted back to its strength of high-priced pens and became profitable again. Consumers have certain expectations of what the price is or should be of a product or service. Their expectations may or may not reflect the actual price of the product or service.

Consumers often associate the price of a product or service with quality. Consumers consider differential pricing used by some marketers to benefit certain classes of consumers such as club members, senior citizens, women etc., A reference price (also called standard price) is any price that a consumer uses as a basis for comparing another price. Consumers are willing to accept a range of prices, called the acceptable price range, for a product or service. Researchers have investigated the effects of three types of consumer price perceptions communicated through advertising. Plausible low prices Plausible high prices 3. Implausible high prices Lecture-16

Perceived Product and Service Quality Consumers often tend to assess the quality of a product or service on the basis of different types of information they relate with the product or service. In general, experienced and knowledgeable consumers are inclined to use country-of-origin as an indicator of product quality only when the information about product attributes is ambiguous and consumers lacking experience tend to use country-of-origin as an indicator of product quality. Kent B. Monroe and Susan B. Petroshius have summarised research findings to show how consumers react to price variable: Consumers seemingly use price as an indicator of product quality as well as an indicator of purchase cost. Consumers appear to develop reference prices as standards for evaluating prices they see in the marketplace. Consumers reference prices are not constant and get modified by shopping experiences. Factors, such as brand image or store image, can soften the strength of the perceived pricequality relationship. Some researchers believe that there are five dimensions of service quality: The appearance of physical facilities, equipment, personnel and communication materials. Ability to perform the promised service dependably and accurately. Willingness to help customers and provide prompt service. Knowledge and courtesy of employees and their ability to convey trust and confidence. Caring, individualised attention that the firm provides to the customers. Joseph Plummer is of the opinion that there are three components to a brand image: Attributes Consequences and Brand personality

Consumers Risk Perception Financial or monetary risk is the risk that the product will not be worth its cost. Expensive products and services are most subject to this risk. Performance risk, which is associated with the possibility that the product will not perform as anticipated or may even fail. The consumer wastes time in getting it repaired, or replaced. The risk is greatest when the product is technically complex. For example, an expensive computer. Physical risk refers to bodily harm to self and others due to product usage. For example, food and beverages, electrical or mechanical appliances, or medical services etc. can sometimes prove risky. Social risk, which means that a poor product purchase may not meet the standards of an important reference group and may result in social embarrassment. For example, clothes, jewelry, carpet, or car etc. Psychological risk relates to loss of self-esteem or self-image as a result of poor choice and making her/him feel stupid. For example, highinvolvement category products or services. How Consumers Deal with Risk Consumers acquire additional information. This allows them to better assess the risk. Consumers remain brand loyal. They stay loyal to a brand which has delivered satisfaction instead of buying an untried brand. Consumers buy the most popular brand because they usually believe that well-known and popular brands can be trusted. Consumers buy the most expensive model or brand as they often associate price with quality. Consumers rely on store image. They trust reputable retail outlets and depend on them regarding their choice of merchandise for resale. Consumers seek money-back guarantees, warranties and pre-purchase trial. For example, a marketer offers free trial and no questions asked refund of money, or there are guarantees/ warranties. Reduce level of expectations to reduce psychological consequences before making the purchase. Lecture-17 CONSUMER LEARNING Four components seem to be fundamental to almost all the learning situations, motivation, cues, response and reinforcement. Motivation: Motivation is the driving force that impels individuals to action and is the result of unfulfilled need(s).

Cues: Cues are relatively weak stimuli, not strong enough to arouse consumers but have the potential of providing direction to motivated activity. Response: The way an individual reacts to a cue or stimulus is the response and could be physical or mental in nature, leading to learning. Reinforcement: Most scholars agree that reinforcement of a specific response increases the likelihood for the response to reoccur. Reinforcement can be anything that both increases the strength of response and tends to induce repetitions of the behaviour that preceded the reinforcement. Behavioural Learning Theories Behavioural learning theories are sometimes also referred to as connectionist or stimulus response theories. Behaviourist psychologists believe in observing changes in an individuals responses that result due to exposure to specific external, environmental stimuli. Behavioural theories are based on stimulus-response (SR) orientation and the belief is that learning occurs through the connection between the stimulus and a response. When an individual responds in a predictable manner to a known stimulus, the person is said to have learned. Two important behavioural theories, classical conditioning (also called respondent conditioning) and instrumental conditioning (also called operant conditioning) are of great relevance to marketing. Classical Conditioning In everyday life, we think of conditioning as a kind of automatic response to something as a result of repeated exposure to it. Classical conditioning pairs one stimulus with another that already elicits a given response and over a period of repeated trials, the new stimulus will also start causing the same or quite similar response. The Russian psychologist, Ivan Pavlov, was the first who pioneered the study of classical conditioning. Repetition Repetition is believed to work by strengthening the bond of association and thus slowing the process of forgetting. Learning follows a pattern, which is known as learning curve. In the figure 7.2, x axis shows the number of repetitions and y axis represents the amount of learning. In a typical case, the rate of learning is quite rapid in the early stages. In later stages, as the amount learned accumulates, the rate of learning per repetition decreases. This shows that there is a limit to the amount of repetition that will aid learning and beyond a limit, the attention and, the rate of learning will decline. Stimulus Generalisation Stimulus generalisation occurs when two stimuli are seen as similar and the effects of one, therefore, can be substituted for the effects of the other. This principle states that a new but similar stimulus or stimulus situation will produce a response that is the same or similar as that produced by the original stimulus. The more the new stimulus is like the conditioned stimulus, the more probable it is that the new stimulus will produce the same conditioned response. According to Bernard Brelson and Gary A. Steiner, the process of stimulus generalisation seems to occur automatically unless stopped by discrimination learning. Stimulus generalisation makes consumer life easier and allows them to

