consumer behavior course material

8/13/2019 Consumer Behavior Course Material

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1 P.Kamalakannan, Sona School of Management, Salem.|

CONSUMER BEHAVIOUR

Unit I

INTRODUCTION

Consumer BehaviourConcepts dimensions of consumer behaviours Application of consumer behaviourknowledge in marketing decisions Approaches to the study of consumer behaviour

Unit II

CONSUMER AS AN INDIVIDUALConsumer needs and motives personality and consumer behavior Consumer Perception Learning -Consumer Attitudes Attitude formation and change communication and persuasion self image life styleanalysis

Unit III

CONSUMER IN THEIR SOCIAL AND CULTURAL SETTINGS

Group Dynamics and Consumer reference groups Family Social Class Cultural and sub cultural aspectsCross cultural Consumer Behaviour

Unit IVCONSUMER DECISION PROCESS AND POST PURCHASE BEHAVIOUR Personal Influence andopinion leadership diffusion of innovations Consumer decision making process models of consumerdecision process Nicosia Howard sheth and Engel Kollat model Post purchase behaviour Consumerexpectation and satisfactionmanaging dissonanceconsumer loyaltytypes of loyalty programmes

Unit V

ADDITIONAL DIMENSIONS Consumerism Consumer protection difficulties and challenges inpredicting Consumer behaviour. Online buying Behaviour Organizational and industrial buyer behaviour Consumer behaviour in Indian Contextemerging issues

Unit VICASE STUDY


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UNITI

CONCEPTS OF CONSUMER BEHAVIOUR

Definition:Consumer behaviour is defined, as a behaviour that consumers display in searching for, purchasing

using, evaluating and disposing of products and services that they expect will satisfy their needs.- Schiffman

Observable activities chosen to maximize satisfaction through attainment of economic goods andservices such as choice of retail outlet, preference of particular brands and so on.

- Dictionary of marketing and advertising

The decision process and physical activity individual engage in when evaluating, acquiring, using ordisposing of goods and services.

- Loudon & Della Bitta

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Personal consumers

Organizational consumers

What is consumer behaviour?Obtaining - purchase/ receipt of product

Consuming - how, where, when and under what circumstances use productDisposing - get rid

Consumer behaviour roles:

Initiator:Individual who determines that some needs or want is not being met and authorizes to rectifythe situation.

Influencer:Individual who intentionally or unintentionally influence the purchase decision.Buyer:Individual who actually make the purchase transaction.User:Individual who directly consume the product.

Importance of studying consumer behaviour:

Consumer is the king. Consumers do not always act or react as the theory suggest.

Consumer preferences are changing and become highly diversified.

Consumer dislikes identical product and prefer differential products.

Segmenting the market to cater the special needs of consumers.

Rapid introduction of new products with technological advancement

To sell products that might not sell easily.

Model of consumer behaviour:

Feedback to consumer

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Individual

Consumer

EnvironmentalInfluence

ConsumerDecision Making

Consumer

Response


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MMeetthhooddssooffssttuuddyyiinnggccoonnssuummeerrbbeehhaavviioouurr::Observational approachIn home observationInterviews and surveysFocus groupField experimentationConsumption research products

PPrriinncciipplleessooffccoonnssuummeerrbbeehhaavviioouurr::Consumer is sovereignConsumer is globalConsumers are differentConsumer has rights

APPROACHES TO THE STUDY OF CONSUMER BEHAVIOUR Managerial approach Holistic approach Balanced approach

Managerial approach:- It is more micro and cognitive in nature.- Micro: emphasizes the individual consumer like his attitude, perception, life style, etc.- Cognitive: emphasizes the thought process of individual consumers and factors in influencing their

decision.- Marketers are interested in this approach because all marketing strategy is to satisfy the individual

consumers need.- Risks in managerial approach:

Overemphasizes the rationality of consumers Overlook the dynamics of environmental factors independent of individual Focus is on purchase rather than consumption

Holistic approach:- It is more macro in nature.- It focuses on consumption experience rather than purchasing process.- It helps in understanding the environmental context of consumer action.- Risks in holistic approach are:

No emphasize on purchase decision. No understanding of cognitive process, which is necessary for the marketer to meet

consumer needs.

Balanced approach: In balanced approach both the managerial view and holistic view are taken by eliminatingthe drawbacks.

APPLICATION OF CONSUMER BEHAVIOUR KNOWLEDGE IN MARKETING DECISION:Understanding of consumer behaviour is essential for the long run success of any marketing program.Some of marketing activities were consumer behaviour knowledge is important are:

Market-opportunity analysis Target market selection Marketing mix determination


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Market opportunity analysis: It involves analyzing the market to identify unsatisfied needs and wants. Theanalysis begins with a study of general market trends such as consumers lifestyle and income levels whichsuggests unsatisfied needs and wants.

Target market selection: Market opportunity analysis results in the selection of target market ie distinctgroupings of consumers who have unique wants and needs.

- Eg: Colgate- Palmolive company segment consumers according to their life style pattern andpersonalities to identify a unique group of consumers for a certain type of deodorant soap.

Market-mix determination:

Marketing mix variables are: Product Price Place Promotion

QUESTIONS

1. What is consumer Behaviour? What is the importance of studying consumer behaviour?2. How can the study of consumer behaviour assist marketers in segmenting markets and positioning products?3. How is the knowledge of consumer behaviour useful to the marketer?4. In what aspects an urban consumer will be different from a rural consumer?5. What are the various shopping patterns of the consumers? Explain.6. Explain the various approaches to study of consumer behaviour.7. Define consumer behaviour. What is the interrelationship between the consumer behaviour discipline and themarketing concept?8. Describe the impact of digital revolution on marketing and on consumer behaviour.


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UNITII

CONSUMER AS AN INDIVIDUAL

CONSUMER NEEDS AND MOTIVESNeed: Basic feel of desireWant:The means of satisfying the need

Types of needs:

o Biogenic need.o Physical need.

o Psychogenic need.o Utilitarian or hedonic need

Biogenic need: The need for air, water and sunlight.Physical need: The need for food, shelter and clothing.Psychogenic need:

The needs acquired in the process of becoming a member of a particular society or culture. This include need for affection, power, self-esteem, etc. Eg: In India need to accumulate wealth for daughters marriage shows attachment and affection.

Utilitarian or Hedonic Need: This need satisfies consumers dreams and builds up self confidence. This need implies that consumer will emphasize the tangible quality of the product.

Eg: Need for efficient washing powder.Need to own a car.

Hierarchy of needs:

Dr.Abraham Maslow, a clinical psychologist formulated the theory of human needs.

This theory identifies five basic level of human needs ranked in the order of importance.

Individual seek to satisfy lower-level of needs before higher-level of needs emerge.

The hierarchy of needs are:Physiological needs:

Basic level of human needs. This need is required to sustain biological life. This need is also called as biogenic need or physical need.

Ads for products and services that promote physical health is an appeal to this level of the needhierarchy.

Eg: need for food, water, shelter, clothing, etc.

Safety and security needs: Once the first level is satisfied this need become the driving force for human behavior. Focus on tomorrows life. Eg: savings account, insurance policies, education, etc.

Social needs: This level satisfies the need for human relationship. Ads of personal care products appeal to this need. Eg: Need for love, affection, belonging and acceptance.

Ego needs: Either inward or outward oriented. Inwardly directed ego needs reflects need for self-acceptance, self-esteem, success, etc. Outwardly directed Ego needs reflects need for prestige, reputation, status, etc.

Self-actualization needs: This need refers to individual desire to fulfill his or her potential or fully exploiting ones

potential. Only few satisfy this need.


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Eg: Player working single-mindedly for many years to excel in his sports.

Evaluation and marketing application: It has received wide acceptance in various social discipline.

Problems: It cannot be tested empirically. No way to measure precisely how satisfied one level of need before the next higher level become

operative.

Useful tool to the marketer as well.Marketing application:

Helps marketer to focus the advertisement appeal to the need level shared by large segment. Facilitate product positioning and repositioning.

Trio of needs:

Need for affiliation: It is a social motive and it influences consumer behaviour. Based on the desire for friendship, for acceptance, etc., People with high affiliation needs are socially dependent on others.

Need for power:

This relate to individual desire to control his or her environment, to control other persons, etc., It is related to ego needs.

