G.R.

DAMODARAN ACADEMY OF
MANAGEMENT
Approved by the All India Council for Technical Education,

affiliated to the Bharathiar University and recognized by the UGC

Neelambur, Avinashi Road, COIMBATORE – 641 062

MBA

III SEMESTER

Consumer Behaviour
Prepared by

Ms.B. Subadra devi

Assistant Professor
GRDAM
 CONSUMER BEHAVIOUR

UNIT – I
Consumer Behaviour and Marketing Strategy, nature and scope of Consumer Behaviour. Market
segmentation and Consumer Behaviour. Learning - nature conditions relevant to high and low
involvement strategies, characteristics and types of learning, Brand loyalty, Brand equity & leverage.
Perception - Process, interpretation, Perception and marketing strategy. Perceptual process and buying
behaviour. Perception - Elements, Just notice able difference - its application to Consumer Behaviour,
Perceptual organization and defence, consumer imagery.

CONSUMER BEHAVIOUR

UNIT I

Consumer Behaviour - Definition

According to Belch and Belch "consumer behavior is the process and activities people engage in when
searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to
satisfy their needs and desires".

Three primary activity of Consumer Behaviour

➢ Obtaining

➢ Consuming

➢ Disposing
Nature of Consumer Behaviour

➢ Systematic process
➢ Influenced by various factors
➢ Different for different customers
➢ Different for different products
➢ Vary across regions
➢ Vital for marketers
➢ Reflect status
➢ Result in spread effect
➢ Undergoes a change
➢ Information search
➢ Brand loyalty
Scope of Consumer Behaviour

➢ Consumer behavior and marketing management

➢ Consumer behavior and non profit and social marketing
➢ Consumer behavior and government decision making
➢ Consumer behavior and demarketing
➢ Consumer behavior and consumer education

Consumer behaviour and marketing strategies

➢ Based on explicit and implicit beliefs
➢ Competitive advantage
➢ Analyzing Market Opportunity
➢ Selecting Target Market
➢ Marketing-Mix Decisions

Market Segmentation
 Geographic Segmentation
 Demographic Segmentation
 Psychographic Segmentation
 Behavioralistic Segmentation
Learning - Definition

According to Kotler’s Definition, learning involves changes in an individual’s behavior arising out of the
experience. Most of the human behavior is learned over time, out of the experience.

Conditions Relevant to High and Low Involvement Strategies

• Classical Conditioning Theory- Ivan Pavlov

• Operant Conditioning – B.F.Skinner

• Cognitive Learning Theory – Jean Piaget

• Social Cognitive Theory (SCT)

Perception - Definition

Perception is defined as the process by which an individual selects, organized, and interprets stimuli into a
meaning and coherent picture of the world.

Elements of Perception

 Sensation

 The absolute threshold

 The differential threshold

 Subliminal perception

Three aspects of Perception

1. Perceptual Selection

2. Perceptual Organization

3. Perceptual Interpretation

Dynamics of Perception

• Selective perception

• Selective Exposure

• Selective attention

• Perceptual Defence

• Perceptual Blocking

• Perceptual Organization

• Figure and Grounds

• Grouping

• Closure

• Perceptual Interpretation

• Perceptual distortion

• Stereotypes

• Physical Appearances

• Jumping to Conclusions

• First Impressions
 • Halo Effect

Consumer Imagery

➢ Product positioning

➢ Product repositioning

➢ Perceptual mapping

➢ Positioning of services

➢ Perceived price

➢ Reference price

➢ Perceived quality

➢ Price quality relationship

➢ Retail store image

➢ Manufacturer’s Image

➢ Perceived Risk

Brand Loyalty – Definition

The American Marketing Association “The degree to which a consumer consistently purchases the same
brand within a particular product class”.

Factors affecting brand loyalty

 Different measurements of brand attitude and purchase habits

 Distribution decision of the company

 Convince place

 Attitudinal and behavioral concept

 Uniqueness

Brand Equity

Brand equity refers to the value of a brand and is determined by the consumer’s perception of the brand.
 G.R. DAMODARAN ACADEMY OF
MANAGEMENT
Approved by the All India Council for Technical Education,

affiliated to the Bharathiar University and recognized by the UGC

Neelambur, Avinashi Road, COIMBATORE – 641 062

MBA

III SEMESTER

CONSUMER BEHAVIOUR

Prepared by

Ms. B. Subadra devi

Assistant Professor
GRDAM
 CONSUMER BEHAVIOUR

UNIT – II
Motivation - Nature, motivational strategies, theories and their relevance, marketing strategies
based on motivational conflict. Personality - Psycho-analytical neo-Freudian and social
approaches to personality understanding consumer diversity, Brand personality, Self and self
image.
CONSUMER BEHAVIOUR

UNIT II

Concept of Motivation

 Motivation is the driving force within individuals that impels them to action.

