COURSE OUTLINE

HBM 2301: CONSUMER BEHAVIOUR

Contact Hours: 42

Purpose: To equip the learner with skills and knowledge in Consumer Behaviour to
facilitate understanding of Consumer Behaviour as a core function in business growth
and development.
Learning Outcomes
At the end of this course unit the learner should be able to:
a) define key concepts used in consumer behaviour
b) Distinguish different Theory and modelling
Content
1. INTRODUCTION
- Definition
 Consumer
 Consumer Behaviour
 Importance of consumer behaviour
2. Marketing Segmentation Process
3. Theory and Modelling consumer Behaviour
4. Diffusion of innovation ( factors, process)
5. Categories of Adopters
6. Internal and External influence
 Cultural factors
 Social factors
 Personal factors
 Psychological factors
 Learning
7. Theories of Motivation
8. Customer Service and its Importance

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Learning and Teaching Methodologies
Lectures, Case Studies, Seminars and Term Papers
Assessment
Type Weighting (%)
Examination 70%
Continuous Assessment 30%
Total 100%

Core Texts
1. Kotler, P. and Keller, K.L. (2006). Marketing Management, 12th Edition, Upper Saddle
River, NJ: Prentice Hall.
2. Kotler, P. (2008) Principles of Marketing, 12th Edition, Upper Saddle RiverNJ Prentice
Hall
3. Matin Khan (2006), Consumer Behaviour and Advertising Management, New Age
International ltd Publishers

4. The marketing customer interface / . London : BPP Professional Education, 2000

Henry Assael; Consumer Behaviour and Marketing Action. South-Western College,
1998. 0538867701.
5.G S Kindra, M Laroche& T Muller. Nelson, Consumer Behaviour. Canada, 1994.
6. Relevant Newspaper articles on Marketing Issues.
7. Other relevant marketing books.

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1: INTRODUCTION OF CONSUMER BEHAVIOUR

Objectives
This chapter provides an introduction to consumer behaviour. “Consumer is the most
Important person. The business revolves around the consumer.”
After finishing this chapter, one should be able to understand:
 What is meant by consumer behaviour
 Reasons for studying consumer behaviour
 Understanding consumer behaviour
 Marketing strategy and consumer behaviour

Definitions
All of us are consumers. We consume things of daily use, we also consume and buy these
products according to our needs, preferences and buying power. These can be onsumable
goods, durable goods, speciality goods or, industrial goods.
What we buy, how we buy, where and when we buy, in how much quantity we buy
depends on our perception, self-concept, social and cultural background and our age and
familycycle, our attitudes, beliefs, values, motivation, personality, social class and many
other factorsthat are both internal and external to us. While buying, we also consider
whether to buy or notto buy and, from which source or seller to buy. In some societies,
there is a lot of affluence and,these societies can afford to buy in greater quantities and at
shorter intervals. In poor societies,the consumer can barely meet his barest needs.

A consumer is anyone who engages himself in physical activities of evaluating,

acquiring, using or disposing of goods and services.
A customer is one who actually purchases a product or service from a particular
organization or a shop. A customer is always defined in terms of a specific product
or company.

Consumer behaviour can be defined as the decision-making process and physical

activity
involved in acquiring, evaluating, using and disposing of goods and services.
This definition clearly brings out that it is not just the buying of goods/services that
receives attention in consumer behaviour but, the process starts much before the goods
havebeen acquired or bought. A process of buying starts in the minds of the consumer,
which leadsto the finding of alternatives between products that can be acquired with their
relative advantagesand disadvantages. This leads to internal and external research. Then
follows a processof decision-making for purchase and using the goods, and then the post-
purchase behaviourwhich is also very important, because it gives a clue to the marketeers
whether his product hasbeen a success or not.

The marketeers therefore tries to understand the needs of different consumers and

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having understood his different behaviours which require an in-depth study of their
internaland external environment, they formulate their plans for marketing.

Consumer generally refers to any one engaging in any one or all of the activities
stated
in our definition. The traditional viewpoint was to define consumers strictly in terms
of economicgoods and services and purchasers of products offered for sale. The view
now has been broadened.
It now also holds that monetory change is not essential for the definition of consumers.
Fewpotential adopters of free services, or even philosophic ideas can be encompassed by
thisdefinition.

REASONS FOR STUDYING CONSUMER BEHAVIOUR

The most important reason for studying consumer behaviouris the role that it plays in our
lives. We spend a lot of time in shops and market places. We talk and discuss with
friendsabout products and services and get lot of information from T.V. This influences
our dailylives.
Consumer decisions are affected by their behaviour. Therefore, consumer behaviour is
said to be an applied discipline. This leads to the microperspective and societal
perspective.

Micro Perspective.It involves understanding consumer for the purpose of helping a

firm or organization to achieve its objectives. All the Managers in different
departments arekeen to understand the consumer.
They may be Advertising Managers, Product Designers, Marketing and Sales
Managers
and so on.
Societal Perspective is on the macro level. Consumers collectively influenced
economic
and social conditions within a society. Consumers strongly influence what will be
product,what resources will be used and it affects our standard of living.
Management is the youngest of sciences and oldest of arts and consumer behaviour in
management is a very young discipline. Various scholars and academicians concentrated
on itat a much later stage. It was during the 1950s, that marketing concept developed, and
thus theneed to study the behaviour of consumers was recognised. Marketing starts with
the needs ofthe customer and ends with his satisfaction. When everything revolves round
the customerthen the study of consumer behaviour becomes a necessity. It starts with
buying of goods. Goodscan be bought individually, or in groups. Goods can be bought
under stress (to satisfy animmediate need), for comfort and luxury in small quantities or
in bulk. For all this, exchangeis required. This exchange is usually between the seller and
the buyer. It can also be betweenconsumers.
To understand the likes and dislikes of the consumer, extensive consumer research
studies are being conducted. These researches try to find out:
What the consumer thinks of the company’s products and those of its competitors?
How can the product be improved in their opinion?

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How the customers use the product?
What is the customer’s attitude towards the product and its advertising?
What is the role of the customer in his family?
The following key questions should be answered for consumer research. A market comes
into existence because it fulfils the needs of the consumer. In this connection, a marketeer
hasto know the 70s framework for consumer research. Taking from an example of soap.

Consumer behaviour is a complex, dynamic, multi-dimensional process, and all

marketingdecisions are based on assumptions about consumer behaviour.
Marketing strategy is the game plan which the firms must adhere to, in order to outdo
the competitor or the plans to achieve the desired objective. In formulating the marketing
strategy, to sell the product effectively, cost-benefit analysis must be undertaken.

APPLYING CONSUMER BEHAVIOUR KNOWLEDGE

(1) Consumer behaviour knowledge is applied in Marketing Management. A sound
understanding of the consumer behaviour is essential to the long-term success of
any marketing programme. It is the corner stone of marketing concept which stress
on consumer wants and needs, target market selection, integrated marketing and
profits through the satisfaction of the consumers.
(2) Consumer behaviour is also important in non-profit and social organizations.
Such
organizations are govt. agencies, religious organizations, universities and charitable
organizations.

(3) Consumer behaviour is applied to improve the performance of government

agencies
as well. For instance, the performance of government transportation is poor. It can
be improved by knowing the needs and wants of the consumers. Getting checks
from
them for their likes or dislikes. Same can be applied to other organizations like
universities and charitable organizations.
(4) Consumer behaviour also helps in marketing of various goods which are in
scarcity.
People are made aware that gas, fuel, water and natural resources are in scarcity.
Consumers are encouraged to reduce their consumption of these commodities.
(5) Consumer benefit from the investigation of their own behaviour. When the
consumer
learns the many variables that affect his behaviour. He gets educated and
understands
better how to effect his own behaviour. What is learnt about consumer behaviour
also benefit consumer in a formal sense.

MARKET ANALYSIS
Market analysis requires an understanding of the 4 Cs which are consumer, conditions,

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competitor and the company. A study is undertaken to provide superior customer value,
whichis the main objective of the company. For providing better customer value, we
should learn theneeds of the consumer, the offering of the company, vis-a-vis its
competitors and the environmentwhich is economic, physical, technological, etc.
A consumer is anyone who engages himself in physical activities of evaluating,
acquiring,using or disposing of goods and services.
A customer is one who actually purchases a product or service from a particular
organization or a shop. A customer is always defined in terms of a specific product or
company.
However, the term consumer is a broader term which emphasises not only the actual
buyer or customer, but also its users, i.e., consumers. Sometimes, a product is purchased
bythe head of the family and used by the whole family, i.e., a refrigerator or a car. There
are someconsumer behaviour roles which are played by different members of the family

All the consumer behaviour roles are to be kept in mind but, the emphasis is on the
buyer whose role is overt and visible.
(a) The consumer. To understand the consumer; researches are made. Sometimes
motivationalresearch becomes handy to bring our hidden attitudes, uncover emotions and
feelings.
Many firms send questionnaires to customers to ask about their satisfaction, future needs
and ideas for a new product. On the basis of the answers received, changes in the
marketingmix is made and advertising is also streamlined.
(b) The external analysis (company). The external analysis may be done by the
feedbacks from the industry analyst and by marketing researches. The internal analysis is
made by the firm’s financial conditions, the quantum of the sales force and other factors
withinthe company
(c) The competition. In the analysis of the market, a study of the strengths and
weaknesses of the competitors, their strategies, their anticipated moves and their reaction
tothe companies’ moves and plans is to be made. The company after getting this
information,reacts accordingly and changes its marketing mix and the offering is made in
a manner whichcan outdo the competitor. This is a very difficult process and it is easier
said than done. Tohave correct information about the competitors and to anticipate their
further moves is the jobof the researcher.
(d) The conditions. The conditions under which the firms are operating has also to be
seriously considered. The factors to be studied are the economy, the physical
environment, thegovernment regulations, the technological developments, etc. These
effect the consumer needs,i.e., the deterioration of the environment and its pollution may
lead to the use and innovationof safer products. People are health conscious and are
concerned with their safety. Hence, inthis case, safer products have a better chance with
the consumer. In case of recession, the flowof money is restricted greatly. This leads to
the formulation of different marketing strategies.
(e) Market segmentation. The market is divided into segments which are a portion of
a larger market whose needs are similar and, they are homogeneous in themselves. Such
segments are identified with similar needs.

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(f ) Need set. By need set, it is meant that there are products which satisfy more than
one need. An automobile can fill the transportation needs, status needs, fun needs or
timesavingneeds. So, the company tries to identify the need sets, which its product can
fulfil. Thenwe try to identify the groups who have similar needs, i.e., some people need
economical cars,others may go for luxury cars.
(g) Demographic and psychographic characteristics. These groups are identified
and they are described in terms of their demographic and psychographic characteristics.
Thecompany finds out how and when the product is purchased and consumed.
(h) Target segment. After all, the above preliminary work is done, the target customer
group known as the target segment, is chosen, keeping in mind how the company can
providesuperior customer value at a profit. The segment which can best be served with
the company’scapabilities at a profit is chosen. It has to be kept in mind that different
target segmentsrequire different marketing strategies and, with the change in the
environmental conditionsthe market mix has to be adjusted accordingly.

Marketing Strategy
Strategies are formulated to provide superior customer value. In formulating market
strategies,the 4 Ps are directed at the target market.

(i) Product. Product is anything that is offered to the consumer which is tangible and
can satisfy a need and has some value.
(j) Price. Price is the amount of money one must pay to obtain the right to use the
product.
(k) Distribution (Place). The goods can be distributed by many channels. These could
be retailers, wholesalers, agents or by direct selling. Distribution outlets play an
important role in reaching the goods to the consumer. They provide, time, place and
possession utilities.
Some goods need to be marketed through the channels or the middleman. Others can be
marketeddirectly by the company to the actual consumer.
(l) Promotion. Promotion is the means of changing the attitudes of the consumer, so
that it becomes favourable towards the company’s products. Various means of promotion
areadvertising, personal selling, sales promotion and publicity.
(m) Service. Service refers to auxiliary service that enhances the value of the product
or the service. For instance, while buying a car, free services are provided over a certain
periodof time. Check-ups are free and maintenance is also covered on the charge of an
adequateamount along with the product purchased. These auxiliary services are provided
at a cost withmoney. These provide value to the product or the customer. These services
give an advantageto the customer and he is free from the botheration of occasional check-
ups or risk. The risk isconsiderably reduced and, the customer derives satisfaction with
his decision to purchase.

'Consumer Behaviour and Market Segmentation

By market segmentation we imply that the entire market is broken down into smaller
groupshaving similar wants. They are homogeneous in themselves and heterogeneous

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with othergroups. The market can be broken down on various bases. These are
Demographic,Psychographic, Benefit Segmentation etc.
The concept of divide and rule applies to the market segmentation. You divide the
market,choose your target market and then master it. Segmentation and choosing the
targetmarket is like shooting with a rifle and not by 12-bore. If the marketing effort is
spread overa wide area it does not have that effect but if it is concentrated on a point like
a rifle it can gomuch further and can be more effective

The segmented market shows 3 groups which are homogeneous in themselves and
heterogeneousamongst themselves.
Market segmentation is a process of dividing a potential market into distinct sub-sets of
consumers with common needs and characteristics and selecting one or more segments to
target with a distinct marketing mix.
Consumers are better satisfied when a wide range of products are available to them.
Thus, market segmentation has proved to be a positive force for both consumers and
marketsalike. If the market was not segmented the same product will be sold to every
prospect with asingle marketing mix it satisfies a generic or a common need, and it
becomes ineffective andends up appealing to none.
Since the consumers are different in their needs, wants, desire and are from different
backgrounds, education experience therefore segmenting the market is very necessary for
effective marketing of goods/services.
Segmentation helps in expanding the market by better satisfying the specific needs or
desires of particular customers.
Today, nearly every product category in the consumer market is highly segmented. For
instance, billion dollar vitamin market is segmented by age for children, young adults, the
elderly etc. The vitamin market provides benefits like increased energy, illness, tension
andstress reduction, enhanced sexuality, improved skin.
Hotels also segment their market, for example Marriott/operatefairfield for short stay.
Residential thus Inn for extended stay which are for budget-oriented traveller and are
cheap.
Courtyard for the price-conscious businessmen, Marriott Hotel for full business
travellers. Marriott resorts for leisure vacation guests.
Marriott time sharing for those seeking affordable resort ownership.
Marriott senior living environment for elderly people.
Maruti, for instance, have positioned the 800cc basic model and Omini Van for the lower
income groups, the Zen, Swift, Alto and Gypsy for the middle income groups, and the
Baleno,Esteem etc. for the higher income groups.,

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BASES FOR SEGMENTATION

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2: PSYCHOGRAPHIC OR LIFESTYLE SEGMENTATIONS

Objectives

Our lifestyles or patterns of living are changing fast and are determined by our activities,
interest and opinions and this affects our consumption pattern.
This chapter imparts knowldege about:
 Lifestyles and their characteristics
 VALS lifestyles classification
 Segmentation strategies

INTRODUCTION
It is defined simply as how one lives, and spends money. It is determined by our past
experiences,innate characteristics and current situations. The products we consume are
related toour lifestyle. Lifestyle marketing established a relationship between the
products offered inthe market and targeted lifestyle groups. Lifestyles segmentation is
based on activities andinterest and opinions of groups. These are psychographic
segmentations, and lifestyles arederived from psychographics. Lifestyle is a unified
pattern of behaviour that determines consumptionand, is also in turn determined by it.
Demographic and psychographic lifestyles are complimentary and work best together.
Demographic variables help marketeers “locate” the target market, and psychographics
providesmore insight into the segment by taking into their activities interests and
opinions.

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Marketers try to find out the activities, interests, and opinions of people by questions
to be answered on a rating scale. This is done to find out how strongly one agrees or
disagreeswith the question.
Characteristics of Lifestyle
1. Lifestyle is a group phenomenon which influences others in the society. A person
havinga particular lifestyle can influence others in a social group.
2. Lifestyle influences all areas of one’s activities. A person having a certain lifestyle
showsconsistency of behaviour in other areas as well. You can always predict that a
personshopping from elite or speciality stores, would not shop from common places. The
sameapplies to eating habits and other habits as well.
3. Lifestyle implies a central life interest: A person may have interest in education,
leisure,adventure work, sexual exploits, etc. which any become their main interest in life.
4. Social changes in society affect lifestyles: For example, as the society becomes more
affluent, lifestyles of people change, sometimes drastically. As one would become richer
ones lifestyle changes accordingly.
Lifestyle Segmentation
This is known as value and lifestyle segmentation and was introduced in 1978 by Arnold
Mitchell. It provides a systematic classification of American adults into nine segments.
Thesewere widely used. Despite its popularity, some managers felt that the nine segments
given byVALS are not appropriate, as two of the segments cover one-third of the entire
population,leaving the rest to be divided into 7 segments, which become too small to be
of interest to manyfirms. These nine segments are shown in Fig. 2.1.
The figure shows four major groups or classfication:
(a) Need driven: (poor and uneducated).
(b) Outer directed: (middle or upper income class consumer whose lifestyle is directed by
external criteria).
(c) Inner directed: (people motivated by inner needs rather than by the expectation of
others).
(d) Integrated: (this group combines the best of outer and inner directed. They are fully
matured).
A further break-up of these groups is shown in the figure, and their characteristics can
be described as given below:
1. Survivors: They are disadvantaged people, who are poor, depressed and withdrawn.
Their purchases are price dominant, and they like to buy products which are economical
andsuit their pocket. They are not very knowledgeable.
2. Sustainers: They are motivated by brand names. They look for guarantee and are
impulse buyers. These people are disadvantaged and want to get out of poverty.
3. Belongers: They buy products which are popular. They are careful and brand loyal
shoppers. They are people who are conventional, conservative, and unexperimental.
4. Emulators: They are status conscious and upwardly mobile. They emulate others,
and buy products to impress other people. They have high aspirations in life.
5. Achievers: They buy top of the line products. They are brand conscious and loyal.

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They are leaders and make things happen. They want to enjoy a good life.
6. I am me: These people are typically young, self engrossed and given to whims. They
go after fads and do not mind taking the lead.
7. Experimentals: These people pursue a rich inner life and want to directly experience
what life has to offer.
8. Societally conscious people: They are simple, frugal persons; who read labels
carefullyand seek information. They are conscious of society and social responsibility.
They wantto improve conditions in society.
9. Integrated: These are fully matured people and constitute the best of outer and
inner directed.
These segments did not appeal to many marketers and therefore, VALS 2 was
introducedin 1989. This system has more of a psychological base than the original, which
was moreactivity and interest based. VALS 2 is based on attitudes and values. It is
measured by statements with which the respondents state a degree of agreement and
disagreement.
It has identified three primary self orientations:
Principle oriented: They are guided by their beliefs and principles.
Status oriented: These individuals are heavily influenced by actions, approval and
opinion of others.
Action oriented: They desire social and physical activity, variety and risk taking

These three orientations determine the types of goals and behaviours that consumers
will pursue, and the goods they will get interested in.
VALS 2 segments, consists of eight general psychographic segments as shown in Fig.
2.2.
This classification is based on Maslow’s hierarchy of needs. At the bottom are the people
with minimal resources and, on the top we have people with abundant resources. This
dividesthe consumer into 3 general groups or segments. Each of these segments have a
distinctivelifestyle, attitude and decision-making. The figure shows their characteristics
as wel. The eightsegments also differ in their resources and orientations. The resources
possessed by those atthe bottom are very little and as we move upwards the resources
increase. Besides money andphysical resources, people at the bottom lack in education,
social resources, psychologicalresources and in self confidence. These studies were made
on American people. The demographiccharacteristics like, age, income, occupation, role,
religion, sex education, marital status caneasily be identified. However, it is more
difficult to identify psychographic characteristics ofattitudes, beliefs, interests, benefits,
lifestyle, etc. This can be done by VALS segmentation

For a segment to be worthwhile, it must have a proper size, i.e., enough number of
people in the segment to make it feasible. It must be stable, so that the people belonging
to asegment not only remain there, but the segment must also grow in size. The segment
mustalso be accessible, so that the marketeer is able to reach the segment in an
economical way.
They can be reached through various media. Marketeers also are on the lookout for new
mediathat can reach the audience with minimum waste, circulation and competition. The

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segmentshould be such that profits can be gained. By catering to a segment, profits must
be ensured.
Profits are the backbone of any organisation. The target segment has to be profitable.

