consumer behaviour - unit i

CONSUMER BEHAVIOR

CONSUMER

PERCEPTION/SENSATION

COGNITION

AFFECT

BELIEFS

SOCIAL ANDOTHER INFLUENCE

INFOSEARCH

CHOICES

PREFERENCES

COMMUNICATION

MARKETRESEARCH

STRATEGY

Influences on and of Consumer Behavior

True or False?1. If you have bad breath, you cannot smell it

yourself.2. If you eat a balanced diet, you do not need

vitamin supplements.3. Using a razor with five blades will reduce the

likelihood of cutting yourself and will result in less skin irritation.

4. Dell Computers tend to be of higher quality than those made by HP and Sony.

5. Rust stains on clothes can be removed with the use of lemon juice. Bleach actually makes these stains worse.

Questions Faced By Consumers• Are veggie burgers actually healthy?• What makeup should you use to get an “even”

skin tone?• Do I get any useful benefits from spending

more than $125 on a digital camera?• Should I get a “make-over?” What am I

looking for? What should I do?• Is my mechanic honest?• Which tie should I wear for a job interview?• Should I give my wife roses, chocolate, or

software?

Consumer Problems and Recognition

• Consumer problem: Discrepancy between ideal and actual state--e.g., consumer:– Has insufficient hair– Is hungry– Has run out of ink in his or her

inkjet cartridge• Problems can be solved in

several ways--e.g., stress reduction <----- vacation, movie, hot bath, medication

CONSUMER DECISIONS:Theory and Reality in Consumer Buying

INFORMATIONSEARCH

PROBLEMRECOGNITIO

N

EVALUATION OF

ALTERNATIVES PURCHASE

POSTPURCHASE

EVALUATION/BEHAVIORS

Theory

Complications

Approaches to Search for Problem Solutions

INTERNAL

EXTERNAL

MemoryThinking

Word of mouth, media,store visits, trial CATALOG

Options Identified and Considered

UNIVERSAL SET

RETRIEVED SET

EVOKED SET

All possible options

Options that readily come to mind

Options that will be considered by the consumer

Note: Retrieved and evoked sets will vary among different consumers

REMINDER• For low involvement

products, efforts aimed at affecting internal search tend to be more effective—the consumer is usually not willing to expend energy on external search.

• External search is more likely for higher involvement products.

Decision Making Issues

• Involvement level– Temporary– Enduring

• Consumer locus of control– Internal– External

• Product category complexity• Consumer knowledge

Evaluation Type

– Compensatory: Decision based on overall value of alternatives (good attribute can outweigh bad ones)

– Non-compensatory: Absolutely must meet at least one important criterion (e.g., car must have automatic transmission)

– Hybrid: Combination of the two (e.g., one non-compensatory measure, then compensatory tradeoffs on other attributes

– Abandoned strategy: Consumer finds initial criteria unrealistic and proceeds to less desirable solution

IMPORTANT

LESSIMPORTANT

Heuristics—Low Involvement Decision Rules

• If either Coke or Pepsi is on sale, buy that brand; otherwise, buy Coke

• The larger the navels, the better the orange

• The larger package is likely to offer a lower unit price (not true in reality)

Attitudes―components

BELIEFS AFFECT(FEELING)

BEHAVIORALINTENTIONS

Attitude Components• Beliefs

– Can be positive, negative, or neutral

– May or may not be accurate

– May contradict other beliefs held by the other person

• Affect– May be positive or negative– May take on specific

dimension (e.g., pleasure, disgust)

• Behavioral Intentions– An individual’s plan or

expectations of what he or she will do

– May appear inconsistent with beliefs

– May not predict well what the individual will do in reality

Generating Beliefs Through Advertising• Statements must be– Perceived– Comprehended– Remembered– Believed (at least in part)

Positioning Through Creating Beliefs• “It’s not delivery; it’s De Journo!”• “Wal-Mart. Always low prices.

Always.”• “I just saved a bunch of money on

my auto insurance.”• “U-um Good!” (Campbell’s Soup)

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Consumer Behaviour

The behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.

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Personal Consumer

The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend.

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Development of the Marketing Concept

Production Concept

Selling Concept

Product Concept

Marketing Concept

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The Production Concept

• Assumes that consumers are interested primarily in product availability at low prices• Marketing objectives:–Cheap, efficient production– Intensive distribution–Market expansion

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The Product Concept

• Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features

• Marketing objectives:–Quality improvement–Addition of features

• Tendency toward Marketing Myopia

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The Selling Concept

• Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so

• Marketing objectives:– Sell, sell, sell

• Lack of concern for customer needs and satisfaction

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The Marketing Concept

• Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition

• Marketing objectives:– Profits through customer satisfaction

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Business Leaders Who Understood Consumer Behaviour

• Alfred Sloan, General Motors• Colonel Sanders, KFC• Ray Kroc, McDonald’s

http://www.gm.com/company/corp_info/history

http://kfc.ca/

http://mcdonalds.ca/

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Implementing the Marketing Concept

• Consumer Research• Segmentation• Targeting• Positioning

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Segmentation, Targeting, and Positioning

• Segmentation: process of dividing the market into subsets of consumers with common needs or characteristics

• Targeting: selecting one ore more of the segments to pursue

• Positioning: developing a distinct image for the product in the mind of the consumer

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Successful Positioning

• Communicating the benefits of the product, rather than its features

• Communicating a Unique Selling Proposition for the product

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The Marketing Mix

• Product• Price• Place• Promotion

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The Societal Marketing Concept

• All companies prosper when society prospers.

