DBA 1722 Consumer Behaviour PDF

MBA
(DISTANCE MODE)
DBA 1722
CONSUMER BEHAVIOUR
IV SEMESTER
COURSE MATERIAL
Centre for Distance Education

Anna University Chennai
Chennai – 600 025
Author
Dr
Dr.. V.J
.J.. SIV
V.J AKUMAR,
SIVAKUMAR,
Assistant Professor, (Marketing)
Department of Management Studies
National Institute of Technoloy (REC)
Thiruchirapalli - 620 015
Reviewer
Ms
Ms.. A. Shameem
Professor & Head,
Department of Management Studies
Aalim Mohamed Salegh College of Engineering,
Avadi - IAF,
Chennai - 600 037
Editorial Board
Dr.T
Dr.T.V
.T.V.Geetha
.V.Geetha Dr.H.P
Dr.H.P eer
.H.Peer
eeruu Mohamed
Professor Professor
Department of Computer Science and Engineering Department of Management Studies
Anna University Chennai Anna University Chennai
Chennai - 600 025 Chennai - 600 025
Dr.C
.C.. Chella
Dr.C ppan
Chellappan Dr.A.K
Dr.A.K annan
.A.Kannan
Professor Professor
Department of Computer Science and Engineering Department of Computer Science and Engineering
Anna University Chennai Anna University Chennai
Chennai - 600 025 Chennai - 600 025
Copyrights Reserved
(For Private Circulation only)
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ACKNOWLEDGEMENT
The author has drawn inputs from several sources for the preparation of this course material, to meet the
requirements of the syllabus. The author gratefully acknowledges the following sources:
• Consumer Behavior by Michael R. Solomon - Pearson Education
• Consumer Behavior by Del I Hawkins, Roger J. Best, Kenneth A. Convey and Amit Mookerjee - Mc
Graw Hill
• Consumer Behavior by London/ Della Bitta - Mc Graw Hill
• Consumer Behavior by John C. Mowen - Mc millan
• Consumer Bheavior by S. Ramesh Kumar - Pearson
Inspite of at most care taken to prepare the list of references any omission in the list is only accidental and
not purposeful.
Dr.V.J. Sivakumar
Author
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DBA 1722 CONSUMER BEHAVIOUR
UNIT I - INTRODUCTION
Consumer behaviour – concepts – dimensions of consumer behaviours – application of consumer behaviour
knowledge in marketing decisions – approaches to the study of consumer behaviour.
UNIT II - CONSUMER AS AN INDIVIDUAL
Consumer needs and motives – personality and consumer behaviour – consumer perception – learning – consumer
attitudes –attitude formation and change – communication and persuasion – self image – life style analysis.
UNIT III - CONSUMERS IN THEIR SOCIAL AND CULTURAL
Group dynamics and consumer reference groups – Family – Social class cultural and subcultural aspects – cross
cultural consumer behaviour.
UNIT IV - CONSUMER DECISION PROCESS AND POST- PURCHASE BEHAVIOUR
Personal influence and opinion leadership – diffusion of innovations – consumer decision – making process –
models of consumer decision process – Nicosia – Howard sheth and Engel –Kollat model – post purchase
behaviour – consumer expectation and satisfaction – managing dissonance – consumer loyalty – types of loyalty
programmes.
UNIT V - ADDITIONAL DIMENSIONS
Consumerism – consumer protection – difficulties and challenges in predicting consumer behaviour – online
consumer behaviour – organizational and industrial buyer behaviour – consumer behaviour in Indian c context-
emerging issues.
REFERENCES
1. Leon G.Schiffman, Leslie Lazar Kanuk, “Consumer Behaviour “, Pearson Education, New Delhi, 2002.
2. David L.Loudon, Albert J Della Bitta, “Consumer Behaviour “, McGraw Hill, New Delhi 2002.
3. Jay D.Lindquist and M.Joseph sirgy, “Shopper, buyer & consumer Behaviour, Theory and Marketing
application”, Biztantra Publication, New Delhi 2005.
4. Sheth Mittal, “ Consumer Behaviour A Managerial Perspective”, Thomson Asia (P) Ltd., Singapore
2003.
. K.K.Srivastava, “ Consumer Behaviour an Indian Context”, Goal Gotia Publishing Co, New Delhi
2002.
6. S.L.Gupta & Sumitra Pal,”Consumer Behaviour an Indian Perspectives”, Sultan Chand, New Delhi
2001.
7. Ms.Raju, Dominique Xavedel, “Consumer behaviour, Concepts Applications and cases” vikas publiching
house (P) Ltd., New Delhi 2004.
8. Henry Assael, Consumer behaviour strategic approach Biztantra, New Delhi, 2005.
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CONTENTS
UNIT I
INTRODUCTION
1.1 OVERVIEW 1
1.2 LEARNING OBJECTIVES 2
1.3 CONSUMER 3
1.4 DEFINING CONSUMER BEHAVIOR 3
1.5 THE NATURE OF CONSUMER BEHAVIOR 4
1.6 BEHAVIORAL DIMENSIONS OF MARKETING 5
1.7 APPLICATIONS OF CONSUMER BEHAVIOR: 6
1.8 MARKET ANALYSIS COMPONENTS 7
1.9 APPROACHES TO THE STUDY OF CONSUMER BEHAVIOR 9
1.10 MARKETING STRATEGY AND CONSUMER BEHAVIOR 10
1.11 CONSUMER DECISIONS 13
1.12 OUTCOMES 12
1.12.1 Firm outcomes 12
1.12.2 Individual Outcomes 16
1.12.3 Society Outcomes 17
1.13 SUMMARY 18
1.14 REVIEW QUESTIONS 18
UNIT II
CONSUMER AS AN INDIVIDUAL
2.1 OVERVIEW 21
2.3 THE NATURE AND ROLE OF MOTIVES 22
2.3.1 The Nature of Motives 22
2.3.2 The Role of Motives 23
2.3.3 Facets of motivation 23
2.4 CUSTOMER NEEDS 24
2.4.1 Maslow’s’ Hierarchy of Needs 24
2.4.2 Mcguire’s Psychological Motives 26
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2.4.3 Murray’s List of Psychogenic Needs 29
2.4.4 Needs identified by Marketing Scholars 30
2.4.5 Sheth, Newman and Gross have proposed that individual choice
behavior stems from five needs: 31
2.5 CUSTOMER EMOTIONS 32
2.6 PERSONALITY AND CONSUMER BEHAVIOR 38
2.7 CONSUMER PERCEPTION 40
2.7.1 Exposure 40
2.7.2 Attention 41
2.7.3 Interpretation 43
2.8 LEARNING 44
2.9 CONSUMER ATTITUDES 46
2.10 COMMUNICATION AND PERSUATION 50
2.11 PSYCHOGRAPHICS HAVE THREE COMPONENTS 53
2.12 VALS 57
2.13 SUMMARY 58
UNIT III
COSUMERS IN THEIR SOCIAL AND
CULTURAL SETTINGS
3.1 OVERVIEW 61
3.3 WHAT IS A GROUP? 62
3.3.1 Types of Groups 62
3.3.2 Consumer-Relevant Groups 63
3.3.3 Reference Groups 65
3.3.4 Types of Reference Groups 67
3.3.5 Factors that Affect Reference Group Influence 67
3.3.6 Reference Group Impact on Product and Brand Choice 69
3.3.7 Benefits of the Reference Group Appeal 70
3.4 THE FAMILY 70
3.4.1 Structural Variables Affecting Families and Households 72
3.4.2 Sociological Variables Affecting Families and Households 72
3.4.3 Functions of the Family 72
3.4.4 Family Life Cycles 74
x
3.4.5 Family Decision-Making 77
3.5.6 Family Marketing 80
3.5 SOCIAL CLASS 82
3.5.1 Characteristics of Social Classes 83
3.5.2 Impact of social class 83
3.6 CULTURE - MEANING 84
3.6.1 Characteristics of Culture 84
3.6.2 Types of Culture 85
3.6.3 Hofstede’s Five Dimensions of Culture 85
3.6.4 Cultural Influences 87
3.6.5 Variation In Cultural Values 87
3.6.6 Subcultures and Consumer Behavior 90
3.6.7 Cross Cultural Consumer Behavior 92
3.6.8 Characteristic features of a firm going global 93
3.6.9 Problems in Cross Cultural marketing 93
3.6.10 Cross-Cultural Consumer Analysis 93
3.6.11 Tangible Benefits of Global Brand Building 95
3.6.12 Strategic Implications 95
3.6.13 Cultural Variations & Non-Verbal Communication 96
3.7 SUMMARY 99
UNIT IV
CONSUMER DECISION PROCESS AND
POST- PURCHASE BEHAVIOUR
4.1 OVERVIEW 101
4.3 OPINION LEADERSHIP 102
4.4 DYNAMICS OF OPINION LEADERSHIP 102
4.5 MOTIVATION BEHIND OPINION LEADERSHIP 103
4.6 TYPES OF OPINION LEADERS 104
4.7 COMPARISON OF OPINION
LEADERS AND SURROGATE BUYER 106
4.8 IDENTIFYING AN OPINION LEADER 107
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4.9 TACTICS ADOPTED BY MARKETERS TO GENERATE A BUZZ 108
4.10 PROGRAMMES DESIGNED TO
STIMULATE OPINION LEADERSHIP 109
4.11 THE DIFFUSION CONCEPT 110
4.12 ELEMENTS TO THE DIFFUSION OF INNOVATION 111
4.13 INNOVATION 111
4.14 TYPES OF INNOVATION 112
4.16 CONSUMER RESISTANCE TO INNOVATION 113
4.17 COMMUNICATION 114
4.18 BARRIERS TO ADOPTION AND MARKETING
STRATEGIES TO OVERCOME THEM 117
4.19 TIME 118
4.20 ADOPTION PROCESS 119
4.21 STAGES IN ADOPTION PROCESS 120
4.22 ADOPTERS 120
4.23 RATE OF ADOPTION 122
4.24 CONSUMER DECISION MAKING PROCESS 122
4.25 CONSUMER DECISION MAKING –
THE COMPLEX APPROACH 125
4.26 CONSUMER BEHAVIOUR AND
MARKETING IMPLICATIONS 126
4.27 CONSUMER BEHAVIOUR MODELS 128
4.28 POST PURCHASE CONSUMDER BEHAVIOUR 139
4.29 CONSUMER LOYALTY 142
4.30 TYPES OF LOYALTY PROGRAMMES 143
4.31 HOW LOYALTY CAN BE IMPLEMENTED 148
4.32 SUMMARY 150
UNIT V
ADDITIONAL DIMENSIONS
5.1 OVERVIEW 155
5.3 INTRODUCTION 156
5.4 COMPONENTS OF CONSUMERISM 157
5.5 THE CONSUMER PROTECTION ACT 1986 161
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5.6 CONSUMER RIGHTS 164
5.7 PROTECTION OF CONSUMER RIGHTS 164
5.8 METHODS OF CONSUMER PROTECTION 165
5.9 DIFFICULTIES AND CHALLENGES OF
PREDICTING CONSUMER BEHAVIOUR 166
5.10 ONLINE CONSUMER BEHVIOUR 167
5.11 ORGANISATIONAL AND INDUSTRIAL BUYER BEHAVIOUR 169
5.12 PARTICIPANTS IN INDUSTRIAL MARKETING 171
5.13 DIFFERENCES IN ORGANIZATIONAL MARKETS 171
5.14 DIFFERENCES IN ORGANIZATIONAL TRANSACTIONS 172
5.15 CONSUMER BEHAVIOUR VS ORGANISATIONAL BUYING 173
5.16 BUY CLASSES 174
5.17 BUYING CENTER 176
5.18 CONSUMER BEHAVIOUR IN INDIA
CONTEXT – EMERGING ISSUES 177
5.19 CHARACTERISTICS OF THE INDIAN CONSUMER BEHAVIOR 179
5.20 CHANGING TRENDS IN INDIAN CONSMER BEHAVIOR 183
5.21 SUMMARY 184
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CONSUMER BEHAVIOUR
NOTES
UNIT I
INTRODUCTION
1.1 OVERVIEW
The fundamental basis of the marketing concept involves the matching of the skills
and resources of the organization, profit or non-profit related, to the needs of the customer.
Marketing management relies on an understanding of how customers make decisions and
their likely reactions to the different elements of the marketing mix. In this context, consumer
behavior not only refers to the physical activity of purchasing but also to relate pre-purchase
and post-purchase activities. Loudon and Della Bitta (1993) define consumer behavior as
‘the decision process and physical activity individuals engage in when evaluating, acquiring,
using, and disposing of goods and services’.
One of the most useful applied distinctions in consumer behavior is between consumer
behavior studied from a micro perspective and a macro perspective. At the micro-level,
the focus is very much on the reaction of the individual consumer with applications that are
relevant to advertising managers, salespeople, or product designers of individual firms or
organizations. At the macro-level, consumer behavior involves the study of the influence of
consumption on the economic and social conditions within society. The anticipation and
forecasting of consumer behavior at that level can be used for organizational planning and
product development, as well as formulation of public policy to improve the efficiency of
the market system.
Research in consumer behavior allied to the study of marketing basically stems from
the 1950s. Economists had a developed series of models explaining consumer choice in
terms changing utilities, or demand preferences, according to variations in price, income
and quantity supplied. This approach has been relatively un influential within the marketing
literature compare with the application of behavioral science concepts taken from psychology
and sociology. The entries on psychology and sociology show how concepts such as
learning, motivation, perception, attitude and social groups have been applied to help our
understanding of every element of the marketing mix. This entry primarily seeks to give an
overview of consumer decision making and show how those concepts listed above may
be integrated to give an understanding of the role they play in explaining decision processes
of consumers. However, before considering that material in detail, it is useful to reflect on
1 ANNA UNIVERSITY CHENNAI

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some aspects of the history of consumer research in marketing in order to appreciate the
NOTES variety of approaches and the overall complexity of the subject. This historical review is
not intended as a comprehensive treatise on the development of consumer behavior but
rather a framework to understand how the subject has arrived at its current status and
content. It also helps to provide a platform from which to consider future developments in
consumer behavior later in the entry.
In the 1950s and through the mid-1960s much of consumer behavior research involved
the evaluation of consumer characteristics for market segmentation. It was at this time that
consumer behavior researchers investigated the application of personality theories and
classifications of motives taken from psychology, and the family life-cycle and social class
taken from sociology. These were applied with very different degrees of success in cross-
sectional studies of markets in order to explain variations in consumer demand for many
different classes of products, and also for different choices of brands. Important contributions
from this period, which are illustrative of some of the research and are still commonly
referred to in the literature and in teaching consumer behavior, include Koponen (1960),
Tucker and Painter (1961), Evans (1959), Haire (1950), Dichter (1964), Martineau (1958),
Coleman (1960), Levy (1966), Wells and Gubar (1966), and Barton (1955).
One of the studies from that period which has had a very profound influence on
consumer behavior and marketing is Rogers’ work on the diffusion of innovations (1959,
1962). He segmented the potential market for a new product according to the time of
adoption and developed a five stage classification within which to describe potential
customers - innovators, early adopters, the early majority, the late majority and laggards.
Another important facet of Rogers’ work was his characterization of the adoption process.
During consumers’ adoption of innovations, Rogers described the individual as moving
through the following series of stages in their decision to purchase:
1. Awareness;
2. interest;
3. evaluation;
4. Trial; and
5. Adoption.
This was one of the first attempts to describe a sequential process which illustrated
the stages of the consumer decision and, as will be seen in later discussion.
1.2 LEARNING OBJECTIVES
After studying this unit, you should understand

• About the consumer
• The concept and the historical review of Consumer Behavior

CONSUMER BEHAVIOUR
• The Nature and Dimensions of Consumer Behavior

• The Applications of Consumer Behavior knowledge in marketing decisions
NOTES
• The Components for Marketing Analysis
• About the Segmentation of Market and the steps involved in it
• Approaches to the study of Consumer Behavior
1.3 CONSUMER
Consumer is a broad term and any person who uses a product or service or deals
with it can be called a consumer. It is not necessary that the person should be a buyer of
the product or service. The term consumer should not be confused with the word ‘customer’
which has the limited meaning of usually denoting a person who contracts to buy the product.
For example, if you are selling tea-dust, you may have just one customer in the Manager of
a cafeteria. On the other hand all the persons who drink tea in the cafeteria are your
consumers.
Consumers are classified into two categories. They are ‘personal consumers’ and
‘institutional consumers’. Personal consumers are those individuals and households who
themselves consume goods or services. Institutional consumers on the other hand are
businesses, organizations and groups that buy and consume goods and services during the
course of their operations.
1.4 DEFINING CONSUMER BEHAVIOR
Consumer behavior may be defined as, “the decision process and physical activity
individuals engage in when evaluating, acquiring, using, or disposing of goods and services”.
Technically, consumer behavior is defined as, “the dynamic interaction of affect and
cognition, behavior and environmental events by which human beings conduct the exchange
aspects of their lives”.
One “official” definition of consumer behavior is “The study of individuals, groups, or

organizations and the processes they use to select, secure, use, and dispose of products,
services, experiences, or ideas to satisfy needs and the impacts that these processes have
on the consumer and society.”
Although it is not necessary to memorize this definition, it brings up some useful points:
• Behavior occurs either for the individual, or in the context of a group (e.g., friends’
influence what kinds of clothes a person wears) or an organization (people on the
job make decisions as to which products the firm should use).
• Consumer behavior involves the use and disposal of products as well as the study
of how they are purchased. Product use is often of great interest to the marketer,
because this may influence how a product is best positioned or how we can
encourage increased consumption. Since many environmental problems result from

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product disposal (e.g., motor oil being sent into sewage systems to save the recycling
NOTES fee, or garbage piling up at landfills) this is also an area of interest.
• Consumer behavior involves services and ideas as well as tangible products.
• The impact of consumer behavior on society is also of relevance. For example,
aggressive marketing of high fat foods, or aggressive marketing of easy credit,
may have serious repercussions for the national health and economy.
Viewing consumer behavior in a broad context, it is actually a subset of human behavior.

That is, factors affecting individuals in their daily lives also influence their purchase activities.
1.5 THE NATURE OF CONSUMER BEHAVIOR
Figure 1.1 is the model that we use to capture the general structure and process of
consumer behavior and to organize this text. It is a conceptual model. It does not contain
sufficient detail to predict particular behaviors; however, it does reflect our beliefs about
the general nature of consumer behavior. Individuals develop self-concepts and subsequent
lifestyles based on a variety of internal (mainly psychological and physical) and external
(mainly sociological and demographic) influences. These self-concepts and lifestyles produce
needs and desires, many of which require consumption decisions to satisfy. As individuals
encounter relevant situations, the consumer decision process is activated. This process
and the experiences and acquisitions it produces in turn influence the consumers’ self-
concept and lifestyle by affecting their internal and external characteristics.
This model, while simple, is both conceptually should and intuitively appealing. Each
of us has a view of ourselves (self-concept), and we try to live in a particular manner given
our resources (lifestyle). Our view of ourselves and the way we try to live are determined
by internal factors (such as our personality, values, emotions, and memory) and external
factors (such as our culture, age, friends, family, and subculture).
Our view of ourselves and the way we try to live results in desires and needs that we
bring to the multitude of situations we encounter daily. Many of these situations will cause
us to consider a purchase. Our decision and even the process of making it, will cause
learning and may affect many other internal and external factors that will change or reinforce
our current self concept and lifestyle.
A quick analysis of your own behavior and that of your friends will reveal the fallacy
of this perception. Consumer behavior is frequently complex, disorganized, no conscious,
organic, and circular. Unfortunately, we must present it in a relatively simple, linear manner
due to the limitations of written communications.

CONSUMER BEHAVIOUR
NOTES
Figure. 1.1 The Nature of Consumer Behavior
1.6 BEHAVIORAL DIMENSIONS OF MARKETING
Marketing has been developed as a discipline only in the past few decades in India.
In today’s world of competitive offerings, diversity of consumer preferences and proliferation
of brands, consumer behavior has become extremely important for marketing decisions-
be it marketing mix elements, segmentation changes or exploring new dimensions in consumer
behavior in a changing environment. Several interesting trends can be expected in the new
millennium. Leisure and luxury markets have boomed in the recent times. Shampoos and
creams, which only the elite could afford a decade back are today marketed in sachets
across the country.
Westernization has impacted the selection of product categories and brands. Jeans
and the brands which exist in this category are an example of this impact. Even in such a
category, an innovative marketer has come up with an ethnic brand (Ruf and Tuf) by
applying the principles of consumer behavior. Shifts in psychographic and lifestyle changes
have given rise to new eating habits (fast foods, eat-outs and food socials). A section of

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consumers may eat while driving. This trend, called grazing, has fast caught up in the
NOTES developed world. This behavior, in turn, may give rise to products like refrigerated glove
apartments and cup holders in cars and perhaps, yoghurts in tubes. Consumer behavior
provides the “behavioral fit” to marketing mix elements which need to be changed from
time to time by marketers.
Consumer behavior deals with the psychological process of decision making by

consumers in a social context which also exerts group pressures on them. For example a
consumer buying a brand of two-wheelers, is motivated by a need to own the category
and the particular brand (based on functional and emotional benefits) and buy the brand
from an outlet. This buying behavior involves several psychological factors. These factors
govern the individual thinking process (like motivation, personality, perception and attitude),
decision-making steps involved in buying, (decision-making process) interaction of the
consumer with several groups like friends, family and colleagues (group-oriented concepts
and selection of the brand and outlet depending on price and features and emotional appeal
(marketing mix elements in a given environment). Consumer behavior links these four
aspects to enable a marketer to formulate marketing strategies. The basic elements of
consumer behavior- what the consumer buys, how he buys, when and where he buys and
how much he buys is understood by the interaction of different factors associated with
consumer behavior.
The field of consumer behavior is the study of individuals, groups, or organizations

and the processes they use to select, secure, use, and dispose of products, services,
experiences or ideas to satisfy needs and the impacts that these processes have on the
consumer and society. This view of consumer behavior is broader than the traditional one,
which focused much more on the buyer and the immediate antecedents and consequences
of the purchasing process. This view will lead us to examine indirect influences on
consumption decisions as well as consequences that involve more than the purchaser and
seller.
1.7 APPLICATIONS OF CONSUMER BEHAVIOR:
Marketing Strategy
All marketing strategies and tactics are based on explicit or implicit beliefs about
consumer behavior. Decisions based on explicit assumptions and sound theory and research
are more likely to be successful than are decisions based solely on implicit intuition. Thus
knowledge of consumer behavior can be an important competitive advantage. It can
greatly reduce the odds of bad decisions.
Social Marketing
Is the application of marketing strategies and tactics to alter or create behaviors that
have a positive effect on the targeted individuals or society as a whole. Social marketing

CONSUMER BEHAVIOUR
has been used in attempts to reduce smoking, to increase the percentage of children receiving
their vaccinations in a timely manner, to encourage environmentally sound behaviours such NOTES
as recycling; to reduce behaviors potentially leading to AIDS; to enhance support of charities;
to reduce drug use; and to support many other important causes. Just as commercial
marketing strategy, successful social marketing strategy requires a sound understanding of
consumer behavior.
Regulatory Policy
Marketing is a highly visible, important activity. It affects the life of individuals, the
success of nonprofit groups, and the profits of businesses. There are many issues where
the appropriate ethical action for marketers is not clear-cut. However, society has declared
that other marketing actions are clearly inappropriate. It has done so by enacting laws and
regulations that prohibit or require specific marketing actions. Regulating marketing activities
requires the same level of understanding and the extensive knowledge of the consumer
behavior as does managing marketing programs. Our consideration of the regulation of
marketing practices will separate regulations designed to protect children from those
designed to protect adults.
Informed Individuals
Most economically developed societies are legitimately referred to as consumption

societies. Most individuals in these societies spend more time engaged in consumption
than in any other activity, including work or sleep (both of which also involve consumption).
Therefore, knowledge of consumer behavior can enhance our understanding of our
environment and ourselves. Such an understanding is essential for sound citizenship,
effective purchasing behavior and reasoned business ethics.
Literally thousands of firms are spending millions of dollars to influence you, your
family and your friends. These influence attempts occur in ads, packages, product features,
sales pitches, and store environments. However, they also occur in the content of many
television shows in the products that are used in movies, and in the materials presented to
children in schools. Given the magnitude of these direct and indirect influence attempts, it
is important that consumers accurately understand the strategies and tactics being used. It
is equally important that all of us, as citizens, understand the consumer behavior basis of
these strategies so that we can set appropriate limits on them when required.
1.8 MARKET ANALYSIS COMPONENTS
Market analysis requires a thorough understanding of the organization’s own

capabilities, the capabilities of current and future competitors, the consumption process of
potential customers, and the economic, physical, and technological environment in which
these elements will interact.

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

CONSUMER BEHAVIOUR
International agreements such as NAFTA (North America Free Trade Agreement)

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

extent, each individual or household has unique needs for most products (a preferred color
combination, for example). The smaller the segment, the closer the total product can be to

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that segment’s desires. Historically, the smaller the segment, the more it costs to serve the
NOTES segment. Thus, a tailor-made suit costs more than a mass-produced suit. However,
flexible manufacturing and customized media are making it increasingly cost effective to
develop products and communications for small segments or even individual consumers.
Market segmentation involves four steps:

1. Identifying product-related need sets
2. Group customers with similar need sets
3. Describing each group
4. Selecting an attractive segment to serve
1.10 MARKETING STRATEGY AND CONSUMER BEHAVIOR
Since all four of the applications of consumer behavior described above focus on the
development, regulation, or effects of marketing strategy, we will now examine marketing
strategy in more depth.
To survive in a competitive environment, an organization must provide target customers

more value than is provided by its competitors. Customer value is the difference between
all the benefits derived from a total product and all the costs and risks of acquiring those
benefits. For example, owning a car can provide a number of benefits, depending on the
person and the type car, including flexible transportation, image, status, pleasure, comfort,
and even companionship. However, securing these benefits requires paying for the car,
gasoline, insurance, maintenance, and parking fees, as well as risking injury from an accident,
adding to environmental pollution, and dealing with traffic jams and other frustrations. It is
the difference between the total benefits and the total costs that constitutes customer value.
Providing superior customer value requires the organization to do a better job of

anticipating and reacting to customer needs than the competition does. Since customer
value is delivered by the marketing strategy, the firm must develop its general marketing
strategy as it evaluates potential target markets.
Marketing strategy is basically the answer to the question: How will we provide
superior customer value to our target market? The answer to this question requires the
formulation of a consistent marketing mix. The marketing mix is the product, price,
communications, distribution, and services provided to the target market. It is the
combination of these elements that meets customer needs and provides customer value.
The Product
A Product is anything a consumer acquires or might acquire to meet a perceived

need. Consumers are generally buying need satisfaction, not physical product attributes.
As the former head of Revlon said, “in the factory we make cosmetics, in the store we sell

CONSUMER BEHAVIOUR
hope.” Thus, consumers don’t purchase quarter-inch drill bits but the ability to create
quarter-inch holes. Federal Express lost much of its overnight letter delivery business not NOTES
to UPS or Airborne but to fax machines and the Internet because they could meet the
same consumer needs faster, cheaper, or more conveniently. Consider one analyst’s
description of McDonald’s product.
The source of McDonald’s pre-eminence is neither hamburgers nor fast-food service.

It’s giving a wide range of people the experience of a reliable break from fatigue, stress,
grown-up responsibility. More variety, fewer calories, even enhanced freshness are not
the principal criteria for success if what those people seek is “a break today.”
We use the term product to refer to physical products and primary or core services.
Thus, an automobile is a product, as is a transmission overhaul or a ride in a taxi. Over
15,000 new products and new versions of existing products are introduced to supermarkets
alone each year. Obviously, many of these will not succeed. To be successful, products
must meet the needs of the target market better than the competition does.
Consider the Chinese computer market. A few years ago, a state-owned company-
Legend-appeared headed for oblivion as China opened its market to Western firms. Today,
it dominates all competitors. How? According to its general manager, “We have much
more insight into the needs of Chinese customer.” These insights have been translated into
bundling software products for first-time buyers (most of the market) into its computers.
These include tutorials on such topics as using the computer, using the Internet, and organizing
home finances.
Communications
Marketing communications include advertising, the sales force, public relations,

packaging, and any other signal that the firm provides about itself and its products. An
effective communications strategy requires answers to the following questions:
• With whom, exactly, do we want to communicate? While most messages are
aimed at the target-market members, others are focused on channel members or
those who influence the target-market members. For example pediatric nurses
are often asked for advice concerning diapers and other nonmedical infant care
items. A firm marketing such items would be wise to communicate directly with
these individuals. Often it is necessary to determine who within the target market
should receive the marketing message. For a children’s breakfast cereal, should
the communications be aimed at the children or the parents or both? The answer
depends on the target market and varies by country.
• What affect do we want our communications to have on the target audience?
Often a manager will state that the purpose of advertising and other marketing
communications is to increase sales. While this may be the ultimate objective, the
behavioral objective for most marketing communications is often much more

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

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

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aware of the product and its capabilities, decide that it is the best available solution, proceed
NOTES to it, and become satisfied with the results of the purchase. A significant part of this entire
text is devoted an understanding of the consumer decision process.
Figure. 1.2 Consumer Purchase Decision Process
The process may be viewed as starting when the consumer engages in problem
recognition. It occurs when the consumer is activated by awareness of a sufficient difference
between their actual state of affairs and their concept of the ideal situation. If an internal
search does not provide sufficient information about products, or how to evaluate them,
the consumer continues with a more involved external search for information. This result in
exposure to numerous informational inputs called stimuli, which can arise from a variety of
sources, including advertisements, printed product reviews, and comments from friends.
Any informational stimuli are subject to information-processing activities which the

consumer uses to derive meaning from stimuli. This process involves allocating attention to
available stimuli, deriving meaning from these stimuli, and holding this meaning in what is
termed ‘short-term memory’, where it can be retained briefly to allow further processing.
The alternative-evaluation phase, involves comparing the information gained in the

search process for alternative products and brands to the product judging criteria or
standards the consumer has developed. When such comparison leads to favorable
evaluations, the consumer is likely to develop a purchase intention toward that alternative
receiving the most favorable evaluation.
From the above figure, a purchasing process usually follows strong purchase intentions.
This process involves a series of selections, including the type of retail outlet as well as the
specific brand or service to use. The consumer’s purchase then leads to various outcomes.
One such outcome is satisfaction as a result of direct experience in using the brand.
Satisfaction will affect the consumer’s beliefs about the brand. Other outcomes are
dissatisfaction and post sale doubt. These can generate a heightened desire for additional
information and influence subsequent problem recognition. In both cases, post purchase
experiences result in feedback to the problem-recognition stage.

