Master of Business Administration – MBA Semester 3 Name: Rohan Fernandes 520840267 Marketing Management MK0011 Behavior Subject code

: Consumer Roll No.: Subject:

Assignment Set – 1
Q1 What are the characteristics of consumer behavior? Why is a study of consumer behavior important from the marketer’s viewpoint? Ans.: Characteristics of consumer behavior: Consumer behavior can be studied from two different perspectives. The most popular, traditional way is to focus on this subject as a pure science, wherein the research findings from behavioral sciences like psychology and also from social sciences like sociology, anthropology and economics, are drawn to explain the various facets of consumer behavior. The other perspective is to analyze this subject as an applied science, with emphasis on its application in business organizations. a) Consumer Perspective In this approach, the focus of consumer behavior study is on enquiring into how people buy, what they buy, when they buy and why they buy, more as a pure science, rather than for application to marketing decision-making. It blends elements from psychology, sociology, socio-psychology, anthropology and economics. It attempts to understand the buyer consumption process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables, in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. This approach focuses more on the nature of the consumption experience, rather than the purchase process. This approach may throw many insights that may or may not be actionable from a marketer’s perspective. There is no sufficient emphasis on the consumer purchase decision process. Hence this approach may have limited use for marketers, since they must understand how consumers take purchase decisions if they have to influence the consumers.

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b) Managerial Perspective In this approach, consumer behavior is studied as an applied social science and the main objective of such an approach is to find a basis for marketing strategies in business organizations. From a managerial perspective, the stress is on predicting the action sequence of a consumer decision process, in order to help a marketer in deciding on suitable marketing strategies. As an improvement of this, a new approach was enunciated by Sheth & Mittal, who expanded the study of consumer behaviors to include several facets, which would be more practical while applying this knowledge to practical situations in business organizations. There are two variations in this approach, which are more meaningful from the managerial perspective: a) All the different aspects of consumer behavior study have been applied in this new approach to “business organizations” as consumers. Normally, most textbooks limit such analysis to individual consumers and some of them extend it to households. However, in the new approach, the behavioral aspects are looked at from the angle of business-to-business transactions, which are very relevant and useful in such situations.

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b) The second approach is in extending the study of consumer behavior to include different roles of a customer in understanding the decision making process. Traditionally, the consumer is the “user” of the product or service and most of the studies limit the application of this knowledge to understand the behavior of customers as users/consumers. The new approach considers three roles of the customer viz. User, Payer and Buyer as important, to apply this knowledge in real life situations in business organizations. In fact the title of the study is called “Customer Behavior” instead of “ Consumer Behavior”, to make it amply clear that all three roles of the customer have to be looked at in order to analyze and apply the various research findings more effectively. In the traditional methods of study of consumer behavior, the applications get limited to mostly fast moving consumer goods (FMCGs) and also to individual/ household users/ consumers. The second approach expands the applications of these studies to encompass practically all markets and products, in all types of marketing situations that would make more sense from a managerial perspective. Why study consumer behavior? Vignette Proctor and Gamble (P&G) is an American Global Corporation established in 1837 with several successful current brands like Tide and Ariel detergent powders, Duracell batteries, Gillette safety razors, Max Factor cosmetics, Pantene hair care products, Pampers brand diapers, etc. When they entered the Japanese market for Pampers in 1977, they used the American product range, American advertising and American sales and promotional strategies. The product was quite thick and designed for American mothers who would leave the diapers on their babies for long periods. The Japanese mothers were however; highly cleanliness minded and would change the diapers on their babies at least twice as often as the American mothers do. Seeing this opportunity, many Japanese companies introduced thinner leak proof diapers that were better suited to Japanese mothers. This resulted in Pampers’ market share crashing to 7% in 1985, from a high of 90% in 1977. The company realized their mistakes after a market study and an improved product with one third of the original thickness was introduced. This resulted in their improving their share to about 35% in 1990 and the same product was introduced in the American market with a new brand name- “Ultra Pampers”. The above example is a classic case of how a study of consumer behavior is most important to the success of products. For any marketing oriented company, such a study should be the basic starting point for all marketing strategy decisions. a) Consumer Behavior and Marketing Strategy: All marketing decisions and strategies are based on assumptions about consumer behavior. It is impossible to think of any aspect or decision in marketing, which can be independent of some analysis of consumer behavior. Before deciding on any marketing strategy, the marketers have to first base their judgments on explicit assumptions resulting from sound theory and research, rather than implicit intuition. Knowledge of consumer behavior can give an important competitive advantage and greatly reduce the odds of bad decisions. The first step in developing a marketing strategy is to analyze the market in which the firm is operating. This requires a detailed analysis of the organization’s capabilities, strengths and weaknesses of competitors, the economic and technological factors affecting the market and finally, the current and future potential customers in the market. On the basis of the analysis of consumers at this stage, the company identifies the groups of individuals, households or firms with similar needs. These are known as market segments, which can be described in terms of demographics, geographic locations, lifestyles, etc. The firm can then select one or more of these segments as target markets, based on their capabilities in comparison with the competition, in the given current and forecasted economic and technological environment. The next step is to formulate the marketing strategy. The objective of the marketing strategy is to provide the customer with more value than the competitor’s brands while maximizing the profits for the firm. Marketing strategy is then formulated in terms of the marketing mix. This involves the determination of the four „P‟s of marketing viz. product features, pricing, promotional mix and distribution policies, which would offer superior value to the customer. It is most important to note

the market is divided on the basis of location. mass marketing would have been relevant and highly successful. West. small cities. i. an understanding of consumer behavior in its proper perspective can bring out many understandable situations.that an analysis of the consumer is the key to formulating a sound marketing strategy and the reaction of the consumer to the marketing mix determines ultimately the success or failure of the strategy.: Market Segmentation: Market segmentation is the process in marketing. with the choice to the consumers of selecting any co lour they wanted as long as it was black. Define market segmentation and explain the different bases for market segmentation. Nirma. Ans. Central. distributed in a certain way and promoted in a certain way. . Some of these are: 1a) Region of the world or country: East. 1Q2. if all of them had the same needs. breathing. Many students expect that the skills acquired by them in these courses will be like accounting or science subjects. sociology. Then. it costs substantially less. etc. The classic case of such a practice was that of Henry Ford’s philosophy of offering Ford Model T car. Sales or Advertising. hilly. This is not to suggest that scientific principles and procedures are not applicable in such situations. wherein a set of rules can be applied across a wide variety of situations to arrive at the correct solution. to select the most appropriate basis on which the market can be segmented. b) Study of Consumer Behavior and Marketing Careers: Most students of consumer behavior aspire for careers in Marketing Management. In fact. with an example of each. 2b) City Size: Metropolitan cities. personalities. psychoanalysis. etc. etc. sold at a given price. backgrounds. have been successfully utilized in the study of consumer behavior. However. the consumers are indeed diverse and such a strategy of mass marketing would be highly risky in today’s market environment. comprised of a given product or service.e. This can then become a very exciting field. Unfortunately the consumer is a living. attitudes.e. many scientific theories and models of psychology. coastal. Before marketers started using the concept of market segmentation. which in itself can be a very challenging task leading to excitement and job satisfaction. Successful utilization of these principles in practical situations have to be done with proper human judgments. and towns. 0 Bases for Market Segmentation The first step in developing a segmentation strategy is. However. There can be different categories in such segmentation also. If all consumers were alike. It is also likely to have similar feelings and ideas about a marketing mix. South. desires. “of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs”. Because each segment is fairly homogeneous in its needs and attitudes. as we have seen in the vignette of HLL vs. There are many ways in which this can be done and some most popular variables used for market segmentation are discussed in the following paragraphs: Geographic Segmentation: In this method. offering the same product and same marketing mix to all consumers. which can be applied in developing suitable marketing strategies. The main advantage in this strategy is that. one advertising campaign and one marketing mix are needed for all consumers. i.. North. changing and many times stubborn individual and dealing with such an uncertain element can be very frustrating to such students. the way the business was done was through mass marketing. it is likely to respond similarly to a given marketing strategy. only one standardized product.

3c) Density of population: Urban, semi-urban, and rural. 4d) Climate: Hot, cold, humid, rainy
Demographic variables This is the second most popular variable used by marketers. Factors like age, education, income, etc. individually or in combination, are commonly used to segment the market. Some of these variables are discussed here: a) Age: The assumption here is that people in the same age group will behave in the same manner. Based on this we can have different subgroups like infants (new born to 1 year), children (1 to 12 years), teenagers (13 to 19 years), adolescents (16-19 years), youth (20-35 years), middle aged (36-50 years), elders or seniors (50 years and above). 1b) Gender: Male preferences are different from the female preferences. While some products like garments and cosmetics are produced exclusively for each segment, there are some products, which are meant for both segments and these are called unisex products. 2c) Education – School, College and University: The level of a consumer’s education will also affect the preferences and also the level of awareness. The higher the level of education, the higher is the awareness about the market environment and about different products. Their awareness about their rights as consumers will also be better. 3d) Marital status: Family has been the focus of most marketing efforts and household continues to be the target for many products and services. Marketers are interested in determining the profiles of decision makers in households, to develop appropriate marketing strategies. Many marketers have found it useful to target specific marital status groupings, like singles, divorced individuals, single parents, dual income married couples, etc. 4e) Income: It is believed that, as the consumers’ income increases, their consumption behavior also changes. Research findings have proved that, the expenditure on food and basic necessities as a percentage of total expenditure declines as consumer income increases. The consumer then starts buying costlier branded products, and also so called luxuries like automobiles, washing machines, microwave ovens, holiday packages, air travel, etc. On the basis of income, the segmentation can be – low income, lower middle income, middle income, higher middle income, high income, etc. 5f) Occupation: Occupation is an important variable and different categories under this can be – self employed, part time employee, full time employee, etc. or professionals (doctors, chartered accountants, management consultants, etc.), traders and shopkeepers, businessmen and industrialists, sales personnel, teachers and professors, housewives, etc. Psycho graphic Variables 1Marketers have been utilizing psycho graphic research, especially personality and attitude measurements. This type of consumer research has proven very valuable in identifying promising consumer segments, which are likely to be responsive to specific marketing messages. The psycho graphic profile of a consumer segment can be thought of as a composite of consumers’ activities, interests and opinions (AIO’s). As an approach to measuring this, the consumers’ responses are analyzed for a large number of statements: 2– activities (how the consumer or family spends time – golf, gardening, volunteering in charitable activities, etc.), 3– interests (what are the preferences and priorities like home, fashion, food, etc.) 4– opinions (what are the feelings about a variety of political issues, social issues, economy, ecology, etc.) Socio-cultural segmentation Sociological (group) and cultural variables provide further bases for market segmentation. Consumer markets have been successfully segmented based on family life cycle, social class, cultural values, etc. Some of these are discussed in the following paragraphs: 1a) Family Life Cycle: This is based on the fact that many families pass through similar phases during a lifetime. At each stage the family needs different products and services. These segments

