SPPY 206

POSTGRADUATE COURSE
M.SC PSYCHOLOGY

SECOND YEAR
SEMESTER - IV

CORE PAPER - XIII

CONSUMER BEHAVIOR,
MARKETING ANDADVERTISING

INSTITUTE OF DISTANCE EDUCATION

UNIVERSITY OF MADRAS
M.SC-PSYCHOLOGY CORE PAPER - XIII
SECOND YEAR- IV - CONSUMER
SEMESTER
BEHAVIOR, MARKETINGAND
ADVERTISING

WELCOME
Warm Greetings.

It is with a great pleasure to welcome you as a student of Institute of Distance

Education, University of Madras. It is a proud moment for the Institute of Distance
education as you are entering into a cafeteria system of learning process as envisaged by
the University Grants Commission. Yes, we have framed and introduced Choice Based
Credit System(CBCS) in Semester pattern from the academic year 2018-19. You are
free to choose courses, as per the Regulations, to attain the target of total number of
credits set for each course and also each degree programme. What is a credit? To earn
one credit in a semester you have to spend 30 hours of learning process. Each course
has a weightage in terms of credits. Credits are assigned by taking into account of its
level of subject content. For instance, if one particular course or paper has 4 credits
then you have to spend 120 hours of self- learning in a semester. You are advised to
plan the strategy to devote hours of self-study in the learning process. You will be
assessed periodically by means of tests, assignments and quizzes either in class room
or laboratory or field work. In the case of PG (UG), Continuous Internal Assessment for
20(25) percentage and End Semester University Examination for 80
(75) percentage of the maximum score for a course / paper. The theory paper in the end
semester examination will bring out your various skills: namely basic knowledge about
subject, memory recall, application, analysis, comprehension and descriptive writing. We
will always have in mind while training you in conducting experiments, analyzing the
performance during laboratory work, and observing the outcomes to bring out the truth
from the experiment, and we measure these skills in the end semester examination.
You will be guided by well experienced faculty.

I invite you to join the CBCS in Semester System to gain rich knowledge leisurely
at your will and wish. Choose the right courses at right times so as to erect your flag of
success. We always encourage and enlighten to excel and empower. We are the cross
bearers to make you a torch bearer to have a bright future.

With best wishes from mind and heart,

DIRECTOR

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M.SC-PSYCHOLOGY CORE PAPER - XIII
SECOND YEAR- IV - CONSUMER
SEMESTER
BEHAVIOR, MARKETINGAND
ADVERTISING

COURSE WRITER

Mr. Rohit Praanna Sri

Assistant Professor
A.M. Jain College, Meenambakkam
Chennai - 600 027

EDITING & COORDINATION

Dr. S. Thenmozhi
Professor
Department of Psychology
Institute of Distance Education
University of Madras
Chennai - 600 005

© UNIVERSITY OF MADRAS, CHENNAI 600 005.

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 M.SC-PSYCHOLOGY

SECOND YEAR

IV - SEMESTER

CORE PAPER -
XIII
CONSUMER BEHAVIOR, MARKETING AND
ADVERTISING
SYLLABUS

Course Objectives - To understand and appreciate the concepts of Consumer

Behaviour, Marketing Advertising.

UNIT I

Consumer Behavior – An Introduction To Consumer Behaviour And Consumer Research

: Consumer behavior –meaning and definition, Consumer behavior and marketing
concept, customer value , satisfaction trust and retention, the impact of new technologies
on marketing strategies. Consumer research – An overview of consumer research
process, developing research objectives, collecting secondary data, designing primary
research, data analysis and reporting research findings, an example research study

UNIT II

Psychological Factors In Consumer Behaviour : Consumer motivation – motivation as a

psychological force, dynamics of motivation , types and systems of needs. Personality –
personality and understanding consumer behavior, brand personality, self and self image
. Perception –attitudes, attitude formation and strategies of attitude change.

UNIT III

Consumer Decision Making And Beyond :Consumer decision, levels of consumer

decision making, models of consumers – four models of decision making, category
based decision making, segments , life style and consumer decision making, a model of
consumer decision making, consumer gifting behavior, relationship marketing

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UNIT IV

Marketing: Introduction: Importance. Scope, core marketing concepts, marketing

realities, orientations towards market place. Customer value, satisfaction and loyalty,
maximizing customer lifetime value. Market segmentation: Levels of market
segmentation, bases for segmenting markets, market targeting.

UNIT V

Advertising: Introduction: Advertising, roles and functions, key players, types of

advertisement, effective advertisement, advertisement ethics. Medias of advertisement :
Basic media concept, print media, News papers, Magazines, packaging, out of home
advertisement, directory advertising, using print advertising, Interactive media like
internet, e mail, alternative and new media.

References

Blackwell,R.D., Miniard,P.W & Engel, J.F.(2010). Consumer behavior. India: Cengage

Learning India Pvt. Ltd.

Kotler,P., Keller, K.L., Koshy, & JHA,M. (2007). Marketing Management (12th ed.).
India: Dorling Kindersley, India Pvt. Ltd.

Schiffman, L. G.,& Kanuk, L.L. (2007). Consumer Behaviour (10th ed.). India:PHI
Learning Private Limited.

Mukherjee,S. (2012). Consumer Behaviour. India: Cengage Learning India Pvt. Ltd.

Kazmi, S.H.H & Batra, S. K. (2008). Advertising and Sales Promotion.New Delhi:Excel
books.

Wells, M. B. (2009). Advertising Principles and Practice (7th ed.) India: Dorling
Kindersley (India) Pvt. Ltd. Licensees of Pearson Education in South Asia.

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 M.SC-PSYCHOLOGY

SECOND YEAR

IV - SEMESTER

CORE PAPER - XIII

CONSUMER BEHAVIOR, MARKETING AND
ADVERTISING

SCHEME OF LESSONS

Sl. No. Title Page No.

1. Consumer behavior 001

2. Consumer research 012

3. Analysis of marketing research 019

4. Consumer motivation 026

5. Consumer personality 035

6. Consumer perception 046

7. Consumer Attitude 055

8. Consumer decision 060

9. Models of Consumer decision 069

10. Gifting Behavior and Relationship marketing 079

11. Introduction to marketing 085

12. Marketing concepts 091

13. Market segmentation 103

14. Introduction to advertising 110

15. Types of advertisements 114

16. Media and advertisements 122

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LESSON-1

CONSUMER BEHAVIOR
Learning Objective

After studying this unit, you must be able to discuss:

 Consumer behavior

 Marketing concepts

 Customer value, satisfaction, and loyalty

 Effects of technology on marketing

Structure

1.1 Introduction

1.2 Definition of Consumer

1.3 Different types of patrons

1.4 What is consumer behavior?

1.5 Why study consumer behavior?

1.6 Consumer behavior and marketing concept

1.7 Customer value

1.8 Customer satisfaction

1.9 Trust and retention – Customer loyalty

1.10 Technology and marketing strategies

1.11 Summary

1.12 Review question

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1.1 Introduction

Consumer is a general term used to define any person who buys goods or services
for their own use. On a larger sense, a consumer is not just a person, it can also be an
organization, that not only buys, but uses or consumes economic services or commodities.
Although defined as buying and using goods, and services, the term also refers to:

a) Hiring goods, and services

b) Buyers of the goods or services not being the actual users (parents buying toys for
children)

Consumers play a huge role in the economic status of the nation. The consumer behavior
dictates the demand, and supply in accordance with the demand enables the flow of
economy. Without demand, or supply meeting the demand, the producers lose the
motivation to sell to the consumers, and the consumers would fail to buy the products failing
to meet their demands, thus putting the economy in a standstill.

1.2 Definition of Consumer

Collins dictionary defines Consumer as “a person who buys goods or services for
personal needs and not for resale or to use in the production of other goods for resale” A
consumer is an individual who purchases, has the capacity to purchase, goods and services
offered for sale by marketing institutions in order to satisfy personal or household needs,
wants, or desires (Walters, 1974). There are two types of consumers, namely personal and
organization. The personal consumer purchases or hires services or goods for their own
personal use or for the use of their family or for gifting purposes. The personal consumer is
mostly the end user. The organizational consumer is any organization purchasing or hiring
goods or services to enable them run their organization be it profitable or non-profitable. The
organizational consumer uses the product not as a single individual but as a single entity
(Schiffman & Kanuk, 1997).

1.3 Different Types of Patrons

When it comes to marketing and advertising, the key element is to appeal to the
patrons who would invest or buy from any business. To provide a convincing appeal would
require the understanding of the patrons, and who they are. The patrons would generally
fall into three categories.
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a. Buyer

b. Customer

c. Consumer

a. Buyer

A buyer is an individual or an organization that makes a purchase from a seller.

b. Customer

A customer is an individual or an organization that buys or hires goods or services

from a business

c. Consumer

A consumer is any person who buys goods or services for their own use.

1.3.1 Difference Between Buyer, Customer and Consumer

Although mistakenly used as interchangeable by a lay person, the terms buyer,

customer and consumer are coined to mean three distinct things in the process of business
transactions. To understand the difference between the three would prove to be crucial in
any business undertaking, from development phase, to marketing and advertisement
phase.

The difference between a buyer and a consumer is that a consumers are end users
in the distribution chain of goods and services, whereas a buyer can be anyone. The
consumers buy or hire goods or services for their usage, and not for manufacturing or
resale.

The difference between a customer and a consumer is that the customer purchases
goods or services, whereas the consumer uses them. For example, the customer purchasing
pet supplies is not going to “consume” them, the pet will, making the pet the consumer and
the person a customer.

Understanding the difference between consumer, buyer, and a customer helps in the
subsequent understanding of the consumer behavior, and helps to make a targeted
marketing and advertising strategy.
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Table: 1.1 Buyer vs Customer vs Consumer

Buyer Customer Consumer

1. A buyer is an individual or A customer is an individual or A consumer is any

an organization that an organization that buys or person who buys
makes a purchase from a hires goods or services from goods or services for
seller. a business their own use.

A customer may or may not

2. A buyer is not an end user be an end user A consumer is always

A customer may or may not an end user

3. A buyer may or may not
sell the goods obtained
4. Ex: a company buying raw
materials and selling to
other companies
give the goods or service
availed to somebody else
Ex: A parent buying a toy for
their child, where the toy is
“consumed” by the child
A consumer always uses
the goods or service
availed
Ex: An individual using a
mobile network plan

1.4 What is consumer behavior?

Consumer behavior is defined as the process whereby individuals decide whether,

what, when, where, how, and from whom to purchase or hire goods and services (Walters,
1974). The consumers’ decision about availing any goods or services, and all the actions
leading up to the consumption of the said good or services is what is known as consumer
behavior.

The study of the buying units and the exchange processes involved in acquiring,
consuming, and disposing of goods, services, experiences, and ideas is called as consumer
behavior according to Mowen (1993). The definition given not only talks about an individual
making a purchase or hire, but also includes about larger quantity of people like a business
or organization trying to acquire their needs. Schiffman & Kanuk (1997) define consumer
behaviour as the behaviour that consumers display in searching for, purchasing, using,
evaluating, and disposing of products, services, and ideas. This definition includes how the
consumer evaluates the impending decision about making a consumption based on the
resources at hand, like time, money, effort, and the moral value of the product. It also talks
about the how, why, when, what and where of the product that needs to be consumed.
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The actions directly involved in obtaining, consuming, and disposing of products and
services, including the decision processes that precede and follow these actions are called
as consumer behavior (Engel, Blackwell & Miniard, 1990). As seen before consumer
behavior is being defined to mean any action or behavior, including those that preceded
the thought of “consuming” any product or service.

1.5 Why study consumer behaviour?

Consumer behavior is a relatively new field of study with no history of research done
to understand the factors that influence the consumers in purchasing a product or service
(Engel et al. 1990 and Schiffman & Kanuk, 1997). The science behind consumer behaviour is
borrowed from the likes of established scientific studies like psychology (study of individual),
sociology (study of groups), social psychology (study of how an individual behaves in
a group), anthropology (study of how society shapes the individual), and economics.
Combining these existing scientific fields of study, consumer behaviour turned out to be a
scientific study that shaped the future of marketing and advertising.

Studying the consumer behaviour enables individuals or organisations to

comprehend the what’s, when’s, where’s, why’s and how’s of the consumer. Comprehension
of these facilitates in the optimal production of goods or services according to the consumer.
In any business the consumers are the ultimatum, that is the consumers can decide whether
a business becomes a success or a failure. Catering to the needs of the consumers is
the ultimate goal of any business, and this is done efficiently done by studying consumer
behaviour.

Consumer behaviour became one of the integral part of shaping the marketing
concepts of the current era. It helped in developing efficient marketing strategies and
concepts that where tailored to influence the consumers into purchasing of goods and
services. How and why the consumer behaviour affects marketing concepts will be seen in
the upcoming section of 1.5.

1.6 Consumer behavior and marketing concept

Consumer behavior from the perspective of marketing strategies became a key factor
in the development of marketing concepts. Marketing concept is field of study that studies
how the marketers first need to define the benefits that are sought by the consumers
from the marketplace, which helps to draft the marketing plans that support the needs of the
costumers (Assael, 1995).
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Historical evidence shows how the consumer behavior has made the marketing
concepts better. In the 1950s the marketing concept was predominantly orientated towards
producing for selling concept. The logic behind this marketing concept is that the products
produced needs to be sold, and the products are made solely for the purpose of sales alone,
the production of which is unilaterally decided by the manufacturer. The consumers had no
part to play in how or what was manufactured. The peaks of this time rarely considered
consumer satisfaction, which led to the consumers having to be actively or aggressively
persuaded into purchasing the product.

In the early 1950s the marketers realized that they could sell more products more
easily by offering products to those consumers they assumed would purchase them.
Through this approach, organizations considered consumer needs and wants, leading to
the formulation of the marketing concept. This became the initial strategy that incorporated
the consumer behavior in the marketing concepts. As can be seen from a historical
perspective, it is important for any organization to acknowledge consumer needs as a key
to success for both survival and profit generation in a modern economy with multiple
products per competitor and multiple competing distribution points. The importance of
learning the consumer behavior to incorporate in the marketing strategy can be
summarized in this statement by Assael (1995): “Consumers determine the sales and
profits of a firm by their purchasing decisions. As such, their motives and actions determine
the economic viability of the firm”.

1.7 Customer value

Customer Value is the level of satisfaction of your customer towards your

business. Customer value is the perception of what a product or service is worth to a
customer versus the possible alternatives. Worth means whether the customer feels that
he or she received benefits and services over what was paid. The customer pays more
than in cash alone, as customer invests their time, effort, convenience, energy and so forth
when making any kind of purchase. This shows why customer value can never be unilinear
by in consideration of just the money spent.

Customer Value = Benefits – Cost (CV=B-C)

To the customer, the benefits can also vary which can shift the value. Value for one
customer may not be the same as another. What’s important to one may not be important to
another segment of your audience. Benefits could include:
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 Quality of the product

 Advantages of ownership

 Image

 Company brand and affiliation

 Access to a solution

 Experience

 Success from use of the product or service

 Long term takeaways (including knowledge)

Value is created through the development and improvement of processes. Value, or

perceived value, can change over the course of the customer’s journey. The customers
purchase or hire based on their preconceived notion of the value of the product or service.

Customer value can be improved by giving an optimal value proposition, which is the
intersection of the offering made by the organisation, other marketplace offerings, and what
the customer needs.

Offering

Marketplace Customer
Offering need

Optimal Value Proposition

1.8 Customer Satisfaction

Customer satisfaction is defined as a measurement that determines how happy

customers are with a company’s products, services, and capabilities. Customers derive
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satisfaction from a product or a service based on whether their need is met effortlessly, in a
convenient way that makes them loyal to the firm.

Model of Customer Satisfaction

Customer satisfaction requires the organizations commitment to understanding what

the customer wants rather than assuming that they know what the customer wants. To give a
customer the satisfaction, the organization has to understand the consumer behaviour.

The expectation of the customer is dependent on the perceived general value of the
product or the service, which then leads to the customer to develop a certain expectation
from the product or the service. The perceived value and expected value are based on the
perceived quality, and when all the perceived expectations are met, the customer achieves
satisfaction. If the customer is not satisfied, the customer rises the complaints, and how the
complaints are met leads to the customer deciding to stay loyal to the brand or to switch
over.

1.9 Trust and retention-customer loyalty

Customer loyalty means the extent to which customers are devoted to a company’s
products or services and how strong their tendency is to select one brand over the
competition. Customer loyalty is positively related to customer satisfaction as happy
customers consistently favour the brands that meet their needs. Loyal customers are
purchasing a firm’s products or services exclusively, and they are not willing to switch their
preferences over a competitive firm.

Brand loyalty stems out of a firm’s consistent effort to deliver the same product, every
time, at the same rate of success. Organizations give special attention to customer service,
seeking to retain their existing current base by increasing customer loyalty. Often, they offer
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loyalty programs and customer rewards to the most loyal customers as an expression of
appreciation for doing repeat business with them. Customer loyalty is the result of
consistently positive emotional experience, physical attribute-based satisfaction and
perceived value of an experience, which includes the product or service. The trust
developed by the customer to any particular brand does not solely depend on the quality or
the value of the product, but also on how these products or services make them feel. For
example: most brand loyal customers have been using one particular brand of product or
service since their childhood not because of the lack of options, but mostly because it gives
them a sense of nostalgia.

Thus the quality along with the emotions of the consumers of the product or service
plays the integral role in how trust worthy the product is perceived as, and how likely they
are to retain their customers. The product or service that retains a good number of loyal
customers can invite new customers through the goodwill of their loyal customers. To
maintain the trust and retain the customers, the manufacturers have to understand the
ever changing needs, and wants of the customers. This is achieved through the scientific
study of the consumer behaviour.

1.10 Technology and marketing strategies

Marketing is the activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value for customers, clients,
partners, and society.

With the rise of the technology, especially in the form of smart phones, the digital
world has reached the hands of almost every individual across the planet. With the
smartphone and the internet facility, one is always connected to the global cloud of
information. The marketing strategies that are employed in the current era has been
diversified in multiple directions due to the facilitation of internet and technology, which
enables the marketer to directly market their products or services directly to each and every
individual who could be a potential user.

For example: an individual looks up at a shoe on a search engine, like Google for
instance, the search engine delivers to the person all the available options from different
websites. When the customer chooses to buy a shoe from one particular website, the
search engine Google get paid by the website. For the individual, the purchase was made
after considering all the available and affordable options, and those with the most attractive
presentation and offers for their products. The website selling the shoe appeals to the
individual by designing the website such that it makes the individual want to buy from the
website, be it the physical design
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of the website, the ease of user interface, the offers, etc. The search engine that enabled this
purchase gets paid by the website to be on the top of the search results.

The above example shows how the development of technology and digitalization has
enabled several entities, here the customer, the seller, and the search engine, to make the
best of all the marketing strategies and use them to their fullest. Consider the pre internet
days, when the marketing strategies solely depended on the widely used technology called
the television, wherein the marketers where able to market the products straight to the
customers’ house without employing millions of marketers. The marketers had to pay the
television channels to broadcast their marketing ads as commercial breaks. Compared to the
pre internet time, the smartphone era has made it easier for the marketers.

Millions of algorithms are run by every website, search engines, and internet providers
to make sure marketing advertisements reach an individual who uses internet. One might
have noticed that a product that they had recently looked up in a search engine suddenly
seems to appear in random websites, be it as an ad in YouTube, or as a click bait in some
educational website. These spaces are paid to show the individual the product or service
that they are more likely to purchase or hire, rather than provide them with random
advertisements which the individual might not even be interested in.

The modern era, the smartphone era, has enabled this individual tailored marketing
strategy by the usage of high levels of calculative algorithms running in the background. This
not only increases the overall flow of products or services, but also helps the customer in
making better informed decisions, which leads to a better customer satisfaction thus
enabling customer loyalty and retention.

1.11 Summary

Consumer behaviour is a scientific approach towards understanding the needs of the

consumers, enabling in better production and sale of products or services. By employing
knowledge gained through the study of consumer behaviour, the consumers availing
products or services get better satisfaction. The study of consumer behaviour shapes
marketing concepts, marketing strategies, and advertisements.
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1.12 Review questions

1. What is consumer behaviour?

2. What is the difference between a buyer, a customer, and a consumer?

3. What is customer value?

4. What is customer satisfaction?

5. What is customer loyalty?

6. Brief on how technologies affect marketing.

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LESSON-2

CONSUMER RESEARCH
Learning Objective

After studying this unit, you must be able to discuss:

 Consumer research

 Research processes in consumer research

 Developing research objectives

 Secondary data in consumer research

 Primary research design in consumer research

Structure

2.1 Introduction

2.2 Objectives of Consumer research

2.3 Consumer research process

2.4 Secondary Data

2.5 Developing primary research model

2.6 Summary

2.7 Review Question

2.1 Introduction

The action or activity of gathering information about consumers’ needs and

preferences, especially in relation to a particular product or service. Consumer research is
done by every organization to understand the demand in the market. The research about
consumer demands and needs in the marketplace tries to identify the inclination, motivation
and purchase behavior of the targeted customers. By understanding these, it enables the
organizations to comprehend the psychology of the customers and create a detailed
purchasing behavior profile.
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It uses research techniques to provide systematic information about what customers

need. Using this information brands can make changes in their products and services,
making them more customer-centric thereby increasing customer satisfaction. This will in
turn help to boost business.

An organization that has an in-depth understanding about the customer decision-

making process, is most likely to design a product, put a certain price tag to it, establish
distribution centers and promote a product based on consumer research insights such that
it produces increased consumer interest and purchases.

For example, a consumer electronics company wants to understand the thought

process of a consumer when purchasing an electronic device, which aids the company to
launch new products, manage the supply of the stock, etc. Carrying out a Consumer
electronics survey can be useful to understand the market demand, understand the flaws in
their product and also find out issues in the various processes that influence the purchase of
their goods. A consumer electronics survey can be helpful to gather information about the
shopping experiences of consumers when purchasing electronics. which can enable a
company to make well-informed and wise decisions regarding their products and services.

2.2 Objectives of Consumer Research

Consumer research is conducted to improve brand equity. A brand needs to know

what consumers think when buying a product or service offered by a brand. Every good
business idea needs efficient consumer research for it to be successful. Consumer insights
are essential to determine brand positioning among consumers.

Consumer research is conducted to boost sales. The objective of consumer research

is to look into various territories of consumer psychology and understand their buying
pattern, what kind of packaging they like and other similar attributes that help brands to sell
their products and services better. Consumer research thus enables the business to reap
optimal profit. It also provides for the customers the products or services that would satisfy
their requirements. The main objective of the customer research is to try to give the
customer the products that they would be the most satisfied with, thus gaining trust and
retaining loyalty to the brand.

Consumer research does good to both the consumers and business, where both the
consumer and the business are profited by the availability of value goods and customer
loyalty. Consumer research also helps in the marketing and advertising process.
Understanding the
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consumer psychology enables the marketer to target the type of audience and potential
consumer in the most efficient way to make them purchase their product or service.

2.3 Consumer Research Process

The process of consumer research started as an extension of the process of market

research. As the findings of market research is used to improve the decision-making capacity
of an organization or business, similar is with consumer research.

The consumer research process can be broken down into the following steps:

1. Develop research objectives: The first step to the consumer research process is to
clearly define the research objective, the purpose of research, why is the research
being conducted, to understand what? A clear statement of purpose can help
emphasize the purpose.

2. Collect Secondary data: Collect secondary data first, it helps in understanding if

research has been conducted earlier and if there are any pieces of evidence related
to the subject matter that can be used by an organization to make informed
decisions regarding consumers.

3. Primary Research: In primary research organizations or businesses collect their own

data or employ a third party to collect data on their behalf. This research makes use
of various data collection methods (qualitative and quantitative) that helps
researchers collect data first hand.