Need for achievement: People with high achievement need regard personal accomplishment as an end in itself. They are more self-confident and risk-taking. It is related to both ego need and self-actualization need.

MOTIVATIONDefinition: Motivation is a driving force within an individual that impels them to action.Model of motivation:This model portrays motivation as a state of need induced tension that drives theindividual to engage in behaviour that he or she believes will satisfy the need and thus reduce the tension.

Learning

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desires

Tension Goal or

needfulfill-ment

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processes

Tensionreduction


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Role or functions of motives:

The role of motive is to arouse and direct the behaviour of consumers. Some of the functions of motivesare:

Defining basic striving: Motives influence consumers to develop and identify their basic striving which includes general

goals such as safety, affiliation, etc which consumer seeks to achieve. Identifying goal objects:

Consumers view product or service as a mean to satisfy their motives. The product is the goal to consumers.

Influencing choice criteria: Motives guide consumers to buy certain products and not the other.

Influencing consumer perception and learning: Motives influences consumer perception and learning process.

Types of motives:

Strong vs. weak motive Conscious vs. unconscious motive Positive vs. negative motive

Rational vs. emotional motive

Arousal of motives:

Physiological arousal Emotional arousal Cognitive arousal Environmental arousal

Physiological arousal: Physiological cues are involuntary and it cause uncomfortable tension. Eg: stomach contraction will trigger awareness of a hunger need.

Emotional arousal:

Autistic thinking(Daydreaming) arouse emotional need and drive them into goal orientedbehaiour.

Eg: fear of examination drives the student to sit and study.Cognitive arousal:

Random thought can lead to cognitive awareness of needs. Eg: ads that provide reminder of home make one feel to speak with parents.

Environmental arousal: Certain cues in the environment arouse a set of needs. Eg: End of school day will arouse a need for food.

Dynamics of motivation:

Needs are never fully satisfied New needs emerges as old needs are satisfied Success and failure influence goals Substitute goal Frustration

Measurement of motives:

Motives are hypothetical constructs and are not tangibly observed.


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No single measurement exists so combination of various qualitative research techniques is used. Motivational research includes all type of measures into human motives.

Motivational research: Motivational research is a qualitative research designed to uncover the consumers subconscious

or hidden motivation. Sigmund freuds psychoanalytical theory of personality provide the foundation for the

development of motivational research.

Limitations:

This research is qualitative and experiment can be performed for only small group sogeneralization of the result for large group will sometimes give wrong result.

This research generated more subjective opinion and it is difficult for the marketer tounderstand consumer behaviour.

PERSONALITY AND CONSUMER BEHAVIOUR

Definition: Personality is defined as the inner psychological characteristics that both determine and reflect howa person responds to his or her environment.

Nature of personality:

Personality reflects individual difference: Individual personality are unique combination of factors so no individuals are alike. Many individuals may be similar in terms of single personality characteristic which help

marketers to categorize consumers into different groups and identify their market segment. Personality is consistent and enduring:

Personality has both consistency and endurance. Personality can change:

Some major life events and gradual maturing process changes the personality.

Theories of personality:Personality theories are:

Freudian theory. Neo-Freudian theory. Trait theory.

Freudian theory: This theory is proposed by Sigmund Freuds. This theory is built on the premises Unconscious needs or drives are at the heart of human

motivation. Human personality consist of 3 interacting systems:

o Ido Superego

o Ego

Id:Warehouse of primitive or instinctual needs for which individual seeks immediate satisfaction. Eg:

hunger, thirst, etc.Superego:

Individuals internal expression of societys moral and ethical codes of conduct. It sees whether individual satisfies the need in the socially acceptable fashion.

Ego:

Individuals conscious control that balances the demands of the id and superego


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Neo-Freudian personality theory: Social relationships are fundamental to the formation and development of personality. Three personality group of individuals are:

o Compliant individuals: those who move towards others.o Aggressive individuals: those who move against others.o Detached individuals: those who move away from others.

Trait Theory: This theory is a quantitative measure. Personality theory with a focus on psychological characteristics Trait - any distinguishing, relatively enduring way in which one individual differs from another Personality is linked to how consumers make their choices or to consumption of a broad product

category - not a specific brand. The traits that are measured are:

o Consumer innovativeness: how receptive a person is to a new experience.o Consumer materialism:: the degree of consumer attachment to a worldly possession.o Consumer ethnocentrism: the consumers likelihood to accept or reject foreign made

products

Consumer innovativeness: How receptive a person is to a new experience. Consumer innovators are the first to try new product. Some of the personality traits that differentiate innovators and non innovators.

Consumer innovativeness: The degree to which consumers are receptive to new products, new services or new practices.

Dogmatism: A personality trait that reflects the degree of rigidity a person displays toward the unfamiliar and

toward information that is contrary to his or her own established beliefs. High dogmatic-discomfort with new product.

Low dogmatic-like to try new product. Social character:

It is a personality trait that range from inner-directedness to other-directedness. Inner-Directed:

o Consumers who tend to rely on their own inner valueso More likely to be innovators

o Tend to prefer ads that stress product features and benefits Other-Directed:

o Consumers who tend to look to others for directiono Less likely to be innovators

o Tend to prefer ads that feature social acceptance

Need for uniqueness: Consumers who avoid appearing to conform to expectations or standards of others.

Optimum stimulation level: A personality trait that measures the level or amount of novelty or complexity that individuals

seek in their personal experiences. High OSL consumers tend to accept risky and novel productsmore readily than low OSL consumers.

Sensation seeking:


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A personality trait characterized by the need for varied, novel, and complex sensations andexperience, and the willingness to take physical and social risks for the sake of such experience

Variety-novelty seeking: A personality trait similar to OSL, which measures a consumers degree to variety seeking Examples:

Exploratory Purchase BehaviorUse InnovativenessVicarious Exploration

Cognitive personality factors:Two cognitive personality traits are:

Need for cognitiono A persons craving for enjoyment of thinking

o Consumers high in NC are more likely to respond to ads rich in product-relatedinformation

o Consumers lowin NC are more likely to be attracted to background or peripheral aspectsof an ad.

Visualizers versus verbalizerso A persons preference for information presented visually or verbally

Consumer materialism:

The degree of consumer attachment to a worldly possession. The extent to which a person is considered materialistic. Characteristic of materialistic people:

Value acquiring and showing-off possessions Are particularly self-centered and selfish Seek lifestyles full of possessions Have many possessions that do not lead to greater happiness

Fixed consumption behavior Consumers fixated on certain products or categories of products Consumers have

o A deep interest in a particular object or product category

o A willingness to go to considerable lengths to secure items in the category of interest.o The dedication of a considerable amount of discretionary time and money to searching

out the product Examples: stamp collectors, hobbyists

Compulsive consumption behavior Addicted orout-of-control consumers Consumers who are compulsive buyers have an addiction; in some respects, they are out of

control and their actions may have damaging consequences to them and to those around them

Consumer Ethnocentrism: The consumers likelihood to accept or reject foreign made products Ethnocentric consumers feel it is wrong to purchase foreign-made products

They can be targeted by stressing nationalistic themes.

Brand Personality

Personality-like traits associated with brands.Examples:

Volvo - safetyPerdue - freshnessNike - the athlete


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BMW - performanceLevis 501 - dependable and rugged

Brand personification: Associating a human-like character to a brand is called as brand personification. Eg: dishwashing liquiddemanding task master.

Product personality and gender: Associating a product or brand with a gender.

Eg: Mr.coffeemasculine personality.Bath soapfeminine personality.

Product personality and geography: Certain product possess strong geographical association. Eg: Germany Cars.

Personality and color: Associating product personality with color. Eg: coca-cola with red connotes excitement.

CONSUMER PERCEPTIONDefinition:

The process by which an individual selects, organizes, and interprets stimuli into a meaningful andcoherent picture of the world. [How we see the world around us]

Elements of perception:The elements of perception are:

Sensation:o Sensation is the immediate and direct response of the sensory organs to stimuli.o Stimulus or stimuli is any unit of input to any of the senses. e.g.: ads, brand name, etc.o Sensory receptors are human organs like eyes, nose, ears, mouth and skin.

o A perfectly unchanging environment provides little or no sensation at all. E.g.: honking horn isnever noticed in heavy traffic.