Strugglers
These are poor people, struggling for existence. Education is low, low skilled, without
strongsocial bonds. They are despairing and, have a low status in society. Their chief
concern is tofulfil their primary needs of physiological security and safety needs. They
represent a modestmarket and are loyal to their favourite brands.
Makers
They are in the action-oriented category. They have construction skills and value self
sufficiency.
Makers experience the work by working on it. They are people engaged in construction
work and work with their hands and in the industry. They are politically conservative,
suspiciousof new ideas; they buy stuff which helps them in achieving their purpose. They
buy tools,pick up trucks and, all that helps them in practical work.
Strivers
They are a status-oriented category, but have a low income as they are striving to find a
secureplace in life. They are low in economic, social and psychological resources. They
are concernedabout the opinion of others. They see success with money. They like to be
stylish. They wish tobe upwardly mobile and strive for more.

Believers
They are in the principle-oriented category. They are conservative, conventional people,
withtheir needs, strong faiths, and beliefs. Have modest resources sufficient to meet their
needs.
They are conservative and predictable. Use established brands.
Experiencers
They are action oriented, young, vital, enthusiastic, impulsive and rebellious. They have
enoughresources and experiment in new ventures. They indulge in exercise, sports,
outdoor recreationand social activities. They are avid consumers and spend much on
entertainment, clothing,food, music, videos, movies, etc. This pattern of behaviour
changes, as they are enthusiasticto new ideas.
Achievers
They are also placed high in the Maslow’s hierarchy of needs and are career and work
oriented.
They make their dreams come true. They are workaholics. Work provides them with a
sense of duty, material rewards and prestige. They live conventional lives, authority and
imageis important to them. They also favour established products and show their success
around.
Fulfilled
As the name suggests, they are satisfied and mature people who are well educated, value
order, knowledge and responsibility. They are practical consumers and conservative.
Theylook for products which are durable, have value and function properly. They are

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well informedabout the world, and are ready to increase their knowledge. Prefer leisure at
home.

Actualisers
They have abundant resources and are sophisticated in their taste and habits. They are
active,and have high self-esteem. They develop, explore and express themselves in a
variety of ways.

Review Questions

1. What is lifestyle marketing? Explain its characteristics?

2. ExplainVALS segmentation. Why importance was given to VALS 2.
3. Explain VALS segmentation given by Arnold Mitchell and explain the various
categories.
4. Explain VALS 2 segmentation with a diagram.
5. Differentiate and explain concentrated marketing, differentiated marketing and counter
Segmentation

3: CONCEPT OF CULTURE AND SUB CULTURE

Objectives:
This chapter deals with the concept of culture, which is a very broad concept and includes
knowledge, belief, customs and pattern of living acquired from predecessors. The student
should be able to understand:
 Concepts of culture and its characteristics
 Function of culture
 Variation in cultural values
 Subculture

Introduction
Culture is part of the external influences that impact the consumer. That is, culture
representsinfluences that are imposed on the consumer by other individuals. A
consumer’s buying behavioris influenced by the psychological factors. These are the
major factors influencing buyingbehavior. In this lesson culture and consumer behavior
are connected. Cultural factors exert thebroadest and deepest influence on consumer
behavior.

Characteristics of Culture
Culture is invented by 3 inter-dependent systems
(i) Ideological system—mental system consisting of ideas, beliefs, values and ways of

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reasoning (good or bad).
(ii) Technological system consists of skills, techniques to produce.
(iii) Organisational system (family and social class) coordinates behaviour.
Culture is learned: It begins early in life and is learned through generations.
Culture is socially shared by human beings living in societies.
Culture as similar yet different. Athletics, sports language music rituals are observed
by all but are different.
Culture is gratifying and persistent: You get satisfaction yet change is difficult.
Culture is integrated and organised.
Culture forms no runs and is prescriptive.
Culture is acquired. It can be acquired from the family, from the region or from all
that
has been around us while we were growing up and learning the ways of the world.
Culture forms a boundary within which an individual thinks and acts. When one
thinks
and acts beyond these boundaries, he is adopting a cross-cultural behaviour and there
are cross-cultural influences as well
Cultural Factors
Culture, subculture, and social class are all cultural factors that are particularly important
inbuying behavior.
Culture
Culture is the set of values, norms, attitudes, and other meaningful symbols that shape
humanbehavior, as well as the artifacts, or products, of that behavior ‘as they are
transmitted from onegeneration to the next (Mc Daniel, 1999). Zaltman (1965) defined
culture as the link betweenindividuals living in the same society.
Culture is the most fundamental determinant of a person’s wants and behavior. Culture is
environmentally oriented. The nomads of Finland have developed a culture for Arctic
survival.
Similarly, people who live in the Brazilian jungle have created a culture suitable for
tropicalliving.
Human interaction creates values and prescribes acceptable behavior for each culture. By
establishing common expectations, culture gives order to society. Sometimes these
expectationsare coded into laws. For example, drivers in our culture must stop at a red
light. As long as avalue or belief meets the society’s expected needs, it remains part of
the culture. If it is no longerfunctional, it fades away. Large families, for example, were
valued in the nineteenth century andearly twentieth centuries when the US economy was
more agrarian. Children were considered anasset because they could help with the farm
work. Today in an industrial economy, large familiesare not necessary.
The growing child acquires a set of values, perceptions, preferences, and behaviors
through hisor her family and other key institutions. A child growing up in the United
States is exposed to thefollowing values achievement and success, activity, efficiency and
practicality, progress,material comfort, individualism, freedom, - external comfort,
humanitarianism, and youthfulness.
Cultures however do change over time as old patterns give way to the new
Culture is dynamic. It adapts to changing needs and an evolving environment. The rapid
growthof technology in this century has accelerated the rate of cultural change.

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TV has changed entertainment patterns and family communication and has heightened
publicawareness of political and other news events. Automation has increased the amount
of leisuretime we have and, in some ways, has changed the traditional work ethic.
Cultural norms will continue to evolve because of our needs of our needs for social
patterns thatsolve problems.
Marketing executives must be alert to these changes so they can adjust their planning to
be instep with, or even a little ahead of, the times.
Some cultural trends affecting the buying behavior of U.S. consumers in recent years
include thefollowing:
• Time has become as valuable as money. Americans feels over committed, with more
obligations and demands on their time than they can fulfill. Across all demographic
groups, theyare willing to sacrifice some income for more time. They also would like
more leisure time,despite the fact that on average Americans actually have more free time
now than they did in therecent past.
• Two-income families are the norm. Families with two incomes are no longer the
exception.
Some view it as a necessity to achieve a reasonable standard of living.: For others,
particularlyhouseholds that include two professionals, it has made the ownership affect
not only the abilityto buy, but also the choice of products and the time in which to buy
and consume them.
• Gender roles are losing their identity. The distinction between the roles of men and
women orhusbands and wives is becoming less clear. It is reflected in educational
opportunities, careers,clothing, and languages.
Young and healthy for the old and sick is what Americans want to be fit and stay active.
To bethought of as younger than your chronological age (once you’re over 21) is seen by
most as acompliment. To remain healthy and free from disease, Americans have made
exercise a regularpart of their lives and changed their eating and drinking, behavior. The
growing opposition tosmoking and alcohol consumption reflects this trend.

Why Understanding Culture Is Important For Marketers

Without understanding a culture, a firm has little chance of selling products in it. Colors,
forexample, may have different meanings in global markets than they do at home. In
China, white isthe color of the mourning, and brides wear red; in the United States, black
is for mourning, andbrides wear white. Pepsi had a dominant market share in Southeast
Asia until it changed thecolor of its coolers and vending equipment from deep regal blue
to light ice blue. In that part ofthe world light blue is associated with death and mourning.
Language is another important aspect of culture that global marketers must deal with.
They musttake care in translating product names, slogans, and promotional messages into
foreign languagesso as not to convey the wrong message. Consider the following
examples of blunders made bymarketers when delivering their message to Spanish-
speaking consumers: General Motorsdiscovered too late that Nova (the name of an
economical car) literally means “doesn’t go” inSpanish; Coors encouraged its English-
speaking customers to “Turn it loose, “but the phrase inSpanish means “Suffer from
diarrhea”; and when Frank Perdue said, “ It takes a tough man tomake a tender chicken,”
Spanish speakers heard” It takes a sexually stimulated man to make achicken
affectionate.

16
As more companies expand their operations globally, the need to understand the cultures
offoreign countries becomes more important. Marketers should become familiar- with the
cultureand adapt to it

Variations in Verbal Communications in Different Cultures

Differences in verbal communication systems are immediately obvious to anyone
entering aforeign culture. An American travelling in Britain or Australia will be able to,
communicate butdifferences in pronunciations, timing and meaning will be readily
apparent. For example, to“table a report or motion” in the United States, means to
postpone a discussion. While inEngland it means to give the matter priority. Attempts to
translate marketing communicationfrom one language to another can result in ineffective
communication as the examples givenbelow illustrate:
1. Ford Motor became painfully aware of this fact when Fierra (a low cost truck for
developingcountries) faced sales problems since. “Fierra” means “ugly old woman’ in
Spanish.
2. The popular Ford car Comet had limited sales in Mexico where it was named Caliente
thereason is, caliente is slang for a street walker.
3. The Pinto was briefly introduced in Brazil without name change. Then it was
discovered that“pinto” is slang for a small male sex organ.” The name was changed to
Corcel which meanshorse.
The problems of literal translations and slang expressions are compounded by symbolic
meanings associated with words, the absence of certain words from key languages and
thedifficulty of pronouncing certain words.
For example, in the Middle East, consumers often refer to a product category by the name
of theleading brand. Thus all brands of vacuum cleaners are known as Hoovers and all
laundrydetergents as Tide.
The company Whirlpool is facing a problem in Spain as its name if virtually
unpronounable inSpain.

Subculture
A culture can be divided into subcultures on the basis of demographic characteristics,
geographicregions, political beliefs, religious beliefs, national and ethnic background and
the like. Eachculture consists of smaller subcultures that provide more specific
identification and socializationfor their members. Subcultures include nationalities,
religious groups, and racial groups andmarketers often design products and marketing
programs tailored to their needs.
A Sub culture: is a homogeneous group of people who share elements of the overall
culture aswell as cultural elements unique to their own group. Within subcultures,
people’s attitudes,values, and purchase decisions are even more similar than they are
within the broader culture.
Subculture differences may result in considerable variation within a culture in what, how,
when,and where people buy goods and services.
In the United States alone, countless subcultures can be identified. Many are concentrated
geographically. People belonging to the Mormon religion, for example, arc clustered
mainly in Utah, Cajuns arc located in the bayou regions of Southern Louisiana. Hispanics

17
are morepredominant in those states that border Mexico, the majority of Chinese,
Japanese, and Koreansarc found in the pacific region of the United States ‘
Other subcultures are geographically dispersed. For example, a recent study had
identifiedHarley-Davidson bikers as a distinct subculture. In addition, computer hackers,
militaryfamilies, and university professors may be found throughout the country. Yet
they haveidentifiable attitudes and values that distinguish them front the larger culture.
If marketers can identify subcultures, they can then design special marketing programmes
toserve their needs. According to the U.S. Census Bureau, the Hispanic population is the
largestand fastest- growing subculture, increasing at a rate of seven times that of the
general population.
To tap into its large and growing segment, Time Inc., rccently1aunched people en
Espanol, aSpanish —language version of its popular people magazine to reach U.S.
Hispanic readers. Similarly, Bank of America recently attempted to raise its profile in
California’s large Asian-American community with new television ads that air in
Cantonese,
Mandarin, Korean, and Vietnamese on several Asian-language stations throughout the
state. Theads tout different products and services Bank of America offers Asian
Americans, such as smallbusinessaccounts and an Asian-language customer phone
service.
In Kenya the different tribes are sub cultures that exhibit characteristic behavior patterns
todistinguish them from other groups within the same culture. For example it has been
said that theKikuyus’ are great entrepreneurs who never lose sight of an opportunity to
make more money. Ithas also been said also that the Luos are very smart, usually very
well dressed and that theLuhyas and Kambas are very loyal and one often finds many
employed in Asian- owner shopsalong Biashara Street. Some have said that these are
stereotypes; but whether the these are trueor not a fact remains that the different tribes are
subcultures that often exhibit different attitudes,beliefs, customs, language and manner of
behavior.
In reality, of course, subculture is not a sufficient basis for market segmentation: While
marketers, need to be aware how sub cultural, characteristics influence buying situation
influences they should bear in mind that race, and ethnic background interact with other
attributes such as life-style1, personality, and social class during the buying decision .

Social Class
Social class is a ranking within a society determined by the them members of the society.
Virtually a1l-huuan societies exhibit social stratification. Stratification sometimes takes
the formof caste system where the members of different castes are reared for certain roles
and cannotchange their caste membership.
More frequently, stratification takes the form of social classes. Although the idea for a
classstructure and the terms upper, middle and lower, class may make some American
uncomfortable,social classes do exist in the U.S and even in Kenya. And people’s buying
behavior is oftenstrongly influenced by the class to which they belong or to which they
aspire.
We can also define social classes as relatively homogeneous and enduring divisions in a
society,which are hierarchically ordered, and whose members share similar values,
interests, andbehavior.

18
Social classes do not reflect income alone, but also other indicators such as occupation,
education, and area of residence. Social classes differ in dress, speech patterns,
recreationalpreferences, and many other characteristics.
Social classes have several characteristics. First, those within each social class tend to
behavemore alike than persons from two different social classes. Second, persons are
perceived asoccupying inferior or superior positions according to social class. Third,
social class is indicatedby a cluster of variables for, occupation, income, wealth,
education, and value orientation —rather than by any single variable. Fourth, individuals
can move from one social class to another
— up or down - during their lifetime. The extent of this mobility varies according to the
rigidityof social stratification in a given society.
Social classes show distinct product and brand preferences in many areas, including
clothing,home furnishing, leisure activities, and automobiles Some marketers focus their
efforts on onesocial class. Thus the Serena in Kenya focuses on upper-class customers,
whereas “KarumaindoChips” restaurant focuses on lower-class customers. Social classes
differ in media preferences,with upper-class consumers preferring magazines and books,
and 1owcrclass consumerspreferring news and drama, and lower-class consumers prefer
television. Even within a mediacategory such as TV, upper-class consumers prefer news
and drama and lower-class consumers;prefer soap operas and sports programs. There are
also language differences, among the socialclasses. The advertiser has to compose copy
and dialogue that ring true to the targeted socialclass.
Without making value judgments about whether one class is superior to or happier than
another,sociologists have made numerous attempts to describe the class structure in a
‘meaningful way.
One scheme useful to, marketing managers is the five-class model developed but
Coleman andRain water, classifying people primarily by education, occupation, and type
of residentialneighborhood.
Notice that income is not one of the classification factors. Social class is not an indication
ofspending capability; rather, it is an indication of preferences and life-style. For
example, a younglawyer might make the same income as a middle-aged steelworker, but
they probably have quitedifferent family backgrounds, tastes and aspirations.
In the summary of the five classes that follows, the percentages are only approximations
and mayfrom one geographic area to another.
The upper class, about 2 percent of the population, includes two groups:
(1)Socially prominent old families, often with inherited wealth, and
(2) newly rich corporateexecutives, owners of large businesses and professionals. They
live in large live in exclusiveneighborhoods and exhibit a sense of social responsibility.
The upper class patronizes fancyshops. They buy expensive goods and services, but they
do not conspicuously display theirwealth.
In Kenya the upper class patronize the golf clubs like the Windsor and Muthaiga Golf
Clubswhere they meet with others in this class and dine there. They buy suits from “Little
Red”, Lordsand other such exclusive stores. Their children go to school like Peponi, St.
Andrew’s Turi, Brook house schools etc. They buy four wheel drive cars, Mercedes,
BMW and other such poshmodels.
The upper-middle class about 12% is composed of moderately successful business and

19
professional people and owners of medium-sized companies. They are well educated,
have a‘strong desire for success, and push their children to do well. Their purchases are,
moreconspicuous than those of the upper class. This class buys products that signify their
statuses yetare socially acceptable. They live well, belong to private clubs and support the
arts and varioussocial causes
The lower-middle class ‘about 32% consist of office workers, most sales, people,
teachers,technicians and small business owners (as a group they are often referred to as
white-collarworkers). They strive for respectability by “doing the right thing” and buying
what is popular.
Their homes are well cared for, and they save money to send their children to college.
They arefuture-oriented, strive to move up to the higher social classes, have self-
confidence and willing totake risks.
The upper-lower-class, include; the blue-collar working class of production workers,
semiskilledworkers and service personnel. These people are tied closely to family for
emotionalsupport. In the family, male-female roles are quite clearly defined. They live in
smaller housesthan the lower-middle class, drive larger cars, have more appliances, and
watch bigger televisionsets. They tend to have a local orientation is short term, and they
are very concerned aboutsecurity.
The lower-lower class is composed of unskilled workers, the chronically unemployed and
peoplefrequently on welfare. They have low incomes, and live in substandard houses and
Neighborhoods. They tend not to have much opportunity to regard the future; hence they
focus onthe present. Often their purchases are not based on economic considerations. The
public tendsto differentiate within this class between the ‘working poor’ and the welfare
poor.
In Kenya the lower-lower classes live in the sprawling slums of Kibera, Mathare where
you have“flying toilets” the basic hygienic amenities are absent and the general living
conditions arepathetic. They buy in the sprawling markets of Githurai, Toy Market,
Kawangware their basic foodstuffs and are notable to patronize the up market stores.
The conclusions from social class research that are significant for marketing are:
A social class system exists in virtually all societies.
There are substantial differences among classes with respect to buying behavior.
Because of this diversity, different social classes are likely to respond differently to a
seller’smarketing program. Thus it may be necessary to design marketing program
tailored to specific social classes.

Review Questions
1. Explain culture and its characteristics.
2. Explain the function of culture and its components.
3. What are the variations in cultural values? Explain with examples

20
4: CONSUMER ATTITUDES, VALUES, BELIEFS, ATTITUDEFORMATION,
ANDCHANGE
Objectives
By the end of this chapter the student should be able to;
1. Explain how attitudes, values and beliefs influence consumer behavior.
2. Identify the characteristics of attitudes.
3. Discuss how marketers can alter beliefs about a product.

