CONSUMER

BEHAVIOUR
Unit-3

Learn with a smile 

MOTIVATION
■ Motivation is the word derived from the word ’motive’ which means needs, desires, wants or drives within the
individuals.
■ It is the process of stimulating people to actions to accomplish the goals.
■ In the work goal context the psychological factors stimulating the people’s behaviour can be -
■ desire for money
■ success
■ recognition
■ job-satisfaction
■ team work, etc
■ Motivation in management describes ways in which managers promote productivity in their employees.
■ Often, people confuse the idea of 'happy' employees with 'motivated' employees. These may be related,
but motivation actually describes the level of desire employees feel to perform, regardless of the level of happiness.
■ Employees who are adequately motivated to perform will be more productive, more engaged and feel more invested in
their work.
■ When employees feel these things, it helps them, and thereby their managers, be more successful.
■ It is a manager's job to motivate employees to do their jobs well. Motivation in management, is the process through
which managers encourage employees to be productive and effective.
■ Motivation is a very important for an organization because of the following benefits it provides:
■ Puts human resources into action
■ Improves level of efficiency of employees- Increase in productivity, Reducing cost of operations, and
Improving overall efficiency.
■ Leads to achievement of organizational goals
■ Leads to stability of work force
■ Motivation is important to an individual as:
1. Motivation will help him achieve his personal goals.
2. If an individual is motivated, he will have job satisfaction.
3. Motivation will help in self-development of individual.
4. An individual would always gain by working with a dynamic team.
■ Motivation is important to a business as:
■ The more motivated the employees are, the more empowered the team is.
■ The more is the team work and individual employee contribution, more profitable and successful is the
business.
■ During period of amendments, there will be more adaptability and creativity.
■ Motivation will lead to an optimistic and challenging attitude at work place.
Management has to offer the following two
categories of incentives to motivate employees:
Process of Motivation
■ The Dynamic Nature of Motivation
■ •         Needs are never fully satisfied
■ •         New needs emerge as old needs are satisfied
■ •         People who achieve their goals set new and higher goals for themselves
Abraham Maslow's Hierarchy of Needs motivational model

■ One of the most popular needs theories is Abraham Maslow's hierarchy of needs theory.
■ Maslow proposed that motivation is the result of a person's attempt at fulfilling five basic needs:
physiological, safety, social, esteem and self-actualization.
■ According to Maslow, these needs can create internal pressures that can influence a person's behaviour.

■ 1. Physiological needs - air, food, drink, shelter, warmth, sleep, etc.

■ 2. Safety needs - protection from elements, security, order, law, limits, stability, etc.
■ 3. Social need/Belongingness and Love needs - work group, family, affection, relationships, etc.
■ 4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial
responsibility, etc.
■ 5. Self-Actualization needs - realising personal potential, self-fulfillment, seeking personal growth and
peak experiences.
■ As the name of the theory indicates, Maslow believed that these needs exist in
a hierarchical order.
■ This progression principle suggests that lower-level needs must be met before higher-level
needs.
■ The deficit principle claims that once a need is satisfied, it is no longer a motivator because
an individual will take action only to satisfy unmet needs.
■ If you look at this pyramid you can see how Maslow's needs are organized with basic
physiological needs, such as air, food, water and sleep, at the bottom and the idea of self-
actualization, or when a person reaches the full potential in life, at the top.
■ Again, according to Maslow, before a person can take action to satisfy a need at any level on
this pyramid the needs below it must already be satisfied.
Herzberg’s Two-Factor Theory of Motivation

■ Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the motivator-hygiene

theory.
■ According to Herzberg, there are some job factors that result in satisfaction while there are other
job factors that prevent dissatisfaction.
■ Herzberg classified these job factors into two categories-
1. Hygiene factors- Hygiene factors are those job factors which are essential for existence of
motivation at workplace.
■ These do not lead to positive satisfaction for long-term.
■ But if these factors are absent at workplace, then they lead to dissatisfaction. 
■ These factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or
maintenance factors as they are required to avoid dissatisfaction. These factors describe the job
environment/scenario.
■ Pay - The pay or salary structure should be appropriate and reasonable. It must be equal and
competitive to those in the same industry in the same domain.
■ Company Policies and administrative policies - The company policies should not be too rigid.
They should be fair and clear. It should include flexible working hours, dress code, breaks,
vacation, etc.
■ Fringe benefits - The employees should be offered health care plans (mediclaim), benefits for the
family members, employee help programmes, etc.
■ Physical Working conditions - The working conditions should be safe, clean and hygienic. The
work equipments should be updated and well-maintained.
■ Interpersonal relations - The relationship of the employees with his peers, superiors and
subordinates should be appropriate and acceptable. There should be no conflict or humiliation
element present.
■ Job Security -  The organization must provide job security to the employees
2. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as motivators.
The motivational factors yield positive satisfaction. These factors motivate the employees for a superior
performance. These factors are called satisfiers.
These are factors involved in performing the job. Employees find these factors intrinsically rewarding.
The motivators symbolized the psychological needs that were perceived as an additional benefit.
Motivational factors include :
■ Recognition - The employees should be praised and recognized for their accomplishments by the
managers.
■ Sense of achievement - The employees must have a sense of achievement. This depends on the job.
There must be a fruit of some sort in the job.
■ Growth and promotional opportunities - There must be growth and advancement opportunities in an
organization to motivate the employees to perform well.
■ Responsibility - The employees must hold themselves responsible for the work. The managers
should give them ownership of the work. They should minimize control but retain accountability.
■ Meaningfulness of the work - The work itself should be meaningful, interesting and challenging for
the employee to perform and to get motivated.
Implications of Two-Factor Theory