4. Collect and analyze data: Data is collected and analyzed and inference is drawn to
understand consumer behavior and purchase pattern.
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5. Prepare report: Finally, a report is prepared for all the findings by analyzing data
collected so that organizations are able to make informed decisions and think of all
probabilities related to consumer behavior. By putting the study into practice,
organizations can become customer-centric and manufacture products or render
services that will help them achieve excellent customer satisfaction.

2.4 Secondary data

Secondary data refers to data that is collected by someone other than the user. It is
typically free or inexpensive to obtain and can act as a strong foundation to any research
project.

Sources of secondary data include (but are not limited to):

Government statistics are widely available and easily accessed online, and can
provide insights related to product shipments, trade activity, business formation, patents,
pricing and economic trends, among other topics. However, data is often not presented
explicitly for the subject one is interested in, so it can take some manipulation and cross-
checking of the data to get it as narrowly focused.

Industry associations typically have websites full of useful information — an overview

of the industry and its history, a list of participating companies, press releases about product
and company news, technical resources, and reports about industry trends. Some
information may be accessible to members only (such as member directories or market
research), but industry associations are a great place to look when starting to learn about a
new industry or when looking for information an industry insider would have.

Trade publications, such as periodicals and news articles, most of which make their
content available online, are an excellent source of in-depth product, industry and competitor
data related to specific industries. Oftentimes, news articles include insights obtained directly
from executives at leading companies about new technologies, industry trends and future
plans.

Company websites can be virtual goldmines of information. Public companies will

have investor relations sections full of annual reports, regulatory findings and investor
presentations that can provide insights into both the individual company’s performance and
that of the industry at large. Public and private companies’ websites will typically provide
detail around product
16

offerings, industries served, geographic presence, organizational structure, sales methods

(distribution or direct), customer relationships and innovations.

Published market research reports are another possible resource, as anyone who’s
ever googled the name of the industry they’re interested in and “market research” can tell
you. For a fee, they can provide a great overview of an industry, including quantitative
data one might not find elsewhere related to market size, growth rates and industry
participant market share.

2.5 Developing Primary Research Model

Consumer market research is based on two types of research method:

2.5.1. Qualitative Consumer Research

Qualitative research is descriptive in nature, It’s a method that uses open-ended questions,
to gain meaningful insights from respondents and heavily relies on the following market
research methods:

1. Focus Groups: Focus groups as the name suggests is a small group of highly
validated subject experts who come together to analyze a product or service.
Focus group comprises of 6-10 respondents. A moderator is assigned to the focus
group, who helps facilitate discussions among the members to draw meaningful
insights

2. One-to-one Interview: This is a more conversational method, where the researcher

asks open-ended questions to collect data from the respondents. This method
heavily depends on the expertise of the researcher. How much the researcher is
able to probe with relevant questions to get maximum insights. This is a time-
consuming method and can take more than one attempt to gain the desired insights.

3. Content/ Text Analysis: Text analysis is a qualitative research method where

researchers analyze social life by decoding words and images from the
documents available. Researchers analyze the context in which the images are
used and draw conclusions from them. Social media is an example of text
analysis. In the last decade or so, inferences are drawn based on consumer
behavior on social media.
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2.5.2 Quantitative Consumer Research

In the age of technology and information, meaningful data is more precious than
platinum. Billion dollar companies have risen and fallen on how well they have been able to
collect and analyze data, to draw validated insights.

Quantitative research is all about numbers and statistics. An evolved consumer who
purchases regularly can vouch for how customer-centric businesses have become today. It’s
all about customer satisfaction, to gain loyal customers. With just one questions companies
are able to collect data, that has the power to make or break a company. Net Promoter
Score question, “On a scale from 0-10 how likely are you to recommend our brand to your
family or friends?”

Net Promoter Score (NPS) helps brands identify brand loyalty and customer
satisfaction with their consumers. Net Promoter Score survey uses a single question that is
sent to customers to identify their brand loyalty and level of customer satisfaction. Response
to this question is measured on a scale between 0-10 and based on this consumers can
be identified as:

Detractors: Who have given a score between 0-6.

Passives: Who have given a score between 7-8.

Promoters: Who have given a score between 9-10.

How organic word-of-mouth is influencing consumer behavior and how they need to
spend less on advertising and invest their time and resources to make sure they provide
exceptional customer service.

Online surveys, questionnaires, and polls are the preferred data collection tools. Data
that is obtained from consumers is then statistically, mathematically and numerically
evaluated to understand consumer preference.

2.6 Summary

Consumer research is the action or activity of gathering information about

consumers’ needs and preferences, especially in relation to a particular product or
service. Consumer research is done in order to provide an insight to the demands and
requirements of the
18

consumers in the marketplace. The producers and marketers gain knowledge on the type of
product and service that is expected, as well as how to appeal to the emotions of the
consumers. The selection of optimal research model, data (which source of secondary data)
enables the consumer research to happen ideally.

2.7 Review questions

1. What is consumer research?

2. What are the objectives of consumer research?

3. What is consumer research process?

4. What is secondary data?

5. What are the research models in consumer research?

 19

LESSON-3

ANALYSIS OF MARKETING RESEARCH

Learning Objective

After studying this unit, you must be able to discuss:

 Market research1 `

 Conducting a market research

 Analysis of market research using various methods

 Writing a market research

 Components of market research

Structure

3.1 Introduction

3.2 Conducting a market research

3.3 Statistics used in market research analysis

3.4 Writing a market research report

3.5 Components of market research report

3.6 Market research study – An example

3.7 Summary

3.8 Review Questions

3.1 Introduction

The process of assembling information about a target market or a target audience is

rightly termed as “Market research”. The primary role of undertaking market research
analysis is to gather or get an in-depth knowledge about the potential as well as existing
respondents to give with better and satisfactory services.
20

Market research is undertaken by a business to not only compete with various other
competitors in the industry but also to get analytical information on the competition, market
size, and varied other market needs. Market research analysis technique comprises of both
analytical as well as statistical research methods adapted to harness and interpret
information in a systematic way.

Given the competitive scenario, businesses cannot hope to run the show using only
their gut instincts. The market research analysis technique involves seeking opinion and
conducting social research to get information which is the need of the hour.

3.2 Conducting a Market Research

Data analysis in a market research project is the stage when qualitative data,
quantitative data, or a mixture of both, is brought together and scrutinized in order to draw
conclusions based on the data. The following steps are followed to conduct an effective
market research and consecutive analysis.

Step 1 - Articulate the research problem and objectives: Market research begins with
a definition of the problem to be solved or the question to be answered. Typically, there
are several alternative approaches that can be used to conduct the market research.

Step 2 - Develop the overall research plan: The task of this stage is to determine the
most efficacious way to collect the necessary information.

Step 3 – Collect the data or information: At this point, you have to consider how
you’re going to obtain the information (meaning, how participants are going to be contacted
whether it’s surveys, phone calls, one-on-one interviews, etc.).

Step 4 – Analyze the data or information: Collecting volumes of information can be

overwhelming. At this stage, you need to organize the data and weed out what is not crucial.

Step 5 – Present or disseminate the findings: From knowing your audience to

knowing what findings are actionable, before releasing your findings, you need to
understand which findings you want to disseminate.

Step 6 – Use the findings to make the decision: Because external consumers of
market research may not use the findings accurately, appropriately, or completely, you need
to consider the attributes of good market research.
 21

3.3 Statistics Used In Market Research Analysis

The statistical methods used in research analysis are as follows.

Multiple Regression - This statistical procedure is used to estimate the equation with
the best fit for explaining how the value of dependent variable changes as the values of a
number of independent variables shifts. A simple market research example is the estimation
of the best fit for advertising by looking at how sales revenue (the dependent variable)
changes in relation to expenditures on advertising, placement of ads, and timing of ads.

Discriminant Analysis - This statistical technique is used for the classification of

people, products, or other tangibles into two or more categories. Market research can
make use of discriminant analyses in a number of ways. One simple example is to distinguish
what advertising channels are most effective for different types of products.

Factor Analysis - This statistical method is used to determine which are the strongest
underlying dimensions of a larger set of variables that are inter-correlated. In a situation
where many variables are correlated, factor analysis identifies which relations are strongest.
A market researcher who wants to know what combination of variables (or factors) are most
appealing to a particular type of consumer, can use factor analysis to reduce the data down
to just a few variables.

Cluster Analysis - This statistical procedure is used to separate objects into specific
groups that are mutually exclusive but also relatively homogeneous in a constitution. This
process is similar to what occurs in market segmentation when the market researcher is
interested in the similarities that facilitate grouping consumers into segments and also
interested in the attributes that make the market segments distinct.

Conjoint Analysis - This statistical method is used to unpack the preferences of

consumers with regard to different marketing offers. Two dimensions are of interest to the
market researcher in conjoint analysis, the inferred utility functions of each attribute, and
the relative importance of the preferred attributes to the consumers.

Multidimensional Scaling - This category represents a constellation of techniques

used to produce perceptual maps of competing brands or products. For instance, in
multidimensional scaling, brands are shown in a space of attributes in which the
distance between the brands represents dissimilarity. An example of multidimensional
scaling in market research
22

would show the manufacturers of single-serving coffee in the form of K-cups. The different
K- cup brands would be arrayed in the multidimensional space by attributes such as the
strength of roast, number of flavored and specialty versions, distribution channels, and
packaging options.

3.4 Writing a Market Research Report

A market research report writing has to convey information that would assist
decision- making in business. The report is the means by which one presents any
marketing related information. Some reports might provide a definite solution to solve a
business problem; other reports might touch on historical business information that would
be used for future business planning. Business reports are a critical part of performing
business activities and proficiency in this area is significant for commercial success.

In making a Market research report, the following steps should be considered:

 Determining the scope of the report

 Collect and categorize the information

 Target audience to be determined

 Analyze the research information

 Establishing the solution and findings

 Arriving at recommendations

 Determine the report format

As most reports are required to support specific organizational objectives, strategies

and decision making it is critical that a chain of continuity in argument and evidence can be
demonstrated between the purpose of the report, the research, and ultimately the solutions,
findings or recommendations.

3.5 Components of Market Research Report

The details of a research report may change with the purpose of research but the main
components of a report will remain constant. The research approach of the market
researcher also influences the style of writing reports. Here are seven main components of
a productive research report:
 23

 Research Report Summary: The entire objective along with the overview of research
are to be included in a summary which is a couple of paragraphs in length. All the
multiple components of the research are explained in brief under the report summary.
It should be interesting enough to capture all the key elements of the report.

 Research Introduction: There always is a primary goal that the researcher is trying to
achieve through a report. In the introduction section, he/she can cover answers
related to this goal and establish a thesis which will be included to strive and
answer it in detail. This section should answer an integral question: “What is the
current situation of the goal?”. After the research was conducted, did the
organization conclude the goal successfully or they are still a work in progress –
provide such details in the introduction part of the research report.

 Research Methodology: This is the most important section of the report where all the
important information lies. The readers can gain data for the topic along with
analyzing the quality of provided content and the research can also be approved by
other market researchers. Thus, this section needs to be highly informative with
each aspect of research discussed in detail. Information needs to be expressed in
chronological order according to its priority and importance. Researchers should
include references in case they gained information from existing techniques.

 Research Results: A short description of the results along with calculations

conducted to achieve the goal will form this section of results. Usually, the
exposition after data analysis is carried out in the discussion part of the report.

 Research Discussion: The results are discussed in extreme detail in this section
along with a comparative analysis of reports that could probably exist in the same
domain. Any abnormality uncovered during research will be deliberated in the
discussion section. While writing research reports, the researcher will have to
connect the dots on how the results will be applicable in the real world.

 Research References and Conclusion: Conclude all the research findings along with
mentioning each and every author, article or any content piece from where
references were taken.
24

3.6 Market Research Study – An Example

We are going to look in to a market research done by Starbucks, a café franchise

across the world. This research was done in the United Nations of America and European
countires.

Starbucks has been a successful company over many decades largely because of its
stellar business strategies. The company expertly employs market research to keep its
offerings and marketing messaging in line with consumer sentiment.

3.6.1 Market Research Methods

Market research can take many different forms, including following cultural trends,
monitoring social media, gathering consumer feedback and in-store product testing.
Starbucks does all of these and more.

One notable way that Starbucks conducts its own form of market research is through
its My Starbucks Idea platform, which it rolled out in 2008 as part of the company’s
“Transformation Agenda” at the time. Since then it has gone through some different
iterations, but the basic idea behind it remains the same: customers, potential customers,
and employees can go to the website to submit any ideas they have for new offerings,
changes they’d like to see to anything that already exists, requests to bring back old
products, and more.

The company also takes advantage of social listening, which involves monitoring
digital platforms such as Facebook, Instagram, Twitter, and Reddit to find out what
customers are saying about the brand and collect feedback that could help the brand
improve. As of December 2018, Starbucks had 11.5 million followers on Twitter, 17.3
million followers on Instagram, more than 37 million likes on Facebook, and nearly 200,000
subscribers on YouTube.

Starbucks regularly tests new products in select stores, which helps the company
figure out if it needs to make any changes before launching them in other markets — or if it
will even continue the launch in other markets. Starbucks also uses data from several
market research firms, as well as data gleaned from its own stores, to shape its new product
lines.

3.6.2 Dairy-Free Alternatives at Starbucks

Examples of how Starbucks has used market trend data, digital consumer feedback
and in-store product testing are the launches of its dairy-free milk alternatives.
 25

Market research company Mintel reports that during the period from 2012 to 2017,
overall sales of dairy-free milk alternatives in the U.S. grew 61 percent, with almond,
coconut, and soy milk being the most popular types. Starbucks has kept pace with this trend
among health- conscious consumers and customers with special dietary limitations. The
company began offering soy milk in 2004. In 2015 it launched drinks with coconut milk, and
in 2016, it began offering almond milk. Starbucks also began offering oat milk in its
European stores in 2018 to keep up with trends there.

The company says that a major reason that it launched these dairy-free milk
alternatives was that they were some of the most requested offerings on its My Starbucks
Idea platform. During 2014, the company also tested the use of coconut milk in stores
located in Cleveland, Los Angeles, and Oregon. The results of the tests and combined
market research were positive enough for Starbucks to begin rolling out coconut milk
nationwide.

3.7 Summary

The process of assembling information about a target market or a target audience is

rightly termed as “Market research”. Analysis of the market research invariable provides
crucial information which enables the success of the business. It also enables the business
to provide the consumers with what they expect out of the product or service. Market
research is like any other scientific research, where the research design, methodology,
analytical methods are all implied, and the findings are presented with evidence based on
the research.

3.8 Review Questions

1. What is market research?

2. How to conduct a market research?

3. What are the statistics used in market research?

4. How to write a market research report?

5. What are the components of market research?

6. Give an example for a market research study.

26

LESSON-4

CONSUMER MOTIVATION
Learning Objective

After studying this unit, you must be able to discuss:

 Consumer motivation

 Different theories of motivation

 Dynamics of motivation

 System of needs

 Application of motivation in consumer behavior

Structure

4.1 Introduction

4.2 Motivation as a Psychological force

4.3 Consumer motivation

4.4 Dynamics of Motivation

4.5 System of Needs

4.6 Summary

4.7 Review Questions

4.1 Introduction

Motivation is the driving force that impels people to act. It represents the reasons one
has for acting or behaving in a particular way. Motivation is the word derived from the word
’motive’ which means needs, desires, wants or drives within the individuals. It is the process
of stimulating people to actions to accomplish the goals. The goals that motivate an
individual may vary from something seemingly small as eating food, to something seemingly
impossible
 27

like being the richest person in the world. The drive that we have towards achieving the goal,
no matter how small or big, is motivation.

4.2 Motivation as a Psychological Force

Motivation acts as the driving force that enables and fosters behavior of individuals. A
person acts or behaves in order to fulfill one or more of his needs. For example: a person
going to work is motivated by the need to earn, provide for self and family, earn a security
for life, etc. The motivational factor that leads to a behavior influences how well the behavior
is carried out. The better the motivation, the better the behavior. There are different
theories that relate motivation and behavior. We will look in to some of the theories in the
up coming section.

4.2.1 Maslows Theory of Motivation

A theory given by Abraham Maslow, puts the order of motivation in to a hierarchy

system as follows.

Maslow’s hierarchy of needs

1. Physiological needs- These are the basic needs of an individual which includes food,
clothing, shelter, air, water, etc. These needs relate to the survival and maintenance
of human life.

2. Safety needs- These needs are also important for human beings. Everybody wants
job security, protection against danger, safety of property, etc.

3. Social needs- These needs emerge from society. Man is a social animal. These
needs become important. For example- love, affection, belongingness, friendship,
conversation, etc.
28

4. Esteem needs- These needs relate to desire for self-respect, recognition and respect
from others.

5. Self-actualization needs- These are the needs of the highest order and these needs
are found in those person whose previous four needs are satisfied. This will include
need for social service, meditation.

The theory states that the motivation factor for an individual transcends from the
lower level to the higher levels as the lower levels gets fulfilled. Maslow’s hierarchy of needs
theory can be summarized as follows:

 Human beings have wants and desires which, when unsatisfied, may influence
behavior.

 Differing levels of importance to human life are reflected in a hierarchical structure of

needs.

 Needs at higher levels in the hierarchy are held in abeyance until lower level needs
are at least minimally satisfied.

 Needs at higher levels of the hierarchy are associated with individuality, humanness
and psychological health.

4.2.2 Alderger – Erg Theory

Alderfer (Furnham, 2008) distinguished three steps or classes of needs: existence,

relatedness and growth. Maslow’s physiological and safety needs belong together to
existence needs. Relatedness can be harmonised to belongingness and esteem of others.
Growth is the same as Maslow’s self-esteem plus self-actualization. Both Maslow and
Alderfer tried to describe how these needs, these stages of needs become more or less
important to individuals.

• Existence needs: These include needs for basic material necessities. In short, it includes
an individual’s physiological and physical safety needs.

• Relatedness needs: Individuals need significant relationships (be with family, peers or
superiors), love and belongingness, they strive toward reaching public fame and
recognition. This class of needs contain Maslow’s social needs and external
component of esteem needs.
 29

• Growth needs: Need for self-development, personal growth and advancement form
together this class of need. This class of needs contain Maslow’s self-actualization needs
and intrinsic component of esteem needs.

4.3 Consumer Motivation

Consumer motivation is an internal state that drives people to identify and buy
products or services that fulfill conscious and unconscious needs or desires. The fulfillment
of those needs can then motivate them to make a repeat purchase or to find different goods
and services to better fulfill those needs.

Motivational Level

Depending on how important a purchase is to an individual, his motivational levels

may vary from low to high. Influences include familiarity with the purchase, status factors and
overall expense and value. Where fulfillment rewards are low, as with groceries, motivation
levels are also relatively low and involve little decision-making behavior. Conversely, with
a complex, risky and emotionally-charged process such as buying a new house, the drive
to achieve the “right” result is high.

Motivational Behavior

The behavioral aspect of consumer motivation concerns the actions someone takes
before purchasing and consuming goods or services. A person might do a lot of research—
evaluating alternatives, testing and sampling—before making a selection. She might decide
to buy something based on which goods or services most closely meet and satisfy
motivational wants and needs. Marketers aim to gain the most impact and eventual sales
by linking their products and services to clearly defined consumer needs and by
understanding what motivates people to buy.

Motivational Influences

Motivational levels differ greatly between individuals and are influenced by many
external variables. These include the social value of making the “right” decision, beliefs
about brands and alignment of brand values and personal values. If other people are
involved in the decision, their motivation also affects the behavior of the primary consumer.
30

4.4 Dynamics of Motivation

Motivation drives consumers to buy and is triggered by psychological tension caused

by unfulfilled needs. Individuals strive both consciously and subconsciously to reduce this
tension through selecting goals and subsequent behavior that they anticipate will fulfill their
needs and thus relieve them of the tension they feel. Whether gratification is actually
achieved depends on the course of action pursued.

The foundation of marketing is identifying and satisfying needs. Marketers do not

create needs, although in many instances they strive to make consumers more keenly aware
of unfelt or dormant needs. Savvy companies define their business in terms of the
consumer needs they satisfy rather than the products they produce and sell. Because
consumers’ basic needs do not change, but the products that satisfy them do, a corporate
focus on developing products that will satisfy consumers’ needs ensures that the company
stays in the forefront of the search for new and effective solutions. By doing so, such
companies are likely to survive and grow despite strong competition or adverse economic
conditions. In contrast, companies that define themselves in terms of the products they
make may suffer or even go out of business when their products are replaced by
competitive offerings that better satisfy consumers’ needs.

Needs

There are two types of human needs:

Physiological needs are innate (biogenic, primary) and fulfilling them sustains
biological existence. They include the need for food, water, air, protection of the body from
the outside environment (i.e., clothing and shelter), and sex.

Psychological needs are learned from our parents, social environment, and
interactions with others. Among many others, they include the needs for self-esteem,
prestige, affection, power, and achievement.

Both these types of needs affect ones buying decision. For example, all individuals
need shelter from elements and therefore they buy or rent houses. A young couple working
in a corporate company would rather prefer staying in a high end apartment on high floors,
near their work place, to impress their friends and to ease the commute. A couple in their
mid-40s with young children would rather prefer to have an individual house in a sub urban
area which is not far from the parents’ work place and also has great schools nearby for the
children.
 31

Goals

Goals are the sought-after results of motivated behavior, and all human behavior is
goal oriented. There are two types of goals: Generic goals are outcomes that consumers
seek in order to satisfy physiological and psychological needs. Product-specific goals are
outcomes that consumers seek by using a given product or service. For example, when a
student tells his parents that he wants to become an entrepreneur, he expresses a generic
goal. If he says he wants to earn an MBA from IIM, he expresses a product-specific goal.

Need Arousal

Most of an individual’s needs are dormant much of the time. The arousal of any need
at a specific moment in time may be caused by biological stimuli, emotional or cognitive
processes, or stimuli in the outside environment. A drop in blood sugar level or stomach
contractions will trigger awareness of a hunger need. A decrease in body temperature will
induce shivering, which makes the individual aware of the need for warmth. Most of these
physiological cues are involuntary, but they arouse needs that cause uncomfortable
tensions until they are satisfied. For example, a person who is cold may switch off the fan in
his bedroom and make a mental note to buy a warm sweater to wear around the house
during the winters.

Selecting Goals

Usually, consumers set purchase-related goals that satisfy more than one need. We
buy clothing for protection and for a certain degree of modesty; in addition, our clothing
fulfills a wide range of personal and social needs, such as acceptance by others. People with
different needs may seek fulfillment by selecting the same goal, and people with the same
needs may seek fulfillment via different goals. For example, two people driven by the need
for achievement might seek fulfillment in different ways. One may seek advancement and
recognition through a professional career, whereas the other may choose to run marathons.

For any given need, there are many different and appropriate goals. The goals that
individuals select depend on those individuals’ personal experiences and knowledge,
physical capacity, prevailing cultural norms and values, and the goal’s accessibility in the
individuals’ physical and social environments. For example, a man wants to build muscles,
he goes the gym, and plans to take protein supplement. However, his physician says that he
cannot consume protein supplement due to some health condition. He has to settle down to
consuming proteins through his diet instead of supplement. The goal object has to be both
socially acceptable and physically accessible.
32

4.5 System of Needs

Over the years, several psychologists have developed lists of human needs, but
there is no single, comprehensive, and commonly accepted list. Although there is little
disagreement about physiological needs, there are distinct differences of opinion about
defining and categorizing needs with nonphysical origins, that is, psychological (or
psychogenic) needs. As we have already seen Maslow’s Hierarchy of Need, we will skip it
in the upcoming section.

4.5.1 Murray’s List of Psychogenic Needs

In 1938, the pioneering psychologist Henry Murray prepared an extensive list of

psychogenic needs, which represented the first systematic approach to the understanding of
non-biological human needs. Murray believed that although each need is important in and of
itself, needs can be interrelated, can support other needs, and can conflict with other needs.
For example, the need for dominance may conflict with the need for affiliation when overly
controlling behavior drives away friends, family, and spouses.

