consumer behavior study material for MBA

UNIT – I INTRODUCTION 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 and services 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 or disposing of goods and services. - Loudon & Della Bitta Types of consumers: • Personal consumers • Organizational consumers What is consumer behaviour? Obtaining - purchase/ receipt of product Consuming - how, where, when and under what circumstances use product Disposing - get rid Consumer behaviour roles: Initiator: Individual who determines that some needs or want is not being met and authorizes to rectify the 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.

O Model of consumer behaviour: Feedback to consumer Individual Consumer Environmental Influence

Consumer Decision Making

Consumer Response

Feedback to environment

Methods of studying consumer behaviour: Observational approach In home observation Interviews and surveys Focus group Field experimentation Consumption research products Principles of consumer behaviour: Consumer is sovereign Consumer is global Consumers are different Consumer has rights APPROACHES TO THE STUDY OF CONSUMER BEHAVIOUR: Different approaches to studying consumer behaviour are:  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 eliminating the 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 Market opportunity analysis: - It involves analyzing the market to identify unsatisfied needs and wants. - The analysis begins with a study of general market trends such as consumers lifestyle and income levels which suggests unsatisfied needs and wants. Target market selection: - Market opportunity analysis results in the selection of target market ie distinct groupings of consumers who have unique wants and needs. - Eg: Colgate- Palmolive company segment consumers according to their life style pattern and personalities to identify a unique group of consumers for a certain type of deodorant soap. Market-mix determination: Marketing mix variables are:  Product

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Price Place Promotion

CONSUMERS DON’T ACT A UNIT – II CONSUMER AS AN INDIVIDUAL CONSUMER NEEDS AND MOTIVES CONSUMER NEEDS Need: Basic feel of desire Want: The means of satisfying the need Types of needs: o Biogenic need. o Physical need. o Psycogenic need. o Utilitarian or hedonic need Biogenic need:  The need for air, water and sunlight . Physical need:  The need for food, shelter and clothing. Psycogenic 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 daughter’s marriage shows attachment and affection. Utilitarian or Hedonic Need:  This need satisfies consumer’s 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:

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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: o Physiological needs. o Safety and security needs. o Social needs. o Ego needs. o Self-actualization needs.

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 need hierarchy.  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 tomorrow’s 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.

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Eg: Need for love, affection, belonging and acceptance.

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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.

Ego needs:

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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.  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.

MOTIVATION Definition:  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 the individual to engage in behaviour that he or she believes will satisfy the need and thus reduce the tension.

Learning Learning

Needs Needswants, wants, and desires and desires

Tension Tension

Drive Drive

Behavior Behavior

Cognitiv Cognitiv ee processes processes

Tension Tension reduction reduction

Goal Goaloror need need fulfillfulfillment ment

Role or functions of motives: The role of motive is to arouse and direct the behaviour of consumers. Some of the functions of motives are:  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: The types are:    

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

Arousal of motives: Four arousal of motives are:  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 oriented behaiour.

 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.  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 freud’s 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 so generalization of the result for large group will sometimes give wrong result.  This research generate more subjective opinion and it is difficult for the marketer to understand consumer behaviour.

PERSONALITY AND CONSUMER BEHAVIOUR Definition: 

Personality is defined as the inner psychological characteristics that both determine and reflect how a 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 Id o Superego

o Ego

Id: Warehouse of primitive or instinctual needs for which individual seeks immediate satisfaction. Eg: hunger, thirst, etc. Superego: Individual’s internal expression of society’s moral and ethical codes of conduct. It sees whether individual satisfies the need in the socially acceptable fashion. Ego: Individual’s conscious control that balances the demands of the id and superego  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 wordly 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 noninnovators. 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 otherdirectedness.  Inner-Directed: o Consumers who tend to rely on their own inner values o 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 direction o 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 products more readily than low OSL consumers. Sensation seeking:  A personality trait characterized by the need for varied, novel, and complex sensations and experience, 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 consumer’s degree to variety seeking  Examples: Exploratory Purchase Behavior Use Innovativeness Vicarious Exploration Cognitive personality factors: 