can be like – young single people, newly weds, parents with infants, parents with teenage children, etc. 2b) Social Class: Social class, i.e. the relative status in the community can be the basis for segmentation. It has been found by research that, the consumers in different social classes vary in terms of values, product preferences and buying habits. Social class is measured by a weighted index of several demographic variables such as education, occupation and income. 3c) Culture and subculture: Members of the same culture tend to share the same values, beliefs and customs. This type of segmentation is particularly successful in international marketing and it is important for the marketers to understand the target country’s beliefs, values and customs. Within the larger culture, distinct subgroups called subcultures are united by certain values and beliefs, which make effective market segments. Consumers are found to be more responsive to promotional messages, which they perceive as related to their own sub culture. Culturally distinct segments can be prospects for the same product, but they can be targeted more efficiently with different promotional appeals. For example, a bicycle can be promoted as a means of transportation in Asia, whereas in western countries it can be promoted as a health and fitness product. Behavioral Variables Depending on the consumer behavior towards consumption parameters and situations related to such consumption, there can a different type of market segmentation. Some of these examples are discussed in the following paragraphs: a) Benefit sought: There can be multiple benefits of the same product from the point of view of different consumers. For example, some consumers purely for the purpose of telephonic conversations may use the cell phone. Some others may be using it predominantly for messaging. Some consumers may look for this as a means of taking photographs whenever they need to. Depending on the different benefits sought, the segmentation can be made. b) Occasion: For the same product, different occasions on which they can be consumed, for example, regular occasions vs. special occasions such as birthdays, weddings, Valentine’s day, Friendship day, etc. can be another option for segmentation. c) Product usage rate: Some consumers are heavy users, some moderate and some light users of the same product. Based on the rate of consumption, target consumers may be segmented. d) Brand loyalty: Many consumers may be hard core loyal (i.e., loyal to one brand), some may have split loyalty (loyal to more than one brand), some may have shifting loyalty (shift from favoring one brand to another) and some may be habitual switchers (zero brand loyalty). Based on this criterion, the marketers may segment their brand markets. e) Product end use: Some products may have multiple end uses. This happens quite frequently in industrial markets, wherein the same raw material or packing material may be used by widely different industries. This then becomes a useful method of segmentation. f) User status: The status of the consumer in many situations such as non-user of a product, potential user, first time user, regular user, etc. also offers another method of effective segmentations for devising the entire marketing mix for such segments. g) Readiness-to-buy stage: This is the stage of preparedness to actually purchase the product or brand. The consumer may be in different stages of such preparedness, such as unaware, aware, informed, interested, desiring, or intending to purchase. Different promotional strategies can be devised depending on each of these stages, making this as the basis for segmentation. h) Attitude towards product: There could be differing attitudes of different consumers towards the same brand or service, based on their perceptions and past experiences. Some marketers use this as the basis for segmentation, in order to suitably devise their promotional mix for better effectiveness. Some of these attitudes can be described as enthusiastic, positive, indifferent, negative or hostile.

Multiple Variables No marketer can afford to use only a single basis of market segmentation in the highly complex market environment. Most marketers normally use multiple bases. Many geographic, psycho graphic, socio-cultural variables along with some of the behavioral variables are used as a combination to segment the markets and design a suitable marketing mix. When numerous variables are combined to give an in-depth understanding of a segment, this is referred to as depth segmentation. When enough information is combined to create a clear picture of a typical member of a segment, this is referred to as a buyer profile. When the profile is limited to demographic variables, it is called a demographic profile (typically shortened to "demography"). A statistical technique commonly used in determining a profile is cluster analysis.

Q3. How does personality influence consumer behavior? What are its implications for marketing strategy? Ans.: Influence of Personality on Consumer Behavior: Personality can be defined as a dynamic and organized set of characteristics possessed by a person that uniquely influences his or her cognitions, motivations, and behaviors in various situations. Every person has a consistent way of responding to his or her environment and this is based on the person’s inner psychological characteristics, which determine the kind of such response. Personality is thought to be determined largely by either genetics and heredity, or environment and experiences. There is evidence for both possibilities. Some even believe it is a combination of both. We keep describing people in terms of their personality in everyday life and many such descriptions are – dominant, outgoing, assertive, aggressive, lively, warm, aloof, sentimental, thick skinned, etc. These are all references to a person’s personality. There are many theories to explain how a personality develops. One of them which is quite simplistic is that a person finds it cumbersome to develop a new response every time a situation arises and it is more efficient for the individual to develop a standard response every time a similar situation arises. The personality traits can have a strong influence on the way consumers respond to marketer’s promotional efforts and also as to when, where and how they consume particular products and services. Hence an understanding of various personality characteristics will be very useful to plan and finalize various marketing mix strategies. Personality is individualistic These are due to inherited characteristics as well as those imbibed from the environment. This combination results in unique personality traits, which are never duplicated. Hence no two individuals can be exactly alike. Two persons may however resemble in one or more of some personality characteristics; but never in all the characteristics. Hence personality becomes a useful tool, which enables a marketer to segment customers into different categories, depending on one or more of the common traits. If there are no commonalities at all of at least some of the personality traits among all the consumers, then it would be impossible to do any market segmentation and it would be futile to develop products and promotions targeted at particular segments. Personality is enduring and consistent Each individual has a distinct set of psychological traits, which lead to consistent and also enduring responses to cues and stimuli from the external environment. These features of a personality help marketers to explain and predict consumer behavior on the basis of the personality characteristics. It is however not possible to change the personality of a consumer. The objective of a marketer is to find out which consumer responses are influenced favorably to which particular personality traits, so that they can try to influence relevant traits in their target group of customers. Personality is only one of the factors, which influence consumer behavior although it is one of the most important factors. Personality can also change

love of status. are all caused by heredity. Having no younger children in the family during the initial period of their upbringing. The second argument insists that the personality gets predominantly influenced by the family and social environment like a person’s upbringing. less judgmental. Schizophrenia. facial features. However there are several circumstances. One of the researches which was conceptualized by using a genetic distance map is given on the next page: . have been proven to be caused by genetic factors. Birth order is the sequence in which the children are born to the same mother. The most widely used human racial categories are based on visible traits (especially skin color. 2. These are called Psychogenic traits. These are considered as group traits. diabetes. weight. Alzheimer’s disease. to our hereditary factors. And more open to new things and change. which decides the rhythms of sleep wake cycles in our daily cycle of activity. Such researchers have proven after extensive studies that the birth order does matter. a big change in career. 3. Psychogenic Traits Personality of an individual starts from the effect of hereditary factors. This is the concept of dividing people into populations or groups on the basis of various sets of characteristics and beliefs about common ancestry. morality. etc. they get influenced by the adult behavior and learn to act responsibly. Physiological differences. colour and texture of hair. school/college. Aging also contributes to such changes. This is also known as “Circadian Rhythm. more risk taking. facial features and hair texture). which lead to gradual changes in the personality of the individual. Race: This is a person’s genetic heritage. There is however an ongoing debate as to whether the behavior of an individual gets predominantly influenced by the genetic factors or by the environmental factors while growing up. Group Traits These are again due to several hereditary factors like race. Hereditary diseases Many diseases like hemophilia. colour of skin. The social changes like women’s empowerment also has brought in many changes in the general personalities in women in the last few decades and it has been found that women are showing many of the personality attributes traditionally exhibited by men. death of a loved person. For example the birth of a child may lead an aggressive person to become softer and more affectionate. Hereditary diseases. sexual preferences. Biological clock All living beings are governed by what is called a Biological Clock. resulting in an older person behaving in a more mature and calm way to adverse situations. Genetics have effects on an individual in four ways: 1. are more sociable. major events in life like marriage. etc. genetics being the major contributor credits the behavioral tendencies like our emotions. etc. A person’s physical features like height. Similarly. which lead to consistent behavior. notions of beauty. The older children are proven to be aspiring and ambitious. parental values. etc. and self-identification.” Psychological effects Such effects of genetics constitute the personality of the individual at birth. creativity. Psychological effects. Physiological differences This is the most obvious effect of genetics. The younger children by contrast have been found to take themselves less seriously.As the individual grows he cultivates a lot of traits. sociability. Biological clock and 4. estrangement from a lover. can lead to noticeable changes in an individual’s personality. any religious groups. and also maintain and enforce law and order in the family.e. etc. The researchers trying to prove this point have studied the birth order of children. family life. gender and age. Researches have analyzed these traits to examine whether significant differences exist between groups of customers with these common traits. The first argument i. An individual is born with these traits and these traits cannot be altered. peer group influences.

as they move into teenage years. These groups have common traits. These are the responses and consequences. which is different from psychological age (how young a person feels). organizes and interprets stimuli received from the environment into a meaningful and coherent picture. long term reciprocal relationships. and organizing sensory information. Gender This is a group trait and is divided into two groups – male and female. As per this theory. which influence consumer values and preferences. a person develops a pattern of behavioural responses because of the rewards and punishments offered by the environment of the person. obligation to return favours. interpreting. Age In this context we are referring to chronological age.F.Skinner is the leading proponent of such a theory known as Behaviorism Theory. Skinner believed that children do bad things because the behavior obtains attention that serves as a reinforcer. discipline in delaying gratification. 4. Distinguish between the different types of selective perception and their implications for marketing strategy. and the attention that child gets is the reinforcing consequence. respect for age and tradition. For example – the core values of the Japanese are found to be hard work. and ambitious. For example: a child cries because the child's crying in the past has led to attention. Indians are found to be deeply religious. etc. selecting. maintain tradition and customs. harmony in all things. Ans. The American psychologist B.: Perception Perception is the process of acquiring. Marketers have successfully segmented the markets based on age criteria. etc. This has been defined as the process by which an individual selects. self-denial for the sake of group. etc. the differences begin to show up and as they grow into adulthood and parenthood these differences are found to be more significant. respect for authority. This process is a . Male female differences are found to be influenced by the life cycle. humility. Environment There are separate theories and research streams. hard working. This has a significant influence on the personality and also the consumer behaviour. Sex differences between male and female pre-puberty children are found to be very minimal.The personality traits of different races have been generally found to have many common personality traits. However. the differences are found to become less acute. which consider the environment as the major determinant of personality. As a person moves into old age. Chinese are found to value hard work. loyalty to the group. In these studies it has been proved that a personality can be developed and molded by a society by means of environmental shaping. The response is the child crying.