■ The Two-Factor theory implies that the managers must stress upon guaranteeing the adequacy of
the hygiene factors to avoid employee dissatisfaction. 
■ Also, the managers must make sure that the work is stimulating and rewarding so that the
employees are motivated to work and perform harder and better.
■ This theory emphasize upon job-enrichment so as to motivate the employees.
■ The job must utilize the employee’s skills and competencies to the maximum.
■ Focusing on the motivational factors can improve work-quality.
McClelland's Human Motivation Theory/ Three Need
Model/Learned needs theory
■ McClelland says that, regardless of our gender, culture, or age, we all have three motivating
drivers, and one of these will be our dominant motivating driver.
■ This dominant motivator is largely dependent on our culture and life experiences.
■ This theory states that human behaviour is affected by three needs - Need for Power,
Achievement and Affiliation.
■ Need for achievement is the urge to excel, to accomplish in relation to a set of standards, to
struggle to achieve success.
■ Need for power is the desire to influence other individual’s behaviour as per your wish. In
other words, it is the desire to have control over others and to be influential.
■ Need for affiliation is a need for open and sociable interpersonal relationships. In other words,
it is a desire for relationship based on co-operation and mutual understanding.
 •Has a strong need to set and accomplish challenging goals.
Achievement •Takes calculated risks to accomplish their goals.
•Likes to receive regular feedback on their progress and achievements.

•Wants to belong to the group.

•Wants to be liked, and will often go along with whatever the rest of the group wants to do.
Affiliation
•Favours collaboration over competition.
•Doesn't like high risk or uncertainty.

•Wants to control and influence others.

•Likes to win arguments.
Power
•Enjoys competition and winning.
•Enjoys status and recognition.
■ Achievement
■ People motivated by achievement need challenging, but not impossible, projects. They thrive
on overcoming difficult problems or situations, so make sure you keep them engaged this
way. People motivated by achievement work very effectively either alone or with other high
achievers.
■ When providing feedback, give achievers a fair and balanced appraisal. They want to know
what they're doing right – and wrong – so that they can improve.
■ Affiliation
■ People motivated by affiliation work best in a group environment, so try to integrate them
with a team (versus working alone) whenever possible. They also don't like uncertainty and
risk. Therefore, when assigning projects or tasks, save the risky ones for other people.
■ Power
■ Those with a high need for power work best when they're in charge. Because they enjoy
competition, they do well with goal-oriented projects or tasks. 
 ERG theory - Clayton Alderfer
■ He categorized Maslow’s hierarchy of needs into three simpler and broader classes of needs
■ In his theory, Alderfer compressed Maslow's hierarchy of needs from five to three:
■ Existence
■ Relatedness
■ Growth
■ (Hence "ERG", standing for Existence, Relatedness and Growth.)
■ Existence needs- These include need for basic material necessities. In short, it includes an
individual’s physiological and physical safety needs.
■ Relatedness needs- These include the aspiration individual’s have for maintaining significant
interpersonal relationships (be it with family, peers or superiors), getting public fame and
recognition. Maslow’s social needs and external component of esteem needs fall under this
class of need.
■ Growth needs- These include need for self-development and personal growth and
advancement. Maslow’s self-actualization needs and intrinsic component of esteem needs fall
under this category of need.
■ At the most basic level, people have existence needs. These map to Maslow's physiological and
safety needs
■ Next, we experience relatedness needs, where we fulfil our need for satisfying interpersonal
relationships. This level relates to Maslow's social needs and to the external part of self-esteem
needs – we feel good about ourselves based on what others think about us.
■ Finally, we reach the growth needs level. Here, we are looking for personal growth and
development by doing work that is of high quality, and meaningful. This equates to the internal
part of Maslow's self-esteem needs and to his self-actualization needs.
Motivation – McGregor Douglas (Theory X & Theory Y)

■ McGregor developed two theories of human behaviour at work: Theory and X and Theory Y.
■ Theory X workers could be described as follows:
■ - Individuals who dislike work and avoid it where possible
■ - Individuals who lack ambition, dislike responsibility and prefer to be led
■ - Individuals who are lazy, have little capacity for creativity
■ The management implications for Theory X workers were that, to achieve organisational objectives, a
business would need to impose a management system of coercion, control and punishment.
■ Theory Y workers were characterised by McGregor as:
■ - Consider effort at work as just like rest or play
■ - Ordinary people who do not dislike work. Depending on the working conditions, work could be
considered a source of satisfaction or punishment
■ - Individuals who seek responsibility
■ The challenge for management with Theory Y workers is to create a working environment (or culture)
where workers can show and develop their creativity.
■ Comparing Theory X and Theory Y
■ Motivation
■ Theory X assumes that people dislike work; they want to avoid it and do not want to take responsibility. Theory Y
assumes that people are self-motivated, and thrive on responsibility.
■ Management Style and Control
■ In a Theory X organization, management is authoritarian, and centralized control is retained, whilst in Theory Y, the
management style is participative: Management involves employees in decision making, but retains power to
implement decisions.
■ Work Organization
■ Theory X employees tend to have specialized and often repetitive work. In Theory Y, the work tends to be
organized around wider areas of skill or knowledge, and employees are encouraged to develop their expertise and
make suggestions and improvements.
■ Rewards and Appraisals
■ Theory X organizations work on a ‘carrot and stick’ basis, and performance appraisal is part of the overall
mechanisms of control and remuneration. In Theory Y organizations, appraisal is also regular and important, but is
usually a separate mechanism from organizational controls. Theory Y organizations also give employees frequent
opportunities for promotion.
■ Application
■ Although the Theory X management style is widely accepted as inferior to others, it has its place in large-scale
production operation and unskilled production line work. Many of the principles of Theory Y are widely adopted by
types of organization that value and encourage participation. Theory Y-style management is suited to knowledge
work and professional services.
About Theory Z