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Two cognitive personality traits are: Need for cognition. Visualizers vs verbalizers. • Need for cognition o A person’s craving for enjoyment of thinking o Consumers high in NC are more likely to respond to ads rich in product-related information o Consumers low in NC are more likely to be attracted to background or peripheral aspects of an ad. • Visualizers versus verbalizers o A person’s 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” or “out-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 - safety Perdue - freshness Nike - the athlete BMW - performance Levi’s 501 - dependable and rugged  Brand personification:  Associating a human-like character to a brand is called as brand personification.  Eg: dishwashing liquid – demanding task master.  Product personality and gender:  Associating a product or brand with a gender.  Eg: Mr.coffee – masculine personality. Bath soap – feminine personality.  Product personality and geography:  Certain product possess strong geographical association.  Eg: salem jasmine.  Personality and color:  Associating product personality with color.  Eg: coca-cola with red connotes excitement. CONSUMER PERCEPTION Definition: The process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world. [How we see the world around us] Elements of perception: The elements of perception are:  Sensation  Absolute threshold  Differential threshold  Subliminal perception  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 is never 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 Weber’s law is the theory concerning the perceived differentiation between similar stimuli of varying intensities. o Weber’s law states that “stronger the initial stimulus, the greater the additional intensity needed for 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 same increase of 25 cent to a gasoline is quickly noticed by the consumer(above j.n.d) o Marketing Applications of the JND o : 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 , lower price, etc.  Subliminal perception : o Perception of very weak or rapid stimuli received below the level of conscious awareness is called as subliminal perception. o Perception of stimuli that are above the level of conscious awareness is called as supraliminal perception or perception. Model or process of perception:

Dynamics of perception:  Perception is the result of two kinds of input: Physical stimuli from outside world Based 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 Factors for the stimulus to be perceived or selected:  Nature of the stimulus:  Marketing stimuli includes a number of variables that effect perception like brand name, ad, package design, etc.  The variables should be attention-compelling to get selected.  Eg: contract in package, poster like ads in magazines, etc  Expectations:  People see what they expect to see and they expect to see is based on familiarity, previous experience and expectations(preconditioned set).  Eg: when a person expect the movie to be terrifying will find it so.

 Motives:  People tend to perceive the things they need or want. Concepts Concerning Selective Perception : Concepts Concerning Selective Perception are:  Selective Exposure  Selective Attention  Perceptual Defense  Perceptual Blocking  Selective Exposure:  Consumers view messages that are pleasant and sympathetic and avoid painful or threatening one.  Selective Attention:  Consumer exhibit high awareness for the stimuli that meet their needs and lo awareness for stimuli that are irrelevant.  Perceptual Defense:  Consumers subconsciously avoid stimuli that are psychologically threatening.  Perceptual Blocking:  Consumers are bombarded with numerous stimuli and they block from conscious awareness. 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. 

Perceptual interpretation:  The interpretation of stumili is uniquely individual.  Influences of Perceptual Distortion: o Physical Appearances o Stereotypes o First Impressions o Jumping to Conclusions o Halo Effect  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 LEARNING: Definition: Consumer learning is the process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behaviour. Importance of Learning: Marketers must teach consumers: –where to buy –how to use –how to maintain –how 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: Motivation Cues Response Reinforcement Learning theories: Behavioural learning theories Cognitive 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: 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.

Unconditioned Stimulus Meat paste Unconditioned Response Salivation Conditioned Stimulus Bell Conditioned Stimulus AFTER REPEATED PAIRINGS Bell

Conditioned Response Salivation

Cognitive Associative Learning: Classical conditioning is viewed as the learning of associations among events that allows the organism to anticipate and represent its environment. From this viewpoint, classical conditioning is not reflexive action, but rather the acquisition of new knowledge. Neo-Pavlovian Conditioning: Creation of strong association between CS and US requires: •Forward Conditioning (CS Precedes US) •Repeated Pairings of CS and US •A CS and US that Logically Belong together •A CS that is Novel and Unfamiliar •A US that is Biologically or Symbolically Salient Strategic Applications of Classical Conditioning: Repetition Stimulus Generalization Stimulus Discrimination Repetition: Repetition increase the strength of association between CS and US so reduce the process of forgetting. Advertising wearout: though overlearning aids retention, at some point an individual will become satiated to numerous exposure and both attention and retention will decline. This is known as advertising wearout. To avoid this marketers use cosmetic variation(change in background, print types,etc) and substantive variation(change in the ad content). Three hit theory: three exposures to an ad are necessary for the ad to be effective .