Table 4.1 Application of psychogenic needs applicable to consumer behavior

NEED ILLUSTRATIVE PROMOTIONAL

CHARECTERISTICS APPLICATION
Achievement:accomplish Do the best and work hard Messages that encourage
tasks, succeed, and inany undertaking. Be able andillustrate success (e.g.,
overcome obstacles. to do things better than advertising education).
others.
Exhibition: shock or thrill Messages showing attention
others and be the center Tell amusing jokes at from others when they
of attention. parties.Say things that others noticeone’s possessions (e.g.,
regard as witty and clever. expensive cars).

Affiliation:spend time, Messages showing people

form strong friendships Be loyal to and share enjoying themselves large
and attachments with thingswith friends. Help groups (e.g., vacations,
others. friends introuble. Be confided shopping situations).
in byothers and told about
Messages showing actualor
theirtroubles.
Power/Dominance:control, symbolic dominance(e.g.,
influence, and lead others Seek leadership in groups. being a chief
Supervise and direct the executive;owning a powerful
actions of others. car).
 33

Change:seek new Doing new and differ likeEating Messages stressing novelty,
experiences and avoid in new restaurants,going on uniqueness, and breaking
routine. trips, and avoidingconventional with routines (e.g., adventure
situations. travel and active vacations).

Order:keeping things neat Planning and organizing the Promoting devices that save
andorganized. details in any undertaking. space and keep things firmly
Setting definite t imes in place(e.g., dividers and
foractivities. organizers for closets,
drawers, and garages).
4.5.2 A Trio of Needs

Another framework for organizing human needs is known as the trio of needs: the
needs for power, affiliation, and achievement. Individually, each of the three needs can
affect consumer motivation.

Power

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

Affiliation

Affiliation is a well-researched social motive that significantly influences consumer

behavior. The affiliation need is very similar to Maslow’s social need and suggests that
behavior is strongly influenced by the desire for friendship, acceptance, and belonging.
People with high affiliation needs tend to be socially dependent on others and often buy
goods that they feel will meet with the approval of friends. Teenagers who hang out at malls
or techies who congregate at computer shows often do so more for the satisfaction of
being with others than for the purpose of making a purchase.

Achievement

Individuals with a strong achievement need often regard personal accomplishment as

an end in itself. They are self-confident, enjoy taking calculated risks, actively research their
34

environments, and value feedback, often in the form of monetary rewards. People with high
achievement prefer situations in which they can take personal responsibility for finding
solutions.10 Because of this, portraying achievement is a useful promotional strategy for
many products and services, especially those targeting educated and affluent consumers.

4.6 Summary

Motivation is the driving force that impels people to act. It represents the reasons one
has for acting or behaving in a particular way. The motivation of an individual to meet his
needs or wants makes him a potential consumer. Different motivational theory describes how
motivation arises, and how to effectively use them to affect the consumer behavior.
Application of the knowledge about the motivation enables the marketer to market their
products or services in the most efficient way.

4.7 Review Questions

1. What is motivation?

2. What is Maslow’s theory of needs?

3. What is ERG theory?

4. What is consumer motivation?

5. Brief about the dynamics of motivation.

6. List out the application of Murrays list of psychogenic needs

 35

LESSON-5

CONSUMER PERSONALITY
Learning Objective

After studying this unit, you must be able to discuss:

 Consumer personality

 Consumer behavior in relation to products

 Personality traits that affect consumer behavior

 Brand personality

 Self image and its relationship to consumer behavior

Structure

5.1 Introduction

5.2 Consumer behavior and new products

5.3 Consumer behavior and other personality traits

5.4 Brand personality

5.5 Self and Self Image

5.6 Summary

5.7 Review Questions

5.1 Introduction

Personality is a stable, organized collection of psychological traits and mechanisms

in the human being that influences his or her interactions with and modifications to
the psychological, social and physical environment surrounding them (Larsen & Buss,
2018). Personality in layman’s term is something that characterizes a person.
36

Personality consists of the inner psychological characteristics that both determine and
reflect how we think and act. The emphasis in this definition is on inner characteristics—
those specific qualities, attributes, traits, factors, and mannerisms that distinguish one
individual from other individuals. As discussed later in this chapter, the deeply ingrained
characteristics that we call personality influence the individual’s product choices: They affect
the way consumers respond to marketers’ promotional efforts, and when, where, and how
they consume many products or services. Therefore, the identification of specific
personality characteristics associated with consumer behavior has been highly effective in
the development of market segmentation and promotional strategies.

5.2 Consumer Behavior and New Products

In this section we will look in to how the personality of the consumer affects the
behavior of the consumer when it comes to the receptivity to new products. Here the
assumption would be that the consumer is going to try new product or service in the market.

5.2.1 Consumer Innovators and Innovativeness

Innovators are the first to try new products, product line extensions, and services
because they are open to new ideas and practices. Their response to newly introduced
products is critical to the success or failure of new products. Consumer innovators are
enthusiastic about innovative products and can speed up the market acceptance of
innovations, because they tell others about their purchases and often show them the new
products. Furthermore, as more consumer innovators discuss the new products online, their
domains of innovative behavior presents illustrative opinions of an innovator of high-tech
products.

Innovativeness is the degree of a consumer’s willingness to adopt new products and

services shortly after the products are introduced. One study discovered four motivational
factors that inspire consumer innovativeness:

1. Functional factors reflect interest in the performance of an innovation.

2. Hedonic factors relate to feeling gratified by using the innovation.

3. Social factors reflect the desire to be recognized by others because of one’s

pursuit of innovations.

4. Cognitive factors express the mental stimulation experienced by using an innovation.

 37

Whereas most researchers view innovativeness as a single personality trait, one

study identified three levels of innovativeness:

1. Global innovativeness—a trait that exists independent of any product-related

context and represents the “very nature” of consumers’ innovativeness

2. Domain-specific innovativeness—a narrowly defined activity within a specific

domain or product category

3. Innovative behavior—actions or responses that indicate early acceptance of

change and adoption of innovations (e.g., being among the first to purchase new and
different products or services).

5.2.2 Dogmatism

Dogmatism is one’s degree of rigidity—the opposite of being open-minded—toward

information and opinion contradictory to one’s beliefs and views (i.e., closed-mindedness). A
person who is highly dogmatic approaches the unfamiliar defensively and with uncertainty
and discomfort. In contrast, a person who is less or not dogmatic readily considers
unfamiliar or opposing beliefs. Generally, consumers who are not dogmatic prefer innovative
products rather than traditional ones.

Highly dogmatic consumers tend to be more receptive to ads that contain appeals
from authoritative figures, such as celebrities and experts. In contrast, low-dogmatic
consumers are more receptive to messages that stress factual differences, product benefits,
and other product- usage information. Researchers found that consumers scoring high on
the traits of “openness to experiences” (similar to low dogmatism) and “extraversion”
(which is related to personal energy, ambition, venturesomeness, and being outgoing)
responded favorably to emotional messages, and were likely to purchase and become loyal
to the brand advertised.

5.2.3 Need for Uniqueness

Many consumers acquire and display material possessions because they want to be
differentiated from other people. Consumers’ need for uniqueness is defined as an
individual’s pursuit of differentness relative to others that is achieved through the acquisition
of consumer goods in order to enhance one’s personal and social identity. Individuals with a
high need for uniqueness adopt new products and brands quicker than others. They prefer
creative products that counter conformity and are outside group norms, and avoid the
similarity reflected in
38

buying mainstream products. Understanding this personality trait is highly pertinent to the
fashion industry, because clothing trends and styles are ever changing. Many marketers
target people with a high need for uniqueness with marketing stimuli designed to enhance
self-perceptions of uniqueness.

5.3 Consumer Behavior and Other Personality Traits

In this section we will look into all the other personality traits that factor into consumer
behavior, apart from new products. This section will discuss personality traits like compulsive
buying, need for novelty and such.

5.3.1 Optimum Stimulation Level

Optimum stimulation level (OSL) is the degree to which people like novel, complex,
and unusual experiences (i.e., high OSL) or prefer a simple, uncluttered, and calm
existence (i.e., low OSL). Research has found that consumers seeking high levels of
optimum stimulation are more willing to take risks, more likely to try new products and be
innovative, and seek to maintain high optimum stimulation levels while shopping

OSL scores also reflect a person’s desired level of lifestyle stimulation. For instance,
consumers whose actual lifestyles are equivalent to their OSL scores said that they are
“quite satisfied” with their lives, whereas those whose lifestyles are under stimulated (i.e.,
their OSL scores are greater than their lifestyle) felt “bored.” This suggests that the
relationship between consumers’ lifestyles and their OSLs probably influences their choices
of products or services and how they manage and spend their time. For instance, a person
who feels bored (an under stimulated consumer) is likely to be attracted to a vacation that
offers a great deal of activity and excitement. In contrast, a person who feels overwhelmed
(an overstimulated consumer) is likely to seek a quiet, isolated, relaxing, and rejuvenating
vacation

5.3.2 Sensation Seeking

Closely related to the OSL concept is sensation seeking: one’s need for varied,
novel, and complex sensations and experiences, and the willingness to take risks for the
sake of such experiences. For example, many teenage males with high sensation-seeking
scores engage in “extreme sports” forms of biking, skateboarding, and rollerblading. One
study discovered that consumers who scored high on sensation seeking and innovativeness
were more likely to incorporate volunteerism into their vacations.
 39

5.3.3 Variety and Novelty Seeking

Another trait similar to OSL is variety or novelty seeking. In consumer behavior,

variety and novelty seeking consists of:

1. Exploratory purchase behavior includes switching brands to experience new,

different, and possibly better alternatives.

2. Vicarious exploration consists of gathering information about new and different

product alternatives and contemplating buying them.

3. Use innovativeness means using an already adopted product in a new or novel way.

Seeking variety is particularly relevant to technological products (e.g., smartphones),

where many models offer an abundance of functions while other provide only basic features.
For example, high variety-seeking consumers are likely to purchase the latest smartphones,
whereas consumers with low variety-seeking are likely to stick with their existing phones.

5.3.4 Need for Cognition

A need for cognition (NFC) measures a person’s craving for or enjoyment of thinking.
Consumers who are high in NFC respond to ads that contain a lot of product-related
information and descriptions, whereas consumers who are relatively low in NFC are
attracted to the background or peripheral aspects of an ad, such as an attractive model or
well-known celebrity. A study showed that including diagnostic product information in
advertising (e.g., information that allows consumers to evaluate product quality and
distinguish between brands) increased ad persuasion for high NFC consumers, but not for
low NFC consumers. Along the same lines, another study found that individuals low in NFC
accepted a marketer’s recommended alternatives more readily than high NFC consumers did.

Need for cognition also plays a role in consumers’ use of the Internet. Studies
showed that high NFC persons were more likely than others to seek product information,
current events, and educational resources online. Other studies discovered that people high in
NFC concentrated on the objectives of their planned online activities, whereas low-NFC
persons were distracted by the vast amount of data on the Web and unable to focus on their
intended online activities
40

5.3.5 Visualizers versus Verbalizers

Researchers found out that some people prefer the written word as a way of securing
information, whereas others are influenced by images. Verbalizers prefer promotional
messages containing a lot of written, textual, and verbal information. Visualizers are more
receptive to pictorial images, and include:

1. Object visualizers, who encode and process images as a single perceptual unit.

2. Spatial visualizers, who process images piece by piece.

Individuals scoring high on object visualization tend to score low in spatial

visualization, and vice versa. Furthermore, whereas visual artists generally excel in object
imagery, scientists and engineers do best with spatial imagery.

5.3.6 Consumer Materialism

Materialism gauges the extent to which an individual is preoccupied with purchasing

and showing off physical possessions that are mostly nonessential and often conspicuous
luxury goods. Highly materialistic consumers define themselves by acquiring possessions.
They value buying and showing off their belongings, are often self-centered and selfish, live
cluttered lives, and often do not experience personal satisfaction or happiness from their
possessions alone. In contrast, consumers who are less materialistic do not define
themselves by what they possess and are more interested in seeking fulfilling experiences
and enjoying them, often with others.

5.3.7 Fixated Consumption

In the context of consumer behavior, fixated consumption refers to collectors’ and

hobbyists’ tendency to accumulate items that are related to their interests and show them off
to friends and others with similar interests. People collect anything: from free items, such
as matchbooks from hotels and restaurants they have visited around the world, to
glass paperweights that cost thousands of dollars, vintage motorcycles and cars, art, and
century- old wines. Fixated consumers share the following characteristics:

1. A passion for and interest in the category of what they collect.

2. Willingness to invest a lot of effort in adding to their collections.

 41

3. Spending a lot of time and discretionary income searching and buying more items
for their collections.

4. Aggressively competing in auctions.

5.3.8 Compulsive consumption

Compulsive consumption is addictive and out-of-control buying that often has

damaging consequences for both the compulsive shopper and those around him or her.
Examples of compulsive consumption problems are uncontrollable shopping, gambling,
drug addiction, alcoholism, and even eating disorders. Furthermore, the ease of online
buying has made compulsive shopping more widespread. Research discovered that at least
75% of compulsive buyers are females. Compulsive shoppers purchase items that they do
not need and often do not end up using, and many require psychological intervention in
order to eliminate or even control severe compulsive shopping. Research suggests that
easy availability of credit cards contributes to compulsive consumption behavior, especially
among college students. Marketers must ensure that their promotional messages do not
encourage irresponsible consumption.

5.3.9 Personality and Color

Consumers not only ascribe personality traits to products and services, but some also
associate personality characteristics with specific colors. For instance, consumers associate
Coca-Cola with red, which connotes excitement. Blue bottles are sometimes used to sell
wine because the color blue appeals particularly to female consumers. Yellow connotes
novelty and black sophistication. Brands can create a sophisticated, upscale, or premium
image (e.g., Mercedes Benz) by using primarily black labeling or packaging. A combination
of black and white communicates that a product is carefully engineered, high tech, and
sophisticatedly designed. For instance, Nike produced shoes in black, white, and a touch of
red for selected models of its sports shoes because this color combination connotes high
performance. Many fast-food restaurants use combinations of bright colors, like red,
yellow, and blue, for their roadside signs and interior designs because research discovered
that consumers associate these colors with fast service and inexpensive food. In contrast,
most fine restaurants use sophisticated colors like gray, white, shades of tan, or other soft,
pale, and muted tones to underscore their classy environments and good service.
42

5.4 Brand Personality

Brand personification occurs when consumers attribute human traits or

characteristics to a brand. A “brand personality” provides an emotional identity for a brand,
which produces sentiments and feelings toward the brand among consumers. For instance,
consumers perceive Nike as the athlete in all of us, and BMW as being performance driven.
A brand’s personality can either be functional (“dependable and rugged”) or symbolic (“the
athlete in all of us”). A distinct brand personality differentiates the brand from similar
offerings, and creates favorable attitudes toward the brand, higher purchase intentions, and
brand loyalty.

Product and brand personifications are forms of anthropomorphism, which refers to

attributing human characteristics to something that is not human. Consumers personify
brands because marketers have given their offerings human characteristics through
repetitive and effective advertising. For example, the Cheetos brand has been around for
decade and has been marketing using the character Chester Cheetah. If the consumers of
Cheetos fried food were asked, “what kind of person or character is Chester Cheetah?”,
they would give different answers that fits close to their perception of the character, which
makes them want to trust the brand and consume the product.

Some consumers become “brand zealots” and develop a relationship with brands
beyond the functions of these products. The most favorite and famous example of this is
people giving names to their bikes or cars, and who communicate with their vehicles.

Figure 5.1 A Brand Personality Framework

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The figure 5.1 shows the brand personality framework, where the brand personality is
broadly categorized into 5 categories, sincerity, excitement, competence, sophistication, and
ruggedness. These five categories stand for how the brand is perceived by the consumers.
For example, a Rolls-Royce would be perceived as sophisticated, a Mahindra Thar
would be perceived as rugged, a Maruti Suzuki would be perceived as sincere, a Hyundai
would be perceived as competent, and a Lamborghini would be perceived as exciting.

5.5 Self and Self Image

Self-image represents the way a person views herself or himself. Perceptions of self
are often related to the purchases of products and services, because consumers often select
products that are consistent with their self-images and enhance them. In fact, consumers
have multiple “selves,” because people act differently in different situations. For instance, a
person is likely to behave in different ways with parents, at school, at work, at a museum,
or with friends at a party.

Each individual has an image of himself or herself as a certain kind of person, with
certain traits, skills, habits, possessions, relationships, and behaviors. One’s self-image
originates in a person’s background and experience. Many products and brands have
symbolic value for individuals because their images are consistent with the ways these
people perceive themselves, and consumers buy offerings that are congruent with their
self-image and avoid products and brands that are not. A recent study uncovered an
interesting correlation between food consumption and self-image

Consumer behavior researchers identified four components of self-image:

1. Actual self-image is the way consumers see themselves;

2. Ideal self-image is how consumers would like to see themselves;

3. Social self-image is how consumers feel others see them; and

4. Ideal social self-image is how consumers would like others to see them.

Consumers select the type of self-image that guides them in the context of buying
situations. For instance, with everyday household products, consumers might be guided by
their actual self images, whereas for some socially enhancing or socially conspicuous
products, they might be guided by their social self-images. When it comes to an important
and strong
44

personal goal or wish, like losing weight and feeling better about oneself and one’s
appearance, people are often guided by either their ideal self-images or ideal social self-
images.

The concept of self-image has strategic implications for marketers. For example,
companies can segment their markets on the basis of relevant self-images and then position
their products or services as symbols of such. These strategies reflect the marketing
concept: Marketers study the needs of a consumer segment (with respect to both the
product category and as the product’s or brand’s reflection of self-image) and then
develop and market an offering that meets both criteria. Jockey, a marketer of
undergarments, recognizes the importance of self-image.

The Extended Self

Consumers’ possessions can confirm or extend their self-images. For instance,

acquiring a soughtafter pair of “vintage” Levi jeans might enrich a teenager’s self-image,
because she might see herself as being more desirable, fashionable, and successful when
she wears those pants. Researchers suggested that possessions are extensions of self in
the following ways:

1. Actually, by allowing the person to do things that otherwise would be very difficult
or impossible to accomplish (e.g., problem solving by using a computer).

2. Symbolically, by making the person feel better (e.g., being considered the “best
dressed” at work).

3. Conferring status or rank, for example, being an art collector and owning a rare
and wellknown masterpiece.

4. Feelings of immortality by leaving valuable bequests after death (e.g., leaving

behind a valuable, like jewelry as family heirloom).

These are how the conception of self and self image affect the consumer behavior.

5.6 Summary

Personality consists of the psychological characteristics that both determine and

reflect how a person responds to his or her environment. Although personality tends to be
consistent and enduring, it may change abruptly in response to major life events, as well as
gradually over time. The different personality traits affect the consumer behavior. Appealing
to the personality
 45

of the masses at whom a product or service is targeted at is the crux of marketing, where it
fosters the consuming behavior of the potential consumers.

5.7 Review Questions

1. What is personality?

2. What is consumer personality?

3. How does consumer personality and behavior apply for marketing new products?

4. What are the other types of personality traits affecting the consumer behavior?

5. What is brand personality?

6. What is self image and how it affects consumer behavior?

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LESSON-6

CONSUMER PERCEPTION
Learning Objective

After studying this unit, you must be able to discuss:

 Consumer perception

 Different elements of perception

 Marketing strategies revolving around perception

 Selective perception

 Perceptual selection

Structure

6.1 Introduction

6.2 Elements of Perception

6.3 Differential Threshold

6.4 Subliminal Perception

6.5 Perceptual Selection

6.6 Summary

6.7 Review Questions

6.1 Introduction

Perception is the process by which individuals select, organize, and interpret stimuli
into a meaningful and coherent picture of the world. It can be described as “how we see the
world around us.” Two individuals may be exposed to the same stimuli, but how each person
recognizes, selects, organizes, and interprets these stimuli is a highly individual process
based on each person’s own needs, values, and expectations.
 47

Consumers act and react on the basis of their perceptions, not on the basis of
objective reality. For each individual, “reality” is a totally personal phenomenon, based on
that person’s needs, wants, values, and personal experiences. Thus, to the marketer,
consumers’ perceptions are much more important than their knowledge of objective reality.
For if one thinks about it, it’s not what actually is so, but what consumers think is so, that
affects their actions and their buying habits. And, because individuals make decisions and
take actions based on what they perceive to be reality, it is important that marketers
understand the notion of perception and its related concepts to determine more readily what
factors influence consumers to buy.

6.2 Elements of Perception

Perception is all about consumers’ subjective understandings and not objective

realities. Altering subjective “wisdom” is difficult, or even impossible. For example, the cell
phone brand, Blackberry has marketed itself as the business phone all through the later
years of the 2000s. When the trend shifted to touchscreen phones, Blackberry lost most
of its customer base owing to sticking to its image of being the business phone and
having its iconic QWERTY keypad. Once the brand lost its customer base, it tried to shift to
the newer format of cellphones, touch only phones. It initially tried to make touchscreen only
phones and failed miserably. Then Blackberry came up with a select number of models
which ran the latest operating system, with touchscreen displays along with its iconic
QWERTY keypad. Even though the phones are up to date and are technologically
advanced, the idea of a Blackberry being a “business” phone has not escaped the
peoples mind, and the customer base has been declining due to the very image that they
used to sell their phones in the 2000s. Even though the brand tried changing its image from
being a business phone to being a “hip” or “trendy” phone, the perception of the people has
not changed.

The study of perception is largely the study of what we subconsciously add to or

subtract from raw sensory inputs to produce our own private picture of the world. Human
beings are constantly bombarded with stimuli during every minute and every hour of every
day. The sensory world is made up of an almost infinite number of discrete sensations that
are constantly and subtly changing. According to the principles of sensation, intensive
stimulation “bounces off” most individuals, who subconsciously block (i.e., adapt to) a
heavy bombardment of stimuli. Otherwise, the billions of different stimuli to which we are
constantly exposed might confuse us and keep us perpetually disoriented in a constantly
changing environment. However, neither of these consequences tends to occur, because
perception is not a function of sensory input alone. Rather, perception is the result of two
different kinds of inputs that interact to form the
48

personal pictures—the perceptions— that each individual experiences. One type of input is
physical stimuli from the outside environment; the other consists of people’s expectations,
motives, and what they have learned from previous experiences. The combination of these
two very different kinds of input produces for each of us a very private, very personal picture
of the world. Because each person is a unique individual, with unique experiences, needs,
wants, desires, and expectations, it follows that each individual’s perceptions are unique.
This explains why no two people see the world in precisely the same way. In the upcoming
sections we will see how the perception of the individual is affected by different marketing
techniques and how to use it to the advantage of marketing.

6.2.1 Sensory Input

Sensation is the immediate and direct response of the sensory organs to stimuli. A
stimulus is any unit of input to any of the senses. Examples of stimuli (i.e., sensory inputs)
include products, packages, brand names, advertisements, and commercials. Sensory
receptors are the human organs (the eyes, ears, nose, mouth, and skin) that receive
sensory inputs. Their sensory functions are to see, hear, smell, taste, and touch. All of
these functions are called into play, either singly or in combination, in the purchase, use, and
evaluation of consumer products. Human sensory sensitivity refers to the experience of
sensation. Sensitivity to stimuli varies with the quality of an individual’s sensory receptors
(e.g., eyesight or hearing) and the amount (or intensity) of the stimuli to which he or she is
exposed. For example, a blind person may have a more highly developed sense of hearing
than the average sighted person and may be able to hear sounds that the average person
cannot.

Most marketing communications appeal to sight and sound. However, smell and
touch also represent considerable opportunities for targeting consumers. Scented strips
have been part of perfume ads for years, but have also been used by other marketers:
for example, scented stickers with coffee aromas were placed on the front page of a daily
newspapers. Regarding the sense of touch, several studies indicated that touching a
product influences persuasion and that touching could be used as a persuasive tool: for
example, Puma attaching a piece of the sole used in the shoe to the price tag of the shoe,
where touching and feeling the sole gives the customer a sense of how good the sole would
function, thus persuading them.

