CONTENTS Unit Contents Page No. INTRODUCTION TO CONSUMER BEHAVIOUR 1.1 INTRODUCTION TO CONSUMER BEHAVIOUR 1.2 MEANING OF CUSTOMER AND CONSUMER. 1.3 IMPORTANCE / RELEVANCE OF STUDYING CONSUMERS* BEHAVIOUR IN THE FIELD OF MARKETING: INDIVIDUAL DETERMINANTS OF CONSUMER BEHAVIOUR 2.1 MEANING OF PERSONALITY AND SELF CONCEPT 2.2 CONSUMER PERSONALITY AND ITS NATURE AND TRAITS 2.3 MOTIVE HIERARCHY, TYPES OF BUYING MOTIVES AND THE DIMENSIONS OF CONSUMER INVOLVEMENT. 2.4 LEARNING AND MEMORY 2.5 ATTITUDE 2.6 EXTERNAL DETERMINANTS OF CONSUMER BEHAVIOUR. 7-33 CONSUMER BUYING DECISION MAKING PROCESS. 3.1 BUYING BEHVIOUR ~ MEANING 3.2. FACTORS INFLUENCING CONSUMER BUYING BEHAVIOUR, 3.3CONSUMER BUYING DECISION MAKING PROCESS. 3.4 POST PURCHASE EVALUATION AND BEHAVIOUR 3.5 TYPES OF BUYING BEHAVIOUR 3.6 DIFFERENCE BETWEEN CONSUMER BUYING AND ORGANIZATIONAL BUYING 34-40 CONSUMER BEHAVIOUR MODELS 4.1 HOWARD-SHETH MODEL 4.2 ENGEL-KOLLAT-BLACKWEEL MODEL. 4.3 NICOSIA MODEL, 41-49 “Only for Private Circulation”Unit Contents Page No. DIFFUSION OF INNOVATION 5.1 DIFFUSION OF INNOVATIONS: MEANING AND DEFINITION 5.2 DIFFUSION PROCESS. 5.3. ADOPTION PROCESS 5.4 CATEGORIES OF ADOPTERS 50-55 CONSUMER RESEARCH 6.1 CONSUMER RESEARCH PROCESS. 6.2 COLLECTION OF SECONDARY DATA 6.3 DESIGNING PRIMARY RESEARCH 56-62 “Only for Private Circulation”INTRODUCTION TO CONSUMER BEHAVIOUR LEARNING OBJECTIVES After studying this chapter, you should be able to: 1. Define Consumer Behaviour. 2, Understand the meaning of Customer and Consusnef 3. Understand the importance / relevance of Studying consumers’ behaviour in the field of Marketing: CONTENTS 1,1 INTRODUCTION TO CONSUMER BEHAVIOUR 1.2. MEANING OF CUSTOMER AND/CONSUMER. 1.3. IMPORTANCE //RELEVANCE OF STUDYING CONSUMERS’ BEHAVIOUR IN THE FIELD OF MARKETING. 1.1 INTRODUCTION TO CONSUMER BEHAVIOUR An organization iS\set up for satisfying the consumers’ unfulfilled needs and wants. In. yourprofessional capacity you may also be a part of one such business organization. But as part of the organization, have you ever wondered about who are the consumers of your products and services? Why do these consumers buy your product and not that of the competitors? How do your consumers perceive your product in terms of meeting their needs effectively? And how are these feelings reflected in their marketplace behaviour as consumers? ete. It is important for the survival and growth of the organization that one should regularly raise such questions and attempt to find answers to them. It is only through such a process of questioning and seeking answers to will help you in ensuring that the firm is on the growth trajectory. A thorough knowledge of consumers and an understanding of their behaviour (as consumers) are essential if you are to sustain yourself as an organization and grow manifolds in the current business scenario, Consumer Behavior NOTES Introduction to Consumer Behaviour “Only for Private Circulation”2 Consumer Behavior NOTES Introduction to Consumer Behaviour Consumers are unique in terms of their needs, wants, consumption patterns and consumption behaviour, In the marketplace, the marketer tries to satisfy these needs by offering suitable product or service offering. In contemporary market, considering the varied needs, wants, consumption pattetns behaviour of consumers and increased level competition ete. it has become all the more difficult for a marketer to do so effectively. Therefore, a comprehensive yet meticulous understanding of consumers and their consumption behaviour has become essential for an organization to suceeed. In other words, a comprehensive, yet sound knowledge of consumers is of vital importance in furthering the company’s business interests. The roots of consumer behaviour can be seen in the concept of “Marketing” and has essentially an interdisciplinary in nature. It has emerged as separate field of study in 1960s, How consumer behaviour is an interdisciplinary subject? a) Psychology: The study of an individual consumer behaviour). individual determinants of b) Sociology: The study of groups andits dynami¢s in buying behaviour. ©) Social psychology: The stud{*of how m individual operates or behaves in the group, 4) Beanamies: The study af income and purchasing power Defini Consumer Behaviour eat) be*definéd. as the study of individuals, groups/organizations and.the processes they use to select, secure, use and dispose of products to satisfythe needs andthe impact of these processes have on consumer and the society. It is a decision process and physical activity engaged in evaluating, acquiring, using and disposing of goods. 1.2 MEANING OF CUSTOMER AND CONSUMER. Who is a customer? ‘A customer is the one, who actually purchases the product or avail the service from a particular shop or service provider. However, a customer may not necessarily be a consumer of the product purchased or the service availed Who is a consumer? A consumer is the actual user of the product or service “Only for Private Circulation’€.g. - a child who is studying in pre-primary school has asked her father to get her a set of color pencils and crayons. In this situation, the father of the child is the customer and the girl is a consumer. 1,3 IMPORTANCE / RELEVANCE OF STUDYING CONSUMERS’ BEHAVIOUR IN THE FIELD OF MARKETING Why to study consumer behaviour? “With every new satisfaction given, customer becomes awafe’of the further satisfactions that can be obtained from a product / service and itis prudent that as an organization you realize it before the competitor / customer Theodor Levitt Asa subject or course Consumer Behavior is viewed as the building block of the marketing concept. According to the marketing concept, the marketer should be able to determine the needs and wants of the targeted market and provide suitable product and service offerings, Mors ¢ffectively and efficiently than the competitors. In other words, Marketing 18 essentially’ a customer-centric philosophy, which aims at understanding customer siteds and wants, providing them the right product/service, and thereby gen: ing Customer delight. A sound knowledge of consumers’ behavior helps thelmarketer in understanding and predicting the consumption patterns and constimption behaviors of people. It also helpg)the thatketers in understanding the internal (individual determinants) andhextemal (environmental factors) forces that makes the people to act out different consumption patterns and behaviors in the market place, In addition to this, the study of consumer behaviour is important for the following tasks performed by a marketer: a) Analyzing the environment: identifying opportunities and fighting threats By identifying needs and wants of the prospective customers. This can be done by examining trends in income consumer lifestyle and emerging influences. e.g. - the trend towards increasing number of working wives and greater emphasis on leisure and convenience have signaled the emerging needs for household gadgets such as vacuum cleaner, washing machine, food processor, dishwasher ete. Consumer Behavior NOTES Introduction to Consumer Behaviour 3 “Only for Private Circulation”Consumer Behavior NOTES Introduction to 4 Consumer Behaviour “Only for Private Circulation” b) Segmenting, targeting and positioning By thoroughly studying the consumer and his purchase behaviour in terms of how they behave and how they make their purchase decision ina given situation, This in turn leads to identification of distinct groups having more or less similar needs and wants. ‘e.g. ~a study on potential consumers for shampoo revealed that there was a class of consumers who would like to use shampoo only on special occasions and otherwise use soap to wash their hair. Further, this consumer class would not afford to spend more than Rs. 3 or 4.on shampoo. Having identified this target market companies with leading brands launched their shampoos in small sachets containing éniugh quantity for one wash and priced just at Rs. 2 or 3 ©) Designing the marketing-mix Product: - Product is a bundle of benefits that a matketer offers to customer for satisfying his needs. By:studying cofisumer behaviour a ‘marketer can make decisions about the productde¥elopment, its size, shape, packaging, flavors ete. e.g. — Maggi Bhuna masala, Sintex inddor loft water tanks Price: - This is one of the most"Wwidely used!'marketing mix tool while furthering the business.intereSts. A:ntarketer faces various questions while determining the’ ptices'of their‘products and they are as following a) What should be'the pice Of the product? b) Shouldlitbe the same as that of the competing product or lower or higher? ©) Should the price be marked on the product or left to the diseretion ofthe retailer fo charge what he can from the customer? 4) Shouldany price discounts be offered? ©), What is the customer perception of a lower or higher price? 1) Would a lower price stimulate sales? Or is a lower pric associated with poor quality? ‘The marketer has to determine the price level which helps in creating the image of the product and also in maximizing the sales revenue. To do so he must try to understand the consumer’s perception about the product, the influence of price on the purchase decisions and impact of pricing on the sales, Therefore, it is only through a continuous study of consumers’ behaviour in the marketplace that the marketer can get answers to the aforementioned issues.Place/ Distribution Consumer Behavior Having determined the product, its size, shape, packaging, price ete. the next decision a marketer has to make regarding the ways to make the products available in the market. In doing so, he has to consider NOTES the customers’ convenience. While determining the channels of distribution the matketets have to find answers to the following questions: a) What type of retail outlets should sell the products? b) Should it be sold through all the retail outlets or only-tiitough selected few? ©) Should it be sold through existing outlets Which also sell ‘competing brands or should new outlets selling exchisiv brand of product be created? your d) How critical is the location of the retail outlets from the consumers’ viewpoint? €) Does the consumer look fai'the nearest convenient location or is, he willing to travel some distance-for buying the product? e.g. Few years ago, Eureka Porbes iftrduced a vacuum cleaner in the Indian market. It was{fiot Only'the launch of @ new brand, but also a aunch of a new produet concept) No retail outlets were selling vacuum cleaners, very few consumers Were aware about the product and they were willing to buys, Under these "circumstances, the company decided to sell the product only through petsonal selling with the salesman calling on the prospective customers at their homes. In this particular set up the salesmair hai enough time to explain, demonstrate and convince the prospective customer about the utility of the vacuum cleaner. On the other hand in a retail outlet this would not have been possible. The retailer has neither the time nor the detailed knowledge required to sell such a new produet concept. This distribution strategy of Eureka Forbes was based on a very fine understanding of the consumer behaviour that resulted in good sales volume. The product concept is well accepted in the urban markets and today the vacuum cleaner is sold through personal selfing as well as selected retail outlets. Promotion: Doing business without promotions is just like hitting the target in the dark. You know where you are aiming at but nobody else does. In the contemporary market there are different media available to a marketer to promote his products or service offering. To do it in ‘the most efficient and effective way a marketer must study the targeted ‘consumers, their geographical location, the media they are having an Introduction to Consumer Bekaviowr = S “Only for Private Circulation6 Consumer Behavior NOTES Introduction to Consumer Behaviour access to, the mostly preferred media and the role of advertising in influencing the purchase decision et. @) Designing the marketing strategies Summary Consumer behaviour comprises the entire spectrum of activities and processes which individuals engage in when buying, using, acquiring or disposing of goods and services. An understanding of consumer behaviour is of critical importance to all persons engaged in any form of marketing activity, its importance stems from the fact that: a) behaviour of consumers can be understood, b) the behaviour can be influenced, and ©) the marketer can manipulate these influencing, Variables to his advantage. Questions 1. Why is it necessary for marketdts,to study consumers’ behaviour? Illustrate with suitable examples, What is meant by Customend Consumer? Discuss the relevance of consumer behaviour in the light Of current business scenario. Give Examples. 3. What is meant by Consumer Bebiaviowr? Discuss the nature and scope of consumer behiout. References 1, David L. Loudom& Albert J. Della Bitta, Consumer Behaviour, 4th Editiongfata MeGraw Hi 2. Leon ‘Schiffman, Leslie Kanuk, S.Ramesh Kumar, Consumer Behavior , 10th Edition Pearson Education 3. IGNOU, Consumer Behaviour- Issues and Concepts 4, Sangeeta Saliney, Consumer Behaviour, NPTEL, IIT Khargpur 5. Suja R. Nair, Consumer Behavior - In Indian Perspective, Himalaya Publishing House, “Only for Private Circulation”Consumer Behavior UNIT - 2 INDIVIDUAL DETERMINANTS OF CONSUMER BEHAVIOUR NOTES LEARNING OBJECTIVES After studying this chapter, you should be able to 1. Understand the meaning and definition of personality and self concept. 2. Understand consumer personality, its traits and nature 3. Understand the Motive Hierarchi Types of. Buying Motives and Dimensions of Consumer Involvement. 4, Understand Learning and Memory. 5. Understand the concept of Attitude, 6. Understand the External Determinants of Consumer Behaviour. CONTENTS 2.1. MEANING OP PERSONALITY AND SELF CONCEPT 2.2. CONSUMER PERSONALITY AND ITS NATURE AND TRAITS 2.3. MOTIVE HIERARCHY, TYPES OF BUYING MOTIVES AND THE DIMENSIONS OF CONSUMER INVOLVEMENT. 2.4 LBARNINGAND MEMORY 2.5 APEITUDE 2.6 EXTERNAL DETERMINANTS OF CONSUMER BEHAVIOUR. 