Stimulus Generalization: The inability to perceive differences between slightly dissimilar stimuli. Imitative “Me-too” product succeed in the market place because of this. Stimulus generalization helps marketer for: Product line extension. Product form extension. Product category extension. Family branding. Licensing. Stimulus Discrimination: The ability to select a specific stimulus from among similar stimuli because of perceived differences is called as stimulus discrimination Positioning: the image or position that the product or service holds in the mind of consumer is critical for its success. Product differentiation: this strategy is designed to distinguish a product or brand from its competitors on the basis of attribute that is relevant and valuable to the consumers. 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. Rat kept in skinner box experiment. Reinforcement of behaviour: Positive Reinforcement: Positive outcomes that strengthen the likelihood of a specific response Example: Ad showing beautiful hair as a reinforcement to buy shampoo Negative Reinforcement: Unpleasant or negative outcomes that serve to encourage a specific behavior Example: Ad showing wrinkled skin as reinforcement to buy skin cream. Strategic application of Instrumental Conditioning: Customer Satisfaction (Reinforcement) Reinforcement Schedules –Shaping Massed versus Distributed Learning Observational Learning A process by which individuals observe the behavior of others and consequences of such behavior. Also known 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 environment Learning involves complex mental processing of information. Information processing: Information processing is related to both consumers cognitive ability and complexity of information to be processed. A cognitive theory of human learning patterned after computer information processing focuses on how information is stored in human memory and how it is retrieved. Information processing and memory stores:

Sensor y Store Rehearsal

Forgotten; lost

Workin g Memor y (Shortterm

Long -term Store Encoding

Forgotten; lost

Retention: Information is stored in long-term memory Episodically: by the order in which it is acquired Semantically: according to significant concepts. Models of cognitive learning:

Retrieval

Forgotten; unavailable

Involvement theory: It is also called as split-brain theory and is developed from the research stream called hemispheral lateralization. Involvement theory of consumer learning postulates that consumers engage in a range of information processing activity from extensive to limited problem solving, depending on the relevance of the purchase. Left hemisphere of the brain is responsible for cognitive activities and it is rational, active and realistic. Right hemisphere of the brain is concerned with nonverbal, pictorial information and it is emotional,implusive and intuitive Issues in Involvement Theory Involvement Theory and Media Strategy Involvement Theory and Consumer Relevance Central and Peripheral Routes to Persuasion Measures of Involvement Involvement theory and media strategy: Right brain: Individual passively process information in right brain with low involvement so repetition produces a change in consumer behaviour (eg: product purchase) which intern change the attitude of the consumer. Consistent with classical conditioning.

Media strategy: TV is a pictorial media so it is low inolvement media and repeated exposure of TV commercial 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-involvement purchase.Eg:automobiles and dandruff shampoo. Low personal relevance of the product and low perceived risk aids the consumer for low-involvement purchase. eg: dish washing liquid,etc. Highly involved consumers are narrow categorizers and uninvolved or low involved consumers are called as broad categorizer. Central and Peripheral Routes to Persuasion This theory proposes that highly involved consumers are best reached through ads that focus on the specific attributes of the product (the central route(left)) while uninvolved consumers can be attracted through peripheral advertising cues such as the model or the setting (the peripheral route(right)). Elaboration Likelihood Model (ELM): This theory suggests that a person’s 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.

Central HIGH Route

Involvement

Peripheral LOW Route

Message Arguments Influence Attitudes

Peripheral Cues Influence Attitudes

Measures of Consumer Learning Recognition and Recall Measures Aided and Unaided Recall Cognitive Responses to Advertising Copytesting Measures Attitudinal and Behavioral Measures of Brand Loyalty Brand loyalty CONSUMER ATTITUDES : Definition: A learned predisposition to behave in a consistently favorable or unfavorable manner with respect to a given object. What are Attitudes? The attitude “object”

Attitudes are a learned predisposition Attitudes have consistency Attitudes occur within a situation Structural Models of Attitudes: Tricomponent Attitude Model Muliattribute Attitude Model The Trying-to-Consume Model Attitude-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 experience with the attitude object and related information from various sources. This knowledge and perception take the form of belief. Affective Component: A consumer’s emotions or feelings about a particular product or brand. Conative Component