CONSUMER BEHAVIOUR
1.12 OUTCOMES
NOTES
1.12.1 Firm outcomes
Product position
The most basic outcome for a firm of a marketing strategy is its product position-an
image of the product or brand in the customer’s mind relative to competing products and
brands. This image consists lf a set of beliefs, pictorial representations, and feelings about
the product or brand. It does not require purchase or use for it to develop. It is determined
by communications about the brand from the firm and other sources, as well as by direct
experience with it. Most marketing firms specify the product position they want their
brands to have and measure these positions on an ongoing basis. This is because a brand
whose position matches the desired position of a target market is likely to be purchased
when a need for that product arises.
Sales
Sales are a critical outcome, as they produce the revenue necessary for the firm to
continue in business. Therefore, virtually all firms evaluate the success of their marketing
programs in terms of sales. As we have seen, sales are likely to occur only if the initial
consumer analysis was correct and if the marketing mix matches the consumer decision
process.
Customer Satisfaction
Marketers have discovered that it is generally more profitable to maintain existing

customers than to replace them with new customers. Retaining current customers requires
that they be satisfied with their purchase and use of the product, Thus customer satisfaction
is a major concern of marketers.
Convincing consumers that your brand offers superior value is necessary in order to
make the initial sale. Obviously, one must have a thorough understanding of the potential
consumers’ needs and of their information acquisition process to succeed at this task.
However, creating satisfied customer, and thus future sales, requires that customers continue
to believe that your brand meets their needs and offers superior value after they have used
it. You must deliver as much or more value than your customers initially expected, and it
must be enough to satisfy their needs. This requires an even greater understanding of
consumer behavior Honda’s recent efforts in this are described below:
Honda had the factory workers who actually assemble the cars as well as marketing
mangers conduct telephone interviews with over 47,000 Accord owners. The interviews
sought to determine customer satisfaction levels with all aspects of the Accord as well as
ideas for improvements. The interviews were conducted by those who would have to
make any necessary changes.

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1.12.2 Individual Outcomes

NOTES
Need Satisfaction
The most obvious outcome of the consumption process for an individual, whether or
not a purchase is made, is some level of satisfaction of the need that initiated the consumption
process. This can range from none (or even negative if a purchase increases the need
rather than reduces it) to complete. Two key processes are involved-the actual need
fulfillment and the perceived need fulfillment. These two might take a food supplement
because they believe it is enhancing their health while in reality it could have no direct health
effects or even negative effects. One objective of government regulation and a frequent
goal of consumer groups is to ensure that consumers can adequately judge the extent to
which products are meeting their needs.
Injurious Consumption
While we tend to focus on the benefits of consumption, we must remain aware that
consumer behavior has a dark side. Injurious consumption occurs when individuals or
groups made consumption decisions that have negative consequences for their long-run
well-being.
For most consumers, fulfilling one need affects their ability to fulfill others due to either
financial or time constraints. For example, some estimates indicate that most Americans
are not saving at a level that will allow them to maintain a lifestyle near their current one
when they retire. The cumulative impact of many small decisions to spend financial resources
to meet needs now will limit their ability to meet what may be critically after retirement.
For other consumers, readily available credit, unrelenting advertising, and widespread,
aggressive merchandising result in a level of expenditures that cannot be sustained by their
income. The result is often financial distress, delayed or bypassed medical or dental care,
family stress, and inadequate resources for proper child care, bankruptcy, or even
homelessness.
Cigarette consumption is encouraged by hundreds of millions of dollars in marketing

expenditures, as is the consumption of alcoholic beverages, snacks with high sugar or fat
content, and other potentially harmful products. These expenditures cause some people
to consume these products or to consume ore of them... Some of these people, and their
families, in turn are then harmed by this consumption.
Companies are not the only entities that promote potentially harmful products. Most
states in the United States now promote state-sponsored gambling, which has caused
devastating financial consequences for some. The following quote indicates the magnitude
of the problem:

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

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Social Welfare
NOTES
Consumer decisions affect the general social welfare of a society. Decisions concerning
how much to spend for private goods (personal purchases) rather than public goods (support
for public education, parks, health care, and so forth) are generally made indirectly by
consumers’ elected representatives. These decisions have a major impact on the overall
quality of life in n a society.
Injurious consumption, as described above, affects society as well as the individuals

involved. The social costs of smoking-induced illnesses, alcoholism, and drug abuse are
staggering. To the extent that marketing activities increase or decrease injurious consumption,
they have a major impact on the social welfare of a society.
However, the same authors conclude: “Although these problems appear daunting,
they are all problems that are solvable through altruistic [social] marketing.” Thus, marketing
and consumer behavior can both aggravate and reduce serious social problems.
1.13 SUMMARY
This unit serves as an introduction to the field of consumer behavior. After several
orienting discussion centers on defining consumer behavior and describing the focus and
text uses for studying it to view consumer behavior as the decision process. Therefore we
recognize that in certain situations consumers will purchase products and services for use
by other individuals. A sound understanding of consumer behavior is essential to the long-
run success of any marketing program.
And the consumer attributes were discussed with the framework of market segmentation
– i.e., an approach to selecting groups of homogeneous consumers as targets for marketing
activity. A clearer understanding should be gained about whom of consumer behavior –
that consumers are people of widely varying characteristics.
Since customer value is delivered by the marketing strategy, the firm must develop its
general marketing strategy as it evaluates potential target markets. And this unit ends with
the consumer decision process intervenes between the marketing strategy (as implemented
in the marketing mix) and the outcomes.
1.14 REVIEW QUESTIONS

¾ Review the activities undertaken by marketing oriented firms and show the relevance
of consumer behavior to each activity.
¾ List out the pitfalls a marketer may encounter by ignoring the study of consumer
behavior.
¾ How is the study of consumer behavior important in the following situations?

CONSUMER BEHAVIOUR
a) In an economy where there is surplus production capacity.

b) In an economy where there are limited disposable incomes of the NOTES
consumers and low purchasing powers.
c) In an intensely competitive situation relating to a product marketed
by several companies with their products being nearly identical.
¾ Relate one of your experiences where post purchase outcomes significantly
influenced your future purchase behavior.
¾ How does the concept of market aggregation differ from market
segmentation?
¾ What are the benefits and costs of market segmentation?

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NOTES

CONSUMER BEHAVIOUR
NOTES
UNIT II
CONSUMER AS AN INDIVIDUAL
2.1 OVERVIEW
The term ‘individual’ means a human being or a single person. The individual may be
major, minor, married or unmarried, and sound or unsound mind. The term “consumer”
more generally refers to anyone engaging in any of the activities. The traditional viewpoint
has been to define consumer strictly in terms of economic goods and services. This position
holds that consumer is a potential purchaser of products and services offered for sale.
Most economically developed societies are legitimately referred to as consumption
societies. Most individuals in these societies spend more time engaged in consumption
than in any other activity, including work or sleep (both of which also involve consumption).
Therefore, knowledge of consumer behavior can enhance our understanding of our
environment and ourselves. Such an understanding is essential for sound citizenship, effective
purchasing behavior, and reasoned business ethics.
Marketing stimuli have meaning only as individuals interpret them. Individuals are not
passive interpreters of marketing and other messages but actively assign meaning based on
their needs, desires, expectations, and experiences. Thus, consumers’ interpretations of
negative publicity depend on their prior commitment to the brand involved. Likewise,
consumers interpret movie critics’ reviews in light of their knowledge about the critic and
his or her biases and preferences. The fairness of a price increase is interpreted on the
basis of the consumer’s inferred motive for the increase. Information about competing
brands is often inaccurately interpreted to favor a preferred brand. So any study of consumer
behavior would be incomplete if it treated only one consumer role.
¾ About the consumer needs and motivational process
¾ The Personality and consumer perception
¾ How consumers learn across a variety of situations
¾ The Consumer attitudes and change
¾ The Communication and persuasion of consumer
¾ About Self image and life style analysis of consumer
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2.3 THE NATURE AND ROLE OF MOTIVES

NOTES
2.3.1 The Nature of Motives
A number of writers have drawn distinctions between motives and other related
concepts such as needs, wants, and drives. For our present purposes these distinctions
are not very helpful and will be avoided. We will view a motive as an inner state that
mobilizes bodily energy and directs it in selective fashion toward goals usually located in
the external environment. This definition implies that motives involve two major components:
1. A mechanism to arouse bodily energy.
2. A force that provides direction to that bodily energy.
The arousal component activates general tension or restlessness but does not provide
direction for release of this energy. It might be compared to the generally random thrashing
about that newborn babies often show. The directive aspect of motives focuses such aroused
energy toward some goal in the individual’s environment. That is, when our hunger is
aroused, we are usually directed toward particular foods.
The arousal leads a person to act (i.e., to behavior). Autonomic (physiological) or

emotive arousal can elicit the relevant behavior directly. For example, the slight of a bear
will automatically (i.e., automatically) make you flee, and seeing something funny may sees
in the mail an express mail envelope, his or her automatic response is to open that envelope
first. Emotive feelings are aroused when we buy products that are made in our home
country versus foreign countries. These feelings are magnified when there are tensions
between the home country and a foreign country. For example, the recent case of U.S.
soldiers being held in China has aroused negative feelings towards Chinese products in the
United States.
Cognitive arousal also would elicit behavior by generally only after further cognitive
activity to figure out possible goal-directed behaviors; for example, a person seeking a
way out of a commitment will identify and deliberate available options. Or a person with
a car breakdown will deliberate alternative ways of getting to the destination. In business,
the onset of a new project causes cognitive arousal, and there is a request for proposals
that are scanned and deliberated upon.
Various concepts have been offered to explain how motives exert their directional
influences on consumers. Earlier views held that inborn instincts beyond the individual’s
control provided the direction for behavior. Later it was stressed that basic needs (hunger,
thirst, and the like) impelled people toward action. This view also held that behavior
instrumental in satisfying a need would become associated with it and have a higher likelihood
of occurring in future situations involving the same need arousal.

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

learning, personality, attitudes, and how people process information. This also results in
directional influences on behavior. For example, motives influence information processing,
which in turn regulates how we interpret and respond to our environment.
2.3.3 Facets of motivation: Needs, Emotions, and psychographics
Whatever the direction of motivation, it manifests in three facets: needs, emotions,

and psychographics. Needs are gaps between the desired and the current state, and they

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lend themselves more readily to cognitive consciousness and appraisal. Emotions are
NOTES more autonomic and engender more personal experience. Psychographics combine
behaviors driven by both needs and emotions.
2.4 CUSTOMER NEEDS
The concept of needs and wants is closely aligned to the concept of motivation. The
desired state provides the goal-object, and its deprivation provides the drive. Psychologies
and consumer researchers have suggested various categories of needs. Among the most
relevant to marketers are Maslow’s need hierarchy, Murray’s psychogenic needs, Ditcher’s
consumption needs, and various marketing scholars’ list of customer needs.
2.4.1 Maslow’s’ Hierarchy of Needs
According to psychologist Abraham Maslow, human needs and wants are arranged
in a hierarchy. Higher-level needs are dormant until lower-level needs are satisfied. Maslow’s
hierarchy of needs consists of (from lowest to higher):
1. Physiological needs (hunger, thirst)
2. Safety and security needs (Security, protection)
3. Belongingness and love needs (Social needs)
4. Esteem and ego needs (self-esteem, recognition, status)
5. Need for self-actualization (Self-development, realization)
A person progresses to higher-level needs if the lower-level needs are satisfied; he or

she regresses back to lower-level needs should these needs become unsatisfied again.
Maslow does not distinguish between needs and wants, but most contemporary books on
marketing do. According to this distinction, only the first two needs in Maslow’s hierarchy
would be needs while the last three are wants.
Maslow’s Needs for household customers
Physiological needs lead customers to strive for, purchase, and use food, clothing and
shelter. For many, such as those below the poverty line, these needs remain perpetually
less than adequately met so that they never rise to higher-level needs. Furthermore, many
of the differences in what customers use and buy are due to physiological differences, (i.e.,
physiological differences due to genetics, race, gender and age).
At the next level, safety and security needs are responsible for many people’s fear of
flying, for example, and for buying insurance against various uncertainties of life. Personal
safety is a motive as old as survival itself, and in modern times, purchase and use of guns is
on the rise in major urban centers to ensure personal safety. Likewise, other safety concerns
relate to automobile safety with regard to health as consumers develop a germ phobia.

CONSUMER BEHAVIOUR
Social motives of belongingness and love are evident when customers want to buy
products that are well regarded by others so that the use of those products brings the NOTES
customers’ peer approval, affection, and a sense of belonging. The kind of neighborhood
you choose to live in, the kind of car you choose to drive, the designer logos on the clothes
you wear, what school you send your youngster to, and the places you vacation are at least
in part determined by how you peer and significant others will look upon these choices.
Many products, such as greeting cards, flowers and other kinds of gifts, are bought
specifically to promote relationships between individuals.
Next, we all work hard to gain success in our individual sphere of activity and to
acquire the qualities others consider desirable and virtuous so that we may win our own
and others’ esteem. We also buy products and services we deem fitting of our esteem.
Beyond impressing others, for example, we drive a car that, in our judgment, reflects who
we are; we visit stores where we are treated with respect; and we even buy and give gifts
to ourselves because we feel we deserve them.
Finally, once these physiological, social, and esteem needs are satisfied, people begin
to explore and extend the bounds of their potential- that is, seek self-actualization. This
self actualization motive is what is behind a person engaging, for example, in self-improvement
activities, such as taking an adult-education course or tenaciously pursuing a skill toward
perfection, like in competitive sports, or even doing meditation to, according to Eastern
philosophy, meet one’s creator, to become what one was supposed to be, in a cosmic
sense.
Maslow’s needs for business customers
Like customers in household markets, customers in the business markets experience

Maslow’s hierarchy of needs. This can be visualized at two levels; business customer as
an enterprise and business customer as individuals working in firms. First consider business
as an enterprise. As an enterprise, business firms need, for their physical survival, at least
three resources: money, employees, and raw materials and equipment. Banks and venture
capitalists who supply cash, recruitment agencies who supply employees, and suppliers of
raw materials and equipment are catering to the survival needs of the business enterprise,
akin to physiological needs of the individual.
Security needs for business firms translate into insurance against loss of property and
assets and against liabilities that may arise in various business transactions. Indeed, safety
and security are key concerns in government and business buying; for example, the safety
features are of paramount importance when city governments procure vehicles for their
police forces. In office buildings, elevators need to be inspected and maintained for safe
operations. In department of Defense contracts, all vendors must assure ad abide by data
security requirements.

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Belongingness for business enterprises refers to recognition by peer organizations

NOTES and being admitted to formal or informal memberships groups of other similar organizations.
Thus to belong to Fortune 500 or to Silicon Valley, to be listed on the stock exchange, to
belong to the Better Bureau, to be recognized as a leading contender in the field, or to be
certified and recertified by formal certification agencies are examples of an enterprise’s
sense of belonging.
Esteem comes partly from being recognized by various bodies but also partly from
one’s own sense of accomplishment, such as winning the Malcolm BAL ridge award or
obtaining the AACSB accreditation by a business school (American Assembly of Colleges
and schools in business). Qualifying to belong to a group of enterprises or to attain certain
status and awards, businesses need to buy, use, and pay for a range of products and
services-for example, tightly controlled quality in raw materials, training for its employees,
or reengineering services.
Finally, self-actualization is seen in business firms; striving to become what they want
to be, such as 3M as the innovative company, Ben & Jerry’s as the environmental company.
Levi Strauss as the Diversity Company, and Benetton as the social consciousness company.
Firms that have these and similar other business firms as their customers must themselves
reflect these values and deal in ways that further or help the customer companies to actualize
their selves.
Now consider business customers as individuals working in organizations. Whatever

they want to buy, they want to feel secure that it is a wise decision and be assured that the
product or service will perform well and to the specifications. Whoever is making the
purchase decision for the organization is held accountable for it, and often he or she is at
risk of being perceived as being incompetent should an unwise purchase decision be made.
Thus, business customers are likely to buy from someone they feel secure in dealing with.
Next, many products are bought simply to satisfy a person’s belongingness and esteem
needs; for example corporate membership in country clubs, corporate jets, the kind of
hotel one chooses on business travel, and even the location and address of business premises.
Finally, self-actualization reflects a person’s personal value system and affects what he or
she buys and whom he or she buys from-for example, buying from local or minority suppliers.
2.4.2 Mcguire’s Psychological Motives
Maslow presented a hierarchical set of five basic motives, and other researchers
have proposed hundreds of additional, very specific motives. McGuire developed a
classification system that organizes these various theories into 16 categories. This system
helps markets isolate motives likely to be involved in various consumption situations.
Each of McGuire’s 16 motives and their implications for marketing are briefly described
in the following sections:

CONSUMER BEHAVIOUR
COGNITIVE PRESERVATION MOTIVES

NOTES
1. Need for Consistency: A basic desire is to have all facets or parts of oneself
consistent with each other. These facets include attitudes, behaviors, opinions,
self-images, views of others, and so forth. Cognitive dissonance is a common
motive of this type. Often making a major purchase is not consistent with the need
to save money, to make other purchases, or to purchase a different brand with
desirable features not in the purchased brand. This inconsistency motivates the
individual to reduce it. Understanding the need for consistency is also important
for structuring advertising messages and developing attitude change strategies.
Consumers have a need for internal consistency, so they are reluctant to accept
information that disagrees with existing beliefs.
2. Need for Attribution: This set of motives deals without need to determine who
or what causes the things that happen to us. Do we attribute the cause of a favorable
or unfavorable outcome to ourselves or to some outside force? The fact that
consumers need to attribute cause underlies an area of research known as attribution
theory. This approach to understanding the reasons consumers assign particular
meanings to the behaviors of others has been used primarily for analyzing consumer
reactions to promotional messages (in terms of credibility). When consumers
attribute a sales motive to advice given by a salesperson or advertising message,
they tend to discount the advice. In contrast, similar advice given by a friend would
likely be attributed to a desire to be helpful and might therefore be accepted.
3. Need to Categorize: People have a need to categorize and organize the vast
array of information and experiences they encounter in a meaningful yet manageable
way. So they establish categories or mental partitions that allow them to process
large quantities of information. Prices are often categorized such that different prices
connote different categories of goods. Automobiles over $20000 and automobiles
under $20000 may elicit two different meanings because of information categorized
on the basis of price level. Many firms price items at $9.95, $19.95, $49.95, and
so forth. One reason is to avoid being categorized in the over $10, $20, or $50
group.
4. Need for Objectification: These motives reflect needs for observable cues or
symbols that enable people to infer what they feel and know. Impressions, feelings,
and attitudes are subtly established by viewing one’s own behavior and that of
others and drawing inferences as to what one feels and thinks. In many instances,
clothing plays an important role in presenting the subtle meaning of a desired image
and consumer lifestyle. This is so critical that companies such as Anheuser-Busch
use clothing consulting firms to tailor clothes for executives that are consistent with
the firm’s desired image.
COGNITIVE GROWTH MOTIVES
5. Need forAutonomy: The need for independence and individuality is a characteristic
of the American culture. All individuals in all cultures have this need at some level.
Americans are taught that it is proper and even essential to express and fulfill this

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need. In contrast, in countries such as Japan, fulfillment of this need is discouraged,

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

CONSUMER BEHAVIOUR
products can provide ego defense. A consumer who feels insecure may rely on
well-known brands for socially visible products to avoid any chance of making a NOTES
socially incorrect purchase.
12. Need for Reinforcement: People are often motivated to act in certain ways
because they were rewarded for behaving that way in similar situations in the past.
This is the basis for operant learning as described in the previous chapter. Products
designed to be used in public situations (clothing, furniture, and artwork) are
frequently sold on the basis of the amount and type of reinforcement that will be
received. Keepsake Diamonds exploits this motive with an advertisement that
states, “Enter a room and you are immediately surrounded by friends sharing your
excitement.”
AFFECTIVE GROWTH MOTIVES

13. Need for Assertion: Many people are competitive achievers who seek success,
admiration, and dominance, Important to them are power, accomplishment, and
esteem. The need for assertion underlies numerous ads.
14. Need forAffiliation: Affiliation is the need to develop mutually helpful and satisfying
relationships with others. It relates to altruism and seeking acceptance and affection
in interpersonal relations. Group membership is a critical part of most consumers’
lives, and many consumer decisions are based on the need to maintain satisfying
relationships with others. Marketers frequently use such affiliation-based themes
as “Your kids will love you for it” in advertisements.
15. Need for Identification: The need for identification results in the consumer playing
various roles. A person may play the role of college student, sorority member,
bookstore employee, fiancée, and many others. One gains pleasure from adding
new, satisfying roles and by increasing the significance of roles already adopted.
Marketers encourage consumers to assume new roles (become a skateboarder)
and position products as critical for certain roles (“No working mother should be
without one”).
16. Need for Modeling: The need for modeling reflects a tendency to base behavior
on that of others. Modeling is a major means by which children learn to become
consumers. The tendency to model explains some of the conformity that occurs
within reference groups. Marketers utilize this motive by showing desirable types
of individuals using their brands. For example, some Rolex ads devote most of
their copy to a description of very successful people such as Picabo Street or
Monica Kristensen. They then state that this person owns a Rolex.
2.4.3. Murray’s List of Psychogenic Needs
Psychologist Henry Murray proposed a list of 12 primary (or viscerogenic) and 28

secondary (or psychogenic) human needs. The list of needs is:

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1. Autonomy: To be independent and free to act according to impulse; to be

NOTES unattached, irresponsible; to defy convention. (e.g. Impulse buying, wearing
unconventional clothing)
2. Dominance: To direct the behavior of others (e.g. Aggressively demanding attention
in service establishments)
3. Nurturance: To give sympathy and to feed, help, and protect the needy. (e.g.
wearing high-fashion clothing)
4. Cognizance: To explore, to ask questions, to seek knowledge (e.g. visiting museums,
learning about new technology and products)
5. Exposition: To give information and explain, interpret, and lecture. (e.g. playing
opinion leaders)
Ernest Dichter’s Consumption Motives
Ernest Dichter was psychoanalyst trained in Vienna in the early part of the century. A
strong believer in Freud’s theory of personality, he believed that unconscious motives play
a significant role in people’s consumption decisions. Based on in-depth interviews with
consumers for some 200-plus products, he identified a set of motives/needs that underlie
an individual’s consumption of diverse products. List of Consumption Motives are:
Mastery over environment - Kitchen appliances
Status - Scotch
Rewards - Gifts to oneself
Individuality - Foreign cars
Social acceptance - Companionship
Love and affection - Giving children toys
Security - Full drawer of neatly ironed shirts
Masculinity - Toy guns
Femininity - Decorating
Eroticism - Sweets, Gloves
Desalination - Listening to and calling in talk shows
Moral Purity/cleanliness - White bread, bathing
Magic-mystery - Religious rituals, crystals
2.4.4. Needs identified by Marketing Scholars

Working more directly on marketing problems and reflecting specifically on an
individual’s behavior in the marketplace, several marketing scholars have identified and
proposed their own classification of needs. Consumer researcher Geraldine Fennel identified
consumer motives for product use based on use-situation-for example, aversive (to avert

CONSUMER BEHAVIOUR
an adverse situation) or positive (to gain a reward) product-use situation. Consumer

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

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2.5 CUSTOMER EMOTIONS

NOTES
Needs and emotions are closely related. Emotions are generally triggered by
environmental events. Anger, joy, and sadness are most frequently a response to a set of
external events. However, we can also initiate emotional reactions by internal processes
such as imagery. Athletes frequently use imagery to “psych” themselves into a desired
emotional state.
Emotions are accompanied by physiological changes. Some characteristic changes are (1)
eye pupil dilation, (2) increased perspiration, (3) more rapid breathing, (4) increased heart
rate and blood pressure, and (5) enhanced blood sugar level.
Emotions also have associated behaviors. While the behaviors vary across individuals
and within individuals across time and situations, there are unique behaviors characteristically
associated with different emotions: fear triggers, fleeing responses, anger triggers striking
out, grief triggers crying, and so forth.
Finally, emotions involve subjective feelings. In fact, it is the feeling component we

generally refer to when we think of emotions. Grief, joy, anger, jealousy, and fear feel very
different to us. These subjectively determined feelings are the essence of emotion.
Figure 2.1 Nature of Emotions Types of Emotion
If asked, you could doubtless name numerous emotions and your friends could name
others that did not appear on your list. Thus, it is not surprising that researchers have
attempted to categorize emotions into manageable clusters. Some researchers have
suggested that three basic dimensions – pleasure, arousal, and dominance (PAD) – underlie
all emotions. Specific emotions reflect various combinations and levels of these three
dimensions. Table 2.1 lists the three primary PAD dimensions, a variety of emotions or
emotional categories associated with each dimension, and indicators or items that can be
used to measure each emotion.

CONSUMER BEHAVIOUR
Table 2.1 Emotional Dimensions, Emotions and Emotional Indicators.

NOTES
A model of Emotion
Although a number of psychologists have tried to explain emotions, the most

contemporary theory is Schachter’s two factor theory. According to psychologist Stanley
Schachter, the experience of emotion depends on two factors, automatic arousal and its
cognitive interpretation, or meaning analysis. In this model, we recognize that the initial
stimulus can come from the external environment as well as from the inside of the organism,
such as hunger pangs or a headache.
Marketer can adapt or respond to customer emotions by (1) designing the stimulus
and (2) aiding the meaning appraisal. The first intervention takes the form of making

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product or service designs to fit appropriate consumption emotions. The second takes the
NOTES form of communication, such as in attaching symbolism to products or services in advertising
or in explaining certain aspects of the marker offering or certain deviations from the expected
marketplace events or outcomes. For example, positive attempts to help a customer’s
meaning appraisal process might include a physician explaining treatment procedures to a
patient or a serer explaining why there is a delay in serving food at a restaurant.
Scales to Measure Plutchik’s Eight Emotions
Plutchik’s emotions can be measured by rating the following triads of an adjectives,

each rated on a five-point scale, ranging from “not at all” to “very strongly.” How do you
feel at the moment?
Fear : threatened, frightened, intimidated
Anger : Hostile, annoyed, irritated
Joy : Happy, cheerful, and delighted
Sadness : gloomy, sad, and depressed.
Acceptance : helped, accepted, trusting
Disgust : disgusted. Offended, unpleasant
Anticipation : alert, attentive, curious
Surprise : Puzzled, confused, startled
WINDOW ON RESEARCH
Customer Moods
Moods are simply emotion s felt less intensely, they are also short-lived. They are
easy to induce, and they appear and disappear frequently and readily. They are pervasive
in that we are always in some kind of mood-happy mood or sad mood, pensive mood or
careless mood, irritated or pleased, amused or bored. Moods affect our behavior of the
moment in general and our response to the marketing activities to which we might be
exposed at the time. For this reason, moods are important for marketers to understand.
Moods are induced by external stimuli as well as internally by autistic thinking that is,
recalling some past incident or fantasizing about some event. Among the marketing stimuli
that can induce positive or negative moods are:
• The ambience of the store or service delivery facility
• The demeanor of the salesperson
• The sensory features pf the product
• The tone and manner of advertising

CONSUMER BEHAVIOUR
• The content of the message itself from a salesperson or in the advertisement whether
it frustrates or fulfils one’s goals in attending to that message (e.g., if the salesperson NOTES
is not knowledgeable or if the advertisement is vain, the customer may feel frustration
at having wasted the time).
Mood states have consequences in terms of favorable or unfavorable customer

response to marketer efforts. In research studies done by consumer researchers, customers
have also been found to linger longer in positive mood environments, recall those
advertisements more that had created positive moods, and feel more positive toward brands
based on advertising that created feelings of warmth.
Mood affects the strategies used to process information by consumers. However

there is one stream of research that states that positive mood reduces the processing of
stimulus information, and there is another that states that positive mood enhances the learning
of brand names better in comparison to a neutral mood. Brand name recall is s pre
requisite for the choice of the brand and recall depends on the process by which the brand
was first encoded into memory. Researchers Lee and Sternthal state that two factors
important in the encoding process are brand rehearsal – “how frequently and recently the
brand has been exposed in the memory as a member of a particular category”-and relational
elaboration-”the process by which consumers link the brands to the specific categories
they belong to.”
In a brand-learning task, they found that being in a positive mood helps consumers to
cluster the brands that they are exposed to, by the categories they belong to when the
respondents are asked to recall as many brands as possible after this exposure, a positive
mood helps them recall more categories and more brands as members of these categories,
thus increasing the number of brands recalled compared to when they are in a natural
mood. Corroborating this finding is the research study by Barone, Miniard, and Romeo
on the effect of positive mood on brand extension evaluations. They show that a positive
mood influences the perceptions of similarity between the brand extensions. Both of these
factors are important determinants of extension evaluations, and positive mood enhances
evaluation of brand extensions by influencing these determinants.
Thus, marketers could use advertising, point-of-sale material, celebrity endorsements,

free gifts, and several other strategies to induce positive moods in consumers to enable a
more positive evaluation of a brand extension, thereby influencing choice.
Marketers on the Internet attempt to overcome their inability to actually bring the
customer into the store by creating the mood or ambience within the web site. This might
include the incorporation of store colors and background music aimed at creating a favorable
mood in the customer.

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Hedonic consumption, seeking Emotional value

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

or activity. This describes customers’ relationships with a select few products that are
consumed with interest, pausing to savor their taste, smell their aroma, feel their texture, or
hear their sound. We like them; we enjoy them; we love them.