simplify the process of evaluation because they do not have to make separate judgements for each and every stimuli. Some companies follow a policy of stimulus generalisation and some others avoid it. Product line extension Product form extension Product category extension Family branding Stimulus Discrimination Stimulus discrimination is just opposite to stimulus generalisation. Unlike reaction to similarity of stimuli, discrimination is a reaction to differences among similar stimuli. The ability of humans to discriminate among stimuli is learned. For example, frequent users of a brand are better able to notice relatively small differences among brands in the same product category. Not taking any chances, marketers use advertising to communicate brand differences that looking at physical characteristics alone would not convey. The concept of product or brand positioning is based on stimulus discrimination, which strives to create a brands unique image in the consumers minds. Instrumental Conditioning (Operant Conditioning) Instrumental conditioning also involves developing association between stimulus and response but requires the subject to discover a correct response that will be reinforced. Any response elicited is within the conscious control of the subject.

Reinforcement Reinforcement is anything that increases the strength of response and tends to induce repetitions of the behaviour that preceded it. Reinforcement or repeated positive outcome influences the likelihood that a response will be repeated. Reinforcement can be of two types: positive reinforcement and negative reinforcement. Instrumental conditioning has important marketing applications in influencing the likelihood that consumers will repurchase a product or service. Repurchase may result only when they are satisfied with usage or consumption experience. Cognitive Learning Theory Cognitive learning approach has dominated the field of consumer behaviour in recent years. Learning that takes place as a result of mental activity is termed as cognitive learning. Cognitive theorists do not endorse the view that learning is based on repetitive trials leading to the development of links between stimuli and responses because consumer behaviour typically involves choices and decision-making. Much earlier, Wolfgang Kohlers work in the 1920s with apes has furnished

important insight into cognitive learning. In case of cognitive learning theory, the concept of closure (the reader may refer to the topic Perception) is important and is considered as the reinforcing factor. Cognitive learning theory is quite relevant in understanding the consumer decision process in situations of high-involvement purchases. In case of complex buying behaviour (extensive problem solving), the consumer becomes aware of a need, indulges in information search and evaluates available alternatives to satisfy the need.

Lecture-18 CONSUMER ATTITUDES Functions of Attitude (Functional Theory of Attitudes) Understanding functions of attitudes helps in learning how they serve consumers. Using this approach, marketers attempt to influence effective responses by using messages that appeal to consumers on the basis of one or more of these four types of functions. According to Daniel Katz, attitudes perform four important functions for individuals: Utilitarian function Value-expressive function Ego-defensive function Knowledge function Attitude Models Tri-component Attitude Model According to this model, attitudes consist of three main components: Cognitive component Affective component Conative component Multi-attribute Attitude Models The Attitude-toward-object Model This is the simplest model and is particularly appropriate for measuring attitudes towards product/service category, or specific brands. The model is usually shown by the following equation: where Attitude 0 = the persons overall attitude toward the object b i = the strength of persons belief that the object contains attribute i e i = persons evaluation or intensity of feeling towards attribute i of attribute) n = the number of relevant beliefs for that person. The Ideal-Point Multi-Attribute Model


According to the attitude toward object model, more (or less) is liked only up to a point for some attributes. Any further increase (or decrease) beyond this point in these attributes becomes bad. Fishbeins Attitude toward Behaviour Model The revised Fishbein model focuses on an individuals attitude towards her/his engaging in purchase behaviour or acting with respect to an object rather than only the attitude towards the object itself. The appeal of this model is that it seems to be a better predictor of an individuals actual behaviour than the attitude-toward-object model. The Attitude Toward Behaviour Model is expressed as: where: AB = the individuals overall attitude towards performing the specific behaviour bi = the persons belief that performing that behaviour results in consequence 1 ei = the persons evaluation of consequence of 1 n = the number of relevant behavioural beliefs. Theory of Reasoned Action Model (TORA) Theory of Reasoned Action (TORA) is the third modification of the original Fishbein model. This theory assumes that consumers consciously consider the consequences of the alternative behaviours being contemplated and choose the one that leads to the most desirable consequences. Factors Inhibiting the Relationship Between Beliefs, Feelings and Behaviour Lack of consumer involvement Lack of purchase feasibility Lack of personal experience with the product Lack of relation between consumers values and beliefs Effect of market conditions Purchase situation Poor attitude accessibility from memory FORMATION AND CHANGE OF ATTITUDES Changing Attitudes It is easier to change beliefs than desired benefits. Marketers could attempt either to change brand beliefs or change the benefits consumers desire by changing the value of attributes. Consumers desired benefits are more enduring than beliefs. It is easier to change brand beliefs than brand attitudes. The high-involvement hierarchy models suggest that change in beliefs precedes a change in attitudes (feelings). Changing attitudes is a more relevant vehicle than beliefs for hedonic products. Products purchases based on emotion or fantasy rely on feelings (attitude) rather than beliefs. It is easier to change attitudes for low-involvement products. Under conditions of lowinvolvement, consumers are not committed to the brand.