 If company is offering a new product line and spending much on heavy advertisement,
not ensuring whether the products are available.

Needs, Goals and Motives

 Individuals-driving force that impels to action – result of tension- which turn is because
of unfulfilled needs.

 To reduce tension, every individual strives for fulfilling their needs.

 This basically, depends on each individual how they fulfill their needs

 Innate needs

 Acquired needs
Goals

 End result of motivated behavior

 Every individual’s behavior is goal-oriented

Marketer’s point of view, 4 types of goals

 Generic – general classes of goals that consumers select to fulfill their needs. Eg:
washing hands

 Product specific goals – what kind of product is used. Eg: soap, liquids, etc.

 Brand specific goals – Eg: which soap-lux, pears,..

 Store specific goals- from where that product must be purchased.

Goal Selection

Goal selected depend on their personal experiences, physical capacity, goal’s accessibility in the
physical and social environment and above all the individual’s cultural norms and values.
Eg: Strong hunger need- what available at that moment
Motives
 2 types of motives – rational and irrational (emotional) motives.
 Consumers when they consider all alternatives and choose those that give them the
greatest utility- known as economic man theory.

Theories of Motivation

Maslow’s Hierarchy of Needs

ERG Theory–Clayton
 Two Factor Theory- Frederick Herzberg

Expectancy Theory – Victor Vroom

Motivational Conflict

A situation in which a consumer is driven to make a decision based on conflicting goals

Conflict Resolution

The ability to resist or resolve interference from task-irrelevant distractors in order to focus on
the target
Marketing Strategies based on Motivational Conflict
 Approach-Approach Conflict
 Approach-Avoidance Conflict
 Avoidance-Avoidance Conflict
Dynamics of Motivation
 Many needs are never fully satisfied
 As needs become satisfied, new and higher-order needs emerge
 Success and Failure influence Goals
Substitute Goals
Frustration
Defense Mechanisms
Motivational Strategies
 Providing Additional Incentives
 Implementing a Loyalty Program
 Enhancing Perceived Risk
 Arousing Consumers Curiosity
Personality
Personality signifies the inner psychological characteristics that reflect how a person reacts
to his environment.
Trait Theory

 Trait theory is representative of multi-personality theories.

 Trait theory is based on certain assumptions, such as traits which are certainly stable in
nature and a limited number of traits are common to most of the people.
 According to the Trait theorists, an individual’s personality make-up stems out of the
traits that he possesses, and the identification of traits is important.
 The trait theories can be of two broad categories, viz., Simple trait theories and general
trait theories.
Simple Trait Theories
General Trait Theories
The Psychoanalytic Theory of Freud
Sigmund Freud - the father of psychology.
The theory is regarded as the cornerstone of modern psychology.
He said that all behavior within an individual cannot be explained, much lies in the
subconscious.
 Id − The id operates based on the pleasure principle, which stresses on immediate
fulfillment of needs. The id is the personality component made up of unconscious psychic
energy which satisfies basic urges, needs, and desires.
Ego − Ego is that state of awareness which thinks of you as separate from the other. It
always thinks of the glories of the past and hopes of the future and focuses on guiltiness. It
always thinks of what was and what could be.
Super Ego − The superego provides guidelines for making judgments. It is the aspect of
personality that holds all our moral standards and ideals that we acquire from both parents
and society.
Neo-Freudian Theory

