INTRODUCTION TO CONSUMER BEHAVIOUR

• Definition

Consumer behaviour has changed dramatically over the past few decades. Today, consumers can
order online many customised products ranging from groceries to laptops. Many have replaced their
daily newspapers with customised, online editions of these media and are increasingly receiving
information from online sources. Students choosing a university no longer rely on receiving
prospectuses through the post; instead, they have online access to all the pertinent information
about a university’s courses. And now in Covid times, education too is via an online platform.

The term consumer behaviour is defined as the behaviour that consumers display in searching for,
purchasing, using, evaluating and disposing of products and services that they expect will satisfy
their needs. Consumer behaviour focuses on how individuals make decisions to spend their available
resources (time, money, effort) on consumption related items. That includes what they buy, why
they buy it, when they buy it, where they buy it, how often they buy it, how often they use it, how
they evaluate it after the purchase, the impact of such evaluations on future purchases and how
they dispose of it.

Consumer behaviour is a process. In its early stages of development, the field was often referred to
as buyer behaviour, reflecting an emphasis on the interaction between consumers and producers at
the time of purchase. Marketers now recognize that consumer behaviour is an ongoing process, not
merely what happens at the moment a consumer hands over money or a credit card and in turn
receives some good or service.

Consumer behaviour is the study of how individual customers, groups or organizations select, buy,
use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions
of the consumers in the marketplace and the underlying motives for those actions.

The behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing
of products and services that they expect will satisfy their needs.

There are two consumer entities:

• Personal: The individual who buys goods and services for his or her own use, for household use,
for the use of a family member, or for a friend.

• Organizational: A business, government agency, or other institution (profit or nonprofit) that

buys the goods, services, and/or equipment necessary for the organization to function.

 Role of Consumer Behaviour in Marketing

The field of consumer behaviour is rooted in the marketing concept , a business orientation that evolved
through several alternative approaches i.e. the production concept, the product concept and the selling
concept.
The production concept assumes that consumers are mostly interested in product availability at low
prices; its implicit marketing objectives are cheap, efficient production and intensive distribution. This
orientation makes sense when consumers are more interested in obtaining the product than they are in
specific features and will buy what is available rather than wait for what they really want. Today, using
this orientation makes sense in developing countries or in other situations in which the main objective is
to expand the market.

The product concept assumes that consumers will buy the product that offers them the highest quality,
the best performance and the most features. A product orientation leads the company to strive
constantly to improve the quality of its product

Marketers found that it was a lot easier to produce only products that consumers wanted. This was first
confirmed through research. Consumer needs and wants therefore became the firm’s primary focus.
This consumer-oriented marketing philosophy came to be known as the marketing concept. The key
assumption underlying the marketing concept is that to be successful a company must determine the
needs and wants of specific target markets and deliver the desired satisfactions better than the
competition. The marketing concept is based on the premise that a marketer should make what it can
sell, instead of trying to sell what it has made.

The marketing concept is based on the premise that a marketer should make what it can sell, instead of
trying to sell what it has made.

Consumer behaviour is the study of how people make decisions about what they buy, want, need, or act
in regard to a product, service, or company. It is critical to understand consumer behaviour to know how
potential customers will respond to a new product or service. It also helps companies identify
opportunities that are not currently met. Consumer understanding plays an important role in
identifying opportunities in the market and thereby in NPD and product improvement

Examples: Oreo shake powder, Gluten free products, Baked snacks/ chips, Maggi Atta Noodles

Consumer Behaviour is key to the following elements of the Marketing concept:

• Consumer Research: The process and tools used to study consumer behaviour

All companies must continually conduct research to understand the needs and priorities of their
market segments.

 Segmentation: Process of dividing the market into subsets of consumers with common needs or
characteristics
Consumer needs are shaped by the environment, culture, education, and life experiences.
Marketers perform segmentation by looking for groups with common needs. Segmentation can be
based on consumers’ demographics, product usage, geography, lifestyle, and many other
characteristics and needs.

 Market Targeting: The selection of one or more of the segments identified to pursue
 When a marketer chooses the segments that they will pursue, they have chosen a target market.
Selection of the correct target market is critical to success of the product since the marketer has
assumed that this group of consumers has a similar need with respect to their product or service.

 Positioning: Developing a distinct image for the product in the mind of the consumer.

Successful positioning includes: Communicating the benefits of the product, communicating

a unique selling proposition

Positioning is how the consumer thinks about your product versus the competitor’s
product. The positioning is ultimately in the mind of the consumer but the marketer helps
form the positioning through effective advertising and communication. Strong positioning
differentiates your product from the competition and clearly tells the consumer how it will
fulfill their needs better than other products on the market.
Marketing Strategy and Consumer Behaviour:

To fully understand how consumer behaviour affects Marketing, it's vital to understand the three factors
that affect CB:

Psychological Factors

• These include perception of a need or situation, the person's ability to learn or understand
information, and an individual's attitude. Each person will respond to a marketing message
based on their perceptions and attitudes. Therefore, marketers must take these psychological
 factors into account when creating campaigns, ensuring that their campaign will appeal to their
target audience

Example: Reaction to George Floyd’s death is not uniform , Response to Lockdown or Unlock 1

Personal Factors

• These are characteristics that are specific to a person and may not relate to other people within
the same group. These characteristics may include how a person makes decisions, their unique
habits and interests, and opinions. When considering personal factors, decisions are also
influenced by age, gender, background, culture, and other personal issues.

Example: Net-banking among older population,

Social Factors

• Social characteristics have a significant impact on consumer behaviour. Social influencers are
quite diverse and can include a person's family, social interaction, work or school communities,
or any group of people a person affiliates with. It can also include a person's social class, which
involves income, living conditions, and education level. The social factors are very diverse and
can be difficult to analyze when developing marketing plans.

Example: Choice of brand ambassador can influence consumers

 Distinction among consumer, customer, buyer, user and payer

Consumer: someone who uses/ consumes the product

Customer: commonly used for consumer of service e.g. broadband, airlines

Buyer: someone who pays for the product/ service, he/ she may or may not be the user

User: similar to consumer this person is the person who eventually uses the product/ services. He/ she
may not necessarily be paying for it

Payer: similar to buyer, this person is funding the product and may not necessarily be the user
 Framework of Consumer Behaviour – internal influences, external influences

A combination of external and internal elements influence the behaviour of consumers. Internal
influences tend to be consumer perceptions of the product/ brand, their past experience, memories
from own experience or experience of someone they know, their own personality and emotional
balance.

External influences are not intrinsic to the consumer e.g. reference groups (friends and family), cultural
background, marketing activities carried out by the brand/company/ competitors, consumer’s social
status i.e. his social group and his position in the society.

 Self-concept & Lifestyle and decision process

As a result of the interaction of the internal (mainly psychological and physical) and external (mainly
sociological and demographic) variables, individuals develop a self-concept that is reflected in a lifestyle.
Self-concept is the totality of an individual’s thoughts and feelings about him- or herself. Lifestyle is,
quite simply, how one lives, including the products one buys, how one uses them, what one thinks about
them, and how one feels about them

These self-concepts and lifestyles produce needs and desires, many of which require consumption
decisions to satisfy. As individuals encounter relevant situations, the consumer decision process is
activated. This process and the experiences and acquisitions it produces in turn influence the
consumers’ self-concept and lifestyle by affecting their internal and external characteristics

 Interdisciplinary concepts from psychology, sociology, anthropology, micro-economics

and organizational buying behaviour

Consumer behaviour was a relatively new field of study in the mid- to late 1960s. Because it had no
history or body of research of its own, marketing theorists borrowed heavily from concepts developed in
other scientific disciplines, such as psychology (the study of the individual), sociology (the study of
groups), social psychology (the study of how an individual operates in a group), anthropology (the
influence of society on the individual) and economics, to form the basis of this new marketing discipline.
Many early theories concerning consumer behaviour were based on economic theory, on the notion
that individuals act rationally to maximise their benefits (satisfactions) in the purchase of goods and
services. Later research discovered that consumers are just as likely to purchase impulsively and to be
influenced not only by family and friends, by advertisers and role models, but also by mood, situation
and emotion. All of these factors combine to form a comprehensive model of consumer behaviour that
reflects both the cognitive and emotional aspects of consumer decision-making.

The process of consumer decision-making can be viewed as three distinct:

1) The input stage influences the consumer’s recognition of a product need and consists of two major
sources of information: the firm’s marketing efforts (the product itself, its price, its promotion and
where it is sold) and the external sociological influences on the consumer (family, friends, neighbours,
other informal and non-commercial sources, social class and cultural and subcultural memberships). The
cumulative impact of each fi rm’s marketing efforts, the influence of family, friends and neighbours, and
society’s existing code of behaviour, are all inputs that are likely to affect what consumers purchase and
how they use what they buy.

2) The process stage of the model focuses on how consumers make decisions. The psychological factors
inherent in each individual (motivation, perception, learning, personality and attitudes) affect how the
external inputs from the input stage influence the consumer’s recognition of a need, pre-purchase
search for information and evaluation of alternatives. The experience gained through evaluation of
alternatives, in turn, affects the consumer’s existing psychological attributes.

3) The output stage of the consumer decision-making model consists of two closely related post-
decision activities: purchase behaviour and post-purchase evaluation. Purchase behaviour for a low-
cost, non-durable product (e.g. a new shampoo) may be influenced by a manufacturer’s extensive sales
promotion (e.g. price cuts) and may actually be a trial purchase; if the consumer is satisfied, he or she
may repeat the purchase. The trial is the exploratory phase of purchase behaviour in which the
consumer evaluates the product through direct use. A repeat purchase usually signifies product
adoption.
 Applications of Consumer Behaviour

1) Marketing Strategy:

Marketing decisions based on explicit consumer behaviour theory, assumptions, and research are more
likely to be successful than those based on hunches or intuition, and thus create a competitive
advantage. An accurate understanding of consumer behaviour can greatly reduce the odds of failures
such as:

S.C. Johnson pulled the plug on its Ziploc TableTops, a line of semi-disposable plates. Table- Tops was one
of the company’s most expensive launches with $65 million spent on marketing. A number of factors
appear to have contributed to the failure including relatively high prices (which made consumers less
likely to throw them away) and the fact that the products really weren’t all that disposable. As one
retailer explained, “There are no repeat purchases. The things last forever.
2) Regulatory Policy

Various regulatory bodies exist to develop, interpret, and/or implement policies designed to protect and
aid consumers. For example, the Food and Drug Administration (FDA) administers the Nutrition Labeling
and Education Act (NLEA). Among other things, NLEA requires that packaged foods prominently display
nutrition information in the form of the Nutrition Facts panel.

3) Social Marketing

Social marketing is the application of marketing strategies and tactics to alter or create behaviours that
have a positive effect on the targeted individuals or society as a whole.

Social marketing has been used in attempts to reduce smoking, to increase the percentage of children
receiving their vaccinations in a timely manner, to encourage environmentally sound behaviours such as
recycling, etc.

Just as for commercial marketing strategy, successful social marketing strategy requires a sound
understanding of consumer behaviour.
 Consumerism & Consumer Behaviour in the contemporary environment

Consumerism is the organized form of efforts from different individuals, groups, governments and
various related organizations which helps to protect the consumer from unfair practices and to
safeguard their rights. This movement has led to many organizations improving their services to the
customer in order to drive customer satisfaction and build long lasting relationships with them. In short,
Consumerism refers to protection of consumer rights.

In this age, consumers are well-informed. Key functions of consumerism are:

• Protection of Rights : protects their rights from unfair practices.

• Prevention of Malpractices : prevents unfair practices within the business community, such as
hoarding, adulteration, black marketing, profiteering, etc.

• Unity among Consumers : creates knowledge and harmony among consumers and to take
group measures on issues like consumer laws, supply of information about marketing
malpractices, misleading and restrictive trade practices.

• Enforcing Consumer Rights: Right to Safety, Right to be Informed, Right to Choose, and Right to
Redress.

Government policies (Liberalisation, Privatisation and Globalisation) have affected the way consumers
behave. These have given consumers exposure to global and private brands. Media exposure too have
influenced their knowledge and perceptions of brands thus shaping their behaviour.

Technology and Advertising are key drivers of change in consumer behaviour. Due to advance
technology and advertising, there are 3 disruptive trends that have changed consumer behaving pattern:

• Real time information

Consumers have access to real time information and are well-informed.

• Consumer reviews

Consumers have a platform to share their experiences and thereby influence others. Reviews
also allow consumers to seek information/ feedback on products.

• Customisation

Technology allows customization of products and services as per the requirements of the
consumer.

The below changes too have had an impact on consumer behaviour:

 Traditional to Digital Marketing

 Offline to online retailing
 Mobile app

Companies are now more socially responsible. They work towards procuring and disposing off sensibly,
be environment friendly. CSR initiatives by companies demonstrates good corporate citizenship which
help in gaining trust of the consumers. Such companies focus on ensuring long run best interest of its
consumers.

Successful brand relationships are result of a satisfying brand experience. Experience is considered
satisfying when there is high value created in the minds of the consumer. Customer trust is key to
customer retention. The basis of this relationship and trust is the experience. This experience strongly
influences consumer behaviour.

To sum up ‘Consumer is the King’ and understanding what makes him/her tick is key.
 Consumers as Individuals

Not all consumers are alike – the marketplace is composed of many different peoples with different
backgrounds, countries of origin, interests, needs and wants, and perceptions. Needs of consumers are
different. Diversity in the marketplace calls for classification or segmentation of the market. Market
segmentation is an attractive, viable, and potentially highly profitable strategy for marketers.

Market segmentation is the process of dividing a market into distinct subsets of consumers with
common needs or characteristics and selecting one or more segments to target with a distinct marketing
mix. In the past, companies would mass market their product i.e. offer the same product and marketing
mix to all consumers. With the widespread acceptance of market segmentation, companies now have
specific products for identified segments e.g. Colgate Max white, Colgate Vedshakti

Market segmentation requires a large enough population with sufficient money to spend (general
affluence) and sufficient diversity to lend itself to partitioning the market into sizeable segments on the
basis of demographic, psychological or other strategic variables. Media choice is dependent on the
segments targeted by the company. Product range optimization can be executed based on the
segmentation. This also helps create a unique and differentiated proposition for key segments.

If all consumers were alike – if they all had the same needs, wants and desires, and the same
background, education and experience – mass (undifferentiated) marketing would be a logical strategy.
Its primary advantage is that it costs less: only one advertising campaign is needed, only one marketing
strategy is developed, and usually only one standardised product is offered. When trying to sell the
same product to every prospective customer with a single proposition/ communication, the marketer
ends up portraying its product as a means for satisfying a common or generic need. As a result, the
product often ends up appealing to no one.

Different customers have different needs. By segmenting the market and choosing target markets,
companies can differentiate their products to provide the benefits that the segments desire. Once a
marketer has identified their segment, they can choose media that is targeted to that segment for their
advertising.

Segmentation strategy allows marketers to avoid head-on competition in the marketplace by

differentiating their offerings, not only on the basis of price but also through styling, packaging,
promotional appeal, method of distribution and superior service.

Market segmentation is just the first step in a three-phase marketing strategy. After segmenting the
market into homogeneous clusters, the marketer then must select one or more segments to target. The
third step is positioning the product so that it is perceived by the consumers in each target segment as
satisfying their needs better than other competitive offerings.
There are five criteria for effective targeting. A market segment should be:

1. identifiable: marketer must be able to see or find the characteristic they have chosen for
segmentation

2. sufficient (in terms of size): It must be large enough to be profitable to the marketer

3. stable or growing: the consumers are not “fickle” and likely to change very quickly

4. accessible (reachable) in terms of both media and cost, and

5. congruent with the firm’s objectives and resources.

Bases for Consumer Segmentation

This two-by-two matrix is important for understanding types of segmentation schemes. It is possible to
break segmentation into two broad groups – those that are based on the consumers themselves and
those that are based on the consumers’ interaction or potential interaction with the product and are
therefore consumption based. Within each of these two larger types of schemes, segmentation
variables can be considered to be based on facts or what is absolutely known and measurable about the
consumer versus cognitions, which are abstract and can be determined only through more complex
questioning.
A) Consumer rooted segmentation

Demographics are the core of almost all segmentation because they are easy and logical. In
addition, they are a cost-effective way to reach segments and demographic shifts are easier to
identify than other types of shifts. When researching segmentation and media exposure, a
consumer researcher will learn that media exposure is often directly related to demographics. Age
segmentation includes segments such as the baby boomers and generations X and Y. Family life-
cycle is based on the premise that many families pass through similar phases in their lives and share
major life events such as moving, marriage, birth of a child, and retirement. Income, education, and
occupation tend to tie together and lead to segmentation based on social class.

Geodemographic segmentation is a popular use of geography in targeting. People who live close to
one another are likely to be similar in tastes, incomes, lifestyles and consumption. They might eat
similar foods, like the same movies, and take the same types of vacations.

Personality traits help us identify what segments are valuable to marketers. People often do not
identify these traits because they are guarded or not consciously recognized.

For instance, if an innovator also classifies themselves high on an “exhibition” personality trait, it
means they want to be the centre of a group and might be important as these are the type of
innovators to spread word-of-mouth messages regarding new products and services.

• Consumer innovators

Innovator is a personality trait where the consumer is open- minded i.e. open to trying new
products. This person perceives less risk in trying new things.

• Dogmatism
Dogmatism is a personality trait that measures the degree of rigidity (versus openness) that
individuals display towards the unfamiliar and towards information that is contrary to their own
established beliefs.

Lifestyles or psychographics are based on consumer values. These includes activities, interests, and
opinions. Lifestyle explains buyer’s purchase decisions and choices. While demographics tell us the
consumer’s ability to buy them and this works for segmentation of basic products, but
psychographics or lifestyles are based on consumer’s values. These shared values, interests,
activities, opinions, and interests are an effective way to explain buyers’ purchase decisions.
VALS

VALS is the most popular segmentation system that combines lifestyles and values. You can see
how it is related to Maslow’s hierarchy of needs and the concept of social character. The system
looks at three primary motivations and then the resources that individuals might have to draw upon.
The lower resource consumer is at the bottom and labeled survivors while the highest resource
consumer is often the innovator.

Socio-cultural values and beliefs

Sociological refers to the study of groups while Social psychological is the study of how an individual
operates in a group. Anthropological refers to cultural, the influence of society on the individual.
Sociological (group) and anthropological (cultural) variables – that is, sociocultural variables –
provide further bases for market segmentation. For example, consumer markets have been
successfully subdivided into segments on the basis of stage in the family life cycle, social class, core
cultural values, subcultural memberships and cross-cultural affiliation.
 Marketers need to include segments based on:
Cultural values e.g. India – religion, US – fitness and health
Sub-cultural membership e.g. Hindu/ Muslim, Asian/ Hispanic
Cross-cultural affiliations e.g. born in one country and live in another, cross cultural influence

An American might identify with common American cultural values, such as fitness and health but
also with sub-cultural values if they are Hispanic or Asian Americans. In this global world, marketers
must often think cross-culturally, including many countries and more global marketing
segmentation. A consumer may be cross-cultural if they were born in one country and are now
living in another.

Family life-cycle segmentation is based on the premise that many families pass through similar
phases in their formation, growth and final dissolution. At each phase, the family unit needs
different products and services.

Social class (or relative status in the community) can be used as a base for market segmentation
and is usually measured by a weighted index of several demographic variables, such as education,
occupation and income

B) Consumption specific segmentation

Consumption-specific bases include facts about actual consumption behavior and cognitions
consumers have about products and services in the form of attitudes and preferences. It is an
extremely popular and effective form of segmentation. It categorises consumers in terms of
product, service or brand usage characteristics, such as level of usage, level of awareness and
degree of brand loyalty

Usage rate is often based on whether a group of consumers are heavy, medium, light, or nonusers
of a product. Many marketers target the heavy consumers since they are often the most loyal and
account for the largest portion of sales. A company with a strong growth objective might target the
other usage segments to fuel their growth in the marketplace. Furthermore, a marketer might
target those who are unaware of their product in order to start the process that could lead to
purchase.

Usage situation based on occasion or situation which often determines what consumers will
purchase or consume e.g. chocolates : Celebration pack vs. Dairy Milk. Usage rate or amount is
important to some marketers, but it might also be worth considering WHEN a given product is used.
This is the basis for a usage-situation segmentation opportunity. People might consume certain
products for special events, certain days of the week, or certain times during the year. Think of the
rise of sales in chocolate and flowers for Valentine’s Day.

Benefit segmentation: In many ways, segmentation is tied to the benefits that a group desires from
your product or service. Knowing these benefits is important for positioning your product in the
minds of the consumer. Consumers are constantly weighing the benefits of different types of media
and noticing that digital media might be preferred in immediacy and accessibility, but that
traditional media often provides more depth and details.

Benefit segmentation can be used to position various brands within the same product category e.g.
toothpaste, if consumers are socially active, they want a toothpaste that can deliver white teeth and
fresh breath; if they smoke, they want a toothpaste to fight stains; if disease prevention is their
major focus, then they want a toothpaste that will fight germs; and if they have children, they want
to lower their dental bills.

Brand loyalty includes the behavior to the brand – how often somebody purchases the brand, in
addition to the attitude or feeling the consumer has to a brand. Many companies have frequency
award or loyalty programs where loyal customers receive rewards and benefits for purchasing often.
Customer relationships are very complex and differ based on commitment by the customers, their
sense of loyalty, their expectations of specialty treatment, their confidence in the company, and
how they are treated by staff and employees from the company.

• Brand loyalty includes:

• Behaviour (frequency of purchase)

• Attitude (disposition/ affiliation to the brand)

Frequency award programs are popular e.g loyalty cards. Customer relationships can be active
or passive

Micro-targeted began in 2004 and is growing field within marketing. It is growing due to the
marketer’s ability to use complex databases and personalized media including email and mobile
phones. Micro-targeting focuses on delivering a personalized advertising message to the user
whether they are at work, at home, or on-the-go.

The premise behind market segmentation is that each targeted segment receives a specially
designed marketing mix, that is, a specially tailored product, price, distribution network, and/or
promotional campaign. Concentrated marketing usually involves only one segment, whereas a
differentiated marketing strategy is targeting several segments with individual marketing mixes.
Differentiated marketing is usually used by financially strong companies that are well
established in their market sector. Counter segmentation involves combining existing segments
for a company to become more efficient and profitable.

Targeting several segments using individual marketing mixes is called differentiated marketing;
targeting just one segment with a unique marketing mix is called concentrated marketing.

In summary, all behaviour is goal-oriented. Goals are the sought-after results of motivated
behaviour. The form or direction that behaviour takes – the goal that is selected – is a result of
thinking processes (cognition) and previous learning of an individual / consumer.
 Consumer Perception and Positioning

Perception refers to how we see the world around us. Perception is defined as the process by which an
individual selects, organises and interprets stimuli into a meaningful and coherent picture of the world.
Though the same stimulus may be exposed to a group of people, how each person in the group
recognises, selects, organises and interprets these stimuli is a highly individual process based on each
person’s own needs, values and expectations. Consumers act or react on the basis of their perception
and their response is individualistic.

The four major elements of Perception are:

Sensation:

Sensation is the immediate and direct response of the sensory organs to stimuli. A stimulus is any unit of
input to any of the senses. Examples of stimuli (i.e. sensory input) include products, packages, brand
names, advertisements and commercials. Sensory receptors are the human organs (the eyes, ears, nose,
mouth and skin) that receive sensory inputs.

Sensation is the response of the sensory organs, including the eyes, ears, nose, mouth, and skin. Most of
marketing focuses on sight and sound but much research is being done on smell and touch.

Advertisers must reach the absolute threshold for consumers to be able to experience their advertising
tactic. It is interesting that the absolute threshold changes over time. Consumers adapt and get used to
a certain ad or message so no longer notice it. This is one of the reasons why advertisers change their
ads frequently e.g. Amul butter, Dove soap, Ponds dreamflower talc

Most stimulus is in the form of products, packaging, communication/ advertisement and the sensory
receptors are our eyes, ears, nose, mouth and skin

Sensory perception is also culturally specific e.g. white colour packaging on shampoo in India has lower
appeal than a black coloured shampoo bottle.

Absolute threshold

Most of marketing focuses on sight and sound. Advertisers must reach the absolute threshold for
consumers to be able to experience their advertising tactic. It is interesting that the absolute threshold
changes over time. Consumers adapt and get used to a certain ad or message so no longer notice it.
This is one of the reasons why advertisers change their ads frequently.

The absolute threshold is the lowest level at which an individual can experience a sensation i.e. when
the individual can sense a difference between something and nothing e.g. the distance at which a driver
can note a specific hoarding beside a road is that individual’s absolute threshold. Two people travelling
together may first spot the hoarding at different times (i.e. at different distances).
As our exposure to the stimulus increases, we notice it less. In the field of perception, the term
adaptation refers specifically to ‘getting used to’ certain sensations; that is, becoming accommodated to
a certain level of stimulation. Sensory adaptation is getting used to high levels of sensory input and
therefore being less able to notice a particular stimulus e.g. spotting any particular ad in a clutter of ads.
Biggest challenge of national advertisers and hence they try to change their ad campaigns regularly. New
ads will provide sensory inputs i.e. will get noticed.