It is easier to change weak attitudes than strong ones. If consumers do not hold strong feelings (attitudes) about brands, any commitment is non- existent and brand switching is quite common. Multi-attribute Models and Attitude Change On the basis of Fishbeins multi-attribute model, four strategies can be considered to change attitudes: By changing the values consumers place on product attributes (ei component in the model) By changing consumers brand beliefs (bi component in the model) By changing brand evaluations (Attitude component) By changing behavioural intentions (Attitude (beh)) Lecture-19 Katz Functional Theory and Attitude Change Daniel Katz pointed out four functions performed by attitudes. As already discussed, these functions include utilitarian function, value-expressive function, ego-defensive function and knowledge function. Changing Attitudes Through Utilitarian Function: One very effective approach to changing brand attitudes is to show how the product can solve a problem not considered earlier. Teflon has found multiple uses; M-Seal is used for sealing leakages; however auto repair shops and garages use it for levelling minor dents and deep scratches. Changing Attitude Through the Value-expressive Function: Attitudes reflect our general values, lifestyles and outlook. It is difficult to change value-expressive function because these relate to personal values and are very important to people. Changing Attitude Through Ego-defensive Function: Very strongly held attitudes often serve the ego-defensive function and are least likely to accept outside influences. A cigarette smoker or tobacco chewer is quite likely to ignore any information about the dangers associated with smoking or tobacco chewing. This is an ego-defensive function and results in an attempt to deliberately avoid painful information. Changing Attitudes Through the Knowledge Function: This approach of changing attitudes is based on consumers cognitive needs. Knowledge function facilitates the information-processing task. Most marketers attempt to create a clear and unambiguous positioning for their brands to develop favourable consumer attitudes. Elaboration Likelihood Model and Attitude Change Under conditions of high-involvement, consumers process information through a central route. They deliberately and consciously examine and process message elements that in their belief have relevance to a meaningful and logical evaluation of the brand. ELM model also considers the importance of consumers thoughts (referred to as cognitive responses) when they are processing marketing related messages. According to this thinking, under conditions of high-involvement, consumers produce thoughts that are more relevant to messages.

The presence of such thoughts indicates that the consumer is processing information in a highinvolvement context. Under conditions of low-involvement, consumers may react with thoughts about the models looks, spokespersons voice or dress, or the background etc., which are all peripheral cues and not related to the ad message. Post-purchase Attitude Change Cognitive Dissonance Theory The degree of commitment. If it is easier to alter the decision, the consumer is less likely to experience dissonance. The importance of the decision. If the purchase decision is more important, it is more likely that the consumer will experience dissonance. The difficulty of choosing among alternatives. Decision difficulty depends on the number of alternatives considered. The individuals personality characteristics. Some individuals have a greater tendency of experiencing anxiety than others. Attribution Theory According to the attribution theory (D. J. Bem), consumers seek to determine causes (attributions) for events, often after the fact. The theory suggests that consumer attitude formation and change is the result of consumers looking at their own behaviour and making judgements about it. For example, if a consumer regularly uses Colgate toothpaste, looking at his/her own behaviour she/he may conclude that she/he likes the toothpaste (she/he has a positive attitude towards the brand). Consumers are also likely to take all the credit themselves for any success (internal attribution) and attribute failures to others or external causes (external attribution).


The Characteristics of Culture Culture is invented Culture is learnt Culture is shared Culture satisfies needs Cultures are similar but different Culture is not static

Cultural Values Cultural values are enduring beliefs that a given behaviour or outcome is desirable or good (Milton J. Rokeach). Our values, as enduring beliefs, serve as standards that guide our behaviour across situations and over time. Social values represent "normal" behaviour for a society or group. Personal values define "normal" behaviour for an individual. Personal values mirror the individual's choices made from the variety of social values to which that individual gets exposed. Rokeach Value Scale (RVS) is used by asking respondents to rank the importance of goals and ways of conduct that can be analysed by ethnicity, religion, age, gender, or any other variables that might be of interest in consumer analysis. Instrumental values such as loving, helpfulness, and honesty etc. are needed to achieve equality, which is a terminal value. The seven categories are: Maturity Security Pro-social behaviour (doing nice things to others) Restrictive conformity Enjoyment in life Achievement Self-direction.

Other-oriented Values Individual/Collective Youth/Age Extended/Limited Family Masculine/Feminine Competitive/Cooperative Diversity/Uniformity Environment-oriented Values Cleanliness Performance/Status Tradition/Change Risk-Taking/Security Problem Solving/Fatalistic Nature Self-oriented Values Active/Passive Sensual Gratification/Abstinence Material/Non-material Hard Work/Leisure Religious/Secular Lecture-21 Schwartz Value Scale (SVS) Shalom H. Schwartz's work has become most influential on cultural value research in marketing and other behavioural disciplines. His research has focused on finding a universal set of values and finding out the structure of their relations. Schwartz Value Scale (SVS) and Portraits Questionnaire (PQ) were designed to measure a comprehensive set of values believed to be held by nearly everyone. Based on empirical research in more than 60 countries and covering over 100,000 respondents, his theory proposes that values are goals across all situations that serve the interest of individuals or groups and express one of ten motivations or value types. Cultural Differences in Non-verbal Communications Whenever we are exposed to a foreign culture, differences in verbal communications (languages) become immediately noticeable. The meaning assigned to a particular group of letters or sounds is not inherent in the letters or sounds. A word means what a group of people agree it to mean. Translating marketing communications from one language to another may pose problems and result in wrong or ineffective communications. Non-verbal communication systems that refer to the