2.1 MEANING OF PERSONALITY AND SELF CONCEPT Personality is defined as, a sum total of outer physiological as well as the inner psychological characteristics that determine and reflect how a person reacts to his environment. It exhibits itself through a unique psychological makeup that activates behavior on the part of an individual in response to forces in his or her environment. However, the emphasis is on the imner characteristics, ie. the qualities, Inalviduat attributes, traits, and mannerisms that differentiate one individual from another peerminants of individual, and make him unique in his own way. Consumer Behaviour 7 “Only for Private Circulation”8 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour Self-concept or self-image is the way we perceive ourselves in a social framework, We always tend to buy only those products and services which we think fit or match with our personality and self concept. eg. - S Kumar’s had roped in Mr. Amitabh Bachchan for promoting its suiting and shirting range in India. This has been done to project an image of class and exclusivity that would match well with the self-concept of their target market Marketers always try to communicate to consumers about their products, its features etc, by referring to their personality characteristics. The philosophy behind this approach is, it will influence the consumer’s purchase decisions in terms of what, when & how do they buy? e.g. - Surf the well-known brand of detergent from the then Hindiiai Lever Ltd, (HLL), Mumbai was posed one of major marketing challenges in the history of the HILL in India, by Nirma, then largely an unknown brand from Alimédabad, in the early eighties. HLL took time in recovering but gained much grouind by positioning a drastically different personality and image for the'Surf. HLL ereated a memorable character called Lalitajiand had her foreeful Endorsement-for the surf when Lalita, a strong, independent woman-and’a value ‘buyer, observed “Surf ki Kkharidari me hi samajhdari hai Source: internet Personality refers to a person's unique inner psychological characteristics, that both determine and reflect how a person responds to his / her environment. In other words it can be defined as the patterns of individual behaviour which are consistent & enduring, ‘An individual's personality also represents a set of characteristics which helps in understanding consumer behaviour in a better way. eg. - Health drinks like Horlicks, Boost, Bournvita & Maltova ete. developed to specially cater to the nutritional needs of varying consumer segments. “Only for Private Circulation”Personality & understanding Consumer Diversity Marketers are interested in knowing how personality can influence consumption behaviour. This information will enable them to understand consumers in a better way, segment and target those consumers who are likely to respond positively to their products or service communication. There are certain specific personality traits which influence consumer acceptance of new products & services. SIXTEEN SOURCE PERSONALITY TRAITS 1) Reserved Vs. Outgoing / extrovert 2) Less intelligent Vs. More intelligent 3) Emotional Vs. Stoic 4) Submissive Vs. Dominant 5) Serious Vs. Happy go lucky 6) Expedient Vs. Conscientious 7) Timid Vs. -Vénturesome &) Tough minded Vs. (© Sensitiv 9) Trusting Vs." Stispicious 10) Practical Vs... Clmaginative 11) Forthright V8.) “Shrewd 12) Self assured Vs. Apprehensive 13) Conservative Vs. Moderate / liberal / Experimental 14) Group dependent. Vs. Self reliant 15) Uneontrotled Vs. Controlled 16) Relxed Vs. Tense Source: Jerry Gray & Frederick Starke OB , Concepts & Appns 2.2 CONSUMER PERSONALITY AND ITS NATURE ‘The sum total of an individuals inner psychological and outer physiological characteristics defines his personality. Inline with an individual’s personality the products also have a personality of their own, It is important to study personality and self concept in consumer behavior as the consumers generally decide on product/brand choices on the basis of their personality. In addition to this the timing and place of purchase, the amount purchased, its usage and disposal, are all based on his personality. Generally it is observed that consumers buy those Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 9 “Only for Private Circulation”10 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour products/brands, whose personality matches with their own, or end up buying. such products/brands that help them in fighting their inferiority ‘e.g. —an individual who is tall and strong built wants to buy a two wheeler for himself. While doing so he will go for a two wheeler that matches with his personality. In this example, he may opt for a Royal Enfield Bullet. ‘Thus, the study of consumer personality, personality traits ete. is important, and holds relevance for a marketer in the design, development and implementation of his marketing strategies. 2.3 MOTIVE HIERARCHY, TYPES OF BUYING MOTIVES AND THE DIMENSIONS OF CONSUMER Involvement Consumer needs are the soul of the marketing concept. Psychologis consumer researchers agree that human beings have the sane needs; however, these needs get translated differently into different wants, resulting in varied motives. An understanding of human nééds and aatives would also help ‘marketers understand and to predict consumption behavior Generally, iLis ubserved that the (eu used interchangeably even though they hold different meanings. A need is a state of felt deprivation while a want is.aldesite fora specific satisfier in the form of a product or service offering suctgs “need” and “want are oe e.g.— Drive- hunger Need ~ food ‘Want “Roti atid subjt A.want may furthetget translated into a brand too, eg. the person desires a Dosa but fromMankar Dosa or a Udipi restaurant, The needs of the target market are always at the epicenter of the marketing activities. HOwever) marketers cannot create needs. In other words it can be sts a marketer. described as needs pre Sometimes, consumers fail to identify the needs as they exist at the sub conscious level and remain unfelt. In such situations, a marketer can help a consumer identify such needs and act so as to satisfy them. ‘eg, We as individuals have to face sweating and the resultant body odour during summer season. People did not become aware about social embarrassment and feel the need of deo sprays or sticks till companies introduced them in the ‘market for consumption “Only for Private Circulation’e.g. Rexona, Ponds etc. aired the advertisements of deo sticks and sprays depicting social embarrassment amongst friends relatives at parties and social gatherings because of body odour As consumers begin to identify and feel that a need exists, there occurs an inner urge or a drive towards taking an action so as to fulfill the need. This inner urge and the impelling action to put in efforts to attain a goal and fulfill the need and thereby attempt at satisfaction is referred to as motivation Motive Hierarchy Abraham Maslow a clinical psychologist, proposed the Hierarchy Of Needs Theory in 1943. It is regarded as one of the most important contributions to the field of motivational research. In this theory, Maslow proposed that human needs could be classified into five basic levels namely, physidlogical needs, safety/security needs, social/affiliation needs, ego/esteém™ needs and self mn needs, Each of the needs were ranked in order Of importance from the lowest to the highest and depicted in a structure of a pyramid actualiz /setualization \ Esteem Needs Social Needs Safety or Security Needs Physiological Needs Source: Abraham Maslow’s Hierarchy of Needs Theory. Physiological needs: - this is the first need related to the survival or sustainability of an individual e.g- food, clothing and shelter: Safety needs: Once the physiological needs are met then the next set of need i.e. safety needs are felt by the individuals. Here individuals are trying to protect self and his /her family from any types risks in future e.ge Life insurance policies, fire extinguishers. Consumer Behavior NOTES Individual Determinants of Consumer Behaviour “Only for Private Circulation”n Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour 3. Social needs: being a social animal, human beings tend to go for social affiliation or belongingness in a given society. Therefore, various ‘groups are created by them and they are family, friends, peers etc. e.g. Friendship 4. Esteem Needs: Maslow has classified esteem needs into two categories namely; esteem for oneself. ¢.g.- dignity, achievement, mastery, independence) and the desire for reputation or respect from others. e.g. status, prestige 5. Self Actualization needs: It refers to the need for personal growth and development wherein an individual tries to fulfill the same By. using his capabilities and resources. According to the theory, these needs are hierarchical and an individual will go level by level, starting first with the fulfillment of the lower-order needs and radually move towards the fulfillment of the higher-order ji¢eds, A person cannot move to the second level unless the first level is Satisfied. Once a level is satisfied, it ceases to be a motivator and the moves to the next. Maslow’s Hierarchy of needs theory is based on the following premises + All human beings acquire*a Similar Set of needs through genetic endowment and social interaction, + Some needs are more'basie’or.critieal than others ‘The more basic needs must be Satisfied to a minimum level before other needs are activated. ‘The hierarchy-of, needs theory is highly useful for the marketers while studying the consumers" motivation Application of Maslow’s need hierarchy theory in Marketing 1) Pi@duct Development 2) Brand Positioning Buying motives Motivation refers to the processes that makes peaple to hehave as they do. 1 occurs when a need is aroused that the consumer wishes to satisfy. Once a ced has been activated, a state of tension exists that drives the consumer to satisfy the need. Motivation satisfies either utilitarian or hedonic needs. A utilitarian need implies that, consumers emphasize the objective and tangible attributes of products e.g. fuel economy in a car. A hedonic need implies that, consumers emphasize subjective and experiential aspects such as self confidence, excitement, ete “Only for Private Circulation’Consumer or buyer is the central figure of all marketing endeavors. Itis the Consumer Behavior consumers who determine the growth, prosperity & even existence of a business enterprise. Hence, it is imperative for all the marketers to understand the pulse of the target market. In order to do so, the marketer must try to delve into the NOTES buyer's mind. In other words the marketer should always try to understand the buying motives of the customers, Motive is a strong feeling, desire or emotion that makes a person to do something. When a motive makes a person to buy a product, then it becomes @ buying motive, In other words it can be described as all the desires, considerations & impulses that induce a buyer to purchase a given product. ‘Types of buying motives Inherent and Learned Buying Motives: Inherent buying motives are those, which arise from the basic needs of the¢Ohsumers such as food, clothing, shelter ete 2, Emotional Buying Motives: Emotional buying motives are those, which are affected by consumer's feelings and are often judged by using feelings or affective partoftonsuiner’s attitude. In such motives, the heart dominates aver head and mind. Sometimes in satisfying these needs, ntan is Rotational. The motives are hunger, thirst, ego, prestige, comfort, pleasure, love and affection ete. A brother buying gifts fois sistor on the occasion of Rakshabandhan ‘or Bhai Dooj, Rational Buying Motives: Rational buying motives are those motives where a‘eonsuiter 1S Fational and his decision is based on logic and {justifications While taking buying decision. In this €ase brain dominates over heart. Before making any purchase, the clstomer get convinced about the price, quality, durability, reliability, Service. And then decides to purchase the goods, which are useful to him, ‘The consumer is often seen taking more time in making rational purchases. 4, Patronage buying motives: - These are the motives which determine where or from whom the products are purchased. Further it can be classified as emotional & rational patronage motives. a) Emotional patronage motives: - are those impulses which motivate & persuade a buyer to purchase products from a specific shop. This type of motive is merely based on subjective reasons. e.g. ~ hair treatment from a particular saloon, purchase of monthly provisions from a particular shop ete. Individual Determinants of Consumer Behaviow 13 “Only for Private Circulation”4 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour b) Rational patronage motives: - When a buyer solicits a particular shop after following a logical reasoning of mind then it is called as rational patronage motive. e.g. — Big Bazaar. ensions of Consumer involvement Involvement refers to a person’s “perceived relevance of the object based ‘on their inherent needs, values and interests.” Zaichkowsky, 1985) Involvement can be viewed as the motivation to process information. (Mitchell, 1979) Consumer involvement influence the ways in which consuméts Seek, process, and transmit information, make purchase decisions and do the post- purchase evaluation. As the level of consumer involvementyingreases, the ‘consumer has greater motivation to gather, understand, elaborate ahd absorb the information. Therefore it is imperative for a marketer to dedigit marketing mix in such a manner that, he can activate the involvement process in favor of his, produets or service offerings. In doing so marketing communication can play vital role, A few models have been proposed that are based on consumer involvement; these are discussed below. a) Low involvement products Low involvement prodticts are those products that are inexpensive or moderately priced, They are Gofigidered to be low in value and risk and are frequently firchii8ed” Generally it is observed that, such products are purchased as amattér of routine €.g, - Toothpaste, soapy bread etc. For such productijthe consumer gives little thought, and feelings may not be formed/for the product until the products are purchased. )) High Involvement produets High involvement and thinking, typically signifies higher level of rationality. Products that comes under this category requires lot of thinking, more and detailed information about the product while making a purchase decision. Such decision making is driven by ‘economic motives. e.g. - cars, laptops, real estate ete. Dimensions of consumer involvement + Cognitive involvement - where a person is motivated to learn everything about the product. “Only for Private Circulation”+ Product inyolvement - the consumer's level of interest in making a particular purchase, + Message response involvement (advertising involvement) -the consumer’s interest in processing marketing communications. + Ego involvement (enduring involvement) - the importance of a product to a consumer’s self-concept. An involvement profile + The perceived importance of the potential negative consequence of a bad purchase, + The probability of making a bad purchase. + The pleasure value of the product category. + The sign value of the product category Such profiles allow consumer researchers to capture the diversity of the involvement construct and use involvement as segmentation base. 2.4 LEARNING AND MEMORY What is learning? Learning is a process 6f'acquiring the knowledge, developing skills through discussions experiments'and experiences which in tur affect the individual's behaviour in futures Principal Elements of Learning 1 Motivation: Relevance of needs and goal. A need that motivates action, Cue matches with consumer's expectations. ‘A stimulus that drives an action. It directs a drive when it Response: Action to satisfy need. Reinforcement: The feedback a consumer receives post usage and subsequent action if he doesn’t get a rewarding experience, e.g. - A person looking for trolley bags/ Suitcase for an overseas pleasure trip with family. Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 15 “Only for Private Circulation”16 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour T. Motivation Relevance of needs and | Requirement of trolley bags suteases ‘goal. A need that motivates action. | for such a ip. 2. Cues Cash discounts AA stimulus that drives an action. | Good deals or offers It directs drive when it matches Good designs with consumer’s expectations. - Response: Action fo salisty need - |The person sees a discount in # store and goes and buys from the shop, E Reinforcement: The feedback a [I he buys the suitcase! trolley bag consumer receives — and finds it comfortable and long’ lasting, he would buy the samesbrand ‘or buy from the same shop in filtie ‘The reward or action - In case he doesn’t find it satisfaétory the he will switch to some Qube brand. There are two approaches to the study of learningy’namely: the behavioral approach to learning, and the cognitive approach to learning. According to the behavioral theorists, leaning takes place%n response-to events/happenings in a person’s extemal environment. On the othérhaind, the eounitive theorists believe that learning takes place as a resultyof # person’ conscious and deliberate information processing and storage actvity. Behavioral Learning Theory ‘The approach defines leaning in férnts of an association between stimulus and response, where the’ Stimulus isan external objeet/person/situation that a petson senses and peféeives, and response is the behavior of the person that ‘occurs in reaction tothe objéet/person situation The theories are based on the assumption that + Peopléilearn to associate the stimulus and response, + ‘They begin to relate the stimulus and response and they generalize the relationship, across situations; whenever the stimulus occurs, there is a similar response + Observable and predictable responses to specific external stimuli are reflective and symbolic of learning having taken place. Behavioural theorists do not focus on the dynamics of the learning process. ‘Their major concem is on viewing learning as a response to events/happenings in a person’s external environment, The main proponents of this approach were Ivan Pavloy, a Russian psychologist who proposed the theory of classical conditioning, and Skinner, an American psychologist who proposed the theory of operant/instrumental conditioning. Both of them have spoken on the relationship between a stimulus and the response, However, they differed on the “Only for Private Circulation”cause and effect relationship. Ivan Pavlov believed that the Stimulus leading to Consumer Behavior Response relationship (S—® R), whereas Skinner spoke of Response leading to Stimulus relationship (R->S) NOTES Theory of Classical Conditioning Theory of Classical Conditioning is proposed by Ivan Pavlov, a Russian psychologist, in the 1920's. This pioneering work was based on the famous experiments that were conducted on his pet dogs. Pavlov believed that; + all living beings are passive in nature, They can be taught howto behave through repetition or conditioning + leaming occurs as a repeated connection/association, between stimulus and response (Stimulus — Response) or (S - R) + leaming takes place through conditioning: as such elassical conditioning also came to be known as respondent conditioning. + leaming becomes conditioned witen a Stimulus that is pained with another stimulus that leads to a knows Fesponse Serves to produce the same response when used alone. Pavlov elaborated upon the'protess of conditioning through a series of experiments that he conducted on dogs, This process of conditioning can be classified into three stages namely; before conditioning during conditioning and after conditioning, 1) Before conditioning: Meat (US) +> Salivation (UR) Initially he gave:meat (Unconditioned Stimulus) to the dog and as natural, there Was a feat deal of salivation (Unconditioned Response). In betweenthe rang the bell (neutral stimulus) but did not offer meat to the\dog. Naturally that didn’t result in salivation, 2) During conditioning: Meat (US) + Ringing of bell (CS)—> Salivation (UR) In this phase he combined offering the meat i.e, Unconditioned Stimulus (US) and ringing of the bell ic. Conditioned Stimulus (CS) and repeated the same until the dog was able to establish an association between meat (US) and ringing of bell (CS) 3) Post conditioning: Ringing of bell (CS) —> $ livation (UR) In this phase he rang the bell and did not offer meat to the dog, but still a great deal of salivation resulted. Utility of Classical conditioning theory for marketers ‘The Pavlovian Theory has implications for marketers. Consumers respond Individual to learning via classical conditioning when: Determinants of Consumer Behaviour 17 “Only for Private Circulation”18 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour + the level of perceived risk is low (and cognitive effort is not required) + products are low on differentiation + purchases are routine; convenience goods and impulse items. The basic concepts that originates from classical conditioning as under: Repetition ‘The repeated pairings of the conditioned stimulus (CS) and the unconditioned stimulus (US) leads to a strong association between the two. It results in the similar response even if the US is missing. Thus, repetition increases the likelihood of a living entity’s responding to a conditioned stimulus. On the similar line , the signs, symbols, logos, colours and jingles help facilitate consumer learning through the process of association, In terms of marketing, this is the reason why marketefS repeat their ‘messages either in print or in audio visual media across channel®'several times a day, Repetition slows down the pace of forgetting e.g HUL advertises for its various brands separately all the day long on various TV channels; while the brand is Lux or Biril or Dove (individual brand), the advertisement concludes with the HU 16go, the parent brand. However, one should also look atthe othe rside of the coin and the same is too much of repetition leads to, boredom, resulting. in fall of attention and subsequent retention. This is referfed toyas the satiation effect, That is why marketers bring in variation im their messtige Content and/or message context, In order to prevent an advertisement wearout, the marketer conveys his message through a variety 6f formats and themes across print and audio visual There can be'tvo types of Variations that a marketer may choose and they are cosmetic vatiationand substantive variation: a) Cosmetic variation Here, a changes bought about in the context or the background or the célebrity/Spokesperson or in the font and the print type. The message contefitideross the advertisement remains the same. eg. Lux: “Filmi sitaron ka saoundarya sabun”; the message content remained the same, but the celebrities were changed over a period of time stich as Hema Malini, Rekha, Sridevi, Madhuri Dixit, Aishwarya Rai ete, b) Substantive variation In substantive variation, the change is brought about in the content of the advertisement. The rest remains the same. It means no changes are made in the context, or the celebrity/spokesperson or the print type and format. “Only for Private Circulation”e.g. - Amul products. In their print advertisement, the mascot (spokesperson) remains the same; but every week the content of the advertisement changes, according to the contemporary events/happenings. Stimulus generalization Stimulus generalisation occurs when a stimulus is so similar to another stimulus, that the former evokes the same response as the latter. In other words it can be described that learning is generalised. In Pavlov’s opinion, a living entity also learns via stimulus generalization; which he had observed duting the conditioning process. In this experiment, the dog had learnt to salivate not only to the sound of the bell, but also the jingling of bells and keys. This is the reason behind the success of imitative “me too” of easily and widely available products/brands. There is a stimulus generalization on the part of the consumers who fail to differentiate between the “mie too” from the original products/brands. This might happen due to similarities in thé name or logo or packaging or in the advertisement, Whensstimiilus generalization takes place, the consumers are confused and are unable"to Wifferentiate the “me-too” products with the original products/brands they have aresfimmiliar with, and end up buying imitative produets/brands, e.g. Puma vs, Peuma, Adidas vs. Abidas; Sony vs. Soni, KFC vs. KHC; Panasonic vs. Panosaunic. In some cases , in addition to.the marketers of “me-too” products; the competitors (market challengers'and followers) may want to encourage stimulus generalization. Thisis done to take the advantage of the market leader’s position in the market and opt for siftilar packaging or advertisements or may even use the same models andicelebtities for their advertisements. eg. Diifigel! and Bveready played very similar advertisements, much 10 the confusioniof consumers. Stimulus discrimination ‘The opposite of stimulus generalization is stimulus discrimination, Stimulus discrimination is aimed at differentiating a particular stimulus from similar stimuli, Marketers always want their product/service offerings to stand out from the rest. Thus, they position their brand in the market in such a way that helps the customers in differentiating it from other brands in the market. Very often it is done through a Unique Selling Proposition (or a USP) or the unique attributes of the brand, Theory of Operant or Instrumental Conditioning Burrhus Frederic Skinner, an American psychologist proposed the theory of operant conditioning in the 1950s. In this theory he emphasized on the role of ‘consequences’ and its impact on the process of leaming, He also talked about Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 9 “Only for Private Circulation”20 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour the response-stimulus connection, (Response —+ Stimulus) or (R-S), rather than the S-R connection as proposed by Pavlov. The learning took place through instrumental or operant conditioning Skinner concluded that a living entity, be it animals or human beings, act instrumentally. They would act out certain behavior that would make them feel rewarded and get them what they want. On the other hand, they would avoid those acts of behavior that would be non-rewarding and don’t get them what they want. ‘The theory of operant conditioning is based on the following assumption + behavior is a funetion of its consequences. This theory is based on on the experiments conducted on pigeorisand rats. To conduct the experiment , he designed a cage, better known as the “Skinner's Box.” The design of the cage had levers ,keys, a bar or a pedal on one of its walls and a mechanism which facilitated the leaning process. When:the pedal is pressed the inbuilt mechanism releases the food into the tage. During the experiment on the rats it was observed that, thé rats moyed acfoss the cage and. suddenly, accidentally they would press the bafvand the food was released. The rat began to understand a connection beoween his moyement and the food and ‘gradually learnt to press the pedal that gave him the food. The food acted as a reward, whef® the rats'wete "rewarded" for choosing an appropriate behavior, and thein-beliavion-was positively reinforced. After certain period of time, Skinner decidled ‘withdraw the food from the system. But the rats contimued their night movematy , but food was not getting released. thereby making them disapointed. As ® result of this the rats stopped pressing the right bars and pedals: This was referred to/as extinction. ‘Skinner concluded that any’behavior that is followed by pleasant events (reinforcing stimulis), ig likelyto be repeated. A positively reinforced behavior increases the likelih@od of fépetition of such behavior. On the other hand, any behavior that is followed by unpleasant events (and a non-reinforeing stimulus), is less likely to'be repeated. In shost it ean be inferred that operant or instrumental conditioning occurs ‘when person learns f0 act out behaviors that are positively reinforced, and avoids those acts of behavior that lead to punishment or yield negative reinforcement. e.g. In terms of consumer behavior, a person want to buy a shoe. He would g0 to a shop and try out various brand, kinds and sizes of shoes. He would continue with the trial and error process, till he can manage to get a shoe that is ‘most comfortable and rewarding. The next time he wants to buy a shoe, he would. repeat the behavior (purchase), and he would go to the store and ask for that particular brand, type and size, This is because the satisfaction (Response) with the purchase of the brand, type and size positively reinforced his behavior towards his next purchase of shoes (Stimulus). In this way, he would learn to repeat behavior and inculcate a habit that is rewarding, “Only for Private Circulation”‘Types of Reinforcement Reinforcement may be defined as something that increases