Absolute threshold:o The lowest level at which an individual can experience a sensation is called the absolute

threshold.o The point at which a person can detect a difference between something & nothing.

o Eg: the distance at which the driver can note a specific billboard on a highway.o Sensory adaptation is getting used to certain sensations so advertisers try to change their

advertisement campaigns regularly. Differential threshold:

o The minimal difference that can be detected between two similar stimuli is called the differential

threshold or just noticeable difference (j.n.d).o Webers law is the theory concerning the perceived differentiation between similar stimuli of

varying intensities.

o Webers law states that stronger the initial stimulus, the greater the additional intensity neededfor the second stimulus to be perceived as different.

o Eg: Increase of 25 cent to a orange juice worth$5.50 is not noticeable(below j.n.d) but sameincrease of 25 cent to a gasoline is quickly noticed by the consumer(above j.n.d)


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Marketing Applications of the JND:

o Marketers use this concept for the following reasons:o Negative change is not noticed by the consumers (below j.n.d).eg: reduction in product size or

quality

o Product improvement is noticed by the consumers (above j.n.d).eg: improved packing , lowerprice, etc.

Subliminal perception:

o Perception of very weak or rapid stimuli received below the level of conscious awareness iscalled as subliminal perception.

o Perception of stimuli that are above the level of conscious awareness is called as supraliminalperception or perception.

Model or process of perception:

Dynamics of perception: Perception is the result of two kinds of input:

Physical stimuli from outside worldBased on previous experience of individual

Stimulus are selected, organized & interpreted in line with their needs and wants.

Three aspects of perception are: Perceptual selection. Perceptual organization. Perceptual interpretation.

Perceptual selection: Consumers subconsciously exercise a great deal of selectivity in the environment. e.g: women in a supermarket gets exposed to numerous stimuli but select the item she needs and

leave because she exercise selectivity in perception. Stimuli get selected depends on two major factors:

Consumers previous experience

Consumers motives at that time

Perceptual organization: Perceptual organization principles are based on gesalt psychology. People do not experience the numerous stumili as separate instead they perceive them as unified

whole. The basic principles are:

Figure and ground Grouping Closure

Figure and ground:

Stimuli that contrast with their environment are more likely to be noticed. Eg: Lufthansa ad featured a jet flying between two glass high-rise building.

Grouping: Consumers group the stimuli to form a unified picture and facilitate their memory. Grouping is advantageous to the marketer to associate a meaning for their product. Eg:ad for tea which shows a couple associate tea drinking with romance and fine living.

Closure: Incomplete message are better remembered than complete ones.


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Perceptual interpretation:

The interpretation of stumili is uniquely individual. Influences of Perceptual Distortion:

Physical Appearances: People tend to attribute the quality of the product based on the qualities of personality

featuring in the ad. Attractive models are perceived to have more expertise regarding enhancing product(jewelry)

and problem solving products(product to avoid dandruff). Stereotypes:

People tend to form their own picture in their mind for various stimuli. First Impressions:

First impression is ever lasting and it is the challenge for the marketer to form so.Jumping to Conclusions:

Consumer jump to conclusion before examining all the complete evidence. E.g.: hearing the first line of ad consumer draw conclusion about the product.

Halo Effect: Evaluation of multiple objects on the basis of the evaluation of just one dimension.

CONSUMER LEARNINGDefinition: Consumer learning is the process by which individuals acquire the purchase and consumptionknowledge and experience that they apply to future related behaviour.

Importance of Learning:

Marketers must teach consumers:where to buyhow to usehow to maintainhow to dispose of products

Types or process of learning:Two types are:

Intentional learning: acquired as a result of careful search.Incidental learning: acquired by accident without much effort.

Elements of Learning Theories:

MotivationCuesResponseReinforcement

Learning theories:Behavioural learning theoriesCognitive learning theories

Behavioural learning theories:

It is also referred as stimulus-response theory.Not concerned with the process of learning as they are with inputs and outputs of learning.Behavioural theories are:


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Classical conditioning.Instrumental or Operant conditioning.

Classical conditioning:

Ivan Pavlov ,a Russian physiologist was first to propose this theory.According to this theory Conditioned learning results when a stimulus is paired with another stimulus

that elicits a known response that serves to produce the same response when used alone.

Dog experiment.

Cognitive Associative Learning: Classical conditioning is viewed as the learning of associations among eventsthat allows the organism to anticipate and represent its environment.

From this viewpoint, classical conditioning is not reflexive action, but rather the acquisition of newknowledge.

Instrumental or operant conditioning: B.F.Skinner, American psychologist developed this theory.Consumers learn by means of trial and error process in which some purchase behaviors result in more

favorable outcomes (rewards) than other purchase behaviors.A favorable experience in instrumental is teaching the individual to repeat a specific behavior.It is helpful in complex goal oriented activity.

Reinforcement of behaviour:Positive Reinforcement: Positive outcomes that strengthen the likelihood of a specific responseExample: Ad showing beautiful hair as a reinforcement to buy shampooNegative Reinforcement: Unpleasant or negative outcomes that serve to encourage a specific behaviorExample: Ad showing wrinkled skin as reinforcement to buy skin cream.

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Unconditioned Stimulus

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Conditioned Stimulus

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Salivation

Conditioned Stimulus

Bell Conditioned ResponseSalivation

AFTER REPEATED PAIRINGS


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A process by which individuals observe the behavior of others and consequences of such behavior. Alsoknown as modeling or vicarious learning.

Eg: associating with dad and imitating the same behaviour.

Cognitive learning theory:It holds that the kind of learning most characteristic of human beings is problem solving, which enables

individuals to gain some control over their environmentLearning involves complex mental processing of information.

Information processing: Information processing is related to both consumers cognitive ability and complexityof information to be processed. A cognitive theory of human learning patterned after computer informationprocessing focuses on how information is stored in human memory and how it is retrieved.

Models of cognitive learning:

Involvement theory:

It is also called as split-brain theory and is developed from the research stream called hemispheral

Involvement theory and media strategy:Right brain: Individual passively process information in right brain with low involvement so repetitionproduces a change in consumer behaviour (eg: product purchase) which in turn change the attitude of theconsumer.Consistent with classical conditioning.

Media strategy: TV is a pictorial media so it is low inolvement media and repeated exposure of TVcommercial will aid in the purchase of the product.

Left brain: Information is actively processed in left brain with high involvement.

Media strategy: Print media is high involvement media.

Limitation: both the brains work together to process information.

Involvement theory and consumer relevance:

High personal relevance of the product and high perceived risk aids the consumer for high-involvementpurchase.Eg:automobiles and dandruff shampoo.

Low personal relevance of the product and low perceived risk aids the consumer for low-involvementpurchase. eg: dish washing liquid,etc.

Attention Cognitive

Action Conative PurchasePostpurchase

Evaluation

TrialAdoption

DecisionConfirmation

AffectiveEvaluation

InterestEvaluation Persuasion

KnowledgeAwarenessAwarenessKnowled e

InterestDesire

Innovation

Adoption

Model

Decision-

Making

Model

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Innovation

Decision

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Promotional

Model


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Highly involved consumers are narrow categorizers and uninvolved or low involved consumers arecalled as broad categorizer.

Central and Peripheral Routes to Persuasion

This theory proposes that highly involved consumers are best reached through ads that focus on thespecific attributes of the product (the central route(left)) while uninvolved consumers can be attracted throughperipheral advertising cues such as the model or the setting (the peripheral route(right)).

EEllaabboorraattiioonnLLiikkeelliihhooooddMMooddeell((EELLMM))::This theory suggests that a persons level of involvement during message processing is a critical factor

in determining which route to persuasion is likely to be effective.When the product is high personally relevant, then involvement increases and consumer follow central

route for information processing.When the product is low personally relevant, then involvement decreases and consumer follow

peripheral route for information processing.

Measures of Consumer Learning

Recognition and Recall MeasuresAided and Unaided RecallCognitive Responses to AdvertisingCopy testing MeasuresAttitudinal and Behavioral Measures of Brand Loyalty

Involvement

CentralRoute

PeripheralRoute

PeripheralCues

InfluenceAttitudes

MessageArgumentsInfluenceAttitudes

HIGH LOW


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Brand loyalty

CONSUMER ATTITUDES:Definition: A learned predisposition to behave in a consistently favorable or unfavorable manner with respectto a given object.