Differential threshold

Marketers are very concerned with the differential threshold, which is also called the just noticeable
difference (j n d). It was a German scientist named Ernst Weber who realized that this difference was
not a fixed amount. The best example is when you buy a low-priced product like a cup of coffee from
Starbucks. A $1 increase in your tall coffee would be noticed by you. But if you were buying a laptop
whose price changed from $455 to $456 you might not even notice.

Differential threshold is the minimal difference that can be detected between two similar stimuli. As per
Weber’s law, the just noticeable difference (j.n.d) between two stimuli is not an absolute amount but an
amount relative to the intensity of the first stimulus. The stronger the initial stimulus, the greater the
additional intensity needed for the second stimulus to be perceived as different.

According to Weber’s law, an additional level of stimulus equivalent to the JND must be added for the
majority of people to perceive a difference between the resulting stimulus and the initial stimulus.
Marketers need to determine the relevant j.n.d. for their products. Weber’s law has important
applications in marketing. Manufacturers and marketers endeavour to determine the relevant JND for
their products for two very different reasons:

(1) so that negative changes (reductions in product size or quality, or increases in product price) are not

readily discernible to the public (they remain below the JND) e.g. reduced pack size of Dairy Milk
chocolate at the same price or Maggi reduced grammage at same price

https://www.financialexpress.com/industry/is-maggi-getting-smaller-heres-why-parle-g-lays-etc-sell-at-
same-price-as-10-years-ago/1745907/
(2) so that product improvements (such as improved or updated packaging, larger size or lower price)
are very apparent to consumers without being wastefully extravagant (i.e. they are at or just above the
JND) e.g. 33% extra

When it comes to product improvements, marketers very much want to meet or exceed the consumer’s
differential threshold; that is, they want consumers readily to perceive any improvements made in the
original product. Marketers use the JND to determine the amount of improvement they should make in
their products. Less than the JND is wasted effort because the improvement will not be perceived; more
than the JND is wasteful because it reduces the level of repeat sales. On the other hand, when it comes
to price increases, less than the JND is desirable because consumers are unlikely to notice it. Since many
routinely purchased consumer goods are relatively inexpensive, companies are reluctant to raise prices
when their profit margins on these items are declining. Instead, many marketers decrease the product
quantity included in the packages, while leaving the prices unchanged – thus, in effect, increasing the
per unit price. Marketers therefore don’t increase the price but reduce the pack size.

Subliminal perception

Stimuli that are too weak or too brief to be consciously seen or heard may nevertheless be strong
enough to be perceived by one or more receptor cells. This process is called subliminal perception
because the stimulus is beneath the threshold, or ‘limen’, of conscious awareness, though obviously not
beneath the absolute threshold of the receptors involved. People have been fascinated by subliminal
perception for over 50 years. The question is whether stimuli that are not consciously sensed can still be
perceived and are therefore capable of altering behaviour. At this point, there is no research that shows
that it directly changes attitudes or purchase behaviour. There is some evidence that subliminal stimuli
may influence affective reactions

e.g. Axe ad, Pond’s talc old ad

Ad needs to be relevant, consumers should be able to relate to it

Aspects of Perception

Consumers are bombarded by stimuli and are therefore very selective as to what messages and
information they perceive. As new information comes to their mind, it is organized within their mind.
Finally, consumers interpret the stimuli based on their needs, expectations, and experience.

A) Selection

Consumers are exposed to thousands, if not millions of stimuli every day. The stimuli that they perceive
depends on three factors:
- nature of the stimulus: includes the product’s physical attributes, package design, brand name,
advertising…

- expectations based on familiarity, previous experience or expectations

- motives i.e. needs and wants for a product or services

In general, they are selective as to what they are exposed to – what messages they seek out. Once
exposed, they are selective of their attention to some messages over others. Consumers might even
screen out or block messages that they consider threatening or overwhelming.

The below four concepts are very important to consider when understanding how consumers select
which stimuli they will perceive:

- Selective exposure: Consumers seek out messages which are pleasant, which they can
sympathise with and which reassure them of good purchases

- Selective attention: Refers to heightened awareness when stimuli meet their needs, consumers
prefer different messages and medium

- Perceptual defense: Screening out of stimuli which are threatening

- Perceptual blocking: Consumers avoid being bombarded with stimuli e.g. Netflix – no ads

B) Organise

Organization refers to how people organize stimuli into groups and perceive them as a whole. This is
referred to as Gestalt which means pattern in German.

There are three major principles of perceptual organization:

- figure and ground

Figure and ground has to do with contrast so that the figure is noticed but that the background adds a
sensory effect. Product placement, when a product appears in a movie or television show, can be
considered a figure and ground issue. An advertiser wants just enough contrast The advertiser wants the
product (figure) to be noticed as it blends in with the ground (character in the show).

People tend to organize perceptions into figure-and-ground relationships. Prior experience affects
perceptions. The ground is usually hazy. Marketers usually design so the figure is the noticed stimuli.
- grouping

Grouping is common in perceptual organization. Whether it is numbers (phone numbers) that are
grouped in 3 or 4 digits OR images in an ad, consumers will group stimuli together to organize them.
This grouping helps memory and recall. People group stimuli to form a unified impression or concept.

Grouping helps memory and recall.

E.g. comms and product placement in store

- closure

Individuals organize their perceptions to form a complete picture. Our minds have a need for closure
and we will work to fill in the missing information when we are presented incomplete stimuli. People
have a need for closure and organize perceptions to form a complete picture.

Will often fill in missing pieces. However incomplete messages remembered more than complete

Instinct to organize pieces of sensory input into a complete image or feeling

C) Interpretation

Perceptual interpretation occurs because consumers have unique motives, interests, and
experiences. How people interpret often reveals a lot about themselves. For instance, individuals
tend to have stereotypes due to physical appearances, descriptive terms, first impressions, and the
halo effect.

Stereotypes : People hold meanings related to stimuli i.e. intrinsic and extrinsic cues/ indicators
Biased notions that people carry in their minds about the meanings of various stimuli

Physical appearance: We often make decisions based on how people or products appear. A
beautiful spokesperson might be perceived as possessing expertise for beauty products. A certain
color to a food might make us think it is healthier.
Positive attributes of people they know to those who resemble them are Important for model
selection. e.g. Celebrities/ or models for products like jewellery, make up

Descriptive terms: The choice of descriptive terms for names and advertisement in services are
particularly important due to the intangible nature of services. e.g. the marketer has stereotyped
the person who eats a cheeseburger vs. tofu and applied them in a descriptive sense to their
product.
First impressions: are lasting so a marketer should be careful how they advertise new products. The
perceiver is trying to determine which stimuli are relevant, important, or predictive

Halo effect: with this effect, a person uses just one dimension in evaluating a person, product, or
service. For instance, a consumer might consider a clean waiting room as an indication of a good
dentist. For this reason, marketers use the halo effect when licensing names of products or
choosing spokespeople. e.g. KFC from Kentucky Fried Chicken

Positioning

Positioning: process by which a company creates a distinct image and identity for its products,
services and brands in consumers’ minds.

It is important to realize that good position defines the product in a unique place in the consumer’s
mind when compared to competing products. This place is the result of the benefits that are
offered by the product and how they are different or better than those of the competitor’s products.

It refers to establishing a specific image for a brand in the consumer’s mind in relation to competing
brands. Positioning conveys the product in terms of how it fulfills a need. Successful positioning
creates a distinctive, positive brand image

e.g. Creta – the perfect SUV, Parachute Coconut oil – har boond me jyaada
Packaging as a Positioning element

A consumer often derives their understanding of a product and its benefits from the packaging. A
good example would be shampoo. The shape of the bottle, the choice of colors and symbols, and
even the cap can help the consumer position the product and determine if the product’s benefits
are gentle, color safe, strong cleaning, or conditioning.
Many marketers will need to reposition their product over time due to either market changes or
consumer preference changes. This is often challenging to marketers, especially if their product had
been perceived negatively in the marketplace.
e.g. Maggi after the lead content episode

Repositioning: process by which a company strategically changes the distinct image and identity of
its products, services and brands in consumers’ minds

e.g. Cadbury, an iconic British brand with heritage dating back to 1824, is currently owned by two
American companies: Mondelēz International, everywhere in the world except for the US, and the
Hershey Company, in the US.

Until 2018, the Cadbury’s positioning was defined as “providing moments of joy”. In 2018, Cadbury
announced a new brand strategy, which for the first time in more than a decade does not revolve
around the moments of joy. The new positioning focuses on “genuine acts of kindness and
generosity”. Cadbury executives wanted the brand to be “more human, more real and relatable”
and decided to build a stronger connection between its positioning and the company’s roots
(Cadbury originally was a family business run by a philanthropist, John Cadbury, known for his
generosity and kindness).

Perceptual mapping helps the marketer visualize how their product is positioned in the consumer’s
mind. The technique of perceptual mapping helps marketers to determine just how their products
or services appear to consumers in relation to competitive brands on one or more relevant
characteristics.
It enables them to see gaps in the positioning of all brands in the product or service
class and to identify areas in which consumer needs are not being adequately met. It is a graph of
products within a category based on two major benefits or attributes. It allows them to see gaps in
the positioning of all the products and identify areas for new products.
Retail Store Image

Shops have images of their own that serve to influence the perceived quality of products they
carry and the decisions of consumers as to where to shop. These images stem from their design
and physical environment, their pricing strategies and product assortments
The image and subsequent positioning of a retail store is a result of the below factors:
- Brands carried
- Prices
- Level of service
- Store ambience
- Clientele
- Product assortment
- Discounts

Of considerable interest are the brands that the store carries. There is an association formed
between the retailer and their brands. The type of product the consumer wishes to buy influences
his or her selection of a retail outlet; conversely, the consumer’s evaluation of a product often is
influenced by the knowledge of where it was bought.

Company image

Consumer imagery extends beyond perceived price and store image to the producers themselves.
Manufacturers who enjoy a favourable image generally fi nd that their new products are accepted
more readily than those of manufacturers who have a less favourable or even a ‘neutral’ image.
Manufacturers want their corporate image to be positive so that their products and brands can be
positively perceived in the marketplace. Institutional advertising can do this in addition to exhibits
and sponsorship of community events.

Favorable image tied to new product acceptance. Companies sponsor community events to enhance
images. There are differences between a company’s product and institutional image/ corporate
image.

Positioning of services
Positioning of services has extra challenges due to the intangible nature of a service. You cannot
hold it in your hand and look at it – you must make your decision based on visual images and
tangible cues, such as delivery trucks, storefronts, or other marketing tactics.
Image is a key factor for services. Services often want a differentiated positioning strategy to market
several versions of their service to different markets e.g. MMT, Cathay Pacific

Perceived Price and Perceived Quality

Perceived price should reflect the value that the customer receives from their purchase. It is
important for customer satisfaction that the consumer sees their price as fair. To determine
fairness, consumers look at other prices that they know. Comparative prices might be ones that the
consumer knows (internal) or prices that the marketer uses in their advertising as is the case with an
ad that states “compare to $100 at our competitor.”

Consumers perceive the quality of a product by intrinsic and extrinsic cues. Those that are intrinsic
concern the physical characteristics of the product. These include color, flavor, aroma, and size.
Many times a consumer will use extrinsic cues, those that are not really part of the physical product
including brand name, reputation, and location within store. If a consumer has no experience with a
product, they are more likely to use external cues. An example of external cues is country of origin.
A chocolate is from Switzerland so it must be good even though you know nothing of the color or
taste of the chocolate.

Reference prices – used as a basis for comparison in judging another price, can be external or
internal.
Internal: price range retrieved by consumer from memory, this plays an important role in evaluation
and perceptions of value
External: sold elsewhere at that price

Perceived quality of services

Services have unique characteristics that make quality a more complex issue. First of all, services
are intangible. It is hard for consumers to compare them side by side without having to use external
cues. Secondly, they can differ from day to day. We all know that we can get a haircut from a
barber or hair stylist on one day that is vastly different from the quality of a previous cut. Services
are difficult because they are perishable, they cannot be put on a shelf and left standing from day to
day. Finally, the products are consumed and produced at the same time, making quality control
hard for the service marketer.

SERVQUAL
The SERVQUAL scale measures the gap between customer expectations of a service before it is
provided versus their perceptions after the service is provided. The scale measures five dimensions,
including reliability, responsiveness, assurance, empathy, and tangibility

Difficult due to characteristics of services:

- Intangible
- Variable
- Perishable
- Simultaneously Produced and Consumed

SERVQUAL scale is used to measure gap between customers’ expectation of service and perceptions
of actual service

ServQual : perceptual measure of the gap between customer’s expectation of services and their
perception of actual service delivered based on 5 dimensions.

Services have unique characteristics that make quality a more complex issue. First of all, services
are intangible. It is hard for consumers to compare them side by side without having to use external
cues. Secondly, they can differ from day to day. We all know that we can get a haircut from a
barber or hair stylist on one day that is vastly different from the quality of a previous cut. Services
are difficult because they are perishable, they cannot be put on a shelf and left standing from day to
day. Finally, the products are consumed and produced at the same time, making quality control
hard for the service marketer.

The SERVQUAL scale measures the gap between customer expectations of a service before it is
provided versus their perceptions after the service is provided. The scale measures five dimensions,
including reliability, responsiveness, assurance, empathy, and tangibility

Outcome
- Reliable delivery of core service
 Process
- Responsiveness
- Assurance
- Empathy in handling customers
- Tangible aspects

Price Quality Relationship

The perception of price as an indicator of product quality (e.g., the higher the price, the higher the
perceived quality of the product) Value is the trade-off between perceived benefits and perceived
sacrifice. As such, a consumer helps understand the benefits many times in terms of the monetary
sacrifice. The more they pay, the better product or service they get.

Perceived Risk

The degree of uncertainty perceived by the consumer as to the consequences (outcome) of a specific
purchase decision

Elements of risk

- Functional Risk (may not perform as expected)

- Physical Risk (may harm self and others)
- Financial Risk (not worth the price paid)
- Social and Psychological Risk (poor product choice will hurt the consumer’s ego)
- Time Risk (time spent in search was a waste)

Consumer purchase decisions are determined by the degree of risk that consumers perceive, and their
tolerance for risk. The major types of risk are listed in this slide. The first, functional risk, deals with the
risk that the product will not perform as expected. Physical risk is the risk to self and others. Financial
risk is that the product will not be worth its cost and social risk is that the choice of the product might
lead to social embarrassment. Psychological risk is that a poor product choice will hurt the consumer's
ego and time risk is that the time has been wasted in purchasing this product.

How consumers handle risk?

How consumers handle risk will differ by their own individual strategy. That being said, there are a
handful of strategies that people tend to use when dealing with risk. The first of these is to seek
information so that they have more knowledge when they purchase. Consumers can also stay brand
loyal, thereby avoiding risk by sticking with a known product. Consumers can select by brand image to
reduce their risk because they may already know and trust the brand, perhaps from buying a different
product by the same brand or company. Some consumers will rely on store image to help them reduce
risk. Some customers buy the most expensive model assuming that the price/quality relationship will
safely deliver them the best product. Finally, consumers seek reassurance through money-back
guarantees, warranties, seals of approval and free trials.

In summary, Perception has strategy implications for marketers because consumers make decisions
based on what they perceive rather than on the basis of objective reality.
 CONSUMER MOTIVATION AND PERSONALITY

The study of personality has been approached in many different ways. Heredity, early childhood
experiences, and other social influences have a strong effect on who you become. The definition given
here is on inner characteristics which distinguish one individual from others.

First of all, personality reflects individual differences. Because no two people are exactly the same,
marketers can look for certain similar personality traits in different consumers. These consumers can
then be grouped together based on this identified personality train. Personality is consistent and
enduring. This helps marketers predict consumer behaviour over time in terms of personality. Finally,
personality can change due to major life events, such as marriage. You may notice personally that your
personality has changed somewhat as you have grown – certainly your personality now is somewhat
different then from when you were 7 years old.

Personality is the inner psychological characteristics that both determine and reflect how a person
responds to his or her environment. The Nature of Personality:

• Personality reflects individual differences

Inner characteristics that constitute an individual’s personality are a unique combination of factors,
no two individuals are exactly alike. Personality is a useful concept because it enables us to
categorise consumers into different groups on the basis of one or even several traits. If each person
were different in terms of all personality traits, it would be impossible to group consumers into
segments, and there would be little reason for marketers to develop products and promotional
campaigns targeted to particular segments.

• Personality is consistent and enduring

Consumers’ personalities may be consistent, their consumption behaviour often varies considerably
because of the various psychological, sociocultural, environmental and situational factors that affect
behaviour.

• Personality can change

Under certain circumstances personalities change. For instance, an individual’s personality may be
altered by major life events, such as the birth of a child, the death of a loved one, a divorce or a
significant career promotion.
These are the three major theories of personalities. There are many more but these three have been
chosen because they are important to the relationship between personality and consumer behaviour.

1. Freudian theory: Unconscious needs or drives are at the heart of human motivation

Sigmund Freud was one of the most important and influential psychiatrists of all time. Sigmund
Freud’s psychoanalytic theory of personality is a cornerstone of modern psychology. This theory
was built on the premise that unconscious needs or drives, especially sexual and other biological
drives, are at the heart of human motivation and personality.

Based on his analyses, Freud proposed that the human personality consists of three interacting
systems: the id, the superego and the ego. The id is conceptualised as a ‘warehouse’ of primitive
and impulsive drives – basic physiological needs such as thirst, hunger and sex – for which the
individual seeks immediate satisfaction without concern for the specific means of satisfaction.

In contrast to the id, the superego is conceptualised as the individual’s internal expression of
society’s moral and ethical codes of conduct. Thus, the superego is a kind of brake that restrains
or inhibits the impulsive forces of the id. The superego drives the individual to fulfill their needs
in a socially acceptable function. The ego is the internal monitor that balances the needs of the
id and the superego.

2. Neo-Freudian personality theory: Social relationships are fundamental to the formation and
development of personality

As opposed to Freud’s theories which were based heavily on development, Neo-Freudian’s are
concerned with social relationships. These relationships are formed to reduce feelings of
inferiority or tension. Furthermore, people can be classified as to how they interact with others
– are they compliant, aggressive, or detached. A compliant individual desires attention, an
aggressive desires admiration, and a detached person desires independence and freedom from
 obligation. What is particularly interesting is how research has shown that these different
personality groups differ in their brand usage.

In addition to Freudian theory, social relationships are fundamental to personality development.

Alfred Adler viewed human beings as seeking to attain various rational goals, which he called
style of life. He also placed much emphasis on the individual’s efforts to overcome feelings of
inferiority (i.e.by striving for superiority). Harry Stack Sullivan, another Neo-Freudian, stressed
that people continuously attempt to establish significant and rewarding relationships with
others. He was particularly concerned with the individual’s efforts to reduce tensions, such as
anxiety or feelings of insecurity. Like Sullivan, Karen Horney was also interested in anxiety. She
focused on the impact of child–parent relationships and the individual’s desire to conquer
feelings of anxiety. Horney proposed that individuals be classified into three personality groups:
compliant, aggressive and detached,

Compliant: Compliant individuals are those who move towards others (they desire to be loved,
wanted and appreciated. They move toward others; attention seeker e.g. wish to be loved

Aggressive: They are those who move against others (they desire to excel and win admiration).
move against others, admiration seeker

Detached individuals are those who move away from others (they desire independence, self-
reliance, self-sufficiency, and individualism or freedom from obligations). They move away from
others, independence seeker.

3. Trait theory: Quantitative approach to personality as a set of psychological traits

Unlike Freudian and Neo-Freudian theories, trait theory is less qualitative and more focused on
measurement of personality. Tests can be done to measure single traits in consumers such as how
receptive they are to new experiences (innovativeness), their attachment to worldly possessions
(materialism), and their likelihood to accept or reject foreign-made products (ethnocentrism).

Trait - any distinguishing, relatively enduring way in which one individual differs from another e.g.
often reflected in consumer’s shopping patterns, brand selection

Personality is linked to broad product categories and NOT specific brands

Consumption related personality traits

Marketers are interested in understanding how personality influences consumption behaviour because
such knowledge enables them to understand consumers better and to segment and target those
consumers who are likely to respond positively to their product or service and communications. Several
specific personality traits that provide insights to marketers:

a) Innovators
Consumer innovators are the group of consumers that are very open to new ideas and are
usually the first to purchase products. Innovativeness is the underlying trait that describes a
 consumer’s willingness to try new products. Companies have found this very important when
introducing brand extensions because it is a key factor in the consumer’s likelihood to try the
new product. For hi-tech products, we see that innovativeness can be explained at three levels.
The first, global innovativeness, is the overall innovative level of the consumer. Drilling down
further, domain-specific innovativeness has to do with the particular product category, and
finally, the innovative behaviour is the actual purchase of the new product.
Laggards are the converse of innovators. They are very slow to change and wait for others to
first try the new product.

b) Dogmatic
Dogmatic is a personality trait that describes how rigid or open a person is to new and
unfamiliar ideas and products. A person who is highly dogmatic approaches the unfamiliar
defensively and with discomfort. They will rarely consider the unfamiliar and tend to be very
close minded. Marketers have realized this type of customer appreciates advertising appeals
with celebrities and other experts.
Dogmatism is a personality trait that reflects the degree of rigidity a person displays toward the
unfamiliar and toward information that is contrary to his or her own established beliefs. It is
opposite of being open-minded. This set of people prefer traditional products and are more
receptive to ads from authoritative figures e.g. Amitabh Bachchan for banks

c) Social character

• This personality trait has its origins in sociological research, but it is of great interest to
marketers because it differentiates the type of advertising that influences these
customers. Inner-directed people prefer ads that stress product features. Inner-
directed people rely on own values when evaluating products Other-directed individuals
gravitate to ads that that show approving social environment rather than product
information – they want to look to others to understand how to act or be accepted, look
to others and are less likely to be innovators

d) Need for uniqueness

Consumers who avoid conforming to expectations or standards of others, who like to display
material possessions to differentiate from other people seek uniqueness in products.

e) Optimum stimulation level

Optimum stimulation levels are related to how a consumer tends to like or dislike novel, complex,
and unusual experiences and products. High optimum stimulation levels lead consumers to take
risks and try new products. Similar to a person with high innovativeness, these consumers are
important to marketers of new products.

A personality trait that measures the level or amount of novelty or complexity that individuals seek
in their personal experiences. It is the degree to which people like novel, complex an unusual
experience e.g. someone who prefers a simple uncluttered and calm existence have low OSL
 High OSL consumers tend to accept risky and novel products more readily than low OSL consumers.
This group is of importance to marketers of new products e.g. Millennials

f) Sensation seeking

The need for varied, novel, and complex sensations and experience. PLUS the willingness to take
social and physical risks for such experiences.

Sensation-seeking traits tie to the need to take risks to fulfill the sensations of experiences which are
different and extreme. Much research has been tied to the study of teenage males who often
engage in this behaviour e.g. adventure sports

g) Variety novelty seeking

Consumers seek variety in many ways. Some exhibit exploratory purchase behavior where they
switch brands often to experience new products. Other consumers display variety by use
innovativeness, using an existing product in a new way.

Measures a consumer’s degree of variety seeking. Examples include:

Exploratory Purchase Behavior – switch brands to experience new, different and better alternatives

Use Innovativeness – use an already adopted product in a new / novel way

Vicarious Exploration – gathering information about a new and different product alternatives and
contemplating buying them

Cognitive personality factors

Cognitive personality factors influence consumer behavior. Need for cognition (NFC) is a person’s
craving for enjoyment of thinking. Individual with high NFC more likely to respond to ads rich in product
information. More likely to use internet to seek product information. Low NFC attracted to the
background and peripheral aspects of the ad e.g. attractive model/ well known celebrity

The level of a consumer’s need for cognition affects how they are likely to respond to certain types of
advertisements. Those that are high in need for cognition tend to respond to ads that supply product
information as opposed to those who are low in need for cognition who tend to be attracted to the
background of the ad, attractive models, and cartoon characters.

Another cognitive personality factor that researchers have isolated is whether a consumer is a visualizer
who prefers visual information or a verbalizer who prefers written or verbal information. This difference
in cognitive personality factors would affect how they respond to a print ad.

a) Visualisers

- These people are more receptive to pictorial images, less attention to verbal messages
 - Object visualizer: encode and process images as a single perception unit

- Spatial visualizer: process images piece by piece

b) Verbalisers
- They respond favourably to verbal messages and pay less attention to visual stimuli

Marketers/ advertisers use this information to make the communication relevant to their consumers
and to connect with them.

From consumer materialism to compulsive consumption

Consumer researchers have become increasingly interested in exploring various consumption and
possession traits. These traits range from consumer materialism to fixated consumption behaviour to
compulsive consumption behaviour.