an ad. Something that relates to a current need – for example. There are many cases wherein some products were perceived as low quality when the price was lowered. if you are planning to buy a stereo system. These are as under: Price Perception The price/quality relationship refers to the perception by most consumers that a relatively high price is a sign of good quality. in store displays. where the product being advertised will fit in. Even on the Internet. some advertisers choose media. Selective Exposure A customer is exposed to a large number of marketing communications every day and only a few of these communications achieve actual exposure. values and expectations. packaging design. There are some special areas of marketing strategy wherein the consumer perceptual process has significant effect. They believe the high price is an indication of good quality. 2. some selected shelf displays in a store. There are four processes by which the individual manages this selectionselective exposure. selective attention. . Something that we expect to see – People are more likely to notice something that they expect to see. Making use of this principle. is becoming more popular in this regard. Perceptual Process and Marketing Strategy Practically all the elements of marketing communications get affected by the perceptual process of the consumer. depending on the needs and interests of the consumer at that point of time. is bound to attract more attention. Something that is unusual – People are more likely to notice something. but beyond initial attention the consumer’s further processing of this information from the stimulus depends on the personal interest in the featured product or service. The belief in this relationship is most important with complex products that are hard to test. wherein the consumer is able to selectively collect the data pertinent to his need and requirement in a more efficient manner. which are of specialized nature. which differs from the ordinary. Premium pricing (also called prestige pricing) is the strategy of pricing at. chances are that you may not notice the music. Consumers are becoming more and more selective as the advertising clutter increases. This selective exposure is also known as gate keeping. the computer laptops are advertised in computer related sections of the newspaper or magazine. However excessive reliance on the price/quantity relationship by consumers may lead to the raising of prices on all products and services.highly individual process and two persons who are exposed to identical stimuli. listen to some sales people. People will buy a premium priced product because: 1. which is in bold print or a TV commercial that is louder than normal. can perceive them totally differently based on each person’s needs. Consumers look out for some selected advertisements. depending on what they are planning to purchase. A person’s interest may be initially attracted by the stimulus characteristics. since you will be expecting to see only books. 3. which also stocks music CDs. 0 Selection in the Perceptual Process Each individual in today’s world gets a huge amount of information every day and it is essential for being selective at each step of the perception process. For example. the more consumers depends on the price/quality hypothesis and the more of a premium they are prepared to pay. or near. brand names. and experiential products that cannot be tested until used (such as most services). customer specific banner ads are placed in related web sites. They ignore some stimuli and some interpretation of stimuli. Such selective placements of ads benefit both the marketers and consumers. If you enter a bookshop. which make a person more likely to pay extra attention to a stimulus such as an advertisement – 1. Selective Attention Even when the consumer is forced to look at an advertisement about a product. you are more likely to notice ads for stereo systems or displays of stereo systems in an electronic shop. For example. print ads and also TV commercials. the consumer may still ignore it. The usage of internet. since the marketers get better attention and consumers are saved from all the clutter.product design. There are three things. selective interpretation and selective blocking. most important of which are . Consumers not interested in a product will totally skip the advertisements of such products. the high end of the possible price range. which in turn causes the price/quality relationship to no longer apply. even those of low quality. which is of no interest to him/her. The greater the uncertainty surrounding a product.

More technically.e. Consumers will always have a „reference price‟ in their mind about each product. 99 as below Rs. religious organizations. etc. so that the company can spark an interest among consumers. the product is perceived as good value for money. Typically. Japanese products were having a very poor quality image in early 1960‟s and today they are perceived to be top quality producers.100 and hence acceptable. The name derives from the Goldilocks story. not so much to punish third-class customers (for which there was no economic incentive). charitable organizations. in order to make the next-lower priced option look more reasonably priced.2. the consumer may perceive it to be too high and reject the product purchase.00.00. Similarly. Such negative and positive perceptions may change with time. in which Goldilocks chose neither the hottest nor the coldest porridge. With the globalization and consequent availability of many products from different parts of the world in each country. If the actual price is within this band. The creation of a corporate image is an exercise in perception management. and 3. Another way this principle works is that. If the actual price is lower than the reference price. If it is more than the maximum level. criminal organizations. They believe it to be a sign of self worth – "They are worth it" . political organizations. most consumers have fixed perceptions about the quality from different countries. an image that is partially deliberate and partially accidental. but instead the one that was "just right". and other NGOs. environmental organizations.example: heart pacemaker The term Goldilocks pricing is commonly used to describe the practice of providing a "goldplated" version of a product. Another important aspect of consumer psychology is that there is a „band‟ or „latitude‟ of price. the maximum and minimum levels of price in the consumer’s mind about the product. at the time of purchase. generate brand equity. 99. and educational organizations all tend to have a unique image. This is also known as a potential result of price discrimination.It is a signal to others that they are a member of an exclusive group. Consumers perceive Rs. this form of pricing exploits the general cognitive bias of aversion to extremes.The cost of product malfunction is too high to buy anything but the best . journalists. encouraging customers to see business-class airline seats as good value for money by offering an even higher priced first-class option. Many marketers like Bata shoe company use this psychology and adopt the „odd pricing‟ method like Rs. partially self-created and partially exogenous.It authenticates their success and status . Corporate Image A corporate image refers to how a corporation is perceived. Primarily marketing experts who use public relations and other forms of promotion to suggest a mental picture to the public create it. If the actual price is below the minimum level. i. create share of mind. 199. There are differing rules of origin under various national laws and international treaties. which he/she wishes to purchase. For example. They require flawless performance in this application . The company does not solely create a corporation’s image. for example. the consumer will purchase the product. instead of taking the cheaper option. as to motivate those who could afford second-class seats to pay for them. labour unions. Corporations are not the only form of organizations that create these types of images. a corporate image is designed to be appealing to the public. and thus facilitate product sales. Country of Origin Country of origin is the country of manufacture. or growth where an article or product comes from. . Governments. thirdclass railway carriages in Victorian England are said to have been built without windows. production. the consumer may perceive it as a substandard product and again reject. For example the products from Germany are perceived to be of high quality standards and those from China are perceived to be of very low quality. Other contributors to a company's image could include news media. It is a generally accepted image of what a company "stands for". at a premium price. consumers have certain cut off levels for accepting a price and prices below this level will be acceptable.

preferences. price. Attitudes are defined as learned predispositions to respond to an object or class of objects in a consistently favourable or unfavourable way. 3c) Low Involvement Hierarchy: This is the case wherein the consumer is not very much involved. cognition or thoughts come first. „this airline is always late”. The examples are – „this computer has a large memory or‟. Attitudes develop on the basis of three factors – affect. Attitudes result in consistent response. This makes sense if the person does not like the sight of blood. The above three factors are discussed in more detail in the following paragraphs: Cognitions are also called beliefs. the consumer buys or avoids a brand. The behavioral intention is a verbal indication of the intention of an individual. the consumer may have some positive feelings about some beach resort. The link between attitude and behavior exists but depends on human behavior. considering the example of holiday planning. Based on the feelings towards a brand. etc. The cognitive response is a cognitive evaluation of the entity to form an attitude. advertisement. There are three types of beliefs. The thinking and learning takes place through product usage. etc. etc. a person. Attitudes are learnt and they are formed on the basis of some experience or information about the object. brand. product use. Attitudes come from judgments. meaning that they simultaneously possess a positive and a negative bias towards the attitude in question. Which one is likely to be more successful and why? Ans. In this case the consumer thinks first. However despite their consistency attitudes are not necessarily permanent and they do change. In this case. some of which is irrational. evaluative and normative. since not much is at stake unlike in the case of the earlier hierarchies of learning and . In this case the consumer collects all the information about several alternatives.Q5. Beliefs are expectations of what something is or is not. Attitudes are positive. retail outlet. In this. Descriptive beliefs are about the quality or attributes of the object or person.descriptive. People can also be "ambivalent" towards a target. This is what is known as predisposition and this will propel the consumer towards behaving in a certain way or prevent the consumer from behaving in another way. service. behavioral change or conation and cognition. evaluates the personal feelings generated by each of the alternatives and then finally decides on which place to go. Attitudes remain in the mind. Evaluative beliefs are about personal likes and dislikes. The object in this context refers to many market related concepts like a product. Normative beliefs are moral and ethical in nature and mostly they relate to the way someone acts. people. product category. Hierarchies in Attitudes The three components of attitude are related and the sequence in which these components occur for a person is known as „hierarchy of attitudes‟ There are three types of attitude hierarchy which are discussed in the following paragraphs: 1a) Learning Hierarchy: This is the most commonly occurring hierarchy.e. Most attitudes in individuals are a result of observational learning from their environment. The learning hierarchy assumes brand beliefs lead to brand feelings and finally to brand purchase. and based on the judgment of suitable alternatives. The affective response is a physiological response that expresses an individual's preference for an entity. feels next and acts last. Select and briefly describe two advertisements that you have seen – one that tries to change attitudes towards a low involvement product and one that tries to change attitude towards a high involvement product. or what something will do or will not do. which explains this irrationality. behaviour or event.favourable or unfavourable.: Attitudes Attitude is a hypothetical construct that represents an individual's like or dislike for an item. 2b) Emotional Hierarchy: Here the consumer feels first and then acts and thinks last. a person who is in favor of blood transfusion may not donate blood. The cognition or learning process takes place last when the consumer is staying in the resort. which the consumer has seen on TV and decides on this without going into any other information. For example. negative or neutral views of an "attitude object": i. affect or feelings come next and co native or action comes last. An example is that of choosing a place for a holiday.