the strength of a response and tends to encourage repetitions of the behavior that preceded the reinforcement. There are two types of reinforcements namley, positive reinforcement and negative reinforcement. Both positive and negative reinforcement can be used to encourage a desired behavior. Positive reinforcement consists of an outcome that strengthens the likelihood of a response being repeated in future. Positive reinforcement In terms of marketing, if'a person enjoys the food he eats fina restaurant the likelihood of his visiting the restaurant and eating from there would increase. This would be an example of positive reinforcement. Another example of positive reinformcement is an advertisement wherein soft and glowing skin was shown as a reinforcement to buy Dove soap. Negative reifnrocement On tthe other hand, a negative reinforcement i8aiv outcome that is also aimed to encourage a specific behavior, In. other words, through a negative reinforcement, a person may be taught to aét ott an alternative behavior that ‘would be more rewarding, e.g. Insurance Compiinies” make"}consumers aware of undesirable consequences in case somethin hafiperis to the head of the family or the bread camer or the house/possestions. People are taught to avoid such negative consequences by buying life insurance policies, medical insurance policies, fire/thef/burglary/ insurance @te. This would be an example of negative reinforcement. Reinforcement Schedule: Skinner in his theory talked about the reinforcement Schedule in terms of the frequency with which it should be applied. According to him thé rewards should not follow a desired behavior all the time as regular reinforcement, may become expected, and thereby lose its novelty and making it ineffective, Therefore , he opined that, reinforcement should be intermittent and be placed at irregular intervals. Kinds of Reinforcement There are four kinds of reinforcement namely, a) positive reinforcement, b) punishment, ©) extinction and d) negative reinforcement. Consumer Behavior NOTES Individual Determinants of Consumer Behaviour a “Only for Private Circulation”2 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour a) Positive Reinforcement A pleasant event is applied after the act of behavior. The individual is rewarded for his/her behavior, thereby encouraging him/her to repeat the same in future. b) Punishment An unpleasant event is applied afler the act of behavior. The individual is punished for his/her behavior, thereby discouraging hinvher to repeat the same in furute. ©) Extinetion Here, a pleasant event is withdrawn after the act of behavidieliother words, the act of behavior is not followed by pleasant consequences. The individual is neither rewarded nor punished for-his behavior, thereby discouraging the repetition of the response. d) Negative Reinforcement In negative reinforcement the act(6f behavior is not followed by unpleasant consequences, The.individual.is not punished for his behavior, thereby encouraging repétition.of the response. Utility of Operant or Instrumental conditioning theory for marketers strumental condi Consumers respond to learning ning when: 1, trial can be attempted: before a ptitchase 2. purchases are linked to desirable affective experiences 3. there is high@rinvolvement and greater cognitive activity. Examples of reinforcement strategies for a marketer Positive Reinforcement A consume willeontinue to patronize a brand and be loyal towards it as long as his purchase decision is satisfying and rewarding. The purchase of the product/brand elicitsa reward in terms of satisfaction, Therefore, the likelihood of the repeat behavior in terms of purchase is high, and brand loyalty would, develop. A habit would be formed as a result of the reward received for the behavior. eg. a lady would continue buying Dove soap as long as she finds that the moisturizer in the soap gives her a soft skin post usage. The marketer needs to fulfil all promises and keep the consumer satisfied, Punishment ‘Asa strategy this has lesser implications for a marketer. However, policy makers, governmental organizations and reform bodies, may depict this to create fear amongst the people and make them law abiding citizens. “Only for Private Circulation’e.g. fines for traffic rule violation, penalty and imprisonment in case of income tax default ete. This would discourage a person from taking an action that would have an unpleasant or a negative consequence. Extinction A company who is known for providing discounts, rebates and offs on its products may face such a situation. If the company suddenly withdraws such schemes, the consumers would be discouraged from purchasing the brand again, Ina way, the consumers would have become used to such incentives to buy e.g. Koutons Retail has positioned itself as “High Fashion: Value for Money” brand, The brand is always having something or the otfier i terms of 30% off or “Flat 50% off, 49% off or Flat 80% off or Denims apRS°299 etc. the customers who are price sensitive and look out for good deals would purchase from Koutons. If Koutons withdraws it’s discount schemés, the likelihood of consumers buying from there would reduce substantially? Negative Reinforcement Asastrategy, it implies that a marketgFencouttage the consumers to buy his products (act out behavior) to avoid any'negative consequences, e.g. — In Pepsodent Toothpasté’s (meant for children) advertisement, a fear appeal was used to make the target Customer aware of undesired consequences in terms of cavities, tooth décay, tooth rélated ailments ete. and how effective the pepsodent toothpaste in protecting the teeth from such things. THE ROLE OF LEARNING IN MEMORY Memory involves 2 process of acquiring information and storing it over time so that it willbe available when needed. Contemporary approaches to the study of memoryemploy an information-processing approach, + Inthe encoding stage, information is entered in a way the system will recognize, + In the storage stage, this knowledge is integrated with what is already in ‘memory and ‘warehoused" until needed. + During retrieval, the person accesses the desired information The memory process Encoding ‘storage Retierl Secrralicats acca enon PM rssncainnenon, PA menor, fund nance e 3rd 2.1 Source: Consumer Behaviour — A European Perspect Edition, Prentice Hall Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 2B “Only for Private Circulation”Consumer Behavior Memory system According to the information-processing perspective, there are three distinct systems of memory namely; NOTES Individuat Determinants of 24 Consumer Behaviour “Only for Private Circulation” a) Sensory memory b) Short term memory ©) Long term memory Relationship among memory system ar Tere ery == .| —aa ae ae ee ery eae ‘ela ano <= ae | = | ee 2.2 Source: Consumer Beha ur A European Perspective 3rd Edition, Prentice Hall a) Sensory memory Sensory memory refer to tempdrary storage of information received from our senses and Jasts a couple of Seconds at the most. e.g. A person who asses by’ bakery may get a brief, but enticing, smell of cake baking inside) This sensation would only last for a few seconds and may be goodenough for that person to determine if he or she should investigate further. If the information is retained for further proce§sing, itjpasses through an attentional gate and is transferred to short-termmmemory, b) « Short-term memory Hereyinformation is stored for a limited period of time and its capacity is limited. It is similar to a computer's cache memory wherein the information processing takes place. Verbal input may be stored acoustically (in terms of how it sounds) or semantically (in terms of its meaning). ©) Long-term memory It is the system that allows us to retain information for a long period of time, Elaborative rehearsal is required for transfer the information| from short-term memory to long-term memory. This process involves thinking about the meaning of a stimulus and relating it to otherinformation already present in the memory. Marketers sometimes assist in the process by devising catchy slogans or jingles that consumers repeat on their own, Recognition and Recall Measures Recognition and recall tests are conducted to find out a) whether consumers remember seeing a particular ad b) _theextent to which they have read it or seen it and can recall its content ©) the resultant attitudes toward the product and the brand, 4) _ their purchase intentions. Recognition tests are based on aided recall, although recall tests use unaided recall. In recognition tests, the consumer is shown an ad and asked whether he ot she remembers seeing it and can remember any of its salieht features. In recall tests, the consumer is asked whether hé or'she has read a specifie magazine or watched a specific television show, and ifs6, can he /she recall any ads seen, the product advertised, the brand, and/ahy salient points about the product, 2.5 ATTITUDE An attitude is a positivélor negative feeling about a product or service offering that an individual has towards them. An individual with a pos attitude towards a productiservice offering is more likely to buy that product. ‘Therefore, itis imperative for a marketer to study consumers’ attitude so as to achieve the desired omteomes Definition According to Gordon Allpot, “Attitudes are learned predisposition to respond to an object or class of objects in a consistently favorable or unfavorable way”. “Attitudes are an expression of inner feelings that reflect whether a person is favorably or unfavorably predisposed to some “object” (e.g., a brand, a service, or a retail establishment),” and “Attitude formation, in turn, is the process by which individuals form feelings or opinions toward other people, products, ideas, activities, and other objects in their environment”, Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 25 “Only for Private Circulation”26 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour Components of attitude An attitude has following three components Cognitive Component Itis the set of information, ideas, facts and knowledge about an object that guides our thoughts. €.g.- an orange is a fruit that is rich in vitamins and is considered as good for skin, 2. Affective Component It consists of emotions and feelings towards an object which influeniee positive or negative evaluation of the same, e.g. - [like oranges. 3. Behaviourial Component Its also known as action component that influences Our marketplace behaviour. e.g. leat and use oranges in the season Characteristics of attitude + Attitudes can be held about anyobject, pesSon, situation ete. ince to purchase behavior i, word of + Attitudes are leamed: Attitudes haying rel may be formed through tirect experience with the product ‘mouth, mass communication. + Attitudes are dynamieand cain change: Functions of attitude Attitude helps eGnsumers in evaluating a product/service offering that ends up in the decision tegardinig whether to buy it or not. In addition to this attitude performs the following functions: a) Utilitarian function Constimers tend to form positive attitudes towards a product/service offering when it provides a utility to them. In other words, if the consumers get a rewarding experience through the benefits offered by them, then the consumers will have favorable attitude towards it. On the other hand if they do not get a rewarding experience, they form a negative attitude towards such an offering e.g. - Complan helps children grow faster and better. b) Ego defensive function Consumers form attitudes about a product or service offering as they help them in defending their ego, self-image and self-concept. If, a “Only for Private Circulation’consumer is high on ethnocentrism and patronizes Indian products, he Consumer Behavior ‘would have a positive attitude towards Indian brands. He would speak for and promote such brands even if he knows that a foreign made product provides better value. Attitudes are formed to NOTES protect the ego. e.g. - Close- Up toothpaste prevents bad breath and does not cause ‘embarrassment when one is with friends. ©) Value expressive funetion Positive attitudes are formed when a product or service €Xpresses @ person's values, lifestyle, personality and self conceptThis is because attitudes pro ceases where there is a mismatch between the préduct image and a consumer's self-image, a negative attitude is developed, Attitudes are areflection of value. ¢ people with a basis for expressing’ their values. In Raymonds, a complete man, status, Style ad Sophistication 4) Knowledge function Auitudes are formed whed covisiimers want to reaffirm theit knowledge base, to fifall help them simplify purchase decision making. If a consumer thinks positive about a brand, it helps reaffirm his opinion, and makes decision making simpler and faster. Atitudes help in decisionmaking. e.g. Fed EX couriénservige - The world on time. Strategies for changing consumer's attitudes 1. Make changes in the product and its packaging ‘The Marketer edn bring in changes in the product itself, thereby adding new features and benefits in it. Thus, he tries to provide a better value proposition to its customers than the competitors. In turn it results in favorable consumer’s attitude. e.g. A lady has a neutral attitude towards various brands of shampoos that are available. In her opinion the brands like Pantene, Sunsilk, Fiama di Wills, Dove and Gaier are all similar to each other. ‘Now, Fiama di Wills comes up with a promotional scheme whereby, a conditioner is given free with the shampoo or it introduces a scheme whereby you buy one, and get one free. In such a case, the lady may develop a positive attitude towards buying Fiami di Wills, as she would feel that she is getting more value for money. Similarly, if Dove claims to prevent hair fall, and boost hair growth, the lady may develop @ favorable attitude towards Dove. Individual Determinants of Consumer Behaviour 27 “Only for Private Circulation”Consumer Behavior NOTES Individuat Determinants of 28 Consumer Behaviour “Only for Private Circulation” While changing the product itself, may be an expensive strategy, involving changes in technology and manufacturing process, as well as changes in the marketing strategy, alternatively the marketer could change ony the packaging. Packaging could also provide benefits like ease of use, ease of carrying and handling as well as storage. e.g. - Dhara refined vegetable oil began to be preferred by single individual houscholds over other brands; this is because it was launched in small packs as 200 ml Tetra Briks. 