Consumer researchers are interested in possession traits and their relationship to consumption. The
first, consumer materialism, is a personality-like trait that describes how essential a person finds
possessions in relation to their identities and their lives.

Consumer Materialism, as a personality-like trait, distinguishes between individuals who regard

possessions as essential to their identities and their lives and those for whom possessions are
secondary. Researchers have found some general support for the following characteristics of
materialistic people:

1. they especially value acquiring and showing off possessions;

2. they are particularly self-centered and selfish;

Fixated Consumption Behaviour - Somewhere between materialism and compulsion, with respect to
buying or possessing objects, is the notion of being fixated with regard to consuming or possessing. Like
materialism, fixated consumption behaviour is in the realm of normal and socially acceptable behaviour.
Fixated consumers do not keep their objects or purchases of interest a secret; rather, they frequently
display them, and their involvement is openly shared with others who have a similar interest.

Fixated consumers typically possess the following characteristics:

1. a deep (possibly passionate) interest in a particular object or product category,

2. a willingness to go to considerable lengths to secure additional examples of the object or

product category of interest, and

3. the dedication of a considerable amount of discretionary time and money to searching out

the object or product

Compulsive Consumption Behaviour - unlike materialism and fixated consumption, compulsive
consumption is in the realm of abnormal behaviour – an example of the dark side of consumption.
Consumers who are compulsive have an addiction; in some respects they are out of control, and their
actions may have damaging consequences for them and those around them e.g. uncontrollable
shopping, gambling, drug addiction, alcoholism and various food and eating disorders

Consumer Ethnocentrism and Cosmopolitanism:

Consumer ethnocentrism has been found to differ from country to country and to change over time.
Ethnocentric consumers feel it is wrong to purchase foreign-made products because of the impact on
the economy. They can be targeted by stressing nationalistic themes. Certain events can impact
ethnocentricity among consumers e.g. certain events in the U.S., including the terrorist attacks on 9/11,
will change the ethnocentrism in the country or Indo-China relations due to LAC issue.

For some products, the country-of-origin can be very important when marketing the product, but in
other situations it must be downplayed. In general, if the image of the country is positive, for example a
French wine or Swiss chocolate, it would be advantageous for the marketer to emphasize where the
product was made. In many ways, cosmopolitanism is the opposite of ethnocentrism. A cosmopolitan
orientation would consider the word to be their marketplace and would be attracted to products from
other cultures and countries e.g. French wine, German machinery, Swiss watches, Swiss chocolates

Brand Personality

Brand personality can be tied to many a successful brand. If the personality is favorable and strong, it
will strengthen the brand and lead to a more favorable attitude, brand preference, higher purchase
intention, and brand loyalty. In addition, in commodity category, detergent for example, it can help
differentiate a brand (it’s the one with the Snuggly Teddy Bear). Brand personality which is strong and
favorable will strengthen a brand but not necessarily demand a price premium.

Consumers attach personality traits to brands depending on their perceptions of the brand.

Examples: Lifebuoy and hygiene/ health https://www.youtube.com/watch?v=upNyvoJozxs

Purdue and freshness, Nike and athlete, BMW is performance driven

Many marketers humanize their products. Research has shown that this can be effective, but the
product must have human attributes. Furthermore, brands have personalities i.e. consumer’s perception
of brand’s attribute for a human like character. Product Anthropomorphism refers to attributing human
characteristics to objects e.g. Tony the Tiger, Mr. Peanut, Amul girl, Ronald

Knowing the gender that consumers assign to your brand help form advertising and marketing decisions.
Who should be the spokesperson in your ad? How should they interact with the brand? Some products
perceived as masculine (coffee and toothpaste) while others as feminine (bath soap and shampoo)
In terms of geography, certain products have a strong geographical association in consumers‘minds.
Where do you think of when you think of Himalaya products? Actual locations, like Philadelphia cream
cheese and Arizona iced tea. Fictitious names also used, such as Hidden Valley and Bear Creek

Consumers also connect personality traits with certain colors. For instance, black is related to
sophisticated and red is excitement. Color combinations in packaging and products denotes personality.

Self & Self image

We have an image of ourselves that has developed over time. Consumers will tend to purchase
products that match their self images or personalities – they choose brands that help them define
themselves.

Consumers have a variety of enduring images of themselves. These self-images, or perceptions of self,
are very closely associated with personality in that individuals tend to buy products and services and
patronise retailers whose images or personalities relate in some meaningful way to their own self-
images.

Consistent with the idea of multiple self-images, each individual has an image of himself or herself as a
certain kind of person, with certain traits, skills, habits, possessions, relationships and ways of behaving.
As with other types of images and personality, the individual’s self-image is unique, the outgrowth of
that person’s background and experience. Individuals develop their self-images through interactions
with other people – initially their parents, and then other individuals or groups with whom they relate
over the years.

A variety of different self-images have been recognised in the consumer behaviour literature for a long
time. In particular, many researchers have depicted some or all of the following kinds of self-image:

Actual self- image: How consumers see themselves

Ideal self-image: How consumer would like to see themselves

Social self- image: How consumers feel others see them

Ideal social self- image: How consumers would like others to see them

Expected self-image: How consumers expect to see themselves in the future

Out to self-image: Traits an individual believes are in her duty to possess

There is a strong relationship for many consumers between some of their possessions and their self. In
this instance, the objects are really part of the consumer’s extended self. The object might have specific
meaning to them that goes beyond what most possessions can offer. It is many a student who must
wear a lucky shirt or bring a charm to an exam to perform at their peak in this situation.

Possessions are part of the consumers’ extended self, object’s value is far beyond what most
possessions can offer.
Often, a consumer wishes to change themselves. Perhaps they want a new look or to appear in a
different way. Altering the self-image can tie to personal vanity as it is involved in one’s appearance.

Virtual self: There are many opportunities to create online “selves.” Whether it is a chat room, a
character in an online role-playing game, or a virtual world – people often pick identities that are very
different then their true selves. In the virtual world, consumer can take any guise:

• Gender swapping

• Age differences

• Mild-mannered to aggressive

To sum up Consumer’s personality shapes their behaviour.

 Consumer Needs & Motivation

Motivation is produced by a state of tension, by having a need which is unfulfilled. Consumers want to fulfill these needs and reduce
the state of tension. For example, when you are very hungry, you are extremely motivated to find food. Perhaps when you need a new
pair of pants, you are a bit less motivated to fulfill this need as compared to your need for food. In the case of needing pants, it is
important for marketers to help increase your motivation and/or specify your need for their products - perhaps Diesel Jeans.

Motivation is the driving force within individuals that impels them to action. The starting point of this process is the urge/drive to fulfil a
need. Needs are the essence of the marketing concept. Marketers do not necessarily create needs but make consumers aware of needs.

The Model of Motivation Process:

This model highlights the motivation process. We can see that the “drive” toward behaviour will often end in the fulfillment of the need.
The processes and effects of previous learning tie strongly into choices made when the behaviour is defined.
Types of needs

 Innate Needs

Physiological (or biogenic) needs that are considered primary needs or motives e.g. food, water, air

 Acquired / Psychogenic Needs

Learned in response to our culture or environment. Are generally psychological and considered secondary needs. These may include
needs for self-esteem, prestige, affection, power and learning..

The example of the need for food compared to a new pair of jeans can be further described by understanding types of needs. The need
for food is more of an innate need and is considered a primary need. The need for a pair of jeans would be considered acquired. The
need for clothing could be considered primary, but the need specifically for a pair of jeans is acquired, especially when they are a certain
brand or designer jean.

Needs may have a positive or negative direction. There are in fact some products we are NOT drawn to. For example, when people
shop for funeral services, this is not something they are usually drawn to but rather must pursue and purchase.

Goals:

The sought-after results of motivated behaviour is a goal. Generic goals are general categories of goals that consumers see as a way to
fulfill their needs e.g. goal to complete Master’s programme

Product-specific goals are specifically branded products or services that consumers select as their goals e.g. to complete Master’s
programme from IIMs.

Continuing with our example of jeans, we can understand the types of goals that exist. When a consumer states they want a pair of
jeans, they have stated a generic goal. When they announce they really want a pair of Calvin Klein jeans, then they have stated product-
specific goals.

Selection of goals:

The goals selected by an individual depend on their:

 Personal experiences
The goals selected by individuals depend on their personal experiences, physical capacity, prevailing cultural norms and values, and
the goal’s accessibility in the physical and social environment.

 Physical capacity
 Prevailing cultural norms and values
 Goal’s accessibility in the physical and social environment

Consumers have many possible goals when making decisions. They are strongly influenced by their experiences, personality, and others’
opinions and input. When choosing goals, they have to keep in mind what is socially acceptable and what they can physically attain.

Motivation:

Needs and goals are interdependent; neither exists without the other. Motivation can be positive or negative in direction. We may feel a
driving force towards some object or condition or a driving force away from some object or condition. For example, a person may be
impelled towards a restaurant to fulfil a hunger need, and away from mountaineering to fulfil a safety need.

Positive Motivation: a driving force toward some object or condition

Approach Goal : A positive goal toward which behaviour is directed

Negative Motivation: Motivation/ a driving force away from some object or condition

Avoidance Goal : A negative goal from which behavior is directed away

There has been extensive research regarding rational versus emotional motives during purchase. Their existence has been tied to how
consumers view marketing variables, including advertisements and pricing adjustments. Furthermore, it must be realized that the
definition of emotional vs. rational motivation differs significantly from one consumer to another and in different situations.

Rationality implies that consumers select goals based on totally objective criteria, such as size, weight, price, or miles per gallon

Emotional motives imply the selection of goals according to personal or subjective criteria

Motivation is highly dynamic and constantly changes in response to life experiences. Motivations change as we age, interact with
others, change careers, acquire wealth, become ill, marry or divorce, or pursue education.

Humans constantly have needs. This is due in part to the fact that our needs are never fully satisfied, or once satisfied, reappear.
Hunger is a good example of a need that is often not satisfied and reappears. As humans, we also develop new needs as we satisfy
existing needs. The hierarch of effects model shows how we meet our lower-level needs first and then move up the hierarchy. Finally,
our needs are based on the goals that we set for ourselves. If one sets a goal to enter politics, they may feel they need a law degree.
However, if they are unsuccessful in getting accepted at law school, their needs may change and they may want to pursue a few years of
work experience first and need to find a job.

Consumers needs tend to be continuous and also dynamic. Needs change over time and also on various occasions. Consumer is very
demanding and not easy to please. Consumer needs are never fully satisfied - new needs emerge as old needs are satisfied. People who
achieve their goals set new and higher goals for themselves e.g. young person has an iphone 6 and now wants to migrate to a higher
version.

Motivation is highly dynamic and constantly changes in response to life experiences. Motivations change as we age, interact with
others, change careers, acquire wealth, become ill, marry or divorce, or pursue education.

Humans constantly have needs. This is due in part to the fact that our needs are never fully satisfied, or once satisfied, reappear.
Hunger is a good example of a need that is often not satisfied and reappears. As humans, we also develop new needs as we satisfy
existing needs. The hierarch of effects model shows how we meet our lower-level needs first and then move up the hierarchy. Finally,
our needs are based on the goals that we set for ourselves. If one sets a goal to enter politics, they may feel they need a law degree.
However, if they are unsuccessful in getting accepted at law school, their needs may change and they may want to pursue a few years of
work experience first and need to find a job.

It is very common that a consumer cannot attain a goal. This may be due to a lack of money, ability, desire, or accessibility. In this
instance, the consumer often substitutes a different goal to reduce the tension created from the existence of this need. In time, this
substitute goal might replace the initial goal. For instance, if a consumer wanted a certain cable television service, but it was not
available in their area, they might choose a satellite television provider. Over time, they may be very satisfied with this choice and feel
that they actually prefer the satellite service over the cable television service.

Failure to achieve a goal and the frustration that follows has been experienced by everyone at some time or another. Marketers must
realize what consumers’ responses might be and how they can address these responses. Online education exists for those who are too
far or do not have the structured time to attend college

The understanding of these defense mechanisms will help provide many opportunities to craft advertising messages to reach the
emotional side of the consumers.
A consumer has a variety of needs but only some of them are aroused at any given time and given top-of-mind priority. Motives become
aroused by the consumer’s psychological condition (they get hungry), their emotional state (frustrated), cognitive processes (they read
an ad that made them think about their needs), or by events occurring in their general surroundings (the weather becomes cold)

Arousal of motives

A consumer has a variety of needs but only some of them are aroused at any given time and given top-of-mind priority. Motives become
aroused by the consumer’s psychological condition (they get hungry), their emotional state (frustrated), cognitive processes (they read
an ad that made them think about their needs), or by events occurring in their general surroundings (the weather becomes cold).

• Physiological arousal e.g. basic needs like hunger, thirst arouse motives

• Emotional arousal e.g. feeling frustrated, feeling happy

• Cognitive arousal e.g. exposed to some stimulus / ad, post which it made them think and act

• Environmental arousal e.g. cold weather –need for warm clothing

• Cognitive Arousal - sometimes random thoughts can lead to a cognitive awareness of needs e.g. an advertisement that provides
reminders of home might trigger instant yearning to speak with one’s parents.

There are two opposing philosophies that deal with the arousal of human motives. The behaviorists see motivation as a mechanical
process that results from a stimulus – something prompts the behavior and people behave or react. On the other hand, the cognitive
school believes that all behavior is directed toward a fulfilling of goals – consumers think through their motives.

Types and Systems of Needs

Researchers are interested in developing a complete list of human needs. Although basic biological needs are easily understood and
agreed upon, it is the psychological and psychosocial needs that differ from researcher to researcher. Murray and Maslow have both
developed lists of needs and Maslow orders them within a hierarchy from lower-level to higher-level needs. Somewhat related to
Maslow’s theory is the belief in a Trio of basic needs including power, affiliation, and achievement.

1) Abraham Maslow’s hierarchy of needs

The theory suggests that individuals seek to satisfy lower-level needs before higher-level needs emerge. The lowest level of chronically
unsatisfied need that an individual experiences serves to motivate his or her behaviour. When that need is ‘fairly well’ satisfied, a new
(and higher) need emerges that the individual is motivated to fulfil. When this need is satisfied, a new (and still higher) need emerges,
and so on.
For clarity, each level is depicted as mutually exclusive. According to the theory, however, there is some overlap between the levels, as
no need is ever completely satisfied. For this reason, although all levels of need below the level that is currently dominant continue to
motivate behaviour to some extent, the prime motivator – the major driving force within the individual – is the lowest level of need that
remains largely unsatisfied.

Physiological Needs

In the hierarchy-of-needs theory, physiological needs are the first and most basic level of human needs. These are necessary to sustain
biological life, include food, water, air, shelter, clothing, sex – also known as biogenic needs or primary needs.

Safety and Security Needs

After the first level of need is satisfied, safety and security needs become the driving force behind an individual’s behaviour. These needs
are concerned not only with physical safety but also include order, stability, routine, familiarity and control over one’s life and
environment e.g. health, savings accounts, insurance policies, education

Social Needs

The third level of Maslow’s hierarchy includes such needs as love, affection, belonging and acceptance. People seek warm and satisfying
human relationships with other people and are motivated by love for their families.

Ego needs

These needs can either have an inward or an outward orientation, or both. Inwardly-directed ego needs reflect an individual’s need for
self-acceptance, self-esteem, success, independence and personal satisfaction with a job well done. Outwardly-directed ego needs
include the needs for prestige, reputation, status and recognition from others. The presumed desire to ‘show off ’ one’s success

Need for Self-Actualisation

The need for self-actualisation (self-fulfilment) refers to an individual’s desire to fulfil his or her potential – to become everything he or
she is capable of becoming e.g. becoming a sports star , a scientist

According to Maslow, higher-order needs become the driving force behind human behaviour as lower-level needs are satisfied. The
theory says that it is dissatisfaction, not satisfaction, that motivates behaviour.

2) Henry Murray’s 28 psychogenic needs

Henry Murray prepared a detailed list of psychogenic needs. This research was probably the first systematic approach to the
understanding of non-biological human needs. Murray believed that everyone has the same basic set of needs but that individuals differ
in their priority ranking of these needs. Murray’s basic needs include many motives that are assumed to play an important role in
consumer behaviour, such as acquisition, achievement, recognition and exhibition

NEEDS ASSOCIATED WITH INANIMATE OBJECTS

Acquisition

Conservancy

Order
Retention

Construction

NEEDS THAT REFLECT AMBITION, POWER, ACCOMPLISHMENT, AND PRESTIGE

Superiority

Achievement

Recognition

Exhibition

Inviolacy (inviolate attitude)

Inavoidance (to avoid shame, failure, humiliation, ridicule)

Defendance (defensive attitude)

Counteraction (counteractive attitude)

NEEDS CONCERNED WITH HUMAN POWER

Dominance

Deferrence

Similance (suggestible attitude)

Autonomy

Contrariance (to act differently from others)

SADOMASOCHISTIC NEEDS

Aggression

Abasement

NEEDS CONCERNED WITH AFFECTION BETWEEN PEOPLE

Affiliation

Rejection

Nurturance (to nourish, aid, or protect the helpless)

Succorance (to seek aid, protection, or sympathy)

Play

NEEDS CONCERNED WITH SOCIAL INTERCOURSE (THE NEEDS TO ASK AND TELL)

Cognizance (inquiring attitude)

Exposition (expositive attitude)

3) Trio of needs

These needs can each be subsumed within Maslow’s need hierarchy; considered individually, however, each has a unique relevance to
consumer motivation.

Power

The power need relates to an individual’s desire to control his or her environment. It includes the need to control other persons and
various objects. This need appears to be closely related to the ego need, in that many individuals experience increased self-esteem when
they exercise power over objects or people.

Affiliation

This need suggests that behaviour is strongly influenced by the desire for friendship, for acceptance, for belonging. People with high
affiliation needs tend to be socially dependent on others. They often select goods they feel will meet with the approval of friends.
Teenagers who hang out at fast-food stores often do so more for the satisfaction of being with others than for making a purchase.

Achievement

The achievement need is closely related to both the egoistic need and the self-actualisation need. People with a high need for
achievement tend to be more self-confident, enjoy taking calculated risks, actively research their environments and value feedback.

Marketing applications of need hierarchy

Though there is no way to measure precisely how satisfied one level of need must be before the next higher need becomes operative,
the hierarchy offers a highly useful framework for marketers trying to develop appropriate advertising appeals for their products. It is
adaptable in two ways: first, it enables marketers to focus their advertising appeals on a need level that is likely to be shared by a large
segment of the target audience; secondly, it facilitates product positioning or repositioning.

Segmentation and Promotional Applications

Maslow’s need hierarchy is readily adaptable to market segmentation and the development of communication. There are consumer
goods designed to satisfy each of the need levels and because most needs are shared by large segments of consumers. For example,
individuals buy health foods, medicines, and low-fat and diet products to satisfy physiological needs. They buy insurance, preventive
medical services, and home security systems to satisfy safety and security needs.

The need hierarchy is often used as the basis for market segmentation with specific advertising appeals directed to one or more need-
segment levels.

For example, an advertisement for a very expensive sports car may use a self-actualisation appeal such as ‘you deserve the very best’.
Similarly, advertisements for soft drinks stress social appeal by showing a group of young people enjoying themselves and the advertised
product. But for nutritional drinks stress refreshment (a physiological need); still others may focus on a low calorie content (thus
indirectly appealing to the ego need).

Motivational Research

Motives are very difficult to identify and measure. This is in part because they are hypothetical and not physical concepts that can be
weighed and measured with a ruler. Because they are not tangible, marketers must use a variety of measurement techniques. Because
consumers often cannot or will not express their motivations outright, researchers use qualitative research to uncover consumer
motives.

Motivational research is qualitative research designed to delve below the consumer’s level of conscious awareness to understand the
underlying reasons for their behaviour and preferences. Motivational research has proved to be of great value to marketers concerned
with developing new ideas and new copy appeals.

Many of these qualitative research techniques are called projective techniques because the consumer must “project” their subconscious
or hidden motives onto another stimulus.
These are three commonly used projective techniques.

Metaphor Analysis:

Metaphor analysis uses pictures as a stimulus for the consumer to express their thoughts, feelings, and beliefs regarding a product or
brand. This method uses pictures as a stimulus for the consumer to express their thoughts, feelings, and beliefs regarding a product or
brand.

Storytelling:

This was successfully used by Kimberly-Clark when researching diapers with young mothers. This method consists of having customers
tell real-life stories regarding their use of the product under study. Kimberly-Clark used this method to develop pull-up diapers.

Word association and sentence completion:

In this exercise, respondents are asked to fill in phrases and match words quickly to get their genuine responses. Respondents are
presented with words, one at a time, and asked to say the first word that comes to mind. They are asked to fill in phrases and match
words quickly to get their genuine responses

In summary, all behaviour is goal-oriented. Goals are the sought-after results of motivated behaviour. Failure to achieve a goal often
results in feelings of frustration. People with different needs may seek fulfilment through selection of the same goals; people with the
same needs may seek fulfilment through different goals.

Class Note ( Session 11 -20)

Attitude

Attitude is a mental state involving beliefs, feelings and values and disposition to act in a certain way. In other words, attitudes refer to
the favourable feelings one might have about a person, thing, or event. Attitudes are normally formed as a combination of several
interrelated beliefs. They are thus, the psychological views that people develop about everything they know and come across or learn in
their lives. Attitudes are formed based on experience, education, upbringing and the environment that surrounds us. How we choose to
think, act and respond to everything in life is determined by our individual attitude. Therefore, it is extremely important for marketers to
understand the attitudes of customers towards their products and services.

Three things that marketers must remember: A) Attitude is a learned predisposition b) it is consistence till some change happens c)
occurs within a situation.

Functional Theory of Attitudes

The functions that attitudes perform are A) Utilitarian B) Value Expressive C) Ego Defensive D) Knowledge function

The Utilitarian Function

We hold certain brand attitudes partly because of a brand’s utility. When a product has been useful or helped us in the past, our
attitude toward it tends to be favourable. One way of changing attitudes in favour of a product is by showing people that it can serve a
utilitarian purpose they may not have considered.
Example of Utilitarian function: ‘The taste that gets you started up’ of Nescafe. That has been captured in the jingle “Jagao, Jagao,
Nescafe Pilao”

The Ego-Defensive Function

Most people want to protect their self-images from inner feelings of doubt – they want to replace their uncertainty with a sense of
security and personal confidence. The ego-defensive function offers reassurance to the consumer’s self-concept. Advertisements
related to skincare products, mouthwashes, deodorants, etc come under this category.

The Value-Expressive Function: Attitudes are an expression or reflection of the consumer’s general values, lifestyle, and outlook. By
knowing target consumers’ attitudes, marketers can better anticipate their values, lifestyle, or outlook and can reflect these
characteristics in their advertising and direct-marketing efforts.

The Knowledge Function

Individuals generally have a strong need to know and understand the people and things they encounter. The consumer’s “need to
know,” a cognitive need, is important to marketers concerned with product positioning. Many product and brand positionings are
attempts to satisfy the need to know and to improve the consumer’s attitudes toward the brand by emphasizing its advantages over
competitive brands

Attitude Models

In order to study the relationship between the attitudes of individuals and their behaviour, various models have been developed. Some
of these models are described below

Tri-component Model: This model helps us understand how attitudes are the result of the interrelationship between a person’s
knowledge, his or her feelings and finally the intensions of the people. Attitudes have been found to have three components namely
cognitive, affective and behavioural component, I,e conative.

Cognitive component: It is all about knowing. Cognition is the mental action or process of acquiring knowledge and understanding
through thought, experience, and the senses. We learn a lot about various products by analysing the stimuli we receive from them.
Depending on the stimuli we receive, we form some beliefs about the products. Knowledge that is gained as a combination of
experiencing the attitude object and obtaining information from related sources is the cognition of a person and this can be termed as
the cognitive component. The cognitive component of an attitude consists of the beliefs, knowledge and information held by a person
regarding a product or services. The knowledge comprises the awareness about the existence of an object, belief about the different
characteristics, the features about the product and also the relative importance he/she places on each of the characteristics. When Head
& Shoulder claims that it is an anti- dandruff shampoo, it is the cognitive component, the brand is focussing on.

Affective Component: An individual’s emotions or feelings toward an object can be termed as an affective component. Such emotions as
anger, happiness, shame, distress, guilt, etc lead the individual to develop a positive or negative attitude about an attitude object.

Clinic Plus has strong associations with the affective attributes like brand for my family, can trust the brand for my hair, makes me look
beautiful, etc.

Conative Component: The likelihood or tendency that an individual will undertake a specific action or behave in a particular way with
regard to the attitude object is called conative component. The conative component comprises the future actions and intentions of a
person. The likelihood or tendency that an individual will undertake a specific action or behave in a particular way with regard to the
attitude object. Intention-to-buy scales are used to assess the likelihood of a consumer purchasing a product or behaving in a certain
way

Multi- Attribute Attitude Models

Multi-attribute attitude models portray consumers’ attitudes with regard to an attitude object as a function of consumers’ perception
and assessment of the key attributes or beliefs held with regard to the particular attitude object.