The likelihood or tendency that an individual will undertake a specific action or behave in a particular way with regard to the attitude object. Cognitive component shows the consumer intension to buy. Multiattribute Attitude Models: Attitude models that examine the composition of consumer attitudes in terms of selected product attributes or beliefs. Some of the models are: Attitude-towards-object model. Attitude-towards-behaviour model. Theory-of-reasoned-action model Attitude-toward-object model: Attitude towards a product is function of evaluation of product-specific beliefs or attributes. Consumers have favorable attitude towards brand which have adequate level of attributes. Consumers have unfavorable attitude towards brand which do not have adequate level of attributes. Attitude-Toward-Behavior Model: A model that proposes that a consumer’s attitude toward a specific behavior is a function of how strongly he or she believes that the action will lead to a specific outcome (either favorable or unfavorable). Theory of Reasoned Action: A comprehensive theory of the interrelationship among attitudes, intentions, and behavior. Theory of Trying to Consume: An attitude theory designed to account for the many cases where the action or outcome is not certain but instead reflects the consumer’s attempt to consume (or purchase). Attitude-Toward-the-Ad Model: 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 consumer’s attitude toward the ad and attitude toward the brand.

ATTITUDE FORMATION AND CHANGE: Attitude formation is the process of shifting from having no attitude to having some attitude about the given object. Issues in Attitude Formation : How attitudes are learned Sources of influence on attitude formation Personality 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 the brand 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 satisfactory experience. Information: When consumers try to satisfy their needs they form the attitude about the product based on the information exposure of that product. Sources of influence on attitude formation: Four main sources are: 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 vice–versa. Strategies of Attitude Change: 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 belief Improve your brand rating Add attribute Change 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 occurs when 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 their attitudes as an outcome of assessing their own or other people’s behavior. Issues in Attribution Theory Self-perception Theory Foot-In-The-Door Technique Attributions Toward Others Attributions Toward Things How We Test Our Attributions Self-perception Theory: A theory that suggests that consumers develop attitudes by reflecting on their own behavior. SELF IMAGE: Enduring image of themselves is called as self- image. Individual’s 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 personalities Virtual personalities may result in different purchase behavior COMMUNICATION AND PERSUATION: Definition: Communication is the transmission of a message from a sender to a receiver via a medium or channel of transmission. Components of communication:

Sender Receiver Medium Message Feedback Communication process: Message initiator(source). Target audience(receiver). Feedback(receivers response). Designing persuasive communication: Communication strategy: Establish communication objective. E.g.: promoting sales of a product. Perception, experience and memory are the factors of persuasion. Target audience: Identify appropriate audience and segment them to identify target group to develop a particular message strategy. Media strategy: Placement of ad in the specific media is important for success of the message. Message strategy: Message is a thought, idea, image or attitude.. Sender should analyze the target audience personal characteristic like education, needs, interest, etc to design a effective message. Message structure and presentation: Resonance: It is defined as a wordplay, often used to create double meaning. Eg: Pepsi’s slogan “hit the beach topless” next to Pepsi bottle cap lying in the sand. Message framing: Positive Message framing: stress the benefit of using specific product. Negative Message framing: stress the benefit to be lost of not using specific product. Comparative ad: Ad for a particular brand that says the advantage of their product and disadvantage of the competitor’s product Order effects: Primary effect Recency effect Repetition: Repetition aids in retention.

UNIT – III 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 mutual goals. Classification of groups:

Membership group: A membership group is one to which a person either belongs or would qualify for membership Symbolic group: A symbolic group is one in which an individual is not likely to receive membership despite acting like a member Reference group: Reference group is any person or group that serves as a point of comparison (or reference) 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 child’s normative reference group is its immediate family. Comparative Reference Groups : Reference groups that serves as a benchmark for specific or narrowly defined 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 to be 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 have direct 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 information about the product is not influenced by the reference group. On the other hand they seek for advice and are influenced . Credibility, attractiveness and power of reference group: A reference group that is perceived as credible, attractive 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 brand Provide the individual with the opportunity to compare his or her own thinking with the attitudes and behavior of the group Influence the individual to adopt attitudes and behavior that are consistent with the norms of the group Legitimize the decision to use the same products as the group Selected Consumer-Related Reference Groups : Friendship groups. Eg: influence product such as snack food, brand-name clothing, etc. Shopping groups. Eg: influence product such as Tupperware. Work groups. Eg: influence product such as Avon. Virtual groups or communities Consumer-action groups: youth development group, education group, etc. Reference Group Appeals: Celebrities: Famous personalities hold the viewers attention and promote the product. Eg: sharukhan promoting the navarathana talc powder. The expert: A person by his occupation is in unique position to help the consumers evaluate the product the advertisement promotes. Eg: ad for frying pan feature a chef explaining the product. The “common man”: Reference group appeal that uses a testimonial of satisfied customers. Eg: slice-of-life advertisement like Aswini hair oil. The executive and employee spokesperson: Top executives festure as a spokesperson in the ad. Eg: Frank Perdue CEO of Perdue chicken feature in the ad. Trade or spokes-characters: Familiar cartoon character feature in the ad to promote the product. Eg: Other reference group appeals FAMILY: Family is defined as two or more persons related by blood, marriage or adoption who reside together.

Households:

Family Households: Married couple, Nuclear family, Extended family

Households Non-Family Households: Unmarried couples, Friends/ Roommates, Boarders Types of families: Married couple: a husband and a wife. Nuclear family: A husband and wife and one or more children. 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 necessary to function as consumers. Socialization begins in early childhood and extends throughout a persons entire life. Model of socialization (slide) Consumer socialization of children:

Preadolescent children acquire their consumer behaviour norms through observation 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. Functions of a family: Economic well-being. Emotional support. Suitable family lifestyles. Family decision making and consumption roles:(slide) Family life cycle: Traditional life cycle: Stage I: Bachelorhood Stage II: Honeymooners Stage III: Parenthood Stage IV: Postparenthood Stage V: Dissolution Nontraditional life cycle: (slide) Family households. Non-Family households. SUBCULTURAL AND CONSUMER BEHAVIOUR: Definition: Subculture is a distinct cultural group that exists as an identifiable segment within a larger, more complex society. Importance: Subcultural 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 Nationality Religion Geographic region Race

examples Indian, American Hindu, Muslim Northeast, Midwest Tamilian, keralite

Age Gender Occupation Social class

senior citizen, teenager male, female engineer, doctor lower, middle, upper

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 Subcultures 200+ organized religious groups in the U.S. Primary organized faiths include: Protestant denominations Roman Catholicism Judaism Consumers 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 of describing others. Many regional differences exist in consumption behavior Westerners have a mug of black coffee Easterners have a cup of coffee with milk and sugar White bread is preferred in the South and Midwest Rye 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 billion They are brand loyal. Prefer high fashions and name brands “as a signal of their success”. Asian-American Consumers Currently about 12 million in size Estimated at 13 million in 2005 Gain of 54% since 1990 Age subculture: Four groups under this are: Generation Y Generation X Baby boomers Older consumers Generation Y: Born between 1977 and 1994; Also called echo boomers and millennium generation 3 Subsegments of Gen Y: Gen Y Adults(age 19-24) Gen Y Teens(age 13-18) Gen Y Tweens or kids(age 8-12) Appealing to generation Y: Shifts from TV viewing to using internet so they prefer internet shopping. Less likely to read newspaper. Not trust the stores their parents shop in. Generation X: Born between 1965 and 1979; Post baby boomer segment (also referred to as Xers or busters). They work to live. Job satisfaction is important than salary.. Expect work-life flexibility. Appealing to generation X: Puchase product with good brand name. This group choose to be with their own rights so marketers focus on fashion, music and language. Baby Boomers : Individuals born between 1946 and 1964 (approximately 45% of the adult population). The largest age category alive today Frequently make important consumer purchase decisions