What are Attitudes?The attitude object

Attitudes are a learned predispositionAttitudes have consistencyAttitudes occur within a situation

Structural Models of Attitudes:Tricomponent Attitude ModelMuliattribute Attitude ModelThe Trying-to-Consume ModelAttitude-toward-the-Ad Model

TRICOMPONENT ATTITUDE MODEL:

Attitude consist of 3 components:Cognitive component.Affective component.Conative component.

Cognitive Component: The knowledge and perceptions that are acquired by a combination of direct experiencewith the attitude object and related information from various sources. This knowledge and perception take the

form of belief.

Affective Component: A consumers emotions or feelings about a particular product or brand.Conative Component: The likelihood or tendency that an individual will undertake a specific action or behavein a particular way with regard to the attitude object.

Cognitive component shows the consumer intension to buy.

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MMUULLTTIIAATTTTRRIIBBUUTTEEAATTTTIITTUUDDEEMMOODDEELLSS::Attitude models that examine the composition of consumerattitudes in terms of selected product attributes or beliefs.

Some of the models are:Attitude-toward-object model: Attitude towards a product is function of evaluation of product-specific beliefsor attributes. Consumers have favorable attitude towards brand which have adequate level of attributesConsumers have unfavorable attitude towards brand which do not have adequate level of attributes.

Attitude-Toward-Behavior Model: A model that proposes that a consumers attitude toward a specific

behavior is a function of how strongly he or she believes that the action will lead to a specific outcome (eitherfavorable or unfavorable).

Theory of Reasoned Action: A comprehensive theory of the interrelationship among attitudes, intentions, andbehavior.

THEORY OF TRYING TO CONSUME: An attitude theory designed to account for the many cases wherethe action or outcome is not certain but instead reflects the consumers attempt to consume (or purchase).

AATTTTIITTUUDDEE--TTOOWWAARRDD--TTHHEE--AADDMMOODDEELL::A model that proposes that a consumer forms various feelings(affects) and judgments (cognitions) as the result of exposure to an advertisement, which, in turn, affect the

consumers attitude toward the ad and attitude toward the brand.

ATTITUDE FORMATION AND CHANGE: Attitude formation is the process of shifting from having noattitude to having some attitude about the given object.

Issues in Attitude Formation:How attitudes are learnedSources of influence on attitude formationPersonality factors

How attitudes are learned:

Attitudes are learned by the following ways:Association: Consumers purchase new product that are associated with the favourably know brand (ie thebrand name towards which the consumer already have favourable attitude).Experience: Attitudes follow purchase and consumption of a product.

Sometimes consumer try new brand and they form favourable attitude towards it if it gives satisfactoryexperience.

Information: When consumers try to satisfy their needs they form the attitude about the product based on theinformation exposure of that product.

Sources of influence on attitude formation:

Personal experience.

Influence of family and friends.Direct marketing.Mass media.

Personality factors: Personality plays a role in attitude formation.Eg: individual with high need for cognition form positive attitude towards ad that are rich with

information and viceversa.

Strategies of Attitude Change:


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Changing the basic motivational function:Utilitarian function.Ego-defensive function.Value-expressive function.Knowledge-expressive function.

Associating the product with special group, event or cause.Resolving two conflicting attitudes.Altering components of multiattribute model.

Change brand beliefImprove your brand ratingAdd attributeChange the relative evaluation of attribute

Changing belief about competitors brand.

Behavior precede or follow attitude formation:

Cognitive dissonance theory: According to cognitive dissonance theory discomfort or dissonance occurswhen a consumer holds conflicting thoughts about a belief or an attitude object.

When cognitive dissonance occurs after purchase it is called as post purchase dissonance.

Tactics to overcome post purchase dissonance:Rationalize the decision being wise.Tell friends the positive feature of the brand.Reassure with existing satisfied owners.

Attribution theory: A theory concerned with how people assign casualty to events and form or alter theirattitudes as an outcome of assessing their own or other peoples behavior.

Self-perception Theory:A theory that suggests that consumers develop attitudes by reflecting on their own behavior.

SELF IMAGEEnduring image of themselves is called as self- image.Individuals self-image is unique.There is a relationship between brand preference and consumers self-image.Consumers try to enhance their self-image by selecting the product with image that they believe will

enhance their own self-image.

Kinds of self-image:Actual self-image: how consumers see themselves.Ideal self-image: how consumers would like to see themselves.Social self-image: how consumers feel others see them.

Ideal social self-image: how consumers would like others to see them.Expected self-image: how consumers expect to see themselves at some specified future time.

Virtual personality:Online individuals have an opportunity to try on different personalitiesVirtual personalities may result in different purchase behavior


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merits and demerits of the hierarchy.15. Explain the factors that determine the receipt of external stimuli by a consumer.16. Explain what role age and life cycle play in forming consumer perception. 17. What are various factors that influence consumer attitude formation? Discuss consumer attitude formationregarding fast food.18. Explain the measurement of attitude toward consumer behavour with an illustration.19. Explain the various buying motives with example.20. What are stimulus generalization and discrimination learning and how are they important to the marketer?

21. Explain Perceptual process and its impact on consumer behaviour.22. What are the elements of consumer learning? How can marketers use measures of recognition and recall tostudy the extent of consumer learning process? Discuss in detail.


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UNITIII

CONSUMERS IN THEIR SOCIAL AND CULTURAL SETTINGS

GROUP DYNAMICS AND CONSUMER REFERENCE GROUPS

Group: Group may be defined as two or more people who interact to accomplish either individual or mutualgoals.

Classification of groups:

Membership group: A membership group is one to which a person either belongs or would qualify formembership

Symbolic group: A symbolic group is one in which an individual is not likely to receive membershipdespite acting like a member

Reference group: Reference group is any person or group that serves as a point of comparison (orreference) for an individual in the formation of either general or specific values, attitudes, or behavior.

Classification of reference groups:Normative Reference Groups: Reference groups that influence general or broadly defined values or

behaviour. It influence in the development of basic code of behaviour.Eg: a childs normative reference groupis its immediate family.

Comparative Reference Groups: Reference groups that serves as a benchmark for specific or narrowlydefined behaviour or attitude. It influence in the expression of specific consumer attitude and behaviour.

Eg: a persons normative reference group might be its neighboring family whose life style appears tobe admirable.

Direct reference group: Those groups with which the individual interact on daily basis.Eg: family,close friends,etc.

Indirect reference groups: Individuals or groups with whom a person identifies but does not havedirect face-to-face contact.

Eg: Movie stars, sports heroes, political leaders, or TV personalities.

Factors that effect reference group influence: The degree of influence depends on nature of the individual,

the product and the specific social factor.Information and experience: Person who have experience with the product and can obtain full informationabout the product is not influenced by the reference group. On the other hand they seek for advice and areinfluenced.Credibility, attractiveness and power of reference group: A reference group that is perceived as credibleattractive and powerful can induce consumer attitude and behaviour change.

Conspicuousness of the product:Visually conspicuous product: not influenced by reference group.Verbally conspicuous product: influenced by the reference group.

Consumer conformity:

Reference group change the consumer attitude by encouraging conformity.

Factors Encouraging Conformity:A Reference Group Must ...

Inform or make the individual aware of a specific product or brandProvide the individual with the opportunity to compare his or her own thinking with the attitudesand behavior of the groupInfluence the individual to adopt attitudes and behavior that are consistent with the norms of thegroupLegitimize the decision to use the same products as the group


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Extended family: a husband, wife, children and atleast one grandparent.Single-parent family: one parent and atleast one child.

Consumer socialization: The process by which children acquire the skills, knowledge, and attitudes necessaryto function as consumers. Socialization begins in early childhood and extends throughout a persons entire life.

Consumer socialization of children: Preadolescent children acquire their consumer behaviour norms throughobservation of their parents and older siblings.

Adult consumer socialization: Socialization is an on-going process. Adolescent is influenced by the

friends.Intergenerational socialization: Some product loyalties or brand preferences is transferred from one

generation to another.

Family life cycle:Traditional life cycle:

Stage I: BachelorhoodStage II: HoneymoonersStage III: ParenthoodStage IV: PostparenthoodStage V: Dissolution

Nontraditional life cycle:Family households.Non-Family households.