There are many variations of the attitude model, three to consider are: attitude-toward-object model, attitude-toward-behaviour model,
and the theory-of-reasoned-action model.

The attitude-toward-object model: According to the attitude-toward-object model, the consumer’s attitude toward a product or specific
brands of a product is a function of the presence (or absence) and evaluation of certain product-specific beliefs and/or attributes.
Consumers generally have a favourable attitude toward those brands they believe have an adequate level of attributes that they
evaluate as positive, and they have unfavourable attitudes toward those brands they feel do not have an adequate level of desired
attributes or have too many negative or undesired attributes.

The Attitude-Toward-Behavior Model: The attitude-toward-behaviour model is designed to capture the individual’s attitude toward
behaving or acting with respect to an object, rather than the attitude toward the object itself. The appeal of this model is that it seems
to correspond somewhat more closely to actual behaviour than does the attitude-toward-object model

Theory-of-Reasoned-Action Model: The theory-of-reasoned-action represents a comprehensive integration of attitude components

into a structure that is designed to lead to both better explanation and better predictions of behaviour. Like the basic tricomponent
attitude model, the theory-of-reasoned-action model incorporates a cognitive component, an affective component, and a conative
component; however, these are arranged in a pattern different from that of the tricomponent model. To understand intention, we also
need to measure the subjective norms that influence an individual’s intention to act. A subjective norm can be measured directly by
assessing a consumer’s feelings as to what relevant others (family, friends, roommates, co-workers) would think of the action being
contemplated. Consumer researchers can get behind the subjective norm to the underlying factors that are likely to produce it. They
accomplish this by assessing the normative beliefs that the individual attributes to relevant others, as well as the individual’s motivation
to comply with each of the relevant others.

ATTITUDE-TOWARD-THE-AD MODELS: As the attitude-toward-the-ad model depicts, the consumer forms various feelings (affects) and
judgments (cognitions) as the result of exposure to an ad. These feelings and judgments in turn affect the consumer’s attitude toward
the ad and beliefs about the brand acquired from exposure to the ad. Finally, the consumer’s attitude toward the ad and beliefs about
the brand influence his or her attitude toward the brand. Consumer socialization has also shown itself to be an important determinant
of a consumer’s attitudes toward advertising.

HOW ATTITUDES ARE LEARNED

When we speak of the formation of an attitude, we refer to the shift from having no attitude toward a given object to having some
attitude toward it. Consumers often purchase new products that are associated with a favourably viewed brand name. Their favourable
attitude toward the brand name is frequently the result of repeated satisfaction with other products produced by the same company. In
terms of classical conditioning, an established brand name is an unconditioned stimulus that through past positive reinforcement
resulted in a favourable brand attitude. A new product, yet to be linked to the established brand, would be the conditioned stimulus.
Sometimes attitudes follow the purchase and consumption of a product.

STRATEGIES OF ATTITUDE CHANGE

Attitude changes are learned; they are influenced by personal experience and other sources of information, and personality affects both
the receptivity and the speed with which attitudes are likely to be altered. Altering attitudes is a key strategy for marketers, especially
when taking aim at market leaders. Marketers have several attitude-change strategies from which to choose: a) Changing the
consumer’s basic motivational function b) Associating the product with an admired group or event c) Resolving two conflicting attitudes
d) Altering components of the multi-attribute model e) Changing consumer beliefs about competitors’ brands

ELABORATION LIKELIHOOD MODEL (ELM)

The elaboration likelihood model (ELM) involves a more global view that two different persuasive routes change attitudes. The central
route is particularly relevant to attitude change when a consumer’s motivation or ability to assess the attitude object is high; that is,
attitude change occurs because the consumer actively seeks out information relevant to the attitude object itself. i) When consumers
are willing to exert the effort to comprehend, learn, or evaluate the available information about the attitude object, learning and
attitude change occur via the central route.

In contrast, when a consumer’s motivation or assessment skills are low (e.g., low-involvement), learning and attitude change tend to
occur via the peripheral route without the consumer focusing on information relevant to the attitude object itself. i) In such cases,
attitude change often is an outcome of secondary inducements (e.g., cents-off coupons, free samples, beautiful background scenery,
great package, or the encouragement of a celebrity endorsement).

Research indicates that even in low-involvement conditions (e.g., like exposure to most advertising), where both central and secondary
inducements are initially equal in their ability to evoke similar attitudes, it is the central inducement that has the greatest “staying
power”—that is, over time it is more persistent.

COGNITIVE DISSONANCE THEORY

According to cognitive dissonance theory, discomfort or dissonance occurs when a consumer holds conflicting thoughts about a belief or
an attitude object. Post purchase dissonance occurs after the purchase. Purchase decisions often require compromise. Post purchase
dissonance is quite normal.

Dissonance gives consumers an uneasy feeling about their prior beliefs or actions – a feeling that they seek to resolve by changing their
attitudes to conform to their behaviour.

Marketers can help reduce post purchase uncertainty by aiming specific messages at reinforcing consumer decisions by complimenting
their wisdom, offering stronger guarantees or warranties, increasing the number and effectiveness of its services, or providing detailed
brochures on how to use its products correctly.
CONSUMER LEARNING

Consumer learning is the process by which individuals acquire the purchase and consumption knowledge and experience they apply to
future related Behavior. Although some learning is intentional; much learning is incidental. Basic elements that contribute to an
understanding of learning are motivation (drives), cues, response, and reinforcement.

There are two schools of thought as to how individuals learn—behavioural theories and cognitive theories. Both contribute to an
understanding of consumer behaviour. Behavioural theorists view learning as observable responses to stimuli; whereas cognitive
theorists believe that learning is a function of mental processing.

Three types of behavioural learning theories are: classical conditioning, instrumental conditioning, and observational (vicarious)
learning. The principles of classical conditioning that provide theoretical underpinnings for many marketing applications include:
repetition, stimulus generalization, and stimulus discrimination. Neo-Pavlovian theories view traditional classical conditioning as
cognitive associative learning rather than as reflexive action.

Instrumental learning theorists believe that learning occurs through a trial-and-error process in which positive outcomes (i.e., rewards)
result in repeat behaviour. Both positive and negative reinforcement can be used to encourage the desired behaviour. Reinforcement
schedules can be total (consistent) or partial (fixed ratio or random). The timing of repetitions influences how long the learned material
is retained. Massed repetitions produce more initial learning than distributed repetitions; however, learning usually persists longer with
distributed (i.e., spread out) reinforcement schedules.

Cognitive learning theory holds that the kind of learning most characteristic of humans is problem solving. Cognitive theorists are
concerned with how information is processed by the human mind: how is it stored, retained, and retrieved. A simple model of the
structure and operation of memory suggests the existence of three separate storage units: the sensory store, short-term store (or
working memory), and long-term store. The processes of memory include rehearsal, encoding, storage, and retrieval.

Despite their different viewpoints, learning theorists in general agree that in order for learning to occur, certain basic elements must be
present—motivation, cues, response, and reinforcement
Unfulfilled needs lead to motivation, which spurs learning. The degree of relevance, or involvement, with the goal, is critical to how
motivated the consumer is to search for knowledge or information about a product or service.

Cues: If motives serve to stimulate learning, cues are the stimuli that give direction to the motives. In the marketplace, price, styling,
packaging, advertising, and store displays all serve as cues to help consumers fulfil their needs in product-specific ways. Cues serve to
direct consumer drives when they are consistent with their expectations.

Response: How individuals react to a cue—how they behave—constitutes their response.

A response is not tied to a need in a one-to-one fashion. A need or motive may evoke a whole variety of responses. The response a
consumer makes, depends heavily on previous learning that, in turn, depends on how related responses were reinforced previously.
Reinforcement: Reinforcement increases the likelihood that a specific response will occur in the future as the result of particular cues or
stimuli. If a consumer is rewarded, that consumer has learnt to associate the purchase with a pleasant feeling and is likely to repeat the
learnt behaviour and become a loyal customer.
There is no single, universal theory of how people learn. But broadly two learning theories will be discussed namely, behavioural
learning theory and cognitive learning theory. Each theory differs on the essential, but each offers insights to marketers on how to
shape their messages to consumers to bring about desired purchase behaviour.

BEHAVIORAL LEARNING THEORIES

Behavioural learning theories are sometimes called stimulus-response theories because they are based on the premise that observable
responses to specific external stimuli signal that learning has taken place. When a person responds in a predictable way to a known
stimulus, he or she is said to have “learned.” Behavioural theories are most concerned with the inputs and outcomes of learning, not the
process.

Two theories relevant to marketing are classical conditioning and instrumental (or operant) conditioning

Classical Conditioning: Ivan Pavlov was the first to describe conditioning and to propose it as a general model of how learning occurs.
For Pavlov, conditioned learning results when a stimulus that is paired with another stimulus elicits a known response and serves to
produce the same response when used alone. He used dogs to demonstrate his theories. The dogs were hungry and highly motivated
to eat. Pavlov sounded a bell and then immediately applied a meat paste to the dogs’ tongues, which caused them to salivate. After a
sufficient number of repetitions of the bell sound, followed almost immediately by the food, the bell alone caused the dogs to salivate.
In a consumer behaviour context, an unconditioned stimulus might consist of a well-known brand symbol. A previously acquired
consumer perception of a brand is the unconditioned response. Conditioned stimuli might consist of new products under an existing
brand name. The conditioned response would be consumers trying these products because of the belief that they embody the same
attributes with which the brand name is associated. Recent conditioning theory views classical conditioning as the learning of
associations among events that allow the organism to anticipate and “represent” its environment. The relationship (i.e., contiguity)
between the conditioned stimulus and the unconditioned stimulus (the bell and the meat paste) influenced the dogs’ expectations,
which in turn influenced their behaviour (salivation). Classical conditioning is seen as cognitive associative learning, not the acquisition
of new reflexes, but the acquisition of new knowledge about the world.

Optimal conditioning—that is, the creation of a strong association between the conditioned stimulus (CS) and the unconditioned
stimulus (US)—requires forward conditioning; that is, the CS should precede the US, repeated pairings of the CS and the US, a CS and US
that logically belong together, a CS that is novel and unfamiliar, and a US that is biologically or symbolically salient. This model is known
as neo-Pavlovian conditioning. Under neo-Pavlovian conditioning, the consumer can be viewed as an information seeker who uses
logical and perceptual relations among events, along with his or her own preconceptions, to form a sophisticated representation of the
world.

Strategic Applications of Classical Conditioning: Three basic concepts derive from classical conditioning: repetition, stimulus
generalization, and stimulus discrimination. Repetition works by increasing the strength of the association between a conditioned
stimulus and an unconditioned stimulus and slows the process of forgetting. After a certain number of repetitions, attention and
retention declines. This effect is known as advertising wear out and can be decreased by varying the advertising messages. Wear out
may be avoided by varying the message through cosmetic variation or substantive variation. Some disagree about how much repetition
is needed. a) The three-hit theory states that the optimum number of exposures to an ad is three. i) One to make the consumer aware of
the product. ii) A second to show consumers the relevance of the product. iii) A third to remind them of its benefits. iv) Others think it
may take 11 to 12 repetitions to achieve the three objectives. The effectiveness of repetition is somewhat dependent upon the amount
of competitive advertising to which the consumer is exposed. a) As exposure increases, the potential for interference increases.

According to classical conditioning theorists, learning depends not only on repetition, but also on the ability of individuals to generalize.
Making the same response to slightly different stimuli is called stimulus generalization. Stimulus generation explains why imitative “me
too” products succeed in the marketplace: consumers confuse them with the original product they have seen advertised. It also explains
why manufacturers of private label brands try to make their packaging closely resemble the national brand leaders. The principle of
stimulus generalization is applied by marketers to product line, form, and category extensions. In product line extensions, the marketer
adds related products to an already established brand, knowing that the new product is more likely to be adopted when it is associated
with a known and trusted brand name. Marketers offer product form extensions that include different sizes, different colours, and even
different flavours. Product category extensions generally target new market segments. The success of this strategy depends on a
number of factors. For example, if the image of the parent brand is one of quality, consumers are more likely to bring positive
associations to the new category extensions.

Family branding—the practice of marketing a whole line of company products under the same brand name—is another strategy that
capitalizes on the consumer’s ability to generalize favourable brand associations from one product to the next. Retail private branding
often achieves the same effect as family branding. For example, Wal-Mart used to advertise that its stores carried only “brands you
trust.” Now, the name Wal-Mart itself has become a “brand” that consumers have confidence in, and the name confers brand value on
Wal-Mart’s store brands.

Licensing—allowing a well-known brand name to be affixed to products of another manufacturer—is a marketing strategy that operates
on the principle of stimulus generalization.

Corporations also license their names and trademarks, usually for some form of brand extension, where the name of the corporation is
licensed to the maker of a related product and thereby enters a new product category. The increase in licensing has made
counterfeiting a booming business, as counterfeiters add well-known licensor names to a variety, of products without benefit of control
or quality control.

Stimulus discrimination is the opposite of stimulus generalization and results in the selection of specific stimulus from among similar
stimuli. The consumer’s ability to discriminate among similar stimuli is the basis of positioning strategy, which seeks to establish a
unique image for a brand in the consumer’s mind. The key to stimulus discrimination is effective positioning, a major competitive
advantage. The image, or position, that a product or service has in the mind of the consumer is critical to its success. Unlike the imitator
who hopes consumers will generalize their perceptions and attribute special characteristics of the market leader’s products to their own
products, market leaders want the consumer to discriminate among similar stimuli. Most product differentiation strategies are designed
to distinguish a product or brand from that of competitors on the basis of an attribute that is relevant, meaningful, and valuable to
consumers. It often is quite difficult to unseat a brand leader once stimulus discrimination has occurred. In general, the longer the period
of learning—of associating a brand name with a specific product—the more likely the consumer is to discriminate, and the less likely to
generalize the stimulus.

INSTRUMENTAL CONDITIONING
Like classical conditioning, instrumental conditioning requires a link between a stimulus and a response. However, in instrumental
conditioning, the stimulus that results in the most satisfactory response is the one that is learned. Instrumental learning theorists
believe that learning occurs through a trial-and-error process, with habits formed as a result of rewards received for certain responses or
behaviours. According to American psychologist B. F. Skinner, most individual learning occurs in a controlled environment in which
individuals are “rewarded” for choosing an appropriate behaviour. In consumer behaviour terms, instrumental conditioning suggests
that consumers learn by means of a trial-and-error process in which some purchase behaviours result in more favourable outcomes (i.e.,
rewards) than other purchase behaviours. A favourable experience is instrumental in teaching the individual to repeat a specific
behaviour. In a marketing context, the consumer who tries several brands and styles of jeans before finding a style that fits her figure
(positive reinforcement) has engaged in instrumental learning. Reinforcement of Behavior: Skinner distinguished two types of
reinforcement (or reward) influence, which provided that the likelihood for a response would be repeated. The first type, positive
reinforcement, consists of events that strengthen the likelihood of a specific response. Negative reinforcement is an unpleasant or
negative outcome that also serves to encourage a specific behaviour. Fear appeals in ad messages are examples of negative
reinforcement. Either positive or negative reinforcement can be used to elicit a desired response. Negative reinforcement should not
be confused with punishment, which is designed to discourage behaviour. Extinction and forgetting—when a learned response is no
longer reinforced, it diminishes to the point of extinction; that is, to the point at which the link between the stimulus and the expected
reward is eliminated. Forgetting is often related to the passage of time; this is known as the process of decay. Marketers can overcome
forgetting through repetition and can combat extinction through the deliberate enhancement of consumer satisfaction.

Strategic Applications of Instrumental Conditioning

Marketers effectively utilize the concepts of consumer instrumental learning when they provide positive reinforcement by assuring
customer satisfaction with the product, the service, and the total buying experience. The objective of all marketing efforts should be to
maximize customer satisfaction. Aside from the experience of using the product itself, consumers can receive reinforcement from other
elements in the purchase situation, such as the environment in which the transaction or service takes place, the attention and service
provided by employees, and the amenities provided. Some hotels provide reinforcement to guests in the form of small amenities.
Companies that create personal connections with customers, and offer diverse product lines and competitive prices, are the ones
providing the best reinforcement, resulting in satisfaction and repeat patronage. Most frequent shopper programs are based on
enhancing positive reinforcement and encouraging continued patronage. Relationship marketing—developing a close personalized
relationship with customers—is another form of non-product reinforcement.

Reinforcement schedules—marketers have found that product quality must be consistently high and provide customer satisfaction with
each use for desired consumer behavior to continue.
Marketers have identified three types of reinforcement schedules: total (or continuous) reinforcement, systematic (fixed ratio)
reinforcement, and random (variable ratio) reinforcement.
Shaping—the reinforcement of behaviours that must be performed by consumers before the desired Behavior can be performed is
called shaping. Shaping increases the probabilities that certain desired consumer behaviour will occur

Modelling or Observational Learning

Learning theorists have noted that a considerable amount of learning takes place in the absence of direct reinforcement, either positive
or negative, through a process psychologists call modelling or observational learning (also called vicarious learning). They observe how
others behave in response to certain situations (stimuli), the ensuing results (reinforcement) that occur, and they imitate (model) the
positively-reinforced behaviour when faced with similar situations. Modelling is the process through which individuals learn behaviour
by observing the behaviour of others and the consequences of such behaviour. Their role models are usually people they admire
because of such traits as appearance, accomplishment, skill, and even social class. Children learn much of their social behaviour and
consumer behaviour by observing their older siblings or their parents.

INFORMATION PROCESSING AND COGNITIVE LEARNING THEORY

Not all learning is the result of repeated trials. Learning also takes place as the result of consumer thinking and problem solving.
Cognitive learning is based on mental activity. Cognitive learning theory holds that the kind of learning most characteristic of human
beings is problem solving, and it gives some control over their environment

Information Processing: The human mind processes the information it receives as input much as a computer does. Consumers process
product information by attributes, brands, comparisons between brands, or a combination of these factors. Consumers with higher
cognitive ability generally acquire more product information and consider more product attributes and alternatives that consumer with
lesser abilities. The more experience a consumer has with a product category, the greater his or her ability to make use of product
information.

How Consumers Store, Retain, and Retrieve Information

The structure of memory: because information processing occurs in stages, it is believed that content is stored in the memory in
separate storehouses for further processing; a sensory store, a short-term store, and a long-term store.
Sensory store—all data comes to us through our senses; however, our senses do not transmit information as whole images. The
separate pieces of information are synchronized as a single image.
This sensory store holds the image of a sensory input for just a second or two. This suggests that it’s easy for marketers to get
information into the consumer’s sensory store, but hard to make a lasting impression.

Short-term store—if the data survives the sensory store, it is moved to the short-term store. This is our working memory. If rehearsal—
the silent, mental repetition of material—takes place, then the data is transferred to the long-term store. If data is not rehearsed and
transferred, it is lost in a few seconds. Long-term store—once data is transferred to the long-term store it can last for days, weeks, or
even years. Rehearsal and encoding—the amount of information available for delivery from the short-term store to the long-term store
depends on the amount of rehearsal an individual give to it. Encoding is the process by which we select and assign a word or visual
image to represent a perceived object. Information overload takes place when the consumer is presented with too much information.
The result of overload is frustration and confusion, resulting in poor purchase decisions.
Retention—information is constantly organized and reorganized as new links between chunks of information are forged. In fact, many
information-processing theorists view the long-term store as a network consisting of nodes (i.e., concepts) with links among them. As
individuals gain more knowledge, they expand their network of relationships, and sometimes their search for additional information.
This process is known as activation, which involves relating new data to old data to make the material more meaningful. The total
package of associations brought to mind when a cue is activated is called a schema. One study demonstrated that brand imprinting—
messages that merely establish the brand’s identity—conducted before the presentation of the brand’s benefits facilitates consumer
learning and retention of information about the brand. Studies also showed that a brand’s sound symbolism and the brand’s linguistic
characteristics impacted the encoding and retention of the brand name. Consumers recode what they have already encoded to include
larger amounts of information (chunking). The degree of prior knowledge is an important consideration.
Knowledgeable consumers can take in more complex chunks of information than those who are less knowledgeable in the product
category. Information is stored in long-term memory in two ways: episodically (i.e., by the order in which it is acquired) and semantically
(according to significant concepts). Many learning theorists believe that memories stored semantically are organized into frameworks
by which we integrate new data with previous experience.

Retrieval is the process by which we recover information from long-term storage. Retrieval is most often triggered by situational cues.
Research findings suggest that incongruent (e.g. unexpected) elements pierce consumers’ perceptual screens and improve the retention
of an ad when these elements are relevant to the advertising message. Interference effects are caused by confusion with competing ads
and result in a failure to retrieve. Advertisements can act as retrieval cues for a competitive brand.

Involvement Theory

Involvement theory is focused on the degree of personal relevance that the product or purchase hold for that consumer. High-
involvement purchases are those that are very important to the consumer and thus provoke extensive problem solving and information
processing. Low-involvement purchases are purchases that are not very important to the consumer, hold little relevance, and have little
perceived risk, and thus, provoke very limited information processing. Highly involved consumers find fewer brands acceptable (they are
called narrow categorizers) . Uninvolved consumers are likely to be receptive to a greater number of advertising messages regarding the
purchase and will consider more brands (they are broad categorizers).

MARKETING APPLICATIONS OF INVOLVEMENT

A marketer aspires to have consumers who are involved with the purchase also view its brand as unique. Many studies showed that
high purchase involvement coupled with perceived brand differences lead to a high favourable attitude toward the brand, which in turn
leads to less variety seeking and brand switching and to strong brand loyalty. Therefore, many studies have focused on the factors that
increase involvement. Online, many advertisers use avatars – animated, virtual reality graphical figures representing people – in their
Web sites. There is no generalized profile of a highly involved consumer, many studies investigated their personal characteristics related
to one’s involvement level. Marketers can take steps to increase customer involvement with their ads.
The best strategy for increasing the personal relevance of products to consumers is to provide benefits that are important and relevant
to customers, improve the product and add benefits as competition intensifies, and focus on forging bonds and relationships with
customers rather than just engaging in transaction.

HEMISPHERAL LATERALIZATION AND PASSIVE LEARNING

Hemispheral lateralization or split-brain theory originated in the 1960’s and became popular in the 1980s. The premise is that the right
and left hemispheres of the brain specialize in the kinds of information they process. The left hemisphere is the centre of human
language; it is the linear side of the brain and primarily responsible for reading, speaking, and attributional information processing. The
right hemisphere of the brain is the home of spatial perception and nonverbal concepts; it is nonlinear and the source of imagination
and pleasure. The left side of the brain is rational, active, and realistic. The right side is emotional, metaphoric, impulsive, and intuitive.

Passive Learning and Media Strategy: Individuals passively process and store right-brain information. Because it is largely pictorial, TV
viewing is considered a right hemisphere activity.
Passive learning is thought to occur through repeated exposures to low-involvement information processing. TV commercials were
thought to produce change in consumer behaviour before it changed consumer attitudes. The left hemisphere is associated with high-
involvement information. i) Print media (newspapers and magazines) are considered left hemisphere or high-involvement activity.
Right-brain theory is consistent with classical conditioning and stresses the importance of the visual component of advertising. Recent
research suggests that pictorial cues help recall and familiarity, although verbal cues trigger cognitive functions, encouraging evaluation.
The right-brain processing theory stresses the importance of the visual component of advertising, including the creative use of symbols.
Pictorial cues are more effective at generating recall and familiarity with the product, although verbal cues (which trigger left-brain
processing) generate cognitive activity that encourages consumers to evaluate the advantages and disadvantages of the product.
BRAND LOYALTY
Brand loyalty is the ultimate desired outcome of consumer learning. a) There is no single definition of this concept. Attitudinal measures
are concerned with consumers’ overall feelings (i.e., evaluation) about the product and the brand, and their purchase intentions.
Behavioural measures are based on observable responses to promotional stimuli—purchase behaviour, rather than attitude toward the
product or brand. A basic issue among researchers is whether to define brand loyalty in terms of consumer behaviour or consumer
attitudes. Behavioural scientists who favour the theory of instrumental conditioning believe that brand loyalty results from an initial
product trial that is reinforced through satisfaction, leading to repeat purchase. Cognitive researchers, on the other hand, emphasize the
role of mental processes in building brand loyalty. They believe that consumers engage in extensive problem-solving behaviour involving
brand and attribute comparisons, leading to a strong brand preference and repeat purchase behaviour.