Include a small subsegment of trend setting consumers (yuppies) who influence consumer tastes of other age segments. They are motivated consumers. They enjoying buying for themselves and for their homes. Seniors: Generally older consumers. Consist of subcultures, including the 50-plus market and the “elderly consumers” market. Three Senior Subsegments •The Young-Old (65-74) •The Old (75-84) •The Old-Old (85 and older) Gender as a subculture: Gender roles and consumer behaviour: Masculine traits: aggressiveness and competitiveness. Feminine traits: neatness, tactfulness, gentleness and talkativeness. Working woman: Segmentation issues: Four Segments of women are: Stay-at-Home Housewives Plan-to-Work Housewives Just-a-Job Working Women Career-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 home country. 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 initiatives like 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 Japan High-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 two or more nations are similar or different. Issues in Cross-Cultural Consumer Analysis Similarities and Differences Among People Time Effects The Growing Global Middle Class Acculturation Research Techniques Similarities and Differences Among People: Cross-cultural consumers analysis is used to determine how consumers of two or more societies are similar or different. This analysis helps the marketer to device appropriate individualized strategies to reach consumers in specific foreign market. Eg: IKEA furniture company offers 14 localized websites describing the product in the localized language. The Growing Global Middle Class: Growing middle class in developing countries is a attractive phenomenon to the global marketers. Middle class consumers have more discretionary(or spending) income which makes the marketers to target 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 marketers should use the research service facility available in the foreign nation to evaluate their potential maket. Research Issues in cross-cultural analysis:( (slide) Alternative multinational strategies: Global Vs local Favoring a “World Brand” Adaptive Global Marketing Framework for Assessing Multinational Strategies Global Local Mixed Global 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 exactly the same way regardless of the country in which they are sold but the advertisement is in the specific target language. Eg: P&G ‘s global brands are: Pantene, oil of Olay, etc. Adaptive Global Marketing: Some firm’s marketing strategy adapts their advertisement messages to the specific values of particular cultures. These firms follow “multilocal” strategies and are called as “glocal” companies.

Eg: McDonald’s, Reebok and Levi’s. Framework for Assessing Multinational Strategies:

PRODUCT STRATEGY

COMMUNICATON STRATEGY STANDARDIZED COMMUNICATIONS

LOCALIZED COMMUNICATIONS

STANDARDIZED PRODUCT

Global strategy: Uniform Product/ Uniform Message

Mixed Strategy: Uniform Product/ Customized Message

LOCALIZED PRODUCT

Mixed strategy: Customized Product/ Uniform Message

Local Strategy: Customized Product/ Customized Message

Marketing Mistakes: A Failure to Understand Differences

Product Problems Promotional Problems Pricing 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 - warmth Iran - death Sweden - coldness India - purity Promotional problem: The promotional message must be consistent with the language and customs of the particular target society. Pricing and Distribution Problems: Pricing and Distribution Policies should meet the local economic condition and customs of the target market. Eg: in many nations small sized product packages are necessary because consumers are not affordable for larger packs. SOCIAL CLASS CULTURAL ASPECTS: Definition: Social class is defined as the division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of all other classes have either more or less status. Social class and social status: Social class is measured in terms of social status. Social stratification: Social status is frequently thought of as the relatively rankings of members of each social class in terms of specific status factors. Status factors are wealth, power and prestige. Social comparison theory: individuals quite normally compare their own material possession with those owned by others in order to determine their relative social standing. Status and consumer purchasing power are related, individuals with more purchasing power have more status. Status consumption: The process by which consumers endeavor to increase their social standing through conspicuous consumption or possession. Socioeconomic variables as expression of status are family income, occupational status and educational attainment.

Social class is hierarchical and a natural form of segmentation: Social class categories are ranked in hierarchy ranging from low to high status. Hierarchical aspects of social class are important for the marketers because consumers purchase certain products favored by the members of higher social class and avoid certain product, as they are perceived as lower class products. Social class membership serves as a important reference group in the development of attitude and behaviours. Social class categories: Two-category social-class schemas: Eg: blue-collar, white collar Lower, upper Three-category social-class schemas: Eg: blue-collar, gray collar, while collar Lower, middle, upper Four-category social-class schemas: Eg: lower, lower-middle, upper-middle, upper Five-category social-class schemas: Eg: lower, lower-middle, middle, upper-middle, upper Six-category social-class schemas: Eg: lower-lower, upper-lower, lower-middle, upper-middle, lowerupper, upper-upper. Seven-category social-class schemas: Eg: : real lower-lower, a lower group of people but not the lowest, working class, middle class, upper-middle, lower-upper, upper-upper. Nine-category social-class schemas: Eg: lower-lower, middle-lower, upper-lower, lower-middle, middlemiddle, upper-middle, lower-upper, middle-upper, upper-upper. Measurement of social class: Three measures of social class are: Subjective measures Reputational measures Objective measures Subjective measures: In subjective approach of measuring social class, individuals are asked to estimate