• Companies, as well as individuals, would be better off if social responsibility was an integral component of every marketing decision.

• Requires all marketers adhere to principles of social responsibility.

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Digital Revolution in the Marketplace

• Allows customization of products, services, and promotional messages like never before

• Enhances relationships with customers more effectively and efficiently

• Has increased the power of customers and given them access to more information

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Digital Revolution in the Marketplace - Continued

• The exchange between consumers and marketers has become more interactive

• May affect the way marketing is done

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Why study consumer behaviour?

• Understanding consumer behaviour will help you become better marketers as it is the foundation for Segmenting markets Positioning products Developing an appropriate marketing

continued

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• Knowledge of consumer behaviour is essential for non-profit organizations–Non profits have different customers to

please–Donors, users, volunteers, general public,

government» continued

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Why study consumer behaviour? • Public service initiatives have to be

based on an understanding of consumer behaviour–Canada’s largest advertiser is the federal

government–Most government initiatives (e.g.,

antismoking campaigns) need a knowledge of consumer behaviour to succeed

» continued

1-35


• Better understanding of our own consumption behaviour

ConsumerPurchaseDecision

Motives

Personality

Needs

Perception

Learning

AttitudesBu

sine

ss

Culture

Economic

Family

Social

SIMPLE MODEL FOR CONSUMER BEHAVIOUR

MODELS OF CONSUMERBEHAVIOUR

Important models of consumer behaviour:

• The Economic Model• Learning Model• Psychological Model• The Sociological Model• The Howard Sheth Model of buying behaviour• The Nicosia Model• The Engle-Kollat-Blackwell Model• Engle, Blackwell and Miniard (EBM) Model• Webstar and Wind Model of organizational buying

behaviour • The Sheth Model of Industrial buying

Traditional Models• The Economic Model• Learning Model• Psychological Model• The Sociological Model

Contemporary Models• The Howard Sheth

Model of buying behaviour

• The Nicosia Model• The Engle-Kollat-

Blackwell Model• Engle, Blackwell and

Miniard (EBM) Model• Webstar and Wind

Model of organizational buying behaviour

• The Sheth Model of Industrial buying

Economic Model:This model assumes that with limited purchasing power and a set of needs and tastes, a consumer will allocate his/ her expenditure over different products at a given prices so as to maximize utility.Bases for Economic Model:

– Price Effect– Substitution Effect– Income Effect

Criticism:• Fails to explain how does the consumer actually behave.• Incompleteness in the Model.• Lack of broader perspective.

Learning Model: This model help marketers to promote association of products with strong drivers and cues, which would lead to positive reinforcement from the consumers.

In marketing context, ‘learning’ will help marketers to understand how consumer learn to respond in new marketing situations, or how they have learned and respond in the past in similar situations.

As Consumers also learn to discriminate and this information will be useful in working out different marketing strategies.

Psychological Model:This model based on the work of psychologists who were concerned with personality. The view was human needs and motives operates on buying.This theory was developed by Sigmund Frued. Acc. To him human behaviour is the outcome of

– Id– Super Ego– Ego

This model is concerned with personality and says that human behaviour to a great extent is directed by a complex set of deep seated motives.

Helps the marketer to know how buyers influenced by symbolic factors in buying a product.

The Sociological Model:As per this model, an individual buyer is a part of the institution called society, gets influenced by it and in turn, also influences it in its path of development.

The interactions with all the set of society leave some impressions on him and may play a role in influencing his buying behaviour.

The marketers, through a process of market segmentation can work out on the common behaviour patterns of a specific class and group of buyers and try to influence their buying pattern.

The Howard Sheth Model of buying behaviourIt attempts to throw light on the rational brand behaviour shown by buyers when faced with situations involving incomplete information and limited abilities.

The model refers to three levels of decision making:• Extensive problem solving• Limited problem solving• Routinized response behaviour

The model has borrowed the learning theory concepts to explain brand choice behaviour when learning takes places as the buyer moves from extensive to routinized problem solving behaviour.

Four components involved in the model:

• Input variables • Output variables• Hypothetic constructs• Exogenous variables

The model makes significant contribution to understand consumer behaviour by identifying the variables which influence consumers.

Input Variables: these variables acts as stimuli in the environment. Stimuli can be of Significative, Symbolic & Social

Significative stimuli are those actual elements of brands which the buyer confronts, where as Symbolic stimuli are those which are used by marketers to represent their products in a symbolic form. Social stimuli are generated by the social environment such as family, friends, groups etc.