REFERENCE GROUP AND OPINION LEADERSHIP

Reference Groups
Reference groups are groups that serve as frames of reference for individuals in their consumption decisions because they are perceived
as credible sources . Reference groups influencing broadly defined values or behaviour are called normative reference groups.
Reference groups serving as benchmarks for specific or narrowly defined attitudes or behaviour are called comparative reference
groups. A group to which a person either belongs or would qualify for membership is called a membership group. There are groups in
which an individual is not likely to receive membership, despite acting like a member by adopting the group’s values, attitudes, and
behaviour. This is called a symbolic group.
An opinion leader may become an opinion receiver later on. Opinion leadership tends to be category specific. One of those people who
indulge in informal product related communication, usually provides information about a product or product category, whether it would
useful to buy, how it would be used etc. He would also offer advice as to which of several brands is the best and from where it should be
bought. This person is known as the Opinion Leader and the process is known as Opinion Leadership. In some cases, the Opinion Leader
just likes to talk and discuss about a product or service category. He voluntarily provides information about the product and product
category and/or about brands. The people who form the audience and listen to him are called Opinion Receivers. In other cases, prior to
a purchase, people could approach an Opinion Leader and request him for information and advice about the product category and/or
about brands. That is, the Opinion Leader would provide information only when asked for. In such cases, the persons (audience/or the
receiver of information) are known as Opinion Seekers. Individuals who on their own seek information and advice about products and
brands are called Opinion Seekers. There is a two-way exchange of information, and both opinion leaders and opinion receivers/seekers
interact with each other. Opinion leaders provide the receivers/seekers with product information, advice, and relate to them their
experiences. In return for this, they gather more information, personal opinion and personal experiences from the receivers/seekers.
Opinion Leaders are not generic in nature; they are specific to a product category and the Opinion Leader for a product category would
become an Opinion Receiver/Seeker for another product category.

ROLE PLAYED BY OPINION LEADERS: Opinion leaders play a key role and act as a vital role between the marketer and the consumer. He
communicates informally about product and service offerings and/or brands; he gives product news and advice to consumers (current
and potential) and also narrates his personal experience to others. The major roles played by opinion leaders are, i) authority figure; ii)
trend setter; and These roles are discussed as follows:
Authority figure: The role that is played by an Opinion Leader when he/she gives product news and advice, and also narrates his/her
personal experiences to consumers, is known as the authority figure role. By providing product news and advice, as also narrating his
personal experiences, he/she helps current and potential consumers satisfy their needs and wants. Opinion leaders are highly involved
with a product category. They gather information about new, technically complex and risky products by reading about them in
newspapers, journals and magazines (also special interest magazines). They attend product launch parties, trade fairs and trade shows,
conferences and symposiums etc. They also enter into conversations and discussions with subject experts, researchers, scientists, and
even innovators. Innovators provide them with accounts of their first-hand experience. It is noteworthy that sometimes even Opinion
Leaders act as innovators and are the first to try out a new product offering in the product category of their interest. Opinion Leaders are
said to be performing the authority figure role as they act as experts and authorities for a particular product category. They have
knowledge, expertise and experience with the product category. They are aware of the various evaluative criteria on which the product
and service offerings should be assessed and they are also aware of the decision rules that need to be applied to make a final purchase
decision. Opinion Leaders are also aware of the various brands that are available, and the value associated with each. So, they are in the
best position to provide information and advice to consumer as to i) whether to make a purchase? ii) If yes, which brand to buy?
Because of this role that they perform as experts, consumers prefer approaching them for information and advice. This helps the
consumers i) reduce the level of physical and cognitive effort associated with a purchase; ii) reduce the level of risk associated with the
purchase. Opinion Leaders enjoy playing this role because of the prestige and pride associated with it. As mentioned above, they may
voluntarily play this role and enjoy talking about a product category, or they may be approached and requested for it by the consumers.
In any case, they derive pleasure and pride in acting out the expert’s role. Opinion Leaders are specific to a product or service category.
It is very rare that an Opinion Leader is an expert or authority for more than one product category. This is because of the fact that it
would involve a lot of effort and would difficult for a person to be well informed and educated about any and every product category.
Further, the expertise would be maintained only if it is an ongoing effort of information gathering, storage and retention. It would
involve a huge amount of effort to develop and maintain expertise in more than one or few areas. Thus, as an expert, Opinion Leaders
specialize in one product category. However, Opinion Leadership could tend to overlap across certain combinations of interest areas,
i.e., Opinion leaders in one product category can often be Opinion Leaders in related areas, like kitchen ware and household goods,
fashion apparel and cosmetics, computers and mobiles, tourism and travel. ii) Trend setter: Opinion Leaders act as trend setters. They
are inner oriented and do not bother about what others in the society say or do. They are also innovative and often go in for purchase of
new product and service offerings (of their interest category) and through the purchase and usage, they set the trend. Opinion Leaders
play the trend setter role when they narrate accounts of their personal experiences to others to copy and emulate. In other words, if
they purchase a new innovative product of their interest, they speak of their experience as acts of behaviour that the audience (opinion
receivers/opinion seekers) should emulate. Unlike the authority role (of providing news and advice), they emphasize more on narrating
their personal experiences. Rather than knowledge and expertise being the source of credibility, it is the personal experience that
provides credibility. Once a trend is set by trend setters, people begin to copy them. In fact, they act as a reference group for others who
want to use the same product and service offerings that are used by former. As trend setters, Opinion Leaders could belong to
membership or non-membership reference groups.
MOTIVES BEHIND OPINION LEADERSHIP:
Both Opinion Leaders and Opinion Receivers/seekers have their own reasons for providing information and receiving/seeking product
information and advice. Opinion Leaders give product related information and advice sometimes voluntarily on their own and
sometimes when are approached and asked for. Similarly, Opinion Receivers/Seekers request for information or listen with listen with
patience to all that the Opinion Leader has to say. There are various reasons as to why such communication exchange takes place
between Opinion Leaders and Opinion Receivers/Seekers, be they relatives, friends, acquaintances or even strangers. Some of the
reasons why Opinion Leaders provide information and why Opinion Receivers/Seekers receive or seek information and advice are
discussed below. These explain the motives behind the Opinion Leadership process

Why do Opinion Leaders provide information?

Opinion Leaders like to give product news, provide expert advice and also love to share their experiences with others. This is because
they are involved and interested in a product or service category, and love to talk about it (product involvement). - WOM
communication gives them an opportunity to talk about their interests to others. Further they may feel so positively and favourably or
negatively and unfavourably about a product and/or brand that they feel like telling about it to others (product involvement, self-
involvement and social involvement) - As they possess knowledge, expertise and experience with a product category, they feel
important and powerful when people approach them for information and advice. It confers upon them a sense of superiority or special
status over others. They take pride in providing information and advice (self-gratification, power and pride). They also feel that others to
whom they have given information and advice on new products or services have bought them because of them
They may be genuinely be benevolent and generous, and out of altruistic concerns may like to help others, especially family, friends,
relatives and neighbours (selfless motive: social involvement). - Opinion Leaders may be also trying to reduce their own level of post-
purchase cognitive dissonance (self-interest). - Interestingly true, many provide information as a) they may be wanting to try out a new
product or service offering after someone else buys and uses it first; or b); or c) they may themselves be trying to reassure themselves of
their own purchase decision by recommending it to others; and d) they may be dissatisfied with a purchase and like to complain about
the purchase of the product and service and/or brand and/or company and/store from where it has been purchased

DYNAMICS OF OPINION LEADERSHIP PROCESS:

The Opinion Leadership process is highly dynamic in nature. Opinion Leaders communicate informally about product and service
offerings and/or brands. They offer product information and advice, and narrate experiences. They are not generic in nature; they are
specific to a product category, and an expert in one product category would not be an expert for another product category. Thus, a
person may be an Opinion Leader for a product category and an Opinion Receiver for another. The dynamic nature of Opinion
Leadership is discussed as follows:
Opinion Leaders provide product information, advice and narrate experiences: Opinion Leaders communicate informally about product
and service offerings and/or brands; they give product news and advice to consumers (current and potential) and also narrate their
personal experience to others. As such they act as authority figures, trend setters and local opinion leaders. Opinion Leaders provide
both positive and negative information: Opinion Leaders provide both favourable and unfavourable information about product and
service offerings and/or brands, and this adds to their credibility. Compared to positive and neutral information and/or evaluation, the
impact of negative information and/or evaluation is much greater and has a bigger impact on Opinion Receivers/Seekers. Thus, they
would avoid such product and service offerings and/or brands that are spoken negatively by Opinion Leaders. Opinion Leaders are
influential and persuasive: Opinion Leaders are highly influential and very effective at persuading people around them. They are credible
informal sources of product knowledge, information and advice. People look up to them for advice and they are good at influencing the
former because of the following:
they are regarded as subject experts, i.e. it is believed that opinion leaders are knowledgeable and experienced about a product or
service category. - since they receive no monetary compensation, their information, advice, opinion and experiences about a product or
service category, are perceived as genuine, objective and unbiased. - they are thought to have no selfish, ulterior or hidden motives, and
this adds to their credibility (unlike a marketer who wants to make a sale). - because they have no self-interest, their advice is regarded
as being in the best interests of others (potential and actual consumers)
THE WORD-OF-MOUTH ENVIRONMENT AND e-WOM
Constantly emerging new technologies allow people to compile and post increasingly sophisticated, appealing, and attention-getting
materials online and vividly share their consumption experience with others. Word of mouth taking place online is called e-WOM. e-
WOM occurs online in social networks, brand communities, blogs, and consumer message boards.
Social Networks
Online social networks are virtual communities where people share information about themselves with others.. A recent study identified
three dimensions underlying consumers’ engagement in e-WOM in online social networks: (1) Tie strength, (2) Similarity and (3) source
credibility
STRATEGIC MARKETING APPLICATIONS OF WORD OF MOUTH
Word-of-mouth is often more effective than paid promotional messages initiated by manufacturers.
Stimulating WOM is not a new strategy, but the emergence of e-WOM brought upon a huge surge in the amount of money and
creativity devoted to campaigns and strategic initiatives centered on WOM, including using buzz agents, viral marketing, e-referrals and
recommendations, and responding effectively to negative rumours.

Buzz Agents
Many firms enlist typical consumers to serve as their buzz agents; these agents agree to promote products by bringing them to family
gatherings, read books while riding on mass transit, etc. These “agents” typically do not receive payment but are motivated by being
called upon to serve as opinion leaders.
Viral Marketing
Viral marketing consists of encouraging individuals to pass on an e-mail message to others, thus creating the potential for exponential
growth in the message’s exposure and influence. Another effective form of viral marketing is online referrals and recommendations.

THE CREDIBILITY OF FORMAL SOURCES, SPOKESPERSONS, AND ENDORSERS

Consumers judge commercial source credibility on such factors as past performance, reputation, the kind and quality of products and
service they are known to render, the image and attractiveness of the spokesperson used, the type of retail outlets through which they
sell, and the media carrying their promotions.
2. Marketers use institutional advertising, which is designed to promote a favourable company image rather than to promote specific
products.
3. Not-for-profit sources generally have more credibility than for-profit sources.
4. Publicity is valuable to a manufacturer as citations in an editorial context give the reader more confidence in the message.
5. Consumers sometimes regard the spokesperson delivering the product message as the source of the message.
6. Marketers often use celebrities as endorsers of their offerings, and a given celebrity’s persuasive power is a function of a consumers’
awareness and likeability of the person.
7. Key findings related to the relationship between the effectiveness of the message and the spokesperson or endorser employed
include: a) The effectiveness of the spokesperson is related to the message itself. b) The synergy between the endorser and the type of
product or service advertised is very important, because according to associative learning theory, celebrities are conditioned with the
products they promote. c) Endorsers who have demographic characteristics that are similar to those of the target audience are viewed
as more credible and persuasive than those that do not.
d) The endorser’s credibility is not a substitute for corporate credibility. e) Marketers who use celebrities to give testimonials or endorse
products must be sure that the specific wording of the endorsement lies within the recognized competence of the spokesperson.
8. In formal interpersonal communications, consumers are more likely to be persuaded by salespersons who engender confidence and
who give the impression of honesty and integrity.

FAMILY AND SOCIAL CLASS

The predominant form of the family is largely influenced by the culture within which the families exist. Important demographic
changes reflect the dynamic nature of the family. Research results indicate that there is little to no difference between working and
non-working wives with respect to the purchases of timesaving durables. A husbands’ behaviour with respect to household chores
remained the same whether the wife was or was not employed, and the ultimate responsibility for household management still
belonged to the wife. There is no doubt that the “typical” or “traditional” family household has changed. Attitudes with respect to
children and child-rearing have also been changing.
SOCIALIZATION OF FAMILY MEMBERS
The socialization of family members is a central family function. In the case of young children, this process includes imparting to
children the basic values and modes of behaviour consistent with the culture. These generally include moral and religious principles,
interpersonal skills, dress and grooming standards, appropriate manners and speech, and the selection of suitable educational and
occupational or career goals. Parental socialization responsibility seems to be constantly expanding. A sign of parents’ constant
pressure to help their young children secure an “advantage” or “keep ahead” are the demanding daily schedules that rule the lives
of many children. Marketers frequently target parents who are looking for assistance in the task of socializing their children. To this
end, marketers are sensitive to the fact that the socialization of young children provides an opportunity to establish a foundation on
which later experiences continue to build throughout life.

CONSUMER SOCIALIZATION OF CHILDREN

The aspect of childhood socialization that is particularly relevant to the study of consumer behaviour is consumer socialization,
which is defined as the process by which children acquire the skills, knowledge, and attitudes and experiences necessary to function
as consumers. A variety of studies have focused on how children develop consumption skills. Many preadolescent children acquire
their consumer behaviour norms through observation of their parents and older siblings who function as role models and sources of
cues for basic consumption learning. In contrast, adolescents and teenagers are likely to look to their friends for models of
acceptable consumption behaviour. Shared shopping experiences (i.e., co-shopping is when mother and child shop together) also
gives children the opportunity to acquire in-store shopping skills. Co-shopping is a way of spending time with one’s children while at
the same time accomplishing a necessary task.
Consumer socialization also serves as a tool by which parents influence other aspects of the socialization process. a) For instance,
parents frequently use the promise or reward of material goods as a device to modify or control a child’s behaviour. According to
research, adolescents reported that their parents frequently used the promise of chocolate candy as a means of controlling their
behaviour (e.g., getting them to complete homework or to clean their rooms).

A socialization agent is a person or organization involved in the socialization process “because of frequency of contact with the
individual and control over the rewards and punishments given to the individual. “ Mothers are generally considered to be stronger
consumer socialization agents than their husbands, because they tend to be more involved with their children, and are more likely to
mediate their children’s exposure to commercial messages. Consumer socialization of children does not function identically in all
cultures. There is research evidence to suggest that a child’s age and sex, family size, social class and race are important factors in
the consumer socialization process.
Growing Up in a Materialistic World
Children learn to attach importance to worldly possessions at an early age. A recent study conducted with school-aged children
found that materialism increases from middle childhood to early adolescence and then declines from early to late adolescence. The
research also found an inverse relationship between self-esteem and materialism in children and adolescents. Another aspect of the
consumer socialization process, particularly for adolescents, is the development of scepticism toward product and service claims and
advertising.

OTHER FUNCTIONS OF THE FAMILY

Other basic functions include economic well-being, emotional support, and suitable family lifestyles.
Economic Well-Being
Providing financial means to its dependents is unquestionably a basic family function. How the family divides its responsibilities for
providing economic well-being has changed considerably during the past 30 years. a) No longer are the traditional roles of husband
as economic provider and wife as homemaker and child-rearer still valid.

Emotional Support

The provision of emotional nourishment (including love, affection, and intimacy) to its members is an important core function of the
contemporary family. The family provides support and encouragement and assists its members in coping with decision making and
personal or social problems. If the family cannot provide adequate assistance when it is needed, it may turn to a counsellor,
psychologist or other helping professional as an alternative.
Suitable Family Lifestyles
Another important family function in terms of consumer behaviour is the establishment of a suitable lifestyle for the family.
Upbringing, experience, and the personal and jointly held goals of the spouses determine the importance placed on education or
career, on reading, television viewing, the learning of computer skills, the frequency and quality of dining out, and on the selection
of other entertainment and recreational activities.
Family lifestyle commitments, including the allocation of time, are greatly influencing consumption patterns.
FAMILY DECISION MAKING AND CONSUMPTION-RELATED ROLES
Marketers most frequently examine the attitudes and behaviour of the one family member whom they believe to be the major
decision maker. Sometimes they also examine the attitudes and behaviour of the person most likely to be the primary user of the
product or service.
DYNAMICS OF HUSBAND-WIFE DECISION MAKING
Marketers are interested in the relative amount of influence that a husband and a wife have when it comes to family consumption
choices.
Family consumption decisions can be classified as
: a) Husband dominated
b) Wife dominated
c) Joint—equal
d) Autonomic—solitary or unilateral

The relative influence of a husband and wife on a particular consumer decision depends in part on the product and service category.
The relative influence has changed over time. Husband-wife decision-making also appears to be related to cultural influence. In the
People’s Republic of China, there were substantially fewer “joint” decisions and more “husband-dominated” decisions for many
household purchases than among Chinese in the United States.

THE EXPANDING ROLE OF CHILDREN IN FAMILY DECISION MAKING

Over the past several decades, there has been a trend toward children playing a more active role in what the family buys, as well as
in the family decision-making process. This shift in influence has occurred as a result of families having fewer children, more dual-
income couples who can afford to permit their children to make a greater number of the choices, and the encourage of the media to
allow children to “express themselves.” Research reveals that children have considerable influence on family decision-making.
Research evidence supports the notion that the extent to which children influence a family’s purchases is related to family
communications patterns.
Children’s influence has been found to be highest in families where the parents are pluralistic parents (i.e., parents who encourage
children to speak-up and express their individual preferences on purchase) and consensual parents (i.e., parents who encourage
children to seek harmony, but are nevertheless open to the children’s viewpoint on purchases), because such parents allow their
children a significantly greater amount of influence that do protective parents (i.e., parents who stress that children should not
stress their own preferences, but rather go along with the parents judgment on what is to be purchased). Research has explored the
notion of the teen Internet maven—teenagers who spend considerable time on the Internet and know how to search for and find
information, and respond to requests from others to provide information. Advertisers have long recognized the importance of
children’s “pester power” and therefore encourage children to “pester” their parents to purchase what they see in ads. The
strategies used by children to influence their parents’ food purchasing decisions included such persuasive strategies as: stating their
preferences or begging; and emotional strategies, such as asking repetitively for a product (in a way that irritates the parents).

Traditional Family Life Cycle

Traditional family life cycle is a progression of stages through which many families pass.
The model has five basic stages. a) Stage I—Bachelorhood. Young single adult living apart from parents.
b) Stage II—Honeymooners. Young married couple.
c) Stage III—Parenthood. Married couple with at least one child living at home.
d) Stage IV—Post parenthood. An older married couple with no children living at home.
e) Stage V—Dissolution. One surviving spouse.

Stage I—Bachelorhood
The first FLC stage consists of young single men and women who have established households apart from their parents. Most
members of this FLC stage are fully employed; many are college or graduate students who have left their parents’ homes. Young
single adults are apt to spend their incomes on rent, basic home furnishings, the purchase and maintenance of two wheelers, travel
and entertainment, and clothing and accessories. Members of the bachelorhood stage frequently have sufficient disposable income
to indulge themselves. Marketers target singles for a wide variety of products and services. Marriage marks the transition from the
bachelorhood stage to the honeymooner stage.
Stage II—Honeymooners
The honeymoon stage starts immediately after the marriage vows are taken and generally continues until the arrival of the couple’s
first child. This FLC stage serves as a period of adjustment to married life.
These couples often have available a combined income that often permits a lifestyle that provides them with the opportunities of
more indulgent purchasing of possessions or allows them to save or invest their extra income. Honeymooners have considerable
start-up expenses when establishing a new home (major and minor appliances, bedroom and living room furniture, carpeting,
drapes, dishes, and a host of utensils and accessory items). During this stage, the advice and experience of other married couples
are likely to be important to newlyweds.

Stage III—Parenthood
When a couple has its first child, the honeymoon is considered over. The parenthood stage (sometimes called the full-nest stage)
usually extends over more than a 20-year period. a) Because of its long duration, this stage can be divided into shorter phases.
i) Preschool phase
ii) Elementary school phase
iii) High school phase
iv) College phase
Throughout these parenthood phases, the interrelationships of family members and the structure of the family gradually change and
the financial resources of the family change significantly. Many magazines cater to the information and entertainment needs of
parents and children

Stage IV—Post parenthood

Post parenthood, when all the children have left home, is traumatic for some parents and liberating for others. This so-called
empty-nest stage signifies for many parents almost a “rebirth,” a time for doing all the things they could not do while the children
were at home and they had to worry about soaring educational expenses. For both, it is the time to travel, take extended vacations.
They have higher disposable incomes. They look forward to being involved grandparents. They are an important market for luxury
goods, new automobiles, expensive furniture, and vacations to faraway places. .
Stage V—Dissolution
Dissolution of the basic family unit occurs with the death of one spouse. The surviving spouse (usually the wife) often tends to follow
a more economical lifestyle.

WHAT IS SOCIAL CLASS?

Some form of class structure or social stratification has existed in all societies throughout the history of human existence. Social
class can be thought of as a continuum – a range of social positions on which each member of society can be placed – researchers
have preferred to divide the continuum into a small number of specific social classes. The concept of social class is used to assign
individuals or families to a social-class category. Social class is defined as the division of members of a society into a hierarchy of
distinct status classes, so that members of each class have relatively the same status and members of all other classes have either
more or less status.

Researchers define each social class by the amount of status (social status) the members of that class have in comparison to
members of other social classes. In social class research (sometimes called social stratification), status is frequently thought of as
the relative rankings of members of each social class in terms of specific status factors. Examples include: a) Relative wealth—
amount of economic assets b) Power—degree of personal choice c) Prestige—the degree of recognition received from others. To
secure an understanding of how status operates within the minds of consumers, researchers have explored the idea of social
comparison theory. The idea is that individuals quite normally compare their own material possessions with those owned by others
in order to determine their relative social standing. Status is often defined in terms of purchasing power. Although social comparison
theory and its related activity of status consumption have the potential of being very enlightening about status and how it operates,
consumer and marketing researchers most often approach the actual study of status in terms of one or more of the following
demographic variables: a) Family income b) Occupational status or prestige
c) Educational attainment
 Reference:
1. Leon G. Schiffman, Leslie lazar Kanuk, (2002). Consumer behaviour. Eleventh edition, New Delhi Prentice Hall of
India private limited
2. ICMR , Consumer Behaviour (2008), ICFAI University Press

Consumer Behavior
Session Number-21

Cultural Influences on Consumer Behavior

The Importance of Cultural Context

To understand the importance of cultural context let’s look at the example of TVS Jupiter scooters positioning and campaign.

TVS named one its scooter as "Jupiter", which symbolizes prosperity, abundance, and luck in several parts of India. Amitabh
Bachchan as a celebrity endorsing the product elaborated on Jupiter as a symbol and related it to the brand thus adding a
powerful combination of cultural meaning associated with both the brand name and the celebrity association (celebrities are a
part of the Indian culture).

https://www.youtube.com/watch?v=ea1Em9X0yDE

As seen in the above example, cultural backdrop is important with respect to consumer behavior because it provides the
interpretive context.
Culture

Culture is the collective values, customs, norms, arts, social institutions and intellectual achievements of a particular society.
Cultural values express the collective principles, standards and priorities of a community. Most of the promotional messages
often reflect the target audiences’ cultural values. Cultures always evolve, so marketers must monitor the sociocultural
environment so as to market existing products more effectively and develop new products that are congruent with changing
cultural trends. Understanding cultural changes is not an easy task because many factors produce cultural changes within a
given society, including new technologies, population shifts, resource shortages, and customs from other cultures.

Society’s members share their values and customs through a common language, although some cultures include more than one
language. We learn cultural norms and customs mostly from family and peers, and begin at a very young age to understand
that some behaviors are appropriate and others are not. Anthropologists have identified three forms of cultural learning: formal
learning, informal learning, and technical learning. Our ethical values are also formed during childhood, as we learn them from
parents, teachers, and other significant adults. Anthropologists distinguish between enculturation (learning one’s own culture)
and acculturation (learning about a new or foreign culture). The contents of media, advertising, and marketing reflect cultural
values and convey them to all members of society very effectively. Given Americans’ extensive exposure to print, broadcast,
and online media, as well as the easily ingested and entertaining presentation formats of their contents, media and advertising
are powerful vehicles for imparting cultural values.

Cultural values are reflected in societies’ languages, symbols, communications, and artifacts. A symbol is anything that
represents something else; symbols can be either verbal or nonverbal.

Words are verbal symbols, and the text of any ad is a composition of symbols. In addition to language and symbols, cultures
include ritualized behaviors. A ritual is a symbolic activity consisting of a series of steps (multiple behaviors) occurring in a
fixed sequence and repeated periodically.