ATTITUDES
An attitude is a learned predisposition to respond to an object or class of objects in a
consistentlyfavorable or unfavorable way. In our model of the buying decision process
attitudes play a major role in the evaluation of alternatives. Numerous studies have
reported arelationship between consumer attitudes and their buying behavior regarding
both productsselected and brands chosen. Surely, then it is in marketers’ best interest to
understand howattitudes arc formed, the functions they perform, and how they can be
changed.
All attitudes have the following characteristics in common:
 Attitudes are learned. The information individuals acquire through their direct
experiences with a product or an idea, indirect experiences with a product, or an idea,
indirect experiences (such as reading about a product in Consumer Reports), and
interactions with their social groups, all contribute to the formation of attitudes. For
example, the opinions expressed by a friend about diet foods plus the consumer’s
favorable or unfavorable experience as a result of using diet foods plus the consumers
favorable or unfavorable experience as a result of using diet foods will contribute to an
attitude towards foods in general.
 Attitudes have an object. By definition, we can hold attitudes only toward something.
Theobject can be general (professional sports) or specific (Chicago clubs); it can be
abstract (Campus life) or concrete (the computer center). In attempting to determine

21
consumer’sattitudes, the objects of the attitude must be carefully defined since a person
might have afavorable attitude towards the general concept (exercise) but a negative
attitude towards aspecific dimension of the concept (jogging).
Attitude has direction and intensity. Our attitudes are either favorable or unfavorable
towards theobject. They cannot be neutral. In addition, they have strength. For example,
you may mildly likethis text or you may like it very much (we hope). This’ factor is
important for marketer, sinceboth strongly held favorable and unfavorable and strongly
held unfavorable attitudes are difficultto change.
Finally, attitudes tend to be stable and generalizable. Once formed attitudes, usually
endure andthe longer they are held the more resistant to change they become. People also
have a tendencyto generalize attitudes. For instance, a person who likes the produce
section in particularsupermarket has a tendency to form a favorable attitude toward the
entire store.
A consumer’s attitude does not always predict purchase behavior. A person may hold
veryfavorable attitudes toward a product but not buy it because of some inhibiting factor.
Typicalinhibitors are not having enough money or discovering that your preferred
product or brand isnot available when you want to buy it. Under such circumstances,
purchasing behavior may evencontradict attitudes.
It can be extremely difficult to change strongly held attitudes. Consequently, when the
marketeris faced with negative or unfavorable attitudes, there are two options:
 Try to change the attitude to be compatible with the product.
 Determine what the consumers’ attitudes are and then change the product to match
thoseattitudes.
Ordinarily it is much easier to change the product than it is to change consumers’
attitudes.
Nevertheless, in some situations attitudes have been changed.

Activity
Consider how attitudes have changed in favor of regular exercise, frozen meals, oversized
tennisrackets, non-alcoholic beer and air bags in cars today
In your local area consider how attitudes have changed in favor of certain products and
thoseproducts to which consumers have adopted negative attitudes.
Values
A value is an enduring belief that a specific mode of conduct is personally or socially
preferableto another mode of conduct. People’s value systems have a great effect on their
consumerbehavior. Hence the personal values of target consumers have important
implications formarketing managers. Consumers with similar value systems tend to react
alike to prices andother marketing related inducements.
Vales also correspond to consumption patterns. People who want to protect the
environment tryto buy only products that will not harm it. Values can also influences
consumers TV viewinghabits or the magazines they read; for example people who oppose
pornography do not buyplayboy. As another example, the personal value system of baby
boomers and generation Xersare quite different. Baby boomers come of age at a time
when the economy seemed secure. As aresult, they are very optimistic economically and
have a basic feeling of financial security.

22
Boomers also have a strong sense of individualism, place great emphasis on achievement
andpower, and place less importance on close relationships. They succeeded in a job
market thatrewarded competitive drive more than co-operative spirit and that they valued
individual skillsmore than team work. In contrast, the members of generation X were
raised in divorcedfamilies, spent considerable time in day care or alone at home after
school, watched moretelevision and witnessed more negative events such as the Persian
Gulf War, escalating crimeriots, Aids, the nuclear threat and pollution. As a result, their
value system embodies selfreliance,freedom rejection of tradition and conformity, and an
emphasis on personalrelationships. They are also more likely to seek that is personally
fulfilling and to purpose abalance of work and leisure activities. They take work
seriously, but disdain the workaholic slave to the job mentality of their parents and
bosses. Work is only a means to their ends: money,fun, and leisure.

BELIEFS
Beliefs and attitudes are closely linked to values. A belief is an organized pattern of
knowledgethat an individual holds as true about his or her world. A consumer may
believe that Sony’scamcorder makes the best home videos, tolerates hard use, and is
reasonably priced. A Christianin Kenya because of his/her beliefs may prefer to watch
Family TV as opposed to channel O. He/she may feel that this is the channel with the
most wholesome viewing. Beliefs may be based onknowledge, faith, or hearsay.
Consumers tend to develop a set of beliefs about products attributesand then through
these beliefs, form a brand image a set of beliefs about a particular brand. Inturn, the
brand image shapes consumers attitudes towards the product.
Attitude tends to be more enduring and complex than beliefs because they consist of
clusters ofinterrelated beliefs. An attitude is a learned tendency to respond consistently
toward a givenobject such as a brand. Attitudes also encompass an individual’s value
system, which representspersonal standards of good and bad, right and wrong and so
forth.
For example of the nature of attitudes, consider the differing attitude of consumers
around theworld towards the habit of purchasing on credit. Americans have long been
enthusiastic aboutcharging goods and services and are willing to pay high interest rates
for the privilege ofpostponing payment. But to many European consumers, doing what
amounts to taking out aloan-even a small one-to pay for anything that seems absurd.
Germans especially are reluctant tobuy on credit. Italy has a sophisticated credit and
banking system well suited to handling creditcards, but card purchasing amount to less
than 1 percent amount to less than 1 percent of allconsumer transactions.
The Japanese have long looked down on credit purchases but acquire to use while
traveling abroad.
If a good or service is meeting its profit goals, positive attitude towards the products
merely needto be reinforced. However, if the broad is not succeeding, the marketing
manager must strive tochange target consumer’ attitudes towards it. This change can be
accomplished in three ways;changing beliefs about the brand’s attributes, changing the
relative importance of these beliefs,and adding new beliefs.

Changing beliefs about attributes

23
The first technique is no turn neutral or negative beliefs about product attributes into
positiveones. For example, pork was losing sales to chicken because consumers thought
pork was fattyand unhealthy. To counter this belief, pork producers launched “the “the
pork”- the other meat”campaign to reposition their product in the minds of consumers.
The campaign tells consumersthat pork is leaner, lower in calories and lower in saturated
fat than they think.
Likewise, BMW is continuing its effects to reposition itself as a safe affordable vehicle
for theentire family and to steer away from its image as a yuppie statement. Its new
commercialsconcentrate on safety features, such as traction control and its print ads show
children for the firsttime. BMW also hopes the campaign will convince consumers that
the cars are not as expensiveas they think.
Newforge foods is having difficulty convincing consumers that spam, a canned- pork
product, ismade of quality ingredients. Research has shown that consumers believe that
spam is made of the“left-over” parts and is, therefore an inferior product. Spam’s
advertising agency hopes to changethis image by promoting the quality of the ingredients
used to make spamChanging beliefs about a service can be more difficult because service
attributes are tangible.
Convincing consumers to switch hairstylist or lawyers or to go to a different dental clinic
can bemuch more difficult than getting them to change brands of razor blades. Image,
which is alsolargely intangible, significantly determines service patronage. How do
consumers becomeconvinced that they will get better dental care in a mall than through a
family dentist?
Changing the importance of beliefs
The second approach to modifying attitudes is to change the relative importance of
beliefs aboutan attribute. For year, consumers have known that brain cereals are high in
natural fiber. Theprimary belief associated with this attribute is that the fiber tends to act
as a mild, naturallaxative. Today, however, cereal marketers promote the high fiber
content of brain cereals as apossible factor of preventing certain types of cancer, vastly
increasing the importance of thisattribute in the minds of consumers.
General Electric (GE) has tried to change Japanese consumer’s belief about the attributes
that aremost important to them in a refrigerator. Japanese manufactures believe that
Japanese consumersprefer the highly stylized and feature-studded appliances that
domestic makers sell in small sizes.
A typical Japanese made refrigerator is a 9-cubic-foot $ 1,300 model with three doors and
acompartment for raw fish.
Larger Japanese models have six doors and a price of around $ 3,200. GE discovered,
however,that many Japanese would gladly trade characteristics for larger, simpler, and
cheaper models.
Since more Japanese women are working after marriage and cant shop daily as their
mothers did,big, inexpensive, two-door refrigerator suddenly make sense. As a result, GE
quickly capturedabout 3 percent of the Japanese market with its modest $ 800 model.

Review questions
1. How do beliefs and attitudes and attitudes influences consumer behavior?
2. How can negative attitudes towards a product be changed?
3. How can marketers alter beliefs about a product?

24
Discussion Questions
What type of attitudes might be most difficult to change? Will an unfavorable attitude
lead to abehaviour that is undesirable?

5: GROUP DYNAMICS AND CONSUMER REFERNCES GROUPS

Objective:
This chapter explains:
 Groups of various types
 How groups influence behaviour
 Influence of reference groups on individuals
 Opinion leaders and their role

Introduction
Humans are inherently social animals, and individuals greatly influence each other. In
addition tocultural factors, a consumer’s behavior is influenced by such factors as
reference groups, family,and social roles and statuses. These are the social factors.

REFERENCE GROUPS
All the formal and informal groups that influence the buying behavior of an individual
are theperson’s reference groups. Consumer may use products or brands to identify with
or become amember of a group. They learn from observing how members of their
reference groups consume,and how they use the same criteria to make their own
consumer decisions.
References groups can be categorized very broadly as either direct or indirect. Direct
referencegroups are face to face membership groups that touch people’s lives directly.
They can be eitherprimary or secondary. Primary membership groups include all groups
with which people interactregularly in an informal, face to face manner, such as family,
friends and co-workers. In contrast,people associate with secondary membership groups
less consistently and more formally. Thesegroups might include clubs, professional
groups and religious groups.

25
Many indirect, non-membership reference groups to which they do not belong also
influenceconsumers.
Aspirational reference groups are those that a person would like to join for example
many highschool American youth aspire to join the NBA (National Basketball
Association). To join anaspirational group a person must at least conform to the norms of
that group. Norms are valuesattitudes deemed acceptable by group for example a person
who wants to be elected as an MP inKenya may start attending “Harambees”, initiating
development projects and being more vocalin the community in which he wants votes. A
teenager on the other hand may pierce his bellybutton, get a tattoo or dye his hair to fit in
with the “in” group.
People also belong to secondary groups, such as religious, professional and trade-union
groups,which tend to be more formal and require less continuous interaction. People are
significantlyinfluenced by their reference groups in at least three ways. Reference groups
expose anindividual to new behavior and lifestyles. They influence attitudes and self-
concept. And theycrate pressures for conformity that may actual products and brand
choice.
It is important to note that whereas people are influenced by groups to which they aspire
are alsoinfluenced by groups to which they do not belong. Aspiration groups are those the
person hopesto join; but dissociates groups are those with an individual does not want to
associate. Theyinfluence our behavior when we try to maintain distance from them.
Marketers try to identify target customer’s reference groups. However the level of
referencegroup influence varies among products and brands. Reference groups appear to
influence bothproduct and brand choice strongly only in case of automobiles and colour
television; mainlybrand choice in such items as furniture and clothing and mainly product
choice in such items asbeer and cigarettes.
Manufactures of products and brands where group influence is strong must determine
how toreach and influence the opinion leaders in these reference groups. An opinion
leader is the personin informal product- related communications who offers advice or
information about a specificproduct or product category, such as which of several brands
is best or how a particular productmay be used. Opinion leaders are found in all strata of
society, and a person can be an opinionleader in certain products areas an opinion
follower in other areas. Marketer try to reach opinionleaders by identifying demographic
and psychographic characteristics associated with opinionleadership, identifying the
media read by opinion leaders, and directing messages at the opinionleadership. The
hottest trends in teenage music, language, and fashion start in America’s inner
cities, then quickly spread to more mainstream youth in the suburbs. Clothing companies
thathope to appeal to the fickle and fashion conscious youth market are making a
concerted effort tomonitor urban leader’s style and behavior.

Reference- group influences

Each group in a society develops its own standards of behavior that then serve as guides
orframes of reference, for the individual members. Families and a circle of friends are
such groups.
Members share values are expected to conform to the group’s behavioral patterns. As we
haveseen a person does not have to be a member of a group to be influenced by it. There

26
are groupswe aspire to join a campus honor society or club) and groups that we admire
even thoughmembership may be impossible (a professional athletic team). Teenagers in
all societies are verymuch influenced by their reference-groups and will dress in certain
ways so as to fit in thesegroups. All of these are potential reference groups-groups of
people who influence a person’sattitude, values and behavior.
Studies have shown that personal advice in face-to-face group is much more effective as
behavioral determinant that advertising. That is in selecting products or changing brand;
we aremore likely to be influenced by word-of-mouth information from members of our
referencegroups than by ads or sales. This is especially true when the information comes
from someonewe consider knowledgeable about the product and/or that we trust.
Reference-group influence can extend to the decision to purchase product as well as the
choiceof a particular brand. If an item is a luxury as opposed to a necessity; the decision
to buy or notto buy the product is influenced by reference groups. In addition, if the item
will be consumedpublicly rather that privately, reference groups influence tends to affect
the brand choice. Whenthe luxury-necessity characteristic of the product is combined
with the public-privateconsumption attribute the following reference- group influence
situation are produced:
 Publicly consumed luxuries (such as membership in a country club) influence the
decision to buy the product and the choice of the brand
 Publicly consumed luxuries (such as bath oils)- influence the decision to buy the
productonly
 Publicly consumed necessities e.g. wrist watch influence the choice of the brand only
 Privately consumed necessities e.g. mattress- no reference group influence

OPINION LEADERS
These are key persons in a group who influence their group and are innovators or early
buyers.
The marketeer focuses his strategies on key persons in the group, some are opinion
leaders,and others are opinion seekers. Thus, key persons are knowledgeable with a lot of
experience.
They are also known as influencers and others are receivers. They consist of friends,
associates, neighbours, etc. In this group, persuasive communication is more fruitful, as
opinionleaders can affect and influence the behaviour of others in a group.
There are opinion leaders who mediate the transmission of information from mass media
to the general public:
(a) Firstly, the Mass Media transmits information to the general public.
Mass Media →Transmission
of Information →General Public
(b) Secondly, Media may send through opinion leaders to general public.
Mass Media →Opinion Leaders →General Public
(Target Customers)

(c) Thirdly, there is interaction between people and information goes forward and
backwards,interaction and positive and negative discussions are made, attitudes are
made, and thus information goes to the general public.
Mass Media →Opinion Leader →General Public

27
(Target Customers)
The opinion leaders transmit the products relative information, which consists of:
(a) use of specific product, e.g., washing machine, vacuum cleaner, electric shaver etc.
(b) which of several brands is the best—Whirlpool, Kelvinator, BPL, etc.
(c) which is the best place to shop from, which dealer, locality, etc.
Opinion leaders for one specific product may not be the opinion leaders for other
products,as well. An opinion leader for infants foods may not be the opinion leader for
kitchenware, etc. Opinion leaders in one area may not necessarily influence other areas.

Characteristics of Opinion Leaders

Opinion leaders are more knowledgeable, and have a keen level of interest.
More involved in the product category.
Have local friendship and social interaction
Can disseminate information.
Have high credibility
Have more self-confidence, are more sociable and cosmopolitan, can rake risks.
Opinion leaders are activated greatly to reduce distance process for the products they
have bought; may want to influence neighbours and friends. They involve themselves, to
confirmtheir own judgment.
They are younger, have more education, have a higher income, and higher occupational
status.

REVIEW QUESTIONS
1. What is a group? Give some examples of groups and their level of involvement.
2. How can groups be classified?
3. What are factors affecting the influence of reference groups? What are the basis of
socialpower?
4. What are opinion leaders? What role do they play in transmitting information?
5. What are the characteristics of opinion leaders?
6. What factors influence reference groups to make decisions on products and brands?

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6: THE FAMILY AND THE CONSUMER BEHAVIOR

Objective:
A family is a cohesive social unit, and the members have a great influence on each other
and play an important role in decision-making. The goal of this chapter is to make the
student understand:
 Reciprocal influence of family members on each other
 Family buying influences
 Intergenerational influence
 Family life cycle
 Consumption pattern

INTRODUCTION

The family is a group of two or more people related by blood, marriage or adoption or
livingtogether. The family is the most important social institution for many consumers,
stronglyinfluencing values, attitudes, self concept-and-buying behavior. For example, a
family thatstrongly values good health will have a grocery list distinctly different from a
family that viewsevery dinner as a gourmet event. Moreover, the family is responsible for
the socializationprocess, the passing down of cultural values and norms to children.
Children learn by observingtheir parents’ consumption patterns, and so they will tend to
shop in a similar pattern.
During their lives most people will belong to at least two families-the one in which are
born(family of orientation) and the one they form at marriage (family of procreation).
The birthfamilies primarily determine core values and attitudes. The marriage family in
contrast has amore direct influence on specific purchases. For example family size is
important in the purchaseof a car. The family of orientation consists of one’s parents and
siblings. From parent a personacquires an orientation towards religion, politics and
economics and a sense of personalambition, self-worth, and love. Even if the buyer no

29
longer interacts very much with his or herparents, their influence on the buyer’s behavior
can be significant. In countries where parentslive with their growth children, their
influence can be substantial. A more direct influence oneveryday buying behavior is
one’s family of procreation namely, one’s spouse and children.

Family Life Cycle and Buying Roles

It is important for a marketeer to know the family structure and its consumption
characteristics.
He should be able to understand the family which is a subset of a household. A household
ismade up of persons who live and occupy a housing unit. These include both, nuclear
and extendedfamilies. A household is a basic consumption unit for most consumable
goods. Major itemssuch as housing, automobiles, electrical appliances, washing machine,
etc. are used more byhouseholds than individuals. In a household, many items can be
shared and possessed, whereasindividuals some times do not posses many such items
individually

Family types
Nuclear family: It consists of two adults of opposite sex living in a socially approved sex
relationship with their children. It consists of husband, wife and their offspring.
Joint family: It includes a nuclear family and other relatives such as parents of husband/
wife, aunts, uncles, and grandparents, also.

Family Decision Stages

1. Problem recognition
2. Search for information
3. Evaluation of alternatives
4. Final decision
Husband-wife influence studies, classify consumer decisions as:
Wife-dominant decisions, e.g., food, purchase of groceries.
Husband-dominant decisions, e.g., automobiles, life insurance
Syncratic decisions (joint), e.g., vacations, choice of schools for children
Automatic decisions (unilateral)
Decisions may either be:
Consensual: Everyone in the family may agree with the desired outcome.
Accommodative: Need conflict resolution by persuasion or bargaining.
Element of power within the family is obtained from:
Economic resources: Persons making greater economic contribution have more economic
power.
Cultural norms: In a male dominated society—husband has greater powers.
Expert power: More knowledge a person possess. Husband may know more about cars—
wife may know more about household items.
Legitimate power: This depends on the role the family members play.
Bargaining power: Power through give and take method.
Reward/referent power: Giving rewards to others which are liked and appreciated.

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Emotional power: Purchase decisions are influenced by emotions, sentiments and
feelingsof one partner.