Output variables: These are which buyer’s observable responses to stimulus inputs. They appear in the sequence as below:• Attention: Based on the importance of the buyer’s

information intake.• Comprehension: the store of information the buyer has

about the brand.• Attitude: the buyer’s evaluation of the particular brand's

potential to satisfy his or her motives.• Intention: the brand which the buyer intends to buy.• Purchase behaviour: the act of actually purchasing,

which reflects the buyer’s predisposition to buy as modified by any of the inhibitors.

Hypothetical Constructs:The model proposes a number of intervening variables which have been categorised into two major groups: perceptual and learning constructs.

Perceptual Constructs include:• Sensitivity to information: the degree to which the buyer

regulates the stimulus information flow.

• Perceptual bias: refers to distorting or altering information

• Search for information: it involves actively seeking information on the brands or their characteristics.

The buyer’s learning constructs can be defined as:• Motives are general or specific goals impelling action.• Brand potential of the evoked set refer to the buyer’s

perception on the ability of brands in his pr her evoked set to satisfy his or her goals.

• Decision mediators are based on the motives. The buyer will have certain mental rules for matching and ranking the purchase alternatives.

• Predisposition refers to a preference towards brand in the evoked set which expresses an attitude towards them.

• Inhibitors refers to environmental forces like price and time pressure which may inhibit or put restrain on the purchase of a preferred brand.

• Satisfaction the extent to which, post actual purchase will measure upto the buyer’s expectation of it.

• Exogenous variables: These are list of a number of external variables (external to the buyer) which can significantly influence buyer decisions.

The Howard Sheth Model of buying behaviour

Limitations of the model:

• There is a absence of sharp distinctions between exogenous variables and other variables.

• Some of the variables, which are not well defined, and are difficult to measure too.

• The model is quite complex and not very easy to comprehend.

The Nicosia ModelThis model attempts to explain buying behaviour by establishing a link between the organisation and its prospective customer. It analyse human being as a system with stimuli as the input to the system and the human behaviour as an output of the system.

The model suggests that message from the first influences the predisposition of the consumer towards the product or services. Based on the situation, the consumer will have a certain attitude towards the product. This may result in a search for the product or an evaluation of the product attributes by the consumer.

If the customer satisfies with above it may result in a positive response, with a decision to buy the product otherwise the reverse may occur.

The Nicosia Model explains in 4 basic areas:Field 1:- the consumer attribute and the firm’s attributes. The advt. message sent from the company will reach the consumer attributes. Field 2:- it is related to the search and evaluation, undertaken by the consumer, of the advertised product and also to verify if other alternatives are variable.

Field 3:- it explains how the consumer actually buys the product.

Field 4:- it is related to the uses of the purchased items. It can also be related to an output to receive feedback on sales results by organisation.

The Nicosia Model

Limitations:

• The flow is not completed and does not mention the various factors internal to the consumer.

• The assumption about the consumer being involved in the decision process with no predisposition about the various brands is restricting.

• Overlapping between firm’s attributes and consumers attributes.

The Engel – Kollat – Blackwell (EKB) Model:• This model talks of consumer behaviour as a decision

making process in the form of five steps (activities) and other related variables which occur over a period of time.

• 5 steps involved in the decision process: – Problem Recognition– Information Search– Alternative Evaluation– Choice– Outcome

• Other related Variables included in this model:– Information input– Information processing– Product – brand evaluation– General motivating influences– Internationalised environment influences

About the model• The model has emphasised on the conscious decision

making process adopted by a consumer.• The model is easy to understand and is flexible.• This model recognises that a consumer may not go

through all the steps always. This is because in case of repeat purchases the consumer may bypass some of the steps.

• One limitation, the inclusion of environmental variables and general motivating influences but not specifying the effect of these on the buyer behaviour.

Engel, Blackwell and Minirad (EBM) Model:• It shares certain things with Howard-Sheth model.

• The core of the EBM model is a decision process which is augmented with inputs from information processing and other influencing factors.

• Four sections of the Model:• Input• Information Processing• Decision process and• Variables influencing decision process.

• The EBM Model when compared to the Howard-seth model is more coherent and flexible than the latter.

• This model also includes human processes like memory, information processing and considers both the positive and negative purchase out comes.

Consumer Buying Behavior

• Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption.

• All these consumers make up the consumer market.

• The central question for marketers is:– “How do consumers respond to various marketing

efforts the company might use?”

HighInvolvement

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

LowInvolvement

Types of Buying Decision Behavior –Lawson’s model

ComplexBuying

Behavior

Variety-Seeking

Behavior

Dissonance-Reducing Buying

Behavior

HabitualBuying

Behavior

Model of Buyer Behavior – Lawson’s model

Marketing and Other Stimuli

MarketingProductPricePlacePromotionOtherEconomicTechnologicalPoliticalCultural

Buyer’s Black Box

Buyer CharacteristicsBuyer Decision Process

Buyer Responses

Product ChoiceBrand ChoiceDealer Choice

Purchase TimingPurchase Amount

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• Stimulus Response Model– Marketing and other stimuli enter the buyer’s

“black box” and produce certain choice / purchase responses.