they advertised giving the lab reports of reputed testing laboratories to prove that the pesticide residue was within tolerable limits. 3. there is some evidence that the relationship between self-esteem and persuasibility is actually curvilinear. The celebrated work of Carl Hovland. 3iii) Add beliefs: This is another approach in which the marketer tries to add new beliefs to the already existing set of beliefs. pertaining to the brand attributes. Some psychologists have debated whether this is a long-lasting effect and Hovland and Weiss (1951) found the effect of telling people that a message came from a credible source disappeared after several weeks (the so-called "sleeper effect"). Source Characteristics: The major source characteristics are expertise. Routes for Changing of Attitude There are many questions faced by marketers. Target Characteristics: These are characteristics that refer to the person who receives and processes a message. Message Characteristics: The nature of the message plays a role in persuasion. Marketers try this method of convincing the consumer that the strong attributes of their brand are most important to the consumer. with people of moderate self-esteem being more easily persuaded than both those of high and low self. In Hovland's view. When Coca-Cola faced the accusation that pesticide residues were found in many Coke bottles. Whether there is a sleeper effect is controversial. One such is intelligence trait intelligence – it seems that more intelligent people are less easily persuaded by one-sided messages. 4. If one reads a report on health and believes it comes from a professional medical journal. In this case. Providing facts and statements about the performance of the particular attribute does this. which seems to be good. There are three routes for attitude formation and change: Cognitive. 2. The consumer may not think much about this and simply buy it and take it home. since Saffola is known for this attribute. Trust trustworthiness and Interpersonal attraction / attractiveness. like why do some attitudes persist indefinitely while some others change quite often? To understand such issues and also to influence changes in consumer attitudes. Take the example of a consumer who sees a new type of brown bread. we should understand attitude change as a response to communication.esteem levels. He and his colleagues did experimental research into the factors that can affect the persuasiveness of a message: 1. 2ii) Shift importance: Most consumers organize the various attributes of a brand in their mind in the order of their importance. Received wisdom is that if people are informed of the source of a message before hearing it. one may be more easily persuaded than if one believes it is from a popular newspaper. The credibility of a perceived message has been found to be a key variable here. Saffola brandcooking oil advertises that controlling cholesterol is important to the consumer and by inference. Although it is sometimes thought that those higher in self-esteem are less easily persuaded. The mind frame and mood of the target also plays a role in this process. then the feelings (affect) and then thoughts (cognitive). at Yale University in the 1950s and 1960s. Sometimes presenting both sides of a story is useful to help change attitudes. Another variable that has been studied in this category is self-esteem. For example.emotional hierarchies where the consumer is highly involved. Thus the action of purchase (Conation) comes first in such a case. There are four marketing strategies to achieve changes in attitude through this route: 1i) Change beliefs: In this strategy. 1a) Cognitive Route: This is the most common and effective approach. Factors affecting Attitude Change: Attitudes can be changed through persuasion. one has to understand how attitudes can be formed where none existed before and how the already existing attitudes can be changed. the cognitive component of the consumer’s attitude is focused upon. affective and co native. while shopping for other products in a store. This is studied in more detail in the coming paragraphs. the consumer is persuaded to change to this brand. helped to advance knowledge of persuasion. Cognitive Routes: A message can appeal to an individual's cognitive evaluation to help change an attitude. One beer brand started . the marketer tries to shift the beliefs of the consumer about the performance of the brand in one or more attributes. there is less likelihood of a sleeper effect than if they are told a message and then told its source.

If the liking for the product increases in the mind of the consumer. who prefers quiet locations to noisy shopping places. well designed compact sofas and bed sets. There are three basic approaches to achieve this: 1i) Classical Conditioning: In this approach. 3000 for a table to . He wanted the store to be highly visible and known for its product range consisting of glass top tables with intricately carved teakwood base. etc. Using humour. which arouse negative feelings or emotions. which utilizes the concept of classical conditioning. “Home Products Pvt. the marketer tries to change the perceptions of the ideal brand. some of the positive feelings associated with the music will get transferred to the brand. Ltd. – Liking of the consumer for the ad itself will be critical for this type of campaign – Repetition of the ads is most important. The prices range between Rs. Rahul returned to India and inherited a small (Rs. designer candle stands. etc. 2iii) Mere Exposure: Just by increased exposure. which create. such as music is consistently paired with the brand name. ii) Affect towards ad: Positive feelings towards the ad may increase the liking for the brand. Ads. Other such stimuli used are pictures. it will lead to positive beliefs. which in turn will lead to purchase of the brand. warm. the following points will have to be noted: – Advertisements with this concept need not contain cognitive (Factual or attribute) information. Repetitive advertisements of low involvement products have been proven to increase the liking of the consumer and subsequent purchase. curio shelves. Over a period. home furniture to retailers. . He planned to start with a single store and then build a chain of such stores by the end of five years. The company was manufacturing and selling at lower price. who had to spend heavily on advertising and sales promotion. For example CRY (Child Relief & You) a charity organisation shows pictures of destitute children to generate sympathy and thus contributes to the cause. Rahul was willing to plough back his export earnings into this venture to make it a reality. – Traditional types of measuring effectiveness of advertising focusing on cognitive component will not be appropriate for these types of campaigns. Rahul was more interested in opening a store to market home accessories. etc. 1b) Affective Route: Many companies try to influence consumers‟ liking of their brand without trying to change the beliefs. After this campaign the consumer started considering the age of beer as a relevant attribute. clothes hangers. since freshness is an important attribute. 4iv) Change ideal: In this strategy. Caselet Rahul’s dream – A store of home accessories After his father’s death. loving feelings. These people earned higher profit margins as compared to bigger competitors. 6.advertising that date of packing of beer is important.” in Bangalore. a stimulus the consumer likes. Presenting the brand to the consumer on a large number of occasions does this. celebrities. This was relatively unknown to the consumer earlier and the consumer never bothered to look at the packing date. brand preference can be improved. The location of the store is planned keeping in mind the preferences of the consumer. like fear. or emotional stories in the ads increase the affect towards the ad. Thus. They try to change the attitude of the hotel guests to consider an eco friendly hotel as an ideal attribute for an ideal brand. guilt. However. in this route. 10 lakhs annual sales) furniture manufacturing company. can also bring in attitude change. The target market aimed for is the upper middle and upper class consumer. sorrow. There are many five star hotels that have come up recently with proper certification on eco friendly concept being followed in their hotel.

While an aggregate comprises merely a number of individuals. would be willing to spend on home accessories just to “keep up with the Joneses”. Characteristics that members in the group may share include interests. and with the making and enforcing of rules governing cooperative human behavior. The members of primary groups consider the opinion or norms of the entire group as important to follow. Examples of symbolic groups are groups who emulate their heroes in movies. Nature of Membership: This refers to whether the membership is real or symbolic.000 for a leather-upholstered sofa. the individual regards himself as a member of this group by unobtrusively adopting the group norms and values and identifies himself with the group. as well as to particular formal organizations of government and public service. The examples are – family.Do you think reference group influence is relevant in this case? Ans. the interpersonal contact frequency tends to decrease. membership. business associations. such as schools. Primary groups: These are characterized by frequent interpersonal contact. it generally functions as a reference group. ethnic/linguistic background. transcending individual human lives and intentions. or celebrities. which are more permanent groups with pervasive and universal presence in society. there are two categories of groups – 31. the base of such behaviour may shift to an entirely different group. interact with one another. more than advertisements in the mass media or direct mailers to prospective customers plays a key role in influencing consumers’ purchase decisions. Frequency of Contact: This refers to how much interpersonal contact the groups have with each other. especially in the case of home accessories. institution. Depending on this characteristic. In symbolic groups. YMCA. In other words. etc. 1a. The term. 2b. there is no provision or procedure for granting membership and the group leader or the key members may even deny membership for the individual. and kinship ties. Examples of membership groups are – family. 55. As the situation changes. etc. work Organisations. When a person is actively involved in a particular group. attraction. which then becomes the new reference group. being more aware of interior décor. Fortune 500 Companies. Institutions are identified with a social purpose and permanence. Rahul is of the opinion that although customers are price conscious. All individuals belong to a number of different groups and also aspire to belong to some other groups.Rs. . Although an individual may belong to a number of groups. Membership groups are those wherein the head or leader of the group as also the key members of the group recognise the membership of the individual who claims membership of this group. However. he/she normally uses only one group as the primary reference group in any given situation. Rotary Club. religions and the family. a reference group is simply a group that an individual uses as a guide for behaviour in a specific situation. As the group size increases. a group in sociology exhibits cohesiveness to a larger degree. who share certain characteristics. 1Classification of Groups Groups can be classified according to three classification criteria: a. A survey also indicated that word of mouth communication. etc. Using this definition. society can appear as a large group.: Influence of Group on Consumer Behaviour Social group A Social group is usually defined as a collection of persons. is commonly applied to customs and behavior patterns important to a society. Institutions are structures and mechanisms of social order and cooperation governing the behavior of two or more individuals. A Reference Group is a group whose presumed perspectives or values are being used by an individual as the basis for his or her current behaviour. values. Work Organisations. and share a common identity. accept expectations and obligations as members of the group. Lions Club. type of contact and c. b. Questions 1. Social groups also include institutions.

42.Choice groups and ascribed or assigned groups. b. etc. is more likely to seek out the advice or example of others. volunteer groups. relatives. Examples are – distant relatives. religious groups. conduct and behaviour are highly codified. is less likely to be influenced by any advice or example of others. the child will learn which foods to select for good nutrition. choice of home furnishings. etc. etc. 4. because there is no restriction on group size or membership. such as movie stars. he is likely to get influenced by someone whom he/she considers as trustworthy and knowledgeable. occupational groups like doctors. the consumer who has little or no experience. Reference groups that serve as benchmarks for specific. reference groups are groups that serve as frames of reference for individuals in their purchase or consumption decisions. which are the appropriate dresses for which occasion. On the other hand. community groups. In a formal group. Reference groups that influence general or broadly defined values or behaviour are called Normative Reference Groups. or the one who has no access to reliable and objective information on the product or service. Secondary groups: Members in secondary groups have limited interpersonal contact. etc. For example. religious groups. which consist of those individuals or groups with whom a person does not have a direct face to face contact. high credibility in the reference group is likely to influence the consumer more effectively. A child’s normative reference group is the immediate family. whereas the comparative groups influence the specific consumer attitudes and behaviour. Examples are – School/college.In your opinion. The examples are – family. or the one who is capable of getting the information easily about the product or service. Thus. volunteer groups. Normative groups influence the basic code of conduct. This could be a neighboring family whose lifestyle appears to be worthy of imitation in certain aspects. there are two categories. • Factors that affect Reference Group Influence The amounts of influence the reference groups have on an individual depend on the nature of the individual and the product and also certain social factors. . which reference group(s) can act as a spokesperson for the company? Ans. In informal groups. Both normative and comparative reference groups have significant influence on every individual. sports heroes. there are very few explicit rules about the group behaviour. TV personalities. etc. The ascribed or assigned groups are those wherein the membership is automatic for someone who has the characteristic that defines the group. Freedom of Choice: In this also. where the individuals voluntarily choose to join. which plays an important role in molding the child’s general consumer values and behaviour. political leaders. 53. like the maintenance of their garden. nor is there any requirement that the individuals identify with a tangible group. lawyers. The norms of secondary groups are considered as less binding or obligatory. prison. Information and Experience: A consumer with first hand experience with a product or service. relatives. etc. prison. workplace. family. Attractiveness and Power of the Reference Group: When a consumer is concerned with obtaining the accurate information about the product quality or performance. etc. It is likely that these specific attitudes are dependant on the basic values and behaviour patterns established in the person’s early development by the normative reference groups. This concept is very useful and relevant.: Reference groups and Consumer Behaviour From a marketing perspective. Choice groups are those. community groups. narrowly defined behaviour are called Comparative Reference Groups. The examples are – friendship groups. Credibility. Degree of Formality: Based on this there are two classifications. Some of these factors are discussed here: a. types of vacations taken by them. 2. etc. The examples are – friendship groups. theatre artists. accountants. We can also add a third group of reference groups here – Indirect Reference groups. how and where to shop for which product.