 There were a group of psychologists who believed that social interaction and resultant
relationships formed the basis for the growth and development of personality.
Based on this, consumers are classified into three personality types
 Complaint Personalities
 Aggressive Personalities
 Detached Personalities
Brand Personality
 Consumers attribute various descriptive personality – like traits or characteristics to
different brands in a wide variety of product categories.
 Product Personality and Gender
 Product Personality and Geography
 Personality and Color
 Self and Self-Image
 One or Multiple Selves
 Different product for different selves
 The Makeup of the Self-Image
 The Extended Self
 Altering the Self
 Virtual Personality or Self
 G.R. DAMODARAN ACADEMY OF
MANAGEMENT
Approved by the All India Council for Technical Education,

affiliated to the Bharathiar University and recognized by the UGC

Neelambur, Avinashi Road, COIMBATORE – 641 062

MBA

III SEMESTER

CONSUMER BEHAVIOUR

Prepared by
Ms. B. Subadra devi
Assistant Professor
GRDAM
 CONSUMER BEHAVIOUR
UNIT – III
Attitude formation & change - Tricomponent and structural models of attitudes, sources of attitude
formation, strategies of attitude change, cognitive dissonance, attribution, self perception theories,
Foot in the door phenomenon. Groups - types, Celebrities, Family, Socialization of family
members, Function of family, Family decision-making and consumption - related roles, Family
life cycle.

CONSUMER BEHAVIOUR
UNIT III
Attitude
➢ An Attitude is a learned predisposition to behave in a consistently favorable or unfavorable
way with respect to a given object.
➢ An Attitude is a relatively enduring organization of beliefs, feelings, and Evaluation
towards socially significant objects, groups, events or symbols.

The Attitude “Object”

Attitudes are a learned predisposition
Attitudes have consistency
Attitudes occur within a Situation
ABC Model/COMPONENTS/Structure OF ATTITUDES
➢ Cognitive component.
➢ Affective component.
➢ Conative component.
 STRUCTURAL MODELS OF ATTITUDES
 The tricomponent attitude model
 The multiattribute attitude model
 The trying-to-consume model
 The attitude-toward-the-ad model
The Multi attribute attitude model – proposed by martin fishbein
 Attitude toward object model
 Attitude toward behavior model
 Theory of reasoned-action-model

The trying-to-consume model

The attitude-toward-the-ad model

Sources of Attitudes
 The central idea running through the process of attitude formation is that the thoughts,
fallings and tendencies to behave are acquired or learned gradually.
Direct Personal Experience
Association
Social Learning
Attitude Formation
Classical Conditioning

Attitude Formation without Prior Knowledge

Consumers Experiments
Information about the Products
Strategies of Attitude Change
Changing the consumers basic motivational function
According to functional approach consumers attitudes can be classified in terms of four func
tions:
a) Utilitarian function
b) Ego-Defensive Function
c) Value Expressive Function
d) Knowledge Function
Associating the product with admired group or events
Resolving two conflicting attitudes
Multi attribute models
According to these models attitude change can be brought about in four ways:
1. Changing the relative evaluation of attributes
2. Changing brand beliefs
3. Adding an attribute
4. Changing the over-all brand rating
Changing Beliefs about Competitor's Brands
Behavior can precede or follow attitude formation
Cognitive Dissonance Theory by Leon Festinger
 An individual always strives to bring consistency within him / her. He will always try to
keep his opinions and attitudes in clusters which are internally consistent.
Attribution Theory
 A theory concerned with how people assign casualty to events and form or alter their
attitudes as an outcome of assessing their own or other people’s behavior.
Self-Perception Theory -Psychologist Daryl Bem
 Self-perception theory is counterintuitive. Common knowledge would have us assume that
a person’s personality and attitudes drive their actions.
Foot-in-the Door Technique
 Research into the foot-in-the-door technique has concentrated on understanding how
specific incentives ultimately influence consumer attitudes and subsequent purchase
behavior.
Group
 A group may be defined as two or more people who interact to accomplish either
individual or mutual goals.
Group membership
Understanding the power of reference groups
Normative
Comparative
A broadened perspective on reference groups
Indirect reference groups
Factors that affect reference group influence
Information and experience
Credibility, attractiveness, and power of the reference group
Conspicuousness of the product
Reference groups and consumer conformity
 G.R. DAMODARAN ACADEMY OF
MANAGEMENT
Approved by the All India Council for Technical Education,

affiliated to the Bharathiar University and recognized by the UGC

Neelambur, Avinashi Road, COIMBATORE – 641 062

MBA

III SEMESTER

Consumer Behaviour

Prepared by

B.Subadra devi

GRDAM
 CONSUMER BEHAVIOUR

UNIT – IV
Culture- Nature - Characteristics - Measurement, Sub-cultures – Nationality, age, geographic,
Regional and Sex, Sub cultural interaction. Cross culture : International perspective cross cultural
consumer analysis, Multinational strategies, Cross – cultural psychographic segmentation marketing
mistakes – undertaking differences.