6.2.2 Absolute Threshold

The lowest level at which an individual can experience a sensation is called the
absolute threshold. The point at which a person can detect a difference between “something”
and “nothing”
 49

is that person’s absolute threshold for that stimulus. To illustrate, the distance at which a
driver can note a specific billboard on a highway is that individual’s absolute threshold. Two
people riding together may first spot the billboard at different times (i.e., at different
distances); thus, they appear to have different absolute thresholds. Under conditions of
constant stimulation, such as driving through a “corridor” of billboards, the absolute
threshold increases (i.e., the senses tend to become increasingly dulled). After an hour of
driving through billboards, it is doubtful that any one billboard will make an impression.
Hence, we often speak of “getting used to” a hot bath, a cold shower, or the bright sun. As
our exposure to the stimulus increases, we notice it less. Sensory adaptation is “getting used
to” certain sensations; that is, becoming accommodated to a certain level of stimulation and
becoming less able to notice a particular stimulus.

Sensory adaptation is a problem that concerns many national advertisers, which is

why they try to change their advertising campaigns regularly. They are concerned that
consumers will get so used to their current print ads and TV commercials that they will no
longer “see” them; that is, the ads will no longer provide sufficient sensory input to be noted.
In an effort to cut through the advertising clutter and ensure that consumers perceive their
ads, some marketers try to increase sensory input, like making the ads more louder or with
more colors.

6.2.3 Ambush Marketing

Ambush marketing consists of placing ads in places where consumers do not expect
to see them and cannot readily avoid them. Examples include brand names stamped on
eggs in a supermarket, featured on video screens in taxis, placed in subway tunnels
between stations, or featured on doctors’ examination tables. Other examples include,
advertisements kept in the washrooms, making the handle of the shaving razor smell like a
perfume, keeping waste sheets with advertisements on them.

6.3 Differential Threshold

The minimal difference that can be detected between two similar stimuli is called the
differential threshold or the just noticeable difference (JND). A nineteenth-century German
scientist named Ernst Weber discovered that the JND between two stimuli was not an
absolute amount, but an amount relative to the intensity of the first stimulus. Weber’s law,
as it has come to be known, states that the stronger the initial stimulus, the greater the
additional intensity needed for the second stimulus to be perceived as different. For
example, during economic downturn, consumers become very price sensitive and are likely
to note even small changes in
50

price. A soft drink that was Rs. 40 for 1 litre would not increase the price to Rs. 50 per litre,
but instead reduce the amount of drink in the bottle, making it Rs. 40 for a bottle of 750 ml
of the soft drink. Most people would fail to notice it immediately as the difference lies under
the JND.

6.3.1 Implications for Product Pricing and Improvement

Weber’s law has important applications in marketing. Manufacturers and marketers

endeavor to determine the relevant JNDs for their products for two reasons. First, they want
to prevent changes (e.g., reductions in product size or quality, or increases in product price)
from becoming readily discernible to the public (i.e., remain below the JND). Second, they
want to ensure that product improvements (e.g., improved or updated packaging, larger
size, or lower price) are very apparent to consumers, but without being wastefully
extravagant (i.e., they are at or just above the JND).

When it comes to product improvements, marketers very much want to meet or

exceed the consumer’s differential threshold; that is, they want consumers to readily
perceive any improvements made in the original product. Marketers use the JND to
determine the amount of improvement they should make in their products. Improvements
below the JND will not be perceived and will hurt the credibility of a marketer promoting the
product as “new and improved.” For example, when Apple came up with some new products
for which it claimed sharper displays, any consumers were disappointed because,
apparently, the improvements were below the JND and therefore unperceived. However,
when Apple introduced Retina Displays, they were hailed as a breakthrough technology
because the improvements were far above the JND and easily noticeable.

6.4 Subliminal Perception

People can be “stimulated” below their level of conscious awareness as well. That is,
they can perceive stimuli without being consciously aware that they are doing so. Stimuli that
are too weak or too brief to be consciously seen or heard may nevertheless be strong
enough to be perceived by one or more receptor cells. This process is called subliminal
perception, because the stimulus is beneath the threshold of conscious awareness, though
obviously not beneath the absolute threshold of the receptors involved.

The effectiveness of so-called subliminal advertising was reportedly first tested at a

drive-in movie theater in New Jersey in 1957, where the words “Eat popcorn” and “Drink
Coca- Cola” were flashed on the screen during the movie. Exposure times were so short
that viewers
 51

were unaware of seeing any message. It was reported that during the six-week test period,
popcorn sales increased 58% and Coca-Cola sales increased 18%, but these findings were
later reported to be false. Years later, it was discovered that although the simple subliminal
stimulus “COKE” served to arouse thirst in subjects, the subliminal command “DRINK COKE”
did not have a greater effect, nor did it have any behavioral consequences.

Despite the many studies of subliminal persuasion, there is no evidence that

subliminal advertising persuades people to buy goods or services. A review of the research
indicates that subliminal perception has no effect on attitudes toward products and
consumption behavior, and that most of its effects were “researched” in highly artificial
situations. A study from done in a laboratory setting, supports this conclusion. Subjects
were asked to keep a running total of numbers flashed on a screen, where they were also
exposed to images of either IBM or Apple logos, shown at a speed faster than could be
consciously seen. The subjects then performed a creativity exercise. The subjects
subliminally exposed to the Apple logo scored higher on the creativity test than those
exposed to the IBM logo or to no logo at all. Some interpret these results to mean that a
brand can make you perform better. For example, if you wear a swimsuit worn and endorsed
by a champion swimmer, you will swim faster. Others argue that the results of the
experiment simply mean that a subliminal stimulus may trigger certain associations and
motivations, but not necessarily lead to different behavior. However, there is no credible
evidence that such advertising can get consumers to engage in shopping—a voluntary and
pleasant behavior.

6.5 Perceptual Selection

Subconsciously, consumers are very selective when exposed to stimuli. An individual

may look at some things, ignore others, and turn away from still others. In actuality, people
receive (i.e., perceive) only a small fraction of the stimuli to which they are exposed. For
example, somebody going to a sporting goods store like Decathlon, gets exposed to
thousands of different products in different aisles and sections. They would see hundreds of
people in the store trying to purchase things, communicating with the store workers; hear
the sounds of balls being dribbled, kicked; arrows being shot at testing area; skateboarders
and people on rollerblades going by fast; noise of shoes squeaking; yet they go in without
losing their sanity, go to the section they wanted to, make inquiries about the different
products themselves, purchase and walk out. This is because they exercised selectivity in
perception.
52

Which stimuli get selected depends on two major factors, in addition to the nature of
the stimulus itself: (1) consumers’ previous experience as it affects their expectations (what
they are prepared, or “set,” to see), and (2) their motives at the time (their needs, desires,
interests, and so on). Each of these factors can increase or decrease the probability that a
stimulus will be perceived.

6.5.1 Stimulus

Physical stimuli that affect consumers’ perceptions of products and evoke attention
include the product itself, its attributes, package design, brand name, advertisements, and
commercials (including copy claims, choice and sex of model, positioning of model, size of
ad, and typography), and placement of promotional messages within the advertising space.
Ads that contrast with their environments are very likely to be noticed. The use of a dramatic
image of the product against a white background with little copy in a print advertisement, the
absence of sound in a commercial’s opening scene, an ad appearing where consumers do
not expect it—all offer sufficient contrast from their environments to achieve differentiation
and merit the consumer’s attention.

Contrast is one of the most attention-compelling attributes of a stimulus. Advertisers

often use extreme attention-getting devices to achieve maximum contrast and, thus,
penetrate the consumer’s perceptual “screen”. For example, we all remember the
advertisements for Ujala, which promised the whiteness of the clothes remaining white. The
advertisements were shot with blue color temperature, with most of the screen being blue
with only the clothes being white. This combination between blue and white provided a
contrast that highlighted the tag line of the product Ujala.

6.5.2 Expectations

People usually see what they expect to see, and what they expect to see is usually
based on familiarity, previous experience, or a set of expectations. In a marketing context, a
person tends to perceive products and product attributes according to his or her own
expectations. A student who has been told by his friends that a particular professor is
interesting and dynamic will probably perceive the professor in that manner when the
class begins; a teenager who attends a horror movie that has been billed as terrifying will
probably find it so. Sometimes, stimuli that conflict sharply with expectations receive more
attention than those that conform to expectations. One study found that people who
believed that they had prepared the dishes they tasted rated the food almost twice as high
as others who tasted the same food
 53

but did not prepare it. These results have implications for many “I made it myself” products.
Marketers should stress the self-preparation aspects in all the promotions for those products,
because such statements are likely to enhance their customers’ satisfaction.

6.5.3 Motives

People tend to perceive the things they need or want: The stronger the need, the
greater the tendency to ignore unrelated stimuli in the environment. A student who is looking
for a new cell phone provider is more likely to notice and read carefully ads for deals and
special offers regarding such services than his roommate who is satisfied with his present
cellular service. In general, there is a heightened awareness of stimuli that are relevant to
one’s needs and interests and a decreased awareness of stimuli that are irrelevant. An
individual’s perceptual process simply attunes itself more closely to those elements in the
environment that are important to him or her. Someone who is overweight is more likely to
notice ads for diet foods; a sexually repressed person may perceive sexual symbolism
where none exists.

Marketing managers recognize the efficiency of targeting their products to the

perceived needs of consumers. For example, a marketer can determine through
marketing research what different segments of consumers’ view as the ideal attributes of
the products they need and wish to purchase. The marketer can then segment the market
on the basis of those needs, and vary the product advertising, so that consumers in each
segment will perceive the product as meeting their own special needs, wants, or interests.

6.5.4 Selective Perception

As the preceding discussion illustrates, the consumer’s selection of stimuli from the
environment is based on the interaction of expectations and motives with the stimulus itself.
Selective exposure occurs when consumers tune into messages that they find pleasant or
with which they are sympathetic, and they actively avoid painful or threatening ones. They
also selectively expose themselves to advertisements that reassure them of the wisdom of
their purchase decisions.

Consumers exercise a great deal of selectivity in terms of the attention they give to
commercial stimuli. Selective attention is consumers’ heightened awareness of stimuli that
meet their needs or interests and minimal awareness of stimuli irrelevant to their needs.
Thus, consumers are likely to note ads for products that would satisfy their needs and
disregard those in which they have no interest. People also vary in terms of the kinds of
information in
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which they are interested and the form of message and type of medium they prefer. Some
people are more interested in price, some in appearance, and some in social acceptability.
Some people like complex, sophisticated messages; others like simple ones.

Perceptual defense takes place when consumers subconsciously screen out stimuli
that they find psychologically threatening, even though exposure has already taken place.
Thus, threatening or otherwise damaging stimuli are less likely to be consciously perceived
than are neutral stimuli at the same level of exposure. Furthermore, individuals sometimes
unconsciously distort information that is not consistent with their needs, values, and beliefs.
One way to combat perceptual defense is to vary and increase the amount of sensory input.
For example, because surveys showed that most smokers no longer pay attention to the
written warning labels on cigarette packs, some laws now require tobacco firms to feature
graphic health warnings on cigarette packs and vary the text of these messages.

Consumers often protect themselves from being bombarded with stimuli by “blocking”
some stimuli from conscious awareness. They do so out of self-protection, because of the
visually overwhelming nature of the world in which we live.

6.6 Summary

Perception is the process by which individuals select, organize, and interpret stimuli
into a meaningful and coherent picture of the world. Perception has strategy implications for
marketers because consumers make decisions based on what they perceive rather than on
the basis of objective reality. Understanding of different elements of perception, like
subliminal stimulus, just noticeable difference, threshold difference, minimum threshold,
benefits the marketer to produce the optimal marketing strategy and advertisements.

6.7 Review Questions

1. What is perception?

2. What are the different elements of perception?

3. What is differential threshold?

4. What is subliminal perception?

5. What is perceptual selection?

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LESSON-7

CONSUMER ATTITUDE
Learning Objective

After studying this unit, you must be able to discuss:

 Consumer attitude

 Formation of attitude

 Various factors affecting attitude

 Marketing strategies affect attitude

Structure

7.1 Introduction

7.2 Attitude Formation

7.3 Summary

7.4 Review Questions

7.1 Introduction

An attitude is a learned predisposition to behave in a consistently favorable or

unfavorable way toward a given object. In the context of consumer behavior, an “object” can
be a product, brand, service, price, package, advertisement, promotional medium, or the
retailer selling the product, among many other aspects of consumption.

Attitudes are learned from direct experience with the product, word-of-mouth,
exposure to mass media, and other information sources that consumers are exposed to.
Attitudes reflect either favorable or unfavorable evaluations of the attitude object and
motivate consumers to either buy or not buy particular products or brands. Consumers buy
products toward which they have positive and favorable feelings; therefore, marketers must
ensure that consumers maintain these attitudes following the purchase so that they keep
buying same products repeatedly.
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7.2 Attitude Formation

As consumers, all of us have many attitudes toward products, services,

advertisements, the Internet, and retail stores, among many others. Whenever we are asked
whether we like or dislike a product (e.g., Little Heart cookies), a service (e.g., BSNL
network), a particular retailer (e.g., Nilgiris Supermarket), a specific direct-online
marketer (e.g., Amazon.com), or an advertising theme (e.g., “Snickers Satisfies”), we are
being asked to express our attitudes. By studying consumers’ attitudes, marketers try to
determine whether consumers will accept new products the company is considering, gauge
why market segments were not persuaded by promotional themes, or learn how target
customers are likely to react to new products, packages and the like. To illustrate, Nike or
Reebok frequently study consumers’ attitudes towards the functional and aesthetic design
of athletic footwear. They regularly gauge reactions to their latest advertising and other
marketing messages designed to form and change consumer attitudes. Attitudes are
cognitions and not easily observable, but researchers can assess them by asking questions
or making inferences from behavior.

Attitudes are directed at objects, such as products, product categories, brands,

services, promotional messages, websites, media, retailers, and many other entities. We
must note that although attitudes generally lead to behavior, they are not synonymous
with behavior. Sometimes, attitudes reflect either a favorable or an unfavorable evaluation
of the attitude object, which might or might not lead to behavior. Attitudes might propel
consumers toward a particular behavior or repel them away from such.

7.2.1 Attitude Learning

Consumers form new attitudes and also change existing attitudes. They often form
positive attitudes towards new items under the same brand that they have been buying
repeatedly and havebeen satisfied with. Nevertheless, consumers often try new products,
product models, and different brands. If such trial purchases meet or exceed their
expectations, then they develop favorable attitudes toward those objects. Generally, the
more information consumers have about a product or service, the more likely they are to
form attitudes about it, either positive or negative. However, if the product is irrelevant to
them, the consumers will not cognitively process any of the available and applicable
information. Furthermore, consumers often use only a limited amount of the information
available to them. Typically, only two or three prominent beliefs about a product play a role in
the formation of attitudes, and less important beliefs carry little weight. Therefore,
advertisements should be focused on the key points that differentiate products from
competitors, and not detail too many of the products’ features.
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7.2.2 Sources Of Attitude Formation

Personal experience, family and friends, media, the Internet, and (increasingly) social
media strongly affect attitudes. A primary source of attitudes toward products is the
consumers’ direct experiences in trying and evaluating them. Recognizing the
importance of direct experience, marketers attempt to get consumers to try new products
by offering cents-off coupons, free samples, and other inducements. If consumers try and
like the new products, they will form positive attitudes and buy them again. In addition to
personal experience, the family strongly impacts people’s initial shopping-related attitudes.
For instance, young children who were rewarded for good behavior with sweet foods and
candy often retain a taste for (and positive attitude toward) sweets as adults.

Marketers increasingly use online advertising to shape the attitudes of small and
specialized consumer niches, because new technologies enable them to customize
advertising messages and also some products. Online, marketers can target consumers on
the basis of their demographic, psychographic, or geo-demographic profiles with
personalized product offerings (e.g., watches or sets of golf clubs for left-handed
people), and messages demonstrating that they understand consumers’ special needs
and desires. Targeted online marketing can shape attitudes more effectively than other
media because the promotional messages address the needs and concerns of precise
micro-segments, whereas messages carried by traditional media generally reach diverse
and large segments, as well as many consumers who have neither need for nor interest
in the product advertised. Research has also shown that attitudes stemming from direct
experience (e.g., product usage) are more enduring and resistant to competitors’
messages than attitudes originating from promotional messages only (i.e., those developed
without trying the product).

7.2.3 Role Of Personality Factor

Personality traits significantly influence the formation of attitudes. For example,

individuals with a high need for cognition (i.e., those who crave information and enjoy
thinking) are likely to form positive attitudes in response to promotions that include a lot of
detailed, product-related information. In contrast, consumers who are relatively low in this
need are more likely to form positive attitudes in response to ads that feature attractive
models or celebrities, or other peripheral cues about the products advertised. Attitudes toward
new products are particularly influenced by personality characteristics related to one’s
innovativeness.
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7.2.4 Attitude Consitent With Behavior

Similar attitudes consistently lead to the same behaviors. However, despite their
consistency, attitudes are not permanent and can change either seldom or frequently.
Normally, we expect consumers’ behavior to correspond with their attitudes. For example, if
we a study showed that middle class Indian’s prefer buying Maruti Suzuki car over most
other brand, then we can expect that they are more likely to buy a Maruti Suzuki car over
any other brand. In this case, affordability is a “situational” factor.

7.2.5 Situational Factor

Attitudes occur within and are affected by situations. In the previous example we saw
that the average middle class Indian would prefer a Maruti Suzuki car over other brands, and
a key factor to it is the affordability, which is a situational factor. In this context, “situations”
are events and circumstances that influence the relationships between attitudes and
behaviors at particular times. Situations can cause consumers to behave in ways
seemingly inconsistent with their attitudes. For example, if somebody tried different body
spray every time they run out of theirs, it shows a negative attitude towards the brands they
have tried. But in reality, they could have even bought different body sprays because they
wanted to try different products, or that they were only buying things that were on sale. The
opposite may also be true. For example, a small scale business owner who travels a lot
prefers staying at Oyo stays rather than at Hiltons or Holiday Inns, we may infer that they
like staying in Oyo. In fact, they may find Oyo stays to be merely acceptable and would
prefer to stay in Hiltons or Holiday Inns. However, because they own their own business
and travels at their own expense, they may feel that Oyo is “good enough.”

7.3 Summary

An attitude is a learned predisposition to behave in a consistently favorable or

unfavorable way toward a given object. In the context of consumer behavior, object is
interpreted broadly to include the product, brand, service, price, package, advertisement,
promotional medium, retailer selling the product, and many other aspects. Attitudes are
relatively consistent with the behavior they reflect. However, despite their consistency,
attitudes are not necessarily permanent; they do change, and sometimes even frequently.
Attitudes occur within and are affected by situations, events or circumstances that influence
the relationship between attitudes and behavior. Personality traits significantly influence
attitudes.
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7.4 Review Questions

1. What is attitude?

2. How is attitude formed?

3. Give the various factors influencing attitude formation?

4. How do attitude formation affect marketing strategies?

5. How does personality affect attitude?

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LESSON-8

CONSUMER DECISION
Learning Objective

After studying this unit, you must be able to discuss:

 Consumer decision

 Different levels of consumer decision making

 Marketing strategies to influence the different levels of decision making

Structure

8.1 Introduction

8.2 Levels of Consumer decision making

8.3 Summary

8.4 Review Questions

8.1 Introduction

Consumer decision making process involves the consumers to identify their needs,
gather information, evaluate alternatives and then make their buying decision. The
consumer behavior may be determined by economic and psychological factors and are
influenced by environmental factors like social and cultural values. The consumer decision
making behavior is a complex procedure and involves everything starting from problem
recognition to post- purchase activities. Every consumer has different needs in their daily
lives and these are those needs which make than to make different decisions. Decisions
can be complex, comparing, evaluating, selecting as well as purchasing from a variety of
products depending upon the opinion of a consumer over a particular product. This renders
understanding and realizing the basic problem of the consumer decision making process for
marketers to make their products and services different from others in the marketplace.
Marketers are interested in consumers’ purchase behaviors, i.e., the decision making
process. The consumers’ decision making is a choice amongst various alternatives that
address problematic issues like:
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- what to buy;

- where to buy;

- when to buy;

- how to buy;

- how much to buy.

8.2 Levels Of Consumer Decision Making

Consumer decision making involves a continuous flow of interactions among

environmental factors, cognitive and affective processes and behavioral actions. A
consumers’ decisions are based on knowledge, affect and behavior related to the marketing
mix.

There are five levels in the consumer decision making process. These are 1. Need
recognition/Problem recognition 2. Pre-purchase information search 3. Evaluation of
alternatives
4. Purchase decision 5. Post-purchase outcome and reactions Each of these stages are
explained as follows:

8.2.1 Need recognition/Problem recognition

This is a stage of perceiving a deficiency/need. A need could be triggered off by an

internal stimulus or an external stimulus. For example, a person is thirsty and feels like
having a cola drink. The stimulus is internal. On the other hand, while walking across the
street, he sees a hoarding which shows a person having a frosted, chilled cola, and he too
desires to have the same, the need is said to have been stimulated by an external stimulus.

A need or problem recognition could be Simple or Complex.

a) Simple: Simple problem recognition is similar to Structured Problems; They occur

frequently as a routine and can be dealt with automatically without much effort.

b) Complex: A Complex problem recognition is similar to Unstructured Problems;

They occur infrequently as unique and non-routine and need considerable effort to be
solved.

A need or problem recognition could result when:

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a) the Actual State changes (AS type): - the product is failing, or the consumer is
running short of it; - there is a problem that exists. - consumers who react in such situations
are called AS Types. Example: A product stops functioning and the customer needs a
replacement; eg. A refrigerator; Samsung One door: Standard;

b) the Desired State changing (DS type): - there is an imbalance between the actual
state and the desired state - another product seems better and superior to the one that is
being currently used; -consumers who react in such situations are called DS Types.
Example: The product is functioning properly; but the consumer wants to buy an upgraded
model; eg., The refrigerator is functioning properly; However, the customer wants to buy
another one which has more features and is more modern; Samsung Two doors: Deluxe:
Frost free; Which of the particular styles operates’ depends on the product or service in
question as well as the situation.

Whether a problem is an AS or DS Type also gets affected by an individual and his

personality. Some consumers are AS Types, who realize that there is a problem after it has
arisen, and so they go in for a purchase; They are reactive by nature; Eg. The consumer
reacts after the refrigerator breaks down. Other consumers are the DS Types, who want to
upgrade to better/newer products; They are proactive; Eg. Want to purchase a newer
model of the refrigerator.

A need is recognized in any of the following situations:

a) When a current product brand X is not performing well.

b) When the current product brand X is nearing depletion.

c) When another brand Y seems superior to the one currently owned, X.

8.2.2 Pre-purchase information search

After a need is recognized, the consumer goes for an information search, so as to be

able to make the right purchase decision. He gathers information about the:

(i) product category and the variations

(ii) various alternatives

(iii) various brands.

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The amount of information a consumer will gather depends on the following:

i) the consumer: demographics (age, gender, education), psychographics (learning,

attitudes, involvement, personality type)

ii) product category: differentiation and alternative brands available, risk, price, social
visibility and acceptance of the product.

iii) situation: time available at hand, first time purchase, quantity of information
required, availability of information.

8.2.2.1 Types of Search Activity

The information search activity may be of various types, viz, specific, ongoing and
incidental.

(i) Specific: This type of search activity is specific to the problem and/ immediate
purchase; it is spurred as the need arises, and the consumer actively seeks information.
Example: student enters college and needs to buy a laptop so that he can work on his
assignments.