Decision-Making Roles
Decision-making roles among family members tend to vary significantly, depending on
the typeof item purchased. Family members assume a variety of roles in the purchase
process. Initiatorsare the ones who suggest, initiate, or plant the seed for the purchase
process. The initiator can beany member of the family. For example, sister might initiate
the product search by asking for anew bicycle as a birthday present.
Influencers are those of the family whose opinions were valued. In our example, mom
mightfunction as a price-range watchdog, an influencer whose main role is to veto or
approve pricerangers. Brother may give his opinion on certain makes of bicycles. The
decision maker is themember of the family who actually makes the decision to buy or not
to buy. For example, Dadmay choose the final brand and model of a bicycle to buy after
seeking further information fromsister about cosmetic features such as color and
imposing additional criteria of his own such assafety. The purchaser (probably Dad or
Mom) is the one who actually exchanges money for theproduct. Finally, the consumer is
the actual user-sister, in case of the bicycle.
Marketers should consider family purchase situations along with the distribution of
consumerand decision-maker roles among family members. Ordinary marketing views
the individual asboth decision-maker and consumer. Family marketing adds three other
possibilities: sometimesmore than one decision-maker is involved; sometimes more than
one consumer is involved; andsometimes the decision maker and the consumer are
different people.
The roles vary widely in different countries and social classes. Vietnamese American, for
example, are more likely to adhere to the traditional model in which the main makes the
decisions for any large purchase. Similarly, successful ads for Korean Americans usually
willfeature a man in his thirties or forties unless the ad for a specifically female product,
such asjewelry.
In the United States, husband-wife involvement has traditionally varied widely by
productcategory. The wife has traditionally acted as the family’s main purchasing agent,
especially forfood, sundries and staple-clothing items. In the case of expensive products
and services likevacation or housing, husbands and wives are engaged in more joint
decision-making. Marketersneed to determine which member normally has the greater
influence in choosing variousproducts. Often it is a matter of who has more or expertise.

Women are rapidly gaining power in the household-purchasing powers, to be exact.

Businessguru, Tom Peters cities women as the number one business marketing
opportunity and says:
The market research is clear: women make or greatly influence most purchasing decision.
Incomes, medical care, cars, vacations and hammers and nails in the huge DIY (do-it-
yourself)industry: One (rare) female DIY-chain executive remarked about her male
colleague’ amazementthat 60% of their customers were women. Women are where the
real bucks are. Now close to 8million women own enterprises in America, up from about
400,000 in 1970. They employ about18.5 million of us, 40% more than old Fobres 500

31
industrials. About 22% of working wives outearn their hubbies and women constitute
about half the population of those with $ 500,000 ormore in net worth.
Women’s great strides in workplace, especially in nontraditional jobs, traditional
householdpurchasing patterns are gradually changing. Shifts in social values regarding
the mission ofdomestic labour have also weakened such standard conceptions as “women
buy all the householdgoods”. Recent research has shown that although traditional buying
patterns still hold, boomerhusband and wives are more willing to shop jointly for
products traditionally taught to be underthe separate control of one spouse or the other.
Hence, convenience-goods marketers are makinga mistake if they think of women as the
main or only purchasers of their products. Similarlymarketers of products traditionally
purchased by men may need to start thinking of women aspossible purchasers. This is
already happening in the car business.
Cadillac-women now make 34 percent of the luxury car market and automakers are
payingattention. Male car designers at Cadillac are going about their work with paper
clips on theirfingers to simulate what it feel like to operate buttons, knobs and other
interior features withlonger fingernails. The Cadillac Catera features an air-conditioned
glove box to preserve suchitems as lipstick and film. Under the hood, yellow marking
highlight where fluid fills go.
Children today are great influence over their parents purchase decisions. This is another
shift inbuying patterns an increase in the amount of dollars spent on influence wielded by
children andteens. This is now an era where children not only are seen and heard but also
catered to likenever before. The numbers show it. Children age 4 to 12 spent an estimated
$ 24.4 billion- threetimes the values of the ready- to- eat cereal. Kids’ power over their
own money is precisely whatinduced Ty, Inc. to introduce Beanie Babies sell for about $
6, just the right amount for a kid’sweekly allowance. The indirect influence on parental
spending of kids age 2 to 14 accounted for $ 300 billion of household purchases in 1997.
Indirect influence means that parents know thebrands, product choice, and preference of
their children without hints or outright request. Directinfluence describes children’s hints,
request and demands-“I want to go to McDonald”. Directinfluence peaked around $ 188
billion in 1997. Nontraditional marketers are now figuring outthat the fastest route to
Mom and Dad’s wallets may be through junior.

Themes in the Family Life Cycle

Generally, there are two main themes in the Family Life Cycle, subject to significant
exceptions:
 As a person gets older, he or she tends to advance in his or her career and tends to get
greater income (exceptions: maternity leave, divorce, retirement).
 Unfortunately, obligations also tend to increase with time (at least until one’s mortgage
has been paid off). Children and paying for one’s house are two of the greatest expenses.
Note that although a single person may have a lower income than a married couple, the
singlemay be able to buy more discretionary items.

1. The bachelor stage—young and single.

2. The newly married couples—young, no children.
3. Full nest 1—young, married, with child.
4. Full nest 2—older, married, with children.

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5. Full nest 3–older, married, with dependent children.
6. Empty nest—older, married, with no children living with them.
7. Solitary survivor—older, single, retired people.

Summary
In this lesson we saw that families or households are of critical importance in the study of
consumer behaviour. This is mainly for 2 reasons. First families or households are the
unit ofusage and purchase for many consumer products. Second the family is a major
influence on theattitudes and behaviour of individuals. During their lives most people
will belong to at least 2families- the family of orientation and the family of procreation.
The birth primarily determines core values and attitudes. The marriage family in contrast
has adirect influence as specific purchases.
As consumers we are the creation of our families to a large extent

REVIEW QUESTIONS
1. How is consumer behavior influenced by relationships within families? Discuss with
context to various family types.
2. Discuss the family lifestyle stages and the changing consumption patterns
7: PERSONALITY AND CONSUMER BEHAVIOUR
Objectives:
This chapter deals with personality and self concept. The goal of this chapter is to
understand:
 Personality theory
 Theory of Freud
 Emotions
 Self concept.
Introduction
The study of human personality has given rise to many, sometimes widely divergent,
schools ofpsychological thought. As a result, attempts to inventory and classify
personality traits haveproduced a variety of different structures. In this discussion,
personality is defined broadly asindividual’s pattern of traits that influence behavioral
responses.

Defining personality
Each consumer has a unique personality. Personality is a broad concept that can be
thought of asa way of organizing and grouping the consistencies of an individual’s
reaction to situations.
Thus, personality combines psychological makeup and environmental forces. It includes
people’sunderlying dispositions, especially their most dominant characteristics. In this
discussionpersonality is defined broadly as an individual’s pattern of traits that influence
behavioralresponses. We speak of people as being self-confident, aggressive, shy,
dynamic, secure,introverted and/or friendly.
How personality influences consumer behaviour
It is generally agreed that personality traits do influence consumer’s perceptions and
buyingbehavior. Marketers believe that personality influences the types and brands of

33
productspurchased. For instance, the type of car, clothes or jewelry a consumer buys may
reflect on oneor more personality traits.
We speak of people as being self-confident, aggressive, shy, dynamic, secure, introverted
and/orfriendly and as being (but not controlled) by these personality traits in their
responses tosituations some common personality traits are:
Adaptability sociability
Aggressiveness stability
Autonomy Self-confidence
Emotionalism Need for achievement
Orderliness Need for affiliation
It is generally agreed that personality traits do influence consumers’ perceptions and
buyingbehavior. However there is considerable disagreement as to nature of the
relationship that is, howpersonality influence behaviour. Many studies have been made of
personality traits in relation toproduct and brand preferences; in a wide variety of product
categories, with mixed results. Thefindings generally have been too inconclusive to be of
much practical value. Although we know,for example, that people’s personalities often
are influenced in the clothes they wear, the carsthey drive (or whether they; use a bike or
motorcycle instead of a car), and the restaurants theyeat in, we have not been successful
in predicting behavior from particular personality traits. Thereason is simple: Many
things besides personality enter into the consumer buying-decisionprocess.

The Psychoanalytic Theory of Freud

Freud proposed that every individual’s personality is the product of struggle among three
interacting forces: These three are fully developed and are in a state of balance in a
healthyperson. If any individual is underdeveloped, then this balance is disturbed and
there isdissatisfaction with the self and the world.
Id: It is a source of strong, basic and instinctive drives and urges which demand instant
gratification even at the cost of violating the norms of society. It demands instant
gratification—Pleasure Principle.
Ego: It operates on a reality principle, and seeks to achieve the pleasurable demands of
the id in as realistic a way as possible. It helps to develop cognition, and controls
impulsivebehaviour.
Super Ego: It is the individual’s moral code and helps in striving for perfection. Its
primary purpose is to restrain aggressive impulses of the id rather than seek to postpone
them, as does the ego.
According to this theory, these three systems are fully developed and are in a state of
balance in a normal healthy person. But when one or more of these systems are
underdeveloped,then the internal balance is disturbed, which leads to maladjustment and
dissatisfaction.
Applications
Consumers have competing desires and want to satisfy their wants. Marketeers, therefore,
create fantasies about the product which is used as a basis for influencing consumers.
Marketeers use flights of fantasy to propel people to buy their products. Hedonism is an
appeal to pleasure principle and this approach offers products for an affluent society.
Psychoanalytical theory appeals to the buyer’s dreams, hopes and fears. It can also
provideproducts which are rational and socially acceptable.

34
Id: It is the strong urge or desire which is at the heart of a consumer’s motivation and
personality. The function of the Id is to discharge tension which it does by demanding
instantgratification, even at the cost of violating the norms of society. Id operates on the
pleasureprinciple. Psychologically, id is the source of all desires and wishes that exist in
the form ofunconscious images and fantasies. Since all wishes are not satisfied, there is
frustration andthis may lead an individual to break norms and rules for his satisfaction. It
does not deal withobjective reality and is subjective.
Ego: This comes into existence because of the limitation of id. Ego operates on the
Reality Principle. It tries to achieve the demands of id in a realistic and possible way. The
egodevelops ways to postpone the wishes of id. If id wants a product the ego restrains it
because offinancial constraints. It controls impulsive behavior. Id engages in dreams and
fantasies whichexist as pleasurable imaginations.
Ego can distinguish between dreams and reality. Ego is an individual’s social control. It
acts as an internal monitor and attempts to balance the demand of id.
Super ego: It strives for perfection. It is the individual’s moral code and helps in striving
for perfection. It restrains the aggressive impulse of the id rather than postponing them, as
does the ego.

Emotions
Emotions control our behaviour. They are relatively uncontrolled feelings which affect
ourbehaviour. We are emotionally charged by environmental factors and events. If
somebodymisbehaves with us we feel angry. On our achievements we feel happy.
Whenever we areemotionally charged, physiological changes also take place within us.
These may be fasterbreathing, perspiration, dilation, or moistening of eyes. Increased
heart and blood pressure,enhanced blood sugar levels, etc. Mental activation also takes
place, and we recall a lot of pleasant or unpleasant incidences and can also think
rationally. The behaviour of differentindividuals vary from situation to situation, and
emotions are mostly associated with behaviour
Emotions have been categorised differently by different thinkers and philosophers.
Plutchickcategorized emotions into eight types. These are as under:
Fear
Anger
Joy
Sadness
Acceptance
Disgust
Expectancy
Surprise
According to Plutchick, other emotions are secondary and come out of these basic
emotions
or, are a continuation of the above emotions, e.g., delight can be a combination of
surprise
and joy. Similarly, contempt can be a combination of anger and disgust. Others have
suggested
3 basic emotions. These are:
P Pleasure These basic emotions gives rise to

35
A Arousal a number of other emotions as shown
D Dominance in the table given below.

SELF CONCEPT
Self-concept can be described simply as how one perceives himself and his behaviour in
themarket place. It is the attitude one holds towards himself. What one thinks of himself.
The selfconcept is not very realistic because an unconcious component is always present.
It can bedivided into six types, as given below:
(i) Actual self: How a person actually perceives himself.
(ii) Ideal self: How a person would like to perceive himself.
(iii) Social self: How a person thinks others perceive him.
(iv) Ideal social self: How a person would like others to perceive him.
(v) Expected self: An image of self somewhere in between the actual and ideal self.
(vi) Situational self: A person’s self image in a specific situation.
Self-concept is a social phenomenon. It is an attitude to the self. Consequently, the way
we dress, the products we use, the services we require, depend on how we want to
perceiveourselves. There is a relationship between the self-image of a person and the
product onewants to buy. Products act as symbols for consumers.
People like to use the products which match their personality. These include clothing,
leisure products, personal care products. Marketeers want an idea of the self-concept and
theimage of the brand. This can be done on a differential scale of 1 to 7 of several items
as shownon next page.
First the consumers are asked to rate their self-concept on the differential scale. Then
they are asked to rate product brands on the same scales. The responses that watch with
thebrands are expected to be preferred by consumers
After matching the self-concept with the brand image, the individual tries to find products
for his satisfaction. If he is satisfied, his self-concept gets reinforced as shown in the
figure.
The interaction between the product and self-concept can be situation specific. In some
situations, the self-concept can be enhanced or reinforced to a lesser or higher degree.
Marketeers use these tools as a guide to product and brand choices

REVIEW QUESTIONS
1. What is the importance of motivation in consumer behavior?
2. How does Maslow’s hierarchy of needs guide a marketer to design and sell his
products?
3. What are the categories of needs emphasised by McGuire?
4. Explain manifest and latent motives in consumer behaviour.
5. What is the traits theory and, how does it help marketers?
6. How do emotions help formulate marketing strategy?
7. Explain self-concept with reference to marketing.

36
8: DECISION MAKING MODELS APPLIED TO CONSUMER PURCHASES

Objectives:
Problem recognition is the first stage in the decision-making process. It explains:
 Three types of decision-making
 Gap between the existing and desired consumer position
 Market strategy and problem recognition

Introduction
A decision involves making a choice from alternatives available.
Levels of Decision Making
1. Extensive Problem Solving
When customers have no established criteria for evaluating a product category or specific
brandsin that category or have not narrowed the number of brands they will consider to a
smallmanageable subset, their decision making efforts can be classified as extensive
problem solving.
At this level, the consumers need a great deal of information to establish a set of criteria
onwhich to judge specific brands.
2. Limited Problem Solving
At this level of problem solving, consumers already have established the basic criteria for
evaluating the product category and the various brands in the category. However, they
have notfully established preferences concerning a select group of brands. They must
gather additionalbrand information to discriminate among the various brands.
3. Routinized Response Behaviour
At this level, consumers have experience with the product category and a well established
set ofcriteria with which to evaluate the brads they are considering. In some situations,
they maysearch for a small amount of additional information, in others they simply
review what theyalready know.

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Consumer Decision Rules
Consumer Decision Rules often referred to as heuristics, decision strategies and
informationprocessing strategies, are procedures use by customers to facilitate brand
choices. These rulesreduce the burden of making complex decisions by providing
guidelines or routines that makethe process less taxing.

They are classified into two major categories;

i) Compensatory Decision Rules- In following a Compensatory Decision Rule, a
consumer evaluates brand or model options in terms of each relevant attribute and
computes a weighted or summated score for each brand. The computed score reflects
the brand’s relative merit as a potential purchase choice. The assumption is that the
consumer will select the brand that scores highest among the alternatives evaluated.
ii) Non compensatory Decision
There are 3 types of non-compensatory rules;
a) Conjunctive Decision Rule- the consumer establishes a separate, minimally acceptable
level asa cut off point for each attribute. If any particular brand or model falls below the
cutoff point onany attribute, the option is eliminated from further consideration. Because
the conjunctive rulecan result in several acceptable alternatives, it becomes necessary for
the consumer to applyadditional decision rules to arrive at a final selection.
b) Disjunctive Decision Rule- the consumer establishes a separate minimally acceptable
cutofflevel for each attribute. In this case if an option meets or exceeds the cutoff
established for anyone attribute, It is accepted. A number of brands or models might
exceed the cutoff pointproducing a situation in which another decision rule is required.
When this occurs, the consumermay accept the first satisfactory alternative as the final
choice, or apply another decision rule thatis perhaps more suitable.
c) Lexicographic Decision Rule- the consumer first ranks the attributes in terms of
perceivedrelevance or importance. The consumer then compares the various alternatives
in terms of thesingle attribute that is considered most important. If one option scores
sufficiently high on thistop ranked attribute it is selected and the process ends. When
there are two or more survivingalternatives, the process is repeated with the second
highest ranked attribute until reaching thepoint that one of the options is selected because
it exceeds the others on a particular attribute.
A variety of Decision Rules reveal that consumers possess a specific shopping strategy
forsaving money. The consumer segment and the specific shopping rules that these
segments applyare;
1. Practical Loyalists- those who look for ways to save on the brands and products that
theywould buy anyway
2. Bottom line price shoppers- those who buy the lowest priced item with little or no
regardfor the 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
d) Affect Referral Rule- It is likely that for many purchase decisions, consumers maintain
inlong-term memory overall evaluations of the brands in their evoked set. This would
makeassessment by individual attributes unnecessary. Instead the consumer would simply

38
select thebrand with the highest perceived overall rating. This type of synthesized
decision rule is knownas the affect referral decision rule.

Hypothetical Use of Decision Rules

Compensatory rule-“I selected the digital camera that came out best when I balanced the
goodratings against the bad ratings”
Conjunctive Decision Rule-“I selected the digital camera that had no bad features”
Disjunctive Decision Rule- “I picked the digital camera that excelled in at least one
attribute”
Lexicographic Decision Rule- “I looked at the feature that was most important to me and
chosethe camera that ranked highest on that attribute”
Affect Referral Rule-“I bought the brand with the highest overall rating”
Figure 9 brings the entire dimension of buying behaviour together in a model. This is the
stimulus-response model.
Marketing and environmental stimuli enter the buyer’s consciousness. The buyer’s
characteristics and decision process lead to certain purchase decisions. The marketer’s
task is tounderstand what happens in the buyer’s purchase decisions.

The model shows the consumer buying-decision-process and the factor that As shown in
thefigure the stages of the buying-decision process are:
1. Need recognition
2. Choice of an involvement level
3. Identification of alternatives
4. Evaluation of alternatives
5. Purchase Decision
6. Post purchase behaviour
How consumers buy-The terms of the purchase
Terms and conditions of sales as well as the transaction-related activities that buyers are
willingto perform affect consumer buying. For instance, for many years’ credit was
extended only byretailers selling big-ticket items. However, today consumers a use credit
cards at fast-foodsrestaurants and grocery stores. Not only do consumers use credit for
installments purchase (tobuy things today with future income), but many now use credit
for convenience. The ability touse American express, VISA, master card, or Barclay’s
card to make a wide variety of purchasewhile not carrying cash in an attractive option to
many consumers
Marketers have experimented with transferring functions or activities to consumers. What
weonce called “service stations” are now called “gas stations” because you pump your
own gas and wash your own windshield in some countries. Consumers have shown a
willingness to assembleproducts, suck their own groceries, and buy in case quantities all
in exchange for lower prices.
Why consumers buy-the objective of the purchase
The intent or reason for a purchase affects the choice made. We are likely to behave very
differently when buying a product for a gift as opposed to buying the same product for
ourselves.