CONSUMER BEHAVIOUR
UNIT IV

Culture

 Culture as the sum total of learned beliefs, values, and customs that serve to
direct the consumer behavior of members of a particular society.

 Belief and Value

The Invisible Hand of Culture

 Impact of culture is so natural and automatic that its influence on behavior is

usually taken for granted.
Culture Satisfies Needs

 Culture exists to satisfy the needs of the people within a society. It offers
order, direction and guidance in all phases of human problem solving by
providing ‘tried and true’ methods of satisfying physiological, personal, and
social needs.

Culture is learned

 At an early age, we begin to acquire from our social environment a set of

beliefs, values, and customs that make up our culture.

How Culture is Learned

 Anthropologists have identified three distinct forms of cultural learning:

Enculturation and Acculturation

 The learning of one’s own culture is known as enculturation.

 Language and Symbols

To communicate effectively with their audiences, marketers must use

appropriate symbols to convey desired product images or characteristics.

Ritual

 A ritual is a type of symbolic activity consisting of a series of steps occurring

in a fixed sequence and repeated over time.

Culture is shared

Various social institutions within a society transmit the elements of culture

and make the sharing of culture a reality.

Culture is dynamic

To fulfil its need gratifying role, culture continually must evolve if it is to

function in the best interests of a society.

Measurement of Culture & Sub-Culture

Projective Tests

 The projective tests attempt to measure underlying traits, fears, anxieties and
attitudes, motivations and personalities.

 Projective tests can be traced to the psychoanalytic psychology, which argue

that human beings have conscious and unconscious attitudes, motivations and
personalities that are hidden and unknown from conscious awareness.

Attitude measurement tests and techniques

 Attitude measurement tests and techniques are used to measure attitudes of

people towards persons, objects, and situations.

Content analysis

 Content analysis focuses on the examination of verbal, written, nonverbal and

pictorial compositions/communication.

Consumer fieldwork

Fieldwork may be conducted on consumers, so as to observe their behavior,

and draw generalizations about the values, myths, beliefs, customs, traditions
and rituals.
 Value measurement instruments

 Researchers today, are increasingly making use of value measurement

instruments. These are scales that measure values by means of a
questionnaire.

SUB-CULTURE

 While culture is defined as the “personality of a society”, (inclusive of

language, customs and traditions, norms and laws, religion, art and music,
etc), it is not entirely homogenous in nature.

TYPES OF SUB-CULTURE

Nationality

Geographical location

Religion

Race and caste

Gender

Age

Cross Culture

Cross-cultural consumer analysis is defined as the effort to determine to what

extent the consumers of two or more nations are similar or different.

objective of cross-cultural consumer analysis

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

Strategies

The greater the similarity between nations, the more feasible it is to use
relatively similar strategies in each nation.

EXPOSURE TO OTHER CULTURES

 The cultural fabric has undergone a transformation and we see changes in our
values and beliefs, customs and traditions, etc.
 Three major issues

 i) how do consumers in one culture get exposed to good/services being used

by people of other cultures.

 ii) how should a marketer design/adapt his 4Ps so as to be accepted by people

influenced by newer cultures (if he is serving in the home market only)

 iii) how should a marketer design/adapt his 4Ps so as to accepted by people of

other cultures (in foreign markets).

Two ways

 i) through ones’ own initiatives

 ii) through the marketers' efforts.

CROSS-CULTURAL CONSUMER ANALYSIS

 Schiffman defines cross cultural consumer analysis as “the effort to determine

to what extent the consumers of two or more nations are similar or different.”

APPLICATION OF CROSS CULTURE CONSUMER ANALYSIS:

RELEVANCE FOR MARKETERS

 People’s values and beliefs, customs and traditions, as also perspectives and
orientations have a bearing on customer’s needs, wants and priorities, finally
translating into their desire for product and service offerings.

STRATEGIES FOR MULTINATIONAL COMPANIES

 Whether they would be making their product and service offerings available
worldwide to all countries or they would be making it available only to certain
select countries in the total international market.