2, Establish an association between the produet/ service offering and an existing favorable attitude about socio-economic, cultural and environmental cause: This association between the productservice offefing and the favorable cause will result in favorable attitudes towards the product/brand. In this way, marketers. not only coiitibuite to the social cause but also try to influence constimers?/attitudes towards their products/service offering. eg. — Livpure’s campaign *CuttingPaani 2.0° helps Shimla resolve its crushing water crisis. This unique eampaign was focused on Shimla’s inprecedented water erisis it fated chiring summons It came asa rude shock to many as Shimila happens t0)be a one of the most sought after tourist destination that geis heavy rainfall by definition. Livpure reached out to azotind 50, cafés and restaurants. The average consumption in any plage’ TS between 10,000 ~ 30,000 litres per day and hence approx} eonsurtiption.at these $0 places will be 1, 60,000 gallons per day,Adopting #CuttingPaani, made them save 80,000 gallons per day. The eampaign did what it set out to do—_make people thinkand Ghange the way they consumed water. 3. Influence the consumer opinion and beliefs and thereby change the consumers’ attitude: Aitharketér can build favorable attitude towards his product or service offering by telling the customers that, how their value proposition is better than the competitors. eg. - GlaxoSmithKline Consumer Healthcare India Ltd. efaims that their ‘energy drink, Horlicks promotes growth and provides energy faster and better than Complan, Heinz India Pvt. Ltd claims the same for their brand, Complan. Thus, both try changing consumer opinions about their brands by comparing them with competitor brands,2.6 EXTERNAL DETERMINANTS OF CONSUMER BEHAVIOUR a) Culture Culture has the biggest influence on the consumer behaviour as it provides the background for family, social class and reference groups, which in turn influences the buying behaviour. Reference groups and families play a critical role in transmitting cultural and sub-cultural values. The culture is.getting reflected in the dressing style, eating habits, methods of food preparation and service ete. standards of performance, and the way’ of dealing with people in interpersonal relations. The function of culture is to establish modes of condi Meaning Culture is the sum total of knowledge, belie tradition’, customs, art, morals ete In other words it can be described a8 the s€t of basic values, perceptions wants and behaviour learned by a méiiber ofthe socity from family and othet important institutions. In a diverse country like India, the cultural factors exert the broadest and deepest influence on consumer buying behaviour. e.g, —emphasis on savitigs schemes oriented towards savings for children’s education, daughter's martiage, Post retirement source of income or gold as an investment avenue/are the resul of India’s unique cultural influence. Sub cultural influences Within/@igiven culture, there are many groups of people with distinet customs, traditions; beliefs etc. which set them apart from other people. These groups have their own style of dressing, food hab traditions, all of which have implications for marketers. and religious e.g. — Everest Masale, the south Indian people will look for the spices that ‘would suit their tastes and preferences and north Indian people will also behave in the same fashion, The need for cross cultural understanding of Consumer Behaviour In a globalised world, the boundaries of market have disappeared and as a result of this the companies have started to expand their business. e.g. - companies like Coca Cola, IBM, and Gillette eam more than half of their earnings from their overseas operations. Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 2» “Only for Private Circulation”30 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour It is imperative for marketers of such companies to understand the different value orientation in the cultures that he operates in or is planning to do so. Steps to be taken for understanding the cultural orientation 1. Research into underlying values and the rate at which these are altering. Try to understand the direction of the change especially with references to the target market. 2. Anticipate the possible conflict that might arise due to introduction of a particular product in the market. In the given cultural set up which product is to be introduced? How important are the needs for whieh the product is created? Are there alternative products available? 3. Analyze the existing individual and family decision pattems and characteristic criteria used for decision making, as Well as the information sources for decision making. 4. Decide on appropriate Marketing Communication, Considering the culture, sub-culture, customs, traditions, languagéysymbols, beliefs etc. a marketer should decide on comercial messages and formats that effectively communicates with the targeted tharket. In addition to this he should also decide on the media by Considering the preferred media, available sources of inforination ete, 5. Determine the prices and.channel of distribution, While taking such decisions a marketer mustiry to,understand: a) What are the sluation nénms of @ given society? b) Do peoplesrate an imipSrtcd product higher than a domestic one or is it vice Versa? ©) Are;people aware of and sensitive to price variations? d) Are existingchannels of distribution suitable and adequate enough inireaching the target market effectively? Theso,are Soine Of the issues which would enable the markets to evolve suitable pricing and distribution strategies in a cross cultural marketing situation. Social Class What is a social class? It isa group consisting of a number of people who share mote or less equal position in a society & tend to share same values, beliefs, and exhibit similar pattems of behaviour and consumption. Social classes may be defined on the basis of education, occupation, personal income etc. Social classes differ from one society to another, and their standing in society may also change over time. The belongingness to a social class influence decisions such as, choice of residence, type of holiday, means of ‘entertainment and leisure, “Only for Private Circulation”Social class and its influence on buying behaviour People's buying behaviour is strongly influenced by the social class to which they belong to ot aspire to belong rather than by income alone, Social class measures have also been linked to demographic and geographic data using the principle that people of similar social classes live in geographic clusters. As a result of this a relatively homogeneous geo-demographic segments arises in terms of their housing, urbanization and ethnicity. Class differene in status are commonly symbolized by food, housing, clothing, furnishings and even at religious gatherings. Particularly in Societies where wealth dictates status, possessions become a substitute indieatOr of an individual's worth in the society. Social class and relative standing within a class also de¢ide the kinds of purchases with regard to house, car, clothing, food, furnituite and appliances, consistent with what is expected by their peers. Reference groups: A Group is defined as two of more people who interact, to accomplish some goal. A ‘Reference group’ consists of allthe Broups thathave direct (face to face) or indirect influence on person’s attitudes or behaviour. ~ Philip Kotler Reference groups influence consumer behaviour in two ways 1. They set levels of spirition fof the individual, ic. they offer e to what lifestyle shoild beled! 2. They define items appropriate for a member of the group to lead that lifestyle Types of reference group Direct influence groups Primary Membership groups Secondary Membership, ‘gzoups (Family, fiiends, and colleagues) (Religious, professional, Social) Informal interaction ‘Formal interaction Every day interaction Periodical interaction Stronger influence Moderate influence Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 3” “Only for Private Circulation”32 Consumer Behavior NOTES Individuat Determinants of Consumer Behaviour Indirect influence groups or Non-membership groups OT Aspirational groups Dissociative groups (Clubs ~ Boat cub, BCCI, Political outfits [NGOs — Rotary. Lions, Vanarai ‘Others ~ Chambers of commerce Summary In the contemporary market, it is important for a marketer to understand personality and self concept as it influence the buyer behaviour in’ the marketplace. In other words, it can be described that itis imperative formarketers to study the said concept as the customers are trying to match theif sélection of products or service offering based on their personality Understanding the consumers’ motivation for buying mptodut or availing ‘a service offering plays an important role in furthering the business interests. In addition to this the cross-cultural issues hay€ its bearing/on the consumers? behaviour in the marketplace. Questions 1. What 1s meant by Personaiiy’ée Seif Concept? How does 1t intiuence the purchase decision. ofan individual? Illustrate with suitable examples, 2, What is meant by buying'modtive? Illustrate the different types of buying motiyes by citing Suitable examples. 3. What is meant By,an attitude? What are the different strategies which consumers’ attitudes can be changed’? 4, Who'deyeloped the theory of Classical Conditioning? Explain suitable examples the utility of the same in Marketing, 5, How does cross cultural issues influence the consumer’s buying behaviour? Explain with suitable examples. 6. Write a detailed note on Operant or Instrumental Conditioning. Reforencos 1. Michael Solomon , Garry Bamossy, Soren Askegaard and Margarct, K. Hog, Consumer Behaviour- A European Perspective, 3rd Edition, Prentice Hall 2. David L. Loudon & Albert J. Della Bitta, Consumer Behaviour, 4th Edition Tata MeGraw Hill, “Only for Private Circulation”3. Sangeeta Sahne} IT Khargpur 4. Leon Schiffman, Leslie Kanuk, S.Ramesh Kumar, Consumer Behavior, 10th Edition Pearson Education Online references 1. wps.prenhall.com/wps/media/objects/162/166294 2. _https://brandequity.economictimes.indiatimes.com/news) advertising/livpures-new-campaign-cuttingpaani-2-0-helps-shimta resolve-its-crushing-water-crisis/67077268 Consumer Behavior NOTES Individual Determinants of Consumer Behaviour 3B “Only for Private Circulation”Consumer Behavior NOTES Consumer Buying Decision Making 34 Process “Only for Private Circulation’ UNIT -3 CONSUMER BUYING DECISION MAKING PROCESS LEARNING OBJECTIVES After studying this chapter, you should be able to 1. Understand the concept of Consumer Buying Behaviour. 2. Understand the factors influencing consumer buying behaviour 3. Understand the steps involved in consum: process, 's buying Wecision making 4. Understand the types of buying behavior 5. Differentiate the consumer buying behaviour and organizational buying behaviour. CONTENTS 3.1 BUYING BEHVIOUR MEANING 3.2. FACTORS INFLUENCING CONSUMER BUYING BEHAVIOUR 3.3. CONSUMER BUYING DECISION MAKING PROCESS. 3.4 POST PURGHASE)EVALUATION AND BEHAVIOUR 3.5. TYPES OF BUYING BEHAVIOUR 3.6 DIFFERENCE “BETWEEN CONSUMER BUYING AND ORGANIZATIONAL BUYING 3.1 BUYING BEHAVIOUR - MEANING Buying Behavior is nothing but a decision processes wherein people are actively involved in the buying and using the products. ‘The analysis of buyer’s behaviour is important for 1a) Understanding buyer’s reactions to a firms marketing strategy. b) Meeting the needs of the customers effectively by providing them a suitable marketing mix. To do so, it is imperative for the marketer to analyze what, where, when and how the consumers buy. ©) Predicting how consumers will respond to marketing strategies.3.2 FACTORS INFLUENCING CONSUMER BUYING Consumer Behavior BEHAVIOUR NOTES Cater facors Toca Facer + cutza, + Reference poup |e sub-eual ator + Aspens poop socal + Famiy Peroni face J Peehologieal aco + Age andLite yee stage [> Motivation |. nenonaity rec |. cccepation + Leaming soca + beets a titers Fig 3.1- Factors influencing consumer's buying behaviour 3.3 STAGES OF THE CONSUMER BUYING PROCESS There are six stages in consumer buying decision process (For complex decisions). 1. Need recognition At this stage the buyer identifies the need to be satisfied by using a particular product. 2. Information search Itincludes searching the required information from the various internal and external sources of information. 3. Evaluation of Alternatives Evaluation of alternatives is done on the basis of the decision criteria reflected in terms of the product's features wanted or unwanted by the | Consumer Buying buyer Decision Making . Process 38 “Only for Private Circulation”36 Consumer Behavior NOTES Consumer Buying Decision Making Process 4, Purchase decision It includes selection of the best alternative in terms of brand, packaging, store, method of purchase ete. 5. Purchase ‘This stage is characterized by an actual purchase of the product. 6. Post-Purchase Evaluation ‘Outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication ete 3.4 POST PURCHASE BEHAVIOUR: What is Post-Purchase Behavior? Post-Purchase Behavior refers to the stage Of the Buyér Decision Process where a consumer will take additional actions, purely based én their satisfaction or dissatisfaction, ‘The consumer's level Of satisfaction or dissatisfaction is directly related to the varying relationship between! their initial expectations of the product (pre-purchase), and their pereption Of the actual performance of the product (post-purchase) in their bands. Five levels of customer satisfaction 1. Compassion - Delighted eustomes: 2. Compliment “Happy tustomer. 3. Cooperation “Satisfied customer. 4, Complaint SaDissatisfied customer. 