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When buying a wristwatch for personal use, a consumer may be most interested in one
that willprovide accurate time at a reasonable price. However, the appearance of a watch
bought as agraduation present can be very important
A marketer must understand the consumer’s objective in buying the product in order to
design aneffective marketing mix. For example, the failure by most watchmakers to
appeal to thefunctional, non-gift watch is what allowed Timex to be successful with its
reasonably pricedproduct. And the interest of other consumers in stylish appearance at
reasonable prices created amarket opportunity for swatch watches
Conditions under consumer Buy-states and mood
Sometimes consumers are in a temporary state that influences their buying decisions.
When youare ill or rushed, you may be unwilling to wait in line or take the time of
particular purchasedeserves. Many ladies tend to eat more when depressed and so many
foods on a shopping spreedone in a depressed state. Moods can influence purchase. As
anger or excitement can result inpurchases that otherwise would not have been exciting
atmosphere of a concert for example, youmight pay more for a common than you would
under normal circumstances. Similarly in a“harambee” you may end up more money than
if you had sent your own personal donation. Salespeople must be trained to recognize
consumer’s moods and adjust their presentationsaccordingly.
Marketers must also monitor long-term situational influences. In Kenya today given the
lowgrowth rate of the economy buyers are very thrifty and cautious in their spending.
Though it ispermanent, they have important implications for virtually all marketers
When a particular situational influences becomes widely accepted and strongly embedded
(suchas shopping on particular days of the week or shopping at certain hours),
overcoming it can bedifficult.

REVIEW QUESTIONS
1. What are the stages in the decision-making process? Explain briefly.
2. When does problem recognition occur? Explain the perceived gap and the threshold
level
3. Suggest a market strategy for problem recognition.

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9: MOTIVATION AND INVOLVEMENT

Objectives
Efficiency can be achieved in work if the people are motivated to achieve the goals. After
reading this chapter one must understand:
 The theories of motivation
 Need hierarchy
 Motives and consumption behaviour
 Personality
 Emotions
 Opinion leaders and transmission of information
 Self-concept

INTRODUCTION
In consumer behaviour, motivation plays an important part in making a decision. What is
themotive of buying? A motive is why an individual does a thing. Motivation is an inner
feelingthat stimulates the action that is to be taken by an individual. It provides a specific
directionor, results in a response. A person can be motivated to buy a product for
convenience, for style,for prestige, for self-pride, or for being at par with others

Maslow’s theory of Motivation

It is a macro theory designed to account for most human behaviour in general. It is based
onMaslow’s hierarchy of needs, which states that a human being has a variety of needs
and,these can be classified as primary and secondary needs or, lower-order and higher-
order needs.
Once a need is fulfilled, human beings, try to fulfill other needs. This is usually done in a
hierarchy, which can be classified as under:
Physiological

41
Food, water, sleep, clothing, shelter and sex
Products in this category include, foods, health foods, medicines, drinks, house garments,
etc.
Safety needs
Seeking physical safety and security, Safety of person, safety of belongings, security of
job, etc
Products are locks, guns, insurance policies, burglar alarms, retirement investments,
etc.
Social needs
The need to be approved in a society—to love and be loved, friendship, love appreciation
andgroup acceptance.
Products are general grooming, entertainment, clothing, cosmetics, jewellery, fashion
garments

Esteem needs
Desire for status, for superiority, self-respect and prestige
Products are furniture, clothing, liquor, hobbies, fancy cars.

Self-actualization needs
The desire for self-fulfillment, the desire to become all that one is capable of becoming,
Products are educational, art, sports, vacations, garments, foods.
Maslow’s hierarchy is a good guide to general behavior. The same consumption
behaviorcan fulfill more than one need.

Marketing strategies
Consumers do not buy products. They buy motive satisfaction or problem solutions. A
persondoes not buy a sofa set but he buys comfort. A person does not buy cosmetics but
he buys hopefor looking good. Marketers therefore try to find the motives for buying, and
build their productsand marketing mixes around these motives. A person may buy a
product for a number ofmotives. One of them could be rewarded for oneself or to self-
indulge in them or for a gift.
Multiple motives are involved in consumption. Therefore, a marketer tries to find out:
(a) The motive for buying,
(b) How to formulate a strategy to fulfil these motives, and
(c) How to reduce conflict between motives.
How to Discover Motives
This is found out by asking questions from the respondent. Some motives are disclosed
by therespondent; others are not divulged or are hidden. For instance, you ask a lady why
she wearsdesigner jeans. She can say that
(a) They are in style
(b) They fit well
(c) They are worn by herfriends. These motives are disclosed. Latent motives may not be
disclosed. These may be
(d) Theyshow that I have money
(e) They make one look sexy and desirable (f ) they show I am young
(g) They project my slimness, etc.

42
Manifest and Latent Motives
Another important method to find out the motives may be by “Motivational Research”
whereindirect questions are asked to elicit the information from the respondents. This is
done byunstructured disguised interviews or questionnaires.
Once the motives have been known, the marketing strategy is designed around the
appropriate set of motives. While designing the strategy, the target market has to be
decidedand the communication has to be chosen for the said target market. Since there is
more thanone motive, more than one benefit should be communicated by advertising and
other methodsof promotion.

Herzberg’s Theory
Fredrick Herzberg developed a two-factor theory that distinguishes dissatifier (factors
that causedissatisfaction) and satisfiers (factors that cause satisfaction). The absence of
dissatisfiers is notenough; satisfiers must be actively present to motivate a purchase. For
example, a computer thatdoes not come with a warranty would be a dissatisfier. Yet the
presence of a product warrantywould not act as a satisfier or motivation of a purchase
because it is not a source of intrinsicsatisfaction with the computer. Ease of use would be
a satisfier.
Herzberg’s Theory has two implications. First, seller should do their best to avoid
dissatisfiers(for example, a poor training manual or a poor service policy). Although
these things will not sell a product, they might easily not sell it. Second, the manufacturer
should identify the majorsatisfiers or motivators of purchase in the market and then
supply them. These satisfiers willmake the major differences as to which brand the
customer buys.
With a greater, understanding of motives, markers are better prepared to design appealing
products and stores. Much more needs to be done, however, to identify marketing
specificmotives and to measure their strengths.

Freud’s Theory
Sigmund assumed that the psychological forces shaping people’s behaviour are largely
Unconscious and that a person cannot fully understand his or her own motivations, A
technique called laddering can used to trace a person’s motivation from the stated
instrumental ones to theterminal ones. Then the marketer can decides at what level to
develop the message and appeal.
When a person examines specific brands, he or she will react only to their stated
capabilities butalso to other, less conscious cues. Shapes, size, weight, material, colour
and brand name can alltrigger certain associations and emotions.
Motivation researchers often collect “in-depth interviews” with a few dozen consumers to
Uncover deeper motives triggered by product. They use various “projective techniques.”
Theirresearch has produced interesting and occasionally bizarre hypothesis: consumers
resist prunesbecause prunes are wrinkled looking and remind people of old age, men
smoke cigars as an adultversion of thumb sucking and women prefer vegetable
shortening to animal fats because thelatter arouse a sense of guilt over killing animals.
More recent research holds that each product is capable of arousing a unique set of
motives inconsumers. For example, whisky can attract someone who seeks social
relaxation, status or fun.

43
Therefore, different whisky brands have specialized in one of these three different
appeals. JanCellebaut calls this approach “motivational positioning”

Learning
Almost all consumer behavior results from learning, which is process that creates
changes inbehavior through experience and practice. It is not possible to observe learning
directly, but wecan infer when it has occurred by a person’s actions. For example,
suppose you see anadvertisement for a new and improved cold medicine. If you go to
store that day and buy thatremedy, we infer that you have learned something about the
cold medicine.

There are two types of learning: experiential and conceptual

Experiential learning occurs when an experience changes your behaviour for example if
you trythe new cold medicine when you get home and it does not relieve your symptoms,
you may notbuy that brand again.
Conceptual learning, which is not learned through direct experience, isthe second type
of learning. Assume, for example, that you are standing at a soft-drink machineand notice
a new diet flavor with an artificial sweetener. But someone has told you that diet
beverages leave an aftertaste, so you choose a different drink. You have learned that you
wouldnot like this new drink without ever trying it.

Reinforcement and repetition boost learning. Reinforcement can be positive or negative.

If yousee a vendor selling frozen yogurt (stimulus), buy it (response) and find the yogurt
to be quiterefreshing (rewards), your behavior has been positively re-enforced. On the
other hand, if youbuy a new flavor of yogurt and it does not taste good (negative
reinforcement) you will not buythe flavor of yogurt again. Without positive or negative
reinforcement, a person will not bemotivated to repeat the behavior pattern or to void it.
Thus, if a new brand evokes neutralfeelings, some, marketing activity such as a price
change or an increase in promotion may berequired to induce further consumptions.
Learning theory is helpful in reminding marketers thatconcrete and timely actions are
what reinforce desired consumer behavior.
A related learning concept useful to marketing managers is stimulus generalization. In
theory,stimulus generalization occurs when one response is extended to a second stimulus
similar to thefirst. Marketers often use a successful, well known brand name for a family
of products becauseit gives consumers familiarity with and knowledge about each
product in the family. Such brandname families spur the introduction of new products
and facilitate the sale of existing items. Jell-O frozen puddings pops rely on the
familiarity of Jell-O gelatin; Clorox laundry detergent relieson familiarity with Clorox
bleach; and ivory shampoo relies once familiarities with ivory soap.

44
General Mills recently introduced Betty Croker-brand cereals, a brand name traditionally
associated with desert and side-dish mixes. In bringing the Betty Crocker name to the
cerealaisle, General Mills hopes to stimulate cereal sales with a familiar face. Branding is
examined inmore detail in another course.
Another form of stimulus generalization occurs when retailers or wholesalers design their
packages that reassemble well-known manufacturer’s brands. Such imitation often
confusesconsumers, who buy the imitator thinking it’s the original. U.S manufacturers in
foreign marketshave sometimes found little, if any, brand protection. For example, in
South Korea, Procter andGamble’s Ivory soap competes with the Korean brand Bory,
which has an almost identical logoon the package. Consumers dissatisfied with Bory may
attribute their dissatisfaction to Ivory,never realizing Bory is an imitator. Counterfeit
products are also produced to look exactly likethe original. For example, counterfeit
Levi’s jeans made in china are hot items in Europe, whereLevi Strauss, has had trouble
keeping up with the demand. The knockoffs look so much like thereal thing that
unsuspecting consumers don’t show the difference until after a few washes, when
the belt loops fall off and the rivets begin to rust The opposite of stimulus generalization
is stimulus discrimination, which means learning todifferentiate among similar products.
Consumers usually prefer one product a s more rewardingor stimulating. For example,
some consumers prefer coca-cola and others prefer Pepsi; manyinsist they can taste a
difference between the two brandswith some types of products such as aspirin, gasoline,
bleach and paper towels-marketers rely onpromotion to point out brand differences that
consumers would otherwise not recognize. Thisprocess called product differentiation, is
discussed in another course, usually productdifferentiation is based on superficial
differences. For example, Bayer tells consumers that it’s theaspirin “doctors
recommended most.”

INVOLVEMENT
Involvement is the intensity of interest with which consumers approach their dealings in
theMarket Place. Involvement characteristics:
(i) Is related to consumer’s values and self-concept, which influences the degree of
personalimportance as ascribed to a product or a situation.
(ii) Involvement can vary in individuals depending on different situations.
(iii) Involvement is related to some form of arousal.

Involvement can be of 3 types

(i) Routinised response behaviour or least involvement
(ii) Low involvement decision making
(iii) High involvement decision making

1. Routinised response behaviour or least involvement. In routinised response,

we buy things as a routine. These are products of daily use which keep buying almost
everynow and then. These products have low or no involvement. Products such as soaps,
toothpaste, blades, bread-butter creams, these are of low values and involve no risk.
Consumers cantry various brands and can keep changing brands according to their likes
and dislikes.

45
2. Low Involvement Decision: These are decision in which some involvement is
necessary.
These are higher value products and involve certain amount of risk. These products
are not bought everyday but after a few years or considerable period of time. These can
bewhite goods, like refrigerators, T.V., Sofa Sets, Computers, Steel Cupboards
sometimes designerclothes and suits.
3. High Involvement Decision Making: These decisions are very important as these
products are of very high value and involve a lot of risk and are bought once in a life time
or afew times in a life time. These can be expensive jewellery, like a solitaire, a house, an
expensivecar. While choosing these items, the attributes of the product are taken into
consideration. Forinstance in a car we look for speed, economy, comfort, style, space,
maintenance etc.
In a house we look for the location, the frontage the direction for north, south the locality
the safety etc. All these attributes are considered and then the final decision is made. On
thelighter side while choosing your life partner or the spouse requires high involvement
as onehas to spend one’s whole life with the spouse. His/her culture background, family
occupation,gentleness and other aspects are to be considered.

10: DIFFUSION OF INNOVATION

Objectives
This chapter gives an understanding of:
 Diffusion and its process
 Types of innovation
 Classification of adopters
 Diffusion enhancement strategies

INTRODUCTION
Diffusion is process by which a new product is accepted and spreads through a market. It
is agroup phenomenon, in which first an idea is perceived, then it spreads throughout the
market,and then individuals and groups adopt the product.
Definition
Diffusion is a process by which the acceptance of an innovation/new product, a new idea,
a newservice, is spread by communication to members of a social system over a period of
time.

Innovation
An innovation is an idea, practice, or product, perceived to be new by an individual or a
group.
A product is said to be an innovation when it is perceived by the potential market as a
change,and not by a technological change brought in it.
New products or new services have been classified as under:
Firm Oriented
If the product is new to the company, it is said to be new.
Product Oriented

46
It focuses on the features inherent in the product and the effect it has on the consumer’s
established usage pattern. This leads to three types of product innovation—continuous,
dynamically continuous, discontinuous innovation.
Market Oriented
It stresses on how much exposure consumers have on the new product:
(i) It can be new if purchased by a small percentage of customers in the market.
(ii) It is new if it has been for a relatively short period in the market.

Consumer-oriented Items
It is based on the consumer’s perception of the product, If he judges it to be new. For
example,the Polaroid camera can be considered as an innovation, because a whole lot of
people whoconstitute the market, use it, and can get photographs in minutes. Microwave
oven for exampleis an innovation. It does wonders for cooking and warming of foods.
Similarly, mobilephones (cell phones) can be considered an innovation. Not only are they
popular, but they wereunthinkable a decade or two back. Innovation can be of various
degrees. For instance, a microwaveoven is more of an innovation than sugar-free cola. In
innovation, behavioral changestake place. These behavioral changes can be small,
modest, or large. The innovation can becontinuous or, dynamically continuous or,
discontinuous.
Continuous innovation
In this type of innovation, minor behavioral changes are required for adoption of the
product,from ordinary cookware to Teflon-coated cookware, where minor behavioral
changes are required.
A modified product, e.g., a new scuba watch, new car model or, low-fat yogurt, etc.
Dynamically continuous innovation
Communicator behavioral changes are required for the adoption of the product. Products
inthis category include compact disk players, cellular phones, erasable ink pen and
disposablediapers.

Discontinuous innovation
Here the adoption of the product requires major behavioural changes and the product is
new,and requires high involvements of the user, along with extended decision-making,
which consistsof the following steps:

DIFFUSION PROCESS
Diffusion process is the manner in which innovations spread throughout the market.
Spreadrefers to the purchase behaviour where a product is purchased with some
continuing regularity.
Spread of innovation can be of three types as shown in the Fig. 9.1.

The diffusion process follows a similar pattern, overtime, irrespective of the social group
or innovation. The typical diffusion process shows a slow growth or adoption. It later
risesrapidly, and then a period of slow growth is noticed. In fast diffusion process, the
productclicks immediately. The spread of innovation is very quick. People patronise the
productimmediately, and later on there is again slow diffusion.
In slow diffusion process, the product takes a lot of time to diffuse or spread, and the

47
Consumer follows a pattern of adoption slowly by getting acquainted with the product.
These studies show that the products take a certain amount of time, from when it gets
Introduced to its saturation. The marketer therefore has to understand what determines
thespread of innovation in a given market segment, and how do the early buying
consumers differfrom those of late purchasers.
The rate of spread of innovation depends on a number of factors listed below:
1. Type of group: Some groups who are young, affluent and highly educated, accept
changes faster than the old, traditional and poor groups. This shows that the target
market is an important determinant of the rate of diffusion.
2. Perceived risk: The more the risk associated with changing to new innovation, the
slower is the rate of diffusion. The risk consists of the product not performing as
expected, the risk of the consequences of change-over, and the risk of reverting back
to the old product, if not satisfied with the innovative product.
3. Type of decision: An individual vs. a collective decision. Individual decisions head to
faster diffusion than collective ones.
4. Marketing effort: This also affects the diffusion process. More aggressive marketing
effort, consisting of high and continuous advertising expenditure, diffuses faster than
otherwise.
5. Trial: The trial can be taken at low cost and low risk, the diffusion is faster. Some
products can be borrowed, rented or, their trial can be taken at retail outlets. These
products like medicines, and other low-priced items have faster diffusion.
These days even car outlets are giving free trials and rides to prospective customers
to make their new models of cars diffuse faster.
6. Fulfillment of felt need: The faster a need is satisfied or fulfilled by a product, the
greater is the rate of its diffusion.
7. Compatibility: The more the product is compatible with the beliefs, attitudes and
values of the individual or group the faster the diffusion—vegetables soup for
vegetarians,ordinary microwave, no roasting

Classification of Adopters
Adopters can be classified into five groups based on the time when they adopt:
Innovators: The first 2.5 per cent to adopt innovation.
Early adopters: The next 13.5 per cent to adopt.
Early majority. The next 34 per cent to adopt
Late majority: The next 34 per cent to adopt.
Laggards: The final 16 per cent to adopt.
Innovators (2.5%)
Innovators are venturing some risk takers. They are younger, more educated and socially
mobile.
They have the capacity to absorb risk associated with the new product. They are
cosmopolitanin outlook, are aware and make use of commercial media, and eager to learn
about new products,are progressive, ready to use new products.
Early adopters (13.5%)
They take a calculated risk before investing and using new innovations. They are opinion

48
leaders and provide information to groups, but they are also concerned about failure.
Therefore,they weigh advantages and disadvantages of the product before plunging in for
a purchase.

Early majority (34%)

They tend to be more continuous and use the product after the innovators and early
adoptersseem to be satisfied with it. They are elders, well educated and less socially
mobile. They relyheavily on inter-personal source of information. They constitute 34 per
cent of the consumers.
Late majority (34%)
They are doubtful and skeptical about the innovation of new products. They tend to use
theproduct not so much because of innovation, but because of other pressures—non-
availability ofthe product and social pressures. They have less social status, and are less
socially mobile thanprevious group. They are average in age, education, social status,
income. They make little use
of media (Magazine etc.). They rely heavily on informal sources of information.
Laggards (16% of a Market)
They are more traditional. They possess limited social interaction and are oriented to the
past.
They adopt the innovations with great reluctance. They have the least education, lowest
socialstatus and income. They possess no opinion leadership and are in touch with other
laggardsand do not subscribe to many magazines.
Market strategy related to diffusion
There are differences in the early purchasers or innovators and late purchasers
(Laggards).
The strategy for the target market adopted is a “moving target market” approach. First the
General target market is selected, and then the focus shifts to innovators, early adopters,
earlymajority, late majority and laggards. This takes place as the product keeps getting
acceptancefrom the consumers. There is then a change in the media and advertising
themes for differenttarget groups.