CONSUMER BEHAVIOUR
Everyone has a favorite activity, a favorite product, a favorite brand. Some of us are
fashion experts; others, car buffs; still others, computer jocks. We are eager to get to NOTES
know these products (e.g., fashions, cars, and computers) and find out everything there is
to know; we get excited whenever the topic comes up, and, of course, we want to be
using them whenever possible. This relationship we develop as users with selected products
and services is called deep involvement. It can be defined as a customer’s extreme interest
in a product or service on an ongoing basis.
Involvement is a general term that can be defined as the degree of personal relevance
of an object, product, or service to a customer. Furthermore, involvement is a matter of
degree-how relevant or how central a product is. Involvement, defined as the degree of
interest, can be viewed as having two forms: enduring involvement and situational
involvement. Enduring involvement is the degree of interest a customer feels in a product
or service on an ongoing basis. In contrast, situational involvement is the degree of interest
in a specific situation or on a specific occasion, such as when buying a product or when
consuming something in the presence of an important client or friend.
Thus, Celia Fernandez is not much interested in dishwashers; she takes the one in her
kitchen for granted. But the last time she was buying one, she became extremely interested
(i.e., involved) in dishwashers, attempting to learn about them, deliberating over various
options, and weighing them vis-à-vis her own needs. In contrast, she is enduringly involved
in gardening and in garden-related products, taking considerable interest in them and enjoying
them. In a business context, a major infrastructure project in a company is an object of
high situational involvement, and maximizing the lifetime value of its customers would be a
matter of enduring involvement.
The extreme form of enduring involvement is deep involvement. Deep involvement

affects customer behavior in a number of ways. First, deeply involved consumers are
knowledgeable about the product or service and, thus, can act as opinion leaders. Second,
they consume a greater quantity of the product and also buy related products. Third, they
are less price sensitive for that product and are willing to spend well. Fourth, they seek
constant information about products and services. Fifth, they want to spend more time in
related activities. It is easier to build more extended relationships with these customers.
Consider for example, Harley-Davidson motorcycle owners; there is a Harley Owners
Club (HOG), and members participate in a wide range of activities, including charity work.
The fanatic loyalty that favored IBM at one time but now favors the Apple Mac shows the
deep involvement that these users have for the product. Finally, deeply involved customers
can act as lead users for new products; they try products in innovative ways and, thus are
sources of new-product ideas.

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Psychographics
NOTES
Along with needs and emotions, the third facet of motivation is psychographics.
Psychographics are characteristics of individuals that describe them in terms of their
psychological and behavioral makeup-how people occupy themselves (behavior) and what
psychological factors underlie that activity pattern. They are manifestation of an individual’s
underlying motivations, and they, in turn, define them. For example, person’s need to seek
affiliation or peer approval makes him or her engage, say, in going to theaters or playing
golf. Theater going or playing golf, thus becomes part of his or her psychographics. This
psychographic, in turn, drives customer behavior toward buying golf equipment or doing
whatever is needed to implement that particular psychographic; it becomes motivational.
2.6 PERSONALITY AND CONSUMER BEHAVIOR
While motivations are the energizing and directing force that makes consumer behavior
purposeful and goal directed, the personality of the consumer guides and directs the behavior
chosen to accomplish goals is different situations.
Personality is an individual’s characteristic response tendencies across similar situations.

If someone asked you, “What is your dad like?” it is unlikely that you would describe him
in terms of demographics. Instead, you would probably use a combination of physical
features and personality characteristics. We can easily describe the personalities of our
family members and friends. For example, you might say that one of your friends is fairly
aggressive, competitive, outgoing, and witty. What you have described are the behaviors
your friend has exhibited over time across a variety of situations. These characteristic ways
of responding to a wide range of situations should, of course, also include responses to
marketing strategies.
While there are many personality theories, all have two common assumptions: (1) all
individuals have internal characteristics or traits, and (2) there are consistent and measurable
differences between individuals on those characteristics. Most of these theories state that
the traits or characteristics are inherited or formed at an early age and are relatively unchanging
over the years.
Single-trait theories emphasize one personality trait as being particularly relevant to

understanding a particular set of behaviors. They do not suggest that other traits do not
exist or are not important; rather, they study a single trait for its relevance to a set of
behaviors, in our case, consumption-related behaviors. Some examples of single-trait theories
that have been shown to be relevant to marketing are those that deal with neuroticism,
consumer conformity, and vanity, affect intensity, trait anxiety, locus of control, sensation,
seeking, self-monitoring, and the need for cognitive closure.
Another single-trait theory of use to marketers is termed consumers’ need for

uniqueness. It is defined as an individual’s pursuit of differentness relative to others that is

CONSUMER BEHAVIOUR
achieved through the acquisition, utilization, and disposition of consumer goods for the
purpose of developing and enhancing one’s personal and social identity. It affects what NOTES
consumers own and value, why they own it, and how they use it. The concepts fit with the
increasingly common marketing practice of deliberate scarcity – producing less of an item
than the predicted demand. Such a strategy helps preserve the uniqueness of the product
and enhances the distinctiveness and status of those who own it.
In contrast to a single-trait theory, a multitrait personality theory specifies several

traits that in combination capture a substantial portion of the personality of the individual.
The multitrait theory used most commonly by marketers is the Five-Factor Model of
personality. This theory identifies five basic traits that are formed by genetics and early
learning. These core traits interact and manifest themselves in behaviors triggered by
situations. Table 2.2 lists the five traits and some of their manifestations.
Table 2.2 The Five-Factor Model of Personality
The Use of Personality in Marketing Practice
Often consumers use products to bolster an area of their personality. Thus, a timid
person might drive a powerful car. While driving the car, this person might feel less timid
and more powerful. However, another timid person might forgo a powerful or flashy car
because “it’s just not me.” Consider one consumer’s explanation of why she did not purchase
the conservative clothing she felt was most suitable for their work:

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NOTES
Figure 2.2 Dimensions of Brand Personality
2.7 CONSUMER PERCEPTION
Information processing is a series of activities by which stimuli are perceived,

transformed into information, and stored. A useful information-processing model having
four major steps or stages: exposure, attention, interpretation, and memory. The first three
of these constitute perception.
2.7.1. Exposure
Exposure occurs when a stimulus comes within range of our sensory receptor nerves.
For an individual to be exposed to a stimulus requires only that the stimulus be placed
within the person’s relevant environment. That is, you have been exposed to a television
commercial if it aired while you were in the room, even if you were “not paying attention”
and did not notice the commercial.
An individual can be exposed to only a minuscule fraction of the available stimuli.

There are now hundreds of television channels, thousands of radio stations, innumerable
magazines, and an exponentially increasing number of websites. Yet one normally watches
only one television station at a time, reads one magazine, newspaper, or book at a time,
and so forth. What determines which stimuli an individual will be exposed to?
Generally, people seek information that they think will help them achieve their goals.
These goals may be immediate or long range. Immediate goals could involve seeking stimuli
such as a television program for amusement or a website to assist in a purchase decision.
Long-range goals might involve studying this text in hopes of passing the next exam, obtaining
a degree, becoming a better marketing manager, or all three. An individual’s goals and the
types of information needed to achieve those goals are a function of that person’s existing
and desired lifestyle and such short-term motives as hunger or curiosity.
Of course, people are also exposed to a large number of stimuli on a more or less
random basis during their daily activities. While driving, they may hear commercials, see
billboards and display ads, and so on that they did not purposefully seek out.

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

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

CONSUMER BEHAVIOUR
INDIVIDUAL FACTORS
NOTES
Individual factors are characteristics of the individual. Interest and need are the
primary individual characteristics that influence attention. Interest is a reflection of
overall lifestyle as well as a result of long-term goals and plans (e.g. becoming a sales
manager) and short-term needs (hunger).
SITUATIONAL FACTORS
Situational factors include stimuli in the environment other than the focal stimulus
(i.e., the ad or package) and temporary characteristics of the individual that are induced
by the environment, such as time pressures or a crowded store.
Program involvement: In general, the audience is attending to the medium because

of the program or editorial content, not the advertisement. In fact, as we saw earlier,
many individuals actively avoid commercials by zapping them.
2.7.3. Interpretation
Interpretation is the assignment of meaning to sensations. It is a function of the gestalt,

or pattern, formed by the characteristics of the stimulus, the individual, and the situation.
Thus, the entire message, including the context in which it occurs, influences our
interpretation, as does the situation in which we find ourselves. For example, our beliefs
about a product are influenced by our beliefs about the capabilities and social responsibility
of the company that produces it as well as its price, country of origin, and the store in
which it is sold. The interpretation of a ‘sale’ sign on a brand depends on how many other
brands are on sale as well as the past history of sales for the brand.
Cognitive Interpretation
It is a process whereby stimuli are placed into existing categories of meaning. This is
an interactive process. The addition of new information to existing categories also alters
those categories and their relationships with other categories. The more radically ‘new’ a
new product is (a discontinuous innovation), the more difficult it is to place into an existing
category or knowledge structure. It is the individual’s interpretation, not objective reality
that influences behavior. A firm may introduce a high-quality new brand at a lower price
than existing brands because the firm has a more efficient production or marketing process.
However, if consumers interpret this lower price to mean lower quality, the new brand will
not be successful regardless of the objective reality.
Affective Interpretation: It is the emotional or feeling response triggered by a stimulus

such as an ad. Like cognitive interpretation, there are ‘normal’ (within-culture) emotional
responses to many stimuli. Likewise there are also individual variations to this response.
Consumers confronting new products or brands often assign them to emotional as well as
cognitive categories.

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2.8. LEARNING
NOTES
Learning is the term used to describe the processes by which memory and behavior
are changed as a result of conscious and nonconscious information processing. Learning is
essential to the consumption process. In fact, consumer behavior is largely learned behavior.
People acquire most of their attitudes, values, tastes, behaviors, preferences symbolic
meanings, and feelings through learning. Culture and social class, through such institutions
as schools and religious organizations, as well as family, friends, mass media, and advertising,
provide learning experiences that greatly influence the type of lifestyle people seek and the
products they consume.
Learning is any change in the content or organization of long-term memory or behavior.

Thus, learning is the result of information processing.
LEARNING UNDER CONDITIONS OF HIGH AND LOW INVOLVEMENT
A moment’s reflection will reveal that people learn things in different ways. Preparing
for an exam generally involves intense, focused attention. The outcome of these efforts is
rewarded with a grade. However most learning is of a much different nature. Most people
know who is playing in the World Series each year even if they don’t care for baseball
because they hear about it frequently.
High-involvement learning: It is one which the consumer is motivated to process or

learn the material. For example, an individual reading Laptop Buyer’s Guide prior to
purchasing a computer is probably highly motivated to learn relevant material dealing with
the various computer brands.
Low-involvement learning: It is one which the consumer has little or no motivation to

process or learn the material. A consumer whose television program is interrupted by a
commercial for a product he or she doesn’t currently use or feel a desire for generall has
little motivation to learn the material presented in the commercial.
CONDITIONING
Conditioning refers to learning based on association of a stimulus (information) and

response (behavior or feeling). The word conditioning has a negative connotation to many
of people and brings forth images of robot like humans. However, conditioned learning
simply means that through exposure to some stimulus and a corresponding response, one
learns that they go together (or do not go together). There are two basic form of conditioned
learning – Classical and Operant.
Classical Conditioning: The process of using an established relationship between a stimulus

and response to bring about the learning of the same response to a different stimulus is
called classical conditioning. This is most common in low-involvement situations. It is likely
that many consumers devote little or no focused attention to the advertisement since cigarette

CONSUMER BEHAVIOUR
ads are low-involvement messages even for most smokers. However, after a sufficient
number of low-involvement ‘scanning’ or ‘glances at’ the advertisement, the association NOTES
may be formed. It is important to note that what is learned is generally not information but
emotion, or an affective response.
Operant Conditioning: Instrumental learning, or operant conditioning, differs from classical

conditioning primarily in the role and timing of reinforcement. Operant conditioning often
involves the actual usage of the product. Thus, a great deal of marketing strategy is aimed
at securing an initial trial. Free samples (at home or in the store), special price discounts on
new products, and contests all represent rewards offered to consumers to try a particular
product or brand. If they try the brand under these conditions and like it (reinforcement),
they are likely to take the next step and purchase it in the future.
COGNITIVE LEARNING
Cognitive learning encompasses all the mental activities of humans as they work to
solve problems or cope with situations. It involves learning ideas, concepts, attitudes, and
facts that contribute to our ability to reason, solve problems, and learn relationships without
direct experience or reinforcement. It can range from very simple information acquisition
to complex, creative problem solving. Three types of cognitive learning are important to
marketers.
Iconic Rote Learning: Learning the association between two or more concepts in the
absence of conditioning is known as iconic rote learning. A substantial amount of low-
involvement learning involves iconic rote learning. Numerous repetitions of a simple message
that occur as the consumer scans the environment may result in the essence of the message
being learned. Through iconic rote learning, consumers may form beliefs about the
characteristics or attributes of products without being aware of the source of the information.
Vicarious Learning/Modeling: It is not necessary for consumers to directly experience

a reward or punishment to learn. Instead, they can observe the outcomes of others’ behaviors
and adjust their own accordingly. Similarly, they can use imagery to anticipate the outcome
of various courses of action. This is known as vicarious learning or modeling.
Reasoning/Analogy: The most complex form of cognitive learning is reasoning, including

analogical reasoning. In reasoning, individuals engage in creative thinking to restructure
and recombine existing information as well as new information to form new associations
and concepts. Information from a credible source that contradicts one’s existing beliefs
will often trigger reasoning. Analogical learning occurs when a consumer uses an existing
knowledge base to understand a new situation or object.

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MEMORY
NOTES
Memory is the total accumulation of prior learning experiences. It consists of two
interrelated components: short-term and long-term memory. These are not distinct
physiological entities. Instead, short-term memory is that portion of total memory that is
currently activated or in use. In fact, it is often referred to as working memory. People also
have explicit memory (memory of specific events or objects) and implicit memory
(generalized memory about events or objects).
Short-term memory has a limited capacity to store information and sensations. In fact, it
is not used for storage in the usual sense of that term. It is more like a file in a computer
system that is currently in use. Active files are used to hold information while it is being
analyzed, augmented, or altered. After the processing is complete, the reconfigured
information is transferred to another system (printed, for example) or returned to a more
permanent storage facility such as the hard drive.
Long-term Memory is viewed as an unlimited, permanent storage. It can store numerous

types of information such as concepts, decision rules, processes, affective (emotional)
states, and so forth. Marketers are particularly interested in semantic memory, which is the
basic knowledge and feelings an individual has about a concept. It represents the person’s
understanding of an object or event at its simplest level.
2.9. CONSUMER ATTITUDES
An attitude is an enduring organization of motivational, emotional, perceptual, and

cognitive processes with respect to some aspect of our environment. It is a learned
predisposition to respond in a consistently favorable or unfavorable manner with respect
to a given object. Thus, an attitude is the way one thinks, feels, and acts toward some
aspect of his or her environment such as a retail store, television program, or product.
Attitude serve four key functions for individuals:

1. Knowledge function: Some attitudes swerve primarily as a means of organizing
beliefs about objects or activities such as brands and shopping. These attitudes
may be accurate or inaccurate with respect to objective reality, but the attitude will
often determine subsequent behaviors rather than that reality. For example, a
consumer’s attitude toward cola drinks may be ‘they all taste the same.’ This
consumer would be likely to purchase the least expensive or most convenient
brand.
2. Value-expressive function: Other attitudes are formed and serve to express an
individual’s central values and self-concept. Thus consumers who value nature
and the environment are likely to develop attitudes about products and activities
that are consistent with that value. These consumers are likely to express support
for environment protection initiatives, to recycle, and to purchase and use ‘green’
products.

CONSUMER BEHAVIOUR
3. Utilitarian function: This function is based on operant conditioning. People tend

to form favorable attitudes toward objectives and activities that are rewarding and NOTES
negative attitudes toward those that are not. Marketers frequently promise rewards
in advertising and conduct extensive product testing to be sure the products are
indeed rewarding.
4. Ego-defensive function: People form and use attitudes to defend their egos and
self-images against threats and shortcomings. Products promoted as very macho
may be viewed favorably by men who are insecure in their masculinity. Or individuals
who feel threatened in social situations may form favorable attitudes toward products
and brands that promise success or at least safety in such situations. These individuals
would be likely to have favorable attitudes toward popular brands and styles of
clothes and use personal care products such as deodorants, dandruff shampoo,
and mouthwash.
Attitudes are formed as the result of all the influences we have been describing in the
previous chapters, and they represent an important influence on an individual’s lifestyle.
ATTITUDE COMPONENTS
It is useful to consider attitudes as having three components: cognitive (beliefs),

Affective (feelings), and behavioral (response tendencies).
Cognitive Component: Cognitive component consists of a consumer’s belief about an

object. For most attitude objects, people have a number of beliefs. Many beliefs about
attributes are evaluative in nature; for example, high gas mileage, attractive styling, and
reliable performance are generally viewed as positive beliefs. The more positive beliefs
associated with a brand, the more positive each belief is, and the easier it is for the individual
to recall the beliefs, the more favorable the overall cognitive component is presumed to be.
Affective Component: Feelings or emotional reactions to an object represent the affective

component of an attitude. A consumer who states ‘I like Diet Coke’ or “Diet Coke is a
terrible soda” is expressing the results of an emotional or affective evaluation of the product.
The overall evaluation may be simply a vague, general feeling developed without cognitive
information or beliefs about the product.
Behavioral Component: The behavioral concept of an attitude is one’s tendency to

respond in a certain manner toward an object or activity. A series of decisions to purchase
or not purchase. Diet Coke or to recommend it or other brands to friends would reflect the
behavioral component of an attitude. Actual behaviors reflect these intentions as they are
modified by the situation in which the behavior will occur.
ATTITUDE CHANGE STRATEGIES
The managers can form and change attitudes toward products and brands. It also
raises ethical questions concerning how firms use this knowledge. In addition to ethical

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issues, it poses difficult challenges to regulators who want to limit the ability of firms to
NOTES develop favorable attitudes toward products whose consumption may prove harmful to
some portion of the population.
Marketers and other ultimately want to change behaviors or response tendencies.

Challenge organizations faces when attempting to reduce smoking is that many smokers
know the habit is harmful to their health but postpones quitting or are unable to quit. Thus,
the belief component appears to be in place but the behavior component is not.
INDIVIDUAL AND SITUATIONAL CHARACTERISTICS THAT INFLUENCE

ATTITUDE CHANGE
Attitude change is determined by the individual and the situation as well as the activities
of the firm or social agency. There are individual differences in how easily individuals will
shift attitudes. Some people are more stubborn or closed-minded or less subject to social
influence than are others.
Attitudes that are strongly held are more difficult to change than are those that are
weakly held. Think of something you feel strongly about - perhaps your school, your
favorite sports team or band, or a disliked behavior such as chewing tobacco. What would
be required to change your attitude about this item or activity? Clearly, it would be difficult.
Consumers tend to avoid messages that are counter to their attitude.
The Elaboration likelihood model (ELM) is a theory about how attitudes are
formed and changed under varying conditions of involvement. The ELM suggests that
brand involvement (the degree of personal relevance of the brand, which may change with
the situation) and decision motivations are key determinants of how information is processed
and attitudes are changed. High involvement results in a central route to attitude change by
which consumers deliberately and consciously examine and precede those message elements
that they believe are relevant to a meaningful and logical evaluation of the brand.
The ELM suggests that vastly different communications strategies are required to
communicate effectively with consumers highly involved with the product compared with
consumers with little product involvement. In general, more detailed, factual and logical
information can be used in high-involvement, central route situations. Low-involvement,
peripheral route situations generally require limited information, such as pictorial ads that
allow quick association to the key attribute with the brand.
COMMUNICATION CHARACTERISTICS THAT INFLUENCE ATTITUDE

FORMATION AND CHANGE
In this, we describe communication techniques that enhance attitude change. It must

be emphasized that, as with all aspects of consumer behavior, individual and situational
characteristics interact with the communication features to determine effectiveness.

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

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Humorous Appeals: At almost the opposite end of the spectrum from fear appeals are
NOTES humorous appeals. Ads built around humor appear to increase attention to and liking of the
ad. Their overall effectiveness is generally increased when the humor relates to the product
or brand in a meaningful way and is viewed as appropriate for the product by the target
audience.
Emotional Appeals: Emotional or feeling ads are being used with increasing frequency.
Emotional ads are designed primarily to elicit a positive affective response rather than
provide information or arguments. Emotional ads such as those that arouse feelings of
warmth trigger a physiological reaction. They are also liked more than neutral ads and
produce more positive attitudes toward the product.
Message Structure Characteristics
One-sided versus Two-sided Messages: In advertisements and sales presentations,

marketers generally present only the benefits of their product without mentioning any negative
characteristics it might possess or any advantages a competitor might have. These are
one-sided messages, since only one point of view is expressed. The idea of a two-sided
message, presenting both good and bad points, is counterintuitive, and most marketers are
reluctant to try such an approach. However two-sided messages are generally more effective
than one-sided messages in changing a strongly held attitude.
Positive versus Negative Framing: Message framing refers to presenting one of two
equivalent value outcomes either in positive or gain terms (positive framing) or in negative
or loss terms (negative framing). Describing (framing) ground beef as ’98 percent fat free’
would be positive framing, whereas describing it as ‘2 percent fat’ would be negative
framing.
Non-verbal Components: Pictures, music, surrealism, and other nonverbal cues are also
effective in attitude change. Emotional ads, described earlier, often rely primarily or
exclusively on nonverbal content to arouse an emotional response. Nonverbal ad content
can also affect cognitions about a product.
2.10 COMMUNICATION AND PERSUATION
Communication with existing and potential consumers, for molding consumer behavior,
is a must for any company. Persuasion is the subtle part of communication that will encourage
continued favorable behavior of existing consumers and convert potential consumers into
customers. Communication and persuasion are important tool in the hands of the marketers
used by them to create a customer base large enough to generate profitability, to keep and
expand the base, to keep existing business and develop it for further new business.

CONSUMER BEHAVIOUR
Communication can be defined as the transmission of information and message to

consumer via the media or personal contact, mail, print tele / electronic means and broadcast. NOTES
Receiving feedback and learning from it is also a part of communication.
COMMUNICATION MIX
Today the concept of communication mix is equally important for a company to achieve
the most effective communication. The following are the elements from among which choices
are to be made by the marketer in arriving at the most appropriate communications mix.
1. Face to face (vis-à-vis) meetings and interactions between sales force and
customers.
2. Direct marketing by means of mailing of letter and catalogues, telephone, fax, or
e-mail, to convey information, develop dialogue and achieve interaction.
3. Advertising in one or several mass media available like Print/Radio/TV/Internet.
4. Sales promotion, which may include a variety of incentives, to stimulate trial
purchases and to establish dialogue with the consumers.
5. Publicity and Public relations exercises to project a general favorable image of the
company or the product to consumers at large.
Some Marketplace Beliefs and Myths Develop Due to Insufficient Communication
Where there is insufficient communication, consumers form their own assumptions

and these assumptions solidify into beliefs and myths. Some examples particularly
encountered in the developing world are the following:
¾ Price and Quality are directly related and therefore a low-priced product cannot
have good quality.
¾ A big company’s products are costlier per se and its consumer is made to pay for
the high overheads of the company.
¾ New products are always costly. If you wait sufficiently the prices will come down.
¾ Synthetic products are lower in quality than those made of natural materials.
¾ Large quantities of a same product presented in economy packages are always
economical.
¾ If the seller is losing (clearance sale, closing down sale etc.) it must be a good
bargain.
¾ Advertised goods are costly because customers pay for the advertisements.
Stores Channel
A large amount of purchases takes place at stores. Whatever may be the direct
communication attempted by the manufacturer, stores is the place where the consumer is
present to receive it again. It is where the purchase ‘happens’. Therefore, it is worthwhile

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to examine the consumer’s behavior vis-à-vis his stock and obtain clues for addressing
NOTES him there with effective communication.
Shopper’s Beliefs to be addressed by communication
Shoppers choose their store mainly from convenience point of view. They may stick
to a stores but while shopping do think about other stores. Shoppers too have their pet
beliefs and marketers have to address these. Some examples of the beliefs are
¾ New stores offer lower prices.
¾ Prices are higher in very large and modern stores.
¾ A discounted sale is a good bargain.
¾ If you buy a highly advertised product you pay for the advertisement and it is the
label you get not the quality
¾ The advertisement is for keeping in touch with the customer and to inform, the
duty of a responsible manufacturer.
Stores Environment
The purchase situation of the consumer is influenced to a certain extent by the

environment of the point of purchase. It is comparable to the situation of audience watching
a stage performance or a sports event. In a store too, each one is influenced by the attitude
exhibited by the other visitors. The there are the noticeable impulse actions. The impulse
actions in a store are like picking up what other shopper ahead has picked up or buying
products, which are conveniently placed near the exit of the store.
Communication and the consumer profile
The profile of the consumer exhibits among other things ‘exposure to media’ and
‘values’. Depending on these the marketer can decide on the selection of media for
communication and the strategy for appeal in the communication. In fact, the other particulars
in the consumer profile like the age, income, education etc. of the consumer will also help
in formulating the message about the benefit of the product.
Strategies
It is worthwhile to examine the actual strategies available to the marketer for making
benefit appeals and emotional appeals.
In the benefits route the communication focuses on one or more of the following:
¾ Economy of price
¾ Guarantees
¾ Value for money
¾ Economy in maintenance

CONSUMER BEHAVIOUR
¾ Technical features
¾ Expert endorsement
NOTES
2.11. PSYCHOGRAPHICS HAVE THREE COMPONENTS;
VALUES, SELF-CONCEPT, AND LIFESTYLES
Values
When you think about what is important to you in life, you are thinking about your
values. Values are end-states of life, the goals one lives for. Psychologist Milton Rokeach
has identified two groups of these: terminal and instrumental. Terminal values are the goals
we seek in life (e.g., peace and happiness) whereas instrumental values are the means or
behavioral standards by which we pursue these goals (e.g., honesty). Rokeach developed
these lists of values for understanding human psychology.
Consumer’s researchers felt a need for values more directly relevant to everyday
consumer behavior. For this purpose, consumer researcher Lynn Kahle and his associates
developed a List of Values (LOV), consisting of nine terminal values:
1. Self-respect
2. Self-fulfillment
3. Security
4. Sense of belonging
5. Excitement
6. Sense of accomplishment
7. Fun and enjoyment
8. Being well respected
9. Warm relationships with others.
This list of values corresponds well to the needs in Maslow’s hierarchy, except that
Maslow includes physiological needs, and LOV adds values of fun and excitement. Kahle
argues that the nine values in LOV relate more closely to the values of life’s major roles,
such as marriage, parenting, work, leisure, and daily consumption, than do the values in
Rokeach Value Survey.
In a number of studies, LOV has been found to be well related to consumer activities.
For example, consumer researcher Sharon Beatty and her associates found that people
who value a sense of belonging especially like group activities. Those who value fun and
enjoyment especially like sing, dancing, backpacking, hiking, and camping, and they consume
a lot of alcohol. People who value a warm relationship with others tend to give gifts to
others for no reason at all.

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Linking Product Attributes to Customer Values

NOTES
One of the basic tenets of marketing has been that customers don’t buy products or
services; rather, they buy benefits. Thus, when consumers buy an automobile, they are not
buying simply 5,000 pounds of sheet metal. Rather they are buying transportation. They
want a car with ergonomic seats because they want their body to feel comfortable, or they
want a car with acceleration from 0 to 60 miles per hour in 7 seconds versus 10 seconds
to experience the driving thrill. If we go one step further, transportation, comfort, or
driving thrill is important to consumers so that they can overcome the physical distance
barrier, or escape to a more desirable place, or master the machine. Ultimately, then, the
product or service features make sense only because they serve some more fundamental
needs (such as the needs in Maslow’s hierarchy) or values (as in the List of Values).
Identifying, the connections between product or service features on the one hand and
customers’ fundamental needs and values on the other is important if marketers are to
design features that would offer value to customers.
This linking is an accomplished by drawing means-end chains. Means-end chains are

simply linkages between the product’s physical features and customers’ fundamental needs
and values. They are identified by a research technique called laddering, in which potential
customers are asked repeatedly in iterative sequence. “Why is that feature important to
you?”
Self-Concept
Everyone has a self-image of who he or she is. This is called self-concept.

Furthermore, the self-concept includes an idea of what the person currently is and what he
or she would like to become; these two concepts are respectively called actual self and
ideal self. For some, the self-concept pertains to their intellectual and /or career
accomplishments; for example one wants to be a successful writer or an engineer or a Wall
Street financial executive. For many, the self-concept pertains to the kind of material life
they want to live.
The self-concepts influence a person’s consumption deeply, for people live their self
concepts in large measure by what they consume. The consuming as Integration metaphor
describes how consumers are able to integrate their self-concepts and objects through a
variety of consumption rituals, self extension and personalizing rituals. For example, business
students who are about to enter the corporate world start dressing more seriously in their
senior year, or employees who are promoted to executive cadre change their wardrobe to
include suits. Marketers can apply the principle of self-concept by obtaining a self-concept
profile of customers in terms of selected personality traits, then obtaining the consumer’s
perceptions of a brand on the same traits. From these two profiles, it is possible to identify
the match or gaps between consumers’ self-concept and their perceptions of the personality

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

• Demographics How we live Purchases
• Subculture • Activities • How
• Social class • Interests • When
• Motives • Likes/dislikes • Where
• Personality • Attitudes • What
• Emotions • Consumption • With Whom
• Values • Expectations Consumption
• Household life • Feelings • Where
cycle • With whom
• Culture • How
• Past experiences • When
• What
Figure 2.3 Lifestyle and the Consumption Process

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Lifestyles are determined by (a) a customer’s personal characteristics, namely, genetics,

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

semi-formal clothing at school campuses while an investment banker is likely to wear suits,
and software professionals are likely to be dressed in business casuals. Some companies
like IBM and Anderson Consulting ask their employees and consultants to dress
conservatively in dark suits and white shirts that make them look older than their real age
and, thereby, adds credence when they meet with top executives of their client organizations.