■ Ouchi first wrote about Theory Z in his 1981 book, "Theory Z: How American Management Can
Meet the Japanese Challenge.“
■ It takes the best of the Japanese management philosophy, and the best of traditional US
management philosophy, and combines the two.
■ According to Ouchi, the benefits of using Theory Z include reducing employee turnover, increasing
commitment, improving morale and job satisfaction, and drastically increasing productivity.
■ To realize these benefits, he argued that an organization should have the following:
■ A Strong Company Philosophy and Culture
■ Long-Term Staff Development and Employment
■ Consensus in Decisions
■ Concern for the Happiness and Well-Being of Workers
■ Informal Control with Formalized Measures
Expectancy Theory of Motivation- Victor Vroom

■ The theory states that the intensity of a tendency to perform in a particular manner is dependent on
the intensity of an expectation that the performance will be followed by a definite outcome and on
the appeal of the outcome to the individual.
■ Victor Vroom stresses and focuses on outcomes
■ Vroom realized that an employee's performance is based on individuals factors such as personality,
skills, knowledge, experience and abilities.
■ The theory suggests that although individuals may have different sets of goals, they can be motivated
if they believe that:
 There is a positive correlation between efforts and performance,
 Favorable performance will result in a desirable reward,
 The reward will satisfy an important need,
 The desire to satisfy the need is strong enough to make the effort worthwhile.
Components of Expectancy Theory of Motivation
■ Expectancy theory has three components: expectancy, instrumentality, and valence.
■ Expectancy: effort → performance (E→P) – Will my effort improve my performance?
■ Instrumentality: performance → outcome (P→O)- Will my performance lead to reward?
■ Valence: V(R) outcome → reward- Will rewards satisfy my goals, needs?
■ The Expectancy theory of Motivation explains the correlation between an individual enthusiasm and
motivation to perform a task with his perception regarding effort, performance and outcomes.
■ According to the theory, an individual, at first, analyzes what level of performance he can make. Then he
evaluates what kind of rewards or outcomes he can achieve through his performance. Finally, he decides
if the outcomes that he is to receive are worth earning or not.
■ This way, the Expectancy Theory of Motivation has explained how expectancy, instrumentality and
valence cause direct impact on motivation of an individual. 
Porter and Lawler Model of Motivation

■ Lyman Porter and Edward Lawler came up with a comprehensive theory of motivation,
combining the various aspects that we have so far been discussing and using two additional
variables in their model.
■ Though built in large part on Vroom’s expectancy model. Porter and Lawler’s model is a more
complete model of motivation.
■ This model has been practically applied also in their study of managers.
■ This is a multi variate model which explains the relationship that exists between job attitudes and
job performance.
■ Assumptions:
■ This model is based on four basic assumptions about human behaviour:
■ (i) As mentioned above, it is a multi variate model. According to this model, individual behaviour is
determined by a combination of factors in the individual and in the environment.
■ ii) Individuals are assumed to be rational human beings who make conscious decisions about their
behaviour in the organisations.
■ (iii) Individuals have different needs, desires and goals.
■ (iv) On the basis of their expectations, individuals decide between alternate behaviours and such decided
behaviour will lead to a desired outcome.
■ Elements:
■ The various elements of this model are explained in the following figure:
■ 1.. Effort:
■ Effort refers to the amount of energy which a person exerts on a job.

■ 2. Value of Reward:
■ First of all people try to figure out whether the rewards that are likely to be received from doing a job will be
attractive to them. This is referred to as valence in Vroom’s theory. A person who is looking for more money,
for example, extra vacation time may not be an attractive reward. If the reward to be obtained is attractive or
valent then the individual will put extra efforts to perform the job. otherwise he will lower his effort.

■ 3. Perceived Effort Reward Probability:

■ In addition, before people put forth any effort, they will also try to assess the probability of a certain level of
effort leading to a desired level of performance and the possibility of that performance leading to certain kinds
of rewards. Based on the valence of the reward and the effort reward probability, people can decide to put in
certain level of work effort.

■ 4. Performance:
■ Effort leads to performance. The expected level of performance will depend upon the amount of effort, the
abilities and traits of the individual and his role perceptions. Abilities include knowledge, skills and
intellectual capacity to perform the job. Traits which are important for many jobs are endurance, perseverance
and goal directedness. Thus, abilities and traits will moderate the effort- performance relationship.
■ In addition, people performing the jobs should have accurate role perception which refers to
the wav in which people define for the jobs. People may perceive their roles differently. Only
those, who perceive their roles as is defined by the organization, will be able to perform well
when they put forth the requisite effort.

■ 5. Rewards:
■ Performance leads to certain outcomes in the shape of two types of rewards namely extrinsic
rewards and intrinsic rewards. Extrinsic rewards are the external rewards given by others in the
organization in the form of money, working conditions. Intrinsic rewards are internal feelings
of job sell esteem and sense of competence that individuals feel when they do a good job.