Diffusion enhancement strategies

The idea is to find out the diffusion inhibitors and to eliminate them for the enhancement
ofdiffusion. For this, the diffusion determinants are analysed, and diffusion strategies
framed,as given in Table 9.3.

Adoption and Diffusion through Marketing Strategy

Marketers have been trying to influence consumers to adopt new innovations. This is
donethrough free samples and price promotions. Advertising is done extensively when
the resultsare not found positive by distribution of free samples and promotions.
Sometimes pricepromotions and free samples are backed by advertising techniques.
Sometimes change agentsare used to overcome resistance to adoption. For medical
products, hospitals, clinics andphysicians of repute are used as change agents.
Rate of Diffusion. The rate of diffusion can be low or high. Marketeers have 2 options
that can influence the rate of diffusion.
Skimming Strategy. This strategy used for major innovations and when the product

49
is in great demand. Prices are set high and it has slow rate of diffusion. The strategy aims
atskimming the cream of the market i.e., to take advantage and get the profits in
abundance.
The segment is small and specific. The segment is price insensitive. It has its own
lifestylesand demographic characteristics, awareness and information advertising is used
in this case.
The distribution is done from selective outlets.
Penetration Strategy. In this, there is rapid and widespread diffusion as the product
is of low value and is within the reach of many. The product is sold to a General Market
by anintensive campaign. The distribution is extensive and the product used is general. It
is used innew products which are not major innovations like cold drink, health drinks,
coffee etc. Theadvertising is widespread and other means of promotion are also used.
The distribution is extensive and covering as many outlets as possible. The price is low
and the product is available. The strategy keeps changing with its position on the
diffusioncurve. All electronic products of major innovation start with the skimming
strategy and graduallymove down to penetration strategy. The price of computers,
television sets microwaveovens etc, starts with a high price and as the product is adopted
and many more competitorscome in the skimming strategy is changed to penetration
strategies. Some products start witha penetration strategy and raise their prices with the
widespread acceptance of the product inthe market.

REVIEW QUESTIONS
1. Explain innovation and diffusion. Discuss the stages in the adoption process.
2. What are various types of diffusion? List and explain the factors that are responsible
forthe spread of innovation.
3. What is the classification of adopters? Illustrate and explain with the help of a diagram.
4. What market strategy must be adopted for the spread of innovation or
diffusion/enhancement?

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11: CONSUMER RESEARCH
Objectives:
By the end of this the student should be able to:
 Describe the characteristics of research
 Explain types of research
 Enumerate the research process
 List the types of sampling techniques
Introduction
Research is undertaken within most professions. More than a set of skills, it is a way of
thinking:examining critically the various aspects of your professional work. It is a habit
of questioningwhat you do, and a systematic examination of the observed information to
find answers with aview to instituting appropriate changes for a more effective
professional service.
Definition of Research
When one says that they are undertaking a research study to find answers to a question,
they areimplying that the process;
1. Is being undertaken within a framework of a set of philosophies (approaches);
2. Uses procedures, methods and techniques that have been tested for their validity and
Reliability;
3. Is designed to be unbiased and objective.
Philosophies mean approaches e.g. qualitative, quantitative and the academic discipline
in whichyou have been trained.
Validity means that correct procedures have been applied to find answers to a question.
Reliability refers to the quality of a measurement procedure that provides repeatability
andaccuracy.
Unbiased and objective means that you have taken each step in an unbiased manner and
drawneach conclusion to the best of your ability and without introducing your own vested
interest.

51
(Bias is a deliberate attempt to either conceal or highlight something).
Adherence to the three criteria mentioned above enables the process to be called
‘research’.

However, the degree to which these criteria are expected to be fulfilled varies from
discipline todiscipline and so the meaning of ‘research’ differs from one academic
discipline to another.
The difference between research and non-research activity is, in the way we find answers:
theprocess must meet certain requirements to be called research. We can identify these
requirementsby examining some definitions of research.
The word research is composed of two syllables, re and search.Re is a prefix meaning
again, anew or over again.
Search is a verb meaning to examine closely and carefully, to test and try, or to probe.
Together they form a noun describing a careful, systematic, patient study and
investigation insome field of knowledge, undertaken to establish facts or principles.
Research is a structured enquiry that utilizes acceptable scientific methodology to solve
problemsand create new knowledge that is generally applicable. Scientific methods
consist of systematicobservation, classification and interpretation of data. Although we
engage in such process in ourdaily life, the difference between our casual day- to-day
generalization and the conclusionsusually recognized as scientific method lies in the
degree of formality, rigorousness, verifiabilityand general validity of latter.
Characteristics of Research:
Research is a process of collecting, analyzing and interpreting information to answer
questions.
But to qualify as research, the process must have certain characteristics: it must, as far as
possible, be controlled, rigorous, systematic, valid and verifiable, empirical and critical.
Controlled- in real life there are many factors that affect an outcome. The concept of
controlimplies that, in exploring causality in relation to two variables (factors), you set up
your study ina way that minimizes the effects of other factors affecting the relationship.
This can be achievedto a large extent in the physical sciences (cookery, bakery), as most
of the research is done in alaboratory. However, in the social sciences (Hospitality and
Tourism) it is extremely difficult asresearch is carried out on issues related to human
beings living in society, where such controlsare not possible. Therefore in Hospitality and
Tourism, as you cannot control external factors,you attempt to quantify their impact.
However, the degree to which these criteria are expected to be fulfilled varies from
discipline todiscipline and so the meaning of ‘research’ differs from one academic
discipline to another.
The difference between research and non-research activity is, in the way we find answers:
theprocess must meet certain requirements to be called research. We can identify these
requirementsby examining some definitions of research.
The word research is composed of two syllables, re and search.re is a prefix meaning
again, anew or over again.
Search is a verb meaning to examine closely and carefully, to test and try, or to probe.
Together they form a noun describing a careful, systematic, patient study and
investigation insome field of knowledge, undertaken to establish facts or principles.

52
Research is a structured enquiry that utilizes acceptable scientific methodology to solve
problemsand create new knowledge that is generally applicable. Scientific methods
consist of systematicobservation, classification and interpretation of data. Although we
engage in such process in ourdaily life, the difference between our casual day- to-day
generalization and the conclusionsusually recognized as scientific method lies in the
degree of formality, rigorousness, verifiabilityand general validity of latter.
Characteristics of Research:
Research is a process of collecting, analyzing and interpreting information to answer
questions.
But to qualify as research, the process must have certain characteristics: it must, as far as
Possible, be controlled, rigorous, systematic, valid and verifiable, empirical and critical.
Controlled- in real life there are many factors that affect an outcome. The concept of
controlimplies that, in exploring causality in relation to two variables (factors), you set up
your study ina way that minimizes the effects of other factors affecting the relationship.
This can be achievedto a large extent in the physical sciences (cookery, bakery), as most
of the research is done in alaboratory. However, in the social sciences (Hospitality and
Tourism) it is extremely difficult asresearch is carried out on issues related to human
beings living in society, where such controlsare not possible. Therefore in Hospitality and
Tourism, as you cannot control external factors,you attempt to quantify their impact.

Rigorous-you must be scrupulous in ensuring that the procedures followed to find

answers toquestions are relevant, appropriate and justified. Again, the degree of rigor
varies markedlybetween the physical and social sciences and within the social sciences.
Systematic-this implies that the procedure adopted to undertake an investigation follow a
certainlogical sequence. The different steps cannot be taken in a haphazard way. Some
procedures mustfollow others.
Valid and verifiable-this concept implies that whatever you conclude on the basis of
yourfindings is correct and can be verified by you and others.
Empirical-this means that any conclusion drawn are based upon hard evidence gathered
frominformation collected from real life experiences or observations.
Critical-critical scrutiny of the procedures used and the methods employed is crucial to a
Research enquiry. The process of investigation must be foolproof and free from
drawbacks. Theprocess adopted and the procedures used must be able to withstand
critical scrutiny.
Types of Research
Research can be classified from three perspectives:
1. Application of research study
2. Objectives in undertaking the research
3. Inquiry mode employed
Application:
From the point of view of application, there are two broad categories of research:
 Pure research and
 Applied research
Pure research involves developing and testing theories and hypotheses that are
intellectuallychallenging to the researcher but may or may not have practical application

53
at the present time orin the future. The knowledge produced through pure research is
sought in order to add to theexisting body of research methods.
Applied research is done to solve specific, practical questions; for policy formulation,
administration and understanding of a phenomenon. It can be exploratory, but is usually
descriptive. It is almost always done on the basis of basic research. Applied research can
becarried out by academic or industrial institutions. Often, an academic institution such
as auniversity will have a specific applied research program funded by an industrial
partnerinterested in that program.
Objectives:
From the viewpoint of objectives, a research can be classified as
 Descriptive
 Correlation
 Explanatory
 Exploratory
Descriptive research attempts to describe systematically a situation, problem,
phenomenon,service or programme, or provides information about , say, living condition
of a community, ordescribes attitudes towards an issue.
Correlational research attempts to discover or establish the existence of a relationship/
Interdependence between two or more aspects of a situation
Explanatory research attempts to clarify why and how there is a relationship between
two ormore aspects of a situation or phenomenon.
Exploratory researchis undertaken to explore an area where little is known or to
investigate thepossibilities of undertaking a particular research study (feasibility study
/ pilot study).In practice most studies are a combination of the first three categories.

Inquiry Mode:
From the process adopted to find answer to research questions – the two approaches are:
 Structured approach
 Unstructured approach
Structured approach:
The structured approach to inquiry is usually classified as quantitative research. Here
everythingthat forms the research process- objectives, design, sample, and the questions
that you plan to askof respondents- is predetermined. It is more appropriate to determine
the extent of a problem,issue or phenomenon by quantifying the variation. E.g. how many
people have a particularproblem? How many people hold a particular attitude?
Unstructured approach:
The unstructured approach to inquiry is usually classified as qualitative research. This
approachallows flexibility in all aspects of the research process. It is more appropriate to
explore thenature of a problem, issue or phenomenon without quantifying it. Main
objective is to describethe variation in a phenomenon, situation or attitude. e.g.,
description of an observed situation, thehistorical enumeration of events, an account of
different opinions different people have about anissue, description of working condition
in a particular industry. Both approaches have their placein research. Both have their
strengths and weaknesses. In many studies you have to combine bothqualitative and
quantitative approaches. For example, suppose you have to find the types ofcuisine /
accommodation available in a city and the extent of their popularity. Types of cuisine is

54
the qualitative aspect of the study as finding out about them entails description of the
culture andcuisine. The extent of their popularity is the quantitative aspect as it involves
estimating thenumber of people who visit restaurant serving such cuisine and calculating
the other indicatorsthat reflect the extent of popularity.

The Research Process

The research process is similar to undertaking a journey.
For a research journey there are two important decisions to make-
1) What you want to find out about or what research questions (problems) you want to
findanswers to?
2) How to go about finding their answers. There are practical steps through which you
must passin your research journey in order to find answers to your research questions.
The path to findinganswers to your research questions constitutes research methodology.
At each operational step inthe research process you are required to choose from a
multiplicity of methods, procedures andmodels of research methodology which will help
you to best achieve your objectives. This iswhere your knowledge base of research
methodology plays a crucial role.

STEPS IN RESEARCH PROCESS:

1. Formulating the Research Problem
2. Extensive Literature Review
3. Developing the objectives
4. Preparing the Research Design including Sample Design
5. Collecting the Data
6. Analysis of Data
7. Generalization and Interpretation
8. Preparation of the Report or Presentation of Results-Formal write ups of conclusions
reached.
Step1. Formulating the research problem:
It is the first and most crucial step in the research process. Main function is to decide
what youWant to find out about. The way you formulate a problem determines almost
every step thatfollows.
Research in social sciences revolves around four Ps:
• People- a group of individuals
• Problems- examine the existence of certain issues or problems relating to their lives; to
Ascertain attitude of a group of people towards an issue
• Programs- to evaluate the effectiveness of an intervention
• Phenomena- to establish the existence of regularity.
In practice most research studies are based upon at least a combination of two Ps.
Every research study has two aspects:
1. Study population-
• People: individuals, organizations, groups, communities (they provide you with the
informationor you collect information about them)
2. Subject area-
• Problems: issues, situations, associations, needs, profiles

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• Program: content, structure, outcomes, attributes, satisfactions, consumers, Service
providers,etc.
• Phenomenon: cause-and-effect relationships, the study of a phenomenon itself
(Informationthat you need to collect to find answers to your research questions) you can
examine theprofessional field of your choice in the context of the four Ps in order to
identify anything thatlooks interesting.
Considerations in selecting a research problem:
These help to ensure that your study will remain manageable and that you will remain
motivated.
1. Interest: a research endeavor is usually time consuming, and involves hard work and
Possibly unforeseen problems. One should select topic of great interest to sustain the
requiredmotivation.

2. Magnitude: It is extremely important to select a topic that you can manage within the
timeand resources at your disposal. Narrow the topic down to something manageable,
specific andclear.
3. Measurement of concepts: Make sure that you are clear about the indicators and
Measurement of concepts (if used) in your study.
4. Level of expertise: Make sure that you have adequate level of expertise for the task
you areproposing since you need to do the work yourself.
5. Relevance: Ensure that your study adds to the existing body of knowledge, bridges
currentgaps and is useful in policy formulation. This will help you to sustain interest in
the study.
6. Availability of data: Before finalizing the topic, make sure that data are available.
7. Ethical issues: How ethical issues can affect the study population and how ethical
problemscan be overcome should be thoroughly examined at the problem formulating
stage.
Steps in formulation of a research problem:
Working through these steps presupposes a reasonable level of knowledge in the broad
subjectarea within which the study is to be undertaken. Without such knowledge it is
difficult to clearlyand adequately ‘dissect’ a subject area.
Step 2 reviewing the literature:
It is an essential preliminary task in order to acquaint yourself with the available body of
Knowledge in your area of interest. Literature review is integral part of entire research
processand makes valuable contribution to every operational step. Reviewing literature
can be time-consuming,daunting and frustrating, but is also rewarding. Its functions are:
a. Bring clarity and focus to your research problem;
b. Improve your methodology;
c. Broaden your knowledge;
d. Contextualize your findings.
a. Bring clarity and focus to your research problem;
The process of reviewing the literature helps you to understand the subject area better and
thushelps you to conceptualize your research problem clearly and precisely. It also helps
you tounderstand the relationship between your research problem and the body of
knowledge in thearea.
b. Improve your methodology:

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A literature review tells you if others have used procedures and methods similar to the
ones thatyou are proposing, which procedures and methods have worked well for them,
and whatproblems they have faced with them. Thus you will be better positioned to select
a methodologythat is capable of providing valid answer to your research questions.
c. Broaden your knowledge base in your research area:
It ensures you to read widely around the subject area in which you intend to conduct your
Research study. As you are expected to be an expert in your area of study, it helps fulfill
thisexpectation. It also helps you to understand how the findings of your study fit into the
existingbody of knowledge.
d. Contextualize your findings:
How do answers to your research questions compare with what others have found? What
Contribution has you been able to make in to the existing body of knowledge? How are
yourfindings different from those of others? For you to be able to answer these questions,
you need togo back to your literature review. It is important to place your findings in the
context of what isalready known in your field of enquiry.
Procedure for reviewing the literature:
i) search for existing literature in your area of study;
ii) Review the literature selected;
iii) Develop a theoretical framework;
iv) Develop a conceptual framework.
Search for existing literature:
To effectively search for literature in your field of enquiry, it is imperative that you have
in mindat least some idea of broad subject area and of the problem you wish to
investigate, in order toset parameters for your search. Next compile a bibliography for
this broad area. Sources are:
1. Books
2. Journals
Books
Comprise a central part of any bibliography. Advantage-material published generally is
of goodquality and the findings are integrated with other research to form a coherent
body of knowledge
Disadvantage-material is not completely up to date, as it can take a few years between the
completion of a work and publication in the form of a book. Search for books in your
area ofinterest, prepare a final list, locate these books in the libraries or borrow from
other sources.
Examine their content, if contents are not found to be relevant to your topic, delete it
from yourreading list.
Journals
Journals provide you with the most up-to-date information, even though there is a gap of
two tothree years between the completion of a research project and the publication in a
journal.
As with books, you need to prepare a list of journals for identifying literature relevant to
yourstudy. This can be done as follows:
 locate the hard copies of the journal that are appropriate to your study;
 use the internet
 look at the index of research abstracts in the relevant field to identify and read the

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articles.
Whichever method you choose, first identify the journals you want to look at in more
detail foryour review of literature. Select the latest issue; examine its content page to see
if there is anarticle of relevance to your research topic. If you feel a particular article is of
relevance to you,read it’s abstract. If you think you are likely to use it, photocopy or
prepare a summary andrecord it for reference for later use.
Review the literature selected:
After identifying books and articles as useful, the next step is to start reading them
critically topull together themes and issues that are associated. If you do not have a
theoretical framework ofthemes in mind to start with, use separate sheets of paper for
each article or book. Once youdevelop a rough framework, slot the findings from the
material so far reviewed into thatframework, using a separate sheet of paper for each
theme of that framework. As you readfurther, go on slotting the information where it
logically belongs under the theme so fardeveloped. You may need to add more themes as
you go. Read critically with particularreference to the following aspects:
• Note whether the knowledge relevant to your theoretical framework is confirmed
beyonddoubt.
• Note the theories put forward, the criticisms of these and their basis, the methodologies
adoptedand the criticisms of them.
• Examine to what extent the findings can be generalized to other situations. Ascertain the
areasin which little or nothing is known-the gaps that exist in the body of knowledge.
Develop a theoretical framework:
As you have limited time it is important to set parameters by reviewing the literature in
relationto some main themes pertinent to your research topic.
As you start reading the literature, you will realize that it deals with a number of aspects
thathave a direct `and indirect bearing on your research topic. Use these aspects as a basis
fordeveloping your theoretical framework. Until you go through the literature you cannot
develop atheoretical framework and until you have developed a theoretical framework,
you cannoteffectively review the literature.
Literature pertinent to your study may deal with two types of information:
 Universal
 Morespecific (i.e. local trends or specific program)
In writing about such information you should start with the general information,
graduallynarrowing down to the specific.
Writing up the literature reviewed:
In order to comply with the first function of literature review i.e. to provide theoretical
Background to your study:
List the main themes that have emerged while reading literature. Convert them into
subheadings.
These subheadings should be precise, descriptive of the theme in question, and follow a
logicalprogression. Now, under each subheading, record the main findings with respect to
the theme inquestion, highlighting the reasons for and against an argument if they exist,
and identify gaps andissues. In order to comply with the second function of literature
review i.e. contextualizing thefindings of your study- requires you to very systematically
compare your findings with thosemade by others. Quote from these studies to show how
your findings contradict, confirm or addto them. It places your findings in the context of

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what others have found out. This function isundertaken when writing about your findings
i.e. after analysis of your data.
Step 3 the formulation of objectives:
 Objectives are the goals you set out to attain in your study.
 they inform a reader what you want to attain through the study.
 It is extremely important to word them clearly and specifically.
Objectives should be listed under two headings:
a) Main objectives (aims);
b) Sub-objectives.
• The main objective is an overall statement of the thrust of your study.
It is also a statement of the main associations and relationships that you seek to discover
orestablish.
• The sub-objectives are the specific aspects of the topic that you want to investigate
within themain framework of your study. They should be numerically listed. Wording
should clearly,completely and specifically communicate to your readers your intention.
Each objective shouldcontain only one aspect of the Study. Use action oriented words or
verbs when writingobjectives. The objectives should start with words such as;
‘To determine’,
‘To find out’,
‘To ascertain’,
‘To measure’,
‘To explore’ etc.
The wording of objectives determines the type of research (descriptive, correlational and
Experimental) and the type of research design you need to adopt to achieve them. e.g.
Descriptive studies:
-To describe the types of incentives provides by Hotel XYZ to employees in Mumbai.
-To find out the opinion of the employees about the medical facilities provided by five
star hotelsin Mumbai.
Correlational studies:
-To ascertain the impact of training on employee retention.
-To compare the effectiveness of different loyalty programmes on repeat clientele.
Hypothesis –testing studies:
-To ascertain if an increase in working hours will increase the incidence of drug/alcohol
abuse.
-To demonstrate that the provision of company accommodation to employees in Mumbai
hotelswill reduce staff turnover.
The definition of a variable:
An image, perception or concept that can be measured – hence capable of taking on
differentvalues- is called a variable.
The difference between a concept and a variable:
Concepts are mental images or perceptions and therefore their meaning varies markedly
fromindividual to individual. A concept cannot be measured whereas a variable can be
subjected tomeasurement by crude/refined or subjective/objective units of measurement.
It is thereforeimportant for the concept to be converted into variables.
Types of measurement scales:

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Measurement is central to any enquiry. The greater the refinement in the unit of
measurement ofa variable, the greater the confidence, other things being equal, one can
place in the findings.
S. Stevens has classified the different types of into four categories:
• Nominal or classificatory scale
• Ordinal or ranking scale
• Interval scale
• Ratio scale
The nominal or classificatory scale:
A nominal scale enables the classification of individuals, objects or responses into
subgroupsbased on a common/shared property or characteristic. A variable measured on a
nominal scalemay have one, two or more subcategories depending upon the extent of
variation. For example,’water’ or ‘tree’ have only one subgroup, whereas the variable
“gender” can be classified intotwo sub-categories: male and female. ‘Hotels’ can be
classified into sub-categories. Thesequence in which subgroups are listed makes no
difference as there is no relationship amongsubgroups.

