INTRODUCTION TO CONSUMER

BEHAVIOR
Ms. Kiran Sharma
 “The aim of marketing is to know and understand
the customer so well that the product or service fits
him and sells itself.”

Peter Drucker
 TWO CONSUMER ENTITIES
Organizational
Personal Consumer
Consumer
•The individual who •A business,
buys goods and government agency,
services for his or or other institution
her own use, for (profit or nonprofit)
household use, for that buys the goods,
the use of a family services, and/or
member, or for a equipment
friend. necessary for the
organization to
function.
CONSUMER BEHAVIOR
 The study of the processes involved when
individuals or groups select, purchase,
use, or dispose of products, services,
ideas, or experiences to satisfy needs
and desires
DEVELOPMENT OF THE
MARKETING CONCEPT

Production Sales Marketing

Orientation Orientation Concept
PRODUCTION ORIENTATION
 From the 1850s to the late 1920s
 Companies focus on production capabilities

 Consumer demand exceeded supply

Production Sales Marketing

Orientation Orientation Concept
SALES ORIENTATION
 From the 1930s to the mid 1950s
 Focus on selling

 Supply exceeded customer demand

Production Sales Marketing

Orientation Orientation Concept
MARKETING CONCEPT
 1950s to current - Focus on the customer!
 Determine the needs and wants of specific target
markets
 Deliver satisfaction better than competitors.

Production Sales Marketing

Orientation Orientation Concept
SOCIETAL MARKETING CONCEPT

 Considers consumers’ long-run best interest

 Good corporate citizenship
THE MARKETING CONCEPT
Embracing the Marketing
Concept
 Consumer Research  The process and tools
 Segmentation used to study consumer
behavior
 Market Targeting

 Positioning
THE MARKETING CONCEPT
Implementing the
Marketing Concept
 Consumer Research  Process of dividing the
 Segmentation market into subsets of
consumers with common
 Market Targeting
needs or characteristics
 Positioning
THE MARKETING CONCEPT
Implementing the
Marketing Concept
 Consumer Research The selection of one or
 Segmentation more of the segments
identified to pursue
 Market Targeting

 Positioning
THE MARKETING CONCEPT
Implementing the
Marketing Concept  Developing a distinct image
for the product in the mind of
• Consumer Research the consumer
• Segmentation  Successful positioning

• Market Targeting includes:

 Communicating the benefits of
• Positioning
the product
 Communicating a unique
selling proposition
THE MARKETING MIX

Product Price

Marketing
Mix

Place Promotion
CUSTOMER VALUE, SATISFACTION, TRUST,
AND RETENTION

Successful Relationships
Strong
High level
Customer sense of Customer
of customer
value customer retention
satisfaction
trust
 SUCCESSFUL RELATIONSHIPS
Value, Satisfaction,
 Defined as the ratio between
Trust, and Retention the customer’s perceived
benefits and the resources
 Customer Value
used to obtain those benefits
 Customer
Satisfaction
 Customer Trust

 Customer
Retention
SUCCESSFUL RELATIONSHIPS
Value, Satisfaction,
Trust, and Retention
 The individual's perception of
 Customer Value the performance of the
 Customer
product or service in relation
Satisfaction to his or her expectations.
 Customer Trust

 Customer
Retention
SUCCESSFUL RELATIONSHIPS
Value, Satisfaction,
Trust, and Retention • Establishing and
• Customer Value maintaining trust
• Customer is essential.
Satisfaction • Trust is the
• Customer Trust foundation for
Customer
•
Retention
maintaining a
long-standing
relationship with
customers.
SUCCESSFUL RELATIONSHIPS
Value, Satisfaction,  The objective of
Trust, and Retention providing value is to
retain highly satisfied
 Customer Value customers.
 Customer  Loyal customers are key
Satisfaction  They buy more
 Customer Trust products
 Customer  They are less price
Retention sensitive
 They spread positive
word of mouth
CONSUMER BEHAVIOR IS
INTERDISCIPLINARY

Psychology

Economics Sociology

Social
Anthropology
psychology
A SIMPLE MODEL OF CONSUMER DECISION MAKING -

Copyright 2010 Pearson Education, Inc. publishing as

Prentice Hall 21 Chapter One Slide
Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioural
Decision Role  Awareness
o Initiator  Interest

o Influencer  Trial

o Decider  Evaluation

o Buyer  Adoption/ Rejection

o User
WHERE IT MAY BE USED?
 Significance in Daily Lives
 Application to Decision Making

Micro Perspective

Societal Perspective
WHY STUDY CONSUMER BEHAVIOR?

 Marketing Management
Market Opportunity Analysis

Target Market Selection

Marketing Mix Determination

 Product
 Price
 Place
 Promotion
 Non Profit and Social Marketing
 Consumer Education
A Decision Process Framework
A SIMPLE MODEL OF CONSUMER DECISION MAKING

27 One Slide
Chapter
INDIVIDUAL ASPECTS OF
CONSUMER BEHAVIOR:
PERCEPTION

Dr. Kiran Sharma

PERCEPTION . . .
. . .as the process by which an individual selects,
organizes and interprets stimuli into a meaningful
and a coherent picture of the world.
 Process by which sensations are selected,
organized, and interpreted
 Adding meaning to raw sensations
THREE STAGES OF PERCEPTION

 Exposure stage - consumers receive

information through their senses.
 Attention stage - consumers allocate
processing capacity to a stimulus.
 Comprehension stage - consumers
organize and interpret the information
to obtain meaning from it.
PERCEPTUAL PROCESSES:
CONCEPTS
Sensation
The Absolute Threshold
The Differential Threshold
Subliminal Perception
THE STUDY OF SENSATION . . .
 Immediate response of our
sensory receptors…Eyes, ears,
nose, mouth, fingers…
 To basic stimuli…

Such as light, color, sound,

odour, and texture
Advertisements, brand names,
commercials, and Packages
 Depends on the sensitivity of the
individual
THE ABSOLUTE THRESHOLD
 The lowest level at which an individual
can experience a sensation.
 The point which differentiates between
“something” and “nothing”.
 Adaptation: Getting ‘used to’ certain
sensation.
 The minimum level that can be
detected. (Minimum needed above Zero)
THE DIFFERENTIAL THRESHOLD /(JND)

 The minimal detectable difference between two

similar stimuli (just noticeable difference).
 It’s not at all the absolute difference.