– Marketers must figure out what is inside of the buyer’s “black box” and how stimuli are changed to responses.

Model of Consumer Behavior

?

Factors Influencing Consumer Behavior-Lawson’s model (Fig.2.3)

Social

Referencegroups

Family

Rolesand

status

PersonalAge andlife-cycle

OccupationEconomicsituationLifestyle

Personalityand

self-concept

Psycho-logical

MotivationPerception

LearningBeliefs andattitudes

Buyer

Culture

Sub-culture

Socialclass

Cultural

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Characteristics Affecting Consumer Behavior

• Culture• Subculture– Hispanic consumers– African Americans– Asian Americans– Mature consumers

• Social Class

Cultural Social Personal Psychological

Key Factors

6 - 71

• Hispanics– 35 million consumers

purchase $425 billion worth of goods and services.

– Expected to grow 64% in 20 years.

– Spanish media makes group easy to reach.

– Brand loyal group.


6 - 72

Sears uses the Fiesta mobile to visit Hispanic neighborhoods regularly

6 - 73

• African Americans– 35 million consumers purchase

$527 billion worth of goods and services.

– Growing more affluent / sophisticated.

– Price and brand name conscious; quality and selection are important.

– Certain media target this group.


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Hallmark offers an Afrocentric line of greeting cards called Mahogany. What other brands have been targeted specifically to African Americans?

6 - 75

• Asian Americans– 10 million consumers

purchase $229 billion worth of goods and services.

– Fastest growing, most affluent subculture.

– Many nationalities comprise this group.

– Consumer packaged goods firms now target this group more heavily.


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• Mature Consumers– 75 million consumers age 50+will grow to 115 million

within 25 years.– Mature consumers

control 50% of all discretionary income.

– Attractive market for travel, restaurant, and cosmetics products, among others.


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• Groups– Membership– Reference

• Inspirational groups

– Opinion leaders• Buzz marketing

• Family– Kids can influence

• Roles and Status


Key Factors

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• Age and life-cycle• Occupation• Economic situation• Lifestyle

– Activities, interests, and opinions

– Lifestyle segmentation• Personality and self-

concept– Brand personality


Key Factors

6 - 79

Lifestyles:Jeep targets people who want to “leave the civilized world behind”

What other types of images could be used to appeal to this lifestyle?

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Think about Tide detergent. What brand personality seems to describe Tide best?Can you think of examples of brands that fit each personality type?

6 - 81


• Motivation– Needs provide motives– Motivation research– Maslow’s hierarchy of needs

• Perception– Selective attention, selective

distortion, selective retention• Learning

– Drives, stimuli, cues, responses and reinforcement

• Beliefs and attitudes


Key Factors

SOURCES OF EXTERNAL INFLUENCES ON CONSUMER BEHAVIOUR-Wilkie (1990)

SCOPE STRENGTH IMMEDIACY

CULTURE general High Long-term

SUBCULTURE general High Long-term

FAMILY specific High Long-term

FRIENDS specific High/low Long term/short term

MKT STIMULI specific low Long term/short term

SCOPE – the sweep or reach of the impactSTRENGTH- the power to impact behaviourIMMEDIACY – direct or focused influence on behaviour; the impactis felt with no or little influence coming into play.

Buyer Decision Process (Fig. 2.4)-Lawson’s model

PostpurchaseBehavior

PurchaseDecision

InformationSearch

Need Recognition

Evaluationof Alternatives

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The Buyer Decision Process

• Need recognition• Information search• Evaluation of

alternatives• Purchase decision• Postpurchase behavior

• Needs can be triggered by:– Internal stimuli• Normal needs

become strong enough to drive behavior

– External stimuli• Advertisements• Friends of friends

Stages

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Attempt to stimulate need recognition

Need or Problem Recognition

• The realization that there is a difference between actual and desired states– The higher the gap, the stronger the need (or

bigger the problem)

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Types of Problems

• Active Versus Inactive problems– Active: those you are aware of– Inactive: those that you are not yet aware of (but

exist)• Those that require immediate solutions and

those that do not require immediate solutions

14-88

Problem Recognition and Marketing Strategy

• Identify existing consumer problems and find solutions for these

• Lower the actual state• Increase the desired state• Increase the importance of the gap between actual

and desired states• Convert inactive problems to active problems• Convert problems into ones requiring an immediate

solution

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Pre-Purchase Search

• Types of Information Sources• Types of Information Sought• Factors Affecting Extent of Information Search

6 - 90




• Consumers exhibit heightened attention or actively search for information.

• Sources of information:– Personal– Commercial– Public– Experiential

• Word-of-mouth

Stages

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Figure 14-3: Types of Information Sources

PERSONAL

FriendsNeighborsRelativesCo-workersComputer salespeopleCalling the electronics store

IMPERSONAL

Newspaper articlesMagazine articlesConsumer ReportsDirect-mail brochuresInformation from product advertisements

Internal web site

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Types of Information Sought

• Brands or alternatives available• Evaluative criteria to be used – Generally, product features

• Ratings of brands on evaluative criteria

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• Evaluation procedure depends on the consumer and the buying situation.