The ordinal or ranking scale:

Besides categorizing individuals, objects, responses or a property into subgroups on the
basis ofcommon characteristic, it ranks the subgroups in a certain order. They are
arranged either inascending or descending order according to the extent a subcategory
reflects the magnitude ofvariation in the variable. For example, income can be measured
either or qualitatively usingsubcategories, ‘above average’, ‘average’ and ‘below
average’. The ‘distance’ between these subcategories are not equal as there is no
quantitative unit of measurement. ‘Socioeconomicstatus’ and ‘attitude’ are other
variables that can be measured on ordinal scale.
The interval scale:
An interval scale has all the characteristics of an ordinal scale. In addition, it uses a unit
ofmeasurement with an arbitrary starting and terminating points. For example,
Celsius scale: 0*C to 100*C
Fahrenheit scale: 32*F to 212*F
Attitudinal scales: 10-20, 21-30, 31-40 etc
The ratio scale:
A ratio scale has all the properties of nominal, ordinal and interval scales plus its own
property:
the zero point of a ratio scale is fixed, which means it has a fixed starting point. Since the
difference between intervals is always measured from a zero point, this scale can be used
formathematical operations. The measurement of variables like income, age, height and
weight areexamples of this scale. A person who is 40 year old is twice as old as one who
is 20 year old.
Constructing hypotheses:
As a researcher you do not know about a phenomenon, but you do have a hunch to form
the basisof certain assumption or guesses. You test these by collecting information that
will enable you toconclude if your hunch was right. The verification process can have
one of the three outcomes.

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Your hunch may prove to be:
1. Right;
2. Partially right; or
3. Wrong.
Without this process of verification, you cannot conclude anything about the validity of
yourassumption. Hence, a hypotheses is a hunch, assumption, suspicion, assertion or an
idea about aphenomenon, relationship or situation, the reality or truth of which you do
not know. Aresearcher calls these assumptions/ hunches hypotheses and they become the
basis of an enquiry.
In most studies the hypotheses will be based upon your own or someone else’s
observation.
Hypotheses bring clarity, specificity and focus to a research problem, but are not essential
for astudy. You can conduct a valid investigation without constructing formal
hypotheses.
The functions of hypotheses:
The formulation of hypothesis provides a study with focus. It tells you what specific
aspects of aresearch problem to investigate. A hypothesis tells you what data to collect
and what not tocollect, thereby providing focus to the study. As it provides a focus, the
construction of ahypothesis enhances objectivity in a study. A hypothesis may enable you
to add to theformulation of a theory. It enables you to specifically conclude what is true
or what is false.
Step 4 Preparing the Research Design
Research design is the conceptual structure within which research would be conducted.
The function of research design is to provide for the collection of relevant information
withminimal expenditure of effort, time and money. The preparation of research design,
appropriatefor a particular research problem, involves the consideration of the following :
1. Objectives of the research study.
2. Method of Data Collection to be adopted
3. Source of information—Sample Design
4. Tool for Data collection
5. Data Analysis-- qualitative and quantitative
1. Objectives of the Research Study: Objectives identified to answer the research
questionshave to be listed making sure that they are:
a) Numbered, and
b) Statement begins with an action verb.
2. Methods of Data Collection: There are two types of data
Primary Data— collected for the first time
Secondary Data—those which have already been collected and analyzed by someone else

Methods of Primary Data Collection

Observation Method:
It is commonly used in behavioral sciences. It is the gathering of primary data by
investigator’sown direct observation of relevant people, actions and situations without
asking from therespondent. e.g.
• A hotel chain sends observers posing as guests into its coffee shop to check on
cleanliness andcustomer service.

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• A food service operator sends researchers into competing restaurants to learn menu
itemsprices, check portion sizes and consistency and observe point-of purchase
merchandising.
• A restaurant evaluates possible new locations by checking out locations of competing
restaurants, traffic patterns and neighborhood conditions.
Observation can yield information which people are normally unwilling or unable to
provide.
e.g. Observing numerous plates containing uneaten portions the same menu items
indicates thatfood is not satisfactory.
Types of Observation:
1. Structured – for descriptive research
2. Unstructured—for exploratory research
3. Participant Observation
4. Non- participant observation
5. Disguised observation

Limitations:
-feelings, beliefs and attitudes that motivate buying behaviour and infrequent behaviour
cannotbe observed.
- Expensive method
Because of these limitations, researchers often supplement observation with survey
research.
Survey Method
Approach most suited for gathering descriptive information.
Structured Surveys: use formal lists of questions asked of all respondents in the same
way.
Unstructured Surveys: let the interviewer probe respondents and guide the interview
according totheir answers.
Survey research may be Direct or Indirect.
Direct Approach: The researcher asks direct questions about behaviours and thoughts.
E.g. why don’t you eat at MacDonalds?
Indirect Approach: The researcher might ask: “What kind of people eat at
MacDonald’s?”
From the response, the researcher may be able to discover why the consumer avoids
MacDonald’s. It may suggest factors of which the consumer is not consciously aware.
Advantages:
-Can be used to collect many different kinds of information -Quick and low cost as
compared to observation and experimental method.
Limitations:
-Respondent’s reluctance to answer questions asked by unknown interviewers about
things theyconsider private.
-Busy people may not want to take the time
-may try to help by giving pleasant answers
-unable to answer because they cannot remember or never gave a thought to what they do
andwhy

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-may answer in order to look smart or well informed.
Contact Methods:
Information may be collected by
 Mail
 Telephone
 Personal interview
Mail Questionnaires:
Advantages:
-can be used to collect large amounts of information at a low cost per respondent.
-respondents may give more honest answers to personal questions on a mail questionnaire
-no interviewer is involved to bias the respondent’s answers.
-convenient for respondent’s who can answer when they have time
- good way to reach people who often travel
Limitations:
-not flexible
-take longer to complete than telephone or personal interview
-response rate is often very low
- Researcher has no control over who answers.
Telephone Interviewing:
- Quick method
- More flexible as interviewer can explain questions not understood by the respondent
- Depending on respondent’s answer they can skip some Qs and probe more on others
- Allows greater sample control - response rate tends to be higher than mail
Drawbacks:
-Cost per respondent higher
-Some people may not want to discuss personal Qs with interviewer
-Interviewer’s manner of speaking may affect the respondent’s answers
-Different interviewers may interpret and record response in a variety of ways
-under time pressure, data may be entered without actually interviewing
Personal Interviewing:
It is very flexible and can be used to collect large amounts of information. Trained
interviewersare can hold the respondent’s attention and are available to clarify difficult
questions.
They can guide interviews, explore issues, and probe as the situation requires. Personal
interviewcan be used in any type of questionnaire and can be conducted fairly quickly.
Interviewers canalso show actual products, advertisements, packages and observe and
record their reactions andbehaviour.
This takes two forms-
 Individual- Intercept interviewing
 Group - Focus Group Interviewing
Intercept interviewing:
Widely used in tourism research.
-allows researcher to reach known people in a short period of time.
- only method of reaching people whose names and addresses are unknown
-involves talking to people at homes, offices, on the street, or in shopping malls.
-interviewer must gain the interviewee’s cooperation

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-time involved may range from a few minutes to several hours (for longer surveys
compensationmay be offered)
-involves the use of judgmental sampling i.e. interviewer has guidelines as to whom to
“Intercept”, such as 25% under age 20 and 75% over age 60
Drawbacks:
-Room for error and bias on the part of the interviewer who may not be able to correctly
judgeage, race etc.
-Interviewer may be uncomfortable talking to certain ethnic or age groups.
Focus Group Interviewing:
It is rapidly becoming one of the major research tool to understand people’s thoughts and
feelings. It is usually conducted by inviting six to ten people to gather for a few hours
with atrained moderator to talk about a product, service or organization. The meeting is
held in apleasant place, and refreshments are served to create a relaxed environment. The
moderatorneeds objectivity, knowledge of the subject and industry, and some
understanding of group andconsumer behaviour. The moderator starts with a broad
question before moving to more specificissues, encouraging open and easy discussion to
bring out true feelings and thoughts.
At the same time, the interviewer focuses the discussion, hence the name focus group
Interviewing. -often held to help determine the subject areas on which questions should
be askedin a later, large-scale, structured-direct interview Comments are recorded
through note taking orvideotaped and studied later to understand consumer’ buying
process. This method is especiallysuited for managers of hotels and restaurants, who have
easy access to their customers. E.g. Somehotel managers often invite a group of hotel
guests from a particular market segment to have afree breakfast with them. Managers get
the chance to meet the guests and discuss what they likeabout the hotel and what the hotel
could do to make their stay more enjoyable and comfortable.
The guests appreciate this recognition and the manager gets valuable information.
Restaurantmanagers use the same approach by holding discussion meetings over lunch or
dinner.
Drawbacks:
-Cost: may cost more than telephone survey
-Sampling: group interview studies keep small sample size to keep time and cost down,
thereforeit may be difficult to generalize from the results.
- Interviewer bias.
Experimental Method
Also called Empirical Research or Cause and Effect Method, it is a data-based research,
comingup with conclusions which are capable of being verified with observation or
experiment.
Experimental research is appropriate when proof is sought that certain variables affect
othervariables in some way .e.g.
-Tenderizers (independent variable) affect cooking time and texture of meat (dependent
variable)
- The effect of substituting one ingredient in whole or in part for another such as soya
flour toflour for making high protein bread.
-Develop recipes to use products.

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Such research is characterized by the experimenter’s control over the variables under
study andthe deliberate manipulation of one of them to study its effects. In such a
research, it is necessaryto get at facts first hand, at their source, and actively go about
doing certain things to stimulatethe production of desired information. Researcher must
provide self with a working hypothesisor guess as to the probable results. Then work to
get enough facts (data) to prove or disprove thehypothesis. He then sets up experimental
designs which he thinks will manipulate the persons orthe materials concerned so as to
bring forth the desired information. Evidence gathered throughexperimental or empirical
studies today is considered to be the most powerful support possiblefor a given
hypothesis.
Determining Sample Design
Researchers usually draw conclusions about large groups by taking a sample. A Sample
is asegment of the population selected to represent the population as a whole. Ideally, the
sampleshould be representative and allow the researcher to make accurate estimates of
the thoughts andbehaviour of the larger population.
Designing the sample calls for three decisions:
Who will be surveyed? (The Sample)
• The researcher must determine what type of information is needed and who is most
likely tohave it.
How many people will be surveyed? (Sample Size)
• Large samples give more reliable results than small samples. However it is not
necessary tosample the entire target population.
How should the sample be chosen? (Sampling)
• Sample members may be chosen at random from the entire population (Probability
sample)
• The researcher might select people who are easier to obtain information from (non-
probabilitysample)
The needs of the research project will determine which method is most effective

TYPES OF SAMPLES
Probability samples
Simple random sample: Every member of the population has a known and equal chance
ofbeing selected
Stratified random sample: Population is divided into mutually exclusive groups such as
agegroups and random samples are drawn from each group.
Cluster (area) sample: The population is divided into mutually exclusive groups such as
blocks,and the researcher draws a sample of the group to interview.

Non-probability samples
Convenience sample: The researcher selects the easiest population members from which
toobtain information.
Judgment sample: The researcher uses his/her judgment to select population members
who aregood prospects for accurate information.
Quota sample: The researcher finds and interviews a prescribed number of people in
each ofseveral categories.

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Tools for Data Collection (Research Instruments)
The construction of a research instrument or tool for data collection is the most important
aspectof a research project because anything you say by way of findings or conclusions is
based uponthe type of information you collect, and the data you collect is entirely
dependent upon thequestions that you ask of your respondents. The famous saying about
computers- “garbage ingarbage out”- is also applicable for data collection. The research
tool provides the input into astudy and therefore the quality and validity of the output (the
findings), are solely dependent onit.

Guidelines to Construct a Research Tool:

The underlying principle behind the guidelines suggested below is to ensure the validity
of yourinstrument by making sure that your questions relate to the objectives of your
study.
Step I: Clearly define and individually list all the specific objectives or research
Questions foryour study.
Step II: For each objective or research questions, list all the associated questions that you
want toanswer through your study.
Step III: Take each research question listed in step II and list the information required to
answerit.
Step IV: Formulate question(s) to obtain this information.

The Questionnaire:
Structured surveys/ interviews employ the use of a questionnaire. A questionnaire
consists of aset of questions presented to a respondent for answers. The respondents read
the questions,interpret what is expected and then write down the answers themselves. It is
called an InterviewSchedule where the researcher asks the questions (and if necessary,
explains them) and recordsthe respondent’s reply on the interview schedule. Because
there are many ways to ask questions,the questionnaire is very flexible. Questionnaire
should be developed and tested carefully beforebeing used on a large scale.
There are three basic types of questionnaire:
• Closed –ended
• Open-ended
• Combination of both

1. Closed –ended Questionnaire:

Closed ended questions include all possible answers/prewritten response categories, and
respondents are asked to choose among them e.g. multiple choice questions, scale
questionsType of questions used to generate statistics in quantitative research. As these
follow a setformat, and most responses can be entered easily into a computer for ease of
analysis, greaternumbers can be distributed.
2. Open-ended Questionnaire:
Open-ended questions allow respondents to answer in their own words. Questionnaire
does notcontain boxes to tick but instead leaves a blank section for the respondent to
write in an answer.
Whereas closed –ended questionnaires might be used to find out how many people use a
service,open-ended questionnaires might be used to find out what people think about a

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service. As thereare no standard answers to these questions, data analysis is more
complex. As it is opinionswhich are sought rather than numbers, fewer questionnaires
need to be distributed.
3. Combination of both:
This way it is possible to find out how many people use a service and what they think of
theservice in the same form. Begins with a series of closed –ended questions, with boxes
to tick orscales to rank, and then finish with a section of open-ended questions or more
detailed response.
How to construct questionnaires:
• Deciding which questionnaire to use- closed or open ended, self or interviewer
administered• Wording and structure of questions- Questions should be kept short and
simple--avoid doublebarreled i.e. two questions in one –ask two Qs rather than one.
Avoid negative questions which have not in them as it is confusing for respondent to
agree ordisagree. Questions should not contain Prestige Bias – causing embarrassment or
forcing therespondent to give false answer in order to look good. Questions about
educational qualificationor income might elicit this type of response. Use indirect
questions for sensitive issues- inindirect questions respondents can relate their answer to
other people .Using closed- endedquestions- try to make sure that all possible answers are
covered so that respondents are notconstrained in their answer. “Don’t know” category
also needs to be added. Avoiding LeadingQuestions, Don’t lead the respondent to answer
in a certain way. e.g. “How often do you washyour car?” assumes that respondent has a
car and he washes his car. Instead, ask a filter questionto find if he has a car, and then, ‘If
you wash your car, how many times a year?’
• Length and ordering of the Questions: - Keep the questionnaire as short as possible. Ask
easyQs which respondents will enjoy answering. If combined questionnaire, keep open
ended Qs forthe end. Make Qs as interesting as possible and easy to follow by varying
type and length of question. Group the qs. Into specific topic as this it makes it easier to
understand and follow.
Layout and spacing is important as cluttered Questionnaire is less likely to be answered.
Piloting the Questionnaire
Once you have constructed your questionnaire, you must pilot it. This means that you
must test itout to see if it is obtaining the result you require. This is done by asking
people to read it throughand see if there are any ambiguities which you have not noticed.
They should also be asked tocomment about the length, structure and wording of the
questionnaire. Alter the questionsaccordingly.
Step 5: Collecting Data:
Having formulated the research problem,, developed a study design, constructed a
researchinstrument and selected a sample, you then collect the data from which you will
draw inferencesand conclusions for your study. Depending upon your plans, you might
commence interviews,mail out a questionnaire, conduct experiments and/or make
observations. Collecting data throughany of the methods may involve some ethical issues
in relation to the participants and theresearcher: - Those from whom information is
collected or those who are studied by a researcher becomeparticipants of the study.
- Anyone who collects information for a specific purpose, adhering to the accepted code
ofconduct, is a researcher.