In the marketing context. or under different circumstances. The term innovation may refer to both radical and incremental changes to products. The Innovation: 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. However. Privately consumed products like detergents. etc. which persuades consumers to be different and not just follow the crowd when making purchase decisions. attitudes and behaviour at different points of time. While innovation typically adds value. shampoos. business. A visually conspicuous product is the one. Since innovation is also considered a major driver of the economy. productivity. etc.e. which is not the market leader. Reference Groups and Consumer Conformity: There are different objectives of different marketers in utilizing the influence of the reference groups. the dress habit of a male may vary depending on the place and role. in order to avoid ridicule or punishment. He may wear conservative business suits in his work place. Assignment Set – 2 1. The social system and 4. innovation may be linked to performance and growth through improvements in efficiency. this non-conformity appeal can be thought of as an attempt to shift the consumer’s reference from one group (Brand A users) to another (non brand A users or Brand B users).. or process that is new to a certain area but not necessarily to the world. as new developments clear away or change old organisational forms and practices. Different reference groups may affect a consumer’s beliefs. The often unspoken goal of innovation is to solve a problem. or with whom they identify. unlike the groups. the power groups are unlikely to change the attitude of the consumer. This is called non. a verbally conspicuous product is the one. The channels of communication. the factors that lead to innovation are also considered to be critical to policy makers. competitive positioning. or those who offer them some status or benefits. The market leaders are normally interested in the ability of the reference groups to change consumer attitudes and behaviour. while he may wear trendy and fashionable dresses in a party with friends. market share. c. In contrast. thought. they are likely to adopt their product due to the attraction. Innovation is an important topic in the study of economics. 3. technology. In the organisational context. according to how visually or verbally conspicuous the product is to others. universities. All Organisations can innovate. may wish to devise a strategy. innovation may also have a negative or destructive effect. this refers to the process by which innovations spread i. the choice of product may be the one which conforms to the norms of the person or the group. or it may be easily described to others (like a vacation in an expensive location). What are the different stages in the process of adoption of a new product? Ans. how the market assimilates them. resulting in the uniform distribution of the substance. An innovation is an item. including for example hospitals. sociology. which affect the consumer due to their credibility or attractiveness. The definition of diffusion includes four basic elements of the diffusion process: 1. Products. are unlikely to be purchased with the reference group in mind. Briefly explain what is meant by diffusion of an innovation. which are consumed conspicuously and status revealing are likely to be purchased with an eye to the reactions of the reference group. quality.When a consumer is primarily concerned with the acceptance or approval of the person or group they like.: Diffusion of an Innovation: Diffusion is the movement of particles of a substance from an area of high concentration to an area of low concentration. d. and local governments. Organisations that do not innovate effectively may be destroyed by those that do. marketers who are responsible for a new brand or a brand. Hence . processes or services. which are less conspicuous. by encouraging consumer conformity. and engineering. For example. When a consumer is primarily concerned with the power that a person or group can exert over him/her. but rather the spread of different kinds of innovations through a society. In reality. which may be highly interesting. Conspicuousness of the Product: The influence of the reference group on a purchase decision of a consumer varies.conformity appeal. which stands out and is noticed (such as a car or a fashionable dress or jewelry). Time. The innovation 2.

1a. 2. which does not alter the established consumption patterns. Other examples are those of “Improved Surf Excel”. there are total changes to consumers‟ buying and usage patterns. Interest. This requires consumers to adapt to totally new consumption patterns. Product innovations develop customer support. but there is no true knowledge of the product. Innovations can be classified in four ways depending on the orientation. Consumer Oriented: Some researchers favour this approach wherein any product. “New Taste maker in Maggie Noodles” etc. etc. A key challenge in innovation is maintaining a balance between process and product innovations. which may develop shareholder satisfaction through improved efficiencies. or how long is considered as short time for the purpose of considering the product as new. the newness of the product is judged in terms of how much exposure the consumers have to the new product. A product is considered new if it has been in the market for a relatively short period of time. An example of a continuous innovation is now seen in the automobile industry as it continues to change and develop. Market Oriented: In this approach. This has the least disruptive influence on established practices of the consumer. rather than the physical features or the market penetration. 2. An example of this type of innovation would be compact discs. Continuous Innovation: This type of innovation is a simple change or improvement of an already existing product where the adopter still uses the product in the same manner as before. the person does not feel the need to run out and find out more information. This approach is not useful when we want to understand the consumer acceptance of a new product. however at the risk of costly R&D that can erode shareholder returns. In this situation. d.innovation typically involves risk. Others feel that for a person to become aware. Some examples are that of “Maruti 800 with MPFI engine”. This is the big idea innovation. Both these definitions are quite subjective. Here the consumption patterns of people are somewhat altered. this is further classified into three categories: 3i. There are five stages in arriving at a decision to purchase or reject a new product. Product Oriented: This approach focuses on the features inherent in the product and on the effect these features have on consumers‟ established consumption patterns. Depending on the extent to which a new product is likely to disrupt the established consumption patterns. Evaluation. 5iii. Adoption (or Rejection) 11. 4ii. . Process innovations tend to involve a business model. If the product has been purchased by a relatively small percentage of the potential target consumers. 3. Dynamically Continuous Innovation: Here the innovation cans either be a creation of a new product or a radical change to an existing one. Examples are solar energy or electric cars. much less consider consuming it. because the product has never been seen before. The stages through which a consumer passes while arriving at a decision – to try or not to try. It is argued that since a person often stumbles upon the innovation by accident during the awareness stage. Camcorders with DVD recording”. 1. 4. Awareness. There are two definitions of a new product in this approach: 1. 2b. The awareness stage merely sets the groundwork for the following stages. When the product is “new” to the company. Awareness: The consumer is first exposed to the new product. which is judged by the consumer as new. it is considered as a new product. Trial and 5. it will provide little incentive to get more information. the innovation must fill a particular need in their life for them to notice. This involves modifications in the existing product rather than a totally new product. is considered “new”. or to continue using or discontinue using a new product – is called “adoption process”. Because of this lack of information. This is somewhat more disruptive than a continuous innovation. c. Discontinuous Innovation: This is a totally new product in the market. Process of Adoption The second major process in the diffusion of innovation is adoption. the newness of the product is based on the consumer’s perception of the product. it is considered new although it may not be new in the marketplace. In other words. Company Oriented: This approach treats the newness from the perspective of the manufacturer. This may involve the creation of a new product or a modification of the existing product. At this stage the innovation is introduced to the person. since the researcher has to establish the degree of sales penetration.

The adoption of some products may have very little effect on the behavioural and lifestyle changes of consumers. personal computer. include the automobile. 22. the consumer decides to use the product on a fullscale basis. Explain the different types of consumer buying decisions. they may seek the advice and knowledge of their peers. with suitable examples. This final stage is the adoption stage. If the innovation has a negative connotation. Some innovations may lead to major changes in these spheres. Adoption/Rejection: If trial is favourable. they will try it out. another possible stage to the adoption process. Examples of innovations. Then if the innovation appears to be positive for their life. or to a decision to discontinue use. thirst. which result in problem recognition: 11. Interest: The consumer is interested in the product and starts searching for additional information. etc. Ans. Trial: The consumer uses the product on a limited basis. Internal Stimulus: This is internal state of physical or psychological discomfort felt by the consumer. etc. Here the individual physically gives the innovation a chance by trying it out for a limited period. decides to adopt the innovation. if unfavourable. locomotive. but does not really know how or if it can be useful in his/her own life. the person firsts begins to make a decision about the innovation. boredom.: Different Types of Consumer Buying Decisions: The process of consumer decision-making consists of various steps as follows: First Step: Problem Recognition The decision process begins with this step. Research proves that most people will not adopt an innovation without personally testing it first to see if it really “works”. as there could be several other steps involved in this process. At this point the person feels good about the innovation. This is a very simplistic model. Another consumer finds that the ink in his pen is over and hence looks out for a refill. At this point in the adoption process. 14. not to decide whether to adopt. The external stimuli can influence a consumer in three different states of mind.22. the consumer decides to reject it. which would stimulate the need in the mind of the consumer. External Stimulus: This is the outside influence like an advertisement of a product. television. Problem recognition is the state in which the consumer feels the need to buy something to help him/her get back to the original state of physical or psychological comfort. The consumer first notices and recognizes the need to be satisfied or problem to be solved for fulfilling some need. airplane. 33. What they are looking to find out during this trial stage is how the innovation can fit into their needs and desires. At this stage. There are two types of stimuli. the individual not only adopts the innovation but embraces it for the future. This is the next stage called the trial stage. Here the individual uses information that they have gathered in the interest and evaluation stages and with the outcome of the trial stage. This decision to reject the innovation after agreeing to adopt it is called discontinuance. for example – hunger. After the individual adopts the innovation they may decide to reject it for whatever reason. the person decides to invest time and energy into finding out more about the innovation. however. How could I use it? Do I really need it? Would it be to my advantage if I had it? These are all questions the consumers ask themselves during the evaluation stage. There is. At this stage. telephone. In many cases. or the fresh bread smell near a bakery. The interest stage is purely to gather knowledge. . refrigerator. Evaluation: Consumer decides whether or not to believe that this product or service will satisfy his/her need. A consumer feels the thirst and looks for water or a beverage. 2. the post adoption or post purchase evaluation can lead to a strengthened commitment. which had a major impact on society. 25.