• Most buyers evaluate multiple attributes, each of which is weighted differently.

• At the end of the evaluation stage, purchase intentions are formed.

Stages

The Buyer Decision ProcessStep 3. Evaluation of Alternatives

Product AttributesEvaluation of Quality, Price, & Features

Degree of ImportanceWhich attributes matter most to me?

Brand BeliefsWhat do I believe about each available brand?

Total Product SatisfactionBased on what I’m looking for, how satisfied

would I be with each product?

Evaluation ProceduresChoosing a product (and brand) based on one

or more attributes.

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• Two factors intercede between purchase intentions and the actual decision:– Attitudes of others– Unexpected situational

factors

Stages

The Buyer Decision ProcessStep 4. Purchase Decision

Purchase IntentionDesire to buy the most preferred brand

Purchase Decision

Attitudes of others

Unexpected situational factors

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• Satisfaction is key:– Delighted consumers

engage in positive word-of-mouth.

– Unhappy customers tell on average 11 other people.

– It costs more to attract a new customer than it does to retain an existing customer.

• Cognitive dissonance

Stages

The Buyer Decision ProcessStep 5. Postpurchase Behavior

Consumer’s Expectations of Product’s Performance

Dissatisfied Customer

Satisfied Customer!

Product’s Perceived Performance

Cognitive Dissonance

BUYER ROLESINITIATOR• First individual who suggests product/service should be

evaluated/purchased.INFLUENCER• Provides view and advice which are valued by others and can

subsequently influence the final decision.DECIDER• The individual who will take the decision in the buying process at

what, how , when and where to buy (store choice), etc.BUYER• The individual who actually makes the purchaseUSER• The individual who consumes or users the service/product.

FACTORS INFLUENCING SHOPPERS’ STORE CHOICE

Kelly and Stephenson ( 1967) identified 8 factors ;1. General store characteristics-reputation, no of stores2. Physical characteristics – décor,cleanliness, checkout

services.3. Convenience –time, parking etc.4. Products – variety, dependability, quality.5. Prices charged – value special sales.6. Personnel – courteous, helpful, friendly.7. Advertising –informative, aggressive, believable.8. Friends’ perception of the store- well known, liked,

reccommended.

ASSUMPTION ON CONSUMER BEHAVIOUR-Behavioural versus Cognitivists view

BEHAVIOURIST

COGNITIVIST

BEHAVIOURIST VERSUS COGNITIVIST APPROACHES

BEHAVIOURIST• Observed behaviour is all

important• People are info transmitters• People are all alike• Behaviour is rational• Human characteristics can

be studied independently.• Emphasis is on what a

person is and does.• Behaviour can be

understood

COGNITIVIST• What goes on in a person’s

mind is the key to comprehension.

• Behaviour is not predictable• People are info generators• Each person is unique• Behaviour is irrational• People must be studied as a

whole• Emphasis is on what a person can be.• Behaviour can never be completely

understood.

THEORIES OF CONSUMER BEHAVIOUR

• The Engel-Kollat-Blackwell (EKB) model.• Howard & Sheth model• Maslow’s Hierarchy model

The Engel-Kollat-Blackwell (EKB) model.

• First developed in 1968.• A key feature of the EKB model is the differences

between high and low involvement as part of the buying process.

• High involvement is present in the high risk purchase• Low involvement is present in the low risk purchase.

Models of Consumer Behaviour The Engel-Kollat-Blackwell (EKB) model

• Consumers are seen as active agents following rules of behaviour, fairly easy to follow and implement because they require only a limited amount of information and capability of elaboration

• For instance, a consumer, being aware of a certain need and believing a certain good category satisfies it, might fix a maximum price he/she can afford and search for the best good available under such a constraint.

Howard & Sheth model

• The model claims that a person’s purchase decision is often influenced by more than one individuals.

• A family buying decision involves multiple influences from its members.

• This theory shows the concept of role structure, that is individuals members of the family takes on roles such as collecting information, deciding on the information budget, etc.

• The theory also states that retailers /businesses are not only dealing with a homogeneous unit but a collection of individuals with different goals, needs, motives and interests.

Models of Consumer BehaviourHoward & Sheth model

• Acoording to the model, the 'inputs' (stimuli) that the consumer receives from his or her environment are:

1. significative - the 'real' (physical) aspects of the product or service (which the co make use of)

2. symbolic - the ideas or images attached by the supplier (for example by advertising)

3. social - the ideas or images attached to the product or service by 'society' (for example, by reference groups)

http://en.wikipedia.org/wiki/Input

http://en.wikipedia.org/wiki/Consumer

• The 'outputs' are what happens, the consumer's actions, as observable results of the input stimuli.