(ii) Ongoing: Here the search activity is a gradual process that could span over time.
Example: the same student, has been thinking of purchasing the laptop since the past five
years, and over these past 5-6 years, he has been gathering information specific to the
laptop as a product category and also about the various brands available.

(iii) Incidental: This is a byproduct of another search activity or experiences.

Consumers absorb information from their day to day routine activities and experiences.
Example: the student goes to a mall; he has gone there to help his mother buy a microwave
oven; there in the store, he attends a demonstration of a new laptop that is being launched.

8.2.2.2 Information Sources

The information sources are of two types:

i) Internal sources: This includes the consumer and his self. He recalls information
that is stored in his memory (comprising information gathered and stored, as well as his
experiences, direct and indirect). Internal sources seem sufficient when: - it is a routine
purchase - the product is of low involvement
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ii) External sources: Here the consumer seeks information from the external
environment. External sources of information include: -Interpersonal communication (family,
friends, work peers, opinion leaders etc.) -Marketing communication or commercial
information (advertisements, salespeople, company websites, magazines etc.) -Other
public sources (editorials, trade magazines and reports, consumer awareness programmes
on TV, Internet etc.) External sources are resorted to in cases where: - past knowledge
and experience is insufficient. - the product is of high involvement and the risk of making
a wrong decision is high.

8.2.3 Evaluation of alternatives

Once the consumer has gathered information and identified the alternatives, he
compares the different alternatives available on certain criteria. This involves: i) Generation
of choice alternatives; ii) Identification of evaluative criteria: Attributes and Benefits; iii)
Application of Decision Rules.

Once the consumer has gathered information and identified the alternatives, he
compares the different alternatives available on certain criteria. This involves:

i) Generation of choice alternatives: While generation of alternatives, a consumer

moves from an evoked set towards the choice set.

 Evoked set/Consideration set: This is the set of alternatives that he actively

considers while making a purchase decision; these exist either in his memory
or feature prominently in the environment. The consumer perceives them to
be acceptable.

 Inept set: These are those alternatives from the evoked set that the consumer
excludes from further consideration, as he perceives them to be inferior and
unacceptable.

 Inert set: These are those alternatives from the evoked set that the consumer
excludes from further consideration, as he is indifferent towards them and
perceives them as ones without much advantages or benefits.

 Choice set: This comprises the final set of one or two brands from which he
finally decides.
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ii) Identification of Evaluative Criteria: Attributes and Benefits: These are objective
and subjective parameters of the brand that the consumer regards as important, and
uses as standards to discriminate among the various alternatives. The consumer evaluates
the different alternatives on one or few or many of these features and then makes a final
choice. They are features that a consumer considers in choosing among alternatives; these
could be functional/ utilitarian in nature (benefits, attributes, features), or
subjective/emotional/hedonic (emotions, prestige etc.). The major evaluative criteria are:

 Economic: Price, Value (Product Attributes, Brand image, Evaluation of

Quality, Price, & Features).

 Behavioral: Need/motivation, Personality, self-concept and self-image,

Lifestyle etc.

 Social influences: Group influences, environmental issues etc.

iii) Application of Decision Rules to make a final choice amongst alternatives: The
consumer uses certain decision rules. The decision rules help a consumer simplify the
decision process; the various evaluative criteria are structured and integrated so as to
simplify the evaluation process.

8.2.4 Purchase decision

After the consumer has evaluated the various alternatives, he selects a particular
brand.
Consumer purchases may be trials/first purchases or repeat purchases.

Trials/First purchase: Trials could be elicited through market testing, or through

promotional tactics such as free samples, coupons, etc.

Repeat purchases: If the consumer is satisfied, he would buy the brand again.
Repeat purchases lead to brand loyalty.

The consumer may further have to make decisions on:

a) where to buy from? (Place: Real/brick and mortar or virtual/online); b) whom to buy
from? (Which store: Depends on reputation of seller, past experience, etc.); b) when to buy?
(Time: Emergency or Routine; During season, off season, sale, rebate etc.)
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It is noteworthy that a purchase intention (desire to buy the most preferred brand)
may not always result in a purchase decision in favor of the brand; it could get moderated
by (i) Attitudes of others; and (2) Unexpected situational factors.

8.2.5 Post-purchase outcome and reactions

The post purchase outcome and reactions contains two stages; Stage I comprises Post
purchase Cognitive Dissonance, and Stage II comprises Product usage and reaction.

Stage I: Post purchase Cognitive Dissonance: This is a feeling of tension and anxiety
that a consumer experiences after the purchase of a product. The consumer begins to have
a feeling of uncertainty with respect the performance of the product and begins to doubt
his purchase decision “whether the decision was the right one?”. He begins to ask himself
the following questions:

a) Have I made the right choice?

b) Have I purchased the right brand?

c) Have I got value for money?

The Fox and the Sour Grapes is a perfect example of Cognitive Dissonance.

Cognitive dissonance generally occurs in cases where:

(i) the decision making and purchase relates to a high involvement product;

(ii) the purchase activity is irrevocable;

(iii) the consumer cannot return the product;

(iv) the various alternatives have desirable features and are all comparable;

(v) the alternatives are also unique in some way or the other.

Consumers try to reduce this dissonance by:

(i) gaining more product information;

(ii) discussing with other satisfied customers who have bought the same product/brand;

(iii) going back to the dealer and asking for reassurances.

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Other methods that consumers employ to reduce cognitive dissonance are by: -
rationalizing that the choice that they have made is the right one. -refer to data (printed/audio
visual) that supports and recommends the chosen product/brand. -make others buy the
same product/brand to reassure their choice.

Marketers also employ strategies to reduce this dissonance by providing guarantees

and warranties, membership to company consumer forums and communication and follow
up with the customers.

Stage II: Product usage and reaction: After the purchase, the consumer uses the
product and re evaluates the chosen alternative in light of its performance viz. a viz. the
expectations. This phase is significant as it (i) acts as an experience and gets stored in
the memory; (ii) affects future purchase decisions; (iii) acts as a feedback. There could be
three situations that can arise: -Performance meets expectations: This leads to a neutral
feeling; Customer may think of more suitable alternatives next time. -Performance exceeds
expectations: The customer is satisfied and this leads to a positive feeling. He would tend to
repeat purchase and it would lead to brand loyalty. He would also spread positive word of
mouth. -Performance falls short of expectations: Here, the customer is dissatisfied and this
leads to a negative feeling. The customer would search for other alternatives, express
grievances, spread negative word of mouth and may even resort to legal action.

8.3 Summary

Consumer decision making process involves the consumers to identify their needs,
gather information, evaluate alternatives and then make their buying decision. The
consumer behavior may be determined by economic and psychological factors and are
influenced by environmental factors like social and cultural values. The different levels of
consumer decision making influences the consumer behavior and the marketing strategies
applied to influence the decision making. Each level represent a stepping stone or a final
point of decision making by the consumer. Appealing to all the levels of the decision
making makes for successful marketing.

8.4 Review Questions

1. What is consumer decision making?

2. What are the different levels of consumer decision making?

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3. What is problem recognition in decision making?

4. What is Pre-purchase information search?

5. What are the Evaluation of alternatives?

6. What is Purchase decision?

7. What is post-purchase outcome and reactions?

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LESSON-9

MODELS OF CONSUMER DECISION

Learning Objective

After studying this unit, you must be able to discuss:

 Different models of consumer decisions

 Categories in consumer decision making

 How lifestyle affects consumer decision making

Structure

9.1 Introduction

9.2 Four Models of Consumer Decision

9.3 Category Based decision making

9.4 Lifestyle and Consumer decision

9.5 Summary

9.6 Review Question

9.1 Introduction

Consumer decision making process involves the consumers to identify their needs,
gather information, evaluate alternatives and then make their buying decision. The
consumer behavior may be determined by economic and psychological factors and are
influenced by environmental factors like social and cultural values. In this unit we are going
to look into the different models of consumer decision making and how it affects marketing
strategies and markets, and how the different lifestyles and categories affect decision
making.

9.2 Four Models of Consumer Decision

The consumer’s decision making model deals with the process of consumer decision
making. This model consists of three stages the Input stage; the Process stage and the out
put stage.
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The input stage can be broadly categorized into Firms efforts and Socio-cultural
Environment. The firm’s efforts relate to the firms marketing mix, i.e. Product, Promotion,
Price, Channels of Distribution, People and Physical evidence. This stage involves the
activities the firm undergoes to sell their products. Socio-cultural environment on the
other hand is the environment of friends, family, society, culture and sub culture that
surround a consumer.

The input stage affects a consumer’s decision making. The decision-making is the
second stage called process. In this stage the consumer does him pre-purchase research
and evaluation based on the firms efforts and socio-cultural environment. The firm’s efforts
and socio-cultural environment influence a consumer’s psychological field. The
psychological field consists of Motivation, Perception, Learning, Attitude and Personality
of a consumer. This stage also evaluates the past experience of the consumer.

The final stage in the consumer decision-making is the Output stage. This stage is
concerned with the actual purchase, repurchase and the purchase evaluation.

9.2.1 Cognitive View

Cognitive View explains decision making from the thinking problem solver’s
perspective. According to Cognitive view, decision-making is an emotional or reasoning
process, which can be rational or irrational and can be based on explicit assumptions or
tacit assumptions. The most important characteristic of this view is that, a consumer is in
pursuit of information until a satisfactory solution is found. Once the satisfactory solution is
found, the process of collecting information is terminated. Problem solving view defines a
consumer who lies between the two extremes of passive and economic view. It is believed
that a consumer cannot have all the knowledge of all the alternative products. Hence the
consumer’s decisions are not perfect. But nevertheless the consumer actively seeks
information and attempts to make satisfactory decision. In a cognitive view, the consumer
has a predefined goal. The next step is action plan or way to achieve the goal. The third
step is implementation of this action plan and controlling it. The final step is attainment or
failure of Goal.

9.2.1.1 Consumer Decision Making and Cognitive Learning.

As defined earlier, the first step in any decision-making is a need reorganization or

goal. A consumer’s cognitive learning is related to pre-purchase search and evaluation of
alternatives.
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For example, if a person is looking to buy a car he will first decide what features does
he want in his vehicle. Whether his first preference is safety or performance. Based on this
evaluation he will evaluate various car models available in the market.

The consumer’s psychological field will come into play once he has identified his
goal. The cognitive learning combined with attitude, personality and previously will form a
perception in a consumer’s mind. This perception will thus motivate a consumer make a
purchase decision.

9.2.1.2 Marketer’s Efforts

A firm’s marketing efforts play a very important role in influencing cognitive learning
process. Over the years the marketers has provided the consumers with information to make
them believe that they have sufficient knowledge and thus spur the decision making
process.

The best example of this can be seen as the “Free” or “Sale” adverts. These adverts
convey that something is free or there is a sale on. This “Free” or “Sale” sticker on the
window display of store is enough to attract the consumers inside the store.

Marketers have used Promotional Model and Diffusion of Innovation to influence the
consumer’s cognitive learning. The promotional model focuses on Attention, Interest, Desire
and Action.

The “Sale” sign is to attract the costumer’s attention. “Up to 50% off” written under
the sale sign is to create interest. Store design and reduced prices to instigate the desire
and marketing campaign to cause Action. There is silent need of a consumer to buy
clothes. The moment the consumer comes across the “Sale” sign, the final piece of
information is received that instigates action.

The marketer’s over time introduce new technology and new products, using the
Innovation Diffusion, to affect the person’s cognitive learning and thus drive sales.

Various automotive companies use the cognitive model to understand their customer
and hence sell their cars. The purchases such as cars, which are expensive, are generally
well thought out. The customers generally do a through pre-purchase research and evaluate
their alternatives before making the purchase. Hence to attract these customers, the
marketers promote their products with test drives, and other adverts that focus mainly on
the features of the vehicles.
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9.2.1.3 Hierarchy of Needs

It can be argued that people looking to satisfying self-actualization need may need
complete information about a product. Their cognitive learning process may vary from that of
those aiming to satisfying physiological, safety, social and esteem needs. But nevertheless,
cognitive learning is ideal for satisfying every need on Maslow’s Hierarchy of Needs. The
degree of information gathered might vary, but learning and information processing will be
constant at each level.

9.2.2 Passive View

Passive view believes that can be manipulated by self-serving interests and

promotional efforts of the marketers. To a certain extent this model can be believed to be
true. But the passive model does not recognize that a consumer plays an equal role in
making the purchase decision. The consumer does make pre-purchase search and
evaluation before buying goods.

This model can be applicable in case of B2C (business to customer) where the
customer is absolutely unaware of good and the marketer is in position to manipulate the
consumers. This is mainly evident in case of tourists. Local sellers and marketers in many
places often manipulate tourists. Since the tourists have very little market and product
knowledge, sales people can manipulate them.

In case of B2B (business to business) application of passive model is highly

debatable, as business men and companies generally go through a through research and
back ground check before buying their desired products. There are of course certain extra-
ordinary incidents, when due to lack of time or resources B2B buyers can also be
manipulated.

9.2.2.1 Consumer Decision Making and Passive View

In the passive view model the marketers generally use their marketing mix to
influence the consumers perception, personality, learning, attitude and motivate the
consumer to buy the product.

Innovation Acceptance Model and Innovation Decision Model are being effectively
used to influence the consumer’s psychological field and hence instigate the consumer to
buy a particular product.
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9.2.2.2 Marketer’s Efforts

Apple Inc for example, have been using the Passive view combined with the
Innovation Diffusion to sale their products. They came up with Ipad in 2010 and with
extensive and unique marketing mix managed to sell it well, now as of 24th March 2011;
people are already queuing for the Ipad 2. It is nothing but belief in the passive model that
is driving the sale of various electronic innovations in today’s world.

There are various other companies that make an effective use of passive view. The
most notable among these are the high street fashion design labels. These retailer introduce
their seasonal fashion, they popularize it using their extensive marketing campaign and sell
them successfully at a profit. Louis Vuitton for example have been following a concept of
retro marketing and selling their products to the customers at a high price and particular
trademark design.

9.2.3 Economic View

Economic view believes in a world of perfect competition, where consumers make

rational decisions all the time. In the true sense of the world this model is inappropriate as
there can never be a situation of perfect competition. Besides it is also not possible for the
consumer to make rational decisions all the time. Because for making rational decisions a
consumer will have to be aware of all the products in the market, all possible alternatives
and their features. Having all this information is literally impossible in today’s fast changing
world.

9.2.3.1 Consumer Decision Making and Economic view

The consumer’s economic decisions are mainly influenced by their needs, attitude,
personality, cultural environment, and marketer’s efforts.

The economists believe that the decline in price of a product will increase the
demand. It is not always true. The consumers consider the price as something they have to
give up for the product. So the decision depends on the need for the product. Maslow’s
hierarchy of needs depict the security and psychological needs as a set of desires which
forces buyers to focus more on food, shelter, family and safety rather than price.

The attitude and personality also come into action during the decision making
process. This has been clearly reflected in Maslow’s esteem needs. The economic view of a
buyer with an attitude of self respect and esteem concentrate on their possessions. And the
spotlight on
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the product and not the price influences their decisions. For instance, buying premium range
clothes boasts the buyer’s esteem and attention from others. Consumers with this attitude
may fall under the category of materialistic people.

The economic view of a buyer depends on their personality of seeking for the
potential and value of the product. Buyers satisfy their actualization needs by comparing
price and quality of the product with the available alternatives. The psychological traits sets
the

The cross-cultural analysis reveals the fact that the benefits of products or services
consumed differ from one country to another. For instance, possessing premium cars in
Africa portrays ones esteem in the society.

The marketers still consider that the consumer’s economic vision towards a product
has little real life application. It is unlikely that the consumer will be aware of the knowledge
of all the alternatives. The consumer with an economic view conducts an extensive
decision making through comparing. So the marketers come up with tactical pricing strategies
illustrating discounts and offers to motivate the stimuli of the consumers effectively.
However, in B2B market it is different. The business markets have well-organized
resources to attain the knowledge and the potential of the products and services.

9.2.3.2 Marketer’s Efforts

Various marketers have been using the low pricing and the economic view to attract
their target market and thus increase their sales. The Pound stores in the UK and Dollar
Stores in the United States of America are the examples of use of economic model.
Various and frequent sales and low pricing offers by the companies to increase their sales
are also examples of economic view. Primark would be an ideal example of a company that
tries to make best of the economic view model. The company sells its merchandize at
prices, which are lowest in the market. The quality of the products though, is not as good as
other in the same market.

9.2.4 Emotional View

Emotional view believes in targeting emotions and impulse of the consumers. This
view believes that there are certain feelings or emotions like joy, love fear fantasy etc
attached to every purchase of the consumers. A consumers is less likely to do pre-
purchase evaluation and search before emotional purchase.
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9.2.4.1 Consumer Decision Making and Emotional View

An emotional view model deals with the personality and attitude of the consumer.
The emotions of a consumer attached to a particular product motivate the consumer to
make a particular decision. Over the years the marketers have used emotions in the their
adverts and marketing campaign to influence the personality and the attitude of the
consumer.

9.2.4.2 Marketer’s Efforts

Over the years football clubs have sold their merchandize on the basis of the
emotional view. The various holiday packages use emotions to attract the customers. My
real-estate seller promote their homes and other properties with a tag line “Your Home” etc
just to attract the emotional aspect to their product. The Body Shop has been using the
emotional model attract its consumers. The company portrayed itself as more humanitarian
than the others in the same industry, by campaigning against animal testing.

Marketers have also been doing various other things with the physical evidence of
their stores to attract the emotional feel. In Tesco, there is a scent of fresh bread in the
bakery section. The All Saints have designed their stores with a display of old sewing
machines and other cloths manufacturing goods of the old times.

9.2.4.3 Hierarchy of Needs

The emotional view is about satisfying the self-actualization need of the customer. It
is more about doing things or buying things to feel good. But it can be argued that
emotional views are also about fulfilling social and esteem needs to a certain extent.

9.3 Category Based Decision Making

When it comes to purchases with which consumers are highly involved—like buying a
car or planning a summer vacation—buyers weigh personal, social and economic risks.
Those risks carry more weight in decisions that are more visible or involve higher-priced
objects:

 Personal:

 Social:

 Economic:
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Not every purchasing decision is one with which consumers are highly involved,
though.
Generally speaking, there are four categories of consumer buying behavior:

1. Routine response: When you go to the grocery store and are trying to grab a loaf of
bread, odds are you’ll either buy the variety you’re familiar with or the one that is carrying the
lightest price tag. In these situations, products are essentially purchased without any
significant thought.

2. Limited decision making: If you’re in the market for some new clothes or a new
collapsible chair that you can bring camping, you might do a little bit of research on brands,
but odds are— unless you’re Kate Moss or some other model or celebrity—you’re going to
go with what’s in your budget and what looks good or seems the most practical.

3. Extensive decision making: Imagine you’re a first-time homebuyer looking to settle into
your first home with your new spouse. You’ve never bought a house before, but obviously
you understand how big of an investment and how expansive a decision such a purchase is.
Such a decision comes with evident economic risks. But how are you going to feel,
personally, about the purchase? How are your peers going to look at you? Extensive
decision making requires the most research.

4. Impulsive buying: Consumers who buy something impulsively wake up that day without
knowing they’re going to spend money on a particular item. But all of a sudden, they are
inspired for whatever reason and make the purchase. Impulsive buying requires no
conscious planning. The person who goes to a liquor store to buy a six-pack and snags an
airplane bottle of whisky when checking out is someone who’s just bought something
impulsively.

9.4 Lifestyle And Consumer Decision

Lifestyle is an important aspect when looking at consumer choices. Just because

there may be two people with similar age, gender, and income, does not mean they’re
likely to purchase the same products. Below will be some examples of why lifestyle is an
important aspect to consider.

Social status

Social status is one of the key elements to how and why people buy certain products
and services. It affects the quality and quantity of what people buy. The rich have more
money to spend on higher quality products. They may aim for brand names like Armani and
Gucci.
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Though the lower class will focus more on necessities and focus on buying one nice
outfit, but then spend more on food and their home.

Eg: If we compare the higher class and lower class in buying cars. The higher class
have more money to spend, they think about style, brand, comfort, safety and anything that
heightens their status. This might make them choose an Audi. But the lower class have less
money to spend so need to focus on what’s most important. They’ll focus greater on safety
and reliability, so they may end up buying an older Maruti Suzuki.

Product involvement

People’s lifestyle comes into play especially when they come to high involvement
products. These products carry high risk, are complex or have high price tags. They may be
a car, home or insurance policy lifestyle comes into play here. We have already seen an
example of what kind of house a couple in their mid 20s and a couple in their mid 40s
might buy in a previous chapter. Depending on their lifestyle, they might buy an apartment
in the city or an individual house in the suburbs. No matter what they choose to buy the
involvement required by them in the decision making and purchasing is high. Each will go
through an extensive problem solving process in order to find their home.

Activities

The activities people undertake vitally determines how their money will be spent. For
example: if a person is dedicated to the gym and works in a gym, then they’re likely to spend
most of their money on gym clothes, weights, exercise machines and healthy food.

Self-image

Self-image is a strong aspect when thinking about how lifestyle affects purchases.
The way someone feels they should look will strongly affect what they buy. For example,
take an individual who has a strong sense of self image, they can walk into a high class
restaurant in leisure clothes or gym clothes, have dinner with their friends or family
without being self- conscious about their clothing. Whereas somebody with low self-image
might wear an Armani suit to the same occasion and still feel out of place.

There are so many factors which can influence peoples buying habits, and lifestyle is
definitely a strong one. How people want to look mixed with the amount of income they earn,
defines how their spending habit form.
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9.5 Summary

Consumer decision making process involves the consumers to identify their needs,
gather information, evaluate alternatives and then make their buying decision. The
consumer behavior may be determined by economic and psychological factors and are
influenced by environmental factors like social and cultural values. The various factors
involved in the decision making process should be studied extensively by the marketers to
effectively market their products or services.

9.6 Review Questions

1. What is decision making?

2. What is consumer decision making?

3. What are the models of consumer decision making?

4. What are category based decision making?

5. How does lifestyle influence consumer decision making?

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LESSON-10

GIFTING BEHAVIOR AND

RELATIONSHIP MARKETING
Learning Objective

After studying this unit, you must be able to discuss:

● Gifting behavior

● Types of gifts

● How gifting behavior affects marketing strategies

● Relationship marketing

● Advantages, benefits of relationship marketing

Structure

10.1 Introduction

10.2 Gifting Behavior

10.3 Relationship Marketing

10.4 Summary

10.5 Review Questions

10.1 Introduction

Gifts are a particularly interesting part of consumer decision-making. Gifts represent

more than ordinary, “everyday” purchases, because they are symbolic, and mostly
associated with important events (e.g., Mother’s Day, births and birthdays, engagements,
weddings, graduations, and many other accomplishments and milestones). Relationship
marketing is a strategy designed to foster customer loyalty, interaction and long-term
engagement. It is designed to develop strong connections with customers by providing
them with information directly suited to their needs and interests and by promoting open
communication.
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10.2 Gifting Behavior

Gifting behavior is a gift exchange that takes place between a giver and a recipient.
The definition is broad in nature and embraces gifts given voluntarily (“Just to let you know
I’m thinking of you”), as well as gifts that are an obligation (“I had to get him a gift”). It
includes gifts given to (and received from) others and gifts to oneself (“self-gifts”). Moreover,
the majority of products that we refer to as “gifts” are in fact items that we purchase for
ourselves.

Gifting represents symbolic communication, with meanings ranging from

congratulations, love, and regret to obligation and dominance. The nature of the relationship
between gift giver and gift receiver determines the gift chosen, but can also have an impact
on the subsequent relationship between the giver and the recipient. There are several types
of gifts:

1. Intergroup Gifting occurs whenever one group exchanges gifts with another group
(such as one family with another). Similarly, gifts given to families will be different than those
given to individual family members. For example, a “common sense” wedding gift may
include products for setting up a household rather than a gift that would be used personally
by either the bride or the groom.