or whether it is satisfy an already existing need. Once the consumer has recognized the problem. However. whether he/she intends to buy the product/service online or offline. Many people argue that. • 2. it is easy to figure out how these new concepts and products are catching up and why these are just satisfying the dormant needs of a consumer. • 3. etc. When the consumer has already recognized the problem and is looking for a solution. some researchers have listed the following benefits of an Internet search. Secondary or selective demand: This is the conversion of the demand from one brand to another. a mobile phone etc. 22. incorporating the principles of Marketing Myopia. brochures. Considered Set: This is the set of brands. which can produce a huge number of alternatives to the consumer. Recalled Set: This is the set of brands. and when a neighbor bought a microwave oven. This happens with most of the technological advances and innovations. Selection: The consumers are able to get a fairly large number of alternatives by searching the Internet very quickly. which has not been noticed or recognized till now. or from his/her own past experience. no one needed many of the products like a video camera. In mature markets of any product. This is done normally by educating the consumer about the benefits of the new product/service and also as to how this can solve a problem. which was getting postponed. The pre-purchase information may be obtained from various sources. which would . the need surfaced strongly to push the consumer to look at alternatives. not a priority. • 4. This is when the consumer may even actively pursue the external stimuli like advertisements or the salesmen to look at various alternatives. Primary Demand: This is the demand for the category of the product or service itself. The consumer may also get the information from friends and acquaintances. 2. Awareness Set: This is the set of brands. which is the most attractive feature of this source. Nowadays there are many other sources. blogs. For example. etc. etc. In fact.1i. This search is confined to a set of brands. before the e-mail. In fact many websites. which can be classified as follows: 1. ii. There has been a controversy in the basic function of marketing. the next step is to search for relevant information to solve the problem. was not recognized in the past. which the consumer considers for the final selection after discarding the other brands. which the consumer is aware of. that encourage actual consumer reviews have increased the credibility of this information. All the marketing efforts for promoting a new product or service are to generate the primary demand. which is basically given by the marketer. the marketers concentrate on the secondary demand creation. Cost: the Internet offers the lowest cost for information search. when one defines the needs in proper perspective. For example a consumer wanted to buy a microwave oven. When the consumer had recognized the problem in the past but was not able to find a solution for various reasons like not having the time. 3. iii. shop displays. most important of which is the Internet. which took so much effort. salesmen. Second Step: Prepurchase Search: This is the second step in the consumer decision process. When a problem. which the consumer can remember when deciding. Reliability: The consumers find the Internet sources more reliable than the store salesmen or advertisements. and that high profile marketing efforts created such demand. Based on these facts there are two types of demand for a product or a service: 11. which was dormant. the consumer never recognized the normal snail mail. The consumer who would have been happy with an old product may feel that the old product is not satisfying his/her need when the new product is advertised.whether it is to create a need. cost and delays as a problem. which are responsible for the phenomenal popularity of this medium: • 1. which seeks to convert a non-buyer of it into a buyer. Quick product comparison: There are many sites which give product comparisons and this has again helped the consumers in taking more informed quick decisions. like advertisements. company website.

There can be many risks involved in making a purchase decision by a consumer like: 0 a. • Urgency: When there is urgency for taking the decision quickly the extent of search gets restricted. too much information results in the consumer getting confused. Many products are advertised with so many features. When the experience is not satisfactory after the previous purchase. in the buying process. which is termed as ‘information overload’. although the cost of the product/service may not be high. In such situations the purchase decisions will be routinely made. There may be another equivalent brand. which could result in a decision. 4 j. The consumer may not find much risk in routine purchases and hence may not seek a lot of information before the purchase decision. There are some products. When there are some new innovations and products introduced in the market after the previous purchase. 2 e. which will involve a great deal of involvement and care of the consumer in decision making. by offering products and services.have been either too laborious or time consuming before the advent of this feature in the internet. Sometimes the emotional involvement of the consumer in a buying decision may be high. 1 d. • Experience: The consumer may have the previous experience with the product or the brand. Many marketers have taken advantage of this aspect and have devised marketing strategies aimed at consumers who value time. Third Step: Evaluation of Alternatives . This depends on how the consumer considers the importance of the product either financially or psychologically. • Involvement: This is the perceived importance of the product for the consumer. • Brand Parity: When the competing brands are not very distinguishable from each other. which will lead to less extensive search for Prepurchase information. This product may become obsolete in the near future and the new products may have much better features. or by comparing their features more extensively. which would save time for them. which may not be favourable to the marketer. The consumer may not be feeling comfortable psychologically with the product. When the perceived risk of the buyer is high. 0 k. he/she is likely to go for extensive search. When the consumer is interested in an assortment of different brands of the same product. When the consumer is highly involved with the product and hence enjoys the entire experience of evaluating various alternatives. If the previous experience is quite old and there is an urge to reconsider. These are as under: Perceived Risk: This is the extent of loss incurred by the consumer if he takes a wrong decision. which a consumer buys routinely without much thought and there are some products. as to how to sort out this excessive information. 2 h. which is lower in price. When the perceived risk of wrong decision is high even with the previous experience. The extent of search effort by a consumer depends on many factors. Such high purchase decision involvement results in extensive search of Prepurchase information. or the same brand may be available at a cheaper rate at some other outlet. 3 i. 1 g. 0 c. 1 b. Hence it is important for the marketers to consider carefully what information is important from the consumer’s perspective and avoid excessive information. the consumer has to resort to more search efforts in terms of getting more reviews by past consumers. although it may not have any product-related problems. that the consumer finds it very difficult to understand the relative importance of these features. This may get disturbed only in certain situations like: 0 f. Sometimes. Your immediate social circle may disapprove. The product may not perform as well as the expectation.

1ii. to evince the right emotions and feelings for the travelers looking for such experience of nature. some of which are discussed below. having a holiday. i) Affective Choice: This is based on the feelings of the consumer rather than the actual benefits of the product or service. Attitudinal Choice: This involves the general attitudes. Cognitive Choice: This is based on the rational comparison of various attributes of the product or service. Buying of a dress. This requires a lot of time and effort and generally results in an optimal decision. the consumer has to evaluate the various alternatives. marketers have to design products and services. when the cost of purchase is high and the perceived risk of wrong decision is also high. which will provide appropriate emotional response in the consumers. This approach is also resorted to when the relevant brand wise information on various attributes is readily available. This requires the knowledge of all the relevant attributes at the time the choice is made and also it involves the comparison of each attribute of various brands. etc. In such situations. Such choice is more relevant in the case of more complex decision-making. 2iii. lack of relevant information. would result in a consumer deciding on this method. The advertising campaign – “God’s own Country” for Kerala Tourism was very effective in following this strategy. There are different methods by which a consumer makes a choice. Many marketers use this strategy to introduce brands. The decision will be based mostly on such anticipated feelings rather than the attributes of the product or service. For this purpose we have to first understand how consumers make choices. will normally involve the anticipated feelings of the consumer while using the product or service. which are lacking in strong brand image or reputation in a competitive market. A variety of situations force a consumer to go for this type of choice in preference to other types.After completing the search for relevant information. The advertising strategy also has to take care of helping the consumers visualize how they will feel while consuming the product or service. impressions and intuitions of the consumer. Time pressure. Many marketers follow a dual strategy for important and expensive products and services by targeting both types of consumers viz. those going for cognitive choice. as well as those going for attitudinal choice. . etc. rather than an informed choice.

the consumer may respond in different ways as explained below.3. especially if the involvement is intensive. • Develop comparative advertising campaigns targeted to new buyers. 1c. While evaluating the benefits after a purchase it is common for customers to be concerned about their purchase decision. It is caused by cognitive dissonance. Cognitive Dissonance: This may result in doubting the wisdom of the choice. 1 2ii. They may go through the entire process of the purchase process from the very beginning when they need to buy the product again. to build confidence in the brand among consumers. they evaluate the performance critically in the initial stages by comparing it with their expectations. • Ask for customers’ feedback on the product. • Enclose an easy to understand instruction booklet along with the product. self-confidence. highlighting the superiority of their brand over the competitors‟ brands. The likelihood of the consumer voicing a complaint depends on three factorsa) Extent of dissatisfaction (whether the dissatisfaction is serious or not).: Post purchase Dissonance: Post purchase dissonance is basically an after purchase cognitive behavior. Here the customer thinks that if he had purchased some other item it would have been better than the one he bought. b) Attribution to marketer (whether the consumer feels that this complaint can definitely be attributed to the marketer) or c) Consumer’s personality (degree of aggressiveness/ submissiveness. or any negative inputs by friends or acquaintances. Marketers can make use of this psychology. Ans. which creates what is called “Cognitive Dissonance” which is a disturbance in the mind. which may reveal some of the positive features neglected by them previously. Performance is below expectations: In this case.) . Exit: This is the extreme reaction when the consumer is totally convinced that the choice was indeed bad. • Send the customer a letter congratulating them on the new purchase and emphasize the high quality of the product. Complain: Dissatisfied customers may either complain or just keep quiet. He/she may then decide not to buy this brand again. Such an evaluation may lead to following three outcomes: a. b. by asking their sales people to get a feedback from the consumers. As the consumers use the product. iii. What is meant by “post-purchase dissonance”? Suggest five different ways in which marketers can reduce post purchase dissonance. Performance matches expectations: This leads to a neutral feeling and satisfaction. The consumer may then try to reduce such disturbance by trying to justify the soundness of the decision by seeking further positive information about their choice and avoid any negative inputs they may get at this stage. giving positive features and avoid competitors‟ advertisements. either in their advertisements or through their sales people. Thus they will re-read the product brochures. Marketers should try to reduce cognitive dissonance to the extent possible. Simply he is not completely satisfied with the purchase and is most likely to switch brands. • Train their dealers and salespeople to examine the needs of consumers and recommend products that would best fit their needs. through the following strategies – • Avoid making over-promises. Performance exceeds expectations: This could lead to a strong brand and store loyalty in future purchases. assertiveness etc. There is a likelihood of this consumer buying this brand again in future from the same store. i. • Develop “post-buy” services at the dealer level.