• Between the inputs and outputs are the 'constructs', the processes which the consumer goes through to decide upon his or her actions. Howard and Sheth group these into two areas:

1. perceptual - those concerned with obtaining and handling information about the product or service

2. learning - the processes of learning that lead to the decision itself

Models of Consumer Behaviour-Howard & Sheth model

MASLOW’S HIERARCHY MODEL• Theory of motivation developed by Abraham

Maslow(1943)• Illlustrated into low needs to high needs.• Comprises of physiological, safety, belongingness,

esteem and self actualization.• Can be applied by retailers to understand a targeted

segment’s needs and wants and offer the right product at the right price, promotion and place.

Physiological Needs(hunger, thirst)

Safety Needs(security, protection)

Social Needs (sense of belonging, love)

Esteem Needs (self-esteem)

Self Actualization

(Self-development)

Maslow’s Hierarchy of Needs (Fig. 2.5)

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The milk moustache campaign changed attitudes toward milk.

http://www.milksucks.com/

6 - 112

Buyer Decision Process for New Products

• New Products–Good, service or idea

that is perceived by customers as new.

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• Stages in the Adoption Process–Marketers should help

consumers move from awareness to adoption.

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Stages in the Adoption Process

Awareness Interest

EvaluationTrial

Adoption

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• Individual Differences in Innovativeness– Consumers can be classified

into five adopter categories, each of which behaves differently toward new products.

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Figure 6-7: Adopter Categories Based

on Relative Time of Adoption

6 - 117


• Product Characteristics and Adoption– Five product characteristics

influence the adoption rate.

6 - 118


Product Characteristics

Relative Advantage Compatibility Complexity Divisibility Communicability

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Factors That Affect the Type of Decision Making Process Used

• Importance of the decision• Extent of previous experience• Existence of well-established decision

criteria• Amount of information at hand about each

alternative• The number of alternatives available• Model of consumption being followed

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Factors that Increase the Level of Pre-purchase Search

• Product Factors: Higher search when– It is a long-lasting or infrequently used product– There are frequent changes in product styling– Large volume is purchased– The price is high– There are many alternative brands– There is much variation in features

» continued

14-122


• Situational Factors: Higher search when:– Experience is lower– Previous experience was unsatisfactory

• Social Acceptability: Higher search when:– Purchase is a gift– Product is socially visible in use

» continued

14-123


• Value-Related Factors: Higher search when:– Purchase is discretionary– All alternatives have both positive and negative

qualities– No agreement among users exists– Conflicting information is available– Other considerations exist

» continued

14-124


• Consumer Factors: Higher search when:– Consumers are well-educated, have higher

income levels and are younger– Consumers are low in dogmatism and risk

perception– Level of involvement is high– Shopping is seen as an enjoyable activity

» continued

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Evaluation of Alternatives – Types of Consumer Choice Processes

• Affective choices– More holistic; an overall evaluation – based on how one feels about a purchase

• Attribute-based choices– Have pre-determined evaluative criteria– May require both external and internal search– Complicated decision rules may be used

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Nature of Evaluative Criteria

• Can be tangible or intangible• Include surrogate indicators– Attributes that are used as indicators of another

attribute• Are often ranked in order of importance

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Consumer Decision Rules

• Procedures used by consumers to facilitate brand or other consumption-related choices

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Consumer Decision Rules

• Compensatory– Brands evaluated in terms of each relevant criteria

and the best brand (or one with the highest score) is chosen

• Non-compensatory– Positive evaluations do not compensate for

negative evaluations

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Non-Compensatory Consumer Decision Rules

• Conjunctive Decision Rule–Product attributes are identified– a minimally acceptable cutoff point is

established for each attribute–brands that fall below the cutoff point on

any one attribute are eliminated from further consideration.

» continued

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• Disjunctive Decision Rule– consumers identify product attributes–establish a minimally acceptable cutoff

point for each attribute– accept the brand that meets or exceeds the

cutoff for any one attribute

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• Lexicographic Decision Rule– Product attributes are identified– Product attributes are ranked in terms of

importance– brands are compared in terms of the attribute

considered most important– Brand that scores highest on the first attribute is

chosen– If there is a tie, the scores on the next attribute

are considered

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Information Search and Marketing Strategy

• Get products into consumers’ evoked set• Limit information search if your brand is the

preferred brand• Increase information search if your alternative

is not the preferred brand• Use point-of-purchase advertising effectively

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Alternative Evaluation and Marketing Strategy

• Identify decision rule used by target market and use suitable promotional messages

• Influence the choice of evaluative criteria• Influence the rating of your product on evaluative

criteria used• Use surrogate indicators effectively• Use ‘consumption vision’

http://www.swisswater.com/

CONSUMER BEHAVIOR IN RURAL MARKET

RURAL CONSUMER BEHAVIOR

• Consumer Buyer Behavior refers to the buying behavior of final consumers individuals and ‐households who buy goods and services for personal consumption.

• The consumer market in this case is Rural India.• About 70% of India’s population lives in rural areas.

There are more than 600,000 villages in the country as against about 300 cities and 4600 towns.

•

• Consumers in this huge segment have displayed vast differences in their purchase decisions and the product use.

