Consumer Behaviour

Text and Cases

Ramneek Kapoor
Director
Kothari Group of Institutions
Indore
Nnamdi O. Madichie
Associate Professor of Marketing & Entrepreneurship
College of Business Administration
University of Sharjah (UAE)

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 Tata McGraw-Hill

Published by the Tata McGraw Hill Education Private Limited,

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Consumer Behaviour: Text and Cases

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 About the Authors
Prof. Ramneek Kapoor is Director, Kothari Group of Institutions, Indore.
Earlier, he was the Principal, Omegan School of Business, Indore. He
has been associated with Indian Institute of Management (IIM), Indore
as a visiting faculty and has also been actively involved with many other
management institutes as visiting and adjunct faculty. He is a Ph. D.
examiner with the Department of Business Administration at a prominent
Indian university.
He is a well-known management trainer and author in the areas of sales,
marketing, and soft-skills. Among others, he has authored/co-authored
Fundamentals of Sales Management, International Marketing (2nd
edition), Services Marketing, Communication for Retail Professionals, and Managerial Skills. He
has presented several papers in these areas in various national and international seminars. He has
organised leadership training sessions for senior executives in several companies and organizations
such as BSNL, LIC, Caparo Group, Nicholas Piramal, Indore Management Association, and
Rotary Club. He also has more than 28 years of professional experience with many national and
multinational companies in the area of sales and marketing management.
Prof. Kapoor¶s pro¿le has been published in the :ho¶s :ho in the :orld 22 (2th Edition).
He can be reached at ramnik2kapoor#gmail.com

Dr. Nnamdi O. Madichie is Associate Professor of Marketing &

Entrepreneurship at the College of Business Administration, University
of Sharjah (UAE). He is also Fellow of the Higher Education Academy
(UK), Fellow of the Academy of Marketing Science, USA (FAMS) and
Editor-in-Chief of the African Journal of Business & Economic Research
(AJBER). Prior to his current position in the Gulf region, he was Senior
Lecturer and Programme Leader for both the BA (Hons) in Marketing and
BA (Hons) in Business Studies at the Business School, University of East
London (UK).
Dr. Madichie’s research spans complementary areas of marketing
(entrepreneurial, sustainable and sports marketing). He maintains an active research agenda in areas
of marketing and entrepreneurship and has been recipient of the “Emerald Highly Commended Paper
Award 2´ as well as the prestigious “2 Emerald Award for Best Practical Implications Paper.´
Dr. Madichie can be reached at nomadichie#yahoo.co.uk

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 Preface

Today’s global business has brought into focus the true importance of adopting a customer centric
outlook by the marketing ¿rms, because it is a well-known fact that all kinds of marketing begins
and ends with the consumer. In fact, the genesis of marketing can be found in the act of determining
consumer needs, designing the products, services and strategies to meet those needs, and ¿nally
ensuring customer satisfaction by the marketers.
A marketer in today’s conditions has to think more like a psychologist. It has to undertake a
research into the consumer behaviour in order to understand as to how its consumers can accept,
perceive, and respond to its product offerings and other related market activities. The psychological
insights so gained into consumer behaviour are then utilised to determine its marketing plan, brand
and product positioning, and consumer communication strategy.
This book is an attempt to discuss consumer behaviour in an easy to understand manner. It
has been divided into  chapters for comprehensive discussion of various aspects of the subject.
Each chapter deals with an important concept of consumer behaviour and amply explains to the
reader that particular concept by taking examples and references from the real world scenario.
Rich chapter-end pedagogy including references, additional readings, chapter summary, objective
type questions (with answers) and review questions add value to the text for the students of the
subject. Each chapter concludes with a case on the theme of the chapter, making the concepts more
comprehensible. All the chapters have been so devised, so as to enable the readers to relate the
theory of consumer behaviour to the real world practices.
:ith its approach and design, we sincerely hope and believe that this book will ¿nd wider
acceptance with both²the students as well as the teachers of the subject. :e shall be grateful for
feedback and suggestions for further improvement in the book.
Ramneek Kapoor
Nnamdi O. Madichie

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 Brief Contents

About the Authors ii

Preface v
Acknowledgements vii
1 Consumer Behaviour: An Introduction 1
2 Models of Consumer Behaviour and Decision-Making 39
3 Consumer Personality 61
4 Consumer Attitude 87
5 Consumer Motivation 112
6 Consumer Learning and Memory 133
7 Consumer Perception 154
8 Influence of Social Classes on Consumer Behaviour 176
9 Group Influences 215
10 Process of Consumer Decision-Making 235
11 Consumer Communication Process 272
12 Relationship Marketing and Consumer Behaviour 311
13 Market Segmentation 341
14 Consumerism and Consumer Movements: A Historical Perspective 374
15 Organizational Customer and Buying Behaviour 402
Index 423