CONSUMER BEHAVIOUR
Psychographics as AIO Profiles

NOTES
The appeal of Psychographics in marketing from the outset has been its quantifiability-
like demographics; psychographics were derived based on quantitative measures. To
measure psychographics (i.e., Values, self-concepts, and lifestyles), researchers present a
series of statements about possible activities, interests, and opinions. Respondents indicate
their agreement or disagreement with these statements.
To analyze and interpret data from measures based on AIO statements, researchers,
and group together people with similar responses. These groups, considered to have
relatively similar lifestyles, values and self-concepts, can then be described using certain
AIO profiles, called psychographic profiles. These profiles are excellent indications of
how people are thinking and where they are going with their lives.
In an attempt to profile online shoppers, Ernst & Young charted their psychographic
profile. They found that leisure time activities of study’s online buyers were not much
different from the average household. Some differences were visible in movie attendance
(37 percent of online shoppers go to movies frequently or regularly compared to 26 percent
of the average household), recreational travel (42 percent versus 32 percent), performing
arts attendance (25 percent versus 17 percent), and family-time pursuits (57 percent versus
50 percent). A smaller percentage of online shoppers watched television (61 percent)
compared to 65 percent of average households. Online shoppers are, however, similar to
all households in volunteer activities, gardening, gourmet cooking, photography, and
attending sporting events.
2.12. VALS
One of the most psychographic profiling schemes is called VALS. Developed by

SRI International, Inc., its first version groups the entire U.s. Population into nine groups,
based on the identities they seek and implement via market place behaviors. According to
SRI, people pursue and acquire products, services, and experiences that provide satisfaction
and give shape, substance, and character to their identities. Even though this scheme has
been replaced by a new VAL’s system with an eight-segment classification, the original
scheme, introduced in 1978, it’s important to understand for us as students of consumer
psychology. That scheme used two dimensions for its conceptual foundation: (1) Maslow’s
hierarchy-the theory that people rise from physiological, to safety, to social belonging, to
self-esteem, to self-actualization motivations; and (2) Riesman’s social character Theory
that a person is either inner directed or outer directed, deriving one’s code of conduct
respectively from oneself or from others. Inner-directed persons are more independent
minded, whereas outer-directed persons are concerned with others’ opinion of them.
At the bottom of the VALS hierarchy are survivors and sustainers, who are, respectively,
the elderly poor and unemployed youth. Belongers is the next group, the largest of the nine

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

meaning to stimuli. Perception begins with exposure. This occurs when a stimulus comes
within range of one of an individual’s primary sensory receptors.
Attention occurs when the stimulus activates one or more of the sensory receptors and the
resulting sensations go into the brain for processing. Because of the amount of stimuli they
are exposed to, people selectively attend to those stimuli that physically attract or personally
interest them.

CONSUMER BEHAVIOUR
Interpretation is the assignment of meaning to stimuli that have been attended to.
Interpretation is a function of individual as well as stimulus and situation characteristics. NOTES
Consumer must learn almost everything related to being a consumer – product
existence, performance, availability, values, preference, and so forth. Marketing managers
therefore are very interested in the nature of consumer learning.
High-involvement learning occurs when an individual is motivated to acquire the

information. Low-involvement learning occurs when an individual is paying only limited or
indirect attention to an advertisement or other message.
Learning is defined as any change in the content or organization of long-term memory or

behavior. Two basic types of learning, conditioning and cognition, are used by consumers.
Memory is the result of learning. Most commonly, information goes directly into short-
term memory for problem solving or elaboration where two basic activities occur –
elaborative activities and maintenance rehearsal. Long-term memory is information from
previous information processing that has been stored for future use.
Attitude can be defined as the way people think, feel, and act toward some aspect of
their environment. Results of all the factors discussed so far in the text, attitudes influence,
as well as reflect, the lifestyle individuals pursue.
Attitude change strategies can focus on affect, behavior, cognition, or some

combination. Attempts to change affect generally rely on classical conditioning. Change
strategies focusing on behavior rely more on operant conditioning. Changing cognitions
usually involves information processing and cognitive learning.
Attitudes, particularly the cognitive component, are the basis for market segmentation
strategies, such as benefit segmentation, and for new-product development strategies.
Self-concept is one’s belief and feelings about oneself. There are four types of self
concept: actual self concept, social self-concept, private self-concept, and ideal self-concept.
An individual’s self-concept, the way one defines his – or herself, typically includes some
of the person’s possessions. The self-concept, including the possessions one uses to define
oneself, is termed the extended self.
Lifestyle can be defined simply as how one lives. It is a function of one’s inherent individual
characteristics that have been shaped through social interaction as the person moves through
his or her life cycle. It is how an individual expresses his or her self-concept in actions.
The VALS system, developed by SRIC-BI, divides the United States into eight groups
– Actualizes, Fulfilled, Believers, Achievers, Strivers, Experiences, Makers, and Strugglers.

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2.14 Review Questions

NOTES
¾ Given that smoking scenes in movies increase the positive image and intention to
smoke among youth, what regulations, if any, should apply to this?
¾ How would you teach teenagers an eating script that involved consistently washing
one’s hands first?
¾ Is low-involvement learning really widespread? Which products are most affected
by low-involvement learning?
¾ How could Maslow’s motive hierarchy be used to develop marketing strategy for
the following:
• Habitat for Humanity
• Neutrogena’s lipsticks
• Listerine mouthwash
¾ List all the emotions you can think of. Place each in one of the core traits.
¾ Do Marketers create needs? Do they create demand? What ethical issues are
relevant?
¾ Suppose you wanted to form highly negative attitudes toward smoking among
college students. Which attitude component would you focus on? Why? What
type of appeal would you use? Why?
¾ Is your self-concept predominantly independent or interdependent? Why?
¾ Does VALS make sense to you? What do you like or dislike about it?

CONSUMER BEHAVIOUR
NOTES
UNIT III
COSUMERS IN THEIR SOCIAL AND CULTURAL

3.1 OVERVIEW
Everybody in this world is a consumer. Everyday of our life we are buying and
consuming an incredible variety of goods and services. However, we all have different
tastes, likes and dislikes and adopt different behavior patterns while making purchase
decisions. Many factors affect how we, as individuals and as societies, live, buy, and
consume. External influences such as culture, ethnicity, and social class influence how
individual consumers buy and use products, and help explain how groups of consumers
behave. The study of culture encompasses all aspects of a society such as its religion,
knowledge, language, laws, customs, traditions, music, art, technology, work patterns,
products, etc. Culture is an extremely critical and all pervasive influence in our life.
With the exception of those very few people who can be classified as hermits, people
tend to be involved with others on a rather constant basis. Like almost all behavior, an
individual’s social relationships are often motivated by the expectation that they will help
in the satisfaction of specific needs. For example, a person might become a volunteer
ambulance driver to satisfy a need for community recognition. Another person might join a
computer club in an effort to find compatible friends to satisfy social needs. A third person
might join a health food cooperative to obtain the benefits of group buying power. These
are just a few of the almost infinite number of reasons why people involve themselves with
others.

¾ The basic concepts of social involvement and group dynamics.
¾ The Social Class and its impact on consumer decisions.
¾ Emphasize the role of reference groups in influencing consumer behavior.
¾ Identify other social and societal groupings that influence consumer buying processes.
¾ A Family and its types

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¾ Family life cycle and its implications on consumer behavior

NOTES ¾ Family roles and consumption patterns & relationships and family marketing
¾ The various influences on culture, sub-cultures and its influences
¾ The environmental variations and cultural values.
¾ Explain the cross-cultural influences on consumer behavior.
3.3 WHAT IS A GROUP?
A group may be defined as two or more people who interact to accomplish some
goals. Within the broad scope of this definition are both an intimate “group” of two neighbors
who informally attend a fashion show together and a larger, more formal group, such as a
neighborhood.
3.3.1 Types of Groups
To simplify our discussion, we will consider four different types of group classification:
primary versus secondary groups, formal versus informal groups, large versus small groups,
and membership versus symbolic groups.
1. Primary versus Secondary Groups
If a person interacts on a regular basis with other individuals (with members of his or
her family, with neighbours, or with co-workers whose opinions are valued), then these
individuals can be considered as a primary group for that person. On the other hand, if a
person interacts only occasionally with such others, or does not consider their opinions to
be important, then these others constitute a secondary group for that person. From this
definition, it can be seen that the critical distinctions between primary and secondary groups
are the frequency with which the individual interacts with them and. the importance of the
groups to the individual.
2. Formal versus Informal Groups
Another useful way to classify groups is by the extent of their formality; that is, the
extent to which the group structure, the members’ roles, and the group’s purpose are
clearly defined. If a group has a highly defined structure (e.g., a formal membership list),
specific roles and authority levels (a president, treasurer, and secretary), and specific goals
(to support a political candidate, improve their children’s education, increase the knowledge
or skills of members), then it would be classified as a formal group. The local chapter of
the American Red Cross, with elected officers and members who meet regularly to discuss
topics of civic interest, would be classified as a formal group. On the other hand, if a group
is more loosely defined, if it consists, say, of four women who were in the same college
sorority and who meet for dinner once a month, or three co-workers who, with their
spouses, see each other frequently then it is considered an informal group.

CONSUMER BEHAVIOUR
3. Large versus Small Groups

NOTES
It is often desirable to distinguish between groups in terms of their size or complexity.
A large group might be thought of as one in which a single member is not likely to know
more than a few of the group’s members personally, or be fully aware of the specific roles
or activities of more than a limited number of other group members. Examples of large
groups include such complex organizations as General Motors, with its numerous
subordinate divisions, and the American Bar Association, with its many state, county, and
city chapters. In contrast, members of a small group are likely to know every member
personally and to be aware of every member’s specific role or activities in the group. For
example, each staff member of a college newspaper is likely to know all the other members
and be aware of their duties and interests within the group. In the realm of consumer
behavior, we are principally concerned with the study of small groups, since such groups
are more likely to influence the consumption behavior of group members.
4. Membership versus Symbolic Groups
Another useful way to classify groups is by membership versus symbolic groups. A

membership group is a group to which a person either belongs or would qualify for
membership. For example, the group of women with whom a young homemaker plays
golf weekly or with whom she hopes to play golf when an opening occurs would be
considered, for her, a membership group. In contrast, a group in which an individual is not
likely to receive membership, despite acting like a member by adopting the group’s values,
attitudes, and behavior, is considered a symbolic group. Clearly, actual membership groups
offer a more direct, and thus a more compelling, influence on consumer behavior.
In summary, we can say that small, informal, primary membership groups are of the great
interest to marketers because they exert the greatest potential influence on consumer purchase
decisions.
3.3.2 Consumer Relevant Groups
To more fully comprehend the kind of impact that specific groups have on individuals,
we will examine six basic consumer-relevant groups: the Family, Friendship groups, Formal
social groups, Shopping groups, Consumer action groups and Work groups.
The Family
An individual’s family is the most important group to influence his or her consumer
decisions. The family’s importance in this regard is due to the frequency of contact that the
individual has with other family members and that the family has a greater extent of influence
on the establishment of a wide range of values, attitudes, and behavior.

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Friendship Groups
NOTES
Friendship groups are informal groups because they are, usually unstructured and
lack specific authority levels. In terms of relative influence, after an individual’s family, it is
friends who are most likely to influence the individual’s purchase decisions. Seeking and
maintaining friendships is a basic drive of most people. Friends fulfill a wide range of needs:
they provide companionship, security, and opportunities to discuss problems that an
individual may be reluctant to discuss with members of his or her own family.
Friendships are also a sign of maturity and independence, for they represent a breaking
away from the family and the forming of social ties with the outside world. Consumers are
more likely to seek information from those friends they feel have values or outlooks similar
to their own.
Formal Social Groups
In contrast to the relative intimacy of friendship groups, formal social groups are more
remote and serve a different function for the individual. A person joins a formal social
group to fulfill such specific goals as making new friends, meeting “important” people (e.g.,
for career advancement), or promoting a specific cause. Because members of a formal
social group often consume certain products together, such groups are of interest to
marketers. For example, the membership list of a men’s club would be of interest to local
men, Insurance agents, automobile agents, tax accountants.
Membership in a formal social group may influence a consumer’s behavior in several

ways. For example, members of such groups have frequent opportunity to informally discuss
products, services, or stores. Some members may copy the, consumption behavior of
other members whom they admire.
Shopping Groups
Two or more people who shop together-whether for food, for clothing, or simply to
pass the time, can be called a shopping group. Such groups are often offshoots of family or
friendship groups. People like to shop with others who they feel have more experience
with or knowledge about a desired product or service. Shopping with others also provides
an element of social fun to an often boring but necessary task. In addition, it reduces the
risk that a purchase decision will be socially unacceptable.
Relatively few marketing or consumer behavior studies have examined the nature of
shopping groups. However, one study of the in-store behavior of shoppers revealed some
differences between group and individual shopping. The research found that shopping
parties of at least three persons deviated more from their original purchase plans (they
bought either more or less than originally planned) than did either single shoppers or two-
party groups. The study also found that shopping groups tended to cover more territory in

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

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What is a Reference Group?

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

CONSUMER BEHAVIOUR
3.3.4 Types of Reference Groups

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

usually depends on the nature of the individual and the product and on specific social
factors. This section discusses how and why some of these factors operate to influence
consumer behavior.

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1. Information and Experience

NOTES
An individual who has firsthand experience with a product or service, or can easily
obtain full information about it, is less likely to be influenced by the advice or example of
others. On the other hand, a person who has little or no firsthand experience with a product
or service, and does not expect to have access to objective information about it (e.g., a
person who believes that relevant, advertising may be misleading or deceptive), is more
likely to seek out the advice or example of others. Research on imitative behavior provides
some interesting insights on how insufficient experience or information concerning a product
makes consumers more susceptible to the influence either positive or negative, of others.
For example, if a medical school student wants to impress his new girl-friend, he may take
her to a restaurant that he knows from experience to be good or to one that has been
highly recommended by the local newspaper’s Dining-Out Guide. If he has neither personal
experience nor information he regards as valid, he may seek the advice of friends or imitate
the behavior of others by taking her to a restaurant he knows is frequented by physicians
whom he admires.
2. Credibility, Attractiveness, and Power of the Reference Group
A reference group that is perceived as credible, attractive, or powerful can induce

consumer attitude and behavior change. For example, when consumers are concerned
with obtaining accurate information about the performance or quality of a product or service,
they are likely to be persuaded by those they consider to be trustworthy and knowledgeable.
That is, they are more likely to be persuaded by sources with high credibility. When
consumers are primarily concerned with the acceptance or approval of others they like,
with whom they identify, or who offer them status or other benefits, they are likely to adopt
their product, brand, or other behavioral characteristics.
When consumers are primarily concerned with the power that a person or group can
exert over them, they might choose products or services that conform to the norms of
that person or group in order to avoid ridicule or punishment. However, unlike other
reference groups that consumers follow either because they are credible or because they
are attractive, power groups are not likely to cause attitude change. Individuals may conform
to the behavior of a powerful person or group but are not likely to experience a change in
their own attitudes.
Different reference groups may influence the beliefs, attitudes, and behavior of an
individual at different points in time or under different circumstances. For example, the
dress habits of a young female attorney may vary, depending on her place and role. She
may conform to the dress code of her office by wearing conservative business suits by day
and drastically alter her mode of dress after work by wearing more conspicuous, flamboyant
styles.

CONSUMER BEHAVIOUR
3. Conspicuousness of the Product

NOTES
The potential influence of a reference group varies according to how visually or verbally
conspicuous a product is to others. A visually conspicuous product is one that can be seen
and identified by others, and that will stand out and be noticed (e.g., a luxury item or
novelty product). Even if a product is not visually conspicuous, it may be verbally
conspicuous it may be highly interesting or it may be easily described to others. Products
that are especially conspicuous and status-revealing (a new automobile, fashion clothing,
home furniture) are most likely to be purchased with an eye to the reactions of relevant
others. Products that are less conspicuous (canned fruits, laundry soaps) are less likely to
be purchased with a reference group in mind.
The success of a brand of status running shoes like Reebok is aided by the fact that it
is relatively easy to spot a person wearing them-given the distinctive flag symbol on the
side of each shoe.
3.3.6. Reference Group Impact on Product and Brand Choice
In some cases, and for some products, reference groups may influence both a person’s
product category and brand (or type) choices. Such products are called product plus,
brand-plus items. In other cases, reference groups influence only the product category
decision. Such products are called product-plus, brand minus items. In still other cases,
reference groups influence the brand (or type) decision. These products are called product-
minus, brand-Plus items. Finally, in some cases, reference groups influence neither the
product category nor the brand decision; these products are called product-minus, brand-
minus items. The idea of classifying products and brands into four groups in terms of the
suitability of a reference group appeal was first suggested in the mid-1950s, along with an
initial classification of a small number of product categories.
Reference Groups and Consumer Conformity
Marketers are particularly interested in the ability of reference groups to change

consumer attitudes and behavior (i.e., to encourage conformity). To be capable of such
influence, a reference group must
1. Inform or make the individual aware of a specific product or brand;
2. Provide the individual with the opportunity to compare his or her own thinking
with the attitudes and behavior of the group;
3. Influence the individual to adopt attitudes and behavior that are consistent with the
norms of the group;
4. Legitimize an individual’s decision to use the same products as the group. The
ability of reference groups to influence consumer conformity is demonstrated by
the results of a classic experiment designed to compare the effects.

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3.3.7. Benefits of the Reference Group Appeal

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

CONSUMER BEHAVIOUR
products like food and soaps may be purchased by a person but consumed by many,
whereas personal care items, such as cosmetics or shaving cream, might be purchased by NOTES
an individual family member for his or her own consumption. Homes and cars, on the other
hand, are often purchased by both spouses, perhaps with involvement from children or
other member of the extended family.
Visits to shopping malls often involve multiple family members buying clothing and
accessories, something with a heavy dose of influence by family memberschildren may buy
clothing paid for and approved of by parents, whereas teenagers may influence the clothing
purchase of a parent.
Regardless of how many family members are present when items are being purchased,
the other family members play an important role in the purchase. Just because of being
mother for two young children, it is her responsibility for buying food for the family and act
as an individual in the market. It does not mean that her decisions are not influenced by the
preferences and power of other family members. Although marketing communications are
usually directed to individuals, marketers should consider the consumption circumstances
and the family structure before deciding on specific communicate on or advertising methods
to attract their segment.
What is a Family?
A family is a group of two or more persons related by blood, marriage, or adoption

who reside together. The nuclear family is the immediate group of father, mother, and
child(ren) living together. The extended family is the nuclear family, plus other relatives,
such as grandparents, uncles and aunts, cousins, and parents-in-law. The family into which
one is born is called the family of orientation, whereas the one established by marriage is
the family of procreation. In a more dynamic sense, the individuals who constitute a family
might be described as members of the most basic social group who live together and
interact to satisfy their personal and mutual needs.
What is a Household?
The term household is used to describe all person, both related and unrelated, who
occupy a housing unit. There are significant differences between the terms household and
family even though they are sometimes used interchangeably. It is important to distinguish
between these terms when examining data.
The term household is becoming a more important unit of analysis for marketers
because of the rapid growth in nontraditional families and non-family households. Among
non-family households, the great majority consist of people living alone. The remaining
non-family households include those consisting of elderly people living with non-family
members. For example, persons of Opposite Sex Sharing Living Quarters, friends living
together, and same sex couples.

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3.4.1 Structural Variables Affecting Families and Households

NOTES
Structural variables include the age of the head of household or family, marital status,
presence of children, and employment status. For example, consumer analysts have
enormous interest in whether families have children and how many they have. Children
increase family demand for clothing, food, furniture, homes, medical care, and education,
while they decrease demand for many discretionary items, including travel, higher-priced
restaurants, and adult clothing.
Other structural changes affect the types of products that are manufactured. For
example, in Japan, high-tech companies have formed a consortium to standardize technology
that has been developed to monitor and manage households.
3.4.2. Sociological Variables Affecting Families and Households
Marketers can understand family and household decisions better by examining the
sociological dimensions of how families make consumer decisions. Three sociological
variables that help explain how family’s function includes cohesion, adaptability, and
communication.
¾ Cohesion is the emotional bonding between family members. It measures how
close to each other family members feel on an emotional level. Cohesion reflects a
sense of connectedness to or separateness from other family members.
¾ Adaptability measures the ability of a family to change its power structure, role
relationships, and relationship rules in response to situational and developmental
stress. The degree of adaptability shows how well a family can meet the challenges
presented by changing situations.
¾ Communication is a facilitating dimension, critical to movement on the other two
dimensions. Positive communication skills (such as empathy, reflective listening,
supportive comments) enable family members to share their changing needs as
they relate to cohesion and adaptability. Negative communication skills (such as
double messages, double binds, criticism) minimize the ability to share feelings,
thereby restricting movement in the dimensions of cohesion and adaptability.
Understanding whether family members are satisfied with family purchase requires
communication within the family.
To determine how the family makes its purchase decisions and how the family affects
the future purchase behavior of its members, it is useful to understand the functions provided
and the roles played by family members to fulfill their consumption needs.
3.4.3. Functions of the Family
Four basic functions provided by the family are particularly relevant to a discussion of
consumer behavior. These include (1) Economic well-being, (2) Emotional support, (3)
Suitable family lifestyles, and (4) Family-member socialization.

CONSUMER BEHAVIOUR
(1) Economic Well-Being

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

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3.4.4. Family Life Cycles

NOTES
Families pass through a series of stages that change them over time. This process
historically has been called the family life cycle (FLC). The concept may need to be changed
to household life cycle (HLC) or consumer life cycle (CLC) in the future to reflect changes
in society. However, we will use the term FLC to show how the life cycle affects consumer
behavior.
Family Life Cycle Characteristics
The traditional FLC describes family patterns as consumers marry, have children,
leave home, lose a spouse, and retire. These stages are described in Table 3.1, along with
consumer behaviors associated with each stage. But consumers don’t necessarily have to
pass through all these stages-thy can skip multiple stages.
Table 3.1 Consumer Activities Occurring in Various Life Cycles

Stages in Family Economic
Likely Buying Behaviour
Life Cycle Circumstances
Bachelorhood Earning reasonable good Buy, Basic kitchen
(Young, Single salary, no financial equipment basic furniture,
staying alone) burdens two wheeler, vacation with
friends
Parenthood Better off financially, Buys baby food, toys,
(young married though home purchases diapers, chest & cough
just attained at peak, less liquid medicines
parenthood ) assets, not able to save
more
Post parenthood Financial position Concentrates on home
(growing children improved with wife improvements, Buy more
or grown up working, probability of tasteful furniture, car, home
children) home ownership on the appliances, and magazines.
higher side) Interested in vacation
packages.
Dissolution Income though good, not Buy more medicinal products
(retired & lone interested in spending. and other products like the
surviving spouse) At times drastic cut in retired people. Seeks more of
income is likely attention, affection and
security conscious
Young Singles
Young singles may live alone, with their nuclear families, or with friends, or they may
co-habitate with partners in this stage. Although earnings tend to be relatively low, these
consumers usually don’t have many financial obligations and don’t feel the need to save for
their futures or retirement. Many of them find themselves spending as much as they make
on cars, furnishings for first residences away from home, fashions, recreation, alcoholic
beverages, food away from home, vacations, and other products.

CONSUMER BEHAVIOUR
Newly Married Couples

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

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

CONSUMER BEHAVIOUR
additional information about consumer markets to analyze their needs, identify niches, and
develop consumer-specific marketing strategies. NOTES
3.2.5. Family Decision-Marking
Families use products even though individuals usually buy them. Determining what
products should be bought, which retail outlet to use, how and when products are used,
and who should buy them is a complicated process involving a variety or roles and actors.
Role Behavior
Families and other groups exhibit what sociologist Talcott Parsons called instrumental
and expressive role behaviors.
¾ Instrumental roles, also known as functional or economic roles, involve financial,

performance, and other functions performed by group members.
¾ Expressive roles involve supporting other family members in the decision making
process and expressing the family’s aesthetic or emotional needs, including upholding
family norms.
Individual Roles in Family Purchases
Family consumption decisions involve at least five definable roles, which may be
assumed by spouses, children, or other members of a household. Both multiple roles and
multiple actors are normal. Marketers need to communicate with consumers assuming
each of these roles, remembering that different family members will assume different roles
depending on the situation and product. Children, for example, are users of cereals, toys,
clothing, and many other products but may not be the buyers. One or both of the parents
may be the decider and the buyer, although the children may be important as influencers
and users.
Family Roles
For a family to function as a cohesive unit, roles or tasks-such as doing the laundry,
preparing meals, setting the dinner table, taking out the garbage, walking the dog must be
carried out by one or more family members. In our dynamic society, etc. family-related
roles are constantly changing.
Key Family Consumption Roles
The roles played by the different family members will vary from product to product.
While shopping in the market, a housewife comes across a new variety of juice that she
buys for the family. Her decision to purchase does not directly involve the influence of
other family members. She is the decider, buyer; but she may or may not be the preparer
and is not the only user. In case of products such as television, car, music systems, furniture

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

CONSUMER BEHAVIOUR
3. Bargaining: An attempt by a spouse to secure influence now that will be exchanged

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

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Table 3.2 Lifestyle segmentation of the teen marker

NOTES
Segment Key characteristics
Name
1 Socially Primarily female: active and extroverted. They are
Driven optimistic and plan to attend college.
2 Versatile Slightly more females than males responsible teens. But
Participant less optimistic and less likely to plan to attend college than
the Social Driven. They are comfortable in Social and
solitary situations.
3 Passive Slightly more males than females: withdrawn, self-
introverts conscious, and the least comfortable in social situation.
They are less optimistic about, the future, and spend the
least.
4 Sports Primarily males: outgoing, active, and greatly interested in
Oriented participating in and watching sports, sports influence their
self-image ad what they buy.
3.4.6. Family Marketing
Family marketing focuses on the relationships between family members based on the
roles they assume, including the relationship between purchaser and family consumer and
between purchaser and purchase decision maker. Family marketing identifies scenarios
where some purchase might have more than one decision maker, whereas some have
more than one consumer. The family marketing model, as see in Figure 3.1, represents
nine cells describing various purchaser-consumer relationships. Depending on where in
the matrix various products fall, marketers can advertise and position products differently
according to their purchaser-consumer relationships.

CONSUMER BEHAVIOUR
NOTES
Figure 3.1 The Family Marketing Model
The family purchase decision-making process can be complex, but answering the
following questions helps identify different purchaser-consumer relationships.
1. Who’s buying for whom?
2. Who are the principal characters?
3. What’s the plot for the purchase?
4. Who wants what when?
5. What can we assume?
Although these answers may not identify all essential relationships marketers should
consider, they do identify a family marketing plan, which creates a relationship between
individuals and products based on the role each individual has in the influence or purchase
of products. In the restaurant industry, the trend has been to focus on marketing to the
family as a single unit. Admittedly, the appeal to families arose from the restaurant industry’s
desire to grow sales and profits.
Influences on the Decision Process
How do husbands and wives perceive their relative influence on decision making
across the decision stages? And what does this mean for marketers? Joint decisions tend
to be made about vacations, televisions, refrigerators, and living room furniture. Autonomic
decision-making tends to be present in decisions about categories that include women’s
jewelry, men’s leisure clothing, indoor paint and wallpaper, and luggage. By understanding

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

CONSUMER BEHAVIOUR
Social class can be defined as ‘The division of members of a society into a hierarchy
of distinct status classes, so that members of each class have relatively the same status and NOTES
the members of all other classes have either more or less status.’
Table 3.3 Factors showing social class differences
Factors responsible for social stratification
S.No Status, Value Social Factors affecting social class

& prestige Class
enjoyed
1 Low Lower Lower level occupation with no authority, less
Class income, and no education or minimum
education. For example, labour class or clerks
etc.
2 Medium Middle Graduates, or postgraduates executives’
class managers of companies with authority,
drawing handsome salary of which certain
amount can be saved and invested. For
example, executives or middle level managers
of companies.
3 High Higher Authoritative person, drawing handsome
Class salary, very often professionally qualified,
working in a very senior position or a person
born into a rich family, with a good
background of education.
3.5.1. Characteristics of Social Classes
The main characteristics of Social class

1. Persons within a given social class tend to behave more alike
2. Social class is hierarchical
3. Social class is not measured by a single variable but is measured as a weighted
function of one’s occupation, income, wealth, education, status, prestige, etc.
4. Social class is continuous rather than concrete, with individuals able to move into
a higher social class or drop into a lower class.
3.5.2. Impact of social class

¾ Provides a sense of identity
¾ Imposes a set of ‘normative’ behaviors
¾ Classes share values, possessions, customs and activities
¾ Marketing response to customers of different economic means
¾ Marketing to the low-income consumer

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¾ Some marketers ambivalent as not perceived as long-term customers constitutes

NOTES a substantial group
¾ Target with value-oriented strategies
3.6. CULTURE - MEANING
For the purpose of studying consumer behavior, culture can be defined as the sum
total of learned beliefs, values and customs that serve to guide and direct the consumer
behavior of all members of that society. Howard and Sheth have defined culture as “A
selective, manmade way of responding to experience, a set of behavioral pattern”. Thus,
culture consists of traditional ideas and in particular the values, which are attached to these
ideas. It includes knowledge, belief, art, morale, law, customs and all other habits acquired
by man as a member of society. An accepted concept about culture is that includes a set of
learned beliefs, values, attitudes, habits and forms of behavior that are shared by a society
and are transmitted from generation to generation within that society.
Culture is learned through the following three ways:

1. Formal learning: parents and elders teach children the proper way to behave. For
instance, you have been taught that you need to study to be successful and happy
in life. This learning may influence your response both as a student and individual
towards education.
2. Informal learning: we learn by imitating the behavior of our parents, friends, or by
watching TV and film actors in action.
3. Technical learning: instructions are given about the specific method by which certain
things to done such as painting, dancing, singing etc.
3.6.1. Characteristics of Culture
¾ Culture is learned.
¾ Culture regulates society –Norms, standards of behavior, rewards and punishments.
¾ Culture makes life more efficient
¾ All members follow same norms.
¾ Culture is adaptive.
¾ Culture is environmental.
¾ Multiple cultures are nested hierarchically.
Culture also determines what is acceptable with product advertising. Culture determines
what people wear, eat, reside and travel. Cultural values in India are good health, education,
respect for age and seniority. But in our culture today, time scarcity is a growing problem,
which implies a change in meals. Some changes in our culture:

CONSUMER BEHAVIOUR
1. Convenience: as more and more women are joining the work force there is an
increasing demand for products that help lighten and relieve the daily household NOTES
chores, and make life more convenient. This is reflected in the soaring sale of
Washing machines, microwaves, Pressure cookers, Mixer grinders, food
processors, frozen food etc.
2. Education: People in our society today wish to acquire relevant education and
skills that would help improve their career prospects. This is evident from the fact
that so many professional, career oriented educational centers are coming up, and
still they cannot seem to meet the demand. As a specific instance count the number
of institutions offering courses and training in computers that has opened in your
city.
3. Physical appearance: Today, physical fitness, good health and smart appearance
are on premium today. Slimming centers and beauty parlors are mushrooming in
all major cities of the country. Cosmetics for both women and men are being sold
in increasing numbers. Even exclusive shops are retailing designer clothes.
4. Materialism: There is a very definite shift in the people’s cultural value from
spiritualism towards materialism. We are spending more money than ever before
on acquiring products such as air-conditioners, cars CD players etc, which adds
to our physical comfort as well as status.
3.6.2. Types of Culture
¾ National culture: The culture prevalent in a nation, common to everyone

¾ Popular culture: The culture of the masses with norms of mass appeal
¾ Subculture: The culture of a group within the larger society. Group identification
based on nationality of origin, race, region, age, religion, gender, etc.
¾ Corporate culture: The company’s values, rituals, customs, myths and heroes
3.6.3. Hofstede’s Five Dimensions of Culture
Culture has a profound impact on the way consumers perceive themselves, products
they buy and use, purchasing processes, and the organisations from which they purchase.
Marketers, however, are giving more attention, to understanding macro cultures and how
they affect consumer behavior. Hofstede found five dimensions of culture that are common
among 66 countries. These dimensions serve as a foundation for characterizing, comparing
and contrasting specific national cultures, and they are helpful in identifying environmentally
sensitive segments of the market.
1. Individualism versus collectivism ( Pursuit of self- or group interest )
Individualism describes the relationship between an individual and fellow individuals,

or the collectivity that prevails in society. Table 3.4 below depicts the attitudinal and
behavioral differences associated with individualism and collectivism.