 It’s an amount relative to the intensity of the first

stimulus.
 The stronger the initial stimulus, the greater the
additional intensity needed for second stimulus to be
perceived as differentiated.
 JND is the minimum change necessary to notice that
a change has occurred.
WEBER’S LAW AND THE JND
Weber's Law states that the
stronger the stimulus, the
greater the change required
for the stimulus to be seen as
different.
MARKETING APPLICATIONS OF JND
Need to determine the relevant
JND for the products so that
 product improvements are quite
visible to consumers.
 Changing size of package,
 Changing the price
Gradual changes in Brand name
DOWNSIZING AND PACKAGING
 May be termed as a marketing strategy wherein
consumers pay the same amount but are
unaware that they receive less.
DOWNSIZING AND PACKAGING
SUBLIMINAL PERCEPTION . . .
Perception of very weak or rapid stimuli
received below the level of conscious
awareness

Will they affect the consumers’ mind?

PERCEPTION DEPENDS ON
Depends on two major factors

Consumers' previous needs,

experiences
Consumers' expectations
MARKETING VARIABLES INFLUENCING
CONSUMER PERCEPTION

 Physical attributes of the product

 Package design
 Brand name
 Advertisements and commercials
 Position of an ad
Zapping, or
channel surfing,
with the television
remote control is a
problem for
advertisers.

Zipping
PERCEPTUAL ENCODING

Processof assigning mental

symbols to sensations.
PERCEPTUAL ENCODING
Process of assigning mental symbols to sensations.
Stimulus interpretation is associated with other related
events, sensations, or images
Gestalt: “The whole is greater than the sum
of its parts”.
•The Closure Principle—People tend to perceive an
incomplete picture as complete.
•The Principle of Similarity—Groups objects share
similar characteristics.
•The Figure–Ground Principle—One part of the
stimulus will dominate (the figure / background).
The Law of Closure
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 Law of proximity Things that are
relatively close to one another tend
to be grouped together.
 The Law of Similarity Items that
look similar will be seen as parts of
the same form.
 The law of Continuity To give it a
definite shape
FIGURE AND GROUND
 PERCEIVED RISK
 Functional risk: The risk that the product will
not perform as expected.
 Will the cell phone I bought work for the given warranty
period?
 Physical risk: The risk to self and others that
the product may pose .
 Will the cell phone damage my health? Is it safe to use?
 Financial
risk: The risk that the
product will not be worth its
price.
 Will the price of mobile/laptop drop after
I buy it?

 Social
risk: The risk that a poor
product choice may result in
some form of social
embarrassment.
 Will my mobile look like an outdated model?
 Psychological
risk: The Risk that
a poor product choice will bruise
the consumer’s ego.
 After buying this product, will my peer group
members laugh that it is a wrong choice?

 Time risk: The risk that the time spent

in product search may be wasted if the
product does not perform as expected.
 I have spent so much time in buying a new
camera/laptop. Was it worth or a waste of time?
REDUCING RISKS
 Seek information - word of mouth, newspapers
 Buy known brands/become loyal,

 Select by Company/Brand image,

 Rely on Store image, e.g. buying from known

shops.
 Buy the most expensive model.
 Seek reassurance - (money‐back guarantees,
pre‐purchase trial, warranty period).
MARKETING IMPLICATIONS
Product factors
 Intrinsic Cues – size, shape and grade of
ingredients.
 Extrinsic Cues – packaging characteristics,
advertising messages, information from
peers, friends, sales persons.
Price Considerations
 Psychological Pricing
 Price and product quality
MARKETING IMPLICATIONS …..CONTD
Company and Store image
 Consumers’ s patronage of a
particular retail store
 Store branding
 Shopper experience
CONSUMER MOTIVATION

Dr. Kiran Sharma

MOTIVATION AS A PSYCHOLOGICAL FORCE

• Motivation is the
driving force within
individuals that impels
them to action.
• Needs are the essence
of the marketing
concept. Marketers do
not create needs but can
make consumers aware
of needs.
MODEL OF THE MOTIVATION PROCESS
TYPES OF NEEDS
 Innate Needs
 Physiological needs that are considered primary
needs or motives

 Acquired Needs
 Learned in response to our culture or environment.
Are generally psychological and are considered
secondary needs
GOALS
 The sought-after results of motivated
behavior
 Generic goals are general
categories of goals that consumers
see as a way to fulfill their needs
 Product-specific goals are
specifically branded products or
services that consumers select as
their goals
Chapter Four
Slide
MOTIVATIONS AND GOALS

Positive Negative

• Motivation • Motivation
• A driving force • A driving force
toward some away from some
object or condition object or condition
• Approach Goal • Avoidance Goal
• A positive goal • A negative goal
toward which from which
behavior is behavior is
directed directed away

Chapter Four
Slide
RATIONAL VERSUS EMOTIONAL MOTIVES
 Rationality implies that consumers select goals
based on totally objective criteria, such as size,
weight, price, or miles per gallon
 Emotional motives imply the selection of goals
according to personal or subjective criteria

Chapter Four
Slide
THE DYNAMICS OF MOTIVATION
 Needs are never fully satisfied
 New needs emerge as old needs are satisfied

 People who achieve their goals set new and

higher goals for themselves

Chapter Four
Slide
SUBSTITUTE GOALS
 Are used when a consumer cannot attain a
specific goal he/she anticipates will satisfy a need
 The substitute goal will dispel tension

 Substitute goals may actually replace the

primary goal over time
FRUSTRATION AND CONFLICT

 Failure to achieve a goal may result in frustration.