CULTUREDefinition: The sum total of learned beliefs, values, and customs that serve to regulate the consumer behaviorof members of a particular society

Culture satisfies needs: Culture exist to satisfy the needs of the people within a society. Culture offers order,direction, and guidance in all phases of human problem solving: When to eat, where to eat, what to eat for eachmeal, what to serve guests at a dinner party, picnic, or wedding.

Culture is learned:3 forms of cultural learning are:

Formal learning: the elders of the family teach a young family member how to behave.Informal learning: child learns by imitating the behaviour of friends or family members.Technical learning: teacher instructs a child in educational settings to behave in a certain manner.

Issues in culture:

Enculturation and acculturation:The learning of ones own culture is known as enculturation.The learning of a new foreign culture is known as acculturation.

Language and symbols:

Members of common culture share common language for efficient communication.Symbol is anything that stands for something else.Marketers use verbal or non-verbal symbols to convey desired product images.Verbal symbols are ad in magazine or TV announcements.Nonverbal symbols are figures, colors, shapes, etc.

Ritual:


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Ritual is a type of symbolic activity consisting of a series of steps occurring in a fixed sequence andrepeated overtime.

Sharing of Culture:

Culture is viewed as a group customs that link together the members of a society.Other institutions, which share the responsibility of cultural transfer, are: educational institution and

houses of worship.

Measurement of culture:Content AnalysisConsumer FieldworkValue Measurement Instruments

Content Analysis: Content analysis is a method for systematically analyzing the content of verbal, written andpictorial communication. The method is frequently used to determine prevailing social values of a society.

Consumer Fieldwork: A cultural measurement technique that takes place within a natural environmentthat focuses on observing behavior (sometimes without the subjects awareness).

Characteristics of Field Observation

Takes place within a natural environmentPerformed sometimes without the subjects awarenessFocuses on observation of behavior

PPaarrttiicciippaanntt--OObbsseerrvveerrss: Researchers who participate in the environment that they are studying withoutnotifying those who are being observed.

Value Measurement Survey Instruments:

Rokeach Value Survey (RVS): A self-administered inventory consisting of eighteen terminal values(i.e., personal goals) and eighteen instrumental values (i.e., ways of reaching personal goals).

List of Values (LOV): A value measurement instrument that asks consumers to identify their two mostimportant values from a nine-value list that is based on the terminal values of the Rokeach Value Survey

Values and Lifestyles (VALS): A value measurement based on two categories: self-definition andresources.

SUBCULTURAL AND CONSUMER BEHAVIOUR

Definition: Subculture is a distinct cultural group that exists as an identifiable segment within a larger, morecomplex society.

Importance: Sub cultural analysis enables the marketers to focus on sizable and natural market segments Subculture is the relevant unit of analysis for market research.

Categories of subculture:

Categories examples

Nationality Indian, American

Religion Hindu, MuslimGeographic region Northeast, MidwestRace Tamilian, keraliteAge senior citizen, teenagerGender male, femaleOccupation engineer, doctorSocial class lower, middle, upper


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Nationality subculture:Nationality is an important subcultural reference that guides in what customer value and what they buy.

Hispanic subculture: Traditional Characteristics of the Hispanic American Market:Prefer well-known brands.Buy brands perceived to be more prestigious.Are fashion conscious.Historically prefer to shop at smaller personal stores.

Buy brands advertised by their ethnic-group stores.Tend not to be impulsive buyers.Increasingly clipping and using cents-off coupons.Likely to buy what their parent brought.Prefer fresh to frozen or prepared items.

Religious Subcultures200+ organized religious groups in the U.S.Primary organized faiths include:

Protestant denominationsRoman Catholicism

JudaismConsumers purchase decision are influenced by their religious identity.Consumer Behavior is directly affected by religion in terms of products that are symbolically and

ritualistically associated with the celebration of religious holidays.Eg: Christmas has become a gift-purchasing season of the year.

Geographic and Regional subculture:

Individuals have the sense of regional identification and they use this identification to as a way ofdescribing others.

Many regional differences exist in consumption behaviorWesterners have a mug of black coffee

Easterners have a cup of coffee with milk and sugarWhite bread is preferred in the South and MidwestRye and whole wheat are preferred on the East and West coasts.

Racial subculture:African-American Consumer

Largest racial minority in U.S.Purchasing power estimated at $572 billionThey are brand loyal.Prefer high fashions and name brands as a signal of their success.

Asian-American Consumers

Currently about 12 million in sizeEstimated at 13 million in 2005Gain of 54% since 1990

Age subculture:

Four groups under this are:Generation YGeneration X


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Four Segments of women are:Stay-at-Home HousewivesPlan-to-Work HousewivesJust-a-Job Working WomenCareer-Oriented Working Women

Shopping pattern:Working women spend less time in shopping.They brand and store loyal.

They shop during evenings ad week-ends.

CROSS CULTURAL CONSUMER BEHAVIOUR:Imperative to be multinational: All major companies market their products beyond their original homecountry. The vocabulary of marketing denotes the term as glocal.

EU-European Union forms a single market and used euro as a common currency.NAFTA-North American Free Trade Agreement consist of United States,Canada and Mexico and provide free market access to more than 400 million consumers.

Reason for being multinational:Opportunity for future growth.Consumers are eager to try foreign products.

Acquiring exposure to other cultures: Some consumers get exposure to other culture by their own initiativeslike travel, working in foreign, etc.

Consumers taste different culture from contact with foreign movie.Consumers taste different culture by buying unfamiliar or different product.Marketers bring new products, services, practices or ideas for international marketing and it gives

cultural transfer.

Country-of-origin effects: Consumers make purchase decision in considering country of origin of their choice.Eg: consumers associate France with Wine, Fashion clothing and perfume,

Germany with cars and machinery.

Some consumers restrict buying product from other countries due to animosity.Eg: Many Chinese consumers consider Sony high-end and high-quality, but may refuse to buy due to

animosity toward JapanHigh-animosity consumers own fewer Japanese products than low-animosity consumers

Cross cultural consumer analysis: It is defined as the effort to determine to what extend the consumers of twoor more nations are similar or different.

Issues in Cross-Cultural Consumer AnalysisSimilarities and Differences Among People: Cross-cultural consumers analysis is used to determine howconsumers of two or more societies are similar or different.

This analysis helps the marketer to device appropriate individualized strategies to reach consumers inspecific foreign market.

Eg: IKEA furniture company offers 14 localized websites describing the product in the localizedlanguage.

The Growing Global Middle Class: Growing middle class in developing countries is a attractive phenomenonto the global marketers.


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Middle class consumers have more discretionary(or spending) income which makes the marketers totarget the middle class segment.

Regulation in different countries may preclude the use of some marketing practices.Eg: Germany advertising rule do not permit comparative advertisement.

Acculturation: Acculturation is the learning of a new foreign culture.Marketers should learn the culture of other countries where they want to sell their product.

Cross-cultural acculturation is a dual process for marketers: Marketers must be sensitive to the prevailing

attitudes, behaviors and values to appropriately position and market their product.To gain acceptance of their product in the foreign nation, marketers should develop a strategy

that encourage members of that society to change their attitude and alter their behaviour.

Applying research techniques: Since there are many research issues exist in cross-cultural analysis marketersshould use the research service facility available in the foreign nation to evaluate their potential maket.

Alternative multinational strategiesGlobal Vs local:

World markets are becoming more similar so the challenges for the marketers are:Whether to use shared needs and values as a segmentation strategy.

Whether to use national borders as a segmentation strategy.Favoring a World Brand:

Some firms have created world brand product that are manufactured, packed and positioned in exactlythe same way regardless of the country in which they are sold but the advertisement is in the specific targetlanguage. Eg: P&G s global brands are: Pantene, oil of Olay, etc.

Adaptive Global Marketing:Some firms marketing strategy adapts their advertisement messages to the sp ecific values of particular

cultures. These firms follow multilocal strategies and are called as glocal companies.Eg: McDonalds, Reebok and Levis.