5. Conversion )~ Disgusted customer Customer’s Remarks & levels of satisfaction: When customer says, 1, “We have got to buy from you", he is DELIGHTED; 2, “You are doing a good job”, he is HAPPY; “We have no complaints with you”, he is SATISFIED; ¥e will give you another chance”, he is DESSATISFIED; 5. “We have had enough of it with you”, he is DISGUSTED. Post usage of the product a) If the consumer perceives that the product's performance is matching with their expectations then it can inferred that they are satisfied. “Only for Private Circulation’b) IF the product's performance is not matching with their expectations ‘then the consumer will feel dissatisfied. ‘The larger is the gap between their expectations and the product's performance, the more will be the dissatisfaction. This dissatisfaction leads to Cognitive Dissonance. Cognitive Dissonance is the buyer discomfort caused by post-purchase conflict resulting from dissatisfaction. All purchases be it big or small will result in some degree of Cognitive Dissonance. Since consumers form, beliefs and attitudes early in the Buyer Decision Process, at some point they will be concemed about having a negative experience with the product they may chose, or potentially missing the perceived benefits of other competing brands, ‘The issue of Cognitive Dissonance raises an important question: Why is it so important to satisfy the consumer? It all comes back to, dur basic definition of marketing: Managing profitable customer relationships. “The goal is to attract new customers through superior value, andto keep growing customers by delivering customer satisfaction. If we are doing these things, then we will be able to capture value from customers to éreate profits and build customer equity. So, if our customers are satisfied they will begin to develop brand loyalty, This brand loyalty will help us deyelop profitable relationships. Our satisfied customers will buy from us again.and, dain. And eventually they become influencers in their cultural and soeial gramps. They will pay less attention to competitors, and buy more of our products in future. In contrast, dissatisfaction breéds the opposite, Consumers that perceive poor product performance'will notcreate profits and will erode customer equity. They will not be loyal, and:they Will become negative influencers in their cultural and social group8)icading others away from our brands, HOW DO CUSTOMERS HANDLE DISPOSAL? Giveit fictsia ofit| | [Ret] | | away Directly to temporarily consumer Loan it] | {Tradeit iccrvase Product to etn of it Sellit To be disposed | | [permanently midéleman, Throw it forresell, Use for oviginal purpose Use for new Keepit purpose Fig 3.2 Disposal of products Consumer Behavior NOTES Consumer Buying Decision Making Process 37 “Only for Private Circulation”Consumer Behavior 3.5 TYPES OF BUYING BEHAVIOUR NOTES Consumer Buying Decision Making 38 Process “Only for Private Circulation’ Habitual buying behaviour This kind of buying behaviour is seen in case of low involvement of the consumers in buying the products and there are few differences between brands. The consumer buys the product almost automatically or quickly. e.g. - toothpaste 2. Complex buying behaviour ‘When the consumer is highly involved in the buying of product and there are significant differences between brands them it is called complex buying behavior. In this type of behavious, the buyer collects detail information about the product‘and its feattre8, its contents, its packaging, price etc. Therefore a marketer must provide the same to the buyers. e.g. A customer while buying a cars highly inyolved in the purchase and hhas the knowledge about the Significaft differences between the available brands in theaarket 3. Variety secking buying behaviour This type of buyer behaviour is characterized by the low involvement of the consurmers in buying the product and there are significant differences between brands. Generally itis observed that, consumers tend to buy different products not because of the dissatisfaction from the earfier product but due to seek variety therein. Kecping this type of behaviour in mind, marketers try to encourage the consumers to buy the product by offering those discounts, free samples and by advertising the product a lot 4. Dissonance reducing buying behaviour. Dissonance-reducing buying behaviour occurs when the consumer is, highly involved in the purchase or buying of a product but sees little difference between brands available in the market. ‘e.g. this may happen in the case of a diamond ring’s purchase, In this type of buyer behaviour, a consumer is likely to experience dissonance; that might come after noticing that other brands available in the market would have been just as good as the one bought by hinvher, if not slightly better, in some dimensions. A consumer in such a buying situation will seek information or ideas that justify the original purchase made by him.3.6 DIFFERENCE BETWEEN CONSUMER BUYING AND ORGANIZATIONAL BUYING: Points ‘Consumer Buying Tinproving organzational Buying Motive Satisfying a particular need Nee Size of bayer ines foe Depending ont ik igh ing onthe situation | Bulk: quanti, Fgh purchased, amount to | Pei soa be spent Naure of having Individual decisions Jolin uy decisions process Fak Decisions a gompared a Time & i Time consuming organizational buying decisions Summary Buying Behavior is nothing but #décision processes wherein people are actively involved in the buying’and Using the products. It is necessary to analyze the buyer’s behaviour for: a) Understanding bulyer’s reactions to a firm’s marketing strategy. b) Satisfying the needs of the customers effectively by providing them suitable productlor service offering. To do so, it is imperative for the marketer to analyze what, where, when and how the consumers buy. ©) Anticipating the consumers’ responses to the marketing mix strategies. Consumer buying behaviour differs trom organizational buying behaviour in terms of their buying motives, quantity purchased, nature of buying process ete. Questions 1. What are the different types of buying behaviour? Explain with suitable examples. 2. How does consumer handle dissatisfaction? Discuss with suitable examples. 3. How does consumer buying differ from organizational buying? Illustrate with suitable examples. Consumer Behavior NOTES Consumer Buying 4, Illustrate the consumers’ buying decision making process by giving Decision Making appropriate examples Process 39 “Only for Private Circulation”Consumer Behavior 5. Write a detailed note on post purchase evaluation and behaviour of a consumer, NorEs References 1. Leon Schiffinan, Leslie Kanuk, $.Ramesh Kumar, Consumer Behavior , 10th Edition Pearson Education 2. David L. Loudon & Albert J. Della Bitta, Consumer Behaviour, 4th Edition Tata McGraw Hill, 3. Sangeeta Sahney, Consumer Behaviour, NPTEL, TIT Khargpur 4, Manohar Ingale, Consumer Behaviour- Handouts, Gedu Collegeof Business Studies, Consumer Buying Decision Making 40 Process “Only for Private Circulation’UNIT - 4 CONSUMER BEHAVIOUR MODELS + LEARNING OBJECTIVES After studying this chapter, you should be able to 1. Understand the Howard ~ Sheth model and the variables used therein, 2. Understand the Engel- Kollat- Blackwell Model, 3. Understand the Nicosia model of consumer behaviour. CONTENTS 4.1 HOWARD-SHETH MODEL 42. ENGEL-KOLLAT-BLAGKWEEL MODEL. 43 NICOSIA MODEL 4.1 HOWARD - SHETH MODEL The consuthier behaviour models refer to varying orientations and perspectives with which consumers approach the marketplace and how/why they behave as the¥ido. It also talks about how the varying orientations impact the pfocess and overall buyer behavior. In this context, the researchers have proposed different consumer behaviour models namely Howard ~ Sheth Model, Engel-Kollat- Blackwell Model, Nicosia Model etc. buying dec! Howard and Sheth proposed this model in the 1960°s. Through this model, they tried to explain the buyer rationality while making a purchase decision even in the conditions of incomplete information. This model of consumer behaviour suggests three levels of decision making and they are as under: a) Routine Response/Programmed Buying Decision Making Customers who have used the product / service repeatediy and who are satisfied with the performance will find a certainty of performance in buying those goods or availing the services. Such customers don’t evaluate other competing offers in order to avoid comparison of value propositions or uncertainty about continued performance. They Consumer Behavior NOTES Consumer Behaviour Models 41 “Only for Private Circulation”Consumer Behavior NOTES Consumer 42 Behaviour Models “Only for Private Circulation” habitually buy these products / services. Such type of buying decisions can be seen in case of i) Frequently purchased low cost items ii) Low involvement of the buyer. iii) Little search and decision efforts in buying the products iv) Products that are purchased almost automatically. e.g. - newspaper, milk ete, 1b) Limited Problem Solving (LPS) Decision Making The buyer has used the product first time and is apparently happy, with it, However, he is not sure about the continued future performance of the product or the service. The customer has a limited problem about the assurance rather than the ba ic value comparison, ‘The customer will enquire with the frequent users, Compare warranty ‘guarantee given by competing offerseask the retailer before making, repeat purchase, Thus, his problem solying is limited to assurance of continued performance. e.g. smart phones ©) _ Extensive Problem Solving (EPS) Decision Making EPS decision takes place when? a) The product or'the service is either new to the market (smart watches, 5G internet services, web series etc.) b) The buYer is notable fo compare the value proposition (Total benefits total cost) With the existing alternatives or no alternative in‘ease of totally new product or service. Here, the buyeP faces a problem in making a prudent buying decision and ence tie tries to reduce the uncertainty by getting more and more information about the product through promotional material, others’ ‘experiences, expert opinion and trials. The buyer will select a product whichhhe thinks would provide himvher a better value for money than others. The thinking is the result of extensive problem solving. EPS buying decisions can be seen in case of; ) Unfamiliar, expensive and infrequently bought products b) High involvement products ©) High degree of economic/performance/psychological risk. 4) More time is taken to collect the required information and deciding. ‘e.g buying a residential property, smart TV ,a sports utility vehicle ete.‘The Howard ~ Sheth model tries to explain the brand choice behaviour over time, Focusing on repeat buying, the model relies on four major components namely, inputs in the form of stimulus display, hypothetical constructs, outputs in terms of response and exogenous variables. u ‘74 ia jel i a _--—=;--+: 1 ii P Fig 4.1 Howard-Sheth Model Source: Jobin A Howard, Jagdish Sheth. ‘The Theory of Buyer Behaviour, John Wiley, 1969) 1. Input variable It consists of informative cucs. about the'allfibates of a product in terms of its quality, price, distinctiveness, Service and availability, The informative cues may come from the product itself or they may be symbolic in nature that come from advertising or promotional aotivitits of the firm. These two sources are commercial in nature and'help the firth in building and projecting these values in the produet. The third $et of iiformative cues may come from the buyer's social environment that ineltides his family, reference groups, social class, culture ete. 2. Hypothetical Construct ‘The hypothetical constructs is classified into two constructs namely, the perceptual constructs and the learning constructs. The perceptual construct deals, with the ways imwhich an individual perceives and responds to the information that comes his way as an input. All the information that is received by an individual may not merit an ‘attention’ and the intake is subject to perceived uncertainty and lack of meaningfulness in the information received and the same is nothing but a stimulus ambiguity. Such ambiguity may lead to an overt search for information about the product that may be influenced by the buyer’s own frame of reference, predisposition and distortion. In turn it leads to a perceptual bias, ‘The learning construct deals with the stages from the buyer’s motives to his satisfaction in a buying situation. The intention to purchase a product is the result of the interplay of buyer's motives, choice criteria, brand comprehension, resultant brand attitude and the confidence associated with the purchase decision. Consumer Behavior NOTES Consumer Behaviour Models 4B “Only for Private Circulation”44 Consumer Behavior NOTES Consumer Behaviour Models ‘The motives are representative of the goals that the buyer secks to achieve in the buying process. It originates from the leaned needs, The buyer's intention to purchase are also influenced by the attitudes about the existing brand alternatives in the buyer's evoked set, which result in the arrangement of an order of preference, regarding these brands: The buyer's evoked set Total Set All the brands available inthe market AwarenessSet Brands known to the user ConsiderationSet The brands a-user considers for availing Choice Set ‘Brands short listed by the user J Decision Set Brand finally déeided upon by the weer. ‘The degree of confidence that a buyer"has about the brand comprehension, choice criteria and buying intentions etc, leads to ai intention to buy. ‘Asa feedback component of leamting, the Model inetudes satisfaction which refers to the post purchase evaluation and Fesultant reinforcing of brand ‘comprehension, attitudes etc, (shown by broken lines in the figure). 3. Output The output variable consists of a $f possible hierarchical responses from attention to purchases"The purchase act is the actual, overt aet of buying, and is the sequential outcomellof thé attention (buyer's response to information received), the brand comprehension (buyer's knowledge about the product class), brand attitude (refetring t0\the evaluation of satisfying potential of the brand) and the buyer's inténtion tat reflects the preferred brand will be bought the next time when the buying is necessitated). 