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 Contents

About the Authors ii

Preface v
Acknowledgements vii

1 Consumer Behaviour: An Introduction 1

Relevance of Studying Consumer Behaviour 2
Changing Faces of Consumer Behaviour and Decision-Making 3
Concept of Consumer Behaviour 3
Development and Emergence of Consumer Behaviour Concept in Marketing 7
Historical Aspects of Consumer Research and Behaviour 8
The Classical Thought 9
Managerial School of Thought 9
Behavioural School of Thought 10
Process of Consumer Research 11
Signi¿cance of Understanding Consumer Behaviour in Marketing 22
Summary 27
Objective Type Questions 28
Review Questions 29
Activities 29
Reference 30
Additional Reading 30
Case 1: Evaluating the Consumers’ Preferences for Motor Cycles in
Rural India 31
Case 2: Use of the Marketing Mix in New Product Launch 32

2 Models of Consumer Behaviour and Decision-Making 39

Traditional Models 40
Contemporary Models 44

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 xii Contents

Summary 53
Objective Type Questions 54
Review Questions 55
Activities 56
References 56
Additional Reading 56
Case: Taking Recourse to Precaution for Prevention—Selling Preventions the
Indus Health Plus Way 57

3 Consumer Personality 61
Meaning and De¿nition of Personality 63
Nature and Properties of Personality 64
Theories of Personality 65
Dimensions of Human Personality and the Consumer Behaviour 69
Applications of Consumer Behaviour in Marketing and Other Fields 72
Understanding the Concept of the Image of Self 73
Summary 74
Objective Type Questions 75
Review Questions 77
Activities 77
References 77
Additional Reading 77
Case: Nike—Retaining Market Leadership in Sports Shoes 79

4 Consumer Attitude 87
Attitude Formation 88
Levels of Commitment to an Attitude 88
Theories Propounding Attitude 89
Models of Attitude 93
Learning Hierarchies 99
Attitude Changes 100
Summary 104
Objective Type Questions 105
Review Questions 106
Activities 106
References 107
Additional Reading 108
Case: Online Education in India—An Attitude Problem? 110

5 Consumer Motivation 112

Needs and Goals 113
Characterization of Motivation 113
Typology of Needs 115
Theories of Needs 115
Levels of Involvement 119

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 Contents xiii

Measures of Involvement 122

9alues 123
Measuring 9alues 124
Motivation Research 125
Summary 127
Objective Type Questions 127
Review Questions 129
References 129
Additional Reading 130
Case: Cotton Prices Hit South Asian Markets 131

6 Consumer Learning and Memory 133

Theories of Learning 134
:hy should Marketers’ Care about Consumers’ Memory" 143
Development of Brand Loyalty and Brand Equity 145
Levels of Involvement 146
Summary 147
Objective Type Questions 148
Review Questions 149
Activities 149
References 149
Additional Reading 150
Case: ICC Cricket World Cup 2011 152

7 Consumer Perception 154

Process of Perception 155
Perceptual Organization 155
Sensory Systems 156
Perceptual Distortion 159
Concepts Underlying Perception 160
Factors InÀuencing Perception 162
Consumer Image and Marketing Perception 163
Perception of Risk 165
Summary 168
Objective Type Questions 169
Review Questions 170
Activities 170
References 171
Additional Reading 172
Case: Slumdog Millionaire 174

8 Influence of Social Classes on Consumer Behaviour 176

Concept of Social Classes 177
Social Strati¿cation and Social Class 178
Concept of Socio-Economic Class 178

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 xiv Contents

Process of Social Strati¿cation 180

Social Strati¿cation Systems 181
Factors Responsible for Social Strati¿cation 181
Culture 9ariance 183
Social Class Characteristics 186
Social InÀuence on Consumer Behaviour 187
Group InÀuence and Consumer Behaviour 188
Personal Factors 189
Psychological Factors 191
De¿nition and Meaning of Culture 192
How does Culture Interest a Marketer 193
Constituents of Culture 194
Cultural 9alues 196
Characteristics of Culture 198
Cross Cultural Marketing 200
Challenges Firms Face in Cross Cultural Marketing 203
Strategies for Dealing with Cross Cultural Differences 205
Subculture and Consumer Behaviour 206
Summary 209
Objective Type Questions 210
Review Questions 211
Activities 212
References 212
Additional Reading 212
Case: Chandigarh Housing Board—Categorizing Housing Schemes for
Consumers 213