 Some adapt; others adopt defense mechanisms to
protect their ego.

Chapter Four
Slide
 MOTIVE CONFLICT

A DIAGRAM OF AN APPROACH-
APPROACH CONFLICT.
A DIAGRAM OF AN AVOIDANCE-
AVOIDANCE CONFLICT.
A DIAGRAM OF AN APPROACH-
AVOIDANCE CONFLICT.
MASLOW’S HIERARCHY OF NEEDS

Chapter Four
Slide
TO WHICH OF MASLOW’S
NEEDS DOES THIS AD APPEAL?

Chapter Four
27
Slide
BOTH PHYSIOLOGICAL AND SOCIAL NEEDS

Chapter Four
28
Slide
TO WHICH OF MASLOW’S
NEEDS DOES THIS AD APPEAL?

Chapter Four
29
Slide
SELF ESTEEM NEEDS

Chapter Four
30
Slide
NEED ?
SAFETY AND SELF ESTEEM NEED
MC CLELLAND - A TRIO OF NEEDS
 Power
 individual’s desire to control environment
 Affiliation
 need for friendship, acceptance, and belonging
 Achievement
 need for personal accomplishment
 closely related to egoistic and self-actualization needs

Chapter Four
33
Slide
TO WHICH OF THE TRIO
OF NEEDS DOES THIS AD APPEAL?

Chapter Four
34
Slide
THE AFFILIATION NEEDS OF YOUNG,
ENVIRONMENTALLY CONCERNED ADULTS

Chapter Four
35
Slide
WHICH NEED ?

Chapter Four
36
Slide
POWER AND ACHIEVEMENT NEEDS

Chapter Four
37
Slide
MEASUREMENT OF MOTIVES

 Researchers rely on a
combination of techniques
 Qualitative research is
widely used
 Projective techniques are
often very successful in
identifying motives.

Chapter Four
Slide
MOTIVATIONAL RESEARCH
 Term coined in the 1950s by Dr. Ernest Dichter
 Based on premise that consumers are not always
aware of their motivations
 Identifies underlying feelings, attitudes, and
emotions

Chapter Four
Slide
QUALITATIVE MEASURES OF MOTIVES

Thematic • Dev by Henry Murray.

Apperception Test

• This method consists of having customers

tell real-life stories regarding their use of
STORYTELLING the product under study.
• Kimberly-Clark used this

WORD
• In this method, respondents are presented
ASSOCIATION with words, one at a time, and asked to
AND SENTENCE say the first word that comes to mind.
COMPLETION
Chapter Four
Slide
CULTURAL ASPECTS
BRANDS ACCEPTING THE CULTURAL
CHANGES
PERSONALITY & SELF
CONCEPT

Dr. Kiran Sharma

PERSONALITY. . .

. . is defined as “the distinctive

patterns of behavior, including
thoughts, and emotions, that
characterize each individual’s
adaptation to the situations of his
or her life.”
NATURE OF PERSONALITY

Personality reflects individual

differences
Personality is consistent and
enduring
Personality can change
MEASUREMENT OF PERSONALITY
Rating Methods
Situational Tests
Projective Techniques
Inventory Schemes
 The test-taker should construct a story about the
people and objects depicted in the picture.
The subject is asked to describe:
i) What led up to the situation shown?
ii) What is happening at the moment?
iii) What the people are thinking and feeling?
iv) What the outcome is likely to be?
 FREUD’S PSYCHOANALYTIC THEORY
Personality results from the clash of 3
forces - the id, the ego, and the superego
 The id represents
physiological drives, acts on
the pleasure principle.
 The ego acts to curb the
appetites of the id, works on
the reality principle.
 The superego is the
conscience or “voice within”,
works on eth morality
principle.
WHAT ARE SOME OF THE ADS THAT
SHOWCASE AND SAY THAT IT APPEALS TO
OTHERS
 Cigarettes
 Clothes

 Watches

 Cosmetics

 Accessories like glasses

 PANTENE

 Pantene’s ad of Rs 1 donation
APPLICATIONS OF PSYCHOANALYTIC
THEORY
 Appeal To Fantasy: operates on the pleasure
principle of the id. Used in promotions for
various products like
◦ Perfume (Chanel No.5),
◦ Sports Footwear (Nike)
◦ Jeans (Levi’s)
 Wish Fulfillment
◦ Eg: Advertisement To City
dwellers by a suburban Company
“Escape To Country Living”
APPLICATIONS (CONTD…..)