reading customer reviews. what to purchase. According to Philip Kotler. If the consumer is satisfied that justice has been done. His model of consumer behaviour is illustrated by the diagram given on the next page – Business buying behaviour: . how to purchase. A relatively low percentage of consumers actually complain and if the complaint is redressed. In fact. 4. etc. when to purchase. Clearly. Sheth & Mittal have further expanded the above definition by including the study of various roles played by a customer such as 11. seeking opinions of others. search for information.. the consumer may perceive that justice has been done.If this results in a complaint and if the marketer successfully redresses the complaint. Depending on the roles being played. What are some of the differences between consumer buying behavior and business buying behavior? Briefly explain the factors influencing business-buying behavior. like going to a shop. he is likely to continue with the same brand and store. It is also an orderly process. they are likely to become loyal customers. The user (who uses or consumes the product or service) 22. the behaviour and decision making process may change. There could be adverse word of mouth publicity. since these activities take place in a particular sequence – e. Ans. Such a result is possible when the consumer feels that he/she was treated with respect during the process of conflict resolution. “Consumer Behaviour is the study of individuals or Organisations and the activities undertaken by them to select. the buyer and the user. procure and use products or services to satisfy their needs and wants. visiting an e-commerce site.: Consumer Buying Behaviour: As mentioned in the introduction. evaluation of information. It has also been found by research that the negative publicity of dissatisfied customers is much more widely done than the positive publicity of satisfied customers. It generally involves a number of activities prior to purchase. trial of the product. 22. whether to purchase. which could be more damaging. The buyer (who physically acts to procure the product or service).g. However the dissatisfied customer is more likely to take the initiative to spread the word around about the negative aspects of his/her experience. etc. It has been found by research that consumer complaints are good for the marketers. or there may be more than one person playing different roles. comparing the various features and prices. consumer behaviour is a complex interplay of several factors. but simply turn to competitors‟ brands. consumer behaviour is influenced by both internal and external factors. In addition. Consumer behaviour is complex. since the same person may play all the roles. involving thinking processes like considering the need for the product or service. the policy and procedure followed was fair and the final decision was justified. Physical activities. A majority of dissatisfied consumers may not complain. consumer behavior is a process. The payer (who pays for such a product or service) 33. If the consumer is dissatisfied with this the hostility increases. the decision maker. The satisfied customers are less likely to spread the word across about the good features of the product. etc. Psychological activities. transacting on the e-commerce site.” The activities undertaken by the consumer can be either of the following: 11. The process may be longer for some products than for others. looking for and enquiring about alternatives. rather than a singular act of buying. Hence a complaint redressal system is a very important part of a successful marketing strategy. consumer behaviour could involve as many as five different roles – the initiator of the decision. the person who influences the decision.

repair. processes can vary greatly between organizations. though B2B can be used to identify sales transactions between businesses (also sometimes referred to as 'Institutional Sales'). and raw materials. A straight rebuy is the purchase of standard parts. purchasing and accounts payable. the purchasing department issued Purchase Orders for supplies. such as transactions between business and individual consumers (B2C) or business to government Organisations (B2G) transactions. B2B is typically performed in much higher volumes than (B2C) applications. Historically. Then. Perceived Risk. a company selling photocopiers would likely be a B2B sales organization. Most organizations use a three-way check as the foundation of their purchasing programs. however. as opposed to a B2C sales organization. procurement can take a smaller role in the operation and use of the contracts. or a plant manager. and not just the final transactions that result from marketing. Purchasing refers to a business or organization attempting to acquire goods or services to accomplish the goals of the enterprise. but most of their time is now available to negotiate major purchases and setting up of other long-term contracts. The concept of buy class is important because the purchase process is different among these three classes. maintenance. Supplier Quality. equipment. and Traffic and Logistics in addition to Purchasing. A modified rebuy is a situation such that the buying center has some relevant experience to draw upon. These types of agreements typically have a longer duration and increased scope to maximize the Quantities of Scale concept. The term 'Business to Business' can also mean all transactions made in an industry value chain 'before' the finished product is sold to the end-consumer for final consumption. such that the buying center does not have any relevant experience with the product or service. purchasing and accounts payable. receiving. Situation Specific Factors There are three factors under this category: 1a. but a purchasing department and accounts payable are usually two of the three departments involved. in an effort to decrease the administrative costs associated with the repetitive ordering of basic consumable items. or changed from the ones considered the last time a similar problem arose. These departments can be purchasing. Factors Influencing Business Buying Behaviour There are many factors. There is still oversight in the forms of audits and monthly statement reviews. and straight rebuy. "Blanket" or "Master" Agreements were put into place. Purchasing managers/directors and procurement managers/directors guide the organization’s acquisition procedures and standards. The alternatives considered. These contracts are typically renewable annually. and accounts payable or engineering. are different. Purchasing managers realized once contracts for the low rupee value consumables are in place.Business-to-business or “B2B” is a term commonly used to describe the transaction of goods or services between businesses. or any recurring need that is handled on a routine basis. I. services. A new task purchase is a problem or requirement that has not arisen before. modified rebuy. a simple release would be issued to the supplier to provide the goods or services. B2B can also encompass marketing activities between businesses. and operating items and supplies. 1b. This involves three departments in the organization completing separate parts of the acquisition process. The three departments do not all report to the same senior manager to prevent unethical practices and lend credibility to the process. When additional supplies are required. Importance and Complexity: . Combinations can vary significantly. For example. since procurement typically includes Expediting. Typically the word “purchasing” is not used interchangeably with the word “procurement”. as opposed to that between businesses and other groups. Though there are several organizations that attempt to set standards in the purchasing process. which can be classified into two categories – situation specific and organisation specific. Buy class There are three buy classes: new task purchase. which affect the business buying behaviour.

Explain the theory of Classical Conditioning and its implications for marketers. Purchase resources and 4. the purchase decision will tend to short circuit the usual process. Time Pressure Customers behave differently when they are under time pressure. If the organisation has more number of departments it will have larger buying group/center. c. 1c. usually consisting of one person and large Organisations have larger buying groups or buying centers and more formalized procedures. 3 5. This refers to how urgently the item is needed. 1a. Structure. Size: The size of the organisation not only determines the customer’s potential purchase volume. This is due to two factors: 1. importance and complexity influence how extensive and involved the purchase decision process will be.the more important is the purchase. 2. The amount at stake can be the financial loss or the performance loss in case of wrong decision. Pavlov referred to this as a Conditioned Stimulus (CS). large and professionally managed firms will have better resourced purchase departments leading to well evaluated decisions and also formal and rigorous vendor evaluation. make the process less deliberative and give more direct role to the user. Conversely. Ans.Perceived Risk refers to the expected probability that the purchase may not produce a satisfactory outcome. The typical procedure for inducing classical conditioning involves paired presentations of a neutral stimulus along with a stimulus of some significance. response. Complexity refers to the extensiveness of the effort required to understand and manage the product during its acquisition. Purchase Orientation: This refers to the philosophy of purchase. 1II. Small business Organisations and entrepreneurial firms behave more like a family. Pavlov called these the Unconditioned Stimulus (US) . 2. When the item is needed urgently. but also the sophistication of the buying process. to offer better value to its customers. The technical and the specialist knowledge required understanding these specifications. Higher the amount at stake and more strategic the product’s role. Organisation Specific Factors There are four organisational factors. 2b. Purchase orientation. perceived risk. The neutral stimulus could be any event that does not result in an overt behavioral response from the organism under investigation.e. Purchase Resources: This refers to the availability of professional buyers and the extent to which the purchase office is staffed with the required type and number of experts as well as equipment. Structure: This refers to the number of departmental units and geographical locations over which the units are spread out and also its degree of centralization. often reflexive. i. Generally. Size. The above three factors. which can vary from „purchasing simply as an administrative function for organising materials needed at most economical rates‟. The amount at stake in case the choice happens to be wrong. The degree of uncertainty that the choice may be wrong. The number of performance specifications and 2. Financial loss depends on the purchase price and performance loss pertains to the product not performing to standards. presentation of the significant stimulus necessarily evokes an innate. The importance of purchase is a combination of the amount at stake and the extent to which the product plays a strategic role in the organisation.: Classical Conditioning: Classical Conditioning (also known as Pavlovian or Respondent Conditioning) is a form of associative learning that was first demonstrated by Ivan Pavlov. 3. This has two dimensions: 1. viz. and the buying process is likely to be prolonged. to „viewing it as a strategic managerial function whose goal is to add value to the organisation’s ability. which affect buying behaviour: 1. d. The new tasks have the highest uncertainty and the straight rebuy the lowest.

