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Marketing Management Text and Cases Consumer Behaviour - Personal and Organisational

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Consumer Behaviour Personal and Organisational
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Marketing Management Text and Cases, S H H Kazmi

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Consumer Behaviour - Personal and Organisational

“Consumer behaviour refers to the mental and emotional processes and the observable behaviour of consumers during searching, purchasing, and post consumption of a product or service.” Satish K. Batra and S. H. H. Kazmi, „Consumer Behaviour‟, Excel Books, 2004. Consumer behavior is the study of how individuals, groups and organisations select buy use and dispose of goods services ideas or experiences to satisfy their needs and wants. Why? A holistic marketing orientation means understanding customers- gaining a 360 degree view of both their daily lives and the changes that occur during their lifetimes so that the right products are marketed to the right customers in the right way.
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Consumer Behaviour - Personal and Organisational

Social Factors Culture and Subculture Roles and Family Social Class Reference Groups

Psychological Factors Motivation Perception Learning Attitudes Personality

Personal Factors Demographic Factors Lifestyle Situational factors Involvement Level

Consumer Decision-Making Process Problem Recognition Information Search Alternatives‟ Evaluation Purchase Action Postpurchase Actions

Various Factors Influencing Consumer Behaviour

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Consumer Behaviour - Personal and Organisational

Social Factors that other people exert and which affect Social factors refer to forces
consumers‟ purchase behaviour. These include culture and subculture, roles and family, social class, and reference groups. It is the fundamental determinant of a persons wants and behaviour. The need for „specific satisfiers‟ is affected by culture. This is because a person‟s values, perceptions preferences and behaviours are acquired through his or her family and other key institutions. The values inculcated vary with race or country This affects their choice of products and services and the way they live and choose their lives. Subcultures provide more specific identification and socialisation for members. It includes nationalities, religions, racial groups and geographic regions.
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Consumer Behaviour - Personal and Organisational

Culture and Subculture
Culture influences consumers through the norms and values established by the society in which they live. Subcultures exist within a given dominant culture. Multicultural marketing to multi racial populations. Ethnic and demographic niches may not respond to mass market categories Social stratification: Caste system in India . Social classes are relatively homogenous and enduring divisions in a society which are hierarchically ordered and whose members share similar values, interests and behaviour.

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Consumer Behaviour - Personal and Organisational

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SEC (socioeconomic classification): Uses a combination of education and occupation of the chief earner of the household to classify urban buyers. Eight broad categories A1,A2, B1, B2, C,D, E1, E2 A1- highest purchase potential E2 lowest Characteristics: 1. those within each class tend to behave alike 2. social classes differ in dress, speech patterns, recreational prefernce and other characteristics 3. inferior or superior positions 4. class indicated by a cluster of variables- occupation, income, wealth, education, and value orientation 5, people move up or down the social class ladder- rigidity of social stratification in a society © SHH Kazmi, 2007 Distinct brand choices im marketing mix elements
Marketing Management Text and Cases, S H H Kazmi Excel Books

Consumer Behaviour - Personal and Organisational

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SOCIAL FACTORS
Reference groups Membership groups- primary groups and secondary groups -exposure to new behaviours and lifestyles -influence attitude and self concept Create pressures for conformity that affect product and brand choices Aspirational groups and dissociative groups Opinion leaders- informal advice or information Confident socially active, involved with category, clear preferences in media Family: important primary reference group Family of orientation- religion, politics and economics. Sense of personal ambition, self worth Family of procreation © SHH Kazmi, 2007 Joint families – decision making
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Consumer Behaviour - Personal and Organisational

Roles and Family

Influencer Initiator (Need recognition) Gatekeeper (Information search) (Evaluation of alternatives)

Decisionmaker (Decision to buy)

Buyer (Purchase)

User (Consumption) & evaluation

Joint Decision-Making Process

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Consumer Behaviour - Personal and Organisational

Personal Factors
Personal characteristics influence decisions. These are things like buyer‟s age

and stage in the life cycle, occupation and economic circumstances, personality and self concept and lifestyle and values. Age and stage in the life cycle-: family life cycle- trends like delayed marriage, divorces, single parents, DINKS, early retirements, Critical life events or transitions- give rise to new needs Occupation and Economic circumstances: influences consumption patterns Spendable income, savings and assets, debts, borrowing power and attitudes towards spending and saving. Use of luxury brands increasing Personality and self conceptSelf confidence, dominance, autonomy, deference, sociability, defensiveness and adaptability Brand personality is the mix of human traits that we attribute to a particular © SHH Kazmi, 2007 brand. Actual self-concept, ideal self concept and others self concept
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Consumer Behaviour - Personal and Organisational