Aggression

 Sporting Events (Car Racing

Events, Hockey Games, Boxing
matches)
Escape

 Promotions for Kerala,

Madhya Pradesh, Rajasthan
 SOCIAL THEORY-KAREN HORNEY

 Compliant (move towards people and

stress the need for love, approval,
modesty, affection)

 Aggressive (move against people and

stress the need for power, strength and
ability to manipulate others)

 Detached (move away from people and

stress the need for independence, freedom
and self-reliance) No Strong emotional ties
develop between themselves and others.
 CAD (COMPLIANT, AGGRESSIVE,
DETACHED) INSTRUMENT

Developed to measure people’s interpersonal

orientations within a consumer context.
 Compliant Types: prefer known brand names and
use more mouth wash and toilet soaps
 Aggressive Types: prefer to use razors, cologne and
after shave lotions, Van Heusen Shirts.
 Detached Types: least awareness of brands
INFLUENCE OF PERSONALITY ON
CONSUMER BEHAVIOR
 Consumer Innovativeness
(receptiveness to new experiences)
 Consumer Materialism (the degree of
consumer’s attachment to “worldly
possessions”)
 Consumer Ethnocentrism
(consumer’s likelihood to accept or reject
foreign-made products)
CONSUMER DOGMATISM
 Measures the degree of rigidity (vs. openness) that
individuals display toward the unfamiliar and
contrary to their established beliefs.
 Consumers low in dogmatism (open – minded) are
more likely to prefer innovative products to
established or traditional alternatives.
NEED FOR UNIQUENESS
 Consumers who avoid conforming to expectations
or standards of others
From Consumer Materialism to
Compulsive Consumption
• Fixated consumption behavior
– Consumers fixated on certain
products or categories of products
– Characteristics
• Passionate interest in a product
category
• Willingness to go to great lengths to
secure objects
• Dedication of time and money
37
to
COMPULSIVE CONSUMPTION BEHAVIOR

 An abnormal behavior –
dark side of consumption.
 “Addicted” or “out-of-
control” consumers
◦ Uncontrollable shopping
◦ Various food and eating
disorders
Consumer Ethnocentrism and
Cosmopolitanism
• Ethnocentric consumers feel it is
wrong to purchase foreign-made
products because of the impact on
the economy
• A cosmopolitan orientation would
consider the world to be their
marketplace and would be attracted
to products from other cultures and
countries.

39
PSYCHOGRAPHICS

“ The use of psychological

attributes, lifestyles and
attitudes in determining the
behavioral profiles of different
customers”
AIO-Activities, Interests and
Opinions
PSYCHOGRAPHIC ANALYSIS IS ...

. . . the
attempt to
measure the
life-styles of
consumers.
AIO STATEMENTS IDENTIFY CONSUMER
ACTIVITIES, INTERESTS, AND OPINIONS

 Activity questions ask consumers

to indicate what they do, what they
buy, and how they spend their time.
 Interest questions focus on what
the consumers’ preferences and
priorities are.
 Opinion questions ask for
consumers’ views and feelings on
such things as world, local, moral,
economic, and social affairs.
APPLICATIONS
 Market Segmentation
 Advertising

 Packaging

 Personal Selling

 Product Development

 Retailing
CONSUMER LEARNING
AND MEMORY

Dr.Kiran Sharma
LEARNING
 viewed as

“a relatively permanent
change in behavior occurring
as a result of experience”
TYPES OF LEARNED BEHAVIOR
Physical Behavior
Affective Learning
ELEMENTS OF LEARNING

Motives (ads during winter and

summer)
Cues (signage)
Response
Reinforcement (positive vs.
negative)
 Elements of Learning

Motivation Cue Response Reinforcement

-Motives: Inner - Cues intensify - Behaviour of -Can be positive

Motives: Inner the purchase a person or negative.
urge to satisfy motive. constitutes the
a need–want response.
through - The -Increases
purchase. marketing mix - Both physical likelihood that a
or the 4Ps and mental in specific
-Consumer is strengthen the nature, and response will
motivated to purchase could take occur in future.
search for motive. various forms.
information.
 BEHAVIORAL LEARNING THEORIES /
STIMULUS RESPONSE THEORIES

Classicalconditioning
Instrumental / Operant
Conditioning
 Behavioural Theories of Learning:

 The approach defines learning in terms of an association

between a stimulus and a response, where the stimulus
is an external object/person/situation that a person senses
and perceives, and the response is the behaviour of the
person that occurs in reaction to the
object/person/situation.
 PAVLOVIAN MODEL OF CLASSICAL
CONDITIONING
Unconditioned Stimulus
(Meat Paste) Unconditioned Response
(Salivation)
Conditioned Stimulus
(Bell)

AFTER REPEATED PAIRINGS

Conditioned Response
Conditioned Stimulus
(Salivation)
(Bell)
 Repetitionincreases the response to a
stimulus. The more often CS is paired with a
US, the stronger the association between the
two and more likely the association will be
remembered.

 Cosmeticvariation in the message context,

though the content may remain the same.

 Signs, symbols, logs, colours and jingles help

facilitate consumer learning through
association.
INSTRUMENTAL CONDITIONING

R1

R2

R3 US
CS Button (Pushing Button) (Reinforcement)

R4

R4
 Classical Conditioning  Instrumental
Conditioning
 Purchase brands due to
habit  Conscious choices are
made regarding positive
 Maggi, IFB, Britannia
or negative
reinforcement
 Cash rebates, free
product samples, trial
periods, low introductory
prices
APPLICATIONS
 Classical  Instrumental
Conditioning Conditioning
 Customer
 Stimulus
Generalization Satisfaction
 Reinforcement
 Stimulus
Schedules
Discrimination (Continuous/partial)
 Shaping
Stimulus Generalization

 Having the same response to slightly different

stimuli
 Helps “me-too” products to succeed
 Products resemble in appearance and packaging.
 Useful in:
 product extensions
 family branding
 licensing
Stimulus Discrimination
Discriminate between various
objects/events
New/different brands or as well as
different models within same
product line
 Types of reinforcement:

 Positive reinforcement consists of an outcome that

strengthens the likelihood of a response being
repeated by the presentation of a desirable
consequence.