4. Exogenous/ External variables ‘The Howard and Sheth model also comprises certain constant exogenous / external variables that influence some or all of the constructs mentioned above and thereby influence the final output variables. They are explained as Inhibitors or environmental forces that restrain the purchase of a favored brand; eg~ importance of the purchase, price, financial status of the buyer, time atthe disposal of the buyer, personality traits, social pressures ete “Only for Private Circulation”4.2 ENGEL, KOLLAT AND BLACKWELL MODEL nour meoRurion noceeENe cecisonaunne mrocess ‘ecm variates Fig 4.2 Engel, Kollat Blackwell Model Source: Consumer Behaviour, Insights from Indian Market-Page'no. 233, PHI Ltd. ‘The Engel, Kollat and Blackwell Médel is also referred to as the EKB model. It was proposed to, otganize. and describe the growing body of knowledge/research conceming gonsimer behavior. As a comprehensive mode, it shows the various cémponeris Gf consumer decision making and the relationships/interactions among them. The model consists of five parts such as information input, imformation processing, decision process stage, decision process variables dnd extefital influences. Information input All types of stimuli that comes from marketing (advertising, publicity petsonal Selling, demonstrations, store display, point of purchase stimuli’or non marketing (family, friends, peers) sources are fighting for seeking the consumers’ attention. These stimuli provide information to the consumers and trigger off the decision making process. Information processing Stimuli received in the first stage provide raw information; the raw information is processed into meaningful information. This stage consists of consumer's exposure to information, his attention, perception/comprehension, acceptance, and retention of information. ‘When the consumer is exposed to the information provided by stimuli, it catches the fancy of his sensory organs. Out of the total information received the consumer will focus only on the information which he Consumer Behavior NOTES Consumer Behaviour Models 45 “Only for Private Circulation”Consumer Behavior NOTES Consumer 46 Behaviour Models “Only for Private Circulation” 8 finds interesting. The same will be analyzed, interpreted, comprehended and transferred to long term memory by the consumer. Decision-process stage At any time during the information processing, the consumer could center into this stage. The EKB model focuses on the five basic decision-process stages, namely; 2) problem or need recognition, b) search for altematives, ¢) evaluation of altematives, d) choice and e) ‘outcomes (post-purchase evaluation and behavior). The outcome acts as a feedback on the input and impacts the effete again, Environmental influences, individual differences and’soctal influences, directly and indirectly influence each of the stages Of the decision process. However, EKB proposed that it is not necessary for eVéry consumer to go through these five stages. It depends on whethérdlie problem is an extensive or a routine problem-solving decision Decision process variables According to the EKB model, individitial characteristics like demographic, psychographic, buyer's”motives, beliefs, attitude, personality, values etc. infldehees the'vafious)stages of the decision making process. External influences This model also sheds lightorcertain environmental and situational influences that affect thesdecision making process. They include culture, sub-culture, Social class, reference groups, family and other normatiy@ fiifluenées and situational influences include consumer's financial éondition, 4.3 NICOSIA MODEL Nicosia model was proposed by Francesco Nicosia in 1976. The model ‘concentrates on the firm's attempts to communicate with the consumer, and the consumers’ predisposition to act in a certain way. This model shown in fig- 4.3 focuses on the relationship between the firm and its potential consumers. The firm communicates with consumers through advertising and passes the commercial messages to its target audience; to which the customers respond through purchases,Fold 1: Consumers attudos ‘sues 1 subfield 2 Foe ‘consumers smevretng ana Gonna.) "Ahde communeston (Presepoetson ‘oon ‘ens 3esona) Y ‘search| Fei 2" Search ‘naevatinton | ond evauston Experience Rtaon()| ¥ (Pre-ecton fed) Modan Fea 4: Feedback [Consumption = + Datislon| (actor) Fe 5: Actof Benno percese Fig. 4.3-Nicusia Model Source: Consumer Behaviour, Insights from Indian Market-Page no. 228 PHI Ltd. Field 4 The consumer attitude'is based on the firms’ mess Field 1 is diyidéd.info'two subfields. Out of these two subfields, the first cone deal with the fitm’s marketing environment and communication efforts that affect consumers*auitude, the competitive environment and characteristics of the target market.The second subfield specifies the consumer characteristics in terms of their experience, personality, and how they perceive the product. Itis at this stage the consumer forms his attitude towards the firm’s product based on his interpretation of the message. Field 2 Search for and evaluation of alternatives: At this stage the consumer start searching for altemnatives in the form of a product or service offering. This is followed by an evaluation done by the consumer wherein he compares a particular company’s products with the substitutes available in the market. On the other hand the firm or the company ‘motivates the consumers to buy its products by giving value for money. Consumer Behavior NOTES Consumer Behaviour Models 47 “Only for Private Circulation”48 Consumer Behavior NOTES Consumer Behaviour Models ield 3 Act of purchase: ‘Here, the consumer is motivated enough to purchase a particular brand from a specific retailer. Field 4 Feed back Nicosia model analyses the feedback of the firm and the consumers after the product is sold and put to use by the consumers. Here, the firm will benefit from its sales data as a feedback, and the consumer will use his experience with the product that might affect his attitude towards the future commercial messages from the firm, Summary The consumer behaviour models refer to varying orientations and perspectives with which consumers approach the markeiplage nd how/why they behave as they do. It also talks about how the varying ofientations impact the buying decision process and overall buyer behavior. In this context, Howard - Sheth model trits toexplain the buyer rationality while making a purchase decision evéit in th€-tonditions of incomplete information, The Engel-Kollat- Blackwell Model is also known as the EKB model. This model shows the various components of Consumer decision making ‘and the relationships/interactions aitiong theft. The model consists of five parts such as information input, iformation. processing, decision process stage, decision process variableSand external influences. Nicosia model concentrates on the firm's attempts'to comiunicat® with the consumer, and the consumer predisposition to actin.a certain way. Questions 1, Wite an illustative note on Howard ~ Sheth Model of consumer behaviowe 2, Byptaking che example of buying a high involvement product like a multi utility car, explain the Howard-Sheth Model of consumer behaviour. 3. Write a detailed note on Nicosia Model References 1. Ramanuj Majumdar, Consumer Behaviour- Insights from the Indian Market, 2010 Prentice Hall India 2. Leon Schiffman, Leslie Kanuk, S.Ramesh Kumar, Consumer Behavior , 10th Edition Pearson Education 3. Sangeeta Sahney, Consumer Behaviour, NPTEL, IIT Khargpur “Only for Private Circulation”4. IGNOU, Consumer Behaviour- Issues and Concepts Consumer Behavior 5. Suja R. Nair, Consumer Behavior - In Indian Perspective, Himalaya Publishing House. NOTES 6. Ram Komal Prasad and Manoj K. Jha, Consumer buying decisions models: A descriptive study, International Journal of Innovation and Applied Studies, page no. 338 Online Resource 1. https://www:academia.edu/$254292/Consumer_Behavior_ Models_in_Tourism_Analysis_Study Consumer Behaviour Models 49 “Only for Private Circulation”50 Consumer Behavior NOTES Diffusion of Innovation UNIT -5 DIFFUSION OF INNOVATION * LEARNING OBJECTIVES After stud 1g this chapter, you should be able to understand 1, The meaning of diffusion, innovation. ‘The process of process of Diffusion 3. The process of Adoption and the steps involved therein 4. The categories of adopters CONTENTS 5.1 DIFFUSION OF INNOVATIONS: MEANING: AND DEFINITION 5.2. DIFFUSION PROCESS. 5.3. ADOPTION PROCESS 5.4 CATEGORIES OF ADOPTERS. 5.1 DIFFUSION OF INNOVATIONS ‘The contemportty market is highly competitive wherein number of players exists and vies for the saméehunk of market pie. In such situations, introduction of a new produét,or service offerings becomes crucial for survival of the organizations. Therefore, marketers are always working towards bringing in new product and Service Offétings so as to meet the evolving needs and wants of the target market, Siéh products may be slightly different from the existing ones, some may be highly different from one another, and some may be totally new to the market. Meaning Diffusion is a macro process that deals with the spread of a new product or service offering amongst the potential market. It relates to the acceptance/tejection of an innovation by the target market. Definitions 1. Diffusion of Imovations is a theory of how, why, and at what rate new ideas and technology spread through cultures, “Only for Private Circulation’2. Diffusion of Imovation is defined as a process by which an innovation Consumer Behavior spreads amongst and gets the absorbed/accepted or assimilated by the market. 3. “Diffusion is the process by which an innovation is communicated NOTES through certain channels over time amongst the members of a social system”. Everett Rogers 5.2 DIFFUSION PROCESS ‘The diffusion process has four elements therein and they are: 8) Innovations Itrefers to the newnes of the produiétor séryite offering b) Channels of communication: It includes marketing communication that takes place between a marketer and the target market. It could'be cither personal (salesperson and consumer) or impersonal (yia print or audio visual media) type of communication. Italso-include¥ interpersonal communication that takes place betwee the conlsuriers themselves or the members of the targeted segments It couild.be a word of mouth communication within consumers of throughian opittion leader. ©) Social system. It refers to the Boefal setting wherein the diffusion takes place. The definitfon-and, scope of the social system depends on type of the fproductor service offering, its utility and its very basis for existence Ina Way, itreflects the target market for whom the product and service is designed, and within what segment, it would be diffused. ¢.g- anew herbal anti-wrinkle cream. In this case, the social system would be confined to the ladies who are in their late 40s. The social system has its impact on the diffusion of a product/service in the following i) Firstly, the new product and service is discussed and or evaluated within the members of the social system through interpersonal communication, opinion leadership and word-of-mouth, ii) Secondly, the philosophy and the resultant orientation, with respect to culture, traditions, values and norms also impact the diffusion process. As a result of this the social system affects the ultimate adoption and assimilation of the innovative offering, Diffusion af Innovation st “Only for Private Circulation”Consumer Behavior NOTES Diffusion 82 of Innovation “Only for Private Circulation’ ‘The marketer needs to keep the social system in mind and accordingly design the marketing mix so as to ensure quick acceptance of the innovations in the products and thereby penetrate successfully in the market. @) Time Time is an important factor in the diffusion of innovation, as it determines the pace of adoption and resultant assimilation of the innovative offering. The impact of the same can be studied on the basis of the amount of time taken by a consumer in adopting a new product or service offering Types of innovation-decisions + Optional innovation decision — by an individual in a social Sytem + Collective innovation-decision — collectively by all individuals in 2 social system, + Authority innovation-decision ~ for the-entiré social system by few individuals in positions of influence of power 5.3 ADOPTION PROCESS The diffusion of innovation takes’place through the adoption process. Adoption is @ micro concept that emphasizes on the various stages through which an individual consumer passes while aceepting or rejecting a new product or a service offering, The same is depicted in fig.5.1 Kaowledge | [Persuasion Decision | [ Implementation | [ Confirmation Awareness) | | )i(atereaty. | | (Evaluation) (tia) (Adoption) Reject || Accent Fig. 5.1 The Adoption Process 1. Knowledge (Awareness) This is the first stage in the adoption process, wherein the consumer is, exposed to a new product or a service offering through advertising and other means of promotion. The marketers’ objective here is to provide some awareness about the innovation, the features and benefits as alsothe brand. At this stage, the communication objective is to spread Consumer Behavior awareness about the innovations in the product, its features and the benefits offered by it. Generally it is observed that the consumer acts, as a mere recipient of information and lacks sufficient knowledge NOTES about the new offering. 2. Persuasion (Interest) In this stage, the consumer develops some interest in the innovative offering and start looking for the required information. In other words, the consumer becomes active in his search for information’about the innovated product and tries to assess how it can benefit him) 3. Decision (Evaluation) At this stage of adoption process the consumer evaluat the innovative offering in terms of the attributes, features, and overall benefits offered by it. In other words it can be desctibed that the Corsumer compares the value propositions of alternatives against the existing one and proceeds further. 