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Brand personality
Brand personality is the specific mix of human traits that we attribute to a particular brand. Jennifer Aaker researched brand personalities and identified the following traits 1. sincerity 2. excitement 3. competence 4. sophistication 5. ruggedness Actual self concept (how we view ourselves) Ideal self concept (how we would like to view ourselves Other’s self concept (how we think others see us)

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Lifestyle and values
A lifestyle is a persons pattern of living in the world as expressed in activities interests and opinions. Decisions influenced by core values- the belief system that underlie attitudes and behaviours. . A lifestyle is a person‟s pattern of living in the world as expressed in activities, interests, and opinions. Means constrained or time constrained- IKEA, fast foods Core values- these are belief systems that underlie attitudes and behaviours. They go much deeper than attitude and determine at a basic level peoples choices and desires at a much deeper level

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Psychological Factors
Psychological factors are internal to an individual and generate forces within that influence her/his purchase behaviour. The major forces include motives, perception, learning, attitude, and personality.

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Consumer Behaviour - Personal and Organisational

Motivation
This refers to driving forces within an individual produced by a state of tension

caused by unfulfilled needs, wants, and desires.
Learning Unfulfilled Needs, Wants and Desires

Felt Tension

Drive

Appropriate Behaviour Cognitive Processes

Goal or Need Fulfilment

Tension Reduction

Motivation Process
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Consumer Behaviour - Personal and Organisational

Motivation Research
Some of the methods used to probe the subconscious mind include:     In-depth interviews Projective techniques Association tests Focus group

Freud‟s Theory- psychological forces shaping peoples behaviour are largel unconscious. Less conscious cues such as shape, size, weight Maslow‟s Theory

Herzberg‟s two factor theory
Dissatisfiers (factors that cause dissatisfaction) Satisfiers (factors that cause satisfaction)
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Perception
Perception is the process by which an individual selects, organises, and interprets stimuli into a meaningful and coherent picture of the world. Perception includes three distinct processes:  Sensation


Information selection
Interpreting the information

1. Selective attention

2. Selective distortion
3. selective retention Subliminal perception
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Consumer Behaviour - Personal and Organisational

Learning
Learning is viewed as a relatively permanent change in behaviour occurring as a result information or experience, both direct and indirect. A drive is a strong internal stimulus, while cues are minor stimuli that determine when where and how a person responds Marketers can build demand for a product by associating it with strong drives, using motivating cues and providing positive reinforcement There are two basic approaches to learning: (1) behavioural approach, and (2) cognitive learning approach.

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Attitudes
“An attitude is an enduring organisation of motivational, emotional, perceptual, and cognitive processes with respect to some aspect of our environment.”

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Consumer Behaviour - Personal and Organisational

Personality
Personality refers to a dynamic concept that describes the growth and development of an individual‟s whole psychological system, which looks at some aggregate whole that is greater than the sum of the parts.

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Marketers consider four main theories of personality as more relevant to their purpose and include (1) Self-concept theory: Self-concept describes the totality of an individual‟s thoughts and feelings having reference to herself/himself as an attitude object. (2) Psychoanalytic theory: Personality is the result of childhood conflicts

between three fundamental components of personality: Id, Ego, and
Superego. (3) Social-cultural theory: Social and cultural variables are more important than biological drives in the development of individual personality. (4) Trait theory: Personality is composed of a set of traits that are relatively stable and describe a general pattern of behaviour.
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Situational Factors
All those factors particular to a time and place that do not follow from a knowledge of personal (intra-individual) and stimulus (choice alternative) attributes and that have a demonstrable and systematic effect on current behaviour.

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Consumer Behaviour - Personal and Organisational

High

Level of involvement

Low

Nominal

Limited

Extended

Types of Decision-making

Involvement Level and Types of Decision- Making
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Consumer Behaviour - Personal and Organisational

Consumer Decision-making Process
Consumer decision-making generally involves five stages:


 

Problem or need recognition,
information search, alternatives evaluation,


purchase, and
post-purchase evaluation.

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Consumer Behaviour - Personal and Organisational

Need Recognition Nisha is fed up with her now obsolete computer with CRT monitor. She needs a 15” laptop for easy mobility and comfort.

Stages in Consumer Decision Process

Information Search

N sha surfs the Internet to learn about laptops.

Alternatives‟ Evaluation

Nisha considers several brands in terms of reputation, features‟ service support, and price.

Store Selection and Purchase

Post-purchase action

Nisha chooses one model of IBM laptop. It has features that appeal to her, dealer gives her Rs. 800 discount, and she buys it.