2. Intercategory Gifting takes place when either an individual is giving a gift to a group
(a single friend is giving a couple an anniversary gift) or a group is giving an individual a gift
(friends chip in and give another friend a joint birthday gift). The gift selection strategies “buy
for joint recipients” or “buy with someone” are especially useful when it comes to a difficult
recipient situation (when “nothing seems to satisfy her”). These strategies can also be
applied to reduce some of the time pressure associated with shopping for the great
number of gifts exchanged during the Indian Diwali-season gift-giving ritual. For example, a
consumer may choose to purchase five intercategory gifts for five aunt-and-uncle pairs
(intercategory gifting), instead of buying ten personal gifts for five aunts and five uncles
(interpersonal gifting). In this way, less time, money, and effort may be expended.

3. Intragroup Gifting is characterized by the sentiment “we gave this to ourselves”;

that is, a group gives a gift to itself or its members. For example, a dual-income couple may
find that their demanding work schedules limit leisure time spent together as husband and
wife. Therefore, an anniversary gift (“to us”) of a long weekend in Andaman Islands would
be an example of an intragroup gift. It would also remedy the couple’s problem of not
spending enough time together. In contrast, interpersonal gifting occurs between just two
individuals: the gift giver and the gift receiver. By their very nature, interpersonal gifts are
intimate because
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they provide an opportunity for a gift giver to reveal what he or she thinks of the gift receiver.
Successful gifts communicate that the giver knows and understands the receiver and their
relationship. For example, a pair of “just the right” cufflinks given to a friend is viewed by the
receiver as “she really knows me.” In contrast, chocolate and flowers given as a Valentine’s
Day gift, when the recipient is expecting a more intimate gift, can mean the deterioration of a
relationship.

Researchers have discovered that both male and female gift givers feel more
comfortable in giving gifts to the same sex. However, they also experienced more intense
feeling with respect to gifts given to members of the opposite sex. everyone knows that
selecting and giving a gift often causes “gifting anxiety” on the part of the givers, the
recipients, and the gifting situations. Knowledge of gender differences is therefore useful for
marketers, because it implies that additional support might be appreciated at the point of
purchase (while in a store) when a consumer is considering a gift for an opposite-sex
recipient.

The gifting process starts with the question: “Should I give a gift to X?” The answer
can be yes or no depending on a variety of factors (e.g., relationship, occasion). If the
answer is yes, the gift giver continues by asking: “What shall I give X as a gift?” This leads
to the next question: “Do I wantto give X something that X desires (i.e., do I want to put in
some real effort researching the gift)?” If the answer is yes, the gift giver is then faced with
the question: “How do I learn what X desires as a gift?” Here there are two choices:
predicting the preferences of the recipient or asking the recipient what he or she desires. If
the consumer answers no to the question, “Do I want to give X something that X desires?”
then the gift giver has two choices (according to the model): (1) to give a gift that he or she
would like (i.e., “To you for me”), or (2) to give a gift that attempts to alter or improve the
gift receiver to the gift giver’s liking (i.e., “Identify imposition”). The symbolic messages
associated with these gifts tend to be less valued by the recipient. If preference prediction
rather than direct questioning of the recipient for a gift idea is chosen, then there will be an
element of surprise. In addition, if the giver does not bother to learn the recipient’s
preferences, then the outcome can also be a surprise—but maybe not a good surprise.

10.3 Relationship Marketing

Relationship marketing is a strategy designed to foster customer loyalty, interaction

and long-term engagement. It is designed to develop strong connections with customers by
providing them with information directly suited to their needs and interests and by promoting
open communication.
82

Relationship marketing is a facet of customer relationship management (CRM) that

focuses on customer loyalty and long-term customer engagement rather than shorter-term
goals like customer acquisition and individual sales. The goal of relationship marketing (or
customer relationship marketing) is to create strong, even emotional, customer connections
to a brand that can lead to ongoing business, free word-of-mouth promotion and information
from customers that can generate leads.

Relationship marketing stands in contrast to the more traditional transactional

marketing approach, which focuses on increasing the number of individual sales. In the
transactional model, the return on customer acquisition cost may be insufficient. A customer
may be convinced to select that brand one time, but without a strong relationship marketing
strategy, the customer may not come back to that brand in the future. While organizations
combine elements of both relationship and transactional marketing, customer relationship
marketing is starting to play a more important role for many companies.

10.3.1 Importance of relationship marketing

Acquiring new customers can be challenging and costly. Relationship marketing

helps retain customers over the long term, which results in customer loyalty rather than
customers purchase once or infrequently.

Relationship marketing is important for its ability to stay in close contact with
customers. By understanding how customers use a brand’s products and services and
observing additional unmet needs, brands can create new features and offerings to meet
those needs, further strengthening the relationship.

10.3.2 Implementing a relationship marketing strategy

Relationship marketing is based on the tenets of customer experience

management (CEM), which focuses on improving customer interactions to foster better
brand loyalty. While these interactions can still occur in person or over the phone, much of
relationship marketing and CEM has taken to the Web.

With the abundance of information on the Web and flourishing use of social media,
most consumers expect to have easy, tailored access to details about a brand and even
expect the opportunity to influence products and services via social media posts and online
reviews. Today, relationship marketing involves creating easy two-way communication
between
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customers and the business, tracking customer activities and providing tailored information
to customers based on those activities. For example, an e-commerce site might track a
customer’s activity by allowing them to create a user profile so that their information is
conveniently saved for future visits, and so that the site can push more tailored information
to them next time. Site visitors might also be able to sign in through Facebook or another
social media channel, allowing them a simpler user experience and automatically connecting
them to the brand’s social media presence.

This is where CRM and marketing automation software can support a relationship
marketing strategy by making it easier to record, track and act on customer information.
Social CRM tools go further by helping to extend relationship marketing into the social media
sphere, allowing companies to more easily monitor and respond to customer issues on
social media channels, which in turn helps maintain a better brand image.

10.3.3 Benefits of relationship marketing

Benefits of relationship marketing include:

 Higher customer lifetime value (CLV). Relationship marketing creates loyal customers,
which leads to repeat purchases and a higher CLV. In addition, loyal customers are likely
to become brand advocates or ambassadors, recommending products and services to
friends, family and business associates.

 Reduction in marketing and advertising spend. Spending on marketing and advertising

to acquire new customers can be expensive. Relationship marketing causes customers
to do the marketing for a brand, in what’s called buzz marketing. Customers tell others
about a brand’s products and services, which can drive sales. Brands with exceptional
relationship marketing programs spend little to no money on marketing or advertising.

 Stronger organizational alignment around the customer. Organizations that emphasize

relationship marketing have a stronger organizational alignment around an exceptional
customer experience. The teams work together to create satisfied and happy customers
over the long term.

10.3.4 Examples of relationship marketing

There are several types of activities brands can use to facilitate relationship
marketing, including:
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 Provide exceptional customer service, as customers who are consistently impressed

by a brand’s customer service are more likely to remain loyal to the brand.

 Thank customers through a social media post or with a surprise gift card.

 Solicit customer feedback through surveys, polls and phone calls, which can create a
positive impression that customer opinions are valued and help to create better
products and services.

 Launch a loyalty program that rewards customers for their continued patronage.

 Hold customer events to connect with customers and build a community.

 Create customer advocacy or brand advocacy programs to reward customers who

provide word-of-mouth advertising on a brand’s behalf.

 Offer discounts or bonuses to long-time or repeat customers.

10.4 Summary

Gifts are a particularly interesting part of consumer decision-making. Gifts represent

more than ordinary, “everyday” purchases, because they are symbolic, and mostly
associated with important events (e.g., Mother’s Day, births and birthdays, engagements,
weddings, graduations, and many other accomplishments and milestones). Gifting behavior
is a primary factor that influences consumer decision. Marketing strategies appealing to the
gifting behavior of the consumer ensures the efficiency of the marketing process.
Relationship marketing is a strategy designed to foster customer loyalty, interaction and
long-term engagement. It is designed to develop strong connections with customers by
providing them with information directly suited to their needs and interests and by promoting
open communication.

10.5 Review Questions

1. What is gifting behavior?

2. What are the types of gift?

3. What is relationship marketing?

4. What are the importance of relationship marketing?

5. What are the benefits of relationship marketing?

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LESSON-11

INTRODUCTION TO MARKETING
Learning Objective

After studying this unit, you must be able to discuss:

 Marketing

 Traditional and Modern Methods of Marketing

 Importance of Marketing

 Scope of Marketing

Structure

11.1 Introduction

11.2 Traditional Marketing

11.3 Modern Marketing

11.4 Importance of Marketing

11.5 Scope of Marketing

11.6 Summary

11.7 Review Questions

11.1 Introduction

Marketing is the act of facilitating the exchange of a given commodity for goods,
services, and/or money to deliver maximum value to the consumer. From a societal point of
view, marketing is the link between a society’s material requirements and its economic
patterns of response. Marketing satisfies these needs and wants through both the exchange
processes and building long-term relationships. Marketing can be viewed as an
organizational function and a set of processes for creating, delivering, and communicating
value to customers, and managing customer relationships in ways that benefit the
organization and its shareholders. Marketing is
86

the science of choosing target markets through market analysis and market segmentation, as
well as understanding consumer buying behavior and providing superior customer value.

The official American Marketing Association definition published in July 2013 defines
marketing as “the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.”

11.2 Traditional Marketing

According to the traditional concept, marketing means selling goods and services that
have been produced. Thus, all those activities which are concerned with persuasion and sale
of goods and services, are called marketing. This concept of marketing emphasises on
promotion and sale of goods and services and little attention is paid to consumer satisfaction.
This concept has the following implications:

(a) The main focus of this concept is on product, i.e., we have a product and it has to
be sold. So, we have to persuade the consumers to buy our product.

(b) All efforts of the marketing people are concentrated on selling the product. They
adopt all means like personal selling and sales promotion to boost the sales.

(c) The ultimate goal of all marketing activity is to earn profit through maximisation of
sales.

11.3 Modern Marketing

The modern concept of marketing considers the consumers’ wants and needs as the
guiding spirit and focuses on the delivery of such goods and services that can satisfy those
needs most effectively. Thus, marketing starts with identifying consumer needs, then plan
the production of goods and services accordingly to provide him the maximum
satisfaction. In other words, the products and services are planned according to the needs
of the customers rather than according to the availability of materials and machinery. Not
only that, all activities (manufacturing, research and development, quality control, distribution,
selling etc.) are directed to satisfy the consumers. Thus, the main implications of the modern
concepts are:

i. The focus of this concept is on customer orientation. The marketing activity

starts with an assessment of the customers needs and plan the production of
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items that satisfy these needs most effectively. This also applies to all other
marketing activities like pricing, packaging, distribution and sales promotion.

ii. All marketing activities like product planning, pricing, packaging, distribution
and sales promotion are combined into one as coordinated marketing efforts.
This is called integrating marketing. It implies:

i. developing a product that can satisfy the needs of the consumers;

ii. taking promotional measures so that consumers come to know about

the products, its features, quality, availability etc.;

iii. pricing the product keeping in mind the target consumers’ purchasing
power and willingness to pay;

iv. packaging and grading the product to make it more attractive and
undertaking sales promotion measures to motivate consumers to buy
the product; and

v. taking various other measures (e.g., after sales service) to satisfy the
consumers’ needs.

iii. The main aim of all effort is to earn profit through maximisation of customer
satisfaction. This implies that, if the customers are satisfied, they will continue
to buy, and many new customers will be added. This will lead to increased
sales and so also the profits.

11.4 Importance of Marketing

Marketing is important to the business, consumer as well as the society. This is evident
from the following points.

i. Marketing helps business to keep pace with the changing tastes, fashions,
preferences of the customers. It works out primarily because ascertaining
consumer needs and wants is a regular phenomenon and improvement in
existing products and introduction of new product keeps on taking place.
Marketing thus, contributes to providing better products and services to the
consumers and improve their standard of living.
88

ii. Marketing helps in making products available at all places and throughout the
year. We are able to get Kashmir shawls and Assam Tea all over India and
get seasonal fruits like apple and oranges round the year due to proper
warehousing or proper packaging. Thus, marketing creates time and place
utilities.

iii. Marketing plays an important role in the development of the economy. Various
functions and sub-functions of marketing like advertising, personal selling,
packaging, transportation, etc. generate employment for a large number of
people, and accelerate growth of business.

iv. Marketing helps the business in increasing its sales volume, generating
revenue and ensuring its success in the long run.

v. Marketing also helps the business in meeting competition most effectively.

11.5 Scope Of Marketing

i. Products and Services: Products and Service are the basic element of
marketing. If there is no product there is no marketing. It is concerned with the
nature and type of products, product quality and design, product planning and
development, product decisions relating to branding, labelling, packaging,
trademarks etc.

ii. Marketing Research: Though products and services were the starting point
under traditional marketing, modern marketing starts with an analysis of the
various aspects of market and related areas. It includes an analysis of nature
and types of customers, size of market, customer attitude, buyer behaviour
etc. An in- depth analysis of customers and markets is a prerequisite for
every marketer to have a successful marketing.

iii. Channel of Distribution: The pathway through which the goods move from
producer to consumer is the channel of distribution. It includes a number of
intermediaries like wholesaler, retailers, jobbers etc. Channels by moving the
goods help in transferring the ownership of goods from seller to buyer.

iv. Physical Distribution: The physical movement of the goods from producer to
consumer is physical distribution. It includes transportation, warehousing,
inventory control and management, order processing etc.
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v. Promotional Decisions: Howsoever good a product is it has no value if it is not

properly promoted. Promotion has the basic objective of informing the market
about product availability and creating a demand for it. Different promotional
tools are there like advertising, sales promotion, personal selling, publicity,
public relations etc.

vi. Pricing Decisions: This is the only element of marketing which generates
revenue for the firm. Pricing is concerned with pricing policies and
strategies, price determination, discounts, commissions etc.

vii. Environmental Analysis: An analysis of the environment in which the business

is to be carried out is the first step for any organisation. The various macro
and micro factors should be studied beforehand only to develop an
understanding of the strength, weaknesses, opportunities and threats, for
an organisation. This will help not only in the formulation of the corporate
strategy but marketing strategy as well. It includes the study of economic
environment, geographical environment, political and legal environment,
social and cultural environment, natural and technological environment etc.
in the country and outside.

viii. Feedback from Customers: For successful marketing of goods it is essential

that the marketer obtains the required feedback from customers. A proper
feedback mechanism should be developed so that reasons for failure or less
satisfaction may be identified and improvements in the products be made.

ix. Responsibility towards the Society: Business and society are interrelated and
interdependent. A business cannot exist in vacuum. It derives its much
needed inputs from society and therefore owes a responsibility towards the
society. These social activities are a part of marketing as the units have to
protect and pro0.mote the interest of the society. A marketer to be socially
responsive owes responsibility towards employees, consumer, shareholder
etc.

11.6 Summary

Marketing is the act of facilitating the exchange of a given commodity for goods,
services, and/or money to deliver maximum value to the consumer. Marketing helps
business to keep pace with the changing tastes of the consumers and meeting the threats
posed by competitors. It helps in providing better goods and services to the consumers,
serves consumers by providing
90

product irrespective of time and place and also by providing a wide range of product in
different size, quality, prices etc. Marketing aims to achieve many objectives. It provides
better quality products to the customers to fulfill their needs. It also creates demand of the
product in the market by using various promotional tools. It helps in creating new
customers, maintaining old customers, and generating profit and goodwill for the business.

11.7 Review Questions

1. What is marketing?

2. What is traditional marketing?

3. What is modern marketing?

4. What is the importance of marketing?

5. What is the scope of marketing?

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LESSON-12

MARKETING CONCEPTS
Learning Objective

After studying this unit, you must be able to discuss:

 Marketing Concepts

 Marketing Realities

 Orientation towards market place

 Customer value, satisfaction, and loyalty

Structure

12.1 Introduction

12.2 Marketing concepts

12.3 Marketing Realities

12.4 Orientation Towards market place

12.5 Customer Value

12.6 Customer Satisfaction

12.7 Customer Loyalty

12.8 Maximizing customer lifetime value

12.9 Summary

12.10 Review Questions

12.1 Introduction

Marketing is the act of facilitating the exchange of a given commodity for goods,
services, and/or money to deliver maximum value to the consumer. From a societal point of
view, marketing
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is the link between a society’s material requirements and its economic patterns of response.
Marketing satisfies these needs and wants through both the exchange processes and building
long-term relationships. Having defined marketing in the previous lesson as a social and
managerial process by which individuals and groups obtain what they need and want through
creating and exchanging products and value with others, this lesson examines the important
concepts that are included and implied in this definition. These concepts are indicated in
Figure 12.1.1 and it is important to note that they are linked, with each one building on the
one before it.

Figure 12.1.1 Marketing Concepts

12.2 Marketing Concepts

12.2.1 Needs, Wants and Demands

The most basic concept underlying marketing is that of human needs. A need is a
state of felt deprivation. It is a part of the human makeup. Humans have many needs, viz.,
physical needs, social needs, spiritual needs and so on. Wants are the form taken by needs
as they are shaped by the one’s culture and personality. Wants are thus shaped by both the
internal and external factors. Wants are described in terms of objects that will satisfy needs.
For example, thirst is a need. To quench this thirst, a person may consider a number of
options – drink water or a soft drink or a fruit juice. These objects (which represent the
different choices for a person to fulfill his/her need) comprise the potential want-list. As
people are exposed to more objects that arouse their interest and desire, marketers try to
provide more choices, that is, more want-
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satisfying products. People have almost unlimited wants but limited resources. Therefore,
they want to choose products that provide the most satisfaction for their money. When
backed by buying power (ability), a want becomes a demand.

12.2.2 Products

A product is anything that can be offered to a market to satisfy a need or want.

People satisfy their needs and wants with products. Though the word suggests a physical
object, the concept of product is not limited to physical objects. Marketers often use the
expressions goods and services to distinguish between physical products and intangible
ones. These goods and services can represent cars, groceries, computers, places,
persons and even ideas. Customers decide which entertainers to watch on television,
which places to visit for a holiday, which ideas to adopt for their problems and so on. Thus
the term ‘product’ covers physical goods, services and a variety of other vehicles that can
satisfy customers’ needs and wants. If at times the term ‘product’ does not seem to be
appropriate, other terms such as market offering, satisfier are used.

12.2.3 Value and Satisfaction

When the customers have so many choices to choose from to satisfy a particular
need, how do they choose from among these many products? They make their buying
choices based on their perceptions of a product’s value. The guiding concept is customer
value. A customer will estimate the capacity of each product to satisfy his need. He/She
might rank the products from the most need-satisfying to the least need-satisfying. Of
course, the ideal product is the one which gives all the benefits at zero cost, but no such
product exists. Still, the customer will value each existing product according to how close it
comes to his/her ideal product and end up choosing the product that gives the most benefit
for the rupee – the greatest value.

12.2.4 Exchange, Transactions and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange.
Exchange is the act of obtaining a desired object from someone by offering something in
return. Thought it is only one of the many ways people can obtain a desired object, it allows
a society to produce much more than it would with any alternative system. For an exchange
to take place, several conditions must be satisfied. Of course, at least two parties must
participate, and each must have something of value to the other. Each party also must want
to deal with the other party and each must be free to accept or reject the other’s offer.
Finally, each party
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must be able to communicate and deliver. These conditions simply make exchange possible.
Whether the exchange actually takes place depends on the parties’ coming to an
agreement. If they agree, we must conclude that the act of exchange has left both of them
better off or at least not worse off. After all, each was free to reject or accept the offer. In this
sense, exchange creates value just as production creates value. It gives customers more
consumption possibilities.

A transaction is marketing’s unit of measurement. It consists of a trade of values

between two parties. A monetary transaction involves trading goods and services in return
for money whereas a barter transaction involves trading goods and services for other goods
and services. Transaction marketing is part of the larger idea of relationship marketing.
Marketing is shifting from trying to maximize the profit on each individual transaction to
maximizing mutually beneficial relationships with consumers and other parties. This is based
on the assumption that if good relationships are built, profitable transactions will simply
follow.

12.2.5 Markets

The concept of transactions leads to the concept of a market. A market is the set of
actual and potential buyers of a product. It may exist in a physical environment as a
marketplace or in a virtual environment (on the internet platform) as a marketspace. To
understand the nature of a market, imagine a primitive economy consisting of only four
people – a farmer, a fisherman, a potter and a hunter. There are few different ways in which
these traders could meet their needs. In the first case, self-sufficiency, they gather the
needed goods for themselves. In the second case, decentralized exchange, each person
sees the other three as potential buyers who make up a market. In the third case, centralized
exchange, a new person called a merchant appears and locates in a central area called a
marketplace. Each trader brings goods to the merchant and trades for other needed goods.
Merchants and central marketplaces greatly reduce the total number of transactions needs
to accomplish a given volume of exchange. As economies grow, exchange becomes even
more centralized, as seen in the growth of huge companies. Large supermarkets now serve
millions of people who formerly shopped in smaller outlets.