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Table 3.4 Individualism versus Collectivism

NOTES
Individualism (E.g., Collectivism (E.g., Hong
United States, Australia, Kong, Japan, India)
Canada Etc)
Self Defined by internal Defined by important others,
Construal attributes, personal traits family and friends
Role of Self-evaluation e.g., Self-definition e.g.,
others standards of social relationships with others
Values comparison, sources of define self and affect
appraisal regarding self. personal preferences.
Emphasis on separateness, Emphasis on connectedness,
individuality relationships
Motivational Focus differentiation, Focus on similarity,
drives relatively greater need to relatively greater need to
Behavior unique Reflective of blend in Influenced by
personal preferences and preferences, needs of close
needs others
2. Power distance ( Social inequality and submission to authority)
Power distance reflects the degree to which a society accepts inequality in power at
different levels in organisations and institutions. It can affect preferences for centralization
of authority, acceptance of differential rewards, and the ways people of unequal status
work together.
3. Uncertainty avoidance ( Tolerance/avoidance of ambiguity )
Uncertainty avoidance concerns the different ways in which societies react to the
uncertainties and ambiguities inherent in life. Some societies need well defined rules or
rituals to guide behavior, whereas others are tolerant of deviant ideas and behavior.
4. Masculinity/femininity (Segregation of male and female roles in society)
This factor determines the extent to which societies hold values traditionally regarded
as predominantly masculine or feminine. For instance, assertiveness, respect for achievement,
and the acquisition of money and material possessions are identified with masculinity; and
nurturing, concern for the environment and championing the underdog are associated with
a culture’s femininity.
5. Abstract versus associative thinking
Creation of value in products based on cause/effect logic or association among events

without a logical link.

CONSUMER BEHAVIOUR
3.6.4. Cultural Influences

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

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Individual/ collective: Whether individual initiation has more value than collective activity?
NOTES
Romantic orientation: This depicts whether the communication is more effective which
emphasizes courtship or otherwise. In many countries a romantic theme is more successful.
Adult/ child theme: Is family life concentrated round children or adults? What role do
children play in decision-making?
Masculine/ Feminine: Whether the society is male dominant or women dominant or

balanced.
Competitive/ Cooperation: Whether competition leads to success. This is achieved by

forming alliances with others.
Youth/ age: Are prestige roles assigned to younger or older members of the society.
American society is youth oriented and Korean is age oriented. Decisions are taken by
mature people in Korea.
II. Environment Oriented Values
Cleanliness: If a culture lays too much stress on cleanliness. There is scope for the sale of
beauty creams, soaps, deodorants, insecticides, washing powder, vacuum cleaner, etc. In
western countries, a lot of emphasis is placed on this aspect and perfumes and deodorants
are widely used.
Performance/ status: A status oriented society cares for higher standards of living, and
chooses quality goods and established brand names and high prices items. This is true for
the United States, Japan, Singapore, Malaysia, Indonesia, Thailand and most Arabic
countries.
In performance oriented societies, where rewards and prestige is based on an

individual’s performance, less importance is given to brand names. Products which function
equally well and may not be big brand names are used. Germans do not give the same
amount of emphasis to brand names. The marketers adopt strategies accordingly.
Tradition/ change: Traditional oriented societies stick to the old product and resist
innovation or new techniques. In traditional societies, there is less scope for new products,
and old traditional products are in greater demand. In some societies which are upwardly
mobile, consumers are looking for modern methods, new products, new models and new
techniques.
Risk taking/ security: An individual who is in a secure position and takes a risk can be
either considered venturesome or foolhardy. This depends on the culture of the society.
For developing new entrepreneurs risk taking is a must. It leads to new product
development, new advertising themes and new channels of distribution. Security oriented
societies have little chances of development and innovation.

CONSUMER BEHAVIOUR
Problem solving/fatalist: A society can be optimistic and have a problem solving attitude
or, be inactive and depend on fate. This has marketing implications on the registering of NOTES
complaints when consumers are dissatisfied with the purchase of the products. Advertising
plays an important part and gives guidance to the consumer, and removes these doubts to
a great extent.
Nature: There are differences in attitude over nature and its preservation. Consumers
stress on packing materials that are recyclable and environment friendly. Some countries
give great importance to stop environmental pollution and to recycling of products.
Companies like P&G, Colgate-Palmolive captured a great extent of the market by

offering products which are less harmful to the environment. They also use ingredients in
the products which are not harmful in any way.
III. Self-Oriented Values
Active/passive: Whether a physically active approach to life is valued more highly than a
less active orientation. An active approach leads to taking action all the time and not doing
anything. In many countries, women are also taking an active part in all activities. This
makes the society a highly active one, where everybody is involved in work.
Material/ non-material: In many societies money is given more importance, and a lot of
emphasis is on being material minded. While in many societies things like comfort, leisure
and relationships get precedence over being materialistic. Materialism can be of two types.
¾ Instrumental materialism, which is the acquisition of things to enable one to do
something or achieve something. Cars are used for transportation. People like to
possess things of material value which would help them to bring efficiency.
¾ Terminal materialism, is the requisition of materialism for the sake of owing it rather
than for use-Art is acquired for owing it. Cultural differences play art important
role in this type of materialism. Instrumental materialism is common in the United
States of America, where as Japanese advertisements are mostly dominating terminal
materialism.
Hard work/leisure: This has marketing implications on labor saving products and instant
foods. Some societies value hard work and consider it as a fuller life. Others adopt labour
saving devices and instant foods to have more leisure time at their disposal.
Postponed gratification/ immediate gratification: Should one save for the rainy day
or live for the day? Sacrifice the present for the future, or live only for the day? Some
countries like The Netherlands and Germany consider buying against credit cards as living
beyond one’s means, whereas credit cards are very popular in America and other countries
having a different cultural orientation, some prefer cash to debt. Some societies save for
tomorrow; others enjoy the present and spend lavishly.

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Sexual gratification/Abstinence: Some traditional societies curb their desires, food,

NOTES drinks or sex, beyond a certain requirement. Muslim cultures are very conservative, and
do not want their women to be seen in public or be exposed, so the Polaroid camera
which gives instant photographs can be purchased and pictures can be taken by the family
members without their women being exposed to the developers in a photo lab.
Humour/ serious: Should we take life lightly and laugh it off on certain issues or, take
everything seriously? This is another aspect of culture. Advertising personnel selling
techniques and promotion may revolve around these themes and the way the appeal for a
product is to be made in various cultures.
3.6.6. Subcultures and Consumer Behavior
Culture can be divided into subcultures. A subculture is an identifiable distinct, cultural

group, which, while following the dominant cultural values of the overall society also has its
own belief, values and customs that set them apart from other members of the same society.
Sub-culture categories are:

¾ Nationality: Indian, Srilanka, Pakistan
¾ Religion: Hinduism, Islam
¾ Race: Asian, black, white
¾ Age: young, middle aged, elderly
¾ Sex: Male, Female
¾ Occupation: Farmer, teacher, business
¾ Social class: upper, middle, lower
¾ Geographic regions: South India, North-eastern India
1. Regional, Ethnic, and Religious Influences on Consumer Behavior
The three major aspects of culture that have important effects on consumer behavior
are regional, ethnic, and religious differences. Firstly, consumption patterns may differ in
various regions of India and the world, and marketing strategy can sometimes be tailored
specifically to these regions.
Secondly, our country has a number of different ethnic groups, and population trends will
dramatically alter the demographic profile of the country in the next 50 years. The very
diverse Asian American subculture is described as young and having higher socioeconomic
status, placing strong value on the family and the group, and being strongly brand loyal. In
spite of its diversity, marketing strategies can be developed for this group.
Finally, religious beliefs and values can influence consumer. Many marketers are now
becoming multicultural in their marketing activities by trying to appeal to a variety of cultures

CONSUMER BEHAVIOUR
at the same time. Although the diversity of the Indian melting pot may be unique, there are
many important ethnic groups in other areas of the world. NOTES
2. Age, Gender, and Household Influences on Consumer Behavior
Among the four major age groups, Teens, who need to establish an identity, are the
consumers of tomorrow and have an increasing influence on family decisions. The somewhat
disillusioned Generation X consists of smart and cynical consumers who can easily see
through obvious marketing attempts.
Baby boomers grew up in a very dynamic and fast-changing world, and this has
affected their values for individualism and freedom. The 50 and older segment can be
divided into two groups-the young again and the gray market. Neither group likes to be
thought of as old. The affect of gender differences on consumer behavior is examined next.
Sex roles are changing. Women are becoming more professional and independent, and
men are becoming more sensitive and caring. Also, men and women can differ in terms
of traits, information processing, decision styles, and consumption patterns.
Gender is consistent throughout lifetime, influencing customer values and preferences.

Gender shows different consumption patterns and perceptions of consumption situations –
E.g. the wedding ceremony.
Households play a key role in consumer behavior. The proportion of nontraditional

households has increased due to factors such as
1. Later marriages,
2. Cohabitation,
3. Dual-career families,
4. Increased divorce, and
5. Fewer children.
Households also exert an important influence on acquisition and consumption patterns.

First, household members can play different roles in the decision process (gatekeeper,
influencer, decider, buyer, and user). Second, husbands and wives vary in their influence in
the decision process, depending on the situation husband- dominant, wife-dominant,
autonomic, or synchronic.
3. Psychographics: Values, Personality, and Lifestyles
The roles of psychographics in affecting consumer behavior are detailed below.
Values are enduring beliefs about things that are important. They are learned through
the processes of socialization and acculturation. Our values exist in an organized value
system, with some values being viewed as more important than others. Some are regarded
as terminal values and reflect desired end states that guide behavior across many different

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situations. Instrumental values are those needed to achieve these desired end states. Domain-
NOTES specific values are those that are relevant within a given sphere of activity. Western cultures
tend to place a relatively high value on material goods, youth, the home, family and children,
work and play, health, hedonism, and technology. Marketers use tools like value
segmentation to identify consumer groups with common values.
Personality consists of the distinctive patterns of behaviors, tendencies, qualities, and

personal dispositions that make people different from one another. Approaches to the
study of personality include
1. The psychoanalytic approach, which sees personality arising from unconscious
internal struggles within the mind at key stages of development;
2. Trait theories, which attempt to identify a set of personality characteristics that
describe and differentiate individuals, such as introversion, extroversion, and
stability;
3. Phenomenological approaches, which propose that personality is shaped by an
individual’s interpretation of life events;
4. Social-psychological theories, which focus on how individuals act in social situations
(e.g., compliant, detached, or aggressive); and
5. Behavioral approaches, which view an individual’s personality in terms of past
rewards and punishments.
Marketers also measure lifestyles, which are patterns of behavior (or activities, interests,
and opinions). These lifestyles can provide some additional insight into consumers’
consumption patterns. Finally, some marketing researchers use Psychographic techniques
that involve all of these factors to predict consumer behavior. One of the most well known
Psychographic tools is the Values and Lifestyle Survey (VALS). The newer VALS2 identifies
eight segments of consumers who are similar in their resources and self-orientations.
3.6.7. Cross Cultural Consumer Behavior
Cross cultural marketing: Objectives and Policies
Cross-cultural marketing is defined as “the effort to determine to what extent the

consumers of two or more nations are similar or different. This will facilitate marketers to
understand the psychological, social and cultural aspects of foreign consumers they wish
to target, so as to design effective marketing strategies for each of the specific national
markets involved.”
A company can enter a foreign market as a

¾ Domestic exporter
¾ Foreign importer
¾ Foreign government-solicit the firm to sell abroad

CONSUMER BEHAVIOUR
The firm’s objectives could be:

¾ To determine how consumers in two or more societies are similar/different and
NOTES
devise suitable, appropriate strategies
¾ Devise individualized marketing strategy if cultural beliefs, values and customs of a
specific country are different
3.6.8. Characteristic features of a firm going global:

1. High market share in the domestic market
2. Advantageous economies of scale
3. Access to marketing/manufacturing bases across global borders
4. Availability of resources and capability to absorb huge losses
5. Product/technology clout
6. Cost and differentiation advantages
3.6.9. Problems in Cross Cultural marketing

1. Problems related to product selection: The marketer going for cross cultural
marketing has to select the customers/ market not on the basis of the superficial
similarities of age or income, but by using the real motivating factors that prompt
them to accept or reject products.
2. Problems related to promotion/marketing communication: e.g. Ariel in the middle
east and also Pepsi
3. Problems related to pricing: the marketer has to adjust his pricing policies according
to the local economic conditions and customs.
4. Problems related to selection of distribution channels: in Japan, P & G used this to
sell soap
3.6.10. Cross-Cultural Consumer Analysis
To determine whether and how to enter a foreign market, we need to conduct some
form of cross-cultural consumer analysis. Cross-cultural consumer analysis can be defined
as the effort to determine to what extent the consumers of two or more nations are similar
or different. Such analysis can provide marketers with an understanding of the psychological,
social, and cultural characteristics of the foreign consumers they wish to target, so that they
can design effective marketing strategies for the specific national Markets involved.
Similarities and differences among people
A major objective of cross-cultural consumer analysis is to determine how consumers

in two or more societies are similar and how they are different.

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Table 3.5 Japanese and American cultural traits difference Alternative

NOTES Multinational Strategies
Japanese Culture Traits American Culture traits
· Homogenous · Diverse
· Harmony to be valid and · Fight for one’s
preserved beliefs/positions
· Group, not individual, · Individualistic
important
· Ambiguous · Clear-cut
· General · Specific
· Hold back emotions in public · Display emotions in public
· Process-oriented · Result oriented
· Make a long story short · Make a short story long
· Nonverbal communication · Verbal communication
important important
· Interested in who is speaking · Interested in what is spoken
Some of us may argue as markets are becoming more and more similar, standardized
marketing strategies are becoming more and more feasible. But, some more would argue
back that differences between consumers of various nations are far too great to permit a
standardized marketing strategy. Whether to use shared needs and values as a segmentation
strategy or to use national borders as a segmentation strategy? Shared needs and values
would mean to appeal to consumers in different countries in terms of their common needs,
values, and goals. Using national borders as a segmentation strategy would mean to use
relatively different local or specific marketing strategies for members of distinctive cultures
or countries.
Table 3.6 Alternative Global Marketing Strategies
1. Favoring a World Brand: A lot of companies have created world brand products
that are manufactured, packaged, and positioned in exactly the same way regardless
of the country in which they are sold. For instance, Sony sells its Walkman in this
fashion.
2. Adaptive Global Marketing: In contrast to the above, some other organisations
imbibe a strategy that adapts their advertising messages to the specific values of
particular cultures. A very good example here would be that of McDonald’s, which
tries to localize its advertising to consumers in each of the cross-cultural markets in
which it operates.

CONSUMER BEHAVIOUR
3.6.11. Tangible Benefits of Global Brand Building

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

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3.6.13. Cultural Variations & Non Verbal Communication.

NOTES
In a culture we have many variations in non-verbal communications. Each culture
assigns a meaning to non-verbal signs utilised by it. There are some variables in non-verbal
communication. These are:
a) Use of time
b) Use of space
c) Friendship
d) Agreements
e) Things
f) Symbols
g) Etiquette
Time
Time is a resource which is distributed equally amongst everybody. Every person has
the same amount of time at his disposal. What view individuals and societies take of time
makes them different. Some can be classified under monochromic culture and others in
polychromic culture. Some of the important differences between monochromic a
polychromic culture are give in the table below.
Table 3.6 Differences between Monochronic and Polychronic Culture
The meaning of time may be different in different cultures. Some people take time in
making decisions according to the importance of decisions. Some insist on coming to the
point directly in business transactions and are well prepared. Some keep appointments by
the minute, others make people wait for a long time.

CONSUMER BEHAVIOUR
Space
NOTES
Space may be related to prestige rather than the need. The higher the office, the
bigger the office space and so on. Americans have the offices of executives on the top floor
and tend to separate the office of subordinates. Japanese have their discount stores on the
upper floor. Some cultures and individuals maintain a fair distance while transacting, others
co-mingle easily. Americans maintain a fair distance while interacting with associates. Arabs
stand very close to each other.
Friendship
Friendship plays an important role in business transactions. Good personal relationship

and feelings matter most in a long term agreement. Social contacts developed by parties
gain priority over technical specifications. Americans make friends easily, and drop them
easily as well, because of both social and geographical mobility. Some cultures like Indian
or Latin Americans have lasting relationships that endure for a long time and so does the
business. Personal ties, personal trust leads to cooperation and a lot of transaction can
take place between parties. Some want to transact business only with those whom they
get along and, making money is secondary.
Agreements
All business when transacted is done under some agreements. These agreements
may be written or just on an understanding between the two parties. Most people enter
into an agreement, but friendship and kinship are also given a lot of importance. Verbal
commitments are also binding in some cultures, where signing a contract is just a mere
formality.
Things
Different cultures attach different meaning to things. Things include products as well
as gifts given in certain business and social situations. An appropriate product in the form
of a gift is to be carefully chosen. The gifts can be big or small. They can be given openly
or presented privately. This depends on the practices followed in that particular country.
Some want to make a show of the gift, by giving it in front of others. Others are secretive
about it.
Symbols and Colors
Different countries attach different meanings to symbols, numbers and colors. Symbols
can be flowers, triangles, pictures and animals, etc. Some numbers are considered lucky,
and others not so lucky, or even unlucky, like 13, 4, etc. Colors have different interpretations.
Pink is associated with a female, and blue with the male in the US, whereas it is just the
opposite in Holland.

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A list of colors and their interpretations is given below:

NOTES
¾ White: Symbol of mourning or death in the Far East, happiness, purity and peace
in the United States.
¾ Purple: Associated with death in many Latin American countries.
¾ Blue: Symbolises feminity in Holland and masculinity in the United States, Sweden,
India, etc.
¾ Red: Color for brides and children in India. Sign of masculinity in the UK and
France, negative in Nigeria, Germany and positive in Denmark, Rumania and
Argentina.
¾ Yellow: Sign of death in Mexico, infidelity in France, celebrations in many countries
including India.
¾ White lilies: Suggestion of death in England.
Symbol of Numbers
¾ 7: Lucky in India, USA, Morocco, Nicaragua and Czechoslovakia.
¾ 13: Unlucky in many countries including India.
¾ 4: Symbol of death in Japan. Packing in 4s is avoided.
¾ Triangle: Negative in Hong Kong and Taiwan, positive in Columbia.
¾ Owl: Wisdom in the United States, bad luck in India.
¾ Deer: Speed, grace in the United States; Homosexuality in Brazil.
Etiquette
These are accepted norms of behavior. Some behavior may be rude or abusive in
one culture and quite acceptable in other cultures, e.g. sitting with legs crossed or sitting in
a manner that shows the sole of a shoe. In Japan it is considered impolite to say no directly
to a business offer. They put it differently, by saying it is very difficult, which means no. The
exchange of business cards in Japan is essential, and indicates the level of your status in
your business.
Similarly, there are many different habits and ways of doing things socially that affect
the making of advertisement. Eating with the fork in the right hand and the left hand kept
under the table is quite common in America, whereas, in European culture, the fork should
be in the left hand and the right hand holding the knife or spoon.
These non-verbal communications in different countries or different languages have a

direct bearing on the marketing activity and must be taken care of. As people recognize
verbal languages, they act accordingly. In a similar manner, non-verbal communication
must also be recognized and understood so that there is less misinterpretation. The
advertisement of the communication we want to give should be appropriate and match
with the culture of the country.

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

and must be taken into account by marketers wishing to do business in those cultures.
Probably more important, however, and certainly more difficult to recognize are nonverbal
communication systems. Major examples of nonverbal communication variables that affect
marketers are time, space, friendship, agreement, things, symbols, and etiquette.

DBA 1722

NOTES
¾ What reference groups would be relevant to the decision to purchase the product
or activity (based on students on your campus)?
¾ Describe two groups which you belong. For each, give two examples of instances
when the group has exerted (a) informational, (b) normative.
¾ Describe a consumption subculture to which you belong. How does it affect your
consumption behavior? How do marketers attempt to influence your behavior
with respect to this subculture?
¾ How would the marketing strategies for the following differ by stage of the HLC?
(Assume each stage is the target market)
• Health Club
• Life Insurance
• Energy drink
¾ Pick two stages in the household life cycle. Describe how your marketing strategy
for the following would differ depending on which group was your primary target
market.
• Sports car
• Mouthwash
• Italian Restaurant
¾ Why should we study foreign cultures if we do not plan to engage in international
or export marketing?
¾ Is a country’s culture more likely to be reflected in its art museums or its television
commercials? Why?
¾ Why do non-verbal communication systems vary across cultures?
¾ To what extent do you think teenagers are truly becoming a single, global culture?
¾ What are the marketing implications of the differences in the masculine/feminine
orientation across countries?

CONSUMER BEHAVIOUR
NOTES
UNIT IV
CONSUMER DECISION PROCESS AND POST

PURCHASE BEHAVIOUR
4.1 OVERVIEW
There are many people around us whom we perceive as experts in one thing or the
other. We seek advice from them in their respective area of expertise. Such people are
known as Opinion Leaders and people seeking advice from opinion leaders and known as
opinion seekers. A family friend who knows a lot about cars and also runs a garage can
prove to be a better source of information when a bike is to be purchased than a close
friend who is very knowledgeable about computers. Therefore, opinion leadership is a
social word- of- mouth communication between the opinion giver and opinion seeker.
Sometimes, the recipient of the information from the opinion leader may not be an active
seeker, but only a receiver of such information in regularly discussion. Such a person is
known as an opinion receiver. Word of out or interpersonal communication implies sharing
information through direct communication between people. It can be fact to face, over the
hone, via the net or through mails.

• The dynamics of Opinion Leadership
• Identify an Opinion Leader
• Understand communication and opinion leadership
• Understand the concept of diffusion and Innovation
• Understand the different types of innovations
• Understand the factors affecting innovation adoption
• Understand post purchase consumer behaviour and models
• Understand post purchase dissonance
• Understand the concept of consumer loyalty and types of loyalty programmes

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4.3 OPINION LEADERSHIP

NOTES
What is opinion Leadership?
Opinion Leadership is the process by which one person (opinion leader) informally
influences the actions or attitudes of others, who may be opinion seekers or merely opinion
recipients. The definition of opinion leadership emphasises on informal influence. This
informal flow of opinion related influence between two or more people is referred to word-
of-mouth communication.
Benefits of word-of-mouth
There are three situations in which opinion leadership takes place:

• When an individual actively seeks advice from others
• When an individual voluntarily provides information to others
• When information is generated in the course of normal interaction of a group
4.4 DYNAMICS OF OPINION LEADERSHIP
• c
Credibility
Opinion seekers regard opinion leaders as trustworthy and a credible source of

information pertaining to a particular product or brand – the opinion leaders have no hidden
commercial motives, like cash rewards, in promoting a brand. Also opinion seekers seek
their help in decision-making because they have expertise or usage experience with a
product or brand, which considerably reduces the perceived risk of the opinion seeker.
The information given by the opinion leader can be either positive or negative, based on
personal experience, and this further strengthens their credibility.
Information and Advice
Opinion leaders are a source for product or brand specific information as well as
advice. They might just share casual information about a certain product that they have

CONSUMER BEHAVIOUR
used, they might even aggressively advice o0pinion seekers whether to buy it o not. The
information passed can be related to which product or brand to purchase and from where. NOTES
Category-specific
Opinion leaders can have expertise in one product category, but can reverse the role
to opinion seekers in case of another product category in which they are not knowledgeable.
A person known for his/her cooking talent may be an expert in the ‘what’ and ‘how’ of
packed edible food products, spices, food nutrition, etc, but when he or she has to buy a
bike, is more likely to seek information from another person whom he/she regards as
knowledgeable about bikes. Therefore, an opinion leader in one product may be an
opinion seeker in another product.
Two-way communication
Opinion leadership phenomena are face-to-face communication between opinion
givers and opinion seekers. Both parties communicate with their respective experience
with each other. Some scholars, thus, believe that the difference between opinion giver
and opinion seekers is somewhat artificial as the person who is knowledgeable about a
certain product and gives related advice to opinion seekers, is also most likely to listen to
others’ comments regarding the product.
4.5 MOTIVATION BEHIND OPINION LEADERSHIP

The opinion leadership process happens due to the following underlying motives of
both parties – the opinion leader and opinion seeker and receiver.
Opinion Leader
There are four main motives behind the role of opinion leader – self involvement,
product involvement, social involvement and message involvement.
Self involvement:
Giving advice to others provides big gratification to the opinion leaders in terms of the
attention they receive. Also, since they can display heir expertise and experience in the
subject mater, it makes them feel superior o others in terms of knowledge. The role of the
opinion leader also involves good feeling of helping others take a decision and increasing
the knowledge of opinion seekers and receivers.
Sometimes, the motive behind opinion leadership could be to reduce post-purchase
dissatisfaction with a product or brand. In such cases, the opinion leader will propagate
the advantages of the product, thereby trying to reassure himself that his purchase decision
was right. For example, unable to make up his mind on which brand of refrigerator to buy,
Mr. Sampath sought the advice of others, and ended up buying an expensive brand. After
the purchase, he began to feel a little dissatisfied with the choice he made. However, he
gave a favourable picture of the brand to others, just o reassure himself that he had made
he right choice.

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Product involvement:
NOTES
Product involvement opinion leaders may feel the necessity to talk to others (opinion
receivers) about the product if it is eie4hter too good or too bad. The information transmitted
would be positive if they are satisfied with the product or brand and negative, if they are
dissatisfied with it.
Social involvement:
Social involvement opinion leaders like o share their product expertise with people in
general as an expression of bonding. It is important to note that in this case, the opinion
leader does not feel the urge to talk about the product/brand due to positive or negative
experience, as in the case of product involvement.
Message involvement:
With an increasing number of advertisements being targeted at consumers these

advertisements often become the topic of discussion. In case of message-involvement,
advertisements and slogans are the basis of group discussions. Such conversations often
use poplar slogans like Surf’s “Dhoondhte reh jaoge” or Maggi Noodles “bus 2 minute.”
Opinion Seeker and Receiver

The main motive for an opinion seeker is looking for information is o reduce the
perceived risk associated with the product purchase. It also reduces the task of searching
for information through other sources. Sometimes opinion is sought with the sole purpose
of buying a product to win the approval of an opinion leader. For the opinion receiver, the
interaction with an opinion leader provides a lot of new and/or existing product knowledge
as well as information related to their purchase, use, etc.
4.6 TYPES OF OPINION LEADERS
Opinion leaders, in general, are people who have expertise in one subject/product.
Activity and have the capability of influencing others. They may or may not be he users of
the product and/or brand that they recommend to others. Opinion leaders, who do adopt
a product early in its life cycle, are called innovative consumers. Opinion leaders are also
mostly likely to be opinion seekers in the product category in which they have high
involvement. They are generally self-confident (which makes them quite convincing to
opinion seekers), wiling to try new products and also to talk about these products to
others. They are socially active and generally have more influence over the people in same
age group and social circle as theirs.
Opinion leaders can be of varying types based on their knowledge, and influence on
the purchase decision of the opinion receiver and/or opinion seeker. There are some
special types of opinion leaders, like generalised opinion leaders, market mavens, surrogate
buyers and purchase pals.

CONSUMER BEHAVIOUR
Generalised Opinion Leader

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

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4.7 COMPARISON OF OPINION LEADERS AND SURROGATE BUYER

NOTES S.
Opinion Leader Surrogate Buyer
No.
1. Informal relationship with end-user Formal (occupational) relationship
of information with end-user of information
2. Information can be active or Active information exchange
passively exchanged
3. Usually, more socially active than Not necessarily more socially
end-user and belongs to the same active than end-user and usually
age and social group does not belongs to the same age
and social group
4. No hidden motive of commercial Gets compensated for his/her

gain services
5. Limited accountability, therefore, High accountability, therefore,
less effort in option screening and greater effort in option screening
evaluation and evaluation
6. Usually more than one opinion Usually, only one surrogate buyer
leader can be consulted is consulted due to cost of
consultation involved
7. Same person can be opinion leader Usually, expert in one

in may related areas. product/service category
Purchase pals
Purchase pals are people who accompany an individual on shopping trips. Purchase
pals are considered to be quality influential opinion leaders at the point of purchase (in
store) in consumer decisions. The major benefit of purchase pals is that they help reduce
the stress and anxiety an individual experiences while make a purchase, especially in a high
involvement expensive product. The other benefit is information support they provide like
better product knowledge, better bargaining skills and better knowledge of outlets, prices
and products.
Thus the choice of purchase pals depend on the relationship they have with the individual
and the type of purchase they make. They can have two types of relationships with the
individual they accompany – either a strong tie relationship or a weak tie relationship.
Strong tie purchase pals are generally family members and close friend who are preferred
when shopping for products which have high social risk. i.e., the risk of social ridicule (say
while shopping for one’s wedding dress). The strong tie purchase pals provide moral
support and help the individual choose products that suit his or her taste. Weak tie purchase
pals are generally non-family members and they are preferred while making purchase of

CONSUMER BEHAVIOUR
products which have high perceived functional risk. - i.e., risk of non-performance (say, an
expensive electronic gadget). NOTES
4.8 IDENTIFYING AN OPINION LEADER
Opinion leaders are easier to define than to find. Still more difficult in measuring their
impact on the opinion seekers. Moreover, the circle of influence of opinion leaders is
generally small compared to celebrity endorsers, who can catch the attention of the entire
segment.
There are several techniques that are used to identify opinion leaders – self designating
method, socio-metric method, key informant method and objective method.
Self Designating Method
This is a frequently used opinion leader identification method used by marketers. It

measures the individual’s self perception of his/her ability o influence others. In this method,
individuals are asked to answer singe or multiple questions about themselves. Generally,
he multiple question approach is preferred as it is more reliable. The major limitation of
this method is that respondents can give biased answers. Another point to note is that
anyone giving advice is not considered as an opinion leader rather opinion leader is a
person whose advice is regarded highly amongst the seekers and is followed too.
Socio-Metric Method
This method focuses on measurement of the group network and product or brand,
based interpersonal communication within a group. Respondents are asked to identify
people to whom they have provided information regarding the product/brand and/or people
from whom they have received product related information. The responses are cross -
checked with the individuals named by the respondents, thus giving authentic results
Although this method is precise, it is expensive and difficult to conduct due to the time
involved in tracking the whole network of opinion leaders and receivers.
Key Informant Method
In this method, a key informant, a person who is a keen observer of the concerned
group, is asked to identify potential opinion leaders with respect to a specific product
category. The informant may or may not be a member of that group, for example a teacher
who knows the students within the class who are regarded highly by fellow students.
Although, it is quite inexpensive and less time consuming than other methods, it is generally
difficult to identify a key informant.
Objective Method
In this method, some individuals act as opinion leaders with respect to a product and
the impact of resultant word-of-mouth communication on the sales of the product is traced

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and measured. This method is quite useful in measuring the impact of word-of-mouth on
NOTES a new product trial, such as a special invitation to select socialites and student groups to
the opening of a multiplex and then tracking down their influence on others. This method
measures an individual’s influence on others in a controlled environment but it needs a
carefully established design for the experiment. Also mapping the spread of word-of-
mouth can be difficult.
Creating a Buzz
A buzz has been described as explosive self-generating demand by the consumers.