Dissonance and evaluation. 8-23 Marketing Management Text and Cases, S H H Kazmi

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Consumer Behaviour - Personal and Organisational

5 stage model of the buying decision process 1. problem or need recognition- recognized by internal or external

stimuli. Need reaches a threshold level ad becomes a drive. Or an external stimuli may evoke a need. • Need for marketers to trigger particular needs, and causes consumer interest- luxury goods, vacation packages need methods to awaken interest • 2. Information search- two levels of attention are heightened attention and active information search • Sources: • Personal • Commercial • Public • Experiential © • a total set – awareness set- consideration set- choice set – decision-SHH Kazmi, 2007 8-24 Marketing Management Text and Cases, S H H Kazmi Excel Books hierarchy of attributes guide decision making

Consumer Behaviour - Personal and Organisational

• 3. Evaluation of alternatives
• • • • Consumer forms judgments on a conscious and rational basis - to satisfy a need - consumer looks for certain benefits from the product solution -Each product is a bundle of attributes with varying abilities to deliver benefits sought to satisfy need - affected by beliefs and attitudes Fit into existing attitudes rather than change it. http://www.youtube.com/watch?feature=player_detailpage&v =IsDqnNgmpt4 http://www.youtube.com/watch?feature=player_detailpage&v =NP0ZbSfu1Pk
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• In the evaluation stage the consumer forms preferences among the brands in the choice set. Customer forms an intension to buy the most preferred brand. • Five sub decisions: brand, dealer, quantity, timing and payment method. • Affected by brand or product knowledge, number or similarity of brand choices, time pressure and the social context affect choice heuristics • Role of intervening factors • A. attitude of others • B. Unanticipated situational factors • Role of perceived risk: • This varies with money spent, uncertainty and amount of consumer self confidence
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4. Purchase decision

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Consumer Behaviour - Personal and Organisational

• Post purchase dissonance • Dissatisfaction or disquieting features or hearing favourable things about other brands • Looks for information that reinforces choice and increases’feel good factor about the brand • 1. post purchase satisfaction • 2. post purchase actions- repeat purchase, positive word of mouth, exit options • 3. post purchase use and disposal – how buyers use and dispose of the product • To increase usage, to provide information about present performance

5. Post purchase behaviour

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Consumer Behaviour - Personal and Organisational

Consumer Decision Processes
There are various types of consumer-decision processes.    Nominal decision-making Extended decision-making Limited decision-making

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Consumer Behaviour - Personal and Organisational

• Consumer involvement defined in terms of the level of engagement and active processing the consumer undertakes

Level of consumer involvement
.

• Complex buying behaviour- when customer spends a huge amount of time and effort in the decision making . High information search and close evaluation. Alternatives are differentiated and numerous, more expensive

and important. It requires extended problem solving
• The customer might take up dissonance reducing buying behaviour when there is little difference between brands and information base is low. He will try to reduce anxiety by disbelieving any negative information about the brand • Limited problem solving- habitual buying behaviour- low involvement and absence of significant brand differences. • Variety seeking buying behaviour- low involvement buy significant © SHH brand differences. Brand switching is more- foods, confectionary items. Kazmi, 2007 Etc
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Consumer Behaviour - Personal and Organisational

Organisational Consumer
“The decision-making process by which organisations establish the need for purchased products and services and identify, evaluate and choose among alternative brands and suppliers.” Organisational buyer characteristics differ from final consumers in several

important aspects.
   Group-based Decision-making Technical Knowledge Rational Motives Dominate

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Decision Approach and Purchase Patterns
Organisational purchases and buying patterns differ from final consumers in many ways.   Formality Negotiations


 

Less Frequent Purchases
Reciprocity Service

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Types of Decision Situations
   Straight Re-buy Modified Re-buy New Task

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Organisational Buyer Decision Process
The size of a decision-making unit (DMU) may vary according to how new, complex and important the purchase decision is; and how centralised, structured and specialised the organisation is.

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Problem Recognition
The first stage of organisational buying decision involves recognising a need or problem.

Product Specification
Participants involved in the decision-making process assess the problem or need and determine what is required to resolve or satisfy it.

Product and Vendor Search
The organisation tries searching for possible products to solve the problem, and also to locate firms who may qualify to be suitable suppliers for those products.

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Product and Vendor Evaluation
The buying centre makes an evaluation to determine which products meet the laid down specifications. Various vendors are also evaluated on criteria such as price, delivery, service, warranty, credit terms, etc.

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Product and Vendor Selection
Information gathered during evaluation stage is used to select finally the product to be purchased, as well as the vendor from which the purchase will be made.

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Performance Evaluation
The last stage in purchase decision process involves an evaluation of the product as well as vendor performance.

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