 A negative reinforcement is an outcome that is also

aimed to encourage a specific behaviour. Through a
negative reinforcement, a person may be taught to act
out an alternative behaviour that would be more
rewarding.
 Reinforcement schedule:
 A reinforcement schedule is the pattern in which
reinforcement is provided over time, and how and when it
is applied. Reinforcement may be continuous or
intermittent.
 When a particular behaviour is reinforced each time it occurs, it
is called a continuous reinforcement.
 When a particular behaviour is reinforced periodically to
maintain a desired established behaviour, it is called an
intermittent reinforcement.
 Intermittent reinforcement may be classified into
response-based ratio schedules and time-based
interval schedules.
 Each of the ratio and interval schedules can be
further classified as fixed and variable.
MEMORY . . .

. . . affects the exposure, attention, and

comprehension stages

. . . allows consumers to anticipate the

stimuli they might encounter
MULTIPLE-STORE MODEL OF MEMORY

Sensory Memory
Short-Term Memory
Long-Term Memory
 Sensory memory happens in the pre-attention stage
where a stimulus is briefly analyzed to determine if it
will receive additional processing.
 Short-term memory is where information is
temporarily stored while people are actively processing
it.
 Long-term memory is connected to short-term
memory through encoding and retrieval processes.
Memory works like parallel processors.
 Encoding is the transfer of information from
short-term memory to long-term memory for
permanent storage.
 Retrieval is the process of accessing information
stored in long-term memory so that it can be
utilized in short-term memory.
 Retrieval is a constructive process. Information in
ads received after product experience can change
the perception of the experience.
SENSORY MEMORY . . .

. . . consists of
firing of
nerve cells,
short-term in
duration,
usually less
than a
second.
SHORT-TERM MEMORY. . .

. . . is the site where information is

temporarily stored while being
processed. Is also called working
memory.
 Rehearsal is silently repeating
information to encode it into
long-term memory.
 If information in short-term
memory is not rehearsed it is
lost within 30 seconds.
TIME REQUIRED TO TRANSFER
INFORMATION IS INFLUENCED BY .
. . . the consumer's
goal to either
recognize or recall
a task. It requires
more time to
encode information
sufficiently for a
recall task.
RECOGNITION AND RECALL
 Recognition tasks are when
information is placed before the
consumer. The goal is to determine if
the information has been seen before.
 Recall tasks are when the consumer
must retrieve the information from
long-term memory without any
prompting. Requires greater depth of
encoding.
Clutter is
when there
are too many
stimuli
making recall
more
difficult.
LONG-TERM MEMORY
. . . has essentially unlimited capacity to store
information permanently.
 Stored information is either semantic
or visual.
 Semantic memory deals with the
encoding and storage of words and
meanings.
 Visual deals with the storage of
images.
 Long term memory is essentially
permanent.
 RELATIVE SUPERIORITY OF PICTURE
VERSUS WORD MEMORY
 Visual images or pictures tend to be more
memorable than their verbal counterparts, especially
when there is low-involvement on the part of the
consumer.
 Words that have high-imagery content are easier to
encode and retrieve than words low in imagery and
concreteness.
 Words and pictures should be used to complement
each other in ads.
 Verbal material is better recalled in high involvement
conditions.
FORGETTING
People forget
because even
though information
has been placed in
long-term memory,
it may be extremely
difficult to retrieve.
This is called a
“retrieval failure.”
INTERFERENCE PROCESSES

 Retroactive interference occurs when later

learned material interferes with the recall of
information learned earlier.

 Proactive interference occurs when earlier

learned material interferes with learning and
recall of information learned later.
TIME AND FORGETTING
 The recall of verbal
information
decreases over time.
 Rapid forgetting
that occurs
immediately after
learning has been
shown to occur in
advertising as well.
AFFECT AND MEMORY
 People are better able to recall
information that has the same
affective quality as their mood state.
 Affect refers to the feelings,
emotions, and moods that
consumers may experience.
 Mood is a transient feeling state
that occurs in a specified situation
or time.
 ADVERTISING APPLICATIONS
 Messages with unique aspects have a greater
potential for being remembered
 Order in which material is presented
influences how well it will be retained.
 More information can be processed and retained
if it is chunked.
 Amount of information that can be transferred to
long term memory is a function of the time
available for processing
 Memory is cue dependent and presentation of
relevant cues will stimulate recall.
……….CONTD.
 Meaningful material is learned more
quickly and has a greater chance of
being retained than does non-
meaningful material.
 Visual Material
 Interactive Imagery
 Showing mistakes
 Incomplete messages
 Mnemonic Techniques
 Mnemonic Techniques
 Development of a pattern of unrelated facts so
that they can be remembered.
 Any technique that allows consumers to “see”
some pattern for associating
CONSUMER DECISION
MAKING
Dr. Kiran Sharma
 A SIMPLE MODEL OF CONSUMER DECISION MAKING -

Copyright 2010 Pearson Education, Inc. publishing as Prentice

Hall 2 Chapter One Slide
Consumer decision-making

 Consumer decision-making pertains to making

decisions regarding purchase of goods and service
offerings.

 It is defined as a process of gathering and processing

information about goods and service offerings and/or
brands, evaluating the alternatives, and selecting the
best possible option so as to reach a brand choice,
which would help solve the problem through
satisfaction of the need and want.
TYPES OF CONSUMER DECISIONS

 What to Buy?
 How much to Buy?

 Where to Buy?

 When to Buy?

 How to Buy?