arbitrary meanings a culture assigns to actions, events and things other than words. Non-verbal communications are mostly influenced by seven factors: Time Space Symbols Friendship Agreements Things Etiquette Cross-cultural Influences The theme of cultural influences in a given country has two variations. Cross-cultural influences and sub-cultural influences. Cross-cultural analysis helps marketers determine to what extent the consumers of two or more nations are similar or different. The greater the similarity between consumers, the more feasible it is to use relatively similar strategies in each country. Rebecca Piirto has reported a study that surveyed more than 15,000 adults in 14 countries on five continents to identify global consumer segments sharing attitudes, values and actual buying behaviour, blurring national boundaries and cultural variations. Strivers Achievers Pressured Adapters Traditional Aspects of Sub-cultures The influence of sub-culture on consumer behaviour depends on factors such as sub-cultural distinctiveness, sub-cultural homogeneity and sub-cultural exclusion. Sub-cultural distinctiveness Sub-cultural homogeneity Sub-cultural exclusion Sub-cultures may be based on religion, region, language, age, gender and many other differences. As in most other countries, one may easily notice several sub-cultures in India. Out of several subcultures, only some are important from the marketers' point of view for formulating separate marketing programmes. Much depends on the relevance of a product category to a particular subculture.

Religious sub-cultures: Religious groups can be regarded as sub-cultures because of traditions and customs that are tied to their beliefs and passed on from one generation to the next. Regional sub-cultures: Distinct regional sub-cultures arise due to climatic conditions, the natural environment and resources, language and significant social and cultural events. Such groups can be identified as having distinct and homogenous needs, tastes, lifestyles and, values. Anyone who has travelled across India would have probably noted many regional differences in language and consumers' consumption behaviour, particularly dresses, food and drink. Gender as Sub-culture In all societies, males and females are generally assigned certain characteristics and roles. Gender roles are the behaviours considered appropriate for males and females in a given society. Gender roles are ascribed roles, which means that a role is based on an attribute over which the individual has little or no control. Achievement roles are based on performance criteria over which the individual has some degree of control. Researchers find it useful to categorise women as traditional or modern, based on their preference of one or the other of two opposite lifestyles: Traditional: After marriage the husband provides for the family and the wife assumes responsibility for running the house and taking care of the children. Modern: After marriage both husband and wife share responsibilities. Both work and they share homemaking and childcare responsibilities. The market of women or men is not as homogenous as one is likely to believe. According to C. M. Schaninger, M. C. Nelso and W. D. Danko, aleast four significant female market segments exist. Traditional housewife Trapped housewife Trapped working woman Career working woman Lecture-22 SOCIAL CLASS Social class (also referred to as social standing) means societal rank, which is one's position relative to others on one or more dimensions valued by society. Social class is based on demographic Socio-economic Social variables that others in society aspire for and hold in high esteem. These Unique characteristics precipitate unique behaviours. factors class behaviours Education Occupation Income level Ownership class Heritage Upper class Middle class Lower-middle Purchases Lower class Preferences


The Nature of Social Class Social classes are based on many components and not only on income and occupation, though income and occupation influence the determination of social class in many developed and developing economies. Social classes are hierarchical that is, from high status to low status. Based on status criteria, individuals may be placed within a class on this hierarchy. The members of one specific social class perceive the other class either as higher or lower in status. Social classes restrict behaviour and interaction between the classes is limited. Generally, members of a social class feel more comfortable and find reinforcement of shared values and behaviour patterns. Social classes are homogenous. Based on similarity of factors such as education, activities, interests, opinions, attitudes and other behavioural patterns, social classes are viewed as homogenous divisions of a society. Symbols of Status Consumers buy products not only for what they can do but also for what they mean, because products or services are seen to possess personal and social meanings in addition to their functional attributes. Conspicuous consumption (Thorstein Veblen, 1899) refers to the tendency of the affluent class to demonstrate upper-class membership through their possessions. Possessions of products or other signs of wealth have always been signs of achievement or status symbols. The things consumers buy become "symbols" that tell others who they are and what their social class is. Marketers use status and prestige appeals based on the following assumptions: The need for self-esteem is universal. Everybody desires to be admired, acknowledged and respected by others. Consumers believe that their purchases of products or services reflect prestige and status. The expression and satisfaction of need for prestige varies across cultures.

A marketer must communicate product prestige in a way that is culturally suitable for the target audience. Concept of Money and Social Class Economists have defined money as a medium of exchange or a standard of payment. Accordingly, money is used to facilitate the acquisition of products and services that everybody needs for everyday living. The meaning of money goes beyond its utilitarian purpose and for many it has a variety of complex psychological meanings; it is equated with success or failure, social acceptability, security, power, love and freedom. Consumers start learning about the meaning of money early in their childhood. Parents develop a powerful system to control the behaviour of their children based on rewards and punishments. Money becomes the means of acquiring objects that are indicators of one's social class. It is also a fact that consumers vary in their attitudes towards how they treat their money. Besides good things that money can do, such as acquiring needed things, providing economic security and helping others and society in general; it has an evil side to it. This desire to make money can lead to obsession, dishonesty, greed, gambling, crime and a number of other harmful activities. Social Class Categories Most early studies in the United States divided specific communities into five or six social class structures. The most influential and earliest attempt to describe American class structure was proposed by W Lloyd Warner in 1941. He identified six social classes: Upper-Upper Lower-Upper Upper-Middle Lower-Middle Upper-Lower Lower-Lower The most general categorisation of social class structure can be put under three groups: Upper class Middle class Lower class The Upper Class The upper class of most societies is a varied group of individuals who include the aristocracy, the nouveau riches (the new social elite) and the upper-middle class. Aristocracy consists of traditional old money families who acquired great wealth and power and whose members live on inherited wealth such as some maharajas and old business families. Such families represent a very small percentage of the population. These consumers are likely to view themselves as intellectual, conservative/ liberal, political and socially conscious. The Middle Class