The most widely used measurements of cultural values are content analysis, consumer field observation, and value
measurement instruments. Content analysis focuses on the content of societies’ verbal, written, and pictorial communications,
including promotional messages. When examining a specific society, anthropologists frequently study cultures through field
observation, which consists of observing the daily behavior of selected members of a society. Based on their observations,
researchers draw conclusions about the values, beliefs, and customs of the society under investigation. There are also
structured, self-administered questionnaires that measure individuals’ cultural values, such as the Rokeach Value Survey, the
Values and Lifestyles instrument, and Gordon’s Survey of Personal and Interpersonal Values.
Indians’’ and other societies’ core values—often employed as persuasive appeals in advertising campaigns—include
achievement and success, family, savings, festivities, shopping as ritual, mythology and food. Some changing trends observed
in the Indian context are success through professional achievement, involvement in work, material success, middle of the road
approach to tradition, impulse gratification and use of Hi-Tech products.

Culture’s Role and Dynamics

Culture is often referred to as an "invisible hand" that guides the actions a particular society. When consumer researchers ask
people why they do certain things they frequently answer, "Because it's the right thing to do a response reflecting the ingrained
influence of culture on our behavior. We can truly understand and appreciate the influence of our culture only after visiting
other countries and observing the local values and behaviors found in those countries. For instance, after visiting restaurants in
France or Italy, many Americans may realize that they eat too much food and snack too often. Furthermore, if we travel within
the United States, we will also observe differences in the norms and preferences of subcultures. For example, consumers living
in the northeastern section of the United States have historically preferred ketchup on their hamburgers, but consumers living
in other sections have liked mustard, or a mixture of mustard and ketchup.

Some researchers conceptualized different levels of cultural norms:

Levels Descriptions
1 Supranationa Reflects the underlying dimensions of culture that impact multiple
l cultures or different societies.
2 National Shared core values, customs, personalities, and predispositional
factors that tend to capture the essence of the “national character” of
the citizens of a particular country.
3 Group Concerned with various subdivisions of a country or society. They
might include subcultures’ difference, and membership and reference
group differences.

On the supranational level of culture, which crosses national boundaries, researchers have developed a lifestyle matrix for four
segments of global youth aged 14 to 24.
CULTURE EVOLUTION

Marketers must always monitor cultural changes to discover new opportunities and abandon markets that have "dried up"
because of cultural changes. To this end, marketers should periodically reconsider why consumers are doing what they do, who
are the purchasers and the users of their offerings, when they do their shopping, how and where they can be reached by the
media, and what new product and service needs are emerging. For example, cultural changes in the United States have
increasingly recognized the expanded career options open to women. Today, most women work outside the home, and
frequently in careers that were once exclusively male oriented. Later in this chapter, we explain why achievement and personal
success are two of this nation's core values and how marketers can use them in advertising.

Although traditionally associated with men, especially male business executives, achievement has become important for
women as well, as they increasingly enroll in undergraduate and graduate business (and other college) programs and often
attain top-level business positions. Also, many women are now in professions previously dominated by males (e.g., medicine,
engineering, science). Therefore, many ads that target women now depict appeals that emphasize achievement and success,
whereas some years ago the same kinds of promotions appealed to women's roles as mothers and housewives.

A longitudinal study examined how women in the United States have been depicted in advertising over the years, and
discovered that changing gender roles were manifested in promotional messages. Specifically, there has been a fourfold
increase in the number of women as the "figure" (i.e., the focal point of the print advertisement) compared to men, and a
substantial increase in the number of ads portraying women as business professionals. In contrast, gender stereotypes and the
portrayal of women as dependent on men continue to exist. For example, a study that was conducted by reviewing television
advertising in Belgium revealed that women are continued to be portrayed as dependent, housewives, and taking care of
children. Furthermore, research evidence suggests that what consumers watch on TV, what magazines they read, and what they
see on social media contributes to their views of gender roles.?

Marketers must change their offerings as culture evolves. For example, for many decades, Esquire magazine was a men's bible
to grooming and dressing well, symbolized by the Esquire Man. However, in the era of same-gender marriage and millennials
who take their cues from pop stars they follow, the magazine must chart a new course—and discover a new Esquire Man in
order to stay relevant.

Change in Social or Cultural Values and Attitudinal Functions with Time

https://www.youtube.com/watch?v=WVjXWynV2Gw

What may have been an ego-defensive behaviour from someone (feeling bad about the status and making an attempt to cover it
up) from the lower strata of the society is today a value expressive function (values of accomplishment while maintaining a
sense of belongingness and being proud of one’s status despite not being rich)
Culture expresses and satisfies the needs of societies

1. It offers order, direction and guidance for problem solving by providing methods of satisfying physiological, personal, and
social needs.
2. Culture determines whether a product is a necessity or discretionary luxury.
3. Culture dictates which clothes are suitable for different occasions.
4. When a specific standard no longer satisfies the members of a society or reflects its needs, it is modified or replaced.

Learning Cultural Values

To be considered a cultural value, a belief or custom must be shared by a significant portion of society, because culture is
essentially a series of norms that guide personal and group conduct and link individuals into a largely cohesive group.

Generally, members of a society share their values and customs through a common language , although some cultures include
more than one language.

Consumer Behaviour
Session Number-22

Cultural Influences on Consumer Behavior

Forms of Learning

• We learn cultural norms and customs mostly from family and peers.
• There are three distinct forms of learning:

a. Formal learning When adults and older siblings teach a young family member
“how to behave.”

b Informal learning A child learns primarily by imitating the behavior of selected

. others, such as family, friends, or TV and movie heroes and
 characters

c. Technical Happens when teachers instruct the child in an educational

learning environment as to what, how, and why it should be done

Enculturation And Acculturation

Enculturation
• The learning of one’s own culture is
known as enculturation.
• A key component of enculturation
is consumer socialization.
Acculturation
 The learning of a new or foreign culture
is known as acculturation.
 A consumer can be a “foreigner” in his
or her own country.

Marketing influences cultural learning

The contents of media, advertising, and marketing reflect cultural values an convey them to all members of society very
effectively.

In advertisements, not only are cultural values depicted in the advertising copy but they are also coded in the visual imagery,
colors, movements, music, and other nonverbal elements of an advertisement. Many products become icons and tangible
expressions of the nations cultural values.
Symbols

A symbol is used to convey desired product images or characteristics; it is anything that stands for something else.

• Symbols can be verbal or nonverbal.

• Symbols may have several, even contradictory, meanings.
• Marketers use symbols to convey desired product images or characteristics.
• Price and channels of distribution (including the type of store where the product is sold) are symbols of the marketer
and the marketer’s product.

Symbolism in the Indian Cultural Context

Ritual

A ritual is a type of symbolic activity consisting of a series of steps occurring in a fixed sequence and repeated over time.

• They can be public or private, elaborate, religious, or civil ceremonies, or they can be mundane.
• Rituals tend to include ritual artifacts (products) that are associated with, or somehow enhance, performance of the
ritual.
• Ritualistic behavior is any behavior that is made into a ritual.
 Ritualistic behavior is an action or series of steps that have become a ritual. For example, golfers who take a few
practice swings before actually hitting the ball display a ritualistic behavior. Personal-care activities are often ritualized,
such as the ritual of a woman’s facial care.

Ritual Artifacts

Core Indian Values

Indian society is driven by a set of core values, though these may vary in the urban and rural contexts. These values remain
basic to Indian culture and are strongly embedded in most subcultures. The variation in the urban milieu may be attributed to
changing lifestyles, the impact of Westernization, and the diffusion of technology. Even within the urban context, these values
may have further variations or contradictions. Young couples working with high-technology firms may lead a typically
Western lifestyle (cars, fast food and weekend holidays) but still hold on to or practice certain religious beliefs and customs
that are totally ethnic in nature. In general, Indian consumers are culture-conscious in the sense that they conform to the
cultural expectations of society. Core values of a society are adopted by a significant number of people; are enduring, or
followed by people for a long time, and enable marketers to understand the behavior of consumers. The following are some of
the core values of Indians.
 1. Family orientation
2. Savings Orientation
3. Festivities
4. Shopping as a ritual
5. Mythology
6. Food Habits

CHANGING CULTURAL TRENDS IN INDIAN URBAN MARKETS

The urban setting is very different from the rural or semi-urban market setting. There are tar-get segments in cities comprising
professionally qualified, high-salaried people who are into the fast track of life. The cultural values of this segment reflect the
trends in the urban markets (trends with regard to niche consumers that do not cover the majority of the population). This
segment is strongly influenced by the lifestyle and aspirations of the West. The following values can be associated with this
niche.

1. Achievement Orientation
2. Work ethic
3. Material success
4. Middle-of-the-Road Approach to Tradition
5. Impulse Gratification
6. Use of Hi-tech Products

Consumer Behavior
Session Number-23

Diffusion of Innovation

The diffusion process and the adoption process are two closely related concepts concerned with the acceptance of new
products by consumers. The diffusion process is a macro process that focuses on the spread of an innovation (a new product,
service, or idea) from its source to the consuming public. The adoption process is a micro process that examines the stages
through which an individual consumer passes when making a decision to accept or reject a new product. Consumer acceptance
of new products and services is studied from the research perspective known as the diffusion of innovations. This diffusion
requires an understanding of two related processes:

i) Diffusion process
ii) Adoption process
Diffusion is a macro process concerned with the spread of a new product (an innovation) from its source to the consuming
public.It is the process by which the acceptance of an innovation is spread by communication to members of a social system
over a period of time.

There are four elements to the process

a) The innovation

b) The channel of communication

c) The social system

d) Time

Innovation adoption process is a micro process that focuses on the stages through which an individual consumer passes when
deciding to accept or reject a new product.

Innovation

There is no universally accepted definition of the terms product innovationor new product. There are four approaches to
defining a new product or a new service:

a) Firm-oriented
b) Product-oriented
c) Market-oriented
d) Consumer-oriented
We are considering product orientation for understanding diffusion.

Resistance to Innovation

Seeking to answer to what makes some new products almost instant successes has marketers looking at the product
characteristics of an innovation.

a) Such characteristics offer clues to help determine the extent of consumer resistance, which increases when perceived
relative advantage, perceived compatibility, trial ability, and communicability are low and perceived complexity is
high.
Innovation overload is used to describe the situation in which the increase in information and options available to the consumer
are so great that they seriously impair decision-making. In a world in which consumers find themselves with too little time and
too much stress, increased complexity of products wastes time and may reduce or eliminate acceptance of the product.Product
characteristics that influence diffusion may vary from country to country.

Product-Oriented Definitions
1. This approach focuses on the features of the product itself and the effects these features are likely to have on consumers’
established usage patterns.There are three types of product innovations:
a) Continuous innovation, which is the least disruptive to consumer patterns.
 b) Dynamically continuous innovation, which, although not altering established behavior patterns, is somewhat more
disruptive.
c) Discontinuous innovation, which requires consumers to adopt new behavior patterns.

Not all new products have equal consumer acceptance potential. As a consequence, marketers try to anticipate consumer
acceptance.Researchers have identified five product characteristics that seem to influence consumer acceptance of new
products:

a) Relative advantage—degree to which potential customers perceive a new product as superior to existing substitutes
The degree to which potential customers perceive the pocketsize cellular phone as superior to other telephones is the
product’s relative advantage. Thus, the product can be positioned as a superior replacement of an older existing
product..
b) Compatibility—degree to which the customer feels the new product is consistent with their present needs, values,
and practice.s The degree to which potential consumers feel a new product is consistent with their needs, values, and
practices is a measure of compatibility. Thus, cellular phones should be promoted as being highly compatible with the
needs of individuals holding managerial and professional jobs, who are often in transit, pressed for time, and must
continually stay in touch with their offices and clients.
c) Complexity—degree to which a new product is difficult to understand or use. Complexity is especially important in
dealing with technological fear. The degree to which a new product is difficult to use. Clearly, cellular phones are
rather simple to use. Generally, easy-to-use products gain wider consumer acceptance than complex innovations
d) Trialability—degree to which a new product is capable of being tried on a limited basis. The degree to which a new
product can be tried on a limited basis. Enabling consumers to try cellular telephones on a limited basis is likely to
speed up the diffusion rate of the new product
e) Observability—ease with which a product’s benefits or attributes can be observed, imagined, or described to
potential consumers. The ease with which a product’s benefits can be observed, imagined, or described to potential
customers. Marketers can convey the benefits of pocket-size cellular telephones to consumers rather easily. Some
consumers, however, may feel apprehensive about using the product because of recent media coverage depicting the
very limited research evidence, suggesting that extensive personal use of cellular phones may cause brain cancer.

TheAdoption Process

The second major process in the diffusion of innovations is adoption.The focus of this process is the stages through which an
individual consumer passes: in arriving at a decision: to try or not to try a new innovative product.It is often assumed that the
consumer moves through five stages in arriving at a decision to purchase or reject a new product:

(1) Awareness

(2) Interest

(3) Evaluation
(4) Trial

(5) Adoption (or rejection).

Although the traditional adoption process model is insightful in its simplicity, it does not adequately reflect the full complexity
of the consumer adoption process.

a) It does not adequately acknowledge that there is quite often a need or problem-recognition stage that consumers face
before acquiring an awareness of potential options or solutions.
b) Also, the adoption process does not adequately provide for the possibility of evaluation and rejection of a new product
or service after each stage, especially after trial.
c) It does not explicitly include postadoption or post purchase evaluation.
The adoption of some products and services may have minimal consequences, although the adoption of other innovations may
lead to major behavioral and lifestyle changes.

To make it more realistic, an enhanced model is suggested as one that considers the possibility of a preexisting need or
problem, the likelihood that some form of evaluation might occur through the entire process, and that even after adoption there
will be postadoption or purchase evaluation that might either strengthen the commitment or alternatively lead to
discontinuation.

The Channels of Communication

How quickly an innovation spreads through a market depends on the degree of communication between marketers and
consumers, as well as communication among consumers themselves.A variety of new channels of communication have been
developed to inform consumers of innovative products and services.Interactive marketing messages are where the consumer
becomes an important part of the communication, rather than just a “passive” message recipient.Rapidly growing new media
are crating or enhancing all types of additional word of mouth online.Podcasts and social networking, used to seek out
information alternatives to TV, radio, and print, is commonplace.
 Consumer Behavior
Session Number-24

Diffusion of Innovation
The Social System
In terms of consumer behavior, market segment and target market are synonymous with the term social system in diffusion
research. A social system is a physical, social, or cultural environment to which people belong and within which they function.
The social system serves as the boundary within which the diffusion of a new product is examined. The orientation of a social
system, with its own special values or norms, is likely to influence the acceptance or rejection of new products:

a) If the social system is modern in orientation, the acceptance of innovations is likely to be high.
b) If the social system is traditional in orientation, innovations that are perceived as radical or as infringements on
established custom are likely to be avoided.
One authority describes the characteristics of a typical modern social system in the following terms:

c) A positive attitude toward change

d) An advanced technology and a skilled labor force
e) A general respect for education and science
f) An emphasis on rational and ordered causal relationships rather than on emotional ones
g) An outreach perspective, in which members of the system frequently interact with outsiders
h) A system in which members can readily see themselves in quite different roles
The key point is that a social system’s orientation is the climate in which marketers must operate to gain acceptance for their
new products.
Time

Time is the backbone of the diffusion process.Three ways of considering time are important:

a. The amount of purchase time

b. The identification of adopter categories
c. The rate of adoption

This form of time has been characterized as the amount of time that elapses between the consumers’ initial awareness of the
new product and the point at which they purchase or reject the product. Purchase time is an important concept because the
average time a consumer takes to adopt a new product is a predictor of the overall length of time it will take for the new
product to achieve widespread adoption.

Adopter Categories

The concept of adopter categories involves a classification scheme that indicates where a consumer stands relative to other
consumers when he or she adopts a new product. Consumers are classified into five adopter categories:

a) Innovators
b) early adopters
c) early majority
d) late majority
e) laggards

Some argue that the above bell curve is an erroneous depiction because it may lead to the inaccurate conclusion that 100
percent of the members of the social system under study (the target market) eventually will accept the product innovation.

The “nonadopter” category is in accord with marketplace reality, for not all potential consumers adopt a product innovation.
Demographic characteristics, alone, are generally not an effective way to profile adopters versus non adopters
Rate of Adoption
The rate of adoption is concerned with how long it takes a new product or service to be adopted by members of a social
system; that is, how quickly it takes a new product to be accepted by those who will ultimately adopt it.In general, the
diffusion of products worldwide is becoming faster or shorter.The objective in marketing new products is usually to gain wide
acceptance of the product as quickly as possible.

Marketers desire a rapid rate of product adoption to penetrate the market and quickly establish market leadership (obtain the
largest share of the market) before competition takes hold.A penetration policy is usually accompanied by a relatively low
introductory price designed to discourage competition from entering the market.Rapid product adoption also demonstrates to
marketing intermediaries (wholesalers and retailers) that the product is worthy of their full and continued support.Under
certain circumstances, marketers might prefer to avoid a rapid rate of adoption for a new product.For example, marketers who
wish to use a pricing strategy that will enable them to recoup thei development costs quickly might follow a skimming policy.

The Adoption Process and Information Sources

The adoption process provides a framework for determining which types of information sources consumers find most
important at specific decision stages.The key point is that impersonal mass-media sources tend to be most valuable for creating
initial product awareness.As a result, the relative importance of these sources declines although the relative importance of
interpersonal sources increases The consumer no longer has to personally “know” the person who “knows,” because he or she
can find such people electronically.
 Consumer Behavior
Session Number-25

Consumer Decision Making

The consumer’s decision to purchase or not to purchase a product or service is an important moment for most marketers. It can signify
whether a marketing strategy has been wise, insightful, and effective, or whether it was poorly planned and missed the mark. Thus,
marketers are particularly interested in the consumer’s decision-making process. For a consumer to make a decision, more than one
alternative must be available. (The decision not to buy is also an alternative.)

Theories of consumer decision making vary, depending on the researcher’s assumptions about the nature of humankind. The various
models of consumers (economic view, passive view, cognitive view, and emotional view) depict consumers and their decision-making
processes in distinctly different ways.

An overview consumer decision-making model ties together the psychological, social, and cultural concepts examined in Parts II and III
into an easily understood framework. This decision model has three sets of variables: input variables, process variables, and output
variables.

Input variables that affect the decision-making process include commercial marketing efforts, as well as noncommercial influences from
the consumer’s sociocultural environment. The decision process variables are influenced by the consumer’s psychological field, including
the evoked set (or the brands in a particular product category considered in making a purchase choice). Taken as a whole, the
psychological field influences the consumer’s recognition of a need, prepurchase search for information, and evaluation of alternatives.

The output phase of the model includes the actual purchase (either trial or repeat purchase) and postpurchase evaluation. Both
prepurchase and postpurchase evaluation feed back in the form of experience into the consumer’s psychological field, and serve to
influence future decision processing.
The process of gift exchange is an important part of consumer behavior. Various gift-giving and gift-receiving relationships are captured
by the following five specific gifting classification scheme: (1) intergroup gifting (a group gives a gift to another group); (2) intercategory
gifting (an individual gives a gift to a group or a group gives a gift to an individual); (3) intragroup gifting (a group gives a gift to itself or its
members); (4) interpersonal gifting (an individual gives a gift to another individual); and (5) intrapersonal gifting (a self-gift).

Consumer behavior is not just making a purchase decision or the act of purchasing; it also includes the full range of experiences
associated with using or consuming products and services. It also includes the sense of pleasure and satisfaction derived from possessing
or collecting “things.” The outputs of consumption are changes in feelings, moods, or attitudes; reinforcement of lifestyles; an enhanced
sense of self, satisfaction of a consumer-related need; belonging to groups; and expressing and entertaining oneself.

Among other things, consuming includes the simple utility of using a superior product, the stress reduction of a vacation, the sense of
having a “sacred” possession, and the pleasures of a hobby or a collection. Some possessions serve to assist consumers in their effort to
create “personal meaning” and to maintain a sense of the past.

Relationship marketing impacts consumers’ decisions and their consumption satisfaction. Firms establish relationship marketing
programs (sometimes called loyalty programs) to foster usage loyalty and a commitment to their products and services. At its heart,
relationship marketing is all about building trust (between the firm and its customers) and keeping promises made to consumers.
Therefore, the emphasis in relationship marketing is almost always on developing long-term bonds with customers by making them feel
special and by providing them with personalized services.

WHAT IS A DECISION?

1. In the most general terms, a decision is the selection of an option from two or more alternative choices.
2. If the consumer has no alternatives from which to choose and is literally forced to make a particular purchase or take a particular
action (e.g., use a prescribed medication), then this does not constitute a decision and is commonly referred to as a “Hobson’s
choice.”
In actuality, no-choice purchase or consumption situations are fairly rare.

LEVELS OF CONSUMER DECISION MAKING

1. Not all consumer decisions receive or require the same amount of effort in the information search.
2. Researchers have identified three specific levels of consumer decision making: extensive problem solving, limited problem solving,
and routinized response behavior.

Extensive Problem Solving

1. When consumers have no established criteria for evaluating a product, or have not narrowed their choices, then they are in
extensive problem solving.
2. At this level, the consumer needs a great deal of information to establish a set of criteria on which to judge specific brands and a
correspondingly large amount of information concerning each of the brands to be considered.

Limited Problem Solving

1. At this level, consumers have already established the basic criteria for evaluating the product category but have not established
preferred categories.
2. Their search for additional information is more like “fine-tuning;” they must gather additional brand information to discriminate
among the various brands.
Routinized Response Behavior

1. At this level, consumers have some experience with the product category and a well-established set of criteria with which to
evaluate the brands they are considering.
a) They may search for a small amount of additional information.
2. Just how extensive a consumer’s problem-solving task is depends on how well established his or her criteria for selection are, how
much information he or she has about each brand being considered, and how narrow the set of brands is from which the choice will
be made.
3. Routinized response behavior implies little need for additional information.

MODELS OF CONSUMERS: FOUR VIEWS OF CONSUMER DECISION MAKING

1. The term models of consumers refer to a general view or perspective as to how and why individuals behave as they do.
2. Four views will be examined:
a) An economic view
b) A passive view
c) A cognitive view
d) An emotional view

An Economic View

1. The consumer has often been characterized as making rational decisions.

a) This model, called the economic man theory, has been criticized by consumer researchers for a number of reasons.
b) To behave rationally in the economic sense, a consumer would have to:
i) Be aware of all available product alternatives.
ii) Be capable of correctly ranking each alternative in terms of its benefits and its disadvantages.
iii) Be able to identify the one best alternative.
c) This perspective is unrealistic because:
i) People are limited by their existing skills, habits, and reflexes.
ii) People are limited by their existing values and goals.
iii) People are limited by the extent of their knowledge.
2. It has been argued that the classical economic model of an all-rational consumer is unrealistic for the following reasons:
a) People are limited by their existing skills, habits, and reflexes.
b) People are limited by their existing values and goals.
c) People are limited by the extent of their knowledge.
3. The economic model is often rejected as too idealistic and simplistic.
A Passive View

1. The opposite of the economic view is the view of the consumer as basically submissive to the self-serving interests and promotional
efforts of marketers (i.e., the passive view).
2. Consumers are perceived as impulsive and irrational purchasers, ready to yield to the arms and aims of marketers.
3. The principal limitation of this model is that it fails to recognize that the consumer plays an equal, if not dominant, role in many
buying situations by seeking information about product alternatives and selecting the product that appears to offer the greatest
satisfaction.
4. This view is largely unrealistic.

A Cognitive View

1. This view portrays the consumer as a thinking problem solver.

2. The cognitive model focuses on the processes by which consumers seek and evaluate information about selected brands and retail
outlets.
3. Consumers are viewed as information processors, and this leads to the formulation of preferences, and ultimately, purchase
intentions.
4. In contrast to the economic view, this view recognizes that the consumer is unlikely to seek all possible information, but will only
seek information until he/she has what is perceived as sufficient information to make a satisfactory decision.
5. Consumers are presumed to use heuristics—short-cut decision rules to facilitate decision making.
a) They also use decision rules when exposed to too much information—information overload.
6. This model depicts a consumer who does not have complete knowledge, and therefore cannot make perfect decisions, but who
actively seeks information and attempts to make satisfactory decisions.

An Emotional View

1. Although aware of the emotional or impulsive side of consumer decision making, marketers have preferred the economic or passive
models.
2. In reality, when is comes to certain purchases or possessions, deep feelings or emotions are likely to be highly involved.
3. Possessions may also serve to preserve a sense of the past and help with transitions in times of change.
4. When a consumer makes what is basically an emotional purchase decision, less emphasis tends to be placed on searching for
prepurchase information and more on the current mood or feelings.
5. Unlike an emotion, which is a response to a particular environment, a mood is more typically an unfocused, pre-existing state—
already present at the time a consumer “experiences” an advertisement, a retail environment, a brand, or a product.
6. Mood is important to consumer decision making in that it impacts when consumers shop, where they shop, whether they shop
alone or with others, and how the consumer responds to actual shopping environments.
a) Mood can be defined as a “feeling state” or state of mind.
b) Some retailers attempt to create a mood for shoppers.
c) Individuals in a positive mood recall more information about a product than those in a negative mood.