Be it the success of movies like Matrix or buzz or consumer hype generated by positive
word-of-mouth interaction can play a vital role in the success of a product. A large number
of target consumers are affected by the power of the buzz, at least partially. Entertainment
and fashion products are usually more affected by a buzz than products related to finance,
electronics, insurance, etc. Companies can cleverly devise tactics to make even low visibility
products the talk of the town.
4.9 TACTICS ADOPTED BY MARKETERS TO GENERATE A BUZZ
Some of the tactics adopted by marketers to generate a buzz are:

• Influencing the opinion leaders, say inviting socialites, popular columnists and
celebrities to an initial movie screening. The movie Crouching Tiger, Hidden Dragon
– marketed by Sony Entertainment carefully planned the audience for the initial
screening. This made the foreign movie a huge success in the U.S.
• Rationing the supply by releasing limited edition of a product, which gives product
exclusivity; say like launching a limited edition of a classic car model. Marketers
can even employ the channel constraint to create buzz, say for that limited edition
car or a one-day sale by a store.
• Exploiting the icons by making use of celebrity endorsements. Celebrity
endorsements does not necessarily mean advertisements featuring celebrities, but
celebrities (movie stars, popular TV stars, sports icons, etc) using the product in
highly visible social events, talk shows, etc.
• Being in the category top lists helps create tremendous interest in the product
and quick rise in sales. The most noted top 10 movies of the week, the top 10
best selling fiction and non-fiction books, the top 10 business schools, etc.
• Nurture the grass roots by encouraging community feeling associated with a
brand or product.
• It is important to note that imitations of product can cash in on the buzz effect
created by a new product if they know when to lunch their counter product against
the original. Marketers often rely much more on mass media advertising to attract
potential consumers.

CONSUMER BEHAVIOUR
4.10 PROGRAMMES DESIGNED TO STIMULATE OPINION LEADERSHIP

NOTES
Advertising and promotional programmes designed to persuade consumers to “tell
your friends how much you like our product” are one way in which marketers encourage
consumer discussions of their products or services. The objective of a promotional strategy
of stimulation is to run advertisements or a direct marketing programme that is sufficiently
interesting and informative to provoke consumers into discussing the benefits of the product
with others.
Advertisements Simulating Opinion Leadership
A firm’s advertisements can also be designed to simulate product discussions by

portraying people in the act of informal communication.
Word-of-Mouth May Be Uncontrollable
Informal communication is difficult to control. Negative comments, frequently in the

form of rumors that are untrue, can sweep through the marketplace to the detriment of a
product. Indeed, a study by the White House Office of Consumer Affairs found that 90
percent or more of unhappy customers would not do business again with the company that
is the source of their dissatisfaction.
Each dissatisfied customer will share his or her grievance with at least nine other
people, and 13 percent of unhappy customers will tell more than 20 people about the
negative experience. Some common rumor themes are:
• The product was produced under unsanitary conditions.
• The product contained an unwholesome or culturally unacceptable
• Ingredient.
• The product functioned as an undesirable depressant or stimulant.
• The product included a cancer-causing element or agent.
• The firm was owned or influenced by an unfriendly or misguided foreign country,
governmental agency, or religious cult.
Some marketers have used toll-free telephone numbers in an attempt to head off
negative word-of-mouth, displaying an 800 number prominently on their products’ labels.
A particularly challenging form of “negative” word-of-mouth can be generated today over
the Internet, when a dissatisfied consumer decides to post his or her story on a bulletin
board for all to see.
Creation of Opinion Leaders
Marketing strategists agree that promotional efforts would be significantly improved

if they could segment their markets into opinion leaders and opinion receivers

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4.11 THE DIFFUSION CONCEPT

NOTES
According to Rogers “Diffusion is the process by which an innovation is communicated
through certain channels over time among the members of a social system.” Diffusion is a
macro process concerned with the spread of a new product an innovation from its source
to the consuming public. Adoption is a micro process that focuses on the stages through
which an individual consumer passes when deciding to accept or reject a new product.
Diffusion of innovations is the process by which acceptance of an innovation (new products
or new service or new idea) is spread by communication (mass media, sales people,
informal conversation) to members of the target market over a period of time
In other words, the study of the diffusion of innovation is the study of how, why, and
at what rate new ideas and technology spread through cultures. It applies, for example, to
the acceptance of new technological products like the wristwatch and the personal computer,
foods like tomato sauce, music styles like opera, dressing styles like the blue jeans and so
on
Diffusion of innovation explains how an innovation reaches the consumer and reasons
for its acceptance or rejection by them. Diffusion is “the process by which an innovation is
communicated through certain channels over time among the members of the social system.
The diffusion process, therefore explains the ways in which an innovation reaches a wide
consumer base.
Diffusion of innovation theory predicts that media as well as interpersonal contacts

provide information and influence opinion and judgment. Studying how innovation occurs,
E.M. Rogers (1995) argued that it consists of four stages: invention, diffusion (or
communication) through the social system, time and consequences. The information flows
through networks. The nature of networks and the roles opinion leaders play in them
determine the likelihood that the innovation will be adopted. Innovation diffusion research
has attempted to explain the variables that influence how and why users adopt a new
information medium, such as the Internet.
Opinion leaders exert influence on audience behaviour via their personal contact, but
additional intermediaries called change agents and gatekeepers are also included in the
process of diffusion. Five adopter categories are: (1) innovators, (2) early adopters, (3)
early majority, (4) late majority, and (5) laggards. These categories follow a standard
deviation-curve, very little innovators adopt the innovation in the beginning (2,5%), early
adopters making up for 13,5% a short time later, the early majority 34%, the late majority
34% and after some time finally the laggards make up for 16%.
Diffusion is the “process by which an innovation is communicated through certain

channels over a period of time among the members of a social system”. An innovation is
“an idea, practice, or object that is perceived to be new by an individual or other unit of

CONSUMER BEHAVIOUR
adoption”. “Communication is a process in which participants create and share information

with one another to reach a mutual understanding.” NOTES
4.12 ELEMENTS TO THE DIFFUSION OF INNOVATION
There are four main elements to the diffusion of innovations. They are:
• Innovation - Any item, thought, or process that is viewed to be new by the
consumer
• Communication – the process of the new idea traveling from one person to another
or from one channel to the individual.
• Social System – the group of individuals that together complete a specific goal
(adoption)
• Time – how long it takes for the group to adopt an innovation as well as the rate
of adoption for individual
Conceptual Model
Diffusion of Innovation Model. Source: Rogers (1995)

4.13 INNOVATION
Various approaches which have been taken to define a new product or a new service
include:
a. Firm-oriented definitions: A firm oriented approach treats the newness of a product
from the perspective of the company producing or marketing it. When the product is
“new” to the firm it is considered to be new.

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b. Product oriented definitions: Product-oriented approach focuses on the features

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

CONSUMER BEHAVIOUR
4.15 ATTRIBUTES OF INNOVATION

NOTES
Other factors affecting adoption are the type of social system (modern or traditional)
type of decision (individual or group), marketing effort (correct market segmentation and
commercial channels) need fulfillment/problem solving (the more obvious the problem solved
by the innovation, more rapid the adoption) the perceived risk (the lower the perceived
risk; the higher the probability of faster adoption).
4.16 CONSUMER RESISTANCE TO INNOVATION
Not all innovations that are introduced to the market become successful. The lack of
adoption in case of a cosmetic is adoption not because of consumer resistance, but due to
the failure of the company to meet consumers’ perception of newness.
Innovation resistance is “the resistance offered by the consumer to an innovation

either because it poses potential changes from a satisfactory status quo or because I conflict
with their belief structure” The resistance to innovation will increase if the relative advantage,

DBA 1722
compatibility, trialability and operability are perceived as slow and complexity is perceived
NOTES as high by consumers.
One more attribute of innovation – flexibility or capacity for modification – becomes

very important if there is consumer resistance to an innovation. If there is resistance to a
modified innovation, the company can modify the innovated products to make it more
acceptable to the consumer, thus increasing its changes of success. The modification will
have to be based on the cause of the resistance. If a new kind of computer mouse is being
resisted, the marketer will have to enquire about the causes. Say if the cause is the even
though performance is better than earlier models, the design or shape of the mouse makes
the user uncomfortable. In this case, the marketer will need to modify the design and then
re-launch the model for the consumers’ adoption or rejection.
To counter the problem of consumer resistance to innovation many innovating

companies like 3M use the lead user approach. In this approach, a lead team comprising
of managers and technical staff, work together to devise profitable innovations while some
other companies rely on the feedback given by their consumers.
Both these approaches to churn out profitable innovations can also play an important
role in identification of the innovation’s limitations and alternative uses. This not only reduces
the probability of resistance but also increase s the potential market as the company focuses
on the alternative use. Sometimes the failure of an innovation due to factors like narrow
target market) also forces company to search for alternative uses of the innovation. An
innovation intended for a particular market segment instead finds acceptance with some
other market group.
Innovation resistance is greater in the case of discontinuous innovations which greatly

disrupt the consumers’ beliefs and past experience. The resistance can vary in degree –
inertia (disinclined to adopt), active resistance (perceived risk is high and tendency to
postpone adoption), and very active resistance (innovation perceived as unsuitable and
can result in anti-adoption drive) and exists across product classes from IT to consumer
durables to medicines.
4.17 COMMUNICATION
It was first thought that the communication process of the diffusion of innovations was
only a one-step process, from the mass media channels to the individual with little or no
interaction between the individuals. This obviously is not the case. Not only do individuals
communicate with each other, some individuals pass along their influence as well as their
knowledge to other individuals.
Compunction proves a platform through which information flows. There are two
types of communication flows – marketers to consumers (through mass media and sales
person) and among consumers (though word of mouth and opinion leaders). Apart from

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

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social system have their own social and cultural environment in which they interact with
NOTES each other.
Each social system has a social hierarchy (e.g., opinion leaders, opinion seekers) and
communication network (sub-groupings of similar kind of people). The social hierarchy
and communication network within a social system determine the direction of diffusion
(upward, downward or across) and rate of adoption. The social norms i.e., established
behavioural patterns of he members of the social system are also a determinant in the
adoption of an innovation.
According to Rogers traditional norms are characterised by:

• A less developed or complex technology
• Low levels of literacy and education
• Little communication between the social system and outsiders
• Lack of economic rationality
• One-dimensional in adapting and viewing others
According to Rogers modern norms are characterised by:

• A developed technology with complex jobs
• Strong importance placed on education
• Acceptance of free thought and new ideas
• Strong preparation and high importance on economic considerations
• Ability to see and understand other peoples situations
Not only does modern system accept and adapt to innovation faster and easier than
traditional system but the individual is more likely to be innovative in thinking and doing in
a modern society.
The identification of social hierarchy and communication network, within a social

system provides the marketers the basis for planning the introduction of the innovation in
the social system. As free world trade is being emphasised, MNCs have received a great

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

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Image barrier (Stereotyped image of origins of an innovation) A non-fat ice-cream

NOTES from Reliance group may be a big shocking to Indian consumers initially A well known
brand name, create a unique brand image and make fun of negative images.
4.19 TIME
Time is an extremely important element of the diffusion process. Time has a bearing
on:
• The adoption process
• Innovativeness of the consumers and
• The innovation rate of adoption.
In medical school when students are learning about the human body they first have to
understand it at a cellular level. Like biology, to truly understand the diffusion of innovations,
one has to understand the adoption process of the individual consumer. As stated earlier,
the difference between the diffusion process and the adoption process is the “who”. The
diffusion process deals with people or groups while the adoption process focuses on the
individual person.
Relevance of time in Diffusion of Innovation

Area of Relevance How time Affects Example
Adoption Process The average time Sneha and Anita are neighbours
taken from initial who have bough home theatre
awareness to systems at different points of time
adoption or but both had seen the launch ad
rejection by a first in the newspaper on the same
consumer date. Sneha took 3 weeks to buy
the model while Anita took 12
weeks. The whole time taken for
adoption was different. The
average time taken here is 7.5
weeks.
Consumer’s Based on time of If the industry categorisation of
innovativeness adoption by a adopters is time of purchase after
consumer, the the launch – innovators (8 weeks)
adopters are early adopters (8 – 16 weeks)
classified from early majority (16 – 36 weeks),
innovators to late majority (36 – 52 weeks) and
laggards. laggards (over 52 eels) then
Sneha is an innovator while Anita
is an early adopter.
Rate of Adoption The speed with If the home theatre system was
which an innovator adopted by the target market in
spreads within the 52 weeks, while the surround
social system. The sound TV took 100 weeks, then
more the time taken we can say that the speed of the
the slower the adoption of home theatre system
adoption, and vice- is faster than that of surround
versa. sound TV.

CONSUMER BEHAVIOUR
4.20 ADOPTION PROCESS

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

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4.21 STAGES IN ADOPTION PROCESS

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

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

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NOTES
4.23 RATE OF ADOPTION

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

CONSUMER BEHAVIOUR
are relevant to advertising mangers, salespeople, or product designers of individual firms

or organisations. At the macro-level, consumer behaviour involves the study of the influence NOTES
of consumption on the economic and social conditions within society. The collective
behaviour of consumers influences our total quality of life, directing the demand and supply
of products and services. The anticipation and forecasting of consumer behaviour at that
level can be used for organisational planning and product development, as well as formation
of public policy to improve the efficiency of the market system.
Reflecting on the literature in consumer behaviour allied closely to marketing, it is

possible to distinguish here approximate phases f development:
1. A segmentation era, primarily associated with the work before the mid-1960s
2. A period from mid 1960s through to the end of the 1970s which was dominated
by the development of knowledge on consumer decision making
3. A period of diversification and enrichment in the 1980s and 1990s.
In the 1950s and through to the mid 1960s much of consumer behaviour research
involved the evaluation of consumer characteristics for market segmentation. It was at this
time that consumer behaviour researchers investigated the application of personality theories
and classification of motives taken from psychology and the family life-cycle and social
class taken from sociology. These were applied with very different degrees of success in
cross-sectional studies of markets in order to explain variations in consumer demand for
many different classes of products and also for different choices of brands.
One of the studies from that period which had a very profound influence on consumer
behaviour and marketing is Rogers’ work on the diffusion of innovations. He segmented
the potential market for a new product according to the time of adoption and developed a
five stage classification within which to describe potential customers – innovation, early
adopters, the early majority, the later majority and laggards. Another important facet of
Rogers’ work was his characterisation of the adoption process. During consumers’ adoption
of innovations, Rogers described the individual as moving through the following series of
stages in their decision to purchase:
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption
This was one of the first attempts to describe a sequential process which illustrated
the stages of the consumed decision, as will be seen in the later discussions. The steps
described by Rogers are typical of the framework that has been used to underpin the
models of consumer decision making.

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In 1968 Engel, Kollat and Blackwell model was one of a series to be developed in
NOTES the late 1960s and early 1970s. Other particularly important contributions ere offered by
Howard and Sheth, Nicosa and towards the end of the 1970s, Bettman provide another
substantial offering with his information processing model of consumer decision making.
Taking an historical perspective on this period, it is probably difficult to under-emphasise
the importance of developments in attitude theory as applied to thinking and research in
consumer behaviour.
Two of the other important developments in the 1970s were the emergence of work
on the family as a decision-making unit, and the foundation of consumer psychographics
and lifestyles as segmentation techniques. Although husband/wife influence had been
investigated earlier, the 1970s saw major developments in that area. The work placed the
investigation of family decision making into a parallel context with individual decision making
based around the type of sequence described by Rogers. The recognition of children in
the family decision process and the nature of consumer socialisation also developed during
this period.
In the area of market segmentation, the most important developments of this period
were the related concepts of psychographics and lifestyles. Retrospectively it is possible
to view their development as an outgrowth of disillusionment with personality and other
variables as a good basis for market segmentation.
The development of mainframe computers and canned packages of multivariate

techniques enabled consumer behaviour researchers and marketers to adopt what has
been called a ‘backward’ approach to market segmentation. Using huge questionnaires
they were able to collect large quantities of data representation the activities, interests and
opinions of consumers. Factor and cluster analysis techniques enabled this pot pourri of
information to be refined into apparently stable and meaningful portraits of consumer groups.
The latest period of development and enrichment is primarily reflected in the consumer
behaviour research of the 1980s and 1990s. Looking back, the dominant paradigm of the
1970s is seen to be one borrowed from cognitive approaches t psychology. Since that
time some particularly strong challenges have been made to this approach. Gradually the
scope of consumer behaviour has expanded as other social and economic trends have
developed that affect marketers. For example, consumer behaviour researchers have
expanded their focus to consider phenomena such as shoplifting, the effect of homelessness
on consumption and compulsive buying.
Also emerging through the 1980s were two major and related contributions to theories
of how consumers make decisions. First, there has been the evolution of an alternative
‘low involvement’ approach to consumer decision making with a different set and sequences
of stages to that outlined by Rogers. Second, consumer behaviour researchers have placed
an increased emphasis on the role o affective as opposed to cognitive influences.

CONSUMER BEHAVIOUR
4.25 CONSUMER DECISION MAKING – THE COMPLEX APPROACH

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

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Lexicographic Decision Rule:

NOTES
In this rule the consumer initially ranks the attributes in terms of perceived relevance
or importance. Later he compares different alternatives in terms of the single attribute that
is considered most important. On this top ranked alternative, regardless of the score on
any other attribute, if one option scores sufficiently high it is selected and the process ends.
Levels of Consumer Decision Making
The consumer decision making process is complex with varying degree. All purchase
decisions do not require extensive effort. On continuum of effort ranging from very high to
very low, it can be distinguished into three specific levels of consumer decision making:
1. Extensive Problem Solving ( EPS )
2. Limited Problem Solving ( LPS )
3. Routine Problem Solving ( RPS )
Extensive Problem Solving ( EPS):
When consumers buy a new or unfamiliar product it usually involves the need to
obtain substantial information and a long time to choose. They must form the concept of a
new product category and determine the criteria to be used in choosing the product or
brand.
Limited Problem Solving (LPS):
Sometimes consumers are familiar with both product category and various brands in
that category, but they have not fully established brand preferences. They search for additional
information helped them to discriminate among various brands.
Routine Problem Solving (RPS):
When consumers have already purchased a product or brand, they require little or no
information to choose the product. Consumers involve in habitual and automatic purchases
4.26 CONSUMER BEHAVIOUR AND MARKETING IMPLICATIONS
The basic belief of marketing-oriented company is that the customer is the hub around
which the business revolves. Therefore, understanding what makes people in general buy
and what makes your customer in particular buy is a vital part of business success. Market
itself means – customer, around whom all marketing strategies are formulated and
implemented. In order to meet competition at the market place, the marketing managers
are using various methods to add value to the final product which will reach the hands of
the consumers. It means in ever changing marketing environment, there is a growing concern
or awareness among marketers to go for a careful study of the consumer behaviour around
which all marketing activities are made. Following are the key marketing implications of
consumer behaviour.

CONSUMER BEHAVIOUR
Consumer Behaviour and Marketing Strategies

NOTES
Understanding the consumer behaviour is the basic for marketing strategy formulation.
Consumers’ reaction to this strategy determines the organisation success or failure. In this
competitive environment Organisations can survive only by offering more customer value
- difference between all the benefits derived from a total product and all the costs of
acquiring those benefits – than competitors. Providing superior customer value requires
the organisation to do a better job of anticipating and reacting to the customer needs than
the competitor.
Marketing strategy is basically the answer to the question: How will company provide
superior customer value to its target market? The answer to this question requires formulation
of marketing - mix – product, price, place and promotion - strategies. The right
combination of these elements meets customer expectation and provides customer value.
For example, marketer of a bike must know the customers performance expectations,
desired service, Price willing to pay, information he seeks and after-sales service to provide
superior customer value.
Consumer Behaviour and Market Segmentation
The most important marketing decision a firm makes is the selection of one or more
segments to focus their marketing effort. Marketers do not create segments but they find it
in the market place. Market segmentation is the study of market place in order to discover
viable group of consumers who are homogeneous in their approach in selecting and using
goods or services. Since market segment has unique needs, a firm that develops a product
focusing solely on the needs of that segment will be able to meet the target group desire
and provides more customer value than competitor. For example, right segment for ‘Femina’
magazine is educated urban women. The success of this magazine depends on their
understanding of the urban woman.
Consumer Behaviour and Product Positioning
Product positioning is placing the product, service, company, or shop in the mind of
consumer or target group. Through positioning marketers seek the right fit between a
product and desired customer benefits. The right positioning means understanding the
consumer perception process in general and perception of company’s product in particular.
For example, Samsung brand is perceived as premium brand by few customers and value-
driven brand by others in the market, but marketer must find out what makes their target
market to perceive differently and position it accordingly.
Consumer Behaviour and Marketing Research
Studying consumer behaviour enables marketing researchers to predict how consumers

will react to promotional messages and to understand why they make the purchase decision

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they do. Marketers realised that if they know more about the consumer decision making
NOTES criteria, they can design marketing strategies and promotional messages that will influence
consumers more effectively. The importance of consumer behaviour made marketers to
think of a separate branch in marketing research - Consumer research, to deal exclusively
for consumer related issues. The current focus of consumer research is on study of underlying
needs and motives in taking purchase decisions, consumer learning process and attitude
formation process.
Consumer Behaviour and Non-Profit and Societal Marketing
A sound knowledge of consumer behaviour can help the organisations that sell ideas
and concepts of social relevance. Institutions that promote family planning, AIDS free
society, governmental agencies, religion orders and universities also appeal to the public
for their support in order to satisfy some want or need in society. The knowledge about
potential contributors, what motivate their generosity, how these motives can be effectively
appealed is useful for the organisations involved in these activities.
Consumer Behaviour and Governmental Decision Making
To major areas where consumer behaviour study helps government is in policy making
on various services, and in designing consumer protection legislation. The knowledge of
people’s attitudes, beliefs, perceptions and habits provides adequate understanding of
consumers
4.27 CONSUMER BEHAVIOUR MODELS
A model is very often referred to as an abstract representation of a process or

relationship. We tend to hold various models in our minds, which allow us to make sense
of the world, and also help to predict the likely course of events. To put it simply, models
help us in the development of theories, understanding complex relationships, and providing
the framework for discussions and research work. In this section we shall make efforts to
examine the various models having relevance to the consumer decision process. The primary
concern is to use the models to understand consumer behaviour. Consumer behaviourists
as well as marketers are interested in understanding how and why certain decisions are
made.
Consumer Decision-Making
Since the 1960s, the study of consumer behaviour has focused largely upon consumer
decision-making processes. Influenced by cognitive psychology, a number of so-called
modal models (or “box-and-arrow” models) have been proposed, presenting the various
stages the consumer goes through when choosing a product to buy or store to shop in,
presented in a flow-chart format (e.g. Nicosia, 1966; Engel et al., 1995). A rather stylised
summary of these modal models might look something like this

CONSUMER BEHAVIOUR
NOTES
In the left-hand column above, we can see that the decision process begins with the
consumer recognising that he or she needs or wants to buy an item. Attention is then
devoted to the task in hand and information gathered. The consumer evaluates the options
available, makes his or her choice and purchases the product. At any stage in the process,
events encountered at one stage may cause the consumer to revert to a previous stage; for
example, during evaluation, none of the options available may prove satisfactory and the
consumer may therefore decide to reassess the initial need and begin the process again for
a completely different alternative solution. Conversely, with very common or repeat
purchases, particular stages (e.g. information search) may be passed through without
conscious attention being applied (i.e. may be automatised) because the information required
is already available in memory. Finally, note how the decision process doesn’t end with
purchase - the extent to which a purchase is deemed successful or unsuccessful will feed
back to influence future purchase decisions.
To the right of the diagram, we see environmental factors, which may influence the
decision-making process at any stage. This category would include a whole array of
variables, ranging from exposure to advertising and promotional materials through to store
atmosphere, crowding and the opinions of significant others.
The diagram is a summary of the models available which, however complex they may
appear, all hypothesize the same linear decision-making process. There is no one single
universally accepted model, each having its own particular strengths and weaknesses. In a
way, this is probably a reflection of the many different consumer motivations highlighted
above - particular models being stronger than others for specific types of shopping.
There are two main problems with modal models such as this when it comes to their
usefulness to the marketer. Firstly, the “box-and-arrow” approach is rather descriptive. It
tells us the decision-making stages the customer negotiates, but tells us very little about

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how the marketer can actually influence these stages to make his or her product/service
NOTES the preferred option. The second weakness of this approach is closely related to the first.
Note how the environment is merely “lumped together” to the right of the diagram. When
we consider all of the factors this encompasses (store location, layout, advertising, prevailing
socio-economic conditions, etc.), this seems woefully inadequate. Moreover, the location
of the environment box separate to the decision-making process gives the impression of
the environment as simply being something “out there”, divorced from the individual shopper.
The reality, of course, is that consumers are a part of the environment, interacting with
environmental factors and influencing each other.
A more accurate model of consumer decision-making would probably locate the

environment “box” as follows:
As you can see, this revised model locates the decision-making process within the
environment box, recognising that the individual is part of the environment.
Consumer Decision Making Models
Types of consumer behaviour models:
Simple models
• Black Box models
• Personal variable models
• Personal Variable/Post Purchase Satisfaction model
Comprehensive models
• Engel, Blackwell and Miniard
• Engel, Kollat and Blackwell

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

and focuses on the three key determinants, information stored in the memory, individual
influences and environmental factors. Consumers will consider the gap between the ideal
state and the current perceived state, thereby deciding whether to progress forward to the
next stage of the process, information search.
Search takes two forms internal and external. The dependence on the two search
modes will vary in relation to the need recognised and the individual situation. Although

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

decisions of a person are governed by the concept of utility. Being a rational man he will
make his purchase decisions with the intention of maximising the utility/benefits.
Economic model is based on certain predictions of buying behaviour (a) price effect-
lesser the price of the product, more will be the quantity purchased (b) Lesser the price of
the substitute product, lesser will be the quantity of the original product bought (substitution
effect) (c) More the purchasing power, more will be the quantity purchased (income effect).

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

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

CONSUMER BEHAVIOUR
in the alternative evaluation stage, and the model makes he central place of attitudes
absolutely explicit since it can be equated to preferences governing behaviour intentions NOTES
and subsequent purchases. The final column lists the influencing variables which impact on
the consumer decision. Understanding how these variables impact on the decision process
provides a basic rationale for their importance to market segmentation strategies.
Howard-Sheth Model
Another of the important early contributions to consumer decision making was made
by John Howard in 1963. The Howard-Sheth model of buying behaviour attempts to
explain the complexity of the consumer decision making process in case of incomplete
information.
This model serves two purposes:

• It indicates how complex the whole question of consumer behaviour is.
• It provides the framework for including various concepts like learning, perception,
attitudes, etc., which play a role in influencing consumer behaviour.
Inputs:
These are the stimuli (information cues) which affect the potential consumers’ choices.
There are three types of information cues which influence the potential consumers’ decagons
making process – cues related to the physical attributes of the product (significative cues);
the verbal and non-verbal elements of product/brand marketing message (symbolic cues);
and information provided by the potential consumers’ social circle (social cues).

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Information Sources
NOTES
Personal social Impersonal
Commercial a) Salesmen a) Product (Significative)
b) Service personal b) Advertising (Symbolic)
Noncommercial a) Family a) Print med (New Stories)
b) Reference groups b) Independent testing such
c) Social class as consumer reports
Perceptual Constructs
These variables are concerned with processing done by the potential consumers with
respect to al the information available to them. Consumers may not mentally register all the
information available (attention). Consumers may actively seek information (overt search)
but all the information meaning may not be clear to them (stimulus ambiguity). Moreover,
consumer will process this attended information with their own reference point leading to
bias (perceptual bias).
Learning Constructs
The perceptual constructs will influence the learning constructs which have direct
linkages with the product itself. These learning constructs are – objectives of purchase
(motives); criteria for evaluation of product / brand (choice criteria); awareness of product/
brand attributes (brand comprehension); attitude towards product/brand; consumers’
confidence in his/her ability to make a knowledgeable choice, consumers’ buying intentions;
purchase; and post purchase feedback (satisfaction).
Output
This is the final consumer decision making process which is actually followed by the
consumers after processing the information.
Although the Howard-Sheth model of buyer behaviour is quite helpful in understanding

consumer decision-making, it fails to clearly define all the aspect of the model. Moreover,
this model is quite complex and difficult to understand.
Exogenous or external Variables:
This theory also includes a number of variables, which are not explained but have a
bearing on some or all of the constructs discussed above and indirectly influences the
output or consumer response.
• Social and organisational setting: Man is basically a social animal. Because of his
interactions with various groups and society, they look to each other for guidance
regarding what to buy, how to buy/dress, etc.