■ 6. Satisfaction:
■ Satisfaction will result from both extrinsic and intrinsic rewards. However, for being satisfied,
an individual will compare his actual rewards with the perceived rewards if actual rewards
meet or exceed perceived equitable rewards, the individual will feel satisfied and if these are
less than the equitable rewards, the individual will feel dissatisfied.
■ Significance of the Porter and Lawler Model:
■ Porter and Lawler model is a departure from the traditional analysis of satisfaction and performance
relationship. In practice, we find that motivation is not a simple cause and effect relationship rather it
is a complex phenomenon.
■ PERSONALITY
■ To understand a buyer needs and convert them into customers is the main purpose of the
consumer behaviour study.
■ To understand the buyer habits and his priorities, it is required to understand and know
the personality of the buyer.
■ Personality signifies the inner psychological characteristics that reflect how a person
reacts to his environment.
■ Personality shows the individual choices for various products and brands. It helps the
marketers in deciding when and how to promote the product.
■ Personality can be categorized on the basis of individual traits, likes, dislikes etc.
■ Though personality is static, it can change due to major events such as death, birth or
marriage and can also change gradually with time.
■ By connecting with the personality characteristics of an individual, a marketer can
conveniently formulate marketing strategies.
■ The word personality is derived from a Greek word “persona” which means “to speak through.”
■ Personality is the combination of characteristics or qualities that forms a person’s unique identity.
■ It signifies the role which a person plays in public.
■ Every individual has a unique, personal and major determinant of his behaviour that defines his/her
personality.
■ Personality can be defined as the unique dynamic organization of characteristics of a particular
person, physical and psychological, which influences behavior and responses to the social and
physical environment.
■ Sigmund Freud’s Psychoanalytic Theory
■ This theory is based on the belief that man is encouraged more by unforeseen forces than the
conscious and logical thought. Freud believed that most of the things in life are not present at the
conscious level but they are present at an unconscious level.
■ The features of Freud’s theory include three attributes − Id, Ego, and Superego.
■ Id − It defines the innate component of personality. It is the impulsive and unconscious part of mind
that seeks immediate satisfaction. Example − A hungry baby cries till he/she is fed.
■ Ego − It is derived from Id and assists in dealing with the external world. It also helps in translating
the inner needs into expressions. It deals with practical and rational thinking process. Example −
We have a fight with our friend and expect the friend to talk first, even though both of us want to
talk.
■ Superego − It is different from ego and is partially unconscious. It includes the traditional values of
society as interpreted by our parents. It also helps in the integral vision of punishment. Example −
Ram came late today so he is grounded for a week.
Trait Theory
■ Traits are the features of an individual or tendency of an individual in a particular manner.
Traits help in defining the behaviour of consumers. According to the Trait theorists, an
individual’s personality make-up stems out of the traits that he possesses, and the identification
of traits is important.
■ Following are the few of the most common traits −
■ Outgoing
■ Sad
■ Stable
■ Serious
■ Happy go lucky
■ Relaxed
■ Self assured
■ Practical
■ Imaginative
■ Trait theory is representative of multi-personality theories. Trait theory is based on certain assumptions, such
as traits which are certainly stable in nature and a limited number of traits are common to most of the
people.
■ According to the Trait theorists, an individual’s personality make-up stems out of the traits that he possesses,
and the identification of traits is important. The trait theories can be of two broad categories, viz., Simple
trait theories and general trait theories.
Simple Trait Theories
■ In simple trait theories, a limited number of traits are identified, and people are categorized and classified on
the basis of these traits.
General Trait Theories
■ In general trait theories, a large variety of traits are identified.
Personality traits have been useful in differentiating between consumer innovators and non- innovators as major
influencers of behaviour include the following:
1. Consumer innovativeness-tells how receptive is a consumer to new products
2. Consumer openness to influence- tells if a consumer is easily influenced or is self directed
3. Consumer Materialism- Some consumers feel possession is the indicator of their identity
4. Consumer Ethnocentrism- belief regarding using foreign made products
Ethnocentrism-evaluation of other cultures according to preconceptions originating in the standards and
customs of one's own culture
■ Social Learning Theory - posits that people learn from one another, via observation, imitation,
and modeling. The theory has often been called a bridge between behaviourist and cognitive
learning theories because it encompasses attention, memory, and motivation.
■ People learn through observing others’ behaviour, attitudes, and outcomes of those behaviours.
Most human behaviour is learned observationally through modeling: from observing others, one
forms an idea of how new behaviours are performed, and on later occasions this coded
information serves as a guide for action. 
■ Type Theory (handouts)
■ Self Theory (handouts)
■ Sentence completion tests are a class of semi-structured projective techniques.
Sentence completion tests typically provide respondents with beginnings of sentences,
referred to as "stems", and respondents then complete the sentences in ways that are
meaningful to them.
■ The responses are believed to provide indications of attitudes, beliefs, motivations, or
other mental states.
■ Therefore, sentence completion technique, with such advantage, promotes the
respondents to disclose their concealed feelings
■ The uses of sentence completion tests include personality analysis, clinical applications,
attitude assessment, achievement motivation, and measurement of other constructs.
They are used in several disciplines, including psychology, management, education,
and marketing.
■ In psychology, a projective test is a personality test designed to let a person respond to
ambiguous stimuli, presumably revealing hidden emotions and internal conflicts
projected by the person into the test.
■ What is perception?