In India, the middle class is the largest consuming class. An interesting distinguishing feature of middle class is that members of this group look to the upper class for guidance on certain behaviours such as apparel selection and leisure activities. They can be both politically and culturally liberal or more conservative and traditional. Relatively younger members of the middle class, with higher education and upward mobility, may be liberal and casual about religion. The Lower Class They are poor people and generally represent a sizable population, particularly in the poorer developing countries. A large number of households in the poor class category live below the poverty line. The exact size of the population and the levels of income would vary from country to country. In some countries, they receive most of their income from illegal activities or from welfare. In some other countries, they represent farm workers, unorganised labour, unskilled workers and casual labour or domestic help. Their living conditions are bad; they are either illiterate or have had very little education. In cities they live in slum areas. They are fatalistic in their outlook and their entire income is spent on food and shelter. The worst hit among the poor class lack basic resources and their main struggle is for survival. They have difficulty in acquiring items such as food, medical care and other things necessary for everyday living and they perpetually struggle to somehow acquire these goods in the face of little or no income. Social Class Categories in India In the current Indian scenario, social classes categorisation based on ancient Indian caste system seems to have no relevance as far as marketers' interests are concerned. The last two social-class of households having relatively low or very low incomes as shown in the table below; aspirants and destitutes not only include the lower castes but also the upper-caste households. Similarly, the climbers, consuming class, as well as the very rich households include both upper-caste households and also the lower-caste households. The National Council of Applied and Economic Research has reported five social class categories based primarily on access to economic resources. Lecture-23 REFERENCE GROUPS Types of Reference Groups Reference groups furnish points of comparison by which one can evaluate attitudes and behaviour. An individual can be a member of a reference group such as the family and would be said to be part of a membership group. This same individual may aspire to belong to a cricket club and would be said to be apart of an aspiration group. A disclaimant group is one to which an individual may belong to or join and then reject the group's values. An individual may also regard the membership in a specific group as something undesirable and to be avoided. Such a group is a dissociative group. Membership Groups

1. 2. 3. 4.

Primary Informal Groups Primary Formal Groups Secondary Informal Groups Secondary Formal Groups

Membership Positive attitude Negative attitude Positive membership group Disclaimant-group

Non membership Aspiration group Dissociative group

Types of membership groups Informal Primary Secondary Positive membership group Disclaimant-group Formal Aspiration group Dissociative group

Types of aspiration groups Contact No Contact Anticipatory Symbolic


Anticipatory Aspiration Groups: These are groups that an individual anticipates to join at some future time. The individual, generally, has some direct contact with such group(s). For instance, the individual may wish to join a group higher in the organisational hierarchy. The individual's aspiration is more likely to be an outcome of anticipated rewards that go with higher position in an organisation such as power, status, prestige, money and other perks. Symbolic Aspiration Groups: The individual admires these groups but is unlikely to join them despite acceptance of the group's beliefs and attitudes. In a study Robert J. Fisher and Linda L. Price found that individuals establish a vicarious connection with such a group by purchasing a product associated to the aspiration group. For example, a tennis fan may buy a Nike sports jacket and shoes because many tennis star wear these. It is important for such an influence that the product is visually obvious. Marketers use certain celebrities to advertise the product and thereby appeal to the symbolic aspirations of consumers Nature of Reference Groups

'Norms' are generally defined rules and standards of behaviours that the group establishes. Group members are expected to conform to these norms which may be with regard to the appropriateness of clothes, shoes, eating habits, or brands of cosmetics etc. 'Values' are shared beliefs among group members regarding what behaviours are appropriate or inappropriate. Cultures and sub-cultures largely define the values, however, they do vary significantly by family and peer groups, for example, one family might place more value on material possessions and another on personal achievements independent of material possessions. 'Roles' refer to functions that an individual assumes or that the group assigns to her/him to accomplish group objectives. For example, in a group buying behaviour such as a family, marketers can identify specific roles that individuals assume. The roles might be of initiator, influencer, decider, buyer and user. 'Status' is the achieved or ascribed position that the individual occupies within the group's hierarchy. As one may expect, greater power and influence goes with higher status. For instance, the executive vice-president in an organisation has a higher status than the sales manager. The vice-president will most likely have a large, well-furnished office symbolising her/his status. In a typical Indian family, the head of the family has more status than anyone else. Consumer purchases of products or services sometimes demonstrate status to match the wealth and implied superiority. Elegant dresses, expensive watches and cars etc. are considered symbols of status in many cultures. 'Socialisation' refers to the process by which new members learn the group's system of values, norms and expected behaviour patterns. When an individual leaves one job and joins another organisation, she/he must learn the informal rules and expectations from the work groups, besides the formal rules and expectations. Reference Group Influences on Consumers Informational Influence Reference groups and other influence sources can exert informational influence by offering information to help make decisions. For example, chat-groups on the Internet often provide information on subjects such as Internet travel sites. This type of influence occurs when a consumer accepts information as credible from a reference group member and believes that the information will enhance knowledge about product choice. Informational influence is based on either the similarity of the group's members to the individual or the expertise of the influencing group member. For instance, an individual may notice several members of a given group using a particular brand of sports shoes. Informational influence is important when the consumer's objective is to seek knowledge, the source credibility is acceptable, the source is viewed as expert and finally the behaviour is acceptance of influence. This has implications for marketers. As the source expertise and credibility affect informational influence, marketers can use sources viewed as credible and expert for a given product category. For example, marketers often use well-known sports figures to promote sporting goods.