Framework for Assessing Multinational Strategies:

Marketing Mistakes: A Failure to Understand DifferencesProduct Problems

PRODUCT

STRATEGYCOMMUNICATON

STRATEGYSTANDARDIZED

COMMUNICATIONS

LOCALIZED

COMMUNICATIONS

STANDARDIZED

PRODUCT

Global strategy:Uniform Product/ UniformMessage

Mixed Strategy:Uniform Product/Customized Message

LOCALIZED

PRODUCT

Mixed strategy:Customized Product/

Uniform Message

Local Strategy:Customized Product/

Customized Message


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Promotional ProblemsPricing and Distribution Problems

Product Problems: Sometimes marketers neglect to modify their products to meet local customs and taste.Eg: Snapple failed because Japanese consumers preferred clear, less sweet iced tea but it is unwilling or

too slow to alter its ingredients.Colour is a critical variable because it has different meaning in different culture.Eg:Meanings of Blue:

Holland - warmthIran - deathSweden - coldnessIndia - purity

Promotional problem: The promotional message must be consistent with the language and customs of theparticular target society.Pricing and Distribution Problems: Pricing and Distribution Policies should meet the local economiccondition and customs of the target market.

Eg: in many nations small sized product packages are necessary because consumers are not affordablefor larger packs.

SOCIAL CLASS CULTURAL ASPECTSDefinition: Social class is defined as the division of members of a society into a hierarchy of distinct statusclasses, so that members of each class have relatively the same status and members of all other classes haveeither more or less status.

Social class categories:Two-category social-class schemas:

Eg: blue-collar, white collarLower, upper

Three-category social-class schemas:Eg: blue-collar, gray collar, while collar

Lower, middle, upperFour-category social-class schemas:

Eg: lower, lower-middle, upper-middle, upperFive-category social-class schemas:

Eg: lower, lower-middle, middle, upper-middle, upperSix-category social-class schemas:

Eg: lower-lower, upper-lower, lower-middle, upper-middle, lower- upper, upper-upper.Seven-category social-class schemas:

Eg: : real lower-lower, a lower group of people but not the lowest, working class, middle classupper-middle, lower-upper, upper-upper.Nine-category social-class schemas:

Eg: lower-lower, middle-lower, upper-lower, lower-middle, middle-middle, upper-middlelower-upper, middle-upper, upper-upper.

Measurement of social class:Subjective measures: In subjective approach of measuring social class, individuals are asked to estimate theirown social class. The result may not be accurate because it gives the individuals self-perception or self-image.


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Reputational measures: The Reputational approach requires selected community informants to make initialjudgment concerning the social class membership of others within the community. The final task of assigningthe community members to the social class position belongs to the trained researcher.

It is proved as impractical because this approach gives the understanding of social class structure and notthe consumption behaviour within the class, which is the purpose of the measure.

Objective measures: Objective measure consists of some socioeconomic variables like occupation, educationand amount of income.

These variables are measured through questionnaires, which have some factual questions aboutthemselves, their family and the place of residence.

Two categories of objective measures are:Single-variable indexes: occupation, education and income.Composite-variable indexes: combine a number of socioeconomic factors.

Consumer behaviour applications of social class:

Clothing: People dress to fit their self-image. Individuals clothing reflects their perception of their own socialclass membership.Fashion: Specific social class differ in terms of what they consider as fashionable or in good taste.

Eg: lower middle class consumers prefer T-shirt with admired personality pictures as an external

point of identification.Upper class consumers prefer clothing with subtle (fine) look.

Shopping: People avoid stores that have image appealing to a social class very different from their own.Eg: wal-mart tends to target more on working class customers.

Pursuit of leisure: Different social class members differ in the choice of recreational and leisure-time activitiesEg: upper class consumers go to theaters, read novels, etc.

Lower class consumers watch TV, go for fishing, etc.

Saving, spending and credit:Upper class consumers are more future oriented and invest in insurance, stocks and real estates.Lower class consumers seeks immediate gratification and are interested in safety and security.Lower class purchaser use credit cards to buy now and pay later.

Upper class consumers use credit card as a substitute for money.Questions

1. Explain the influence of culture on consumer behaviour2. Family is the learning ground for any consumer- Do you agree? Substantiate your answer.3. Briefly explain cross-cultural consumer analysis.4. Does media patronage differ with social class? Explain5. Explain the relationship between cultural settings and choice criteria of food products.6. Does product consumption differ with social class? Explain.7. What is the role of reference groups in influencing the consumer behaviour?8. What is reference group? Name two reference groups that are important in you. In what way do theyinfluence you in your purchasing behaviour?

9. Explain the various reference group types.10. What is social class? How does it help marketers to devise their strategies?11. Define the concept of culture. How does it affect the consumer behaviour?12. Explain the techniques of measurement of opinion leadership and discuss how does it influenceconsumer behaviour.13. What are the systematic approaches to measuring Social Class? Explain the impact of social class onconsumer buying behaviour.14. Culture is shared, dynamic and can be measured. Comment.


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UNITIV

CONSUMER DECISION PROCESS AND POST-PURCHASE BEHAVIOUR

PERSONAL INFLUENCE AND OPINION LEADERSHIP:

Definition:Opinion leadership is the process by which one person (the opinion leader) informally influences the

consumption actions or attitudes of others who may be opinion seekers or opinion recipients.

Elements of opinion leadership:

Opinion leader: individuals who influence the behaviour of others.Opinion receiver or opinion recipients: individuals who receive information without consciously searchingfor it.

Opinion seekers: individuals who actively seek information and advice about a product.

Examples of Opinion Leadership:During a coffee break, a co-worker talks about the movie he saw last night and recommends seeing it.A family decides that they would like a swimming pool for their backyard and they ask neighbours who

have pools which pool Construction Company they should call.

Viral Marketing:

It is named viral because it allows the message to spread like a virus. Viral marketing describe anystrategy that encourages individuals to pass on a marketing message to others, creating the potential forexponential growth in the messages exposure and influence.

The other names of viral marketing are:

Buzz Marketing

Opinion

Leader

Opinion

Receiver

Opinion

Seeker


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Wildfire Marketing

Avalanche MarketingReasons for the Effectiveness of Opinion Leadership:

Credibility

Positive and Negative Product Information

Information and Advice

Opinion Leadership Is Category-Specific

Opinion Leadership Is a Two-way Street

Credibility: Opinion leaders are highly credible source of information and have first hand experience with theproduct. They receive no compensation for their advice. They do not have commercial motive.

Positive and Negative Product Information: Opinion leader provide both positive and negative productinformation.

Information and Advice: Opinion leaders are the source of both information and advice. They may share theirexperience with the product or aggressively advice others to buy or avoid a specific product.

Opinion Leadership Is Category-Specific:Opinion leaders specialize in certain product category about whichthey provide information or advice.

Opinion Leadership Is a Two-way Street: Consumers who are opinion leaders in one product-relatedsituation may become opinion receivers in another situation, even for the same product.

Motivations behind Opinion Leadership:

The Needs of Opinion LeadersThe Needs of Opinion ReceiversPurchase PalsSurrogate Buyers versus Opinion Leaders

The Needs of Opinion Leaders: Opinion leaders may try to reduce their own post purchase dissonanceOpinion leaders are motivated by self-involvement, product involvement, social involvement and messageinvolvement.

The Needs of Opinion Receivers: Opinion receivers obtain new-product or new-usage information. Opinionreceivers reduce their perceived risk. They reduce their search time.

Purchase Pals: Purchase pals are information sources who actually accompany consumers on shopping tripsMale purchase pals are the source of product category expertise, product information, retail store and priceinformation. Female purchase pals gives moral support and increase confidence in the buyers decision.

Surrogate Buyers versus Opinion Leaders:OPINION LEADER:

1. Informal relationship with end-users2. Information exchange occurs in the context of a casual interaction3. Homophilous (to a certain extent) to end-users4. Does not get paid for advice5. Usually socially more active than end-users6. Accountability limited regarding the outcome of advice


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7. As accountability limited, rigor in search and screening of alternatives low8. Likely to have used the product personally9. More than one can be consulted before making a final decision

10. Same person can be an opinion leader for a variety of related product categories

SURROGATE BUYER

1. Formal relationship; occupation-related status2. Information exchange in the form of formal instructions/advice

3. Heterophilus to end users (that is, is the source of power)4. Usually hired, therefore gets paid5. Not necessarily socially more active than end-users6. High level of accountability7. Search and screening of alternatives more rigorous8. May not have used the product for personal consumption9. Second opinion taken on rare occasions

10. Usually specializes for a specific product/service category

Measurement of Opinion Leadership:

Self-Designating Method

Sociometric MethodKey Informant MethodObjective Method

SELF-DESIGNATINGMETHOD

Do you influence otherpeople in their selection

of products?