• Villagers react differently to different products, colours, sizes, etc. in different parts of India.

FACTORS INFLUENCING BUYING BEHAVIOR

• The various factors that affect buying behavior of in rural India are:

1) Environmental of the consumer2) Geographic influences3) Family4) Economic factors5) Place of purchase6) Creative use of product

Cultural factors influencing consumer behaviour

1) Product (colour, size, design, and shape):2) Social practices3) Decision making by male head‐4) Changes in saving and investment patterns

Factors affecting consumer behaviorRural Taste Subject Urban Taste

Bold and Primary Colors Colors Liked Shades of Colors, Light Hues

Cinema, Nautanki, Dangals, Melas

Entertainment Theme Parks, Internet, Travel

Synthetics, Colourful Clothes Denim, Cottons, Designer

Red – Happiness, Auspicious. Green - Prosperity

Color Relevance Red – DangerGreen - Safety

Social factors• Touching feet• Hair should not be left open after washing.• Housing in rural areas based on caste and in urban

areas based on Socio economic class.• Influenced by NGOs, Opinion Leaders, Aanganwadi

workers.• Joint Family in rural areas and Nuclear Family in urban

areas.• Role and Status of Sarpanch, retired military personnel,

priests, teachers, medical practitioners.• Product choice features• Very Social in Rural Areas

Products and Status SymbolsRural Urban

Social/Political status Educational Degree

Tractor/Jeep/Car Car

Large Pucca House with courtyard House Locality

Children’s city education / jobs Children’s school / college

Land Airconditioning

Telephone Club membership

Pilgrimage Holiday Abroad

Technological Factors• Rural India is beginning to experience the impact of technology,

leading to major changes that are transforming the countryside. Opportunities, products, services, knowledge, information are all exploding.

• Introduced with the purpose and need to create an instant network for good governance, telecommunications has transformed rural India in so many other ways that is of interest to marketers. STD booths and PCOs have emerged as the new community centre in the villages for the exchange of news and views for every age group and therefore an important place for marketers to display brand communication messages.

Economic Factors

• The entire economic environment of rural India shows a much improved prosperity due to repeated benevolent monsoons, new and improved techniques, higher quality of inputs and increasing awareness and education on agriculture.

• Banking is reaching out to the doorstep of more and more farmers. Finance is now more readily available and so is credit.

Political Factors• Schemes launched by Government has led to the

development of rural areas.• The Government of India is empowering the Panchayati

Raj and other village institutions by making available developmental funds. This has resulted in major purchases of equipment and materials needed for infrastructure development.

• 30% compulsory representation of women in local bodies is leading to their empowerment, encouraging women in rural India to explore income generation and entrepreneurial activities.

Fundamentals of rural consumer behavior

• Demonstrations, Targeting Opinion Leaders, Employing Trained Sales Persons

• Lack of Strong Brand Consciousness• Generally ask for the product and not the

brand.• Indian consumers, on an average, try about six

brands of same package goods product in one year, compared to two for Americans.

Lifestyle of rural consumer

• Rural Consumer is very religious – Dabur developed a religious calendars and gave Hanuman Chalisa along with their products. Ganga made of milk and holy water of Ganga. Govinda as a Brand Ambassador.

• Rural Consumers prefer to work Hard themselves – Machines to be sold on the basis of benefits offered and not on the basis of comfort and convenience.

• Strong Family ties and respect for Family Values• Likes to play Cards and Hangs out at Choupal.

Rural Shopping Habits : Consumer Insights

• Preference for small or medium Package – Britannia’s Tiger Biscuits, Cavinkare’s Chik Shampoo, and small Coke for Rs. 5.

• Role of Retailer • Role of Opinion Leaders for durables – Opinion

Leaders like Sarpanch, village elders and educated Youth of the village.

Consumption by Age and Stages of the life cycleAge Life-Cycle stage Urban Rural

Below 12 Child Video games, Chocolates, beverages, health drinks

Toys, ice candy, daliya

13-19 Teenage Cell phones, motor cycles, Internet

Bicycle, television, cinema

20-40 Young Car, Personal Computer, branded clothing, alcohol, stores/malls

Motorcycle, telephone, LPG, tailored/unbranded clothes, local liquor, haat

40-60 Middle Aged Luxury Car, Credit Cards, House, health insurance, holiday trips

Tractors, Kissan Credit Card, postal savings, mela

Above 60 Old Clubs, theatre, parks Chaupal, Playing Cards, pilgrimage.

Occupation and Income

• In the rural sector, a range of goods and services beyond the very basic ones are bought by a consumer, influenced by the occupation and income of the individual. Fishermen buy a boat and large nets, whereas a farmer opts first for a tractor and pump set.

Lifestyle – Comparison of rural and urban Lifestyle

Dimensions Urban Rural

Demographics Convent Educated, salary earner, small nuclear family, large dense population, apartments

Govt school, self-employed, large family, small/scattered population, ordinary spacious houses

Activities Office jobs, internet surfing. Health club, shopping, clubs and party

Agriculture, physical sports, gossip, playing cards, cinema, religious congregation.