A MODEL OF CONSUMER DECISION MAKING

1. The model looks at cognitive processes, problem solving, and to some degree, the emotional aspects of consumer decision making
as well.
2. This is not an exhaustive review but a synthesis and coordination of relevant concepts into a whole.
a) The model has three major components: input, process, and output.

1. The input component draws on external influences that provide information or influence a consumer’s product-related values,
attitudes, and behavior.
2. Chief among these input factors are the marketing mix activities of organizations that attempt to communicate the benefits of their
products and services to potential consumers and the non-marketing socio-cultural influences, which, when internalized, affect the
consumer’s purchase decisions.

Consumer Behavior
Session Number-26

Consumer Decision Making

Marketing Inputs
1. The firm’s marketing activities are a direct attempt to reach, inform, and persuade consumers to buy and use its products.
2. The impact of a firm’s marketing efforts is governed by the consumer’s perception of these efforts.
3. Marketers should be alert to consumer perceptions by sponsoring consumer research, rather than relying on the intended impact of
their marketing messages.

Sociocultural Inputs

1. Sociocultural inputs consist of a wide range of noncommercial influences—comments of a friend, an editorial in the newspaper, a
family member, and direct noncommercial sources of information.
2. The unwritten codes of conduct communicated by culture indicate right and wrong consumption behavior.
3. The cumulative impact of each firm’s marketing efforts, the influence of family, friends, and neighbors, and society’s existing code of
behavior are all likely to affect the how and what of consumer purchases.

Process

1. The process component of the model is concerned with how consumers make decisions.
2. Psychological field—represents the internal influences—motivation, perception, learning, personality, and attitudes—that affect
consumers’ decision-making processes.
3. The consumer decision consists of three states: need recognition, prepurchase search, and evaluation of alternatives.

Need Recognition

1. Recognition of a need occurs when a consumer is faced with a problem.

2. Among consumers there seem to be two different problem recognition styles.
a) Actual state types—consumers who perceive that they have a problem when a product fails to perform satisfactorily.
b) Desired state types—the desire for something new may trigger the decision process.

Prepurchase Search

1. Prepurchase search begins when a consumer perceives a need that might be satisfied by the purchase and consumption of a
product.
a) The consumer usually searches his or her memory first.
b) If no experience is present, then he/she may engage in an extensive search of the outside environment.
c) Past experience is considered an internal source of information.
i) The greater the relevance of past experience, the less of an external search
ii) The degree of perceived risk can also influence this stage.
iii) High risk situations will lead to complex information gathering, low-risk, simple search and evaluation.
2. The act of “shopping” is an important form of external information.
a) According to a recent consumer study, there is a big difference between men and women in terms of their response to
shopping.
b) In addition to gender differences, research reveals that price considerations can also play a role in determining the extent of
the search process.
3. An examination of the external search effort associated with the purchase of different product categories (e.g., TVs, VCRs, or
personal computers) found that, as the amount of total search effort increased, consumer attitudes toward shopping became more
positive, and more time was made available for shopping.
a) The less consumers know about a product category and the more important the purchase is to them, the more time they will
make available and the more extensive their prepurchase search activity is likely to be.
4. The Internet has had a great impact on prepurchase search.
a) Web sites can provide consumers with much of the information they need about the products and services they are
considering.
5. How much information a consumer will gather also depends on various situational factors.
6. At the most fundamental level, search alternatives can be classified as either personal or impersonal
a) Personal search alternatives include more than a consumer’s past experience with the product or service. They include asking
for information and advice from friends, relatives, coworkers, and sales representatives.

Evaluation of Alternatives

1. When evaluating potential alternatives, consumers tend to use two types of information:
a) A “list” of brands (the evoked set)
b) The criteria they will use to evaluate each brand
2. Evoked set—evoked set refers to the specific brands the consumer considers in making a purchase in a particular product category.
a) The inept set consists of brands the consumer excludes from purchase consideration as unacceptable.
b) The inert set is those brands to which the consumer is indifferent because they are perceived as having no advantage.
c) The evoked set consists of the small number of brands the consumer is familiar with, remembers, and finds acceptable.
3. The five terminal positions in the model that do not end in purchase would appear to have perceptual problems. For example:
a) Brands may be unknown because of the consumer’s selective exposure to advertising media and selective perception of
advertising stimuli.
b) Brands may be unacceptable because of poor qualities or attributes or inappropriate positioning in either advertising or
product characteristics.
c) Brands may be perceived as not having any special benefits and are regarded indifferently by the consumer.
d) Brands may be overlooked because they have not been clearly positioned or sharply targeted at the consumer market segment
under study.
e) Brands may not be selected because they are perceived by consumers as unable to satisfy perceived needs as fully as the
brand that is chosen.
4. The implication for marketers is that promotional techniques should be designed to impart a more favorable, perhaps more relevant
product image to the target consumer.

5. Criteria used for evaluating brands—the criteria consumers’ use for evaluating brands are usually expressed in terms of
important product attributes.
a) When a company knows that consumers will be evaluating alternatives, they sometimes advertise in a way that recommends
the criteria that consumers should use in assessing product or service options.
b) Research shows that when consumers discuss such “right products,” there is little or no mention of price; brand names are not
often top-of-mind; items often reflect personality characteristics or childhood experiences; and it is often “love at first sight.”
6. Research has explored the role of brand credibility on brand choice, and has found that brand credibility improves the chances that a
brand will be included in the consideration set.
7. Three factors that impact a brand’s are:
a) The perceived quality of the brand
b) The perceived risk associated with the brand
c) The information costs saved with that brand
8. Furthermore, the study indicates that trustworthiness is more important than expertise when it comes to making choices.
9. Consumer decision rules—consumer decision rules are referred to as heuristics, decision strategies, and information-processing
strategies, and are procedures used by consumers to facilitate brand choices.
a) These rules reduce the burden of decision making.
b) Compensatory decision rules—a consumer evaluates brand or model options in terms of each relevant attribute and
computes a weighted or summated score for each brand.
i) The computed score reflects the brand’s relative merit as a potential purchase choice.
ii) The assumption is that the consumer will choose the brand with the highest score.
iii) A unique feature of a compensatory decision rule is that it allows a positive evaluation of a brand on one attribute to
balance out a negative evaluation on some other attribute.
c) Noncompensatory decision rules do not allow consumers to balance positive evaluations of a brand on one attribute against a
negative evaluation on some other attribute. Forms include:
i) Conjunctive decision rule—the consumer establishes a minimally acceptable level that is established as a cutoff point for
each attribute.
a) If any particular brand falls below the cutoff point on any one attribute, the brand is eliminated from
consideration.
ii) Disjunctive rule—this rule mirrors the conjunctive rule.
a) The consumer establishes a minimally acceptable level as a cutoff point for each attribute.
b) In this case if a brand alternative meets or exceeds the cutoff established for any one attribute, however, it is
accepted.
iii) Lexicographic decision rule—the consumer first ranks the attributes in terms of perceived relevance or importance.
a) The consumer then compares the various brand alternatives in terms of the single attribute that is considered
most important.
b) If one brand scores sufficiently high on this top-ranked attribute, it is selected, and the process ends.
c) The highest-ranked attribute may reveal something about the individual’s consumer orientation.
10. A variety of decision rules appear common. Nine out of ten shoppers who go to the store for frequently purchased items have a
specific shopping strategy for saving money.
a) Practical loyalists—look for ways to save on those brands and products that they would buy anyway
b) Bottom-Line Price Shoppers—buy the lowest-priced item, with little or no regard for brand
c) Opportunistic Switchers—use coupons or sales to decide among brands and products that fall within their evoked set
d) Deal Hunters—look for the best “bargain” and are not brand-loyal
11. A synthesized decision rule, the affect referral decision rule, is the simplest, and is the consumer remembering past evaluations
from his/her evoked set and selecting the brand with the highest perceived overall rating.

12. How do Functionally Illiterate Consumers Decide?—The National Adult Lieteracy Survey found:
 a) A bit more than 20 percent of American consumers did not possess the rudimentary skills in language and arithmetic needed
for the typical retail environment
b) Perhaps as much as half of all U.S. consumers lack the skills needed to master specific aspects of shopping, such as sales
agreements and credit applications
c) Despite the fact that functionally illiterate consumers have only 40 percent as much purchasing power as their literate
counterparts, they may spend as much as $380 billion annually.
13. Research has found that functionally illiterate consumers do make decisions differently, in terms of cognitive predilections, decision
rules and tradeoffs, and coping behaviors.

14. Going online to secure assistance in decision making—for the past several years researchers have been examining how using the
Internet has impacted the way consumers make decisions.
a) Three factors that have been researched are:
i) Task complexity (number of alternatives and amount of information available for each alternative)
ii) Information organization (presentation, format, and content)
iii) Time constraint (more or less time to decide)

15. Lifestyles as a consumer decision strategy—an individual’s or family’s decisions to be committed to a particular lifestyle
impacts their consumer behavior.
a) Research suggests that 15 percent of Baby Boomers will be seeking a simpler lifestyle.

16. Incomplete information and noncomparable alternatives—in many situations consumers face incomplete information. They cope
with this missing information in a number of ways.
a) They may delay decision making until the missing information is available.
b) They may ignore the missing information and work with available information.
c) Consumers may change their decision-making strategy to accommodate the missing information.
d) Consumers may infer or construct the missing information.
e) Consumers may conclude that none of their choices offer sufficient benefits to warrant purchase.
17. In applying decision rules—In applying decision rules, consumers may at times attempt to compare dissimilar alternatives.
18. A series of decisions—a purchase can involve a number of decisions rather than a single decision.
19. Decision rules and marketing strategy—an understanding of which decision rules consumers apply in selecting a particular product
or service is useful to marketers concerned with formulating a promotional program.
 Consumer Behavior
Session Number-27

Consumer Decision Making

OUTPUT
1. The output portion of the consumer decision-making model concerns two closely associated kinds of postdecision activity: purchase
behavior and post-purchase evaluation.
2. The objective of both activities is to increase the consumer’s satisfaction with his or her purchase.

Purchase Behavior

1. Consumers make three types of purchases: trial purchases, repeat purchases, and long-term commitment purchases.
a) Trial is the exploratory phase of purchase behavior in which consumers attempt to evaluate a product through direct use.
i) When a trial is satisfactory, consumers are likely to repeat the purchase.
b) Repeat purchase behavior is similar to brand loyalty.
i) A repeat purchase usually signifies that the product meets with the consumer’s approval and that the consumer is willing
to use it again and in larger quantities.
ii) This form is closely related to brand loyalty.
c) Trial is not always feasible, such as with big-ticket items and durable goods. In that case the consumer moves from evaluation
directly to long-term commitment.
Postpurchase Evaluation

1. As consumers use a product, they evaluate its performance in light of their own expectations.
2. There are three possible outcomes of such evaluation.
a) Actual performance matches expectations, leading to a neutral feeling.
b) Positive disconfirmation is when the performance exceeds expectations (which leads to satisfaction).
c) Negative disconfirmation is when the performance is below expectations.
3. An important aspect of the purchase process is reducing postpurchase cognitive dissonance—when consumers try to reassure
themselves that their choice was a wise one.
4. The degree of postpurchase analysis relates to the importance of the product decision and the experience acquired in using the
product.
5. The consumer’s postpurchase evaluation feeds back as experience to the consumer’s psychological field and serves to influence
future related decisions.
6. A satisfied customer is one who feels that he or she has received “value.”
7. As an outcome of an evaluative judgment, value implies the notion of a trade-off of benefits – the features of the purchased item –
versus the sacrifice necessary to purchase it.

The Decision to Do Nothing

1. Once in awhile, a consumer may go through the entire purchase decision-making process and decide not to buy or not to switch
from one brand or service provider to another.
2. A recent study examining “why customers stay” with their current service providers found that the reasons vary by type of service
and by culture.
3. Information load may be a reason why a consumer elects to do nothing.

CONSUMER GIFTING BEHAVIOR

1. The amount of money spent and feelings generated by gifts make them an interesting part of consumer behavior.
2. Gifting behavior is the process of gift exchange that takes place between a giver and receiver.
a) It includes gifts given to (and received from) others and gifts to oneself, or self-gifts.
3. Gifting is symbolic communication with implicit and explicit meanings.
4. One of the models of gifting reveals the following five gifting subdivisions:
a) Intergroup gifting
b) Intercategory gifting
c) Intragroup gifting
d) Interpersonal gifting
 e) Intrapersonal gifting
5. Intergroup gifting occurs when one group exchanges gifts with another.
6. Intercategory gifting is an individual giving a group a gift, or a group giving an individual a gift.
7. An intragroup gift is a gift that a group gives itself.
8. Interpersonal gifts occur between two individuals.
9. An intrapersonal gift occurs when the giver and the receiver are the same individual (a self-gift).

BEYOND THE DECISION: CONSUMING AND POSSESSING

1. Historically, consumer behavior studies have focused on the product, service, or brand choices.
2. We now see that the experience of possessing, collecting, or consuming things contributes to consumer satisfaction and overall
quality of life.
3. Consumer choices might be viewed at the beginning of the consumption process rather than at the end.
a) The choice or purchase decision is the input of the process.
b) The input stage includes a consumption set and a consuming style.
c) The process stage consists of using, possessing, collecting, and disposing of things and experiences.
d) The output stage would include changes in feelings, attitudes, and behaviors, as well as reinforcement of a lifestyle.

Products Have Special Meaning and Memories

1. Consuming is a diverse and complex process.

2. It includes utility of a product, the psychological use of the product, memories, etc.
3. As a consequence, some possessions create personal meaning for consumers and/or help them maintain a sense of the past.
4. Some people maintain their identity after major changes in their life by linking to their past.
5. Older consumers are often faced with the issue of how they should dispose of special possessions.

Relationship Marketing

1. Many firms are pursuing relationship marketing programs in order to build loyal usage and a commitment to their company’s
products and services.
a) It is built on trust that grows from keeping promises.
2. The goal of relationship marketing is to build strong, lasting relationships with a core group of customers.
3. The emphasis is on developing long-term bonds, making consumers feel good about the company, and giving the consumer some
kind of personal connection to the business.
4. A review of the composition of 66 consumer relationship marketing programs revealed three elements shared by more than 50
percent of the programs.
a) Fostering ongoing communication with customers (73 percent of the programs)
b) Furnishing loyalty by building extras like upgrades and other perks (68 percent of the programs)
c) Stimulating a sense of belonging by providing a “club membership” format (50 percent of the programs)
5. Like personal relationships between individuals who are willing to do favors for each other, “relationship” marketers offer loyal
customers special services, discounts, increased communications, and attention beyond the core product or service, without
expecting an immediate payback.
a) A new form of relationship marketing has resulted as Internet usage has increased. The term used on the Internet is
“permission marketing.”
6. Although direct marketing, sales promotion, and general advertising may be used as part of a relationship marketing strategy,
relationship marketing stresses long-term commitment to the individual customer.
7. A recent study suggests that the “marriage” of market research and database marketing can result in improved promotional
marketing to participants in a firm’s relationship marketing program. The study notes that the ability to satisfy consumer needs can
be improved by using the following dimensions:
a) Cognitive
b) Affective
c) Conative
d) Situational
e) Social norms
8. Ultimately, it is to a firm’s advantage to develop long-term relationships with existing customers, because it is easier and less
expensive to make an additional sale to an existing customer than to make a new sale to a new consumer.
9. Research indicates that consumers today are less loyal than in the past, due to six major forces:
a) The abundance of choice
b) Availability of information
c) Entitlement (consumers repeatedly ask “What have you done for me lately?”)
d) Commoditization (most products/services appear to be similar—nothing stands out)
e) Insecurity (consumer financial problems reduce loyalty)
f) Time scarcity (not enough time to be loyal).
10. A recent study lists six areas in which a loyalty building strategy can result in cost savings:
a) Reduced marketing costs
b) Lower transaction costs
c) Reduced customer turnover expense
d) Increased cross-selling success
e) More positive word of mouth
f) Reduced failure costs

Consumer Behavior
 Session Number-28

Consumer in the Market Place -Outlet Selection and Purchase

The selection of retail outlet, can be made considering a number of factors. These are: outlet image, advertising, outlet location
and size consumer characteristics.

1. Outlet Image

It is the perception of the consumer about the store. It concerns all the attributes associated with the store. It can be perceived
on the following dimensions.The table gives dimensions of store image. Marketers make extensive use of these dimensions to
formulate retail strategies. First they try to project a favorable image; secondly they try to group customers with similar wants,
and they try to coordinate the two together, to be effective as a retail store. Some stores which try to be “everything to all
customers” fail miserably, as their image is not focused in a proper manner. The target market must be well defined. There can
be junior stores, senior stores, veteran stores, feminine stores, low-priced stores, elite stores, etc. Some stores concentrate on
providing service when it is not available easily. They provide service all round the clock, and give a lot of importance to
service. All these aspects create image in the minds of the consumer.

2. Advertising

Retailers use price advertising and attract people to stores. People usually come to buy the advertised items and also end up
buying other products. Sales of additional items is known as spillover sales. Price is also an important factor for purchasing the
product and, at least three decisions in this regard are necessary:

1. How much discount should be given?

2. How long should the discount last?
3. How should the information be given to the target customer?
4. Should preference or comparison price be used?

Consumers perceive price advertisement as reduction in price. Many advertisers project the regular price, as well as the offered
price, showing a discount or a substantial savings.Reference price is the price compared with other products on sale. Other
factors like product category, brand, initial price level, consumer group and retail outlet is also to be considered in price
advertising.

3. Outlet Location and Size

For the location of the store, convenience is the important factor. The consumers tend to buy from the store that is closest to
them. All other things being equal, larger stores are preferred to smaller stores. People will go to smaller stores or nearby stores
for minor items, but for purchasing items of high value, or specialty items, people will take the trouble of going to distant
places and choose the best.
Location creates an impact on the consumer. Travel time to reach the store is an important factor. If it takes more than 15
minutes to reach the store and if there are traffic jams in the way it is a hindrance or a barrier in the way of shopping for many
consumers. The square feet of floor space is also an important factor.

Consumers like ample space to move around and want to see the displays and the products closely. Location of the store may
not be so much importance to many as may be other variables like the price, the variety, store quality and cleanliness and the
ambience of the store. Stores in attractive surroundings are preferred to those in unattractive surroundings.

4. Consumer Characteristics

Consumer characteristics must be studied because it gives an idea of the consumer. Different consumers have different reasons
and different desires for shopping. Some buy for convenience others for an image, some others for fulfilling obligations, etc. In
this connection, perceived risk and shopper orientation are quite important.

Perceived Risk

The risks that are perceived by the consumer are of various types. They are social or economical risk, and these differ from
consumer to consumer. Economic risks are concerned with monetary aspects. Whereas, social risk is concerned with the
approval of the society. The way one does one’s hairstyling, the choice of clothes, jeweler. Some products can have both big
social and economic risk. These can be living room furniture or automobiles. Some products may be lower both economic and
social risk, e.g., items of low value such as pencils, pens, socks, kitchen appliances, etc. Perceived risk therefore comes under
both consumer characteristics and product characteristics. These give a lot of information to retailers for formulating a retailing
strategy. Following risks could be involved.Financial risk →paying more.Social risk →does not meet the approval of social
group.Psychological risk →loss of self-esteem. Others buying at cheaper rates. Performance risk →not performingPhysical
risk →bodily harm, faulty brakes adulterated food etc.Social-and-economic risks

These risks are to be reduced in a number of ways. In traditional stores, quality products and famous brand names must be kept
for the consumer. Toll-free service may be provided,other facilities like 24-hour service may be provided with trained staff and
100 percent satisfaction guarantee. Economic risk can be reduced through warranties and other price policies.Social risk is
harder to reduce and skilled sale force and known brands should be used.

Shopping Orientation

There are many reasons for shopping. It may be for acquiring a product, or for making social interaction, or for exercise, or just
for looking around and gaining more product knowledge. It can also be for exercising the physical parts and mental faculties.
These motives may be different for different individuals and the purpose for shopping may also vary.

Thus, by shopping orientation we mean, what emphasis is put on various activities or,the reasons we have for shopping.
Shoppers are therefore categorized into seven different categories, as given below:

 Inactive shoppers-They do not enjoy shopping and are not concerned much with price, product selection, etc. They
have a restricted lifestyle and restricted interest in shopping.
 Active shoppers- They enjoy shopping, and like to find out about various products. They are knowledgeable and
balance price with quality, fashion, attributes, etc.
  Service shoppers-They give importance to service by the shopkeepers. Both in-store and after-sales service is their
main consideration.
 Traditional shoppers- They are active shoppers and engage in outdoor activities. They are knowledgeable and not price
sensitive.
 Price shoppers-They are price conscious. They make a lot of search and find the lowest price available. They take the
help of the media for this purpose.
 Dedicated fringe shoppers- They are catalogue shoppers, and have little interest in television and radio. Not store loyal.
They are not heavy socializes and do things by themselves.
 Transitional shoppers- They are experimental and keep changing stores and products. They do not go for low price and
buy products that interest them most. There are also a number of influences that alter brand choices, as shown in below.
 Transitional shoppers- Sometimes, unplanned purchases take place. These are purchases which have not been planned
from before. These are also known as impulse purchases, which the consumer had not planned or thought or, before
entering the store. This can mean a lack of rationality in decision-making.

Point of Purchase Displays

These are important influences in helping the customer to make a decision. They become very effective in case of snacks,
foods, etc. and the impact of these displays is tremendous and can be enhanced when combined with advertising.

Price reductions

Price reductions can be in the form of discounts, coupons, gifts. When price reduction is given to the consumer, the preference
for these brands becomes more enhanced and the brand moves faster than the competing brands. This is a great motivation
which acts in multiple ways. The consumer may buy the product because he is getting it cheaper, and may stock the product in
a greater quantity than is desired. This is known as stockpiling. The users of competing brands may switch to the low price
brand for the time being and, may or may not become permanent buyers of the brand. The price reduction may induce the non-
buyers to visit the stores and strike a bargain. It is not necessary that all householders and consumers may respond to price
reduction.

Store layout

This is an important factor in store retailing. Prominently displayed products with good lighting and visibility, attract greater
attention of buyers and have more chances of being sold. The store layout should not be monotonous, and be changed after
intervals of time to give it a more innovative look. The principle of store displays and various types of displays must be
practiced.

Store atmosphere

A congenial atmosphere influences a person psychologically, and good environment, makes the customer stay a longer time in
the shop, which enhances the chances of sales. In atmospherics we give importance to lighting, floor layout, presentation
fixtures, colors, sound, dress,behavior of salesman. The atmospherics apply to a number of services such as banks,
hospitals,restaurant, etc. The types of racks used, and the way the merchandise is displayed on them,also influences the
atmosphere. It is the setting which is enjoyed by the consumer. The consumer feels happy in a good atmosphere which also
constitutes the type of clientele visiting the store.

Store-atmosphere and shopper behaviour

Stock out

If a product or a brand is out of stock, i.e., not available at an appropriate time, the consumer gets tempted to switch brands or
delay the purchase. This is detrimental to the product and the manufacturer. It is therefore necessary for the retailer to order the
inventory in good time,and also to ensure that stocks are always available, or replenished in time. If the stocks are not available
when required, it influences the purchase behavior of the consumers in many ways.

 He may purchase a substitute product or brand.

 He may delay the purchase.
 Forego the purchase entirely.
 Purchase the desired brand at another store.
 He may make negative comments about the product/brand.
 He may praise the substitute product and adopt the new product/brand permanently.
 He may develop a poor opinion of the store he had been patronizing.
 He may visit alternative stores quite often.

All these behavior patterns or outcomes are detrimental and negative to the store in question.

Sales personnel

It is the sales person that educates and enlightens the prospective customer. A competent,smart and intelligent salesman can
change the entire perception of the consumer, i.e., many retail owners having adequate knowledge can convince a consumer
that Britta which is much cheaper has a better purifying affect. It retains the bacteria away from drinking water, better than
Aqua guard. They can also explain the convenience of Britta and its cost effectiveness and ease of handling which makes it
quite competitive in the market. Therefore, many retail stores train their salesman both in the selling process and in closing the
sales to the prospective customer and ensuring consumer satisfaction. The salesman also emphasizes after sales service,which
is a part of good salesman ship. A good interaction may take place in case of high and medium involvement products which
are costly and risky to buy. The salesman in this case plays an important role.

Purchase

This is the final step in a transaction. Unless the purchase is made, all efforts of layout, atmosphere, effort of the salesman are a
waste. Closing the sales is important. The trend these days is shifting to credit sales, which can be done by using various credit
cards various types of credit can also be given. Marketers are competing to provide credit facility. In fact, credit has also
become a product. Firms want to sell their credit facilities to the consumer.
 Consumer Behavior
Session Number-29

Consumer in the Market Place – Impact of Marketing Communications

This chapter has described how the consumer receives and is influenced by marketing communications. The five components of
communication are: the sender, the receiver, the medium, the message, and feedback (the receiver’s response). In the communications
process, the sender encodes the message using words, pictures, symbols, or spokespersons and sends it through a selected channel (or
medium).The receiver decodes (interprets) the message based on his or her personal characteristics and experience, and responds (or
does not respond) based on such factors as selective exposure, selective perception, comprehension, and psychological noise.