4
RANGE OF CONSUMER PROBLEM SOLVING
APPROACHES

 Routine Problem Solving (RPS)

 Limited Problem Solving (LPS)

 Extensive Problem Solving (EPS)

LEVELS OF CONSUMER DECISION MAKING

 Routine Problem Solving

 Usually review what they already know
 Limited Problem Solving
 Criteria for evaluation established
 Fine tuning with additional information
 Extensive Problem Solving
 A lot of information needed
 Must establish a set of criteria for evaluation

Chapter Fifteen Slide

RANGE OF CONSUMER SOLVING
APPROACHES

RPS LPS EPS

Buying Brand New Brand in Unfamiliar

Patterns Purchased a familiar product
before product category
category

Seeks No Moderate Substantial

Information Information

Time Taken Habitual Take little Longer time

time
7
CONSUMER DECISION MAKING

8
Consumer decision-making process

The consumers’ decision-making is a choice

between various alternatives; it addresses
problematic issues such as what to buy,
where to buy, when to buy, how to buy, and
how much to buy.
TYPES OF ACTIVITIES IN PURCHASE
PROCESS

Problem
Recognition

Information Search
And Evaluation

Purchase Decision

Post Purchase
Behavior
ASSUMPTIONS
 Two or more alternatives exist
 Evaluative Criteria helps in assessing
each alternative’s consequences
 Evaluative procedure is used to
determine the chosen alternative
 Information obtained from external
sources/past experiences used in
evaluative procedure
EXCEPTIONS TO CONSUMER DECISION
PROCESS

 Necessity – Allocation of income within categories of

expenses (food/beverage, education, housing, medical
etc.,)
 Interlocked with purchases (petrol, insurance
when purchasing a car/home)
 Purchase preferences acquired in childhood
 Conformity to group norms/ imitation of others
 Superficial basis (select brand on the basis of
convenience)
PROBLEM RECOGNITION
 “adifference of sufficient magnitude
exists between what the consumer
perceives as the desired state of affairs
and the actual state of affairs.”
 Problem • Why do I need it?
Recognition
Information • What exactly is this product?
Search
Evaluation Of • What options are available?
Alternatives
Purchase • How exactly does the purchase
Decision happen?

Post Purchase • Did I make the right choice?

Decision 14
 Ideal State Actual State

•Simple Expectations Physical factors

DIFFERENCE
•Future goals/Aspirations Need
•Motivations/Self Image External Stimuli
• Culture
•Change in Personal
Circumstances

PROBLEM
RECOGNITION

Perceived Difference Between an ideal

state and a actual state motivates the
consumer to take actions. 15
The Process of Problem Recognition
TYPES OF PROBLEM RECOGNITION

Routine Problems
Emergency Problems
Planning Problems
Evolving Situations
 TYPES OF PROBLEM RECOGNITION
Immediacy Of Solution
Expectancy Of Immediate Immediate
Problem Solution Solution Not
Required Required

Expected Routine Planning

Unexpected Emergency Evolving

SITUATIONS THAT LEAD TO PROBLEM
RECOGNITION

 Depleted or Inadequate stock of goods

 Discontentment with the stock of goods
 Change in Environmental Situations
 Change in Financial Situations
 Marketing Activities

19
RESULTS OF PROBLEM
RECOGNITION
Consumer does not pursue any
further problem solving
behavior
Consumer proceeds into further
stages of decision-making
activity-Information Search and
Evaluation
20
MARKETING IMPLICATIONS

Putting
customers in • May lead to acquisition,
the state of consumption or disposition
problem of product
recognition

Techniques to • Attempt to create new ideal

stimulate state
problem • Create dissatisfaction with
recognition the actual state 21
 Pre-purchase information search

 The amount of information that a consumer

gathers varies and generally depends on the
following:

 Product category

 Person (or the consumer)

 Purchase situation
DO CONSUMERS ALWAYS SEARCH
RATIONALLY?

 Some consumers tend to

avoid external search,

9-23
especially with minimal time
to do so and with durable
goods (e.g. autos)

 Symbolic items = more

external search
 High perceived risk
DO CONSUMERS ALWAYS SEARCH
RATIONALLY? (CONT’D)
 Brand switching
 Variety seeking: unpredictability can be
rewarding to consumers

9-24
 When in good mood or little
stimulation elsewhere (sensory-
specific satiety)
 We select familiar brands, when decision
situation is ambiguous or when there is
little information about competing brands
HOW MUCH SEARCH OCCURS?
 Search activity is greater when…
 Purchase is important

9-25
 There is a need to learn more about purchase
 Relevant info is easily obtained/utilized
 One is younger, is better-educated, and enjoys
shopping/fact-finding
 One is female (compared to male)
 One places greater value on own style/image
CONSUMER’S PRIOR EXPERTISE

 Moderately
knowledgeable Figure 9.5

consumers tend to

9-26
search more than
product experts and
novices
 Experts: selective
search
 Novices: others’
opinions,
“nonfunctional”
attributes, and “top
down” processing
PERCEIVED RISK

 Belief
that product has negative
consequences

9-27
 Expensive, complex, hard- to-understand
products
 Product choice is visible to others (risk of
embarrassment for wrong choice)
 Riskscan be objective (physical danger)
and subjective (social embarrassment)
 The type of information search activity
that a consumer embarks on may be of
three types, namely, specific, ongoing, and
incidental.

 Information sources are of two types,

internal and external.
INFORMATION SEARCH: CONTEXTUAL
FACTORS
•Task complexity – the number of
alternatives and amount of information
available for each alternative.
•Information organization – the
presentation, format and content.
•Time constraints – the amount of time
the consumer has to decide.
Consumers have limited information-
processing capacity 29
 CONSUMERS DEVELOP STRATEGIES TO
RELIEVE RISK. THEY BUY BRANDS:

 Endorsed by celebrities or an expert on product

 Used before and found satisfactory
 Rely on reputation by buying a major well known
brand
 Tested and approved by a government organization
 Offers a money back guarantee
 Most expensive and elaborate model

30
THE INFORMATION EVALUATION PROCESS

Evaluation
involves activities undertaken by the consumer to
appraise carefully, on the basis of certain
criteria,alternative solutions to market related
problems

31
 Evaluation of alternatives

 It is a stage where the consumer evaluates and

compares the various available alternatives,
makes a judgement about the preferred brand,
and forms a purchase intention.
 The process of evaluation of alternatives varies
(a) based on the nature of the goods and service
category, (b) from person to person, and (c)
based on purchase situation.
THE EVOKED SET

33

Chapter Fifteen Slide

34
EVALUATING ALTERNATIVES( INFORMATION
PROCESSING STRATEGIES)

 Choice by processing Brands (CPB)

 Buyer assesses one brand at a time examine several
attributes and then moves on to the next
 Choice by processing Attributes (CPA)
 Buyer examines a specific attribute and then compares
several brands and then compares several brands on that
attribute, then a second attribute is compare and so on.