Each respondent is asked a series ofquestions to determine the degree towhich he or she perceives himself or

herself to be an opinion leader.

OOPPIINNIIOONNLLEEAADDEERRSSHHIIPP

MMEEAASSUURREEMMEENNTT

MMEETTHHOODD

SSAAMMPPLLEE

QQUUEESSTTIIOONNSSAASSKKEEDD

DDEESSCCRRIIPPTTIIOONNOOFFMMEETTHHOODD

SOCIOMETRIC METHOD Members of a social system areasked to identify to whom they giveadvice and to whom they go foradvice.

Whom do youask?Who asks you for

info about that productcategory?

OOPPIINNIIOONN

LLEEAADDEERRSSHHIIPP

SSAAMMPPLLEE

QQUUEESSTTIIOONNSSAASSKKEEDD

DDEESSCCRRIIPPTTIIOONNOOFFMMEETTHHOODD

KEY INFORMANTMETHOD Who are the mostinfluential people in therou ?

Carefully selected key informants in asocial system are asked to designateo inion leaders.

Artificially places individuals in a positionto act as opinion leaders and measuresresults of their efforts.

Have you tried the

product?OBJECTIVE METHOD


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Profile of Opinion Leaders:

Frequency and overlap of opinion leadership:

Opinion leadership tends to overlap across certain combination of interest areas. Opinion leaders in oneproduct area often are opinion leaders in related areas in which they are also interested.

Market maven: Individuals whose influence stems from a general knowledge or market expertise thatleads to an early awareness of new products and services.

The Interpersonal Flow of CommunicationTwo-Step Flow: A communication model that portrays opinion leaders as direct receivers of information frommass media sources who, in turn, interpret and transmit this information.

Multistep Flow: A revision of the traditional two-step theory that shows multiple communication flows.Opinion leaders both influence and are influenced by opinion receivers.

GENERALIZED ATTRIBUTES ACROSS

PRODUCT CATEGORIES

CATEGORY-SPECIFIC ATTRIBUTES

InnovativenessWillingness to talkSelf-confidence

GregariousnessCognitive differentiation

InterestKnowledgeSpecial-interest media exposure

Same ageSame social statusSocial exposure outside group

Mass Media Opinion

Leaders

Opinion

Receivers

(the masses)

Step 1 Step 2

Mass Media

Information

Receivers

Opinion

Receivers/

Seekers

Opinion

Leaders

Step 1a

Step 1b

Step 2

Step 3


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Issues in Opinion Leadership and Marketing Strategy: Marketers are aware of the power that opinionleadership exerts on consumer preference so they encourage word-of-mouth communication.

Eg: Sony Walkman attained its market share by word-of-mouth communication. Marketers strategy tostimulate opinion leaders are:

Programs Designed to Stimulate Opinion LeadershipAdvertisements Stimulating Opinion LeadershipWord of Mouth May Be UncontrollableCreation of Opinion Leaders

Programs Designed to Stimulate Opinion Leadership: Advertisement and promotional program designed topersuade consumers to tell your friends how much you like our product are one way in which marketersencourage consumer discussion of their product and services.

Advertisements Stimulating Opinion Leadership: Advertisements stimulate product discussion by portrayingpeople in the act of informal communication.Eg: informal communication of more women is often portrayed in TV advertisement of personal care products.

Word of Mouth May Be Uncontrollable: Word-ofmouth is difficult to control so both positive and negativeproduct information spreads like a forest fire.

Creation of Opinion Leaders: Product-specific opinion leaders can be created by taking socially involved orinfluential people and deliberating increasing their enthusiasm for a product category.

DIFFUSION OF INNOVATIONS

The framework of exploring consumer acceptance of new products is known as diffusion of innovationsTwo important processes under the study of diffusion of innovations are:

Diffusion process.Adoption process.

DDiiffffuussiioonn PPrroocceessss: The process by which the acceptance of an innovation (new product, new idea or new

service) is spread by communication to members of social system (target market) over a period of time. It is amacro process.

Elements of the Diffusion Process:

The InnovationThe Channels of CommunicationThe Social SystemTime

The Innovation:

Various definitions of innovation or new products are:

Firm-oriented definitionsProduct-oriented definitionsMarket-oriented definitionsConsumer-oriented definitions

Firm-oriented definitions:This approach defines a product as new when the company produces it or markets itfor the first time.


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Product-oriented definitions: This approach defines the newness of the product based on the feature inherentin the product and on the effect these features are likely to have on consumers.

Market-oriented definitions: This approach defines the newness of the product in terms of how muchexposure consumers have to the new products.

Consumer-oriented definitions: Consumer-oriented approach a new product is any product that a potentialconsumers judges to be new.

The channels of communication: Communication channels helps in spreading the innovation to the targetmarket. Some of the sources of communication are:

Word-of-mouth communication.Impersonal sources (advertising and editorial matters)Interpersonal sources (salespeople and informal opinion leaders)

The social system: A social system is a physical, social or cultural environment to which people belong andwithin which they function.

Eg: for a new hybrid seed corn the social system is all the farmers.

Time:

Time is a backbone of diffusion process.Three aspects under this are:

The amount of purchase timeThe identification of adopter categoriesThe rate of adoption

Purchase time:Purchase time is the amount of time that elapses between consumers initial awareness of a new product

and point at which they purchase or reject it. This gives information about the total time taken by the newproduct to achieve widespread adoption.

Adopterscategories:

A sequence of categories that describes how early (or late) a consumer adopts a new product in relationto other adopters.

Adopter categories are:Innovators:

VenturesomeVery eager to try new ideasAcceptable if risk is daringMore cosmopolite social relationshipsCommunicates with other innovators

Early Adopters:

Respected

More integrated into the local social systemThe persons to check with before adopting a new ideaCategory contains greatest number of opinion leadersAre role models

Early Majority:

DeliberateAdopt new ideas just prior to the average timeSeldom hold leadership positions


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Deliberate for some time before adoptingLate Majority:

SkepticalAdopt new ideas just after the average timeAdopting may be both an economic necessity and a reaction to peer pressuresInnovations approached cautiously

Laggards:Traditional

The last people to adopt an innovationMost localite in outlookOriented to the pastSuspicious of the new

Rate of adoption:The time taken by a new product to get adopted to the members of social system. Marketers adopts two

types of policy to increase the adoption rate:Penetration policySkimming policy

AAddooppttiioonnPPrroocceessss:

The stages through which an individual consumer passes in arriving at a decision to try (or not to try), to

continue using (or discontinue using) a new product. It is a micro process.Stages in adoption process:

NAME OF STAGE WHAT HAPPENS DURING THIS

STAGEEXAMPLE

Awareness Consumer is first exposed to the

product innovation.

Jane sees an ad for a new MP3 player in the magazine

she is reading.

Interest Consumer is interested in theproduct and searches foradditional information.

Janet reads about the MP3 player on the manufacturers

Web site and then goes to an electronics store near herapartment and has a salesperson show her a unit.

Evaluation Consumer decides whether ornot to believe that this product orservice will satisfy the need--a

kind of mental trial.

After talking to a knowledgeable friend, Janet decidesthat this MP3 player will allow her to easily downloadthe MP3 files that she has on her computer. She alsofeels that the units size is small enough to easily fit intoher belt ack.

Trial Consumer uses the product on a

limited basis

Since an MP3 player cannot be tried like a small tubeof toothpaste, Janet buys the MP3 player online from

Amazon.com, which offers a 30-day full refund policy.

Adoption(Rejection)

If trial is favorable, consumerdecides to use the product on afull, rather than a limited basis--if unfavorable, the consumer

decides to reject it.

Janet finds that the MP3 player is easy to use and thatthe sound quality is excellent. She keeps the MP3

player.

NAME OF

STAGE

WHAT HAPPENS DURING

THIS STAGE

EXAMPLE


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Profile of consumer innovators:Defining the Consumer InnovatorInterest in the Product CategoryThe Innovator Is an Opinion LeaderPersonality TraitsMedia HabitsSocial CharacteristicsDemographic Characteristics

Defining the Consumer Innovator: Consumer innovators are small group of consumers who are the earliestpurchaser of a new product.

Interest in the Product Category: Consumer innovators are more interested in the product category becausethey are the early purchaser of the new product.