Lecture-24 Comparative Influence Consumers tend to constantly compare their attitudes with reference to those of members of important groups. They serve as a benchmark and the individual's urge is to seek support to her/his attitudes and behaviour. To accomplish this, individuals are inclined to associate with groups with which they agree and stay away from groups with which they disagree. An example can illustrate this point. When a new student in a college meets other students, she/he is likely to compare their attitudes towards education, student's union, sports, movies and dress etc. In the process, the student may also identify brands of jeans, shoes and two-wheeler autos that they use. The student will be attracted to those who appear to be similar to herself/himself because they reinforce existing attitudes and behaviour. The consumer's objective is self-maintenance and enrichment in accepting the comparative influence. To enhance her/his self-concept, the individual associates with groups that have similar attitudes and behaviour. This provides reinforcement and ego gratification. The source of power is referent power and the individual identifies herself/himself with the group. Normative Influence There is a fine residential educational institution for women in Rajasthan, Banasthali Vidyapith, having the status of a deemed university. Teachers, students and other staff members are required to wear only khadi and remain vegetarian. Robert J. Fisher and D. Ackerman note that normative influence, also called utilitarian influence, refers to social pressure designed to encourage conformity to the expectations of others to gain a direct reward or to avoid any sanctions. Normative influence can also affect conformity which is the tendency for an individual to behave as the group behaves. Research shows that conformity and brand-choice seem to be related, though brand-choice congruence may not be the only way to express conformity. An individual may also conform by performing the activities that the group wants the member to perform. For example, Indian as well as other Eastern cultures seem to be more group oriented and individuals are more likely to go with group desires. Conditions for Conformity 'The individual is committed to the group and values membership in it'. Carrying on with the example of Banasthali Vidyapith, the teachers, other staff members and students are committed and value its membership and conform to the norms and expectations of the institution. 'The group provides significant rewards for compliance and punishment for lack of compliance'. The basic reward for compliance with group norms is acceptance. 'The individual's behaviour in conforming is visible to members of the group'.The rewards for conformity are more likely if the individual's behaviour is visible, such as clothes. Non-compliance may draw sanctions. The basis of normative influence is reward or coercion and the resulting behaviour toward the group is conformity and compliance.

Lecture-25 FAMILY INFLUENCES Family Life Cycle Stages The concept of household or family life cycle is important for marketers in segmenting the market. In 1966, William Wells and George Gubar proposed eight stages to describe the family life cycle ("Life Cycle Concept in Marketing Research," Journal of Marketing Research, November 1966). The following life cycle stages are typical of families: The bachelor stage: Young, single persons under the age of 35 years. Incomes are generally low since they have started careers, but they may have few financial burdens and sufficient discretionary income. Newly married: Young couples, no children. If both spouses are employed, they will have high levels of discretionary income. Full nest : Young married couples with youngest child under 6 years of age. There would be greater squeeze on income because of increased expenses on childcare. However, if they are members of a joint family, the level of discretionary income is likely to be high. Empty nest : Older married couples with no children living with them, parents still employed. Reduced expenses result in greater savings and highest discretionary income. Examples of non-traditional household life cycle categories: Sequence I Young married couples with children Single parent with older children Older, unmarried Sequence II Young divorced couple without children Middle-aged married couple without children Older married couple without children. Sequence III 1. Young married couple with children 2. Middle-aged divorced parent 3. Middle-aged married parent with children and stepchildren. Sequence IV 1. Young unmarried couple without children 2. Middle-aged married couple without children 3. Older married couple without children