12.3 Marketing Realities

We can say with some confidence that the marketplace isn’t what it used to be. It is
dramatically different from what it was even 10 years ago. Major Societal Forces Today,
major, and sometimes interlinking, societal forces have created new marketing behaviors,
opportunities, and challenges.
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Here are 12 key ones.

i. Network information technology. The digital revolution has created an Information

Age that promises to lead to more accurate levels of production, more
targeted communications, and more relevant pricing.

ii. Globalization. Technological advances in transportation, shipping, and

communication have made it easier for companies to market in, and consumers to
buy from, almost any country in the world. International travel has continued to
grow as more people work and play in other countries.

iii. Deregulation. Many countries have deregulated industries to create greater

competition and growth opportunities. In the United States, laws restricting
financial services, telecommunications, and electric utilities have all been loosened
in the spirit of greater competition.

iv. Privatization. Many countries have converted public companies to private ownership
and management to increase their efficiency, such as the electricity company
Toshiba Transmission & Distribution Systems (India) Private Limited and the
international airline British Airways in the United Kingdom.

v. Heightened competition. Intense competition among domestic and foreign brands

raises marketing costs and shrinks profit margins. Brand manufacturers are further
buffeted by powerful retailers that market their own store brands. Many strong
brands have become megabrands and extended into a wide variety of related
product categories, presenting a significant competitive threat.

vi. Industry convergence. Industry boundaries are blurring as companies recognize new
opportunities at the intersection of two or more industries. The computing and
consumer electronics industries are converging, for example, as Apple, Sony, and
Samsung release a stream of entertainment devices from MP3 players to plasma
TVs and camcorders. Digital technology fuels this massive convergence.

vii. Retail transformation. Store-based retailers face competition from catalog houses;
direct- mail firms; newspaper, magazine, and TV direct-to-customer ads; home
shopping TV; and e-commerce. In response, entrepreneurial retailers are building
entertainment into their stores with coffee bars, demonstrations, and
performances, marketing an “experience” rather than a product assortment.
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viii. Disintermediation. The amazing success of early dot-coms such as AOL,

Amazon.com, Yahoo!, eBay, E*TRADE, and others created disintermediation in the
delivery of products and services by intervening in the traditional flow of goods through
distribution channels. These firms struck terror into the hearts of established
manufacturers and retailers. In re-sponge, traditional companies engaged in reinter-
mediation and became “brick- and-click” retailers, adding online services to their
offerings. Some became stronger contenders than pure-click firms, because they
had a larger pool of resources to work with and established brand names.

ix. Consumer buying power. In part, due to disintermediation via the Internet, consumers
have substantially increased their buying power. From the home, office, or mobile
phone, they can compare product prices and features and order goods online from
anywhere in the world 24 hours a day, 7 days a week, bypassing limited local
offerings and realizing significant price savings. Even business buyers can run a
reverse auction in which sellers compete to capture their business. They can
readily join others to aggregate their purchases and achieve deeper volume
discounts.

x. Consumer information. Consumers can collect information in as much breadth and

depth as they want about practically anything. They can access online
encyclopedias, dictionaries, medical information, movie ratings, consumer reports,
newspapers, and other information sources in many languages from anywhere in
the world. Social networking sites—such as Dogster for dog lovers, TripAdvisor for
ardent travelers, and Goodreads for book lovers—bring together consumers with a
common interest. At CarSpace.com auto enthusiasts talk about chrome rims, the
latest BMW model, and where to find a great local mechanic.

xi. Consumer participation. Consumers have found an amplified voice to influence peer
and public opinion. In recognition, companies are inviting them to participate in
designing and even marketing offerings to heighten their sense of connection and
ownership. Consumers see their favorite companies as workshops from which they
can draw out the offerings they want.

xii. Consumer resistance. Many customers today feel there are fewer real product
differences, so they show less brand loyalty and become more price- and quality-
sensitive in their search for value, and less tolerant about undesired marketing.
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12.4 Orientation Towards Market Place

As the market has changed, so has the way the company deals with the marketplace.
The company orientation towards marketplace deals with the concepts which a company
may apply while targeting a market. There are basically five different orientations which a
company takes towards the marketplace.

i. Production Concept – In this concept the company mainly tries to increase production
irrespective of demands of the customer. The production concept is almost extinct now
with companies paying more and more attention to the customer. Read more about
The Production concept. The concept is mainly based on the principle that, “as the
productivity levels increase, cost of production decreases, and as a result, customer
will be able to purchase a product at a cheaper rate, which in turn accelerates the
sales of the company.”

ii. Selling concept – The selling concept believes that customers will not
buy products unless persuaded to do so. As we know, this is true even today in case
of certain products such as insurance. Although the customer should use it, they
rarely do. Read more about The Selling concept.

iii. Product Concept – The product concept says that customers will always buy
products which are better in terms of quality performance and features. The concept
is especially applicable in terms of electronics and other techno gadgets
nowadays. Read more about The Product concept. For a product to be successful
under this concept, it should stand apart from the rest of the crowd. Let’s take Apple
and Google for example. The end products of these companies are not only of the
best quality, but are also very exclusive. Hence, companies willing to adapt ‘product
concept’ marketing strategy should not only keep themselves updated with the ever
changing technical trends, but also the needs of their customers.

iv. Marketing Concept – Just like selling is a necessity, similarly branding and marketing
are a necessity in some products. The marketing concept proposes that the success
of a firm depends on the marketing efforts of the company in delivering a value
proposition. Read more about The Marketing Concept. For a company to achieve its
sales target, a great marketing strategy coupled with a proper branding are
absolutely important. Marketing concept thus indicates that for a company and its
product to be successful, it needs to approach the customers with a value
proposition and to deliver the same without fail.
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v. Societal Marketing Concept – The societal marketing concept leads to a company

orientation which believes in giving back to the society what it had received from the
society. This concept believes that the company is profiting because of society and
hence it should also take measures to make sure the society also benefits from the
company. Read more about the Societal Marketing Concept. If a company has
benefited from the society, it should reciprocate the same by striving towards
benefiting the society. This is one of the fastest growing marketing concepts which is
quite capable of creating an indelible impression in the minds of customers, and
along the way, help itself create an unparalleled brand image.

Figure 12.4.1 Marketplace orientation

12.5 Customer Value

Customer Value is the level of satisfaction of your customer towards your

business. Customer value is the perception of what a product or service is worth to a
customer versus the possible alternatives. Worth means whether the customer feels that
he or she received benefits and services over what was paid. The customer pays more
than in cash alone, as customer invests their time, effort, convenience, energy and so forth
when making any kind of purchase. This shows why customer value can never be unilinear
by in consideration of just the money spent.

Customer Value = Benefits – Cost (CV=B-C)

To the customer, the benefits can also vary which can shift the value. Value for one
customer may not be the same as another. What’s important to one may not be important to
another
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segment of your audience. Benefits could include:

 Quality of the product

 Advantages of ownership

 Image

 Company brand and affiliation

 Access to a solution

 Experience

 Success from use of the product or service

 Long term takeaways (including knowledge)

Value is created through the development and improvement of processes. Value, or

perceived value, can change over the course of the customer’s journey. The customers
purchase or hire based on their preconceived notion of the value of the product or service.

Customer value can be improved by giving an optimal value proposition, which is the
intersection of the offering made by the organisation, other marketplace offerings, and what
the customer needs.

Offering

Marketplace Customer
Offering need

Optimal Value Proposition

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12.6 Customer Satisfaction

Customer satisfaction is defined as a measurement that determines how happy

customers are with a company’s products, services, and capabilities. Customers derive
satisfaction from a product or a service based on whether their need is met effortlessly, in a
convenient way that makes them loyal to the firm.

Model of Customer Satisfaction

Customer satisfaction requires the organizations commitment to understanding what

the customer wants rather than assuming that they know what the customer wants. To give a
customer the satisfaction, the organization has to understand the consumer behaviour.

The expectation of the customer is dependent on the perceived general value of the
product or the service, which then leads to the customer to develop a certain expectation
from the product or the service. The perceived value and expected value are based on the
perceived quality, and when all the perceived expectations are met, the customer achieves
satisfaction. If the customer is not satisfied, the customer rises the complaints, and how the
complaints are met leads to the customer deciding to stay loyal to the brand or to switch
over.

12.7 Customer Loyalty

Customer loyalty means the extent to which customers are devoted to a company’s
products or services and how strong their tendency is to select one brand over the
competition. Customer loyalty is positively related to customer satisfaction as happy
customers consistently favour the brands that meet their needs. Loyal customers are
purchasing a firm’s products or services exclusively, and they are not willing to switch their
preferences over a competitive firm.
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Brand loyalty stems out of a firm’s consistent effort to deliver the same product, every
time, at the same rate of success. Organizations give special attention to customer service,
seeking to retain their existing current base by increasing customer loyalty. Often, they
offer loyalty programs and customer rewards to the most loyal customers as an expression
of appreciation for doing repeat business with them.

Customer loyalty is the result of consistently positive emotional experience, physical

attribute-based satisfaction and perceived value of an experience, which includes the
product or service. The trust developed by the customer to any particular brand does not
solely depend on the quality or the value of the product, but also on how these products or
services make them feel. For example: most brand loyal customers have been using one
particular brand of product or service since their childhood not because of the lack of
options, but mostly because it gives them a sense of nostalgia.

Thus the quality along with the emotions of the consumers of the product or service
plays the integral role in how trust worthy the product is perceived as, and how likely they
are to retain their customers. The product or service that retains a good number of loyal
customers can invite new customers through the goodwill of their loyal customers.

To maintain the trust and retain the customers, the manufacturers have to understand the
ever changing needs, and wants of the customers. This is achieved through the scientific
study of the consumer behaviour.

12.8 Maximising Customer Lifetime Value

Maximizing customer lifetime value (CLV) is achieved through establishing a lifetime

of customer interaction points as each provides an opportunity to win revenue and loyalty.
While the previous two posts in this CLV miniseries focused on the definition of CLV and
how to boost CLV, today we’ll dive into how to maximize CLV through customer
interactions.

The beauty of recurring revenue models is the abundance of opportunities a

company has to create these customer interaction points. From an upgrade to an upsell and
customer service to customer promotions, there are various ways to connect with customers
and maximize CLV.

For example, consider how you can interact with customers after they make a
purchase. Remember, a key tactic to increasing CLV is a focus on recurring revenue rather
than one-time
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sales transactions. So rather than simply sending an automated summary of the purchase,
build in some personalized recommendations for other products. While they may not
purchase another item at that exact moment, 84% of customers report that
personalization impacts customer retention and loyalty. They are more likely to purchase
from you again in the future when they feel a personal connection.

12.9 Summary

Marketing is the act of facilitating the exchange of a given commodity for goods,
services, and/or money to deliver maximum value to the consumer. The different marketing
concepts are based in categories of needs, wants, and demands; products; value and
satisfaction; Exchange, Transactions, and Relationships; and market. The marketing reality
of the modern time have changed drastically compared to traditional times. The perceived
value of the product by the customer leads to satisfaction and thus retaining the customer
loyalty.

12.10 Review Questions

1. What are the marketing concepts?

2. What are the realities of marketing?

3. What is orientation towards marketplace?

4. What is customer value?

5. What is customer satisfaction?

6. What is customer loyalty?

7. How to maximize customer lifetime value?

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LESSON-13

MARKET SEGMENTATION
Learning Objective

After studying this unit, you must be able to discuss:

 Market Segmentation

 Levels of market segmentation

 Bases for market segmentation

 Market targeting

Structure

13.1 Introduction

13.2 Basics of market segmentation

13.3 Levels of Market Segmentation

13.4 Market Targeting

13.5 Market Targeting Procedure

13.6 Summary

13.7 Review Questions

13.1 Introduction

Market segmentation is the research that determines how your organization divides
its customers or cohort into smaller groups based on characteristics such as, age,
income, personality traits or behavior. These segments can later be used to optimize
products and advertising to different customers. At its core, market segmentation is the
practice of dividing your target market into approachable groups. Market segmentation
creates subsets of a market based on demographics, needs, priorities, common interests,
and other psychographic or behavioral criteria used to better understand the target
audience.
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By understanding your market segments, you can leverage this targeting in product,
sales, and marketing strategies. Creating your marketing communications both in ad
messaging and advanced targeting on digital platforms like Facebook and Google using your
segmentation will allow for better response rates and lower acquisition costs. Market
segments can power your product development cycles by informing how you create product
offerings for different segments like men vs women or high income vs low income.

13.2 Basics Of Market Segmentation

Understanding segmentation starts with learning about the various ways you can
segment your market. There are four primary categories of segmentation, illustrated below.

Table 13.1.1 Basics of Market Segmentation

Demographic Segmentation

Demographic segmentation sorts a market by demographic elements such as age,

education, income, family size, race, gender, occupation, nationality, and more.
Demographic segmentation is one of the simplest and most commonly used forms of
segmentation because
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the products and services we buy, how we use those products, and how much we are willing
to spend on them is most often based on demographic factors.

Firmographic Segementation

Firmographic segmentation is similar to demographic segmentation. The difference is

that demographics look at individuals while firmographics look at organizations.
Firmographic segmentation would take into consideration things like company size, number
of employees and would illustrate how addressing a small business would differ from
addressing an enterprise corporation.

Behavioral Segmentation

Behavioral segmentation divides markets by behaviors and decision-making patterns

such as purchase, consumption, lifestyle, and usage. For instance, younger buyers may
tend to purchase body wash, while older consumer groups may lean towards soap bars.
Segmenting markets based off purchase behaviors enables marketers to develop a more
targeted approach.

Psychographic Segmentation

Psychographic segmentation takes into account the psychological aspects of

consumer behavior by dividing markets according to lifestyle, personality traits, values,
opinions, and interests of consumers. Large markets like the fitness market use
psychographic segmentation when they sort their customers into categories of people who
care about healthy living and exercise.

13.3 Levels of Market Segmentation

Different approaches are used to segment a large market into market segments,
each of which is unique in terms of its response to a company’s product and service
offerings. Market Segmentation can take in four places as shown in the below diagram.

Figure 13.3.1 Levels of market segmentation

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Mass Marketing

This strategy was earlier used by most organizations, now normally seen in small
business organizations. A small organization will produce its products in with similar features
in bulk and target it to all the consumers irrespective of their preferences. The seller
engages in mass production and uses mass distribution system to reach all consumers in
the market. The promotional and marketing activities are also generic. This concept is
profitable as mass production lowers the cost of production and margin for profits is high
due to this.

The proliferation of advertising media and distribution channels is making it difficult to

practice “one size fits all” marketing. No wonder some have claimed that mass marketing is
dying.

Segment Marketing

Segment market is division of market into smaller markets which have similar needs
and demands. This type of marketing helps the marketer to connect with every type of
consumer in the best possible way. The promotional and advertisement activities are
based on each segment catered specifically to the needs of that segment. Products here are
carefully designed to meet the needs of each segment served in contrast to mass marketing,
where same product is offered to all.

The company can create a more fine-tuned product/service offer and price it
appropriately for the target audience. The choice of distribution channels and
communications channels becomes much easier. And the company may face fewer
competitors if fewer competitors are focusing on this market segment.

Niche Marketing

A Niche market is a more narrowly defined group, typically a small market which has
not yet been well served. A company might create a niche market and develop highly
specialized products or services to meet the customers’ needs that aren’t being met by
other offerings.

Advantages of niche marketing:

 High level of specialization helps in a reduction of cost

 Help to occupy a dominant market position within the chosen niche

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 Creates a strong brand image

 No competition or little competition

Micro Marketing

Here marketing activities are tailored to specific narrowly defined demographic,

psychographics behavioral segments. In this case, products are specialized to meet a very
specific need of potential customers and marketed primarily to that customer set.

Micro Marketing is further classified into three categories

1. Local Marketing – marketing tailored to the needs and wants of a local consumer.

2. Individual Marketing – also called as one to one marketing, concept which was
earlier followed by cobblers and tailors. A manufacturer will customize the offer,
logistics, and financial terms for each major account.

3. Mass Customization – Preparing individually designed product and communication

on large scale

13.4 Market Targeting

A company cannot concentrate on all the segments of the market. The company can
satisfy only limited segments. The segments the company wants to serve are called the
target market, and the process of selecting the target market is referred as market targeting.
Market segmentation results into dividing total market into various segments or parts.

Such segments may be on the basis of consumer characteristics or product

characteristics or both. Once the market is divided into various segments, the company has
to evaluate various segments and decide how many and which ones to target. It is simply
an act or process of selecting a target market.

Market targeting is a process of selecting the target market from the entire market.
Target market consists of group/groups of buyers to whom the company wants to satisfy or
for whom product is manufactured, price is set, promotion efforts are made, and distribution
network is prepared.
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13.5 Market Targeting Procedure

Market targeting procedure consists of two steps:

1. Evaluating Market Segments:

Evaluation of market segments calls for measuring suitability of segments. The

segments are evaluated with certain relevant criteria to determine their feasibility.

To determine overall attractiveness/suitability of the segment, two factors are used:

i. Attractiveness of Segment:

In order to determine attractiveness of the segment, the company must think on

characteristics/conditions which reflect its attractiveness, such as size, profitability,
measurability, accessibility, actionable, potential for growth, scale of economy,
differentiability, etc. These characteristics help decide whether the segment is attractive.

ii. Objectives and Resources of Company:

The firm must consider whether the segment suit the marketing objectives. Similarly,
the firm must consider its resource capacity. The material, technological, and human
resources are taken into account. The segment must be within resource capacity of the firm.

2. Selecting Market Segments:

When the evaluation of segments is over, the company has to decide in which market
segments to enter. That is, the company decides on which and how many segments to enter.
This task is related with selecting the target market. Target market consists of various groups
of buyers to whom company wants to sell the product; each tends to be similar in needs or
characteristics. Philip Kotler describes five alternative patterns to select the target market.
Selection of a suitable option depends on situations prevailing inside and outside the
company.

13.6 Summary

Market segmentation is the research that determines how your organization divides
its customers or cohort into smaller groups based on characteristics such as, age,
income, personality traits or behavior. These segments can later be used to optimize
products and advertising to different customers. Segmenting market enables the marketer to
find their target
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audience. The different types of segmentation provide the marketers with necessary
information as to which demography, firmographic, psychographic, or behavioral aspect
the marketing strategies should be targeted at.

13.7 Review Questions

1. What is market segmentation?

2. What are the basics of market segmentation?

3. What are the different levels of market segmentation?

4. What is market targeting?

5. Explain the procedure of market targeting.

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LESSON-14

INTRODUCTION TO ADVERTISING
Learning Objective

After studying this unit, you must be able to discuss:

 Advertising

 Objectives of advertising

 Functions of advertising

 Key players

Structure

14.1 Introduction

14.2 Roles of Advertising

14.3 Functions of Advertising

14.4 Key Players in Advertising

14.5 Summary

14.6 Review Questions

14.1 Introduction

Advertising is a means of communication with the users of a product or service.

Advertisements are messages paid for by those who send them and are intended to inform
or influence people who receive them.

Advertising is always present, though people may not be aware of it. In today’s
world, advertising uses every possible media to get its message through. It does this via
television, print (newspapers, magazines, journals etc), radio, press, internet, direct selling,
hoardings, mailers, contests, sponsorships, posters, clothes, events, colours, sounds,
visuals and even people (endorsements).
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The advertising industry is made of companies that advertise, agencies that create
the advertisements, media that carries the ads, and a host of people like copy editors,
visualizers, brand managers, researchers, creative heads and designers who take it the
last mile to the customer or receiver. A company that needs to advertise itself and/or its
products hires an advertising agency. The company briefs the agency on the brand, its
imagery, the ideals and values behind it, the target segments and so on. The agencies
convert the ideas and concepts to create the visuals, text, layouts and themes to
communicate with the user. After approval from the client, the ads go on air, as per the
bookings done by the agency’s media buying unit.

14.2 Objectives Of Advertising

The objectives of advertising can be listed as follows:

1. To introduce a new product by creating interest for it among the prospective customers.

2. To support personal selling program. Advertising may be used to open customers’

doors for salesmen.

3. To reach people inaccessible to salesmen.

4. To enter a new market or attract a new group of customers.

5. To fight competition in the market and to increase the sales.

6. To enhance the goodwill of the enterprise by promising better quality products and
services.

14.3 Functions Of Advertising

Advertising has become an essential marketing activity in the modern era of large-
scale production and severe competition in the market. It performs the following functions:

(i) Promotion of Sales: Advertising promotes the sale of goods and services by informing
and persuading the people to buy them. A good advertising campaign helps in winning
customers and generating revenues.

(ii) Introduction of New Products: Advertising helps in the introduction of new products in
the market. A business enterprise can introduce itself and its products to the public
through advertising. Advertising enables quick publicity in the market.
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(iii) Support to Production System: Advertising facilitates large-scale production. The

business firm knows that it will be able to sell on a large-scale with the help of advertising.
Mass production will reduce the cost of production per unit by making possible the
economical use of various factors of production.

(iv) Increasing Standard of Living: Advertising educates the people about the products and
their uses. It is advertising which has helped people in adopting new ways of life and giving
up old habits. It has contributed a lot towards the betterment of the standard of living of the
society.

(v) Public Image: Advertising builds up the reputation of the advertiser. Advertising enables
a business firm to communicate its achievements and its efforts to satisfy the customers’
needs to the public. This increases the goodwill and reputation of the firm.

(vi) Support to Media: Advertising sustains press. Advertising provides an important source
of revenue to the publishers of newspapers and magazines and the producers of T.V.
programs.

14.4 Key Players In Advertising

In the process of advertising, there are specific players who deliver different
functions, the entire combination of which constitutes the entire intricate mechanism of
advertising. These five players are:

i. Advertiser

ii. The advertising agency

iii. The media

iv. The vendor

v. The target audience

The advertiser is basically the company whose product or service is going to be

promoted through the incorporation of advertising. In the eventual realm of affairs, the
impact of the final advertisement is going to leverage him the most as its his brand whose
future depends upon the nature of the advertising.

While the advertiser will get affected the most (positively or negatively), it’s the
advertising agency, which plays the greatest role in generating the impact of the
advertisement. In other
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words, the advertising agency is verily responsible for the magnitude of effectiveness of the
advertisement, the outcome of which will make or break the brand. As for the media or the
medium that will be chosen to deliver the advertisement, these different media that include
electronic, print and interactive media, which constitute the channels of communication that
will be employed to enhance the reach factor for the brand. The better and more compatible
the media (channel of communication) is, the greater the outcomes of advertising.

Vendors are not directly related to any of the above-mentioned stakeholders. They
have an indirect yet significant relationship with the advertising procedure. Consisting of
players like freelancers, consultants and self-employed professionals, the vendors actually
provide aegis to the advertiser in helping him and the advertising agency to achieve the
optimum quality of advertising that will not only be substantial but would also exude
adequate charm.

Last but definitely not the least, it is the target audience that requires the utmost
mention. They are the final deciders, the ultimate stakeholders whose consent would be the
eventual determinant in shaping the present and future of the advertised brand.

14.5 Summary

Advertising is a means of communication with the users of a product or service.

Advertisements are messages paid for by those who send them and are intended to inform
or influence people who receive them. Effective advertisement leads to high customer turn
in for any company. It plays a major role in a products life, from the introduction of the
product into the market to years long sustenance of the product in the market.
Understanding the different players in advertising helps in efficient modeling of the
advertisements.

14.6 Review Questions

1. What is advertising?

2. What are the objectives of advertising?

3. What are the functions of advertising?

4. Who are the key players in advertising?

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LESSON-15

TYPES OF ADVERTISEMENTS
Learning Objective

After studying this unit, you must be able to discuss:

 Types of advertisements

 Effective advertising

 Ethics in advertising

Structure

15.1 Introduction

15.2 Types of Advertising

15.3 Effective Advertising

15.4 Advertising Ethics

15.5 Summary

15.6 Review Questions

15.1 Introduction

A successful advertising campaign will spread the word about your products and
services, attract customers and generate sales. Whether you are trying to encourage new
customers to buy an existing product or launching a new service, there are many options to
choose from.

The most suitable advertising option for your business will depend on your target
audience and what is the most cost effective way to reach as many of them as possible, as
many times as possible. The advertising option chosen should also reflect the right
environment for your product or service. For example, if you know that your target market
reads a particular magazine, you should advertise in that publication.
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In order to have truly effective marketing for your product or service, you need a
carefully crafted message catering to the medium you choose. Luckily, with the explosion
of digital media, there are even more different types of advertisements.

15.2 Types Of Advertising

1. Display Ads

This includes digital and newspaper advertising. Digital ads are the updated version
of newspaper advertising; it’s the same concept but in 21st-century form. It means buying
ad space on sites that are of interest to your target demographic. You can create text ads,
which essentially look just like traditional print media ads, the floating banner above the
site’s contact and even wallpaper with your product or service on the site background.

The major difference between display ads and the ads you find in newspapers is the
use of search engine optimization techniques to reach your target audiences more
effectively when they search for you. These types of advertisements are typically also Pay
Per Click, which means you bid on keywords most associated with your service or products
and pay for your results to be at the top of the search engine search. The another one is Cost
Per Thousand, which means to pay a flat rate to show up in search results 1,000 times.

2. Social Media Ads

Pinterest, Instagram, Facebook and pretty much all social media sites offer relatively
inexpensive advertising. Paid social media ads are the kind of advertisement that focuses on
reaching your target audience with how much you pay adjusted to how many see it and
engage with it. Organic social media ads are the kind of advertisement that generates lots of
word-of- mouth. Say you post something to your business Facebook page that offers a free
product if followers click Like and tag a friend — that is the type of advertisement that is free
to post and makes people aware of what you have to offer.

3. Newspapers and Magazines

These kinds of advertisements are traditional yet no less effective. Combining this
type of advertisement between local, statewide and national print media is a great marketing
campaign strategy. Plenty of people still reach for their morning newspaper or love to settle
down with a hard copy of a magazine. Also, most print media now has a digital presence
and can combine these types of advertisements with its virtual version.
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4. Outdoor Advertising

Now that billboards have gone digital it’s a huge way to make an effective statement.
Transit ads are another kind of advertisement that falls under the outdoors umbrella —
feature your product or service on buses, taxis, bike messenger services and pedicabs.
Promoting this way gives you excellent brand recognition as these types of advertisements are
seen everywhere daily and make your offering hard to forget.

5. Radio and Podcasts

Verbal promotion is a type of advertisement that can be repeated often as part of

radio or podcast shows. You can have a traditional type of ad recorded to be played or there
is also the chance of sponsorship. Narrow down the types of podcasts your target audience
subscribes to or the station they most listen to for creating the kind of advertisement
customers like and remember.

6. Direct Mail and Personal Sales

Direct mail, or the art of sending a compelling sales letter by snail mail to your target
audience, can offer a healthy return on investment for small businesses. The starting point is
to identify your target market, then send an enticing offer out to all of those prospects.
Measuring the responses helps you to see which type of customers are responding to this
format, so you can use even more precision targeting with your next mail shot.