CONSUMER BEHAVIOUR
• Social class: In order to conform to the norms of the social class to which he/she
belongs, the individual will be engaged in a behaviour, which will be acceptable to NOTES
the
• Social class to which it belongs
• Culture: refers to the shared, somewhat consistent pattern of behaviour of a group
of people. Each culture has a set of beliefs, values, etc. So the pattern of buyer
behaviour will be based on a pattern of behaviour shared in a specific subset of a
larger culture-a subculture trait.
• Purchasing power/ Financial status: The money/income available for purchasing
goods and services during some specific time period also plays a role in influencing
the consumption pattern and thereby his buying behaviour.
The Nicosia Model
The buyer behaviour model is taken from the marketing mans point of view. It is also
called systems model as the human is analysed as a system, with stimuli as the input to the
system and the human behaviour as an output of the system.
Francesco Nicosia, an expert in consumer motivation and behaviour has developed

this in 1966. He tried to explain buyer behaviour by establishing a link between the
organisation and its prospective consumer. Here the messages from the company initially
influence the predisposition of the consumer towards the product and service. Based on
the situation, the consumer will have a certain attitude towards the product. This may result
in a search for the product or an evaluation of the product attributes by the consumer. If
this step satisfies the consumer, it may result in a positive response, with a decision to buy
the product or else the reverse may occur.
The Nicosia model divides the above activity explanation into four basic areas:
Area 1:
Field one has two sub areas-the consumer attributes and the firms attributes. The
advertising message from the company will reach the consumers attributes. Certain attributes
may develop sometimes depending upon the way the message is received by the consumer.
The newly developed attribute becomes the input for area 2.
Area 2:
This area is related to the search and evaluation undertaken by the consumer of the
advertised product and also to verify if other alternatives are variable. If the above step
motivates to buy the product / service, it becomes the input for the third area.
Area 3:
This area explains as how the consumer actually buys the product.

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Area 4:
NOTES
This is related to the uses of the purchase items. This can also be used as an out put
to receive feedback on sales results to the firm.
Thus models of buyer behaviour are generally based on certain factors internal to the
consumer e.g., learning, personality, attitudes and perceptions. The external factors may
be in the form of group, cultural and inter-personal influences and effects advertising and
communications. The action of individuals is the result of both internal / external factors
and interactions to the consumer decision making processes. The modern concepts of the
buying behaviour state that the behaviour is the result of interaction between people centered
factors and situation centered factors. The marketer is expected to be aware of the person
centered factors such as buyer motivation, learning, perceptions, attitudes, values and
beliefs. Similarly, marketers must be aware of social environment and internal personal
interactions influencing the buyer behaviour.
Outside Variables
• Personality
• Social Class
• Financial Status and Trial
• Culture
• Importance of Purchase
• Time Pressure
The heterogeneity among people across the world makes understanding consumer
buying behaviour an intricate and challenging task. Product motives and patronage motives
play a crucial role in consumer purchases. Like individuals organisations also make many
buying decisions. The major factors that distinguish it from consumer decision are Market
structure and Demand, Buyer characteristics, and Decision process and buying patterns.
The degree of involvement has a lot of impact on search of information, Information
processing, and Transmission of information. The various models of consumer
involvement help marketers to study purchase behaviour across product segments.
Consumers usually go through five stages in arriving at a purchase decision. In the first
stage, the customer identifies an unsatisfied need. In the second stage consumer collect
information about the product and brands. In a third stage, the consumer evaluates all the
alternatives with the help of available information. Later in stage four, the customer makes
a purchase decision. And finally in the fifth stage, consumer experiences post-purchase
satisfaction or dissatisfaction. Organisational buyer has different decision making criteria.
Decision making rules – Compensatory and Non-compensatory – simplify the complex
nature of decision making to consumers. Understanding consumer behaviour is the basis
of the formulation of marketing strategies. Consumer behaviour studies help in designing

CONSUMER BEHAVIOUR
effective marketing strategies like, Marketing-mix Strategy, Market Segmentation

Strategy, Product Positioning Strategy, and Marketing Research. As consumer behaviour NOTES
is very complex to understand, consumer models aid marketer to put their effort to
understand in right direction. The models – Economic. Learning, Psychoanalytic,
sociological, Howard-Sheth and Nicosia enables marketers to understand and predict
consumer behaviour in the market place.
4.28 POST PURCHASE CONSUMDER BEHAVIOUR
After making the purchase, the consumer sometimes experiences post purchase
dissonance, which may even lead to nonuse and subsequent exchange or return of the
product. In case the consumer decides to use the product (or keep it, even when he/she
does not use it due to lack of any exchange or return policies) it is usually followed by the
product being disposed off. Post-purchase evaluation is followed by satisfaction, non-
satisfaction or dissatisfaction. In case of dissatisfaction, consumer may take action that
can vary from waning family and friends against the product to taking legal action.
Consumer’s post-purchase dissonance
Dissonance is “a psychologically uncomfortable state” and post-purchase dissonance
is the state of anxiety the consumer experience after making a purchase, generally it is the
result of difficult purchase decisions. It is important to note that in case the alternative
being considered for purchase are perfect substitute for each other, no post-purchase
dissonance will occur after purchasing any one of such alternatives. However, in the absence
of perfect substitutes, some amount of post-purchase dissonance is unavoidable. In case,
all the alternatives are desirable, consumers might experience strong negative emotions
while making a choice, which may result in postponing or completely dropping the purchase
A high level of post purchase dissonance can result if:

• It is difficult for the consumer to arrive at the purchase decision because of the
importance of the decision and/or the number of alternatives available
• All the alternatives being considered are almost equally desirably by the consumer
• The decision cannot be undone, i.e., the purchase does not entail any exchange,
refund, guarantee, etc.
• The product/brand is new I the market and /or belongs to a less known marketer.

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POST PURCHASE CONSUMER BEHAVIOUR

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

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

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cleaning paste. This gave them idea for developing a new utensils cleaning product, now
NOTES known as Axion.
When product is not used
There are many instances of consumers buying products for their use, but failing to
use them, be it he ‘cyclic machine’ or the fancy dress somehow just was not appealing
after the very first use. Product nonuse refers to the purchased product not being used at
all or being used for a very short duration. It is important to note here that product nonuse
does not include none use to lifecycle changes (say, bicycle purchased for a school student
in his lat year may not be sued when the boy is in college) and forced purchase (say, the
school uniform) or (and) undesirable gifts, say a mother buying a dress for her daughter,
which the daughter does not particularly like, because is low priced). Research has suggested
that price discounts are a very common reason for consumers ending up buying something
that they just do not use later.
Marketers often perceive a product purchased as a product consumer. However, as

we have seen, this is not always the case. It is highly likely that non-used products will have
less repurchases and purchasers may even dissuade others from buying the non-used
product. The purchase of a microwave oven, for example, might have been for cooking
purpose, but consumers may end up using it as an expensive food heating device. Marketers
therefore should also focus on encouraging consumption (say, by suggesting new ways or
occasion of use) instead of directing all their resources at only making consumers purchase
their products.
The concept of’ loyalty ‘is not a new concept; it was in practice since many centuries.
In past, ancient Roman Empire had often used the concept of loyalty for their army. Today
marketers are trying to capture market share and profits with the help of a loyal customer
base.
4.29 CONSUMER LOYALTY
Loyalty is, in simpler terms, a reliance on a particular brand or company even though
numerous satisfactory alternatives may exist. Loyalty helps build relationships. It requires
that companies view customers as people first and consumers second. Trust, commitment,
ethical practices, fulfillment of promises, mutual exchange, emotional bonding, personalisation
and customer orientation have been reported to be the key elements in the relationship
building process
The concept of loyalty first appeared in the 1940s. In its earliest days loyalty was
proposed as a uni-dimensional construct, which was related to the measurement perspective
taken by the researcher. Two separate loyalty concepts evolved. namely, “brand preference”
(Guest, 1944, 1955) and “share of market” which was later referred to as

CONSUMER BEHAVIOUR
attitudinal loyalty and behavioural loyalty respectively. Nearly 30 years after loyalty first
appeared in the academic literature, researchers proposed that loyalty may be more complex NOTES
and that it may comprise both attitudinal and behavioural aspects.
This two-dimensional concept has since been combined and referred to as

composite loyalty. The composite definition of loyalty considers that loyalty should always
comprise favourable attitudes; intentions and repeat-purchase (see Jacoby and Chestnut,
Loyalty evolves and that there are stages of loyalty. In a personal sense loyalty is a
feeling or an attitude of devoted attachment and affection. This feeling of loyalty tends to
imply that a person feels an obligation to stay with a brand in good and bad times. Loyalty
is the key to the longevity of any brand and one type of loyalty, namely word of mouth has
recently been correlated with company growth. It is possible that each and every customer
has loyalty qualities or states in varying degrees, and that customer’s have a different mix
of loyalty qualities or states. Marketers can activate different loyal states or qualities in
different ways. For example, word of mouth behaviours may be encouraged through reward
programmes while attitudinal loyalty may be encouraged through emotive advertising.
As the concept of loyalty is dynamic, managers need to study how these intentions
evolve through different phases of a brand life cycle. Loyalty intentions are a function of
perceived value early in the life cycle. Over time, more affective attitudes toward the brand
and the relationship with the company come to mediate the effects of value on intentions.
From the introduction to the growth stage of a life cycle, managers must adapt from improving
value per se to measuring and managing relationships and brands directly.
Providing customers with perceived value or satisfaction is widely recognised as a

means of improving loyalty intentions and actual retention. However, research demonstrates
that these relationships are potentially complex and dynamic and that the drivers of intentions
change and evolve over time
4.30 TYPES OF LOYALTY PROGRAMMES
Loyalty in Airline industry:
Nearly every airline has a point reward system. The system itself is no longer a
differentiator. So customers would really remain loyal to an airline which assures safety,
efficient and pleasing service and recognition of their preferences. People fly on those
airlines where the brand experience is unique.
The Indian airlines industry is no exception to loyalty programme. Passengers flying
certain airlines get special privileges on specific trips and at certain hotels. Special rates are
offered by Indian Airlines or Jet Airways, the main criterion being flying frequency on basic
room tariffs at tie-up hotels. The programmes should be mutually beneficial to both parties
as they have access to each other’s database. The Taj hotel group has tied up with prominent

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international airlines like British Airways, Virgin-Atlantic, Emirates and Sri Lankan Airways,
NOTES to provide members of their frequent flyer programmes with a host of special benefits. It
has tied up recently with two more airline frequent flyer programmes – Singapore Airlines’
Kris Flyer programme and Delta Airlines’ Sky Miles programme. For starters, members
will earn between 250 and 500 miles on their respective frequent flyer programme, each
time they stay at a participating Taj hotel. Thenumber of miles earned varies as per the
hotel they stay in. Apart from earning miles, members of the frequent flyer programmes will
also enjoy special discounts (including room discounts between 10 to 15 per cent on
printed tariff) room upgrades and value add-ons whenever they stay at a Taj hotel.
Loyalty in Telecom Industry
Telecom and energy services pre-deregulation are examples of repeat customer
business driven by lack of choice. When new choices became available, customers eagerly
seek out alternatives if they’re not satisfied with their current provider.
Tata Indicom, India’s premier telecom service provider has launched its ‘Smart PCO
Loyalty Programme 2006-07, a one-year programme for its PCA operators. The
announcement coincided with honoring the loyal PCO operators for 2005-06. This
programme is aimed at building loyalty and trust among the existing Tata Indicom operators,
while appreciating and commending their commitment and performance.
Prizes were given away by noted film star Sneha to felicitate the winners. Maruti 800,
Bajaj Pulsar bikes and home theatres, all totally worth Rs 60 lakh, were given away as
prizes. The Smart PCO Loyalty Programme 2006-07 has been christened as ‘Smart PCO-
Cricket Kudhukolam Loyalty Programme 2006-07’ where the operator who has a PCO
with STD or CCB (coin collection box) connections is eligible for entry. Whosoever
achieved the minimum level of norms prescribed by the organisation has been assured of
a prize with the highest performer winning an all-paid trip to the World Cup Cricket
tournament in the Caribbean Islands in March 2007. Indica Xeta, Bajaj Pulsar, Hero
Honda CD 100 and gold coins worth Rs 1,00,000 are the other prizes to be won by the
Tata Indicom loyalists. Likewise reliance India, Hutch, IDEA, BSNL have different schemes
for loyalty. Total number of subscribers 129.5 million till 2006.
All these players are following different schemes for their subscribers and doing up
selling & cross selling activities. In India also now different board exam results are going
to be declared by SMS and it makes the path smoother not only for students, but also for
their parents. State and national government warn the general public regarding the natural
calamities by tieing up with different service provider through SMS. AIRCEL, the cellular
company that operates in the Chennai and Tamil Nadu circles, has launched an SMS-
based facility where its subscribers can get acupressure tips for various ailments Called
‘MobiHealth,’ the service provides tips for various ailments ranging from the common cold
to obesity . Hutchison Essar to deliver m-coupons, which can be cashed across 40 retail
outlets such as Barista, Domino’s Pizza, Lifestyle and Kaya Skin Clinic.
CONSUMER BEHAVIOUR
Similarly, Airtel has joined with Enpocket, a global leader in intelligent mobile marketing,
to give advertisers a convenient, effective way to reach a major cross-section of the country’s NOTES
population. Television contest and radio mirchi contest are addition to this telecom loyalty
scheme.
Loyalty in Indian Railway Department
The Indian Railways is turning customer savvy. The organisation is offering regular
train travellers reward points on train travel. The points are awarded for all categories of
AC travel with the exception of AC III tier, provided the tickets are booked through the
Indian Railways’ Web site for internet booking - managed by Indian Railways Catering
and Tourism Corporation (IRCTC).
Indian Railways has launched its first ever loyalty programme, which would be executed
through SBI Cards, called Shubhyatra and the co-branded SBI Railway Card. Among
other normal credit card benefits, and also function as free platform tickets. The Shubhyatra
card can be used to acquire loyalty points for all bookings irrespective of the bank used
for making payments. IRCTC has tied up with about 17 banks through which passengers
can pay while booking their tickets through the internet. It pioneered the online rail ticket
booking in India through its website ’www.irctc.co.in’, and, booking Railway tickets
through various unconventional modes like, Mobile phones, SMS etc.,
Users of this service get their tickets at their door step without any hassle and earn
reward points on their travel and use them to buy a ticket in those very segments. About 30
per cent of the totals of 10,000 tickets sold every day through IRCTC on an average are
in those AC categories that could earn reward points. Moreover, the reward points earned
on this card through other retail purchases can also be used to buy train tickets.
This card has some other benefits such as the waiver of membership fees of Shubhyatra
and 1.8 per cent surcharge on ticket bookings, flexi-payment options through equal monthly
instalments, personal accident insurance of up to Rs 10 lakh, among others.
Loyalty in banking industry
The importance of maximising customer lifetime value is widely recognised. A 1994
study by showed that a 5 per cent increase in retention rate brought a 30 per cent increase
in profits to a bank’s retail chain; the same increase in retention rate caused an 85 per cent
increase in bank deposit profits and a 75 per cent increase in credit card profits.
The value of micromarketing was recently demonstrated by one financial institution.
From the database, the name and address files were matched, the files were cleaned and
the data enhanced. Natural customer segments and attributes such as time with bank and
whether a single or multi-product holder were identified. Customer clusters were then
formed; for instance, conservative savers and profligate risk takers. After considering recent
behavioural patterns, cross-sell propensity models and pre-approving applications, a mail

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

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

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4.31 HOW LOYALTY CAN BE IMPLEMENTED

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

CONSUMER BEHAVIOUR
Step2: Calculating inertial CLV (Customer lifetime value)

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

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Step 5: Leveraging
NOTES
In the above each strategy requires moving as many customers as possible from one
status to another, but still there are some leveraging tool which must be taken into
consideration like Brand equity, value equity, relationship Equity and satisfaction.
Attitudes of customers towards brand, its communications, its associations with

community events etc. constitute brand equity. Similarly perceptions about quality, price
and convenience constitute value equity. Various types of loyalty programmes comprise
relationship equity and satisfaction with the brand make up satisfaction – these are the
leveraging tools. The company needs to find the deficits vis-a-vis its competitor to determine
how to leverage each of the equity in its favour?
What is a Loyalty Card?
Many loyalty programmes utilise a so-called “Loyalty card”. So what is a loyalty

card?
A loyalty card is a plastic card with a magnetic strip at the back, or a small chip at the
front of the card. The magnetic strip or chip contains information that is used to identify the
buyer at every transaction. This way, the buyer is linked to the transaction at the swipe of
his card.
Now every transaction of a buyer is known, the company that issued the card can
offer rewards for repeated business: for instance, points can be rewarded for every Rs.
100 spent. When the buyer has collected enough points, these can be traded in for real
gifts.
So the loyalty card is used to track repeat transactions of a card holder, so the card
issuer can reward him or her for the repeat business. One can wonder, however, how
“loyal” a customer is if he must be “bribed” for repeat business...
4.32 SUMMARY
• Opinion Leadership is the process by which one person (opinion leader) informally
influences the actions or attitudes of others, who may be opinion seekers or merely
opinion recipients. The definition of opinion leadership emphasises on informal
influence. This informal flow of opinion related influence between two or more
people is
• There are three situations in which opinion leadership takes place: (i) When an
individual actively seeks advice from others (ii) When an individual voluntarily
provides information to others and (iii) When information is generated in the course
of normal interaction of a group
• There are three situations in which opinion leadership takes place (i) When an
individual actively seeks advice from others (ii) When an individual voluntarily

CONSUMER BEHAVIOUR
provides information to others (iii) When information is generated in the course of

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

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

CONSUMER BEHAVIOUR
6. Describe about the frequency and overlap of opinions in information flow.

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

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NOTES

CONSUMER BEHAVIOUR
NOTES
UNIT V
ADDITIONAL DIMENSIONS
5.1 OVERVIEW
In the good olden days the principle of Caveat emptor’, which meant buyer beware
governed the relationship between seller and the buyer. In the era of open markets buyer
and seller came face to face, seller exhibited his goods, buyer thoroughly examined them
and then purchased them. It was assumed that he would use all care and skill while entering
into transaction.
The maxim relieved the seller of the obligation to make disclosure about the quality of
the product. In addition, the personal relation between the buyer and the seller was one of
the major factors in their relations. But with the growth of trade and its globalization the
rule no more holds true. It is now impossible for the buyer to examine the goods before
hand and most of the transactions are concluded by correspondence. Further on account
of complex structure of the modern goods, it is only the producer / seller who can assure
the quality of goods.
After reading this chapter you should be table to:

• Understand the concept of consumerism and its components
• Understand the concept of consumer protection
• Know the objectives of UN guidelines for Consumer Protection
• Understand the objectives of the Consumer Protection Act, 1986
• Understand Consumer rights and the methods of consumer protection
• Know the remedies available for an aggrieved consumer
• Understand consumer disputes redressal agencies
• Understand difficulties and challenges of predicting consumer behaviour
• Understand the concept of online consumer behviour
• Understand the concept of organisational and industrial buyer behavior

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• Understand the differences in organizational markets

NOTES • Understand the differences between consumer behaviour vs organisational buying
• Understand the concept of buy classes
• Understand the concept of buying centre
5.3 INTRODUCTION
With manufacturing activity becoming more organized, the producers / sellers are
becoming stronger and organised whereas the buyers are still weak and unorganized. In
the age of revolutionized information technology and with the emergence of e-commerce
related innovations the consumers are further deprived to a great extent. As a result buyer
is being misled, duped and deceived day in and day out. Mahatma Gandhi, the father of
nation, attached great importance to what he described as the “poor consumer”, who
according to him should be the principal beneficiary of the consumer movement. He said
“A Consumer is the most important visitor on our premises. He is not dependent on us we
are on him. He is not an interruption to our work; he is the purpose of it. We are not doing
a favour to a consumer by giving him an opportunity. He is doing us a favour by giving an
opportunity to serve him.”
In spite of these views consumerism is still in its infancy in our country, thanks to the
sellers market and the government monopoly in most services. Consumer awareness is
low due to the apathy and lack of education among the masses. No one has told them
about their rights - to be informed about product quality, price, protection against unsafe
products, access to variety of goods at competitive prices, consumer education etc. What
consumerism lacks here is education and information resources, testing facilities, competent
leadership, price control mechanism, and adequate quasi-judicial machinery. The providers
of goods and services have been reluctant to give due consideration to consumer interest
protection.
In present situation, consumer protection, though as old as consumer exploitation,

has assumed greater importance and relevance. Consumerism is a recent and universal
phenomenon. It is a social movement. Consumerism is all about protection of the interests
of the consumers. According to McMillan Dictionary (1985) “Consumerism is concerned
with protecting consumers from all organisations with which there is exchanged relationship.
It encompasses the set of activities of government, business, independent organisations
and concerned consumers that are designed to protect the rights of consumers”. The
Chamber’s Dictionary (1993) defines Consumerism as the protection of the interests of
the buyers of goods and services against defective or dangerous goods etc. “Consumerism
is a movement or policies aimed at regulating the products or services, methods or standards
of manufacturers, sellers and advertisers in the interest of buyers, such regulation maybe
institutional, statutory or embodied in a voluntary code occupied by a particular industry or
it may result more indirectly from the influence of consumer organisations”

CONSUMER BEHAVIOUR
As commonly understood consumerism refers to wide range of activities of government

business and independent organisations designed to protect rights of the consumers. NOTES
Consumerism is a process through which the consumers seek redress, restitution and remedy
for their dissatisfaction and frustration with the help of their all organised or unorganised
efforts and activities. It is, in-fact a social movement seeking to protect the rights of
consumers in relation to the producers of goods and providers of services. In-fact
consumerism today is an all-pervasive term meaning nothing more than people’s search for
getting better value for their money. Consumer is the focal point of any business. Consumers’
satisfaction will benefit not only business but government and society as well. So
consumerism should not be considered as consumers’ war against business. It is a collective
consciousness on the part of consumers, business, government and civil society to enhance
consumers’ satisfaction and social welfare which will in turn benefit all of them and finally
make the society a better place to live in.
5.4 COMPONENTS OF CONSUMERISM
There are various components of consumerism. First and foremost is self-protection

by consumers. Consumer must be aware of his rights, raise voice against exploitation and
seek redressal of his grievances. Consumers’ consciousness determines the effectiveness
of consumerism. It is the duty of the consumer to identify his rights and to protect them.
Voluntary Consumer Organisations engaged in organising consumers and encouraging them
to safeguard their interests is another important element of consumer movement. The
success of consumerism lies in the realisation of the business that there is no substitute for
voluntary self-regulations. Little attention from the business will not only serve consumers
interest but will also benefit them. Some businesses in India have come together to adopt
a code of conduct for regulating their own activities. Regulation of business through legislation
is one of the important means of protecting the consumers. Consumerism has over the time
developed into a sound force designed to aid and protect the consumer by exerting, legal,
moral and economic pressure on producers and providers in some of the developed
countries.
Consumerism” is likely to dominate the Indian market, thanks to the economic reforms
ushered in and the several agreements signed under the World Trade Organisation. The
transition will be from a predominantly “sellers market” to a “buyers market” where the
choice exercised by the consumer will be influenced by the level of consumer awareness
achieved.
Consumer Protection
By “consumerism” we mean the process of realising the rights of the consumer as

envisaged in the Consumer Protection Act (1986) and ensuring right standards for the
goods and services for which one makes a payment. This objective can be achieved in a
reasonable time frame only when all concerned act together and play their role. The players

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are the consumers represented by different voluntary non-government consumer

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

CONSUMER BEHAVIOUR
In the field of telecom, power, transport and water supply, the consumers today are
going through a number of problems not knowing how to get their grievances redressed. NOTES
The number of cases relating to these sectors is increasing in the consumer courts. It must
be possible for the government to take steps to see that the areas of grievances are identified
and remedial steps taken through proper systematisation of procedure and working style.
There are a number of areas where the procedure has to be made simple and
consumer-friendly. For example, when it was felt that the quality of bottled water purchased
by the consumer has to be ensured by fixing standards, it came out that even though it is
necessary and desirable, under the existing laws it cannot be done. The Ministry of Law
pointed out and rightly so, that water is not “food” as per the provisions in the Food
Adulteration Act. The process of getting statutory notification in the interest of the consumer
in this case, where all concerned are agreeable, is likely to take 12 to 18 months. In such
a situation the only answer is to prevail upon the manufacturers to go for voluntary ISI
(Indian Standards Institution) certification. This method is working in the case of bottled
water, thanks to the cooperation of producers and the clear preference expressed by the
active consumer groups.
Similarly in the area of “investor protection” in spite of several steps taken by the
regulatory authorities such as the Reserve Bank of India and the Securities and Exchange
Board of India, the case of exploitation of consumers is increasing. This is an area of grave
concern and requires concerted action by the regulators, government and the consumer
organisations. We must find a way out to save the consumers from the unscrupulous
functioning of Non-banking finance companies.
The third category is the protection of consumers from the private sector dealing with
goods and services. It is not to be construed that the entire business sector is keen on
exploiting the consumers. These are established business firms which really care for consumer
satisfaction, their own reputation and goodwill. Voluntary bodies like the Fair Business
Practices Forum are functioning effectively and are quick in removing the grievances of the
consumers. These can go a long way in reducing the number of cases in the consumer
courts.
If the Government is to take a pro-active role in increasing consumer awareness,

encourage consumer education, training and research and administer the infrastructural
need of the consumer courts - then it should have enough funds. It is not easy to get
adequate budget allocations for obvious reasons. The best way appears to be to work out
methods by which the Central Consumer Welfare Fund is augmented and a similar fund is
set up at State level also. It is gratifying to note that action has been initiated in this direction
and there is every reason to hope that the future will be better.
The consumer has to be aware of his rights and play a key role. The success of
“consumerism” is a strong function of consumer awareness and the assistance the movement

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gets from the government. The consumer movement got a boost and moral support from
NOTES the late U.S. President John F. Kennedy in the historic declaration in Congress on March
15, 1962, declaring four basic consumer rights (choice, information, safety and the right to
be heard).
Subsequently, March 15 every year is celebrated as World Consumer Rights Day.

However this annual ritual observation does not appear to have produced the desired
results. A sub-continent like India with regional imbalances and diversity of languages requires
not one but several Ralph Nadars. A recent survey has revealed that a number of consumers
in the urban as well as rural areas are not very much aware of the consumer movement and
the rights of the consumers. It is in this context that it is considered relevant to quote the
objectives adopted by the General Assembly of United Nations in 1985.
The U.N. guidelines for consumer protection are meant to achieve the following
objectives:
a) To assist countries in achieving or maintaining adequate protection for their
population as consumers;
b) To facilitate production and distribution patterns responsive to the needs and desires
of consumers;
c) To encourage high levels of ethical conduct for those engaged in the production
and distribution of goods and services to consumers;
d) To assist countries in curbing abusive business practices by all enterprises at the
national and international levels which adversely affect consumers;
e) To facilitate the development of independent consumer groups;
f) To further international cooperation in the field of consumer protection;
g) To encourage the development of market conditions which provide consumers
with greater choice at lower prices.
It is interesting to note that in spite of U.N. recognition, encouragement from the

developed countries and the pro-active role played by the Government, the consumer in
India still does not get his due. It is time that he wakes up and realises his rights. Even the
great Hanuman required someone older and wiser to remind him of his potential strength.
It will be useful if voluntary consumer organisations take up this role and make way for the
realisation of the objectives of the U.N. guidelines and the Consumer Protection Act.
In the next millennium, every consumer in his own interest has to realise his role and
importance in the right perspective. Each citizen in a democracy derives his power at the
time of elections and exercises it through the ballot. In a competitive economic environment
the consumer has to exercise his choice either in favour of or against the goods and services.
His choice is going to be vital and final. He should realise his importance and prepare
himself to exercise his rights with responsibility. It is very often stated “Customer is sovereign

CONSUMER BEHAVIOUR
and consumer is the King.” If that is really so, why do we have the Consumer Protection
Act? Why is there a need for protecting the King? Should it not be rightly called “Consumer NOTES
Sovereignty Act”? It is for the consumers to decide. After all the dictum in democracy is,
the citizens get a government they deserve. Similarly the consumers in society get a position
in the market depending upon what they do or do not do. It is agreed on all hands that
“consumer empowerment” in India has a long way to go.
5.5 THE CONSUMER PROTECTION ACT 1986

An act to provide for better protection of the interests of consumers and for that
purpose to make provision for the establishment of consumer councils and other authorities
for the settlement of consumer disputes and for matters connected therewith.
Industrial development in the field of manufactured goods has led to the influx of
various consumer goods into the Indian market to cater to the needs of the consumers and
a variety of services such as banking, financing, insurance, transport, housing construction,
entertainment have been made available to the consumers.
In order to protect the consumers from exploitation and to save them from adulterated
and substandard goods and deficient services the Consumer Protection Act came into
force on 15th April, 1986 and it applies to the whole of India except the State of Jammu
and Kashmir.
Objective of the Act
The Consumer Protection Act 1986 is a social welfare legislation which was enacted
as a result of widespread consumer protection movement. The main object of the legislature
in the enactment of this act is to provide for the better protection of the interests of the
consumer and to make provisions for establishment of consumer councils and other
authorities for settlement of consumer disputes and matter therewith connected.
In order to promote and protect the rights and interests of consumers, quasi judicial
machinery is sought to be set up at district, state and central levels. These quasi judicial
bodies have to observe the principles of natural justice and have been empowered to give
reliefs, of specific nature and also to impose penalties for non compliance of the orders
given by such bodies.
The main object of these bodies is to provide speedy and simple redressal to consumer
disputes. It is one of the benevolent pieces of legislation intended to protect the consumers
at large from exploitation.
How the act was enacted?
The act was passed in Lok Sabha on 9th December,1986 and Rajya Sabha on 10th
December, 1986 and assented by the President of India on 24th December, 1986 and
was published in the Gazette of India on 26th December, 1986.