■ According to Stephen P Robbins, Perception is a process by which individuals organize and

interpret their sensory impressions in order to give meaning to their environment.
■ The term originated from a Latin word ‘percepio’ meaning receiving, collecting, action of taking
possession, apprehension with the mind or senses.
■ Perception (from the Latin perceptio, percipio) is the organization, identification, and
interpretation of sensory information in order to represent and understand the environment
■ Perception is a process of seeing, receiving, selecting, organizing and interpreting the stimuli
which is present in the external environment and then giving meaning to it.
■ The Perception Process (in the handouts as well)
■ The perceptual process is a sequence of steps that begins with stimuli in the environment and ends
with our interpretation of those stimuli. This process is typically unconscious and happens hundreds
of thousands of times a day. An unconscious process is simply one that happens without awareness
or intention.
■ When you open your eyes, you do not need to tell your brain to interpret the light falling onto
your retinas from the object in front of you as "computer" because this has happened
unconsciously. When you step out into a chilly night, your brain does not need to be told "cold"
because the stimuli trigger the processes and categories automatically.
■ 1. Selection
■ The world around us is filled with an infinite number of stimuli that we might attend to, but our
brains do not have the resources to pay attention to everything.
■ Thus, the first step of perception is the (usually unconscious, but sometimes intentional) decision of
what to attend to. Depending on the environment, and depending on us as individuals, we might
focus on a familiar stimulus or something new.
■ When we attend to one specific thing in our environment—whether it is a smell, a feeling, a sound,
or something else entirely—it becomes the attended stimulus.
■ 2. Organization
■ Once we have chosen to attend to a stimulus in the environment (consciously or unconsciously,
though usually the latter), the choice sets off a series of reactions in our brain.
■ This neural process starts with the activation of our sensory receptors (touch, taste, smell, sight, and
hearing). The receptors transduce the input energy into neural activity, which is transmitted to our
brains, where we construct a mental representation of the stimulus (or, in most cases, the multiple
related stimuli) called a percept. 
■ The information the brain has received is well organized.
■ Perceptual Selectivity
Perceptual selection is the process by which people filter out irrelevant or less significant information
so that they can deal with the most important matters.
■ 3. Interpretation
■ After we have attended to a stimulus, and our brains have received and organized the information,
we interpret it in a way that makes sense using our existing information about the world.
■ Interpretation simply means that we take the information that we have sensed and organized and turn
it into something that we can.
■ By putting different stimuli into categories, we can better understand and react to the world around
us.
■ PERCEPTION vs SENSATION
■ Sensation may be described as response of physical sensory organs i.e. eyes, ear, nose,
tongue and skin which continuously encounters numerous stimuli that are present in
environment and then giving reaction to it without thinking.
■ On the other hand perception involves processing of raw data so that some meaning can
be concluded from it.
Learning
LEARNING INTRODUCTION (HANDOUTS)
THEORIES
1. BEHAVIOURAL LEARNING THEORIES (HANDOUTS)
■ Classical conditioning
■ Instrumental conditioning (operant conditioning) -Skinner is regarded as the father of Operant
Conditioning. It means roughly changing of behaviour by the use of reinforcement which is given
after the desired response. Skinner introduced a new term into the Law of Effect - Reinforcement.
Behaviour which is reinforced tends to be repeated (i.e. strengthened); behaviour which is not
reinforced tends to die out-or be extinguished (i.e. weakened).

2. COGNITIVE LEARNING THEORY

■ Cognitive Learning Theory is a broad theory that explains thinking and differing mental processes
and how they are influenced by internal and external factors in order to produce learning in
individuals.
■ When cognitive processes are working normally then acquisition and storage of knowledge works
well, but when these cognitive processes are ineffective, learning delays and difficulties can be seen. 
3. OBSEVATIONAL LEARNING
■ Observational learning, or modeling, is a type of learning most associated with the work
and social learning theory
■ Observational learning can produce new behaviors, and either increase or decrease the
frequency with which a previously learned behavior is demonstrated.
■ This type of learning can also encourage previously forbidden behaviors.
■ Learning that occurs as a function of seeing, retaining, and, in the case of imitation
learning, replicating novel behavior executed by other people.
ATTITUDE
CHARACTERSTICS OF ATTITUDE (HANDOUTS)
THORIES: (HANDOUTS)
■ 1. BALANCE THEORY
■ 2. COGNITIVE DISSONANCE
Attitude-Behavior Consistency
■ It refers to the extent to which attitude leads to purchase.
■ The study of attitude-behavior consistency concerns the degree to which people’s
attitudes (opinions) predict their behavior (actions).
■ Attitude-behavior consistency exists when there is a strong relation between opinions
and actions.
■ For example, a person with a positive attitude toward protecting the environment who
recycles paper and bottles shows high attitude-behavior consistency.
■ The study of attitude-behavior consistency is important because much of the usefulness
of the attitude concept is derived from the idea that people’s opinions help guide their
actions.
Strategies of Attitude change
■ Changing the consumer’s basic motivational function : the consumer attitudes towards a
product or brand can be changed by making a particular need important.
■ Associating the product with an admired group or event:  Attitudes are related, at least in
part, to certain groups, social event’s or causes. It  is possible to alter attitudes toward
companies and their products, services and brands by pointing out their relationships to
particular social groups, events, or causes.
■ Changing  brand beliefs
■ Adding an Attitude:  This can be accomplished either by adding an attribute that previously
has been ignored or one that represents an improvement or technological innovation.
■ Changing the overall brand rating : Another strategy consists of attempting to alter
consumer’s overall assessment of the brand directly, without attempting to improve or
change their evaluation of any single brand attribute. Such a strategy frequently relies on
some form of global statement that “this is the largest selling brand” or “ the one all others
try to initiate” or a similar claim that sets the brand apart from all its competitors.
 Consumer Behaviour - Reference Groups