Thus, as companies decide to expand their markets to foreign territories,

they need to follow one of the two strategies, viz.:

 i) They could offer the product/service offerings with the same marketing mix
(standardized and global), as in their native country. Such a strategy is known
as an undifferentiated strategy, i.e., one marketing strategy for all countries.

 ii) They could adapt the product/service offerings in the foreign country. This
would present a more “localized offering” where the and service offerings are
 positioned, designed, promoted and sold in a manner that is distinctive and
specific to foreign countries and cultures.

Cross-Cultural
Psychographic Segmentation

 Psychographic segmentation is a method used to group prospective, current or

previous customers by their shared personality traits, beliefs, values, attitudes,
interests, and lifestyles and other factors.

Six Global Consumer Market Segments

 Strivers

 Devouts

 Altruists

 Intimates

 Fun seekers

 Creatives
 G.R. DAMODARAN ACADEMY OF
MANAGEMENT
Approved by the All India Council for Technical Education,

affiliated to the Bharathiar University and recognized by the UGC

Neelambur, Avinashi Road, COIMBATORE – 641 062

MBA

III SEMESTER

Consumer Behaviour

Prepared by

B.Subadra devi

GRDAM
 CONSUMER BEHAVIOUR

UNIT – V
Opinion leadership & process, Dynamics, motivation and opinion leadership, Measurement and
corporate strategy of opinion leadership. Innovation, Characteristics, Types, Profile of consumer
innovator, Diffusion of innovation, Adoption process.

CONSUMER BEHAVIOUR
UNIT V

Opinion Leaders

 Opinion leadership is a dynamism through which one person (the one who has
a strong opinion) informally influences the actions or attitudes of others (who
may not have any opinion or seeking an opinion).

DYNAMICS OF THE OPINION LEADERSHIP PROCESS

 Credibility

 Reliable Product Information

 Information and Advice

 Opinion leadership is category specific

 Opinion leadership is a two-way process

 Opinion leaders are more knowledgeable

The Motivations behind Opinion Leadership

 The needs of opinion leaders

 The need of opinion receivers

Measuring Opinion Leadership

 Self-designating Method

 Sociometric Research

 Key Informant Method

 Objective Method
 Diffusion of Innovations

 The framework for exploring consumer acceptance of new products is drawn

from the area of research known as the diffusion of innovations.

Diffusion and Adoption

 i) Whether the modified/new product and service offering would be accepted

by the segment(s) – Diffusion

 ii) How quickly would the product and service offering be accepted by the
segment(s) – Adoption

FACTORS AFFECTING DIFFUSION OF INNOVATION/ADOPTION

PROCESS

Triggers to the Diffusion of Innovation/Adoption Process

Relative advantage

The relative advantage of the innovative product/service offering over already

existing products/services, accelerates its rate of adoption by the target market.

Compatibility

The compatibility of the innovative product and service offering with the existing
backgrounds, behavior and lifestyle patterns of consumers also affects its adoption
by the consuming public.

Complexity

An innovative offering would be easily diffused when there is ease of

understanding, purchase and use.

Trialability

The ease with which the product or service can be tested and tried also determines
the rate of acceptance.

Observability

Observability in an innovative product refers to the degree to which a

product/service’s benefits can be observed, imagined and perceived by a potential
consumer.
Profile of a Consumer Innovator & Adoption Process

 People vary in degree with respect to their receptivity towards new

product/service offerings.

 The marketer needs to have an understanding on what constitutes an

“innovator”

 The traits/qualities/ characteristics that differentiate an innovator from a non-

innovator, indicate that separate media and message strategy need to be
formulated

Traits/qualities/ characteristics

 Innovators are not “generic”; they are “specific” to a product and service type.
- Innovators are desirous of new products/services in a particular category

 Consumer innovators are generally younger than late adopters or non-

innovators.

 After a while, innovators tend to become opinion leaders.

 Innovators also possess certain personality traits. –cognitive, inner-directed,

variety novelty seekers, unusual experiences, risk.

Barriers to the Diffusion of Innovation/Adoption Process

 Usage

Value

Risk

Psychological Factors

The two common threats are

 Tradition barrier –relates to socio-culturally accepted norms of behavior that

are regarded as “right and appropriate,” by the consumer segment.

Eg: western outfits, Kellogg's

 Image barrier- refers to the consumer’s attitude and feelings about the
product/service offering, the brand, or the dealer, or even the country of
origin.

Eg: patriotic and ethnocentric