35
EVALUATION OF ALTERNATIVES:
ATTRIBUTES
•Product attribute • Price less important
 examples  when products are

 Size “right”
 Weight • Brand credibility is

 Sweetness  affected by

 Color  Perceived quality

 Packaging  Information costs saved
 Perceived risk
•Criteria to assess

 product may be
advertised
36
FACTORS INFLUENCING AMOUNT OF EVALUATION

 The more urgent the need the less evaluation is

likely to take place
 The more significant the product to the buyer the
greater the evaluation
 The more complex the alternatives more evaluation
will take place

37
 Application of decision rules to make the final
choice:

 Evaluative criteria are used to make comparison

between different brand alternatives to arrive at
a decision.

 There can be two kinds of decision rules,

namely, compensatory and non-compensatory
rules.
Compensatory rules
 A compensatory rule uses a ‘trade-off’ between the good
and bad attributes of a product and/or brand.

Non-compensatory rules
 A lower rating on an attribute cannot be offset by a
higher rating on the other.

 A lower rating or a negative evaluation of any one © All

attribute eliminates the brand from further consideration. right
s
rese

Non-compensatory rules could assume three forms:

rved.
 Oxfo
conjunctive, disjunctive, and lexicographic. rd
Univ
ersit
y
 HYPOTHETICAL USE OF DECISION RULES

Decision Rule Mental Statement

Compensatory rule I selected the netbook that came out best when I
balanced the good ratings against the bad
ratings

Conjunctive rule I selected the netbook that had no bad features

Disjunctive rule I picked the netbook that excelled in at least one

attribute
Lexicographic rule I looked at the feature that was most important
to me and chose the netbook that ranked highest
on that attribute

Affect referral rule I bought the brand with the highest overall 40

rating
40
SEGMENTATION BY SHOPPING
STRATEGY
1. Practical Loyalists—those who look for ways to
save on the brands and products they would buy
anyway.
2. Bottom-Line Price Shoppers—those who buy
the lowest-priced item in the category with little or
no regard for brand.
3. Opportunistic Switchers—those who use
coupons or sales to decide among brands and
products that fall within their evoked set.
4. Deal Hunters—those who look for the best
bargain and are not brand loyal.
 MARKETING IMPLICATIONS

Information Search Process

 Determining Sources of information

 Warranty Cards
 In-Depth Research (Longitudinal / Cross sectional)
 Determining Source influence
 Influencing Consumer’s evoked sets

Evaluation Process
 Determining which criteria are used by consumer
 Determining the importance of criteria
 MARKETING IMPLICATIONS (CONTD….)

Influencing Consumers’ Evaluation

 Altering Cue Characteristics

 A JND between brands can be accomplished by
emphasizing a minor (but easy to evaluate) difference in
product, price or package
 Altering Information Value
 Change the way consumers evaluate – try and educate
customers
Purchase

 The purchase decision may be rational and logical

based on evaluation of attributes (attribute-based
comparisons). It may also be based on attitudes
and opinions, values and beliefs, and
intuition. For some product categories, decisions
may be based on affect and feelings, and fun
and fantasy. For others, they may be purely
habitual and out of brand loyalty.

 Consumer purchases may assume forms of

trials/first purchases, repeat purchases, and long-
term commitment.
WHY PEOPLE SHOP?

Personal Motives Social Motives

Role Playing Social Experience outside
Diversion the home
Self Gratification Communication with others
Learning about New Trends Peer group interaction
Physical Activity Status and authority
Sensory Stimulation Pleasure of bargaining
CHOICE OF STORES
Customer Services

Personnel

Advertising

Merchandise

Store Design and Physical facilities

Store Location

Clientele
 IN-STORE PURCHASING BEHAVIOR
Merchandising Personal Selling
techniques Effects
Store Layout and Traffic
Patterns
Point of Purchase Media
Product Shelving
Pricing Strategies
Packaging
Brand Choice
SITUATIONAL NATURE OF CONSUMER
DECISIONS

 Physical Surroundings – geographical location,

décor, lighting, sounds, fragrance, weather.
 Social Surroundings – courteous staff, interpersonal
relations
 Temporal Perspective – days, weeks, months

 Antecedent States – momentary moods/ conditions,

cash on hand, fatigue
 NON STORE PURCHASING PROCESSES –
HOME SHOPPING

 Characteristics of Purchasers
 In-Home Shopping Motivators

• Convenience
• Risk Of Buying
• Lifestyle
 Marketing Implications (Promotional materials to
provide sufficient information and also testimonials
from satisfied users)
Impact of a Out of Stock Situation
PURCHASE DECISION PROCESS

Initiator Influencer Decider Buyer User

51
COMPREHENSIVE PICTURE OF DECISION
PROCESS

52
OUTPUT OF CONSUMER DECISION MAKING
 Purchase behavior
 Trial purchases
 Repeat purchases
 Long-term
commitment

 Postpurchase
evaluation

53

Chapter Fifteen Slide

POSTPURCHASE EVALUATION
 Actual Performance Matches Expectations
 Neutral Feeling
 Actual Performance Exceeds Expectations
 Customer delight
 Performance Is Below Expectations
 Negative Disconfirmation of Expectations