Nature of Household or Family Purchases Much depends on income limitations coupled with family responsibilities. These two factors influence many of the buying decisions of families. As already pointed out, young bachelors as well as newly married young couples (assuming that both are employed) are quite likely to have significant discretionary income. Young bachelors are more likely to spend money on clothes and entertainment etc., while newly married couples will spend more on furnishings, time-saving home appliances, TV and music system etc. as they are establishing their new household. The family replaces many household items and also buys new appliances. In case of non-traditional family lifecycle sequences, single parents are more likely to be females. In general, divorced women face significant decrease in their financial resources and this influences their buying patterns. Single parents are compelled to spend much less time with children and are likely to spend more money on day-care services for children and toys. Nature of Family Decision-Making When two or more family members are directly or indirectly involved in the decision-making process, it is called family decision-making. Such family decisions differ from individual decisions in many ways. For example, if we consider the purchase of a bicycle for a child, some of the relevant aspects to think about can be: who recognises the need for bicycle? How a brand is selected? What role the concerned child plays? Some family purchases are inherently emotional and affect the relationships between family members. The decision to buy a new dress, a toy, or a bicycle for the child is more than simply a routine purchase. We have already seen the different purchase roles in the opening chapter of this book: the initiator, the gatekeeper or information gatherer, the influencer, the decider, the buyer and the user(s). According to Jagdish N. Sheth, joint decision-making is more likely under four conditions: A joint decision is likely to be taken under such circumstances to reduce the uncertainty and the risk. For example, the purchase of a house for the family will most likely be a joint decision, as it would involve financial, social and psychological risks. When the buying decision is important to the household. Purchase decisions for lowinvolvement products are mostly made individually. Highinvolvement items such as expensive appliances etc. are generally purchased in consultation with other family members. Importance of most high-involvement decisions is generally related to some kind of perceived risk. Certain demographic factors encourage joint decision-making. i. Joint decisions are less likely among upper and lower socio-economic groups. However, joint decision-making is quite likely among middle-income families. ii. Joint decisions are fairly common among younger families, particularly during the first few years of marriage. iii. As long as the family does not have any children, joint decision-making is more likely. Once children arrive, roles of spouses become more divided and the need for joint decisions decreases.


If only one parent is employed, there are few time pressures and joint decision-making is more likely .

Husband-wife Influences Nature of Product Traditionally, among different societies throughout the world, husbands are regarded as providers of material support and leadership authority within the family and wife is more likely to provide affection and moral support. Husbands are viewed as dominant decision-makers for products such as financial services and automobiles etc., while wives are regarded as decision makers for foods, toiletries and small appliances etc. However, these roles have merged as an increasing number of wives have started going into employment and changes in family norms, particularly in urban areas. Harry L. Davis and Benny P. Rigaux undertook a detailed study of husband/wife influences by product category and classified products into four categories: Products for which the influence of husband tends to dominate the decision- making. Such products include hardware, sports equipment, financial services and men's shaving products etc. Products for which the influence of wife tends to dominate the decisionmaking. Examples of such products are women's clothing, toiletries, groceries, kitchenware and child clothing etc. Products for which decisions are made by either the husband or the wife (autonomous decisions). These products may include women's jewelry, toys and games, cameras and men's casual clothing etc. Products for which husband and wife make joint decisions. Examples of such products are refrigerators, furniture, TV sets, carpets, financial planning and family car etc. Lecture-26 Nature of Purchase Influence The differentiation of roles is believed to result from small group interaction. Leaders that emerge take up either instrumental roles or expressive roles. Leaders taking up instrumental roles are concerned with tasks that help the group take decisions about its basic purpose or goal (also called functional or task leaders). For example, decisions on budgets, timing and product specifications would be task-oriented. Leaders with expressive roles facilitate expression of group norms and provide the group with social and emotional support in order to maintain intra-group cohesion such as design, colour and style, reflect group norms. Family Characteristics The third reason for variation in relative influence of husband/wife relates to family characteristics. Though husband and wife tend to dominate decisions for certain product categories, the degree of their dominance may vary within different families. Research shows that the influence of the husband will generally be more in making purchase decisions than wife when: 1. 2. Husband's level of education is higher than his wife. Husband's income and occupational status are higher than wife's.

3. 4. 5.

His wife is not employed. The couple is young and at an earlier stage of family life cycle. If the couple has a greater than average number of children.

Parent-child Influences Children are playing an increasingly important part in family decision-making. No sooner do they posses the basic communication skills needed to interact with parents and other family members, they start their "I want" this campaign. In the context of consumer behaviour, parent-child relationship is viewed as a situation of influence and yield. Children strive to influence parents to buy something and parents yield to their demand. Older children with greater media exposure are more likely to directly influence decisions concerning purchase of food items, personal care and beauty products, TV, stereo and computer etc. Dual-income households foster greater self-reliance among children. As a result of this, they are likely to influence decisions for products that the whole family consumes. Influence of Children in Purchasing Process As a result of increasing numbers of working parents, much responsibility for shopping has been shifted to teenagers. Teenage girls not only help in shopping but also spend time in preparing meals at home for the family. Teenagers also have a say in family decisions for cars, TV sets, computers and family vacations. Sharon E. Beatty and Salil Talpade have reported that teenagers exert most influence when: 1. They have more perceived knowledge of the product: It is not unusual for teenagers to possess more knowledge than parents about certain types of products such as cellular phones, camcorders and computers etc. 2. They consider the product to be important: If teenagers view a product as more important to them, they are more likely to exert influence on family purchasing decision. 3. They have more purchasing power: In case the teenager's purchasing power is greater, parents are more likely to respect her/his opinion about purchasing a product. Lecture-27 DIFFUSION OF INNOVATION Innovation and their Impact on Society The ability to develop successful new products is critical to a company's sales, future growth and long-term survival. Gabriella Stern has reported that 49 percent of the total revenue of some of the world's leading companies has come from the new products that they have developed. There is no universally accepted definition of "product innovation" or "new product." Everett M Rogers (Diffusion of Innovation, 4th ed. Free Press, 1995) observes that some researchers have favoured a consumer-oriented approach in defining an innovation.