There are two types of communications: interpersonal and impersonal (or mass) communications. Interpersonal communications occur
on a personal level between two or more people and may be verbal or nonverbal, formal or informal. Consumers’ comparative and
normative reference groups are key sources of their informal, interpersonal communications. In mass communications, there is no direct
contact between source and receiver. Interpersonal communications take place in person, by telephone, by mail, on the Web, or by e-
mail; mass communications occur through such impersonal media as television, radio, newspapers, and magazines. Feedback is an
essential component of all types of communications because it provides the sender with some notion as to whether and how well the
message has been received.

The credibility of the source, a vital element in message persuasiveness, often is based on the source’s perceived intentions. Informal
sources and neutral or editorial sources are considered to be highly objective and, thus, highly credible. Informal, interpersonal
communications are called word of mouth (WOM). Consumers generally perceive WOM as highly credible, and marketers must devise
strategies that stimulate positive WOM about their offerings. The growth of online communications and social networks has significantly
widened the WOM environment and also provided marketers with more opportunities to use such networks to promote their products.
The credibility of a commercial source is more problematic and usually is based on a composite evaluation of its reputation, expertise,
and knowledge and that of the medium in which it advertises the retail channel, and company spokespersons.
Media selection depends on the product, the audience, and the advertising objectives of the campaign. Each medium has advantages
and shortcomings that must be weighed in the selection of media for an advertising campaign. In addition to mass media, marketers
now have access to new media that are more dynamic and interactive and enable developing more customized communications that
can reach consumers via media with narrowcasting, rather than broadcasting, capabilities. Also, branded advertising has been growing
significantly and is now part of most electronic communications.

The manner in which a message is presented influences its impact. The major structural aspects of advertising messages are framing,
one-sided versus two-sided messages, and advertising resonance. The major advertising appeals used include humor, fear, sex,
comparative advertising, audience participation, abrasive advertising, and using celebrities.

The feedback of interpersonal communications is immediate and direct while the impact of impersonal communications is delayed,
indirect, and often inferred. The impact of promotional messages includes exposure, persuasion, and sales effects. The primary methods
of communications feedback are measures of media and audience exposure, message attention, interpretation and recall, and recently
developed methods gauging the impact of addressable advertising.

Social media channels enable interactions among people in whichthey create, share, and exchange information and ideas in
virtualcommunities and networks. The channels comprise mobile andonline technologies that support two-way communications for
individuals

and groups, giving them the means to form their own orco-create content with others, post and open it for discussions,modify it, and
withdraw it. Social communication channels offerbetter engagement prospects because they can form comradeshipamong people with
similar lifestyles, needs, and corresponding purchases.Marketers can use social media to engage customers withtheir offerings because
websites can enliven people’s interactionswith the promotional messages through moving images, links torelated materials, and
customizing viewing options (e.g., the “sortby” options). Additionally, websites gather data that enablesmarketersto understand their
clients more acutely. People engagein social media to provide and receive information, cultivaterelationships,show off expertise, and
find others with similarinterests.

Social media channels include owned social media, paid socialmedia, and earned social media. Google is the most widely usedsearch
engine online and a prominent advertising medium. Acrossbrowsers, most online surfers use Google to find answers to questions,locate
websites and sources for products and services, trackdown information, and much more. Google is the largest providerof the data and
targeting tools that advertisers need for impression-basedtargeting, as well as the major supplier of real-time biddingto advertisers
seeking impressions among consumers who fit certaincriteria.
Most brands now have official Twitter handles and Facebookpages. Companies have discovered that customers are highlyenthused
about and more responsive to twitter messages from thecorporate bosses, especially if such messages encourage consumersto tell the
senders about their experiences with the brands.

Social media campaigns must be planned together with advertising in traditional media. Aaudiences(i.e., consumers, retailers, and other
parties with whom the companydoes business), which justifies larger advertising budgets. Furthermore, executives should closely
examine consumers’ clicks on the “like” buttons and “mine” and use data from their Facebook pages to develop new niches for their
products (sometimes with partners in other product categories).

Additionally, marketers must considerthe fact that social media simultaneously reaches several

Mobile advertising is the communication of products or services tomobile device and smartphone consumers. The mobile
advertisingspectrum ranges from short text messages to interactive advertisements.Mobile devices provide several types of value: (1)
monetary—good value for the money that also exceeds the value consumersreceive from using non-mobile devices; (2) convenience—
savingtime and money, improving efficiency, and making life easier; and(3) emotional and social—immediate and always available
communicationswith others.

Mobile marketers are still spending most of their money onsearch ads placed on websites that show results from search enginequeries.
Also, they have been creating mobile ads that are fun, payrewards, and help customers find useful information (e.g., referrals).As
smartphone screens became larger, marketers began usingmobile ads that take over the entire screen. And, some mobile
marketershave been experimenting with inserting ads in places whereconsumers do not expect to see any, in an effort to overcome
consumers’tuning-out of promotional messages. Many advertisers usebanner ads on mobile devices’ screens because such ads are
cheap,although most recognize that consumers find banners annoying.

Initially, the extent of mobile advertising in other countries,especially in Europe and even more so in Southeast Asia, was fargreater than
in the United States. However, there are indications thatU.S. companies have been spending more on mobile advertisingthan any other
country. The primary reason for the growth of mobileadvertising is that more and more people are using smartphones andother mobile
internet devices such as tablets and e-readers.

Mobile advertising should be distinguished from mobileadvertisingcampaigns on social networks, which consist of ads thatpop up on, for
example, Facebook mobile news feeds to its usersafter marketers have purchased this advertising space fromFacebook.

Consumer Behavior
Session Number-30

Post-Purchase Behavior
Sub-Topics

 Satisfaction/dissatisfaction – loyalty/non-use or complaint behaviour

 Measuring satisfaction, handling complaints, achieving customer loyalty
 Post-purchase dissonance – causes and approaches to reducing the same
 Disposal alternatives

Marketers need to be concerned about a consumer’s evaluation of a product after he or she buys it as well as before.

Satisfaction/dissatisfaction – loyalty/non-use or complaint behaviour

Our overall feelings about a product after we've bought it—what researchers call consumer satisfaction/dissatisfaction
(CS/D)—obviously play a big role in our future behavior. It's a lot easier to sell something once than to sell it again if it
bombed the first time. We evaluate the things we buy as we use them and integrate them into our daily consumption activities.
In a sense, each of us is a product reviewer, whether or not we bother to talk or blog about our experiences.

Companies that score high in customer satisfaction often have a big competitive advantage—especially when so many firms
skimp on the attention they pay to customers. Good marketers constantly look for reasons why their customers might be
dissatisfied so that they can try to improve.

Satisfaction or dissatisfaction is more than a reaction to how well a product or service performs. According to the expectancy
disconfirmation model, we form beliefs about product performance based on prior experience with the product or
communications about the product that imply a certain level of quality. When something performs the way we thought it
would, we may not think much about it. If it fails to live up to expectations, this may create negative feelings. However, if
performance happens to exceed our expectations, we're happy campers.

To understand this perspective, think about how you decide if a restaurant is good or bad depending on the type of place it is.
You expect sparkling clear glassware at a fancy eating establishment, and you're not happy if you discover a grimy glass.
However, you may not be surprised if you see fingerprints on your beer mug at a local greasy spoon; you may even shrug off
this indiscretion because it's part of the place's "charm.”

Customer complaint behaviour

 Customers are often uncomfortable making direct complaints.
 If a customer is dissatisfied with your business, they will often complain to others - colleagues, family, friends and your
business competitors - before they complain to you.
 Understanding customer complaint behaviour, including how and why they complain, can help you minimise negative
perceptions about your business.

Dissatisfaction responses

Possible outcomes of a negative purchase evaluation:

 Taking no action
 Switching brands, products or stores
 Warning friends and colleagues

Actions taken by consumers in response to product dissatisfaction

Measuring satisfaction, handling complaints, achieving customer loyalty

Customer satisfaction surveys measure how satisfied the customers are with relevant attributes of the product or service, as
well as the relative importance of these attributes (using an importance scale). Surveys using a five-point semantic differential
scale, ranging from “very dissatisfied” to “very satisfied”. Research shows that customers who indicate they are “very
satisfied” (typically a score of 5 on the satisfaction scale) are much more profitable and loyal than customers who indicate that
they are “satisfied” (a score of 4). Therefore, companies that merely strive to have “satisfied” customers are making a crucial
error.
Key Techniques

1. Customer satisfaction surveys

2. Mystery shoppers
3. Complaint analysis

Mystery shoppers

Mystery shoppers are professional observers who pose as customers and interact with and provide unbiased evaluations of the
company's service personnel in order to identify opportunities for improving productivity and efficiency.

Customer Complaints

• Analysing customer complaints is crucial for improving products and customer service.
• Research indicates that only a few unsatisfied customer actually complain.
Most unsatisfied customers say nothing but switch to competitors
• Marketers must solicit complaints by asking specific questions beyond the routine.

Consumer Behavior
Session Number-31

Post-Purchase Behavior
Sub-Topics

 Satisfaction/dissatisfaction – loyalty/non-use or complaint behaviour

 Measuring satisfaction, handling complaints, achieving customer loyalty
 Post-purchase dissonance – causes and approaches to reducing the same
 Disposal alternatives

Post-purchase dissonance – causes and approaches to reducing the same

Post purchase dissonance is when the customer may be unsatisfied or unsure of their purchasing decision; they may rethink
about their decision on post purchase stage. This is basically due to the difference between what they actually expected to
have and what they really experienced. The customer encounters higher level of dissatisfaction in this stage.

Dissonance theory was derived from two basic principles

1. Dissonance is uncomfortable and will motivate the person to reduce it.

2. Individuals experiencing dissonance will avoid situations that produce more dissonance

After the purchase is made, the consumer may utilize one or more of the following to reduce dissonance:

 Increase the desirability of the brand purchased

 Decrease the desirability of rejected alternatives
 Decrease the importance of the purchase decision
 Reverse the purchase decision (return before use)

Reasons behind Post-Purchase Dissonance

 Once a minimum threshold of dissonance tolerance is passed. That is, consumers may tolerate a certain level of
inconsistency in their lives until this point is reached.
 The action is irrevocable. For eg: when the consumer purchases a new car, there is little likelihood that he will be able to
reverse his decision and get his money back.
 Alternatives available are quite dissimilar in their qualities.
 Unselected alternatives have desirable features.
 There are several desirable alternatives

Dissonance Reduction

 Changing product evaluation

 Seeking new information to support choice
 Change his/her attitude (reason to buy that product is coupon offers)
 A concept very similar to post purchase dissonance is consumption guilt. Consumption guilt occurs when negative
emotions or guilt feelings are aroused by the use of a product or a service.

Disposal alternatives

Disposition of product or product container may occur before, during, or after use. Or, for products that are completely
consumed, no disposition may be involved. A physical product often continues to exist even though it may no longer meet a
consumer’s needs. Exploding demand and short product spans for high-tech items is creating a growing concern over e-waste.
Getting rid of products when consumers no longer need or want them is a major concern both to marketers and to public
policymakers.

We all have to get rid of our "stuff" at some point, either because it has served its purpose or perhaps because it no longer fits
with our view of ourselves (as when newlyweds "upgrade" to a real place). Concern about the environment, coupled with a
need for convenience, makes ease of product disposal a key attribute in categories from razors to diapers. Furthermore, our
demand for sustainable products that don't harm the environment when we're done with them creates new markets and new
opportunities for entrepreneurs who find a better alternative.

Disposal Options

The issue of product disposition is vital because of its enormous public policy implications. We live in a throwaway society,
which creates problems for the environment and also results in a great deal of unfortunate waste. One study reported that we
never use as much as 12 percent of the grocery products we buy; consumers buy nearly two thirds of these abandoned products
for a specific purpose such as a particular recipe and then change their plans. Because we don't use these items immediately,
they slowly get pushed to the back of the cupboard and forgotten. Some of those "science projects" that grow in the back of
your refrigerator might qualify. In another survey, 15 percent of adults admitted they are pack rats, and another 64 percent said
they are selective savers.

In contrast, 20 percent say they throw out as much garbage as they can. The consumers most likely to save things are older
people and those who live alone. Training consumers to recycle has become a priority in many countries.

Consumer Behavior
Session Number-32

Dark side of consumer behavior

In marketing consumer behavior plays a very important role in connecting the marketer with the customer.
The consumers derive benefits from the marketing where their needs are articulated by the marketers.

Consumer Behavior does have a dark side too.

In pursuit of selling their offers many a times marketers tend to go overboard and go for Deviant Consumer
behavior:

1. Addictive,compulsive,Impulsivebehavior.
2. Consumertheft
3. Underagedrinkingandsmoking.

Many a times the thin line between what is right and what is wrong is blurred and it consumer behavior
tends to cast a dark shadow

DEVIANT CONSUMER BEHAVIOR:

The behavior of an average consumer in everyday consumption is normal, some time consumer behavior is regarded as
deviant. Deviant behavior includes addictive, compulsive and impulsive behavior, consumer theft, use of black markets and
underage drinking and smoking

Consumer behavior may be deviant because it involves a physical or psychological abnormality

or involves a behavior regarded as illegal such deviant behavior can be associated with theacquisitionor usage
of offerings.

Addictive behavior is taking action as a result of a dependency. Addicted consumers feel a great

attachment to and dependence on a product or activity and believe that they must use it to

function (smoking).

Deviant acquisition behavior Deviant usage behavior

 1.Addictiveconsumpt
ion
Physical/Psychological
Abnormality  Smoking
 drugs
2.compulsiveconsum
Compulsiv
ption
ebuying
Con Underag
Illegal Behavior
su edrinkin
mer g,Under
thef agesmo

Compulsive behavior is an inability to stop doing something. compulsive

buying can be an emotionally involving experience. Consumers may
engage in compulsive buying to feel a thrill, gain attention, or feel that
they are pleasing someone else. But this emotional high may be

followed serious financial and negative emotional consequences. (Gambling)

Impulsive behavior is non thoughtful action acting on impulse. Two specific types of
impulsive

behavior related to acquisition and consumption are impulsive buying and impulsive eating.
An

impulsive is a sudden urge to act as would happen when you find yourself doing something

based on an emotional whim rather than on a reasoned, nonemotional analysis ( eating

habit).

Consumers can exhibit any of these behaviors with respect to acquisition or consumption
with

problematic outcomes if consumers do not make an effort to exert self – control. Consumer

theft reflects a desire to steal things.

 Consumer Theft

Consumer theft divided into two types

Shoplifting Credit Card

Fraud

Factors affecting consumer theft:

Three factors influencing in consumer theft economic need, few demographic variables and

psychological factors

Theft:

Temptation

Ability to rationalize Product, Purchase environment, Consumer

Temptation to steal:

The temptation to steal arises when consumers want products that they cannot legitimately

buy.

Rationalization for stealing:

Consumers steal because they can somehow rationalize their behavior as being either
justified

or driven by forces outside themselves.

Black market:

Black markets represent situations in which consumers pay for items not readily available.

These are called black markets because the sellers are unauthorized which means that the
buying

–selling process is usually illegal. Black markets for drugs, entertainment.

Underage drinking and smoking:

Addictions to alcohol and tobacco represent one form of deviant consumer behavior. Illegal
use

of these products by minors is another deviant consumer behavior. Underage drinking and

smoking have consequences for the individual and for society.

Ethical issues in marketing:

Marketing contribute to other negative social outcomes, outcomes not only related to
deviant

behavior.

It is also related to four important ethical issues

Advertising to children

Marketing and obesity

Advertising and self image

Privacy concerns.
 Consumer Behavior
Session Number-33

Organizational Consumer Behavior

Individual consumers are not the only buyers in a market. Companies and other organizations
also need goods and services to operate, run their businesses, and produce the offerings they
provide to one another and to consumers. These organizations, which include producers,resellers,
government and nonprofit groups, buy a huge variety of products including equipment, raw
materials, finished goods, labor, and other services. Some organizations sell exclusively to other
organizations and never come into contact with consumer buyer.

Organizational markets have their own patterns of behavior and decision-making dynamics that
are important to understand for two major reasons. It’s helpful to appreciate how and why
organization buying decisions are different from the decisions an individual consumer makes.
Secondly we need to recognize how the decision-making process differs in order to create
effective marketing for organizational customers and target segments.

Unlike the consumer buying process, multiple individuals are usually involved in making
organizational buying decisions. A purchasing agent or procurement team (also called a buying
center) may also be involved to help move the decision through the organization’s decision
process and to negotiate advantageous terms of sale.Organizations define and enforce rules for
making buying decisions with purchasing policies, processes, and systems designed to ensure the
right people have oversight and final approval of these decisions. Typically, more levels of
consideration, review, and approval are required for more expensive purchases.

For anyone involved in organizational marketing or selling, it is important to know:

  Who will take part in the buying process?

 What criteria does each person use to evaluate prospective suppliers?

 What level of influence does each member of the process have?

 What interpersonal, psychological, or other factors about the decision team might
influence this buying process?

 How well do the individuals work together as a group?

 Who makes the final decision to buy?

Because every organization is unique, the answers to these questions will be different for every
organization and every sale. Marketers should understand their target segments well enough to
identify commonalities where they exist and then create effective marketing to address the
common roles and decision makers identified.

Organizational Buying Situations

Who makes the buying decision depends, in part, on the situation. Common types of buying
situations include the straight rebuy, the modified rebuy, and the new task.The straight rebuy is
the simplest situation: the organization reorders a good or service without any modifications.
These transactions are usually routine and may be handled entirely by the purchasing department
because the initial selection of the product and supplier already took place. With the modified
rebuy, the buyer wants to reorder a product but with some modification to the product
specifications, prices, or other aspects of the order. In this situation, a purchasing agent may be
involved in negotiating the terms for the new order, and several other participants who will use
the product may participate in the buying decision.

The buying situation is a new task when an organization considers buying a product for the first
time. The number of participants and the amount of information sought tend to increase with the
cost and risks associated with the transaction. For marketers, the new task is the best opportunity
for winning new business because there is no need to displace another supplier (which would be
the case for the rebuy situations).For sales opportunities that are new tasks, there may be an
opportunity for a solution sale (sometimes called system selling). In these opportunities, the
buyer may be interested in a provider that offers a complete package or solution for the business
problem, rather than individual components that address separate aspects of the problem.
Providers win these opportunities by being the company that has both the vision and the
capability to provide combination of products, technologies, and services that address the
problem–and to make everything work together smoothly. Solution sales are particularly
common in the technology industry.

Characteristics of Organizational Buying

Organizational purchasing decisions include levels of complexity that are unique to

organizations and the environments in which they operate.

Timing Complexity

The organizational decision process frequently spans a long period of time, which creates
a significant lag between the marketer’s initial contact with the customer and the purchasing
decision. In some situations, organizational buying can move very quickly, but it is more likely
to be slow. When personnel change, go on leave, or get reassigned to other projects, the decision
process can take even longer as new players and new priorities or requirements are
introduced. Since a variety of factors can enter the picture during the longer decision cycles of
B2B transactions, the marketer’s ability to monitor and adjust to these changes is critical.

Technical Complexity

Organizational buying decisions frequently involve a range of complex technical dimensions.

These could be complex technical specifications of the physical products, or complex technical
specifications associated with services, timing, and terms of delivery and payment. Purchases
need to fit into the broader supply chain an organization uses to operate and produce its own
products, and the payment schedule needs to align with the organization’s budget and fiscal
plans. For example, a purchasing agent for Volvo automobiles must consider a number of
technical factors before ordering a radio to be installed in a new vehicle model. The electronic
system, the acoustics of the interior, and the shape of the dashboard are a few of these
considerations.

Organizational Complexity

Because every organization is unique, it is nearly impossible to group them into precise
categories with regard to dynamics of buying decisions. Each organization has a characteristic
way of functioning, as well as a personality and unique culture. Each organization has its own
business philosophy that guides its actions in resolving conflicts, handling uncertainty and risk,
searching for solutions, and adapting to change. Marketing and sales staff need to learn about
each customer or prospect and how to work with them to effectively navigate the product
selection process.

Unique Factors Influencing Organizational Buying Behavior

Because organizations are made up of individual people, many of the same influencing factors
discussed earlier in this module apply in such settings: situational, personal, psychological, and
social factors. At the same time, purchasing decisions are influenced by a variety of factors that
are unique to organizations, the people they employ, and the broader business environment.

Individual Factors

Organizational decisions are influenced by characteristics of the individuals involved in the

selection process. A person’s job position, tenure, and level in the organization may all play a
role influencing a purchasing decision. Additionally, a decision maker’s relationships with peers
and managers could lead them to exert more–or less–influence over the final selection.
Individuals’ professional motives, personal style, and credibility as a colleague, manager, or
leader may play a role. To illustrate, a new department head might want to introduce an updated
technology system to help her organization work more productively. However, her short time in
the role and rivalry from other department heads could slow down a buying decision until she
has proven her leadership capability and made a strong case for investment in the new
technology.
Organizational Factors

Purchasing decisions, especially big-ticket expenditures, may be influenced by the organization’s

strategies, priorities, and performance. Generally the decision makers and the providers
competing for the business must present a compelling explanation for how the new purchase will
help the organization become more effective at achieving its mission and goals. If a company
goes through a quarter with poor sales performance, for example, the management team might
slow down or halt purchasing decisions until performance improves. As suggested above,
organizational structure plays a central role determining who participates in the buying process
and what that process entails. Internal organizational politics and culture may also impact who
the decision makers are, what power they exert in the decision, the pace of the buying process,
and so forth. An organization’s existing systems, products, or technology might also influence
the buying process when new purchases need to be compatible with whatever is already in place.

Business Environment

B2B purchasing is also influenced by factors in the external business environment. The health of
the economy and the company’s industry may determine whether an organization chooses to
move ahead with a significant purchase or hold off until economic indicators improve.
Competitive pressures can create a strong sense of urgency around organizational decision
making and purchasing. For instance, if a leading competitor introduces a compelling new
product feature that causes your organization to lose business, managers might be anxious to
move forward with a project or purchase that can help them regain a competitive edge. When
new technology becomes available that can improve products, services, processes, or efficiency,
it can create demand and sales opportunities among companies that want the new technology in
order to compete more effective.The organizational decision process involves problem
recognition, information search, evaluation and selection, purchase implementation, and post
purchase evaluation. While functional attributes such as price and quality certainly play a
critical role, brand image can also be important, in some cases even increasing the prices that
organizational buyers are willing to pay.

Purchase implementation
This is more complex and the terms and conditions more important than in household decisions.
How payment is made is of major importance. Finally, use and post purchase evaluation are
often quite formal. Many organizations will conduct detailed in-use tests to determine the life-
cycle costs of competing products or spend considerable time evaluating a new product before
placing large orders. Satisfaction depends on a variety of criteria and on the opinions of many
different people. To achieve customer satisfaction, each of these individuals has to be satisfied
with the criteria important to him or her.

Organizations have a style or manner of operating that we characterize as organizational culture.

Firmo-graphics (organization characteristics such as size, activities, objectives, location, and
industry category, and characteristics of the composition of the organization such as the gender,
age, education, and income distribution of employees) have a major influence on organizational
culture. The process of grouping buyer organizations into market segments on the basis of
similar firmographics is called macro segmentation.

Reference groups play a key role in business-to-business (B2B) markets. Reference group
infrastructures exist in most organizational markets. These reference groups often include third-
party suppliers, distributors, industry experts, trade publications, financial analysts, and key
customers. Lead users have been shown to be a key reference group that influences both the
reference group infrastructure and other potential users.Other external influences on
organizational culture include the local culture in which the organization operates and the type of
government it confronts
Internal factors affecting organizational culture include organizational values, perception,
learning, memory, motives, and emotions. Organizations hold values that influence the
organization’s style. Individuals in the organization also hold these values in varying degrees.
Organizations also develop images, have motives, and learn. Seller organizations can affect how
they are perceived through a variety of communication alternatives. Print advertising, direct
mail, sales calls, and the Internet are common. Whereas organizations have rational motives,
their decisions are influenced and made by people with emotions. A seller organization has to
understand and satisfy both to be successful
Each of the factors discussed here is important for marketing strategy because each contributes to
the type of buyer that an organization faces. One important way to segment organizational
buyers is in terms of transactional versus relational exchanges Transactional exchangesinvolve
single transactions, are short lived, involve few investments by the buyer and seller in the
relationship, and involve low loyalty.Alternatively, relational exchangesinvolve multiple events,
occur over an extended period of time, involve significant investments by the buyer and seller,
and involve higher levels of loyalty. Factors such as industry structure, decision-making culture
and structure, risk tolerance, and the nature of the purchase influence whether a buyer takes a
relational or transactional approach. Marketers must adjust their strategies, particularly as they
regard relationship marketing depending on the type of buyer they face. Periodic audits can be
helpful in ensuring that buyers are getting the value desired from a relationship