9 Group Influences 215

Factors InÀuencing Reference Groups 215
Types and Nature of Reference Groups 216
Reference Group and Consumer Conformity 218
Bene¿ts of Reference Group Appeals 221
Group InÀuences in Real-:orld Marketing 224
Summary 228
Objective Type Questions 228
Review Questions 229
Activities 230
References 230
Additional Reading 230
Case: Sri Lanka’s Big National Push Towards a Connected Society 232

10 Process of Consumer Decision-Making 235

Consumer Decision-making 236
How do Customers Decide to Buy" 236

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 Contents xv

Five Stages of Consumer Buying Decision Process 237

Customer Buying Process for New Products 241
Buying Motives 242
Types of Buying Decisions 244
Decision-making Models of Consumer Behaviour 246
Consumer Decision-making in the Households 248
Types of Families 249
Life Cycle Stages of a Family 250
Life Cycle Stages of a Nontraditional Family 251
Decision-making Model in Modern Household 252
Buying Roles 253
Concept and Process of Innovation 255
The Concept of Adoption 259
Opinion Leaders 262
Summary 265
Objective Type Questions 265
Review Questions 267
Activities 267
References 267
Additional Reading 267
Case: The Story of Innovation of a Single Car Key to Replace
Multiple Car Keys 269

11 Consumer Communication Process 272

Concept of Communication 272
Technological Advancements and Communication 273
Understanding Communication 273
Communication Establishes Meaning 274
Understanding the Spread of Communication 275
ConÀict and Communication 276
Media and Communications Psychology 277
Human Communication 279
The Concept of Oral Communication 281
Communication Noise 282
Elements of Communication Process 282
Functioning of the Communication Process 283
Elements of Communication 284
Models of Communication 285
Marketing Communication 287
Elements of Marketing Communication 288
Establishing Promotional Strategy as a Communication Tool 299
Summary 303
Objective Type Questions 304
Review Questions 305

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 xvi Contents

Activities 306
References 306
Additional Reading 306
Case: Innovative Consumer Communication by Mercedes Benz UK 307

12 Relationship Marketing and Consumer Behaviour 311

Introduction 311
De¿nition of Relationship Marketing 312
Relationship Marketing vs Transactional Marketing 312
Concept of Relationship Marketing 314
Process of Relationship Structure 318
Consumer Relationship Building Strategy in Relationship Marketing 319
Four Level Structures of Customer Relationship Strategies 321
Customer Relationship and Brand Loyalty 324
Building Brand Loyalty Pyramid 326
Customer Relationship and Customer Satisfaction 327
Features that Customers Look for in Establishing a Satisfying Marketing
Relationships 329
Customer Relationship Optimization with Effective Communication 332
Summary 334
Objective Type Questions 334
Review Questions 336
Activity 336
References 336
Additional Reading 336
Case: Jet Airways—Establishing Relationship Marketing Through Frequent Fliers’
Programme 337

13 Market Segmentation 341

Introduction 341
:hat does Market Segmentation Mean" 342
Objectives of Market Segmentation 343
Process of Market Segmentation 346
Criteria for Selecting Segmentation 351
Methods of Market Segmentation 352
Developing a Target Market Strategy 354
Some of the Common Mistakes of Market Segmentation 364
Summary 365
Objective Type Questions 366
Review Questions 367
Activities 367
References 368
Additional Reading 368
Case: Market Segmentation by Maruti Udyog Limited 369

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 Contents xvii

14 Consumerism and Consumer Movements: A Historical Perspective 374

De¿nition of Consumer Culture 374
De¿nition of Consumerism 375
Agencies that InÀuence Consumerism and Consumer Movements 375
Factors Contributing to Consumerism and Consumer Movements 377
Historical Perspective of Consumer Movement in US 381
Historical Perspective of Consumer Movement in India 384
Current Scenario of Indian Consumerism 386
Government’s Role and Responsibility Towards Consumerism 388
Consumer Protection Act, 8 390
The Monopolies and Restrictive Trade Practices Act (MRTP) Act,  393
Advantages of Consumerism 395
Summary 396
Objective Type Questions 396
Review Questions 398
Activities 398
References 398
Additional Reading 399
Case: Active Consumerism Taking Care of the Public Interest in
Globalized India 400

15 Organizational Customer and Buying Behaviour 402

Business Marketing 402
Organizational Buyers 403
Characteristics of Organizational/Industrial Markets 403
Organizational Buying Decision-making approach and Buying Systems 408
Factors that InÀuence Organizational Buyer Behaviour 409
Organizational Buying Process 411
Importance of Online Buying in Organizational Buying 415
Summary 416
Objective Type Questions 417
Review Questions 419
Activities 419
Additional Reading 419
Case: Negotiation and Value Analysis 420

Index 423

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