Positive punishment (also called "Punishment by contingent stimulation") occurs when a behavior (response) is followed by an aversive stimulus. are either positive (delivered following a response). the dogs started to salivate in response to the bell. thereby increasing that behavior's frequency. such as introducing a shock or loud noise. sweepstakes and rebates. 4. such as taking away a child's toy following an undesired behavior. In the Skinner box experiment. Reinforcement and punishment. Modeling In this model the individual learns by observing others. Many airlines offer frequent flier programmes that accumulate mileage towards future free redemption. the shoppers were found spending more time in the store and also bought more products. During his research on the physiology of digestion in dogs. Pavlov used bells to call the dogs to their food and. Positive reinforcement occurs when a behavior (response) is followed by a favorable stimulus (commonly seen as pleasant) that increases the frequency of that behavior. The celebrity’s personality by classical conditioning rubs on to the product itself. resulting in a decrease in that behavior. In his initial experiment. after a few repetitions. the core tools of operant conditioning. This type of learning is also called imitation or imitative behaviour. On the days when slow music was played. Pavlov called these “psychic secretions”. Marketers make use of this concept by offering extrinsic rewards like coupons. This has been proved in many marketing experiments. There are four classes of people who are likely to be imitated by others: 11. primarily in the role and timing of reinforcement and was developed by B. or negative (withdrawn following a response). Skinner. negative reinforcement can be a loud noise continuously sounding inside the rat's cage until it engages in the target behavior.meat powder in this example). Children learn from their parents.F. when compared to the days on which fast music was played. The original and most famous example of classical conditioning involved the salivary conditioning of Pavlov's dogs. then this stimulus would become associated with food and cause salivation on its own. Negative reinforcement occurs when a behavior (response) is followed by the removal of an aversive stimulus (commonly seen as unpleasant). etc. In the Skinner box experiment. Negative punishment (also called "Punishment by contingent withdrawal") occurs when a behavior (response) is followed by the removal of a favorable stimulus. such as pressing a lever. Pavlov noticed that. such as pressing a lever. Persons superior in social status 33. if a particular stimulus in the dog’s surroundings was present when the dog was presented with meat powder. This type of classical conditioning will be occurring in our everyday lives. Pavlov referred to this learned relationship as a conditional reflex (now called Conditioned Response). when their brand has no intrinsic ally or superior reward compared to competing brands. Pavlov called this the Conditioned Response (CR). a neutral stimulus (bell) became a conditioned stimulus (CS) as a result of consistent pairing with the unconditioned stimulus (US . from their teachers. Marketers have used this principle when they pair their brand with a likeable celebrity. the music pace was varied on different days from slow to fast. a stimulus such as food or sugar solution can be delivered when the rat engages in a target behavior. the dogs began to salivate in the presence of the lab technician who normally fed them. individuals learn from experts. upon which the loud noise is removed. Thus. This creates a total of four basic consequences: 1. In an experiment in a supermarket. eventually the two stimuli become associated and the organism begins to produce a behavioral response to the CS. respectively. Persons superior in age/grade hierarchy 22. From this observation he predicted that. Persons superior in intelligence ranking system 44. 2. rather than simply salivating in the presence of meat powder (an innate response to food that he called the unconditioned response). Some manufacturers go out of the way to get associated with prestigious retail outlets. Superior technicians in any field . Operant Conditioning: It is also known as Instrumental conditioning and it differs from classical conditioning. If the CS and the US are repeatedly paired. 3. resulting in a decrease in that behavior.and Unconditioned Response (UR). Some business customers boast about their famous clients.

primarily because the Government was giving substantial support to this industry.. After adopting a skimming pricing strategy. While the first year after the launch of Tufcom shoes showed positive results. from 1991 onwards. i. 6. Caselet M/s. are imitated by those in lower class.: 1. Tufleather Ltd. There is a likelihood of this consumer buying this brand again in future from the same store. As the consumers use the product.the belief that high price is an indicator of high quality. The age hierarchy works more in eastern countries like Japan. – “ Tufcom Shoes” For the last fifty years.The choice of the model varies from culture to culture. namely the lower priced shoe market segment? Ans. namely durability and ease of care. In 1993. the company set up its own factory with R & D facilities in Hosur. Do you think the company should identify a new buyer market. They felt that Tufcom offered quality that was superior to leather in terms of durability and ease of care. the company would later consider penetrating the lower priced shoe market segment. In addition. Based on the test marketing results. related products. In most societies the more educated are imitated by less educated persons. strength. Performance exceeds expectations: This could lead to a strong brand and store loyalty in future purchases. some complaints were received from buyers of Tufcom shoes that they found the shoes unusually warm. In the post liberalization period. Performance matches expectations: This leads to a neutral feeling and satisfaction. sales began to fall drastically after that. With the intention of selling shoes. China. which make leather shoes and other.e. Feedback from their sales team indicated that high price buyers did not get motivated by the factors emphasized by Tufleather. more skilled technicians are imitated by less skilled technicians and those who are in higher social class. Where do you think the company went wrong in analyzing consumer shoe buying behavior? 12. particularly to firms that were export oriented. The pilot study indicated positive consumer response. the company’s R & D department developed a material “Tufcom”. India. Tamil Nadu. Such an evaluation may lead to following three outcomes: a. the company set up a large plant with a huge investment and entered into tie-ups with reputed shoe manufacturers to buy the new material and make attractive shoe models. b. based on the consumer perceptual process . flexibility and durability. The company developed a premium pricing strategy for the Tufcom material. In western countries. M/s. they evaluate the performance critically in the initial stages by comparing it with their expectations. They also planned to have an in-house trained team of sales people who would visit the shoe retail outlets and train their sales persons on how to sell shoes. Tufleather also helped the shoe manufacturing companies by providing point of purchase and advertising materials for a nationwide advertising campaign. etc. Tufleather has been in the business of manufacturing and selling leather to companies. where elders are always respected and emulated. The middle class normally aspires to imitate the rich class. . the company was contemplating entering the shoe manufacturing industry. The company also set up a sub unit to produce shoes with this new material and conducted test marketing to gauge the initial response. grade hierarchy is operational. Questions 11. which it claimed had properties of shoe material permeability.

There could be adverse word of mouth publicity. A majority of dissatisfied consumers may not complain. Such a result is possible when the consumer feels that he/she was treated with respect during the process of conflict resolution. or any negative inputs by friends or acquaintances. ii.  Train their dealers and salespeople to examine the needs of consumers and recommend products that would best fit their needs. Hence a complaint redressal system is a very important part of a successful marketing strategy. the policy and procedure followed was fair and the final decision was justified. he is likely to continue with the same brand and store. Exit: This is the extreme reaction when the consumer is totally convinced that the choice was indeed bad.  Ask for customers‟ feedback on the product. they are likely to become loyal customers. self-confidence. Market Segmentation Market segmentation is the process in marketing. Thus they will re-read the product brochures. If the consumer is satisfied that justice has been done. the consumer may perceive that justice has been done. giving positive features and avoid competitors‟ advertisements. Cognitive Dissonance: This may result in doubting the wisdom of the choice. Complain: Dissatisfied customers may either complain or just keep quiet.  Develop comparative advertising campaigns targeted to new buyers. especially if the involvement is intensive. Marketers can make use of this psychology. Marketers should try to reduce cognitive dissonance to the extent possible. “of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs”. i. highlighting the superiority of their brand over the competitors‟ brands. He/she may then decide not to buy this brand again. assertiveness etc.  Enclose an easy to understand instruction booklet along with the product. However the dissatisfied customer is more likely to take the initiative to spread the word around about the negative aspects of his/her experience. Market Segment: a market segment is a subgroup of people or organizations sharing one or more characteristics that make them have similar product needs. to build confidence in the brand among consumers.) If this results in a complaint and if the marketer successfully redresses the complaint. It has also been found by research that the negative publicity of dissatisfied customers is much more widely done than the positive publicity of satisfied customers. The consumer may then try to reduce such disturbance by trying to justify the soundness of the decision by seeking further positive information about their choice and avoid any negative inputs they may get at this stage. but simply turn to competitors‟ brands. either in their advertisements or through their sales people.  Send the customer a letter congratulating them on the new purchase and emphasize the high quality of the product. A relatively low percentage of consumers actually complain and if the complaint is redressed. by asking their sales people to get a feedback from the consumers. b) Attribution to marketer (whether the consumer feels that this complaint can definitely be attributed to the marketer) or c) Consumer’s personality (degree of aggressiveness/ submissiveness. The satisfied customers are less likely to spread the word across about the good features of the product. It has been found by research that consumer complaints are good for the marketers. which could be more damaging. They may go through the entire process of the purchase process from the very beginning when they need to buy the product again. which may reveal some of the positive features neglected by them previously. If the consumer is dissatisfied with this the hostility increases. Because each segment is fairly homogeneous in its needs and attitudes. it is likely to respond similarly to a . The likelihood of the consumer voicing a complaint depends on three factorsa) Extent of dissatisfaction (whether the dissatisfaction is serious or not). Performance is below expectations: In this case. iii. through the following strategies –  Avoid making over-promises. 2. which creates what is called “Cognitive Dissonance” which is a disturbance in the mind.c. the consumer may respond in different ways as explained below.  Develop “post-buy” services at the dealer level.

middle aged (36-50 years). part time employee. are commonly used to segment the market. humid. 2b) City Size: Metropolitan cities. 3e) Income: It is believed that. education. Before marketers started using the concept of market segmentation. air travel. as the consumers’ income increases. microwave ovens. 4 . Some of these variables are discussed here: 1a) Age: The assumption here is that people in the same age group will behave in the same manner. rainy Demographic variables This is the second most popular variable used by marketers. high income. there are some products. single parents. etc. 1c) Education – School. hilly. and rural. dual income married couples. Central. chartered accountants. lower middle income. There can be different categories in such segmentation also. sales personnel. individually or in combination. Based on this we can have different subgroups like infants (new born to 1 year). like singles. which are meant for both segments and these are called unisex products. offering the same product and same marketing mix to all consumers. distributed in a certain way and promoted in a certain way.). middle income.given marketing strategy. The consumer then starts buying costlier branded products. small cities. Many marketers have found it useful to target specific marital status groupings. teachers and professors. the higher is the awareness about the market environment and about different products. the segmentation can be – low income.e. comprised of a given product or service. It is also likely to have similar feelings and ideas about a marketing mix. divorced individuals. holiday packages. the market is divided on the basis of location. sold at a given price. to select the most appropriate basis on which the market can be segmented. South. 0 Bases for Market Segmentation The first step in developing a segmentation strategy is. There are many ways in which this can be done and some most popular variables used for market segmentation are discussed in the following paragraphs: Geographic Segmentation: In this method. elders or seniors (50 years and above). Marketers are interested in determining the profiles of decision makers in households. housewives. to develop appropriate marketing strategies. etc. 2b) Gender: Male preferences are different from the female preferences. and also so called luxuries like automobiles. The higher the level of education. the way the business was done was through mass marketing. North. traders and shopkeepers. income. 4d) Climate: Hot. Research findings have proved that. children (1 to 12 years). teenagers (13 to 19 years). etc. The classic case of such a practice was that of Henry Ford’s philosophy of offering Ford Model T car. 3c) Density of population: Urban. higher middle income. College and University: The level of a consumer’s education will also affect the preferences and also the level of awareness. youth (20-35 years). or professionals (doctors. full time employee. While some products like garments and cosmetics are produced exclusively for each segment. their consumption behavior also changes. management consultants. etc. with the choice to the consumers of selecting any colour they wanted as long as it was black. Their awareness about their rights as consumers will also be better. f) Occupation: Occupation is an important variable and different categories under this can be – self employed. washing machines. etc. adolescents (16-19 years). coastal. Some of these are: 1a) Region of the world or country: East. etc. etc. On the basis of income. the expenditure on food and basic necessities as a percentage of total expenditure declines as consumer income increases. Factors like age. cold. West. semi-urban. 2d) Marital status: Family has been the focus of most marketing efforts and household continues to be the target for many products and services. businessmen and industrialists. etc. and towns. i.

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