Interests Chinese, Continental foods, designer clothes, beauty salons, holiday trips

Desi food, milk, bright colored clothes, jewellery, visiting towns, markets/melas

Information Search and pre-purchase evaluation

• The rural consumer primary seeks and gets his information from opinion leaders and influencers, rather than the media. However, this information search is fuelled by exhibitions and road shows, because of the opportunity of personal interaction and leisurely pace of absorbing and understanding the information and its relevance.

• In the case of high involvement products, this information search needs to be supplemented by an out of village visit to a company outlet with an opportunity for personal interaction. The need to demonstrate individual accessories of the product and their performance also becomes critical.

• The ultimate clincher is always the ‘touch and feel’ experience. Anything less will not lead to a purchase.

Urban Buying Process Rural

High-involvement product, comfort, status, drive, consumer’s recognition for need

Need Recognition High involvement product - productivity drives consumer’s recognition for need.

First hand information from TV, Internet, Newspaper Ads/ Consults a fellow owner before dealer visit

Information search First hand information from a fellow owner and nearby dealer at district town.

Educated/aware understands, analyses technical specifications. At most looks for test drive

Evaluation of alternatives

Lower education and awareness. More importance to fellow owner and illustration of dealer. Consults opinion leader like progressive farmers. Live field demonstration.

Normally buyer makes final decision. Family influences color and looks,. Drives new car home with family.

Purchase decision Collective decision by buyer, adult son, mechanic and progressive village farmer.

Contd.Higher satisfaction or dissonance because of greater risk factor.Higher risk taking ability, because of wanting experimentation. After sales service no issue

Post-purchase behavior Higher satisfaction, lower dissonance. Because risk-taking is lower and expectation level is low. Low risk-taking ability because life-attached product, lack of technical know how, low confidence on after sales service.

Organizational Buying Behavior

Organizational Buyers• Types

– Industrial– Reseller– Government and non-

profit organizations

• Purchase types– Straight rebuy– Limited decision

making– Extended decision

making

• Characteristics– Greater involvement– Bureaucracy– Long term relationships– Price is important but

may not be the most important factor

Supplier-Buyer Relationship

• Why work closely?

• How?

Organizational Buying Process

1. Problem Recognition

2. General Description

of Need

3. ProductSpecifications

4. Supplier Search

5. Acquisitionand Analysisof Proposals

6. Supplier Selection

7. Selectionof

Order Routine

8. PerformanceReview

Three Buying Situations

1. New task2. Modified rebuy3. Straight rebuy

Three Buying Situations1. New Task

• New task—the problem or need is totally different from previous experiences.– Significant amount of information is required.– Buyers operate in the extensive problem solving

stage.• Buyers lack well defined criteria.• Lack strong predispositions toward a solution.

Three Buying Situations2. Modified Rebuy

• Modified rebuy—decision makers feel there are benefits to be derived by reevaluating alternatives.– Most likely to occur when displeased with the

performance of current supplier.– Buyers operate in the limited problem solving

stage.• Buyers have well defined criteria.

Three Buying Situations3. Straight rebuy

• Straight rebuy—the problem or need is a recurring or continuing situation.– Buyers have experience in the area in question.– Require little or no new information.– Buyers operate in the routine problem solving

stage.

Forces Influencing Organizational Buying Behavior

EnvironmentalForces

OrganizationalForces

GroupForces

IndividualForces

OrganizationalBuying

Behavior

•Economic Outlook: Domestic & Global•Pace of Technological Change•Global Trade Relations

•Goals, Objectives, and Strategies•Organizational Position of Purchasing

•Roles, relative influence, and patterns of interaction of buyingdecision participants

•Job function, pastexperience, and buyingmotives of individualdecision participants

A projected change in business conditions can drastically alter buying plan.

Forces on Organizational Buying

• Environmental Forces– Economic influences• ↓economy=• Selective shifts

– Technological influences• Foresee changes


• Organizational Forces– Role of purchasing agents– Should it be centralized?• Benefits

– Better integrate purchasing– Cut costs– Favorable terms– Work better with engineers– Specialization

• When to centralize or decentralize?


• Group Forces• Buying Center– Different people play different roles– New task– Straight rebuy/modified rebuy

• Predicting Composition– Why?

Forces on Organizational Buying• Group Forces (cont’d)– Buying center influences

• Users• Gatekeepers• Influencers• Deciders• Buyers

– Identifying patterns of behavior• Isolate personal stakeholders• Follow flow of information• Identify experts• Trace connections to the top• Understand purchasing’s role

Individual Forces• Differing Evaluative Criteria• Information-processing• Selective processing– Selective exposure– Selective attention– Selective perception– Selective retention

• Risk-reduction strategies– Perceived risk


Questions for the Industrial Salesperson

1. Which member takes part in the buying process?2. What is each members relative influence in the

decision?3. What criteria is important to members in the

evaluation process?

Members of the buying center assume different roles throughout the procurement process.

Clues for Identifying Powerful Buying Center Members