■ A reference group includes individuals or groups that influence our opinions, beliefs, attitudes and
behaviors.
■ They often serve as our role models and inspiration.
■ Marketers view reference groups as important because they influence how consumers interpret
information and make purchasing decisions.
■ Reference groups influence what types of products you will purchase and which brand of product
you choose.
■ In our daily lives, we all get influenced by a variety of people while making our purchase decisions.
■ We, as humans do a lot to try to impress others.
■ We make purchase to get compliments and try that others should not think less of us.
■ A reference group is the group whose perspective we consider. Now our reference could be very
large or very small including few of our family members or few close friends. Reference groups
influence people a lot in their buying decisions.
■ They set the levels of lifestyle, purchasing patterns, etc.
■ Nature of Reference Groups: Reference groups have certain characteristics that affect their
influence on consumers.
■ They establish norms, roles, socialization, status and power.
■ Group powers
■ Reward Power : The perception that you will be rewarded by a group or other environmental
influence for certain behaviour. The more valuable the reward the greater the power. Rewards can
include intangible things such as praise or honors as well as money, goods and services.
■ Advertisers frequently use reward power to influence consumers by implying love , happiness,
popularity, and success will be yours for using their product.
■ Coercive Power : This power influences behaviour with fear. Coercion is intended to frighten or
scare the consumer by showing the unfortunate results that can occur if the item is not purchased,
such as being shunned for bad breath or dandruff. 
■ Legitimate Power : Group members' perception that the group has the legitimate right to influence
them. Expressions such as "should", "ought to", "must", give legitimacy to expected behaviour
from a group such as family/parents, teachers, or religious organizations. Advertisers appeal to the
consumers moral values such as ads by charities, non-profit organizations, alumni associations.
■ Expert Power : People accept the influence of individuals who are known experts recognized for
their expertise. Teachers are subject experts and their students accept their instruction.
■ Referent Power : An individual's identification with a group grows as he associates more
with that group. The stronger the relationship the greater the influence of the group and
certain members of the group on the individual. If the individual maintains the identification
with the group, the greater its referent power.
■ Advertisements show ordinary people, like you and me, using the same product brand as
popular role models or heroes. Movie and sports stars are frequently used for their referent
power. Status symbols are often recommended by celebrities.
■ Types of Reference Groups
■ A normative reference group influences your norms, attitudes, and values through direct
interaction. Examples of your normative reference groups include your parents, siblings, teachers,
peers, associates and friends.
■ A comparative reference group is a group of individuals whom you compare yourself against and
may strive to be like. Examples include celebrities and heroes.
■ Primary Groups -Primary reference groups are basically the set of people whom you meet every
day. They can be from your family, your close friends, your roommates, etc.
■ These people from primary groups may have a direct and strong impact in your lives and your
buying decisions since they are very significant to you. Primary groups make you comfortable and
give you a feeling that they are with you when you are confused about a purchase. 
■ Secondary Groups- Secondary reference groups are usually formal and they speak less frequently.
They might be professionals, your colleagues, your seniors at work or your acquaintance at club, etc.
■ In secondary reference groups the power to influence people is quite less as compared to primary
reference groups as people in these groups are not that comfortable in sharing their thoughts or views
on the purchase.
■ Aspirational Group- Aspirational group is the one to which a person may want to
become part of. They currently are not part of that group but wish to become and get with
that group. For doing the same, they try to dress, talk, act and even think the way the
members of that group do.
■ For example, people who like Madhuri Dixit wish to become like her and meet her and so
start purchasing and using all those products that she endorses.
■ Dissociative Group-The people in these groups are totally opposite to the people in the
aspirational group. Here people deny of becoming or getting connected to a particular
group. They just hate being related to that group.
■ For example, if people don’t like a particular community, they would never like being
connected to them. So they would try all the possible ways to avoid the way in which they
dress, think or act.
■ A formal group is one in which there is some sort of structure and, in some cases, for
which there are specific membership requirements.  To join a professional club, you may
have to meet educational requirements. If the club runs regularly scheduled luncheons
each month, you are likely to be obligated to attend, particularly if the club is both formal
and primary.
■ An informal group is one that has no special membership or attendance requirements
other than common interests. Walking clubs, reading groups, and mother-and-toddler play
groups are typical examples.
Thus marketers need to understand the likes and dislikes of the consumers and also the groups to
which they belong.
Marketers should recognize the extent to which a reference group influences the consumer and he
should also understand out of all the groups which group influences him the most.
■ MEANING OF FAMILY
■ The term “family” refers to the basic sociological unit. The term has been used to denote two or
more people staying together and related to each other by blood or marriage.
■ The composition, size and structure (in terms of roles and statuses) has undergone a change
across time and culture. There have been large families including grandparents, parents,
children, uncles, aunts and cousins (all staying together as a joint family); and small families
which comprise just parents with their children (nuclear family).
■ Roles and statuses have also changed, with both men and women taking active part in making
purchase decisions, and women playing roles which were earlier reserved for men and vice
versa.
■ Thus, the family as a social unit has varied in composition and structure, as well as the roles
played by family members.
■ RELEVANCE OF THE FAMILY FOR A MARKETER
■ The family as a social unit is of tremendous importance for a marketer. This is because of three
reasons, viz., a monetary source for dependents, an indication of values and lifestyles, and the
root for socialization.
■ a) Monetary source: The family may comprise a single earner or a dual earner; the rest of the
members acts as dependents; It is father and/or mother who are the bread earners, and earn for
the rest of the members (children) who act as dependents. While this role was restricted earlier
to the man in the family, there is a transition, and today even the woman in the family is
playing this role.