4, Implementation (Trial) Here, the consumer tries the innévative products or service offerings and decides whether toaccept or reject the same. It is done on the basis of satisfuction or disSatistiotion from the said offering. Confirmation (Adoption) At this stagep the Gonsummer will adopt the innovations in the product or service offering, 5.4 CATEGORIES OF ADOPTER Fig- 5.2 Adopter Categories Source: Adapted/Reprinted from Rogers Everett M., Diffusion of Innovations, (3rd Edition, The Free Press, a division of Diffusion Simon & Schuster, 1995) af Innovation 33 “Only for Private Circulation”Consumer Behavior NOTES Diffusion 54 af Innovation “Only for Private Circulation” 4. Innovators: 2.50% Innovators are the first individuals to adopt an innovation, They are a) _ willing to take risks, b) youngest in age, ©) have the highest social class, ) have great financial lucidity, ©) very social and have closest contact to scientific sources ) interaction with other innovator Early adopters: 13.50 % Early adopters are the second fastest category of individual whio adopt an innovation. They are a) younger in age, b) have a higher social status, ©) have more financial lucidity, ) advanced education, €) are more socially forward than late adopters. Early majority: 34.00 % These are the individuals whé adopt an innovation after a varying degree of time. a) They are sloWer in the adoption process, 'b) haveabove @verage social status, ©) contact withiearly adopters and 4) show somelopinion leadership. Late Majority : 34.00 % Individuals in this group are the last to adopt an innovation. They are a) skeptical about an innovation, b) have below average social status, ©) very little financial lucidity, 4) in contact with others in late majority and early majority, ©) very little opinion leadership.Laggards : 16.00 % ‘The individuals who are the last one to adopt an novation, They are a) typically focused on “traditions”, b) have lowest social status, ©) lowest financial fluidity, d) oldest of all other adopters, ©) _incontact with only family and close friends, f) very little to no opinion leadership. Summary Diffusion is a macro process that deals with the spread of a new product or service offering amongst the potential market, [t)relates to the acceptance/rejection of an innovation by the target market. "The diffusion process has four elements therein and they areva) Inniovations; b) channels of communications, c) Social system and i Time. Adoption emphasizes on the vari6u§ stageS trough which an individual consumer passes while accepting or rejecting anew product or a service offering. It includes awareness, interest, evalilation, tial and adoption. Questions 1. Write an illustrative note the diffusion of innovation process. 2. What are the Wiffereit, categories and characteristics of adopters? Explain, 3. What i8:meant,by diffusion of innovation? Describe the adoption process, 4. How does diffision of innovations take place? Explain. References 1, Ramanuj Mujumdar, Consumer Behaviour- Insights from the Indian Market, 2010 Prentice Hall India 2. Sangeeta Sahney, Consumer Behaviour, NPTEL, IIT Khargpur Leon Schiffman, Leslie Kanuk, S.Ramesh Kumar, Consumer Behavior, 10th Edition Pearson Education 4. Manohar Ingale, Consumer Behaviour- Handouts, Gedu College of Business Studies Consumer Behavior NOTES Diffusion of Innovation 55 “Only for Private Circulation”Consumer Behavior UNIT - 6 CONSUMER RESEARCH NOTES * LEARNING OBJECTIVES After studying this chapter, you should be able to understand 1, The process of consumer research. 2. Collecting secondary data 3. Designing primary research CONTENTS 6.1 CONSUMER RESEARCH PROCESS 6.2. COLLECTION OF SECONDARY DATA 6.3, DESIGNING PRIMARY RESEARCH 6.1 CONSUMER RESEARCH PROCESS. In the current business scehtario ithas become imperative for the marketers to analyze and understand the envirofment (both intemal and external) in which they are operating, Cofigumer esearch focuses on the consumer and his consumption behavior) Companies could either conduct consumer research through their inhouse marketing information systems or outsource the activity to marketing reseditch comigultants, ‘There are si¥'StepSiinvolved in the consumer research process and they are as following a) Defining the research problem and objectives of the research: b) Collecting and evaluating the secondary data ©) Designing a primary research study 4) Analyzing the data ©) Preparing the report 56 Consumer Research “Only for Private Circulation’a) Defining the problem and objectives of the research: In this stage, firstly the marketer identifies and defines the research problem that arises due to the changes in the macro environment. There are two types of problem solving namely: i) Actual state: This approach is aimed at being active ic. getting involved in solving the problem that has already arisen, €.g.- A company dealing in paper products and stationery is « market leader sinee a long time, Of late there have been concerns about environmental protection and recycling. The market is sehsitive towards environmental issues and more and more people aft getting conscious about the same. During this period another 6omipany enters the market that deals in recycled paper and stationary products. AS a result of this there is noticeable decrease in the'sales volume and market share of the said company. This makes the/¢ompany to go in for consumer research study. fi) Desired state: In this approach, marketer aets proactively. In other ‘words it can be described that, liegets intiélved in solving the problem in anticipation of future opportunities or threats. = A company that deals inptper products and stationary is a market leader in this categorys Through the analysis of external environment, the said company fealizes that it is imperative for them to strictly adhere to the environmental’ protection, regulatory norms and in response introduées, the Feycled paper and stationary products. The company carrieSout Consumer research study so as to understand the ‘consumers’ responsésito the newly introduced products. Secondly, th€ objeétives of the research study should be defined clearly. While doing sovone should ensure that, the objectives are neither defined too narrowly or too. broadly. The objectives can have any one or more of the following: 1, Explanation: to explain events and identify reasons of occurrence. 2. Prediction: to predict accurrence of events in future Insight generation and discovery: to gain newer insights 4, Hypothesis testing: to test relationship between variables or set of variables, 5. Monitoring of environment: to identify opportunities and threats, b) Collecting and evaluating the secondary data Secondary data is the one that is already available either in print (books, journals, reports ete.) or electronic format (CD-ROMS, online databases, intemet). It could be obtained through these sources as well as published data and reports Consumer Behavior NOTES Consumer Research 37 “Only for Private Circulation”Consumer Behavior NOTES 58 Consumer Research “Only for Private Circulation’ Advantages of secondary data i) easily accessible ii) relatively inexpensive ii) can be obtained quickly Disadvantages of secondary data i) Limited utility: Secondary data offers limited utility as its has been collected for the purposes other than the current research study ii) Lack of relevance and accuracy Evaluation of secondary data Criteria Iss Remarks Specifications |» Population Data should be reliable, valid ‘and research | # Sampling technique and» Shonld enable design © Sample size ‘generalization, Data collection method © Response rate = Data analysis Enorand | Examine orrorsin Ames _accunicy by accuracy + Approach comparing data from Research desigh different sources, + Reporting Objectives | The purposes forwhich the _ | The objectives will determine data is collected the relevance of the data Dependabiliy | Source oF information | The sources of information shall determine the reliability Source: Marketing Research- An Applied Approach; Naresh K Malhotra and David F. Birks, Third European Edition Page no.88 ¢) Designing a primary research study ‘Once the research problem and the objectives of the study are defined, the next logical step is to develop the research plan. The plan includes details regarding the sources of data, research tools and techniques, sampling plan and, contact methods for data collection ete. i) Source of data: PrimaryResearch tools and techniques: In case of primary data, the major tools and techniques are: a) Surveys In the field of marketing, the most popular technique for data collection is surveys. Surveys are done in order to learn about customers’ awareness, liking, disliking and product preferences. They are also done to find out the level of customer satisfaction, As the findings from such surveys are generalized to the entire population (in our case, the market, it becomes all the more important for a researcher t0'select appropriate, representative and adequate sample with utmost care Conducting a survey to find out customer awareness abouta particular product or service offering or to find out customers” responses to a new ad-campaign, eg b) focus groups In this type of research, 6 to 10 people based on their demographic psychographic and behaviolttial cOfisiderations are selected purposively to conduct the research. Such group also has a moderator, who focuses on the selegted people during this research study. The group members are asked’ questidns about the 4 Ps and they are involved in discussionsxélated to the research problem/issue. Through such discussions, the moderttor gains insight into the group members emotions, feelings, attitudes, underlying motivations and interests ete. ‘The said sessions ate recorded for further analysis. Generally it observed fiat, thisstechnique is used during pre-testing phase of product inthe matket before itis launched. The outcomes from such research Study provide insight into product acceptance in the market. 6g. — Reasons beliind customers’ preference for higher prived branded ‘electromtieygoods over a low priced local brand of such a product. ©) Observation ‘This research technique is hased on observing the customers, and drawing conclusions thereof. The customers may be existing or potential customers. In this research, customers are observed in the marketplace while they are involved in a buying activity. In addition to this their consumption pattern is also observed. This technique can be used to test customers” verbal and non-verbal reactions to product offerings (features and benefits, quality, aesthetics ete), price (increasc/decrease, discounts and allowances, exchange, warranties and guarantees), distribution (stores, layout, ambience, attitude of staff etc.) and promotion (advertising, sales promotion etc). e.g. — Why do customers ask for the competitors’ brand rather than your brand? Consumer Behavior NOTES Consumer Research 59 “Only for Private Circulation”Consumer Behavior NOTES 60 Consumer Research “Only for Private Circulation” @) Behavioral measures Here, the customers’ reactions in terms of their behavior are interpreted through customer databases and the store scanning data, Customers” actual responses in terms of purchase are recorded and analyzed. This is done on the assumption that there is a difference between a customer's intention to buy and actual purchase, Therefore, actual responses are recorded and analyzed. It is considered as more reliable than surveys and is used in both quantitative and qualitative research. iii) Sampling Plan Considering the research objectives the researcher prepares a sampling’ plan. It includes four important constituents and they are: a) Universe or Population It consists of all the elements about which we wish to make some inferences e.g. ~ A research study is aimed at testing’ the causal Felationshtip between tooth decay in children and the use of #teputéd toothpaste brand, Here, if the study is restricted to the city of Pune then the children from 4 to 12 years of age from Pune constitute the-universe or population, b) Sampling Unit A sampling unit is the-element(s).that could be considered to be chosen as a samplett is basi¢ unit of study. e.g. - Any child from a school in"Puite between the 4-12 years of age could be the sampling tit ©) Samples Size Determining the Sample size is one of the most critical tasks of a rescarch)study/as the size of the sample affects the reliability and validityof the results and hence, it should be done with utmost care. @) Sampling technique ‘The sampling techniques are classified into two categories namely; probability and non probability sampling. In probability sampling every unit in the universe or population has an equal chance of getting selected as the sample. It includes simple random sampling, systematic random or interval random, stratified random sampling, and cluster sampling, On the other hand, in case of non probability sampling every unit in the universe/population does not have an equal chance of being chosen as the sample. It includes convenience sampling, judgmental sampling, purposive sampling, quota sampling, and snowballing.iv) Contact methods for data collection: ‘The respondents may be contacted personally or through telephone, e-mail ete. d) Analyzing the data After the data is collected, itis analyzed and interpreted, The major question is “What conclusions can be drawn"? Both statistical and non-statistical tools are used for analysis. The selection of such tools depends on the type of data. e) Preparing the report The report is prepared and the findings are presented to the-marketing department for facilitating the decisions. The contents of the repdrbate: 1. Executive summary 2, Research problem 3. Objectives 4, Methodology 8. Findings and observations 6. Conclusions 7. Suggestions. Summary Research provides a Solid foundation for a sound decision making as it sheds light on the facts and figures. This enables the managers to take appropriate and timely decisions forflurtheting the business interests, In today’s scenario it has become all the more important for the marketers to analyze and understand the environment (both internal-and external) in which they are operating and respond. accordingly. Consumer research provides deeper insights into the changes in the marketing environment and assists in decision making. It includes the following steps: a) Defining the research problem and objectives of the research: b) Collecting and evaluating the secondary data ©) Designing a primary research study 4) Analyzing the data ©) Preparing the report Questions 1. “Research provides the basis for sound marketing decision making.” Do you agree? Justify your answer. 2. Write an illustrative note on primary research. 3. What is meant by research? Discuss in detail the process of consumer research Consumer Behavior NOTES Consumer Research 61 “Only for Private Circulation”Consumer Behavior References 1. Schiffman, L.G, and Kanak, L.L., Consumer Behavior, Fight Edition, 2004, Prentice Hall, India NoTES 2. Loudon, D.L. and Bitta AJ. Della, Consumer Behavior, Fourth Edition, 2002, Tata MeGraw- Hill, New Delhi 3. Sangeeta Sahney, Consumer Behaviour, NPTEL, IIT Khargpur 4, Kotler P, and Keller K.L. , Marketing Management, Thirteenth edition, 2009, Pearson. 5. Naresh K Malhotra and David F. Bitks, Marketing Research An Applied Approach:, Third European , 2006, Prentice Hall *Note For further details of this subject, the students are requested #6 réferthe list of books given in the syllabus. 62 Consumer Research “Only for Private Circulation’