In a similar vein, direct or personal sales is still a big area of advertising, especially
for small businesses. A good salesperson can use his or her skills to persuade a customer
to buy a product. If the salesperson is especially effective, the customer will continue to
spread the word about your product through recommendations and referrals.

7. Video Ads

This type of advertisement engages with your target customers on a digital level.
Create a short video and post it on your social media or pay to have it run on sites like
YouTube, Hulu and blogs. A video ad can be created by experts from an agency or even
done by your in-house team — even if that team is comprised of just yourself.
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8. Product Placement

This kind of advertisement is seen more and more. If you pay for a podcast host to
mention using your product or pay a television show to feature a character talking about or
using your service, that is product placement. You can also talk to popular YouTube channel
hosts about this type of advertisement.

9. Event Marketing

Paying to sponsor a sports team or a charity benefit falls under event marketing.
These types of advertisements mean a large cross-section of people hear your brand
name and associate it with that event. Many companies also look to conventions for this
sort of niche advertisement.

10. Email Marketing

A kind of advertisement that is focused on your existing customers, email marketing

involves them signing up for promotional sales or newsletters focused on your brand. Email
marketing is an updated customer loyalty promotion and works very well when you treat
customers as insiders with VIP knowledge.

15.3 Effective Advertisement

Advertising effectiveness pertains to how well a company’s advertising accomplishes

the intended. Small companies use many different statistics or metrics to measure their
advertising effectiveness. These measurements can be used for all types of advertising,
including television, radio, direct mail, Internet and even billboard advertising.

Creating effective advertisements requires a joint effort between multiple departments

and sometimes external entities. Therefore, those choosing to work independently from the
other departments or associated content creators may not always achieve the client’s
objectives in the right manner. The majority of the battle is developing an ad that does not
get lost in the mass advertising clutter we are exposed to today and will be remembered by
the audience in the long-term.
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The 7 principles of effective advertising are:

1) Visual Consistency

Repeatedly expose ones’ target to a specific image or display. In addition, doing so

will embed this into their long-term memory. If you are not developing visually consistent ads,
then you may not create a connection with your target. The importance of this consistency
cannot be stressed enough. Most advertisements are glanced at for only a few seconds by
viewers. An advertisement with visual consistency across numerous ads and exposures
will help to move the message from short-term to long-term memory. This can help make the
advertisement effective. For example, think of a company like Nike. Through years of
exposing the Swoosh and slogan “Just Do It,” they have created a brand message that is
amongst the most recognized in the world. However, one may not have the geographical or
financial reach of Nike, but they can apply this to their market no matter the size.

2. Campaign Duration

The duration of a campaign should be identified early in the development stage. As

touched on above, displaying the same ad for a set period of time will embed the message
in long-term memory. However, just as important, is determining exactly how long to run the
ad. If it runs too long it may become stale to the target, and they may lose interest. On the
other hand, changing the ad too frequently may disrupt viewer’s ability to retain the
information.

Enter reach and frequency. Frequently displaying an ad will usually mean having a
shorter duration. Also, a lower reach will typically mean a longer duration to reach the same
number of people. Many campaigns last about 6 months, but the length will vary depending
on your frequency and reach.

3. Repeated Taglines

Consistent taglines go hand-in-hand with visual consistency. This will give the
advertiser one of the most effective approaches. The advertisement can change, but
repeatedly using the same tagline and imagery will help consumers to make a connection
with their current knowledge of your brand.
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4. Consistent Positioning

When first developing a product the producer should put some time into how they will
position their product in relation to their competition. This positioning strategy should be
displayed frequently through the product’s life and in all advertisements used. Therefore, if
product is stressing quality over price and convenience, then the advertisements should
reflect this. Inconsistent positioning is one of the hardest mistakes to overcome once made.
Inconsistency will make it difficult for viewers to remember the brand for something definitive.
Most importantly, developing a consistent positioning strategy helps to avoid uncertainty in
messaging.

5. Simplicity

Firstly, a simple advertisement is much easier to comprehend than a complex one. If

you are creating a print ad, use a short tagline with limited copy. It will be much easier to read
and remember than an overloaded ad. Also, avoid the temptation to tell your viewers
everything about your product. Use the advertisement to drive traffic to other places such as
your website, where they can find more in depth information about your offering.

Even in radio or television ads, they do not verbally overload content. For example,
doing so will result in the speaker having to talk much faster than they should be. Therefore,
if a viewer is given too much information in a short period of time, they may be come
uninterested and tune out, or be unable to recall it later. The simplicity of advertisements
also directly applies to internet advertising, because if there is too much content and the
page takes too long to load, viewers will leave.

6. Identifying a Selling Point

This is one of the most important aspects of an advertisement. The viewers must be
able to quickly identify three things. Attempting to offer multiple selling points to viewers can
confuse them by presenting too many ideas at once. Therefore, focus on one point for the
campaign that you believe will best sell the benefits of the product to your consumers.

7. Create an Effective Flow

All advertisements should lead the viewer to a desired action or conclusion. In print
ads the viewer’s eyes should be moved to the key point of the ad. Similarly, for television,
the flow should be developed to end with your key point being the last thing viewers will
remember.
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Likewise, on social media ads and email newsletters you should direct viewers to your website
where they can learn more and make a purchase decision.

15.4 Advertising Ethichs

Ethics means a set of moral principles which govern a person’s behavior or how the
activity is conducted. And advertising means a mode of communication between a seller and
a buyer. Thus ethics in advertising means a set of well defined principles which govern the
ways of communication taking place between the seller and the buyer. Ethics is the most
important feature of the advertising industry. Though there are many benefits of
advertising but then there are some points which don’t match the ethical norms of
advertising.

An ethical ad is the one which doesn’t lie, doesn’t make fake or false claims and is in
the limit of decency.

Nowadays, ads are more exaggerated and a lot of puffing is used. It seems like the
advertisers lack knowledge of ethical norms and principles. They just don’t understand and
are unable to decide what is correct and what is wrong.

The main area of interest for advertisers is to increase their sales, gain more and
more customers, and increase the demand for the product by presenting a well decorated,
puffed and colorful ad. They claim that their product is the best, having unique qualities
than the competitors, more cost effective, and more beneficial. But most of these ads are
found to be false, misleading customers and unethical. The best example of these types of
ads is the one which shows evening snacks for the kids, they use coloring and gluing to
make the product look glossy and attractive to the consumers who are watching the ads on
television and convince them to buy the product without giving a second thought.

Ethics in Advertising is directly related to the purpose of advertising and the nature of
advertising. Sometimes exaggerating the ad becomes necessary to prove the benefit of the
product. For e.g. a sanitary napkin ad which shows that when the napkin was dropped in a
river by some girls, the napkin soaked whole water of the river. Thus, the purpose of
advertising was only to inform women about the product quality. Obviously, every woman
knows that this cannot practically happen but the ad was accepted. This doesn’t show that
the ad was unethical.

Ethics also depends on what we believe. If the advertisers make the ads on the belief
that the customers will understand, persuade them to think, and then act on their ads, then
this
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will lead to positive results and the ad may not be called unethical. But at the same time, if
advertisers believe that they can fool their customers by showing any impractical things like
just clicking fingers will make your home or office fully furnished or just buying a lottery ticket
will make you a millionaire, then this is not going to work out for them and will be called as
unethical.

15.5 Summary

There are different types of advertisements, each with their own purpose. Using of
the apt method of advertisement defines how efficient and successful the advertisement is
going to be. There are methods to create an effective ad campaign. Following the methods
to create effective advertisements is crucial to how well the ad is received or perceived.
There are certain ethics that needs to be followed when making an advertisement. How well
the ethics are followed in making and presenting the ad shows a certain commitment to
being ethical and lawful by the product.

15.6 Review Questions

1. What are the different types of advertisements?

2. What are the effective methods to advertise?

3. What are the ethics to be followed in advertisement?

4. What is visual consistency?

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LESSON-16

MEDIA AND ADVERTISEMENT

Learning Objective
After studying this unit, you must be able to discuss:

 Role of media in advertising

 Types of media advertisements

 Print media

 Internet and alternative media advertising

Structure

16.1 Introduction

16.2 Basic Concepts of Media

16.3 Print Media Advertisements

16.4 Using Print Advertising

16.5 Internet Advertising

16.6 Summary

16.7 Review Questions

16.1 Introduction

Advertising media are the devices by which and through which the advertising
messages are transmitted by the advertisers to the prospective and existing customers.
The message regarding the product or service is passed on to the consumers or persons
concerned through the media.

Advertising media refers to the various media channels through which advertising is
done. Advertising media is used for showcasing promotional content which communicated in
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various forms such as text, speech, images, videos using TV, radio, online, outdoor etc.
Basically they are channels through which companies can advertise their products and
services to reach to customers.

In the 20th century, the media was dominated by print, radio, and television,
attracting a broad swath of the public, affording them the opportunity to read, listen, and
watch the world around them in a way that they previously had not been able to do.
Beginning in 1989, the World Wide Web, (W3C.org) was invented, and it devised a virtual
medium of software laid on top of the internet’s physical wiring structure, which has since
enabled the public to message, tweet, send and receive emails, photos and videos; and to
interact with user sites such as Twitter, Facebook and many others.

16.2 Basic Concepts of Media

Media is on your mobile phones and computer screens, in newspapers and

magazines, stretched across billboards and broadcast through radio waves. They are
mediated messages, and you are flooded with them every day. With so many viewpoints, it’s
hard to separate fact from fiction. To guide your exploration of the media that surround you,
the Center for Media Literacy developed these five core concepts:

1. All media messages are constructed.

Media texts are built just as surely as buildings and highways are built. The key
behind this concept is figuring out who constructed the message, out of what materials and
to what effect.

2. Media messages are constructed using a creative language with its own rules.

Each form of communication has its own creative language: scary music heightens
fear, camera close-ups convey intimacy, big headlines signal significance. Understanding the
grammar, syntax and metaphor of media language helps us to be less susceptible to
manipulation.

3. Different people experience the same media message differently.

Audiences play a role in interpreting media messages because each audience

member brings to the message a unique set of life experiences. Differences in age, gender,
education and cultural upbringing will generate unique interpretations.
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4. Media have embedded values and points of view.

Because they are constructed, media messages carry a subtext of who and what is
important — at least to the person or people creating the message. The choice of a
character’s age, gender or race, the selection of a setting, and the actions within the plot are
just some of the ways that values become “embedded” in a television show, a movie or an
advertisement.

5. Most media messages are organized to gain profit and/or power.

Much of the world’s media were developed as money-making enterprises.

Newspapers and magazines lay out their pages with ads first; the space remaining is
devoted to news. Likewise, commercials are part and parcel of most television watching.
Now, the Internet has become an international platform through which groups or individuals
can attempt to persuade.By considering the core concepts behind every media message,
you equip yourself with an ability to analyze and interpret a message — and to accept or
reject its legitimacy.

16.3 Print Media Advertisements

Print media advertising is a form of advertising that uses physically printed media,
such as magazines and newspapers, to reach consumers, business customers and
prospects. Advertisers also use digital media, such as banner ads, mobile advertising, and
advertising in social media, to reach the same target audiences. The proliferation of digital
media has led to a decline in advertising expenditure in traditional print media, but print isn’t
dead.

1. Newspapers and Weeklies: Advertisers can choose from a wide range of different types
of newspapers, including local, regional or national titles published in daily, evening, weekly
or Sunday editions. Newspapers target different readerships with a mix of content, often
including sports, entertainment, business, fashion and politics in addition to local, national or
world news. Advertisers can buy different sizes of advertising space, from small classified
ads with text only, to display ads featuring text, photographs, illustrations and graphics in
sizes up to a full page or even a double-page spread.

2. Consumer and Trade Magazines: Magazines offer advertisers extensive choices of

readership and frequency. Consumer magazines cover a wide range of interests, including
sport, hobbies, fashion, health, current affairs and local topics. Many business and trade
magazines provide coverage of specific industries, such as finance or electronics. Others
cover cross-industry topics, such as communications or human resources, while still others
focus on job-specific areas, such as publications for executives, marketing professionals or
engineers.
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Publishing frequency is typically weekly, monthly or quarterly. As with newspapers,

advertisers can take advertising spaces from classified ads to full page ads in black and
white or color.

3. Direct Mail: Letters and Postcards: Advertisers use direct mail to reach smaller target
audiences or selected prospects. Direct mail often take the form of a letter, brochure or flyer
sent via the postal service. Advertisers can compile their own list of prospects and customers
for the mailing, or rent a mailing list from a specialist firm.

4. Packaging:Packaging is directed straight at the consumer or customer, where the impact

created by the package acts as further advertisement for the product. Picture yourself at the
store buying shampoo. You are standing in the aisle staring at all of these bottles that
contain the product you are looking for. You start reading the different bottles and
eventually one of them catches your attention for enough time that you actually read what it
says. The message is appealing enough that it convinces you to pick it up and purchase it.
You went in there to get shampoo, but what convinced you was the bottle, not the actual
product. Even if this was the best shampoo in the world, without the proper package
design you would never come into contact with the product. You didn’t even need to see a
television advertisement or a Facebook ad to convince you. The packaging did all of the
talking, all of the advertising, and it sealed the deal. Packaging can go even further than
just product packaging. It can go to the extent of creating an actual experience.

5. Billboards and Posters – Out of home advertisements: Advertising on billboards and

posters gives advertisers the opportunity to reach consumers on the move. Putting posters in
retail malls, for example, helps advertisers reach consumers close to the point of purchase.
Posters or billboards in train stations, airports or busy town centers have the potential to
reach large groups of consumers. Advertisers can change the messages on billboards and
posters at a frequency of their choice.

6. Directory Advertising: It is advertising that appears in a specific directory. A popular

example of directory advertising can be seen looking at companies that place ads in the
Online Yellow Pages directory. Yellow Pages carves out certain categories in their directory
to provide an easy format for looking up many different service providers. This is a general
directory. There are also companies that provide industry specific online directories. For
instance, if you run a Law Office, you can seek out directories dedicated only to legal/law
online services. Within these directories you would be placed in your appropriate category,
so when the directory is searched by consumers they will find you as their target
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16.4 Using Print Advertising

We are a society of technologically-obsessed people who aren’t comfortable unless

we are constantly connected via some sort of digital device. And, because the entire world
has moved online, some in the advertising industry would have you believe print
advertising is dead and buried. Print is still very much alive. In fact, advertisers who make
print a part of their marketing mix have the potential to significantly increase their response
rates. Here are just six advantages of print advertising.

1. Leveraged Credibility: Print publications that consistently offer readers high-quality,

reliable content develop credibility, and advertisers can easily leverage this credibility.
Known as the “halo effect,” brands who place ads in respected print publications receive
the same positive feelings from readers that are associated with the publication itself. This
means your ads can be seen as completely trustworthy, which makes generating leads and
sales much easier.

2. “Influencers” Are Swayed by Print: A survey found that “influencers,” those consumers
who have the ability to sway other consumers, are influenced by print ads, with 51% being
influenced by magazines and 53% influenced by newspapers.

3. Print Readers Have Bigger Attention Spans: The digital age has pretty much killed the
human attention span. We surf the web with six different tabs open while someone is instant
messaging us, another is texting us, and “The Walking Dead” is on the TV in the
background. We’re simply not as receptive to all of the digital advertising happening around
us. Print readers, on the other hand, don’t typically multitask when they read a magazine or
newspaper, making them far more receptive to the ads within the publication.

4. Unplugging Is In: We touched upon the fact that we are tech-obsessed creatures, but we
are tech-obsessed creatures who have begun to understand the value of “unplugging” every
now and then. When we do unplug from the digital world, we tend to turn to print media as a
form of entertainment and engagement.

5. Print Ads Offer More Flexibility and Options: Print ads allow you to target your
audience. You can choose exactly which section of the newspaper or magazine your
audience is most likely to read. You can choose to run ads in specialty magazines or only in
papers that deliver to specific geographic locations in your area. You can choose to
have your ads run in Wednesday’s paper or Sunday’s paper.
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Beyond these options, print allows you to tailor your campaigns to fit your budget by
offering quarter-page, half-page and full-page ads. And finally, advertising in print
publications mean you’ll actually work with a human being when buying your ad space
as opposed to relying on an online algorithm to decide where your ads should live.

6. Print Ads Drive Action: A survey reported that 65% of print readers typically take some
form of action after viewing a newspaper ad. For example, people who viewed an
advertisement from a national grocery chain were six times more likely to buy the product
than the retail average. As we mentioned at the beginning, when print and digital
advertising work synergistically, results can be dramatic. The use of QR codes and other
interactive features within print ads has helped to create a bridge between the print-digital
divide. Ads that include free download offers or social media URLs encourage prospects to
engage with brands online and inevitably help to drive more traffic and create awareness.
Successful ad campaigns reach targeted markets, effectively communicate a message,
and drive action. By embracing the many advantages of print advertising and adding it to
their marketing mix, advertisers can leverage the power of both print and digital to create the
most awareness and revenue possible.

16.5 Internet And Advertising

As web technologies evolved in the 1990s, internet advertising appeared as a virtual

equivalent to traditional marketing methods like TV and radio ads, newspaper advertising,
billboards, etc. In 2019 marketers expect that companies will spend more money on digital
advertising than on traditional ads. Let’s find out why online advertising has become so
popular and explore its most commonly used types — search engine marketing, email
marketing, social media advertising, display ads, native advertising and more.

16.5.1 Why is Internet advertising important?

 Easy global coverage. Nowadays, people have a habit of searching for information
about products and services via search engines like Google, Bing, and others.
internet advertising is a way to demonstrate your offers in front of over 4.3 billion
web users around the globe. You can easily target the entire world via the Internet.

 Affordable for any budget. The minimum cost to reach an audience of 2,000 is three
times cheaper than traditional advertising methods, so any company from a small
family business to a huge enterprise can utilize online ads and get the most out of
their financial resources.
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 Drives traffic to a website. The more visitors you get to the site, the more potential
customers you have, which will result in increased sales. Internet advertising aims to
attract users’ attention and send them to your website. The offers displayed in the
digital ads should arouse curiosity and give people a good reason for clicking through
your site.

 Allows targeting. Unlike traditional marketing media that advertises to everyone

without filtering, internet advertising tailors the message to a specifically targeted
audience — people who are most likely to convert into customers. For instance, a
travel equipment company may use social media ads for advertising to users who
are keen on travel, encouraging likes and shares.

 Enables retargeting. Internet advertisements are a way to say “hey, looks like a
couple of days ago you checked out this toaster. I’ve got a marvelous one for you
here!” If many prospects visit your household appliances online store without buying
anything, remind them about your brand with banner ads displayed on websites they
browse.

 It allows you to create various touchpoints with your audience. Internet advertising
helps you to appear in the right place, at the right time to communicate with your
audience. If you own a small bakery, use socials like Instagram and Pinterest to
demonstrate the products. To share news and build long-lasting relationships with your
audience, reinforce them with email marketing. By mixing different types of digital
advertising wisely, you can show that your company is always present and ready to
be of service.

 It is measurable. Unlike offline marketing, where the cost and effectiveness are
somewhat approximate, you can precisely track the return on your efforts and
internet marketing efficiency with web analytics platforms like Google Analytics.

16.5.2 Types of Internet Advertising (Alternative and New media)

The Internet offers vast opportunities to connect with potential customers, so let’s
review some of the most influential types of internet advertising on the market.

1. Search Engine Marketing: A search bar is the starting point of the users’ buyer journey.
Entering a keyword, people focus mainly on the first page results. Search engine marketing
is all about getting your webpages to the top of the SERP (search engine results page),
whether in an organic or paid way.
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Google AdWords displays the paid results based on the ad rank auction. Companies
name their price for a particular keyword, while Google analyzes the quality and relevancy of
the content. Here is the formula of the ad rank:

Ad rank = cost-per-click bid × quality score.

2. Email Marketing: This is a marketing approach based on communication via email. This
type of internet advertising is one of the oldest players on the field and the most adaptive
one. Since email marketers are always searching for innovations such as recently
launched interactive amp emails. You may personalize, segment, and A/B test your email
campaigns to better target your audience. Email marketing is the least obtrusive platform
for advertising because subscribers willingly opt-in to receive email newsletters and
promotions, plus, they are able to opt-out anytime. The main idea of email marketing is to
drive warm marketing leads to the website, mixing promotions with valuable non-sales
content.

3. Social Media Ads: This means advertising on socials like Facebook, Instagram, Twitter,
Pinterest for B2C, and LinkedIn for B2B. Companies tailor their news and promotions to the
target audience via social media in two ways:

 Organically. If you produce kitchenware, you can post valuable content like hacks,
exciting ways of using your products, or some recipes to encourage shares and build
an attractive brand image.

 Paid. In this case, you can use social media functionality for business by showing
promotional posts targeted to your audience based on age, gender, favorite activities,
and other things they have in common.

4. Video Advertising: As the name suggests, these ads are in a video format and placed on
services like YouTube, Vimeo, DailyMotion, and Vine. This is an expensive type of
advertising but also an effective one, since high-quality videos may go viral. A video
advertising campaign called “Save The Ocean” encourages people to join the company that
aims to reduce water pollution.

5. Web Push: This technology allows you to grab users’ attention whenever they are online.
These messages appear in the corner of your screen, and a click on it redirects a user to a
particular webpage. For example, a coffee shop can send you a morning notification about
the 20% discount for making an order before 10 am. Users subscribe for push notifications
to stay in touch with the brand and be the first to know the news and updates.
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6. Mobile Advertising: This type of advertising appears on smartphones and tablets.

Companies can advertise with SMS after the user opts-in or with display ads in the browser
optimized for mobile devices. If you run a shoe shop, mobile ads are especially good for
advertising to the local audiences with the time-sensitive offers. You can create SMS
campaigns in no time with SendPulse, and their open rate is extremely high: up to 98%.

16.6 Summary

Advertisements cannot exist without media. Media is the medium through which
information is carried from one place or person to other. Advertisements are a form of
information carrying the message about the product or the service. Print and digital media
are the two media formats that carry advertisements. Print media, in the digital age might
seem nonexistent but exists and influences on daily basis. Internet acts as the medium for
all other alternative medias to communicate and advertise.

16.7 Review Questions

1. What are the basic concepts of media?

2. Explain in detail about the various print media.

3. Why is print advertisement still used?

4. What is internet advertising?

5. What are the alternative media advertising?

131

MODEL QUESTION
PAPER
M.SC-PSYCHOLOGY

SECOND YEAR - IV - SEMESTER

CORE PAPER - XIII

CONSUMER BEHAVIOR, MARKETING AND
ADVERTISING
Time: 3 Hours Max Marks: 80

Part - A

Answer any TEN questions in 50 words each: (10 x 2 = 20)

1. Define marketing.

2. What is Marketing Mix?

3. What do you mean by a Niche?

4. What is Mega Marketing?

5. Define Consumer Behaviour.

6. List the levels of Consumer Decision Making.

7. What do you mean by Evoked Set?

8. Mention the two types of research.

9. What is customer satisfaction measurement?

10. What are the components involved in Task Marketing Environment?

11. What do you mean by Direct Marketing?

12. What are Web Communities?

132

PART- B (5X6=30)

Answer any FIVE questions in 250 words each

13. Explain the 4P’s of marketing.

14. Discuss the benefits of direct marketing.

15. What are the patterns of Market Segmentation?

16. Explain the various types of consumer.

17. Narrate the buying roles played by people.

18. Describe the modernist era of consumer research.

19. Discuss about consumer adoption process

PART- C (3X10=30)

Answer any THREE questions in 500 words each

20. Give a detailed account on the core marketing concepts.

21. Explain the psychological factors influencing buyer behaviour.

22. Elaborate the levels of consumer decision making

23. Elaborate upon the Quantitative Research Designs in Consumer Research .