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The Act provides following remedies to an aggrieved consumer:

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

CONSUMER BEHAVIOUR
compensation if any, claimed does not exceed Rs.20,00,000 (TWENTY LAKHS), and a
complaint can be filed in a District Forum within the local limits of which NOTES
a. The opposite party resides or
b. Carries on his business or works for gain or
c. Where the cause of action arises.
ADDRESSES: DELHI, MAHARASTRA AND KARNATAKA
2. State Consumer Disputes Redressal Commission

The State Consumer Disputes Redress Commission is established in each state and
these have jurisdiction to entertain complaints where the value of goods or services and the
compensation if any, claimed exceeds Rs.20,00,000 (TWENTY LAKHS) but does not
exceed Rs.1, 00,00,000 (ONE CRORE).
ADDRESSES: STATEWISE
3. National Consumer Disputes Redressal Commission
The National Consumer Disputes Redressal Commission has jurisdiction to entertain
complaints where the value of the goods or services and compensation if any claimed
exceeds Rs.1, 00,00,000 (ONE CRORE).
Consumer Protection Councils
Sections 4,5,6,7 & 8 of the Act makes provision for the establishment of Consumer
Protection Councils. The State Government is authorized by the Act to establish by
notification, councils at the Central, State & District levels to be known as “Central Consumer
Protection Council”, Consumer Protection Council & District Consumer Protection Council
respectively. It also lays down the objects of the said councils. It also makes provisions for
appointment of Chairman & other official and non-official members of the said council.
Consumer Disputes Redressal Agencies
This part of the Act contains 22 sections i.e. Sections 9 to18, 18-A, 19 to 23, 24-A,
24-, 25, 26 and 27. This part provides for establishment of consumer disputes redressal
forum at district level, state level and central levels known as “District Forum”, “State
Commission” and “National Commission”.
It also makes provisions regarding the composition, jurisdiction, procedure to be

followed by the District forum, State commission & National commission. Any person
aggrieved by an order of the District forum may appeal to the State commission & an
order of the State commission can be challenged before the National Commission. Any
person aggrieved by the order of the National Commission can resort to the Supreme
Court as the last remedy.

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It also provides for a limitation period for preferring appeals to the State Commission,
NOTES National Commission and Supreme Court. District forum, State Commission or National
Commission shall not entertain any appeal filed after expiry of 2 years from the date on
which the cause of action has arisen. However, the forums have the power to condone the
delay in preferring appeals within such time limit if sufficient cause is shown for not filing the
appeal within the prescribed time limit. What is “sufficient cause” will depend on the facts
and circumstances of every particular case.
It also makes provisions regarding enforcement of the orders of the District forum,
State Commission and National Commission and penalties to be levied under the Act.
Consumers play a vital role in the economic system of a nation because in the absence
of effective demand that emanates from them, the economy virtually collapses. Mahatma
Gandhi said, “A consumer is the most important visitor on our premises. He is not dependent
on us, we are on him. He is not an interruption to our work; he is the purpose of it. We are
not doing a favour to a consumer by giving him an opportunity. He is doing us a favour by
giving us opportunity to serve him. But, of late, unfortunately cheating by way of overcharging,
black marketing, misleading advertisements, etc has become the common practice of greedy
sellers and manufacturers to make unreasonable profits. In this context, it is the duty of the
government to confer some rights on consumers to safeguard their interests.
5.6 CONSUMER RIGHTS

1. Right to Safety: The right to be protected against goods which are hazardous to
life and property.
2. Right to Information: The right to be informed about the quality, quantity, purity,
price and standards of goods.
3. Right to Choose: The right to be assured access to a variety of products at
competitive prices, without any pressure to impose a sale, i.e., freedom of choice.
4. Right to be Heard: The right to be heard and assured that consumer interests will
receive due consideration at appropriate forums.
5. Right to Seek Redressal: The right to get relief against unfair trade practice or
exploitation.
6. Right to Education: The right to be educated about rights of a consumer.
5.7 PROTECTION OF CONSUMER RIGHTS
Consumer protection means safeguarding the rights and interests of consumers. It
includes all the measures aimed at protecting the rights and interests of consumers.
Consumers need protection due to the following reasons:
1. Illiteracy and Ignorance: Consumers in India are mostly illiterate and ignorant.
They do not understand their rights. A system is required to protect them from
unscrupulous businessmen.

CONSUMER BEHAVIOUR
2. Unorganised Consumers: In India consumers are widely dispersed and are not
united. They are at the mercy of businessmen. On the other hand, producers and NOTES
traders are organized and powerful.
3. Spurious Goods: There is increasing supply of duplicate products. It is very difficult
for an ordinary consumer to distinguish between a genuine product and its imitation.
It is necessary to protect consumers from such exploitation by ensuring compliance
with prescribed norms of quality and safety.
4. Deceptive Advertising: Some businessmen give misleading information about
quality, safety and utility of products. Consumers are misled by false advertisement
and do not know the real quality of advertised goods. A mechanism is needed to
prevent misleading advertisements.
5. Malpractices of Businessmen: Fraudulent, unethical and monopolistic trade
practices on the part of businessmen lead to exploitation of consumers. Consumers
often get defective, inferior and substandard goods and poor service. Certain
measures are required to protect the consumers against such malpractices.
6. Freedom of Enterprise: Businessmen must ensure satisfaction of consumers. In
the long run, survival and growth of business is not possible without the support
and goodwill of consumers. If business does not protect consumers’ interests,
Government intervention and regulatory measures will grow to curb unfair trade
practices.
7. Legitimacy for Existence: Business exists to satisfy the needs and desires of
consumers. Goods are produced with the purpose of selling them. Goods will, in
the long run, sell only when they meet the needs of consumers.
8. Trusteeship: Businessmen are trustees of the society’s wealth. Therefore, they
should use this wealth for the benefit of people.
5.8 METHODS OF CONSUMER PROTECTION
There are four main methods of protecting the interests of consumers:

1. Business Self-regulation: The business community itself can help in achieving
consumer protection and satisfaction through self -discipline. Businessmen can
regulate their own behaviour and actions by adopting higher ethical standards.
Trade associations and chambers of commerce can check unfair trade practices
used by some businessmen.
2. Consumer Self-help: Every consumer must be alert as self-help is the best help.
He should educate himself and know his rights. He should not allow unscrupulous
businessmen to cheat him.
3. Consumers’Associations: Consumers should form voluntary associations. These
associations can educate and awaken consumers. They can take organized action
and put pressure on businessmen to adopt fair trade practices.

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4. Government Regulations: The State can ensure consumer protection through

NOTES legislative, executive and judicial actions. The laws enacted by the Government
must be strictly enforced by the executive. Government of India has enacted several
laws to protect the interests and rights of consumers. Some of these laws are as
follows:
• The Essential Commodities Act, 1955 which aims to regulate and control the
production, supply and distribution and prices of essential commodities.
• The Prevention of Food Adulteration Act, 1954 which aims to check
adulteration in food items and eatables.
• The Drugs and Cosmetics Act, 1940 which seeks to ensure purity and quality
in drugs and cosmetics.
• The Standards of Weights and Measures Act, 1956 which aims at ensuring
that consumers get the right weight and measurement in products.
• The Household Electrical Appliances (Quality Control) Order, 1976 which
seeks to ensure safety and quality in the manufacture of electrical appliances.
• The Consumer Protection Act, 1986 which seeks to provide speedy and
inexpensive redressal to the grievances of consumers.
5.9 DIFFICULTIES AND CHALLENGES OF PREDICTING CONSUMER

BEHAVIOUR
Basic objective of the studying consumer behavior is that the firm needs to know who
buys their product. How they buy? When and where they buy? Why they buy? How they
respond to marketing stimuli. Because they study consumer behavior what is Consumer
Behavior about? How, why, where and when consumers make purchase decisions?
Considers who influences the decisions? What is Consumer Behavior about? All these are
important questions, which are to be known to the companies so that they can design, and
implement marketing strategies to satisfy the customers.
Consumers determine the sales and profits of a firm by their purchase decisions, thus
the economic viability of the firm. What is Disposable income and what is Discretionary
income what is the stage of family life cycle stage because these all these factors influence
the consumer behaviors which are very important to the marketers.
Consumer behavior is the procedure throughout the final purchaser makes buy
assessments. This can be defined as Consumer Behavior Defined as of the processes
involved when individuals or groups select, purchase, use, or dispose of products, services,
ideas, or experiences to satisfy needs and desires (Solomon, 1996). Those actions directly
involved in obtaining, consuming and disposing of products and services, including the
decision processes that precede and follow those actions. Consumer behavior examines
mental and emotional processes in addition to the physical activities.

CONSUMER BEHAVIOUR
The study of consumers helps firms and organizations improve their marketing strategies
by understanding issues such as how NOTES
• The psychology of how consumers think, feel, reason, and select between different
alternatives (e.g., brands, products);
• The psychology of how the consumer is influenced by his or her environment (e.g.,
culture, family, signs, media);
• The behavior of consumers while shopping or making other marketing decisions;
• Limitations in consumer knowledge or information processing abilities influence
decisions and marketing outcome;
• How consumer motivation and decision strategies differ between products that
differ in their level of importance or interest that they entail for the consumer; and
• How marketers can adapt and improve their marketing campaigns and marketing
strategies to more effectively reach the consumer.
One “official” definition of consumer behavior is “The study of individuals, groups, or

organizations and the processes they use to select, secure, use, and dispose of products,
services, experiences, or ideas to satisfy needs and the impacts that these processes have
on the consumer and society.” Although it is not necessary to memorize this definition, it
brings up some useful points:
• Behavior occurs either for the individual, or in the context of a group (e.g., friends
influence what kinds of clothes a person wears) or an organization (people on the
job make decisions as to which products the firm should use).
• Consumer behavior involves the use and disposal of products as well as the study
of how they are purchased. Product use is often of great interest to the marketer,
because this may influence how a product is best positioned or how we can
encourage increased consumption. Since many environmental problems result from
product disposal (e.g., motor oil being sent into sewage systems to save the recycling
fee, or garbage piling up at landfills) this is also an area of interest.
• Consumer behavior involves services and ideas as well as tangible products.
• The impact of consumer behavior on society is also of relevance. For example,
aggressive marketing of high fat foods, or aggressive marketing of easy credit,
may have serious repercussions for the national health and economy.
However it should be remembered that doing the above is difficulty given the fact that
many psychological factors are at play and no two individuals think and act in the same
way.
5.10 ONLINE CONSUMER BEHVIOUR
Every business has one thing in common i.e. it depends on “customers” to be successful.
Customers make or break some business. In order to be profitable, businesses need to
first attract, then hold and in the end maintain its clientele. Customer support service is the

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

CONSUMER BEHAVIOUR
5.11 ORGANISATIONAL AND INDUSTRIAL BUYER BEHAVIOUR

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

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What do organizations purchase for?

NOTES
Organizational consumers purchase for:
• Further production,
• Usage in operating the organization, and/or
• Resale to other consumers
Whereas, Final (or ultimate) consumers normally purchase for:

• Personal,
• Family, or
• Household use
Industrial/organizational markets
Let us now look at the various participants and types of players in the Industrial
markets:
• Producer
• Manufacturers
• Service producers
• Reseller
• Wholesalers
• Retailers
• Government
• Federal
• State
• County
• Local
• Institutional
• Charitable
• Educational
• Community
• Other non-business
Let us take the example of a telephone; think about the hundreds of components that
are used in producing it. Each one of those component parts had to be sold to the telephone
manufacturer. The part had to be designed such that it met the needs of the buyer, it had to
be promoted in a way to make the buyer aware that it was available, it had to be distributed
at the times and in the quantities that the buyer needed, and all of this had to be done in
such a way that the part could be produced and delivered at a competitive price. There are

CONSUMER BEHAVIOUR
hundreds of parts, wires, screws, glues, paints, and such that are marketed before the
telephone is itself finally produced, marketed, and sold to a final household consumer. NOTES
This manufacturer must also purchase supplies that are not part of the product but are
used in running the manufacturing operation. It must purchase computers, printer and
photocopier paper, desks and chairs, services to mow the lawn, etc.
How is it that this manufacturer makes buying decisions that are similar in nature to
household buyers? How is it that this manufacturer makes buying decisions that are different
in nature from those of household buyers?
5.12 PARTICIPANTS IN INDUSTRIAL MARKETING
Extractive Manufacturing Consuming and

Industries Industries user industries or
units
Mining and Manufacturer selling to
Construction Forestry other manufacturers Households Government
Agriculture Fisheries (includes importers Family of business and
Farming middlemen, industrial users Exporters
Government & its
enterprises etc)
5.13 DIFFERENCES IN ORGANIZATIONAL MARKETS
We know that Organizational markets are different in nature from household

consumer markets. Let us see how they are different!
• Use goods for further production, operations, or resale. Household, or final,
consumers purchase products for personal consumption.
• Purchase equipment, raw materials, and semi-finished goods. Household
purchasers almost always purchase finished goods for personal consumption.
• Demand is derived from that of final consumers. If you own a machine shop
that makes bushings that are used in washing machine motors, then the demand for
your products (bushings) is derived from final consumer demand for washing
machines. If the economy is poor, and demand for washing machines is down,
then so too will be the demand for washing machine motors and for the bearings
that are used in them.
• Multiplier effect / accelerator principle: However, there will probably not be a
one to one correspondence between these. If retailers find that demand for washing
machines is declining, they might be conservative in placing new orders with
wholesalers, perhaps ordering slightly less than what they actually believe demand
to be. Wholesalers, in seeing their orders decline, might also be conservative in
placing orders to manufacturers, ordering slightly less than what they actually believe

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demand to be. Manufacturers, seeing their orders decline, might order slightly
NOTES fewer motors, and the motor manufacturers might conservatively order slightly
fewer bushings than they actually expect to need. Demand for your bushings might
experience wider swings, either up or down, than the changes in demand at the
final consumer end of the supply chain. This makes organizational markets, especially
if you produce some of the small parts at the beginning of the supply chain, very
volatile.
• Can make items themselves. Competition in organizational markets comes not
only from suppliers of similar goods and services, but can come from supplier’s
goods, services, or delivery, then it can choose to make those products itself.
5.14 DIFFERENCES IN ORGANIZATIONAL TRANSACTIONS

• Buying specialists are often used. It is usually seen that organizations often
employ people who are professional purchasing agents. Just as sales agents are
professional specialists at finding organizations that need the products that their
employer produces, purchasing agents are specialists are professional specialists
at finding what their employer needs. Whatever stereotypes you might have from
experiences with salespeople in consumer sales, any negative stereotypes of
salesperson behavior probably would not be appropriate in dealing with
professional buyers.
• Often use multiple buying responsibilities. A household purchaser is often the
sole decision maker. Making a sale to an organization, however, often requires
selling to several entities within the buying center. For example, you might be using
a desktop computer at work, but the decision as to what specifications were
needed might have been set by someone in the computer department, the decision
to buy might have been made by your department manager, bids taken by someone
in the purchasing department, and the final authorization made by the company
president.
• Often use multiple suppliers. It is often desirable to have a long-term relationship
with more than one supplier, even if a second supplier has higher prices for otherwise
similar terms and conditions. If problems in quality or delivery are experienced
with a supplier, production can still be maintained if the second supplier can be
used to replace the first. The ideals of a cozy, trusting relationship that has been
promised with strategic alliances in the popular business literature does not always
work if it leaves one party vulnerable as a sole supplier or buyer.
• More likely to require exact specifications. A household purchaser might select
a particular model of desktop computer for no other reason than it has a pleasing
color. An organizational purchaser is more likely to set specifications regarding
processor speed, memory, hard drive size, and such before taking bids on price.
• Often lease equipment and space. As a household consumer, you would
probably prefer to own your own car, furniture, and home. These are things that
represent personal expression, status, and wealth. Your objectives as a business

CONSUMER BEHAVIOUR
manager, however, are very different. You might prefer to lease public warehouse
space to provide the flexibility to change locations when the market demands, to NOTES
lease trucks so that you can leave the problems of maintenance and disposition to
someone else, etc.
• More frequently employ competitive bidding and negotiation. Household
consumers (especially those of us in urban settings) are more likely to accept as
final a price that is placed on a product in a retail setting or to accept a price that is
given to us by a service provider. As a business manager, your employer is more
likely to require that you accept, say, three bids for a service or to negotiate various
terms and conditions associated with product specifications, delivery, and price.
5.15 CONSUMER BEHAVIOUR VS ORGANISATIONAL BUYING
In contrast to consumers, organisational buyers represent those “buying goods and

services on behalf of an organisation for the purpose of the furtherance of organisational
objectives”. Before highlighting some of the differences between the two, however, it is
important to caution against over stressing the differences. For instance, some authors
argue that buying goods on behalf of one’s employers makes buyers more caution and
rational than when purchasing consumer goods privately. Closer examination of the evidence,
however, suggests the differences are almost exclusively related to price and very small
anyway. So, be aware that there can be differences, but they are by no means always
universal - a single employee feeling poorly motivated towards his/her job on one day, for
example, may well be far less cautious than on other days when all is well in the workplace!
The most obvious difference between consumer and organisational buying is that the
underlying motivation is different; i.e. personal consumption versus business usage. There
are other contrasts, however:-
Setting for Buying:
For consumers, the buying unit is within the household, whereas for the organisational
buyer, the setting is within the firm. This means that the industrial marketer targeting the
organisational buyer must take account of factors such as buying procedures, levels of
authority, and so on, factors not relevant in consumer marketing.
Technical/Commercial Knowledge:
Usually, the organisational purchaser will be a trained professional, more

knowledgeable than the average consumer purchaser. This can often necessitate a completely
different sales approach.
Contact with Buyers/Distribution Channels:
Organisational markets are usually more geographically concentrated than consumer

markets. Factors such as proximity to available labour, raw materials, and transportation

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facilities often dictate an industry’s location. In addition, compared to consumer markets,

NOTES there can be far fewer potential customers. Taken together, these variables mean that the
industrial marketer must normally maintain far more direct and personal contact with his or
her potential clients.
Number of Decision-Makers:
In consumer purchasing, the number of people involved in the decision-making process

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

CONSUMER BEHAVIOUR
In such circumstances, the buying centre proved to require fewer participants and allow
for a quicker decision process than in a new task buy class. NOTES
3. Straight Rebuy
The buyer routinely reorders a product with no modifications. The buyer retains the
supplier as long as the level of satisfaction with the delivery, quality and price is maintained.
New suppliers are considered only when these conditions change. The challenge for the
new supplier is to offer better conditions or draw the buyer’s attention to greater benefits
than in the current offering.
Based on field research, Robinson, Faris and Wind divided the buyer purchase process
into eight sequential, distinct but interrelated phases
1. Recognition of the organisational problem or need;

2. Determination of the characteristics of the item and the quantity needed;
3. Description of the characteristics of the item and the quantity needed;
4. Search for and qualification of potential sources;
5. Acquisition and analysis of proposals;
6. Evaluation of the proposals and selection of suppliers;
7. Selection of an order routine;
8. Performance feedback and evaluation.
The buying process can vary from highly formalised to an approximation depending
on the nature of the buying organisation, the size of the deal and the buying situation.
The relationship between the buyer and seller is initiated in phases 1 and 2. Assessing
the buyer’s needs and determining gaps between the current and desired situation is
important. Buyers need assistance in forming realistic perceptions of both the current and
the desired situation. Need gaps create the motive behind any purchase.
The relationship needs to be developed during phases 3 to 7. A sales person must be

aware that a buyer not only has functional needs, but psychological, social, knowledge and
situational needs as well. These components should be addressed in meetings in order to
obtain commitment. The purchase can be a one-time transaction of a repetitive nature.
When there are multiple deliveries, the supplier and buyer must agree on an order routine.
As buy phases are completed, the process of ‘creeping commitment’ occurs and
reduces the likelihood of new suppliers gaining access to the buying situation.
During the performance feedback and evaluation phase, the relationship between the
seller and buyer can develop into a longer term engagement. Buyer loyalty and customer
satisfaction are primarily determined by the sales activities during this last phase. The model

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

CONSUMER BEHAVIOUR
• Buyers: The final purchase transaction might be left to a purchasing agent who
otherwise has no involvement in decision-making. A sales agent for an office NOTES
equipment supply house might help an organization to decide what brand of
typewriters would be best, but that organization could then allow the purchasing
agent to find the best deal on that brand, and the best deal with regard to price
might come from a competing office supply house. A responsibility of salespeople,
then, is often to maintain good, trusting, and long-term relationships with the
purchasing agents in prospective buying organizations, whether or not they have
purchased in the past. A buyer is someone who arranges the transaction.
• Gatekeepers: Why do salespeople often give secretaries little gifts of chocolates
or flowers or an occasional free lunch? A secretary can be nice or nasty in passing
information in either direction. The prospective buyer’s secretaries can be helpful
in providing names, telephone numbers, and office hours of key members of a
buying center in an organization. They can also be helpful in passing messages
from the salesperson to members of the organization. A gatekeeper could include
anyone in the organization who can control the flow of information. Some books
use the term Decision Making Unit to describe the notion of the buying center, and
some additionally include the entity of initiator. An initiator would be a person who
initiates the idea or a purchase.
Note that the idea of the Buying Center is conceptual - there is no such department in
any organization!
5.18 CONSUMER BEHAVIOUR IN INDIA CONTEXT – EMERGING

ISSUES
India has come to be known as a nation producing value-enhanced, superior, trained

human power. Indians have made their mark in the fields of information technology,
biotechnology, pure sciences and economics.
With the globalisation of the job market, demand and acceptance of Indian skills
worldwide has opened up opportunities for new jobs within the country, particularly back
office operations of multinational corporations. Furthermore, the domestic service e sector
itself is witnessing robust growth.
The emerging flat world is bringing about a confluence of cultures and new lifestyles
across India. The new lifestyle trends are altering the fabric of Indian society and also
modifying its social and financial behaviour.
Shift in Consumer Tastes
The shift in tastes and preferences of Indian consumers from traditional and conservative
looking product lines to more varied, modern and liberal assortment of commodities can
be attributed to some social and economic trends indicated below:

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• Joint households making way for nuclear families.

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

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

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They prefer high value consumer products, but often have to settle for the more
NOTES affordable one. These habits in turn affect their purchasing habits where they are trying to
go for the middle and upper middle level priced products.
The Working Women
The working woman segment is the one, which has seen a tremendous growth in the
late nineties. This segment has opened the floodgates for the Indian retailers. The working
woman today has grown out of her long-standing image of being the homemaker. Today,
she is rubbing shoulders with men, proving herself to be equally good, if not better. Working
women have their own mind in decision to purchase the products that appeal to them.
India’s Rich
India’s rich can be categorized into five major categories as follows:
The Rich
These people are upwardly mobile. Some of them in this category are Double Income
No Kids (DINK) households. They spend more on leisure and entertainment-activities
than on future looking investments. Across the category, backgrounds are distinctly middle
class. They aspire, therefore, to attain the super-rich status.
The Super Rich
There are less DINK families here than in the rich category. The Super Rich are
mainly professionals and devoted to consumerism. They buy many durables and are status
conscious.
The Ultra Rich

There is no typical profile of the ultra-rich. There are some DINK households of
middle-level executives. Some single earning households are of first generation
entrepreneurs. Some rich farmers, who have been rich for a long time, belong to this
category.
The Sheer Rich
They do not have a homogenous profile. There are joint families as well as nuclear
families in this category. They consume services greatly. They own multiple cars and
houses. They aspire to social status and power.
The Obscenely Rich
They are first-generation entrepreneurs who have made it big. Some of them are
techies. A variety of people belong to this category. They are just equivalent to the rich in
the developed countries. They crave for exclusivity in what they buy. Most premium
brands are relevant to them.

CONSUMER BEHAVIOUR
Rural Consumer
NOTES
About three quarters of the Indian population are in the rural areas and with the
growing middle class, specially in the Indian cities; the spill over effect of the growing urban
middle class is also felt in the rural areas.
The Indian rural market has been growing at 3-4% per annum, adding more than 1
million new consumers every year and now accounts for close to 50% of the volume
consumption of fast-moving consumer goods (FMCG) in India. The market size of the fast
moving consumer goods sector is projected to more than double to US$ 23.25 billion by
2010 from the present US$ 11.16 billion. As a result, it is becoming an important market
place for fast moving consumer goods as well as consumer durables.
Increasing Awareness of Indian Consumers
Over the years, as a result of the increasing literacy in the country, exposure to the
west, satellite television, foreign magazines and newspapers, there is a significant increase
of consumer awareness among the Indians.
Today more and more consumers are selective on the quality of the products/services.
This awareness has made the Indian consumers seek more and more reliable sources
for purchases such as organized retail chains that have a corporate background and where
the accountability is more pronounced. The consumer also seeks to purchase from a place
where his/her feedback is more valued.
Indian consumers are now more aware and discerning, and are knowledgeable about
technology, products and the market and are beginning to demand benefits beyond just
availability of a range of products that came from ‘trusted’ manufacturers.
The Indian consumers are price sensitive and prefer to buy value for money products.
Marketing Strategies
Online Marketing
Currently, the products Indian consumers are buying through online are greeting cards,
clothes, CDs/VCDs/DVDs, cassettes, books, magazines, medicine and educational material.
The popular online shops in consumer include:

• www.ebay.in
• www.shopping.rediff.com
• www.reliablegreetings.com
• www.shopping.expomarkets.com

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

products given free of charge as gifts to purchases of selected products above a certain
value. TVs, washing machines, refrigerators, and ready made clothes are some of the
product categories in which freebies are given to Indian consumers. Freebies generally
comprise tooth paste, soaps, detergent, cooking oil etc.

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

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• Garment and apparel

NOTES • Footwear
• Sportswear
• Toys
• Gift items
Foreign brands vie increasingly with domestic brands for the growing market in India.
Foreign made furniture is well accepted by the Indian consumers. Malaysian, Chinese,
Italian furniture are growing in popularity in India.
Indian consumers have also developed lifestyles which have emerged from changing
attitudes and mind sets; exposure to western influences and a need for self-gratification.
Beauty parlours in cities, eateries, designer wear, watches, hi-tech products are a few
instances which reflect these changes.
• Buyers’ Market In The Making
The sellers’ market is slowly moving towards becoming the buyers’ market. Since,
India’s economic liberalization policies were initiated in 1991, many new product offerings
have entered the Indian market and product variety has also increased manifold.
Import licensing restrictions are being eliminated and tariffs significantly reduced and
this has led to large range of consumer goods made available in India. Indian consumers
have always preferred foreign goods and with the liberalization, they now have a choice of
foreign products vis-à-vis the local products.
• Consumer Spending Behaviour
The way Indian consumers are spending their money on various items has changed in
recent years. The share being spent on the basis (food and beverages) has fallen from
54.07 per cent in 1992-93 to 44.8 per cent in 2002-03. Other items have increased in
importance, for example, medical and healthcare spending has increased from 3.5 per
cent to 8.5 per cent of total expenditure over the same period, a compound growth rate of
19.71 per cent. Similarly spending on transport and communication has grown at 13.2 per
cent.
While the Compound Annual Growth Rate (CAGR) in total consumer spending has
been around 12 per cent a year over the past decade, there have been sharp ups and
downs. Consumer expenditure has been in tandem with the annual GDP growth.
5.21 SUMMARY
• Consumerism is a recent and universal phenomenon. It is a social movement.
Consumerism is all about protection of the interests of the consumers. Consumerism
is a movement or policies aimed at regulating the products or services, methods or

CONSUMER BEHAVIOUR
standards of manufacturers, sellers and advertisers in the interest of buyers, such

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

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

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

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13. What is meant by Organisational and industrial buyer behaviour?

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

CONSUMER BEHAVIOUR
NOTES NOTES

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NOTES NOTES

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MBA

Centre for Distance Education

• Consumer Behavior by Michael R. Solomon - Pearson Education

• Consumer Behavior by London/ Della Bitta - Mc Graw Hill

• Consumer Behavior by John C. Mowen - Mc millan

• Consumer Bheavior by S. Ramesh Kumar - Pearson

1 ANNA UNIVERSITY CHENNAI

1.2 LEARNING OBJECTIVES

After studying this unit, you should understand

2 ANNA UNIVERSITY CHENNAI

• The Nature and Dimensions of Consumer Behavior

1.4 DEFINING CONSUMER BEHAVIOR

One “official” definition of consumer behavior is “The study of individuals, groups, or

3 ANNA UNIVERSITY CHENNAI

Viewing consumer behavior in a broad context, it is actually a subset of human behavior.

1.5 THE NATURE OF CONSUMER BEHAVIOR

4 ANNA UNIVERSITY CHENNAI

Figure. 1.1 The Nature of Consumer Behavior

1.6 BEHAVIORAL DIMENSIONS OF MARKETING

5 ANNA UNIVERSITY CHENNAI

Consumer behavior deals with the psychological process of decision making by

The field of consumer behavior is the study of individuals, groups, or organizations

1.7 APPLICATIONS OF CONSUMER BEHAVIOR:

6 ANNA UNIVERSITY CHENNAI

Most economically developed societies are legitimately referred to as consumption

1.8 MARKET ANALYSIS COMPONENTS

Market analysis requires a thorough understanding of the organization’s own

7 ANNA UNIVERSITY CHENNAI

8 ANNA UNIVERSITY CHENNAI

International agreements such as NAFTA (North America Free Trade Agreement)

1.9 APPROACHES TO THE STUDY OF CONSUMER BEHAVIOR

To be viable, a segment must be large enough to be served profitably. To some

9 ANNA UNIVERSITY CHENNAI

Market segmentation involves four steps:

1.10 MARKETING STRATEGY AND CONSUMER BEHAVIOR

To survive in a competitive environment, an organization must provide target customers

Providing superior customer value requires the organization to do a better job of

A Product is anything a consumer acquires or might acquire to meet a perceived

10 ANNA UNIVERSITY CHENNAI

The source of McDonald’s pre-eminence is neither hamburgers nor fast-food service.

Marketing communications include advertising, the sales force, public relations,

11 ANNA UNIVERSITY CHENNAI

12 ANNA UNIVERSITY CHENNAI

1.11 CONSUMER DECISIONS

13 ANNA UNIVERSITY CHENNAI

Figure. 1.2 Consumer Purchase Decision Process

Any informational stimuli are subject to information-processing activities which the

The alternative-evaluation phase, involves comparing the information gained in the

14 ANNA UNIVERSITY CHENNAI

Marketers have discovered that it is generally more profitable to maintain existing

15 ANNA UNIVERSITY CHENNAI

1.12.2 Individual Outcomes

Cigarette consumption is encouraged by hundreds of millions of dollars in marketing

16 ANNA UNIVERSITY CHENNAI

17 ANNA UNIVERSITY CHENNAI

Injurious consumption, as described above, affects society as well as the individuals

1.14 REVIEW QUESTIONS

18 ANNA UNIVERSITY CHENNAI

a) In an economy where there is surplus production capacity.

19 ANNA UNIVERSITY CHENNAI

20 ANNA UNIVERSITY CHENNAI

2.3 THE NATURE AND ROLE OF MOTIVES

The arousal leads a person to act (i.e., to behavior). Autonomic (physiological) or