The Innovator Is an Opinion Leader: Consumer innovators provide other consumers with information oradvice about new product and influence the behaviour of others so they are called as opinion leaders.

Personality Traits:

Consumer innovators areLess dogmatic: approach new product with openness.Need for uniqueness: they feel to be seen unique by using new products.Inner-directed: they rely on their own values and standards while making decisionHigh optimum stimulation level: individuals who seek unusual experience.Variety seeking: they are brand switcher and try new products.

Media Habits: Consumer innovators are less likely to watch TV. They used to read special interest magazines.Social Characteristics: Consumer innovators are more socially involved and socially accepted by others.Demographic Characteristics: The demographic characteristics of consumer innovators are:

Young personHigher personal income

More formal educationHigher occupational status

CONSUMER DECISION MAKING PROCESS:Stages:

1. Need Recognition: The process of buying a service begins with the recognition that a need or wantexists. Maslows hierarchy specifies 5 need categories.

a. Physiological needs: Biological needs such as food water and sleep.b. Safety needs: Shelter, protection and security.c. Social needs: Affection, friendship and acceptance.d. Ego needs: Prestige, success, accomplishment and self esteem.

e. Self actualization: Self-fulfillment and enriching experience.2. Information Search: When purchasing services, consumers seek and rely greater extent on personal

sources for the following reasons:a. Mass and selective media can convey information about search qualities but can communicate

little about experience qualities.b. Non personal sources of information may not be available.c. Because consumers can discover few attributes before purchase of a service, they may feel

greater risk in selecting the little-known alternative.


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d. Consumers find post purchase information as essential because services possess experiencequalities.

The degree of perceived riskwould appear to be involved in the purchase of services because servicesare intangible, non standardized and usually sold without guarantees or warranties.

3. Evaluation of service alternatives: Faced with the task of collecting and evaluating experiencequalities, consumers may simply select the first acceptable alternative rather than searching manyalternatives. In consumer behaviour terms, the consumers evoked set of alternatives is smaller withservices than with the goods. Technology is also a viable alternative for many services. The internet has

the potential to widen the set of alternatives.4. Service purchase and Consumption: Services are experiences, moods and emotions are critical factors

that shape the perceived effectiveness of service encounters.a. Positive moods can make customers more obliging and willing to participate in behaviours that

help service encounter succeed.b. Moods and emotions influence service customers is to bias the way they judge service

encounters and providers.c. Finally moods and emotions affect the way information about the service is absorbed or

retrieved.5. Post purchase Evaluation:

a. Attribution of dissatisfaction: When consumers are disappointed with purchasesbecause the

products did not perform satisfactorily, they may attribute their dissatisfaction to a number ofdifferent sources, among them the producers, the retailers, or themselves.

b. Innovation diffusion: The rate of diffusion of an innovation depends on consumers perceptionsof the innovation with regard to 5 characteristics: relative advantage, compatibilityCommunicability, divisibility and complexity.

c. Brand loyalty : The degree to which consumers are committed to particular brands of goods orservices depends on a number of factors:

1. The cost of switching brands (switching cost)2. Availability of substitutes3. The perceived risk associated with the purchase4. The degree to which they have obtained satisfaction in the past

MODELS OF CONSUMER DECISION PROCESS:NICOSIA MODEL:

Francesco Nicosia formulated this model. He says the act of purchase itself is more complex decisionprocess. This model focus on conscious and deliberate decision making behaviour. The fields are componentsare:

The firms attributes and outputs or communications and the consumers psychological attributes.

The consumers search for and evaluation of the firms output and other available attributes.The consumers motivated act of purchase.The consumers storage or use of the product.

Limitations:The flow is incomplete in its treatment of numerous factors internal to the consumers.Assumption that consumer begins the decision process with no predisposition regarding involved firms

is restricting.

HOWARD-SHETH MODEL:This model depicts rational brand choice behaviour by buyer under conditions of incomplete

information and limited abilities.


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Four major components are:Input variablesOutput variablesHypothetical constructsExogenous variables

Input variables:Significant stimuli: these are actual elements of brands that the buyer confronts.Symbolic stimuli: producers representing their products in symbolic form such as in ad generate these.

Social stimuli: these are generated by social environment including family and groups.

Output variables:Attention: the magnitude of the buyers information intake.Comprehension: the buyers store of information about a brand.Attitude: the buyer evaluation of particular brand potential to satisfy his motives.Intension: the buyers forecast of which brand he will buy.Purchase behaviour: the actual purchase act.

Hypothetical constructs:

The perceptual constructs are:

Sensitivity to information: the degree to which the buyer regulates the stimulus information flow.Perceptual bias: distorting or altering information.Search for information: active seeking of information about brands.

The learning constructs are:Motive: general or specific goals impelling action.Brand potential of the evoked set: the buyer perception that the brand in the evoked set will

satisfy his needs.Decision mediators: the buyers mental rule of matching and ranking purchase alternatives

according to his motives.Inhibitors: environmental factors such as price which restrain purchase of a preferred brand.Satisfaction

Exogenous variables: These are not well defined as they are external to buyers.Limitations:

No sharp distinction between exogenous and other variables.Some variables are not well defined and difficult to measure.This model is complex.

ENGEL-KOLLAT MODEL: This model is developed in 1968 by Engel, Kollat and Blackwell.The steps in decision process that occurs overtime are:

Motivation and need recognitionSearch for information

Alternative evaluationPurchaseOutcomes

The variables are grouped into four categories. They are:Stimulus inputsInformation processingDecision processVariables influencing the decision process


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Two different mode of operation by consumers are:Extended problem solving: it is characterized by high level of involvement and high perceived

risk so satisfaction with the brand gives commitment to use the brand.Limited problem solving: it is characterized by low level of involvement and low perceived risk

so motivation to search for brand information is low and consumers will engage in non rigorous evaluation ofalternatives.

Limitations:The role of some variables are vague.

The role of motives in influencing behaviour is also vague.This model is mechanistic in its treatment of decision process.

Basic Model of CB:

Stages Psycho Process

Problem recognition Motivation

Info Search Perception

Alternative Evaluation Attitude Formation

Purchase Decision Integration

Post Purchase Evaluation Learning

Economic Model: Under the model, CB is one dimensional. Buying decisions are based on the concept ofutility. Assuming that a human being is always rational, he will make his purchase decision with the intention ofmaximizing his utility. It is based on certain predictions of buying behavior:

Price-effect- lesser the price of the product, more the qty. purcha sed( this model doesnt takeinto consideration diminishing marginal utility)

Lesser the price of substitute product, lesser will the qty. of the original product bought. Thisis called substitution effect.

More the purchasing power, more will the qty. purchased i.e. income effect.It doesnt take into consideration effective component of human mind and it doesnt take into consideration the

products having no substitute like life saving medicines.

Learning Model: Classical psychologists have been interested in formation and satisfaction of needs and tastesAccording to them, living beings were influenced by both innate needs like hunger, thrust, sex, shelter andlearned needs like fear and guilt. A drive or internal stimulus which when directed towards a drive reducingobjects becomes a motive. Products and services act as a stimulus to satisfy these drives. It only takes care ofeffective component but not the rational component of consumer mind.

Psycho-Analytical Model:Based on the research by psychologists in the area of personality. This model isbased on the theory by Sigmund Fraud. Herein, human needs operate at the conscious as well as sub-consciousminds. Human beings are considered to have 3 states which work in tandem. They are:

ID-A source of all psychic energy, which drives us to action. It is most basic innate nature.

Super Ego-It is an internal representation of what is approved by society.

Ego-The conscious directing ID impulses to find gratification in a society accepted manner.

On the basis of this, human behavior is said to be directed by a complex set of deep seated motives. Therefore,buyers will be influenced by symbolic factors while buying a product. Marketers use this approach to generateideas for development of product design features, advertisements and other promotional techniques. It doesnttake into consideration internal traits of an individual according to the trait theory.


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Sociological Model: As per the model, an individual is a part of institution called as society. Since he is livingin society he gets influenced by it through his life experiences. This individual in turn also influences thesociety. The two work in tandem towards growth and development. The individual lays several formal andinformal associations like that of a family member, a student or an employee or active member of an informalactive social organization. This in turn influences product choices and service selection.

Black box Model: As per this model, human mind is complex model of observable, identifiable and measurablevariables which are

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