Innovations bring about changes in consumers' consumption patterns. Some innovations influence how, when, where, why, or whether we acquire products. The list of innovations keeps going on and on with the passage of time. Consumers' thirst for better and more efficient products and services seems to be insatiable. Rapid strides in the fields of science and technology are responsible for developing and offering radically new and highly complex products that promise more convenience and comfort to consumers. Types of Innovations A continuous innovation is one that has a limited influence on consumption behaviour of consumers. Consumers would use a product representing continuous innovation in much the same way they used products that came before it. Product alteration is on a continuous basis. Adoption of such products requires minor changes in behaviour that are unimportant to consumers. Most of the new products that are introduced in the market represent continuous innovations such as newer models of computers and autos etc. A dynamically continuous innovation is one that affects consumers' consumption behaviour in a pronounced way. Adoption requires a moderate change in an important behaviour or a major change in an area of behaviour that is of low or moderate importance to the individual. The examples include Internet shopping, digital camera, notebook computers, electric cars and cordless phones. Real Jukebox is a dynamically continuous innovation because it requires changes in the way we acquire, use and dispose of music and may utilise other technologies such as CD and DVD writers. Innovations can also be categorised by the benefits that products or services offer. Some services, attributes, or ideas are functional innovation because they provide functional performance benefits to consumers over existing alternatives. For example, computer notebooks offer portability over stationary computers. Functional innovations often take advantage of new technology. For example, technological advances have offered consumers the advantage of downloading images from the Internet and conducting videoconferencing via their cellular phones. Breadth of Innovation Breadth of innovation describes the new and different uses to which a product is put. For example, baking soda has been used as a baking ingredient, a tooth polisher, a carpet deodoriser and a refrigerator deodoriser. Teflon is a product, which was originally designed to prevent things from sticking to cookware. Subsequently, its thin tapes have been used in plumbing to prevent leakage from joints. Teflon is also used in men's suits. Nylon has been put to several different uses such as producing clothing, diving suits, balloons, parachutes, ropes, fishing lines, masts and many others. The Diffusion Process The diffusion process is the manner in which innovations spread over time to other consumers through communication across a market. Diffusion research traces the penetration and acceptance of an innovation across its life cycle. Adoption Decision

The adoption of an innovation requires that an individual or a group of consumers decide buying a new product. The process of diffusion starts when early adopters influence their reference group members and other acquaintances. Therefore, it is reasonable to view adoption as the first step in the diffusion process. Lecture-28

Factors Affecting the Diffusion of Innovation Type of Target Group Number of People Involved in Decision-making Extent of Marketing Efforts Involved Need Fulfillment Compatibility Relative Advantage Complexity Observability Triability . Perceived risk arriers to Adoption of Innovation 1. Value barrier refers to a product's relative advantage compared with substitute products. When cellular phones were introduced, they were too expensive for most general consumers relative to the value they could get from commonly used telephones. More than a decade ago BMW introduced a 650 cc motorcycle in India. 2. Usage barrier results when an innovation is incompatible with consumers' long established practices. Internet shopping is not consistent with most Indians' shopping habits and its diffusion is extremely slow in this country. 3. Risk barrier is concerned with physical, economic, functional, or social risk for adopting an innovation. If the intensity of perceived risk is high, consumers are likely to wait and watch till such time that they are reasonably assured that there are no unusual risks associated with product adoption. Time Factor and Diffusion Process Time is an important component of diffusion theory and concerns the time of adoption of an innovation by consumers considering whether consumers are earlier or later adopters and the rate of diffusion, that is, the speed and extent with which individuals and groups adopt the innovation. Time of adoption: Everett M. Rogers examined more than 500 studies on diffusion and concluded that there are five categories of adopters classified by time of adoption: Innovators Early adopters The early majority The late majority Laggards

Adopters and Non-adopters: Whatever has been discussed so far is based on Everett M. Rogers' classification dealing only with adopter categories. Several marketing studies have used a simple three-part classification to deal with non-adopter categories as well. Robert L. Anderson and David J. Ortinau used a three-part classification which considers both adopters as well as non-adopters: Early adopters Later adopters Non-adopters

ate of Diffusion Rate of diffusion refers to the cumulative level of adoption of an innovation over time among groups. There are four major reasons that explain why innovations are adopted more quickly: With the increase in household disposable income, new products are likely to be more affordable. Rapid technological advances require quicker adoption cycles. As technology is becoming more standardised, it reduces consumers' risk perception associated with the adoption of a new product. The rate of diffusion of Pentium processorbased PC was fairly quick because of the acceptance of DOS (operating system) as the industrywide standard. Information regarding innovation is communicated rapidly and is accessible to the consumers conveniently. Obviously, the more quickly consumers become aware and gain knowledge about a new product through mass media and Internet, the faster is communication to various groups. Role of Communication in the Diffusion Process In the definition of diffusion process we saw that communication is a key element that influences diffusion across markets. Consumers rely on marketer-controlled mass media advertising for information about new product introductions. Cultural Context and Diffusion of Innovation Culture may have an important influence on the diffusion of innovation. Two concepts are worth considering in this regard: cultural context and cultural homogeneity. Low-context cultures are those that rely primarily on verbal and written communication in transmitting meaning. They place more value on individual initiative and rely more on mass media for communication. High-context cultures rely primarily on non-verbal communication, with little difference in norms, values and socio-economic status among groups. The emphasis on non-verbal communication means that such cultures will place more value on interpersonal contacts and associations. One would expect the rate of diffusion to be rapid in high-context/homophilous cultures because of their uniformity, leading to relative ease of transmitting information from one dissimilar group to another.