■ b) Values and lifestyles: The parents in the family are also a source of values and lifestyles for
the family. The grandparents and the parents in the family, inculcate among the children basic
values and norms, and also tell them about suitable lifestyles. This has an impact on the
children when it comes their day to day living, on their education, career, recreational
activities, etc.
■ c) Socialization: This reflects itself in the values, lifestyles and overall modes of behavior of
individuals; eg. the kind of food to eat, dresses to wear, customs and practices to follow etc. are
all a result of the socialization process.
■ FAMILY AND BUYING DECISION PROCESS:
■ It is the entire family that acts together while making purchase decisions. However, researchers
tend to focus either on the decision maker who makes choices about a purchase or the user
who uses the product or service offering.
■ Purchase decisions in the family are joint decisions made by the members of the family, be it
husband, wife, children, or may be even members of the extended family. Thus the family is
recognized not only as the basic social unit but also as the basic decision making unit.
■ Buying roles:
■ The members in the family play what is known as “buying roles,” viz. the initiator, influencer,
decider, buyer and user.
■ Reversal of Buying Roles: However, with a large number of women taking to professions,
men are no longer confined to their offices but are also taking up responsibility with household
chores.
■ With changing times, family roles have also undergone a change; most purchase decisions are
joint decisions. Marketers do address this issue when they depict through their ads, men
washing clothes with Ariel or men making Act II popcorn.
■ Joint Decision Making in a Family: Most purchase decisions are jointly made by the spouses together
or with their children involved. While making purchase decisions and brand choices, the family may
very often find itself in disagreement with one another. In such situations, the family members tend to
influence each other to reach a consensus that makes everyone happy and leaves them satisfied.
■ THE FAMILY LIFE CYCLE:
■ The family life cycle has been defined as a series of stages through which most families’ progress, with
varying characteristics across varies stages;
■ these characteristics relate to marital status, size of the family, the age profile of the family members
(focusing on the age of the oldest and/or youngest child), the employment status of the head of
household, the income level and the disposable income at hand.
■ Stage I: Bachelorhood: Young single adult (male/female) living apart from parents and
■ into a livelihood.
■ - Stage II: Newly Married: Young married couple.
■ - Stage III: Parenthood: Married couple with at least one child living with them at home.
■ - Stage IV: Post parenthood: An older married couple with no children living at home.
■ Children have left home for studies or for employment.
■ - Stage V: Dissolution: One surviving spouse.
■ Stage I: Bachelorhood: The stage comprises a young single adult (male/female) living
apart from parents and into a livelihood. While incomes are low as they have just started a
career, financial burdens and responsibilities are also low. As such bachelors have a high level
of disposable income.
Priorities and Preferences of Purchase: They tend to spend their money on house rent, basic
furniture and kitchen equipment. They are recreation oriented and like to spend on purchase of
automobiles (particularly motor bikes), travel (trekking and holidays), adventure sports (motor
racing, bungee jumping etc.), health clubs, clothes and fashion accessories).
Implications for Marketers: Marketers realize that bachelors possess large disposable income;
they find in them an attractive segment for sports, travel, entertainment and fun.
■ Family and Marketing Strategy
■ Use the FLC for segmentation and positioning
■ Recognize the diverse consumption roles within the family
■ Understand and use the dynamics of husband-wife decision making
■ Understand and use the consumer socialization role played by the family
Stage II: Newly Married: The stage comprises a newly married couple and continues
till the first child is born. One of the spouses may be working or both may be working. They are
financially better off than they would be in the next stages. If both are working, income is higher.
If both are working, the couple has discretionary income at hand that permits a good lifestyle,
and provides for purchases or savings.
Priorities and Preferences of Purchase: They tend to spend on creating a home for themselves.
They spend on cars, furniture, curtains and upholstery, electronics, kitchen appliances and
utensils, and vacations.
Implications for Marketers: They form an attractive segment for the marketer as they form the
highest purchase rate amongst segments. The highest average purchase of durables takes
place in this stage.
Stage III: Parenthood: The stage comprises married couple with children. This stage
extends for about a long 20-25 year period; and could be further broken up into three stages,
viz., Full Nest I, Full Nest II and Full Nest III. Throughout these stages, the size and structure of
the family gradually changes, so does income and expenses with varying priorities. The
financial expenses increase rapidly with children being born in Full Nest I and gradually
decrease as children become independent and self-supporting as one reaches Full Nest III.
- Full Nest I: The youngest child in the family is six or below.
Priorities and Preferences of Purchase: While liquidity of cash is low, expenses are high. The
family spends on baby food, diapers, medicines for cough and cold, doctor visits, child toys and
games, school admissions and fees and insurance policies. There are increased expenses on
child care.
Implications for Marketers: At this stage, purchasing is at the peak, and so this is an attractive
segment for the marketer. The children in the family begin to impact family purchases, and are a
huge potential for future.
Full Nest II: The youngest child in the family is six or above. Generally the stage comprises
children aged 6-12 years.
Priorities and Preferences of Purchase: Financial position gets better as one begins to rise up
the ladder. The family spends on food, clothes for children, education of children, insurance policies
and investments. They also pay for medical expenses and particularly, dental treatment. They go in
for deals; buy larger-size packages, and economy packs. Junk food, fashion clothing and
accessories, video games etc. are prime demands.
Implications for Marketers: At this stage, purchasing is still at the peak, and so this is also an
attractive segment for the marketer. The children, as also teenagers continue to impact family
purchases. The latchkey kids are a potential for home delivered junk food like pizzas and
burgers.
Full nest III: They are older married couples with dependent and/or independent children but staying
together at home. Children reach the higher educational level; one of them may start earning too.
Priorities and Preferences of Purchase: The family income continues to increase and so do expenses.
The family continues to spend on food, clothes for teenagers, higher education of children, and also
repeat purchase of durables that were bought in honeymooning stage or Full Nest I. The family buys
new furniture, electronic goods and appliances and cars. Thus there is high average purchase of