54
DECISION MAKING: OUTPUT

Three types of outputs:

•Trial

•Repeat purchase/brand loyalty

•Post-purchase evaluation
 Positive/negative disconfirmation of expectations
 Cognitive dissonance

•How do consumers cope with cognitive

dissonance?
55
COGNITIVE DISSONANCE

•Cognitive dissonance / Post-purchase

dissonance
•Ways to reduce post-purchase dissonance
1. Rationalize decision
2. Seek advertisements that support choices (avoid
competitive ads).
3. Seek reassurance from satisfied owners

56
POST PURCHASE BEHAVIOR

57
CONSUMER DECISION MAKING

58
CONSUMERS AND THE
DIFFUSION OF
INNOVATIONS
WHAT IS SHOWN OR STATED IN THIS AD THAT IS
DESIGNED TO ATTRACT CONSUMERS TO THIS NEW
PRODUCT?
NEW FLAVOR
 The process by which the
acceptance of an
innovation is spread by
Diffusion
communication to
Process
members of a social
system over a period of
time.
ELEMENTS OF THE DIFFUSION PROCESS

The Innovation

The Channels of Communication

The Social System

Time
THE INNOVATION

 Firm-oriented definitions
 Product is “new” to the company
 Product-oriented definitions
 Continuous – least disruptive influence on
established behavior. Involves the introduction
of a modified product rather than an totally new
product.
 Dynamically continuous – Somewhat more
disruptive than a continuous innovation but does
not alter established behavior.
 Discontinuous – Requires consumers to adopt
new behavior.
WHAT KIND OF INNOVATION IS SHOWN
HERE, AND WHY?
CONTINUOUS INNOVATION – THE
PRODUCT IS MODIFIED
THE INNOVATION

 Market-oriented definitions
 Based on consumer exposure
 Consumer-oriented definitions
 Consumer judges it as “new”
THE INNOVATION
PRODUCT CHARACTERISTICS

Relative • Degree to which consumers consider it superior

Advantage to existing substitutes

• Degree to which consumers feel it is consistent

Compatibility with their present needs, values, and practices

• The degree to which it is difficult to understand

Complexity or use

• The degree to which it can be tried on a limited

Trialability basis

• The degree to which its benefits can be observed,

Observability imagined, or described
CHANNELS OF COMMUNICATION
 Channels of communication
 Marketer to consumer
 Consumer to consumer
 Influential impersonal sources
THE SOCIAL SYSTEM
 Modern social systems accept more
innovation due to their:
 Positive attitude toward change
 Advanced technology and skilled labor
force
 Respect for education and science
 Emphasis on rational and ordered social
relationships
 An outreach perspective where members
interact with outsiders
 A system where members can see
themselves in different roles
TIME

 Purchase Time
 Adopter Categories

 Rate of Adoption
ADOPTER CATEGORIES

Category 1 Category 2 – Category 3 – Category 4 –

Category 5 –
- Early Early Late
Laggards
Innovators adopters Majority Majority
• First to • Will • Members • Second • Very last
buy the buy of the 1st half of to
mini mini ½ of the the “mass purchase
“mass market”
netbook netbook the mini
market” who
shortly who would netbook,
after its would purchase if at all
introdu purchase the
ction the mini mature
netbook mini
netbook
DIFFUSION CURVES FOR ADOPTER
CATEGORIES - FIGURE 14.5
DISCUSSION QUESTION

 Which adopter category are you?

 Does it differ with different product categories?

 How about your parents, what category are

they?
 Is age a factor in innovation behavior?
RATE OF ADOPTION

 How long does it take a new product to be adopted

by the members of a social system?
 The stages through
which an individual
consumer passes in
Adoption arriving at a decision to
Process try (or not to try), to
continue using (or
discontinue using) a new
product.
 STAGES IN ADOPTION PROCESS
NAME OF WHAT HAPPENS DURING THIS
STAGE STAGE
Awareness Consumer is first exposed to
the product innovation.
Interest Consumer is interested in the
product and searches for
additional information.
Evaluation Consumer decides whether or
not to believe that this product
or service will satisfy the need
–a kind of “mental trial.”
EXAMPLE
Raj sees an ad for a 23-inch thin LCD
HDTV in a magazine he is reading.
Raj reads about the HDTV set on the
manufacturer’s Web site and then goes
to an electronics store near his
apartment and has a sales person show
him the unit.
After talking to a knowledgeable
friend, Raj decides that his TV will fit
nicely on top of the chest in his
bedroom. He also calls his cable
company and finds out that he can
exchange his “standard” cable box at
no cost for an HDTV cable box.
 STAGES IN ADOPTION PROCESS
NAME OF WHAT HAPPENS
STAGE DURING THIS STAGE
Trial Consumer uses the product
on a limited basis
Adoption If trial is favorable,
(Rejection) consumer decides to use the
product on a full, rather
than a limited basis – if
unfavorable, the consumer
decides to reject it.
EXAMPLE
Since the HDTV set cannot be
“tried” like a small tube of
toothpaste, Raj buys the TV at this
local electronics store on his way
home from work. The store offers a
14-day full refund policy.
Raj loves his new HDTV set and
expects many year of service from
it.
THE CONSUMER INNOVATOR

 The earliest purchasers of a new product

 Tend to have higher level of:
 Education
 Social interaction
 Opinion leadership
 Venturesomeness
 Social Status
THE CONSUMER INNOVATOR
 Interest in product category
 Opinion leader
DISCUSSION QUESTIONS
 Who are the most influential opinion leaders for
college-aged people?
 Why are they influential?