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a) Ethical issues concerning research participants: There are many ethical issues in
relation toparticipants of a research activity.
i) Collecting information:
Your request for information may put pressure or create anxiety on a respondent. Is it
ethical?
Research is required to improve conditions. Provided any piece of research is likely to
helpsociety directly or indirectly, it is acceptable to ask questions, if you first obtain the
respondents’informed consent. If you cannot justify the relevance of the research you are
conducting, you arewasting your respondents’ time, which is unethical.
ii) Seeking consent:
In every discipline it is considered unethical to collect information without the knowledge
of theparticipant, and their expressed willingness and informed consent. Informed
consent implies thatsubjects are made adequately aware of the type of information you
want from them, why theinformation is being sought, what purpose it will be put to, how
they are expected to participatein the study, and how it will directly or indirectly affect
them. It is important that the consentshould be voluntary and without pressure of any
kind.

iii) Providing incentives:

Most people do not participate in a study because of incentives, but because they realize
theimportance of the study. Is it ethical to provide incentives to respondents to share
informationwith you because they are giving their time? Giving a present before data
collection is unethical.
iv)Seeking sensitive information:
Certain types of information can be regarded as sensitive or confidential by some people
andthus an invasion to their privacy, asking for such information may upset or embarrass
arespondent. For most people, questions on drug use, pilferage, income, age, marital
status etc areintrusive. In collecting data you need to be careful about the sensitivities of
your respondents.
It is not unethical to ask such questions provided that you tell your respondents the type
ofinformation you are going to ask clearly and frankly, and give them sufficient time to
decide ifthey want to participate, without any major inducement.
v) The possibility of causing harm to participant:
When you collect data from respondents or involve subjects in an experiment, you need
toexamine carefully whether their involvement is likely to harm them in any way. Harm
includes;
Research that might include hazardous experiments, discomfort, anxiety, harassment,
invasion ofprivacy, or demeaning or dehumanizing procedures. If it is likely to, you must
make sure that therisk is minimal i.e. the extent of harm or discomfort is not greater that
ordinarily encountered indaily life. If the way information is sought creates anxiety or
harassment, you need to take stepsto prevent this.
vi) Maintaining confidentiality:
Sharing information about a respondent with others for purposes other than research is
unethical.
Sometimes you need to identify your study population to put your findings into context.
In sucha situation you need to make sure that at least the information provided by

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respondents is keptanonymous. It is unethical to identify an individual’s responses.
Therefore you need to ensurethat after the information has been collected, the source
cannot be known.
b) Ethical issues relating to the researcher:
i) Avoiding bias:
Bias on the part of the researcher is unethical. Bias is a deliberate attempt to either to hide
whatyou have found in your study, or highlight something disproportionately to its true
existence.
ii) Provision or deprivation of a treatment:
Both the provision and deprivation of a treatment/ intervention may pose an ethical
dilemma foryou as a researcher. Is it ethical to provide a study population with an
intervention/ treatment thathas not yet been conclusively proven effective or beneficial?
But if you do not test, how can youprove or disprove its effectiveness or benefits? There
are no simple answers to these dilemmas.
Ensuring informed consent, ‘minimum risk’ and frank discussion as to the implications of
Participation in the study will help to resolve ethical issues.

iii) Using inappropriate research methodology:

It is unethical to use a method or procedure you know to be inappropriate e.g. selecting a
highlybiased sample, using an invalid instrument or drawing wrong conclusions.
iv) Incorrect reporting:
To report the findings in a way that changes or slants them to serve your own or someone
else’sinterest is unethical.
v) Inappropriate use of the information:
The use of information in a way that directly or indirectly adversely affects the
respondents isunethical. If so, the study population needs to be protected. Sometimes it is
possible to harmindividuals in the process of achieving benefits for the organizations. An
example would be astudy to examine the feasibility of restructuring an organization.
Restructuring may be beneficialto the organization as a whole bur may be harmful to
some individuals. Should you askrespondents for information that is likely to be used
against them? It is ethical to ask questionsprovided you tell respondents of the potential
use of the information, including the possibility ofit being used against some of them, and
you let them decide if they want to participate.
Step 6: Processing and Analyzing Data
Processing and analyzing data involves a number of closely related operations which are
Performed with the purpose of summarizing the collected data and organizing these in a
mannerthat they answer the research questions (objectives)
The Data Processing operations are:
1. Editing- a process of examining the collected raw data to detect errors and omissions
and tocorrect these when possible.
2. Classification- a process of arranging data in groups or classes on the basis of common
Characteristics. Depending on the nature of phenomenon involved
a) Classification according to attributes: here data is analyzed on the basis of common
characteristics which can either be;
 Descriptive such as literacy, sex, religion etc. or

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 Numerical such as weight, height, income etc
Such classification can be either:
Simple classification: where we consider only one attribute, and divide the universe into
twoclasses—one class consisting of items possessing the given attribute and the other
classconsisting of items which do not possess the given attribute.
b) Classification according to class –intervals: is done with data relating to income, age,
weight,tariff, production, occupancy etc. Such quantitative data are known as the
statistics of variablesand are classified on the basis of class –intervals. e.g. persons whose
income are within Kshs1000 to Kshs 5000can form one group or class, those with income
within Kshs 6000 to Kshs 10000 can form another group or class and so on. The number
of items which fall in a givenclass is known as the frequency of the given class.
3. Tabulation-Tabulation is the process of summarizing raw data and displaying the same
incompact form for further analysis. It is an orderly arrangement of data in columns and
rows.
Tabulation is essential because:
a) It conserves space and reduces explanatory and descriptive statement to a minimum.
b) It facilitates the process of comparison.
c) It facilitates the summation of items and the detection of errors and omissions.
d) It provides the basis for various statistical computations.
Tabulation may also be classified as simple and complex tabulation. Simple tabulation
generallyresults in one-way tables which supply answers to questions about one
characteristic of dataonly. Complex tabulation usually results on two-way tables (which
give information about twointer-related characteristics of data), three –way tables or still
higher order tables, also known asmanifold tables.

Data Analysis Methods

Qualitative Data Analysis:
Qualitative data analysis is a very personal process with few rigid rules and procedures.
For thispurpose, the researcher needs to go through a process called
Content Analysis
Content Analysis means analysis of the contents of an interview in order to identify the
mainthemes that emerge from the responses given by the respondents .This process
involves a numberof steps:
Step 1. Identify the main themes. The researcher needs to carefully go through the
descriptiveresponses given by respondents to each question in order to understand the
meaning theycommunicate. From these responses the researchers develop broad themes
that reflect thesemeanings People use different words and language to express
themselves. It is important thatresearcher select wording of the theme in a way that
accurately represents the meaning of theresponses categorized under a theme. These
themes become the basis for analyzing the text ofunstructured interviews.
Step 2. Assign codes to the main themes: If the researcher wants to count the number of
times atheme has occurred in an interview, he/she needs to select a few responses to an
open- ended question and identify the main themes. He/she continues to identify these
themes from the samequestion till a saturation point is reached. Write these themes and
assign a code to each of them,using numbers or keywords.

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Step 3. Classify responses under the main themes: Having identified the themes Next step
is togo through the transcripts of all the interviews and classify the responses under the
differentthemes.
Step 4. Integrate themes and responses into the text of your report: Having identified
responsesthat fall within different themes, the next step is to integrate into the text of your
report. Whilediscussing the main themes that emerged from their study, some researchers
use verbatimresponses to keep the feel of the response. There are others who count how
frequently a themehas occurred, and then provide a sample of the responses. It entirely
depends upon the way theresearcher wants to communicate the findings to the readers.
Quantitative Data Analysis:
This method is most suitable for large well designed and well administered surveys using
properly constructed and worded questionnaire. Data can be analyzed either manually or
with thehelp of a computer.
Manual Data Analysis: This can be done if the number of respondents is reasonably
small, andthere are not many variables to analyze. However, this is useful only for
calculating frequenciesand for simple cross tabulations. Manual data analysis is
extremely time consuming. The easiestway to do this is to code it directly onto large
graph paper in columns. Detailed headings can beused or question numbers can be
written on each column to code information about the question.
To manually analyze data (frequency distribution), count various codes in a column and
thendecode them. In addition, if you want to carry out statistical tests, they have to be
calculatedmanually. However, the use of statistics depends on your expertise and the
desire/need tocommunicate the findings in a certain way.
Data Analysis Using a Computer:
If you want to analyze data using computer, you should be familiar with the appropriate
program. In this area, knowledge of computer and statistics plays an important role.
The most common software is SPSS for windows. However, data input can be long and
laborious process, and if data is entered incorrectly, it will influence the final results.
Step8: Reporting the Findings:
Writing the report is the last, and for many, the most difficult step of the research process.
Thereport informs the world what you have done, what you have discovered and what
conclusionsyou have drawn from your findings. The report should be written in an
academic style. Languageshould be formal and not journalistic.

Review Questions
1. Describe the characteristics of research
2. Explain types of research used in consumer research
3. Enumerate the research process as used in consumer research
4. List the types of sampling techniques used in consumer research

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12: INDUSTRIAL BUYING BEHAVIOUR

Objectives
Organizational buying behavior is important as it is done for the organization by a group
of human beings constituting the power centre. One should understand the:
 Difference between consumer and organizational buying
 Characteristics of organizational buying
 Factors affecting organizational buying
 Risk factors and their reduction
 Buying situations
 Selection of a supplier

INTRODUCTION
Organizational buying is a complex process of decision-making and communication. It
takestime, involves several members and considerations. Robinson, Faris and Wind have
identifiedeight steps in organizationalbehavior.
1. Need recognition
2. Definition of characteristic and quantity needed
3. Development of specification to guide the procurement
4. Search for and qualification of potential sources
5. Acquisition and analysis of proposals
6. Evaluation of proposals and selection of suppliers
7. Selection of an order routine
8. Performance feedback and evaluation.
Example Illustrating the Eight Steps in Organizational Buying Behavior:
Need recognition is the first step while making a purchase decision. The need may be
for a machine which could bring efficiency in production or packing. It can be to provide
a cooland comfortable working climate in the office. It may be a transportation need or,
any requirementwhich is essential to carry on with the day to day work. The need can be

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fulfilled byvarious alternatives. Transportation need can be fulfilled by a scooter, a car, a
mini truck ora van or any other way. Working cool climate can be provided by an air
cooler or an air conditioner.
A packing machine can be manual, semi-automatic or automatic.
Once the need is identified by a purchase committee, which may consist of the purchase
officer, general manager, production manager and others, the type and quantity of the
itemneeded are specified, i.e., the number of pieces to be bought. While specifying these,
economicconsideration are also important depending upon the work and economy of the
company or/firm.
Once these things have been decided, quotations are asked for or, tenders are floated
and the offers given by various interested parties which are then scrutinised and analysed
ona number of criterion. These may be:

1. Past reputation of the manufacturer.

2. The efficiency of the machine, the durability, economies of working, the design, etc.
are considered.
3. Delivery period.
4. Terms of payment.
5. Guarantees given by the company.
6. Price.
7. after sales service, etc.
On the basis of the above a few firms are short listed and then again reviewed.
In certain cases there are recommendations by very high authorities which cannot be
Ignored. Although the order may have been decided in favors of a supplier, but
recommendationsand other factors may change the decision in favour of another supplier.
If supplies are tobe spread over the whole year or an extended period of time, an order
schedule is prepared,instructing the suppliers to make supplies at required intervals of
time. From the above exampleit is clear that organizational buying differs from consumer
buying in many ways. Organizationbuying has its own characteristics, as given below:

Characteristics of organization buying behavior

1. O.B. is a multi-person activity: it is done by a team consisting of some important
People in the organisation. These people come from many backgrounds and have
differentview points and notions which have to be integrated. They have different
qualifications andhold different positions in the organizational hierarchy. They can be
referred to as the buyingcentre, and play different roles.
User
The person who actually uses the product, like the person using the typewriter, computer,
orthe production department
Influencer
The people who influence the buying like the purchase officer, the production manager,
thedesign engineer, etc.
Decider
The committee appointed for purchases who decides what product and what quantity is to
bepurchased.
Gate Keeper

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Those who control the flow of information within the organisation
Specifiers
These are the consultants or design people who develop the specifications of the product,
or ofthe services required.
It is a formal activity: Unlike consumer behaviour, organisational buying is a formal
activity, where rules and procedures are laid down. There is also a formal contract
between buyer and a seller. The terms and conditions of payment are also laid down. The
time of suppliesare also specified.
There is a larger time lag as compared to consumer buying:
1. As all procedures are to be followed, it takes much longer. The deciding of the
purchase,quality, quantity and adherence to rules and regulations, the delivery of product,
etc. maytake quite some time
2. It is a formal activity: The purchases are made according to certain procedures, rules
and regulations. Sometimes quotations are asked for, and for higher amounts of
purchases,tenders may be floated. These have to be given proper importance by
advertising in newspapers or by proper publicity. These are formally opened before a
committee constituted forthe purpose. Many aspects are looked into, but an important
consideration is also the moneyor, the cost that is quoted for the product. All the activities
are carried out in a judicial mannerand with the consent of the committee.
3. It is a rational but emotional activity: By this we mean that we are dealing with
people who are human beings and those who are dealing are also human beings. This
givesrise to emotions and no matter how rational we tend to become, it is the human
element thatalso comes into play, and many a time the order goes not to the most
deserving candidate, butcould tilt in the favour of somebody who may have connections,
which may be political, or onthe basis of friendships and relationships.
4. There is a longer time lag between efforts and results: In individual buying, the sales
and the purchase may not last more than a dew minutes, but in industrial buying, a lot of
procedures have to be followed. These procedures lead to time delays. It takes long to ask
forquotations and tenders—once all the tenders have been submitted, a date is fixed for
openingthe tenders, which is intimated to the parties concerned. Later the order is placed.
The ordertakes a long time to complete as it is mostly a bulk order. Once the order is
supplied, manytimes in installments, the payment also takes time, and may get held up
for May reasons. Thus,there is a time lag between the effort and the results.
5. Uniqueness of the organisation: Every organisation is unique in some way or the
other. Some are partnership firms; others could be private limited and public limited
companies.
They have their own structure and their distinct culture. Their objectives, resources and
nature of buying is different.
Some firms like to pay cash, some always ask for credit. Others also pay in advance,
some have limited resources, some have abundant resources. These influence the nature
ofbuying as well. The objectives of a company could be to keep in tune with the modern
times.
Others may stick to traditional methods, some are willing to change and welcome it,
othersresist change. These and other differences of the company influence organisational
buying in abig way.
6. There are fewer industrial buyers than individual buyers: For example, a firm produces

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medicine which is bought by many individuals, or a firm making cosmetics is used by
thousandsof individuals.
7. The industries buy in bulk in huge amounts, whereas, individual consumers buy in
lesser and in smaller quantities.
8. Most industrial buyers are geographically concentrated in an area. We have industrial
estates of industrial houses, where most industries are concentrated.
9. Reciprocal buying: In this we follow the principle of “you buy from me, I buy from
You The manufacturer buys raw material from the suppliers who sell his products as
well.
10. Middlemen role is reduced: In organizational buying, the manufacturer mostly sells
directly to the user or, the channel path is very small as compared to consumer buying.
11. Demand of industrial goods is dependent on the demand of the consumer. It could be
called derived demand. When there is a baby boon (more children are born) the demand
forbaby products increases.
12. Inelastic demand: Price changes do not make much difference in the demand. If the
cost of cigarettes increase, smokers will buy cigarettes any way. Similarly, people need to
fulfiltheir genuine requirements irrespective of the change of price.

Organization customers
We need to understand the organizational market. For making a car, many components
arerequired; to market help of a distribution channel is required. It is a chain.

Organisation can be classified as Industrial—industries are scattered all over the country,
and they constitute all organisations involved in manufacturing, assembling, fabrication,
etc.
Institutional
These organizers cover universities, hospitals, distribution firms, and advertising firms.
Government organisation
Like theorganisations several collecting organisations, several boardsand government
administrative organisations.
Public organisation
Post, telegraph, and telecommunication, water works, health organisations.
Private organisation
There are many other firms in which the organisation exists. These are:
Mining and extractive industries: These include Coal India ONGC, Hindustan Copper
Limited, industries involved in extraction from ore.Material processing industries: Tata
Steel, Steel Authority of India, Bharat AluminumCompany (BALCO), Hindalco, etc.
Manufacturing of parts and assembly: General Electric Company, Larsen Turbo,
Kirloskar, MICO, Bharat Forge and many other industries involved in making parts and
assembly.
Final assembly: Local brands of cooler manufacturers, shelves, cupboards, trays, tables,
chairs, TV manufacturers, truck manufacturers, computer manufacturers.
Distributors
These firms undertake the distribution of various goods, and many products are marketed
bythem. These include consumable goods, office goods, food products, bearings, tubes,

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electricalappliances. They may be in the form of marketers, distributors, agents,
middleman or agents.

Factors influencingorganization buying

There are a number of external and internal environmental factors that directly or
indirectlyaffect organisational buying behaviour. Economic factors are considered very
important fororganisational buying. Strong personal relationships also play a very
important role in organizational buying. Other factors are political influences that are
dominant. Organisational buyingis also situational and situations play an important role.
Most thinkers feel that theseinfluences can be grouped under four major headings.
1. External environment factors
Under this heading we have social, political, legal, cultural, economic factors that interact
with each other, for example they could be power shortages, credit squeezes, political and
economic changes, which govern many of the rules regulations. The shortage of raw
materials,excessive tariffs and taxes on a particular item. These affect the buyer
behaviour and theindustry has to adapt itself to these changes. Competition in the market
REVISION PAPERS

PAPER1
INSTRUCTIONS:
Question ONE is Compulsory. Answer TWO (2) other additional questions.

1.The study of consumer behavior has been criticized as a waste of time and other
resources. As a consumer behavior study, respond to the following.
a)Explain the importance of studying consumer behavior as a marketer.(10 marks)

b)Explain the challenges consumers experience as they make purchase decisions(10

marks)

c)Explain the importance of Consumer Movement in Kenya.(10 marks)

2.Highlight and briefly explain the various stages followed by the consumer as
he/she makes a purchase decision.(20 marks)

3.Highlight and briefly explain the various trends in the business external
environment that are likely to affect the future of consumer behavior.(20 marks)

4.Briefly explain the following terms in relation to consumer behavior. (20MARKS)

a)Perception
b)Communication
c)Motivation
d)Attitudes
e)Learning

5.a)“A consumer is a unique and sovereign being” Discuss.(10 marks)

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b)Kenyan consumers have been described as universal in that anything and everything
can sell in the Kenyan market. Discuss.(10 marks)

PAPER2
INSTRUCTIONS:
Question One (1) is compulsory for all students. Answer two (2) additional questions.
1.a)As a marketer explain the importance of studying consumer behaviour as you
participate in marketing activities.(10 marks)

b)Explain and illustrate the generalized model of consumer decision making process,
highlighting the four major influences on this model.(10 marks)

c)Explain the importance of using consumer decision making models.(10 marks)

2.Define the following terms and explain their importance in consumer behaviour:
(a)Perception
(b)Motivation
(c)Personality
(d)Communication (20 marks)

3.Highlight the challenges that marketers experience as they undertake marketing

activities.(20 marks)

4.(a)As a marketer briefly list the recent trends in the external environment
that are likely to affect consumer behaviour in future.(10 marks)

(b)Technology in the banking sector has drastically influenced changes in consumer

behaviour. Discuss giving examples.(10 marks)

5.(a)Discuss the role played by consumer movement in Kenya.(10 marks)

(b)Explain the challenges that consumer movements face in a developing country like
Kenya.(10 marks)

PAPER3
1. Marketers are faced with a lot of challenges as they undertake marketing activities. It is
therefore critical to take consumer behavior as an area of study before participating
in the marketing arena. In this context, respond to the following:
a)Explain the importance of taking consumer behavior as an area of study.(15 marks)

b)Explain the challenges that marketers encounter as they try to understand consumer
behavior.(15 marks)

2.a)As a marketer, discuss the role of communication in influencing purchase decision

positively.(10 marks)

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b)Highlight the factors that may hinder communication between the marketer and the
consumer.(10 marks)

3.a)Consumer organizations are critical for the welfare of the relationship between the
marketer and the consumer. Explain how consumer organizations can be strengthened.(10
marks)

b)Highlight the trends that are likely to impact on the development of consumer
organizations in Kenya(10 marks)

4.Briefly discuss the following terms in relation to consumer behavior:

a)Consumer motivation(5 marks)

b)Consumer memory (5 marks)

c)Consumer attitudes (5 marks)

d)Consumer personality (5 marks)

5.a)“External environmental factors play a major role in influencing consumer’s purchase

decisions.” Discuss.(10 marks)

b)Evaluation of alternative ways of satisfying consumer needs is a critical step in

consumer’s decision making process. Explain the major sources information that can help
influence consumer towards a purchase decision. (10 marks)

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