durables. The family also invests in real estate and property and/or flats. They continue to spend on
medical expenses, particularly dentists and visit general physicians for regular check ups.
Implications for Marketers: At this stage, income begins to increase as one of the children begins to
earn. As expenses see a rise, the stage offers a potential for marketers.
Stage IV: Post parenthood: This is a stage that occurs once children have left home. They leave home
first for education, and then for employment. As they complete their education, and find employment,
they gradually leave home one by one, thus, leaving the nest. Thus, this stage has also been broken into
two stages, viz., Empty Nest I and Empty Nest II. As one moves across Empty Nest I and II, the size
and structure of the family changes (quite similar to the Parenthood stage and the Full Nest I, II and
III).
■ Empty Nest I: This is a stage that occurs when at least one of the children has left home.
He/she has completed education, taken up a job and has left home to start his/her home.
He/she is independent and can manage on own. While children are managing to start up on
their own, parents are still working.
Priorities and Preferences of Purchase: The family size gradually begins to shrink. Parents are
still earning; expenses gradually reduce, and so there is highest level of savings and disposable
income at hand. The family spends on food, instalments for real estate/house, higher education
of the dependent children, and, medical expenses on dentist, physiotherapy and heart. They
have leisure time in hand, and watch television, movies, and may even go on a vacation.
Implications for Marketers: At this stage, the couple beings to again have disposable income in
hand. Financial responsibilities towards children begins to decrease. This stage offers potential
for marketers who are involved in providing services like leisure, travel and holiday.
■ Empty Nest II: In this stage, all the children have left home, and the couple has retired from
occupation. They live on pension and other social security investments. If health permits, they
take up part-time jobs.
Priorities and Preferences of Purchase: The couple has higher disposable incomes because of
savings and investments, and they have fewer expenses. They decide to spend on all that they
had been thinking to spend on but had not been able to because of familial responsibilities.
They spend money on food, travel and holidays, watch TV and form hobby clubs. They refurnish
their home or may even move to newer homes after retirement. Medical expenses also see a
rise. However, for those older retired couples who do not have much income from adequate
savings and investments, the situation is much different. There is a sharp drop in their income.
Implications for Marketers: The stage is lucrative for those involved in the entertainment
industry. Many industries provide special discounts in travel and stay as “Senior Citizen
benefits, for example, hotels, airlines and railways. Banks and financial institutions also have
special facilities for those above 60, especially higher rates of interest on deposits.
Stage V: Dissolution: This stage in the FLC occurs when one of the couple dies, and leaves behind the
other surviving spouse.
Priorities and Preferences of Purchase: When one of the spouses is still earning, or earns
money from savings and investments, things are little easier. However, if he/she is not earning,
he/she follows a lifestyle that is economical. The primary expenditure is on medicines, check ups
with doctors and restrictive diet.
Implications for Marketers: The stage is characteristic of a widow/widower with lower income
and least shopping and expenses.
Short notes
■ 1.Cognitive dissonance is the mental stress (discomfort) experienced by a person who
simultaneously holds two or more contradictory beliefs, ideas, or values; when performing an
action that contradicts one of those beliefs, ideas, or values; or when confronted with new
information that contradicts one of the beliefs, ideas, and values.
■ People tend to seek consistency in their beliefs and perceptions. So what happens when one of
our beliefs conflicts with another previously held belief?
■ The term cognitive dissonance is used to describe the feelings of discomfort that result from
holding two conflicting beliefs. 
■ Example: The conflict:
■ It is important for the man to take care of the environment.
■ He is driving a car that is not environmentally-friendly.
■ 2. Product repositioning:
■ The product is modified to make it more acceptable to its present target market. Customer
requirements may have changed and the product has to be modified to be able to serve the new
needs effectively.
■ The company may have acquired new resources and competencies enabling it to modify the
product so that it serves the target market better. (Kinetic Honda and Honda Activa)
■ 3. Dogmatism measures the degree of rigidity versus openness that an individual displays
toward an information that is contrary to their own set and established beliefs
■ Consumers can be classified as: -
■ Highly Dogmatic- Consumers who are high in dogmatism are closed minded people. These kind
of people are more likely to go with / purchase products that are well established in the market
rather than purchasing products that are new and innovative. They accept a new product with
discomfort. These kinds of people usually fall in the age group of 50-60 who do not ready
accept the new products. These kinds of people tend to be more receptive to ads for new
products and services that contain an appeal from an authoritative figure. That is the reason why
marketers use celebrity and experts at the time of launching and re-launching a new product.
■ Example- Amitabh Bachan doing the Cadbury ad after the controversy, doctors doing the
medicine ads, customers of highly trusted brands like Maruti, Godrej, etc
■ Low Dogmatic- Consumers who are low in dogmatism are open minded people and are more
likely to prefer innovative products to established and traditional. Customers belonging to this
type are more receptive to messages that stress factual differences, product benefits and other
forms of product usage information. These kinds of people usually fall in the age group of 20-30
years (youngsters).
■ Examples: customers of McDonalds, KFC, Pizza Hut, Tata Nano, etc.
■ Why does a marketers need to know these?
■ • To understand consumers taste and preferences better
■ • To identify the target market quickly
■ • Helps to segment the market properly
■ • Helps to predict the future of a product in a particular market

■ 4. Perceptual organization is the process of grouping visual elements together (organization) so

that one can more readily determine the meaning of the visual as a whole (perception). 
Perceptual organization is concerned with process of organizing the inputs identifiable whole
objects. A person’s perceptual process organizes the incoming information into the meaningful
whole.
■ 5. BF Skinner: Operant Conditioning
■ Skinner is regarded as the father of Operant Conditioning. It means roughly changing of
behaviour by the use of reinforcement which is given after the desired response. Skinner
introduced a new term into the Law of Effect - Reinforcement. Behaviour which is reinforced
tends to be repeated (i.e. strengthened); behaviour which is not reinforced tends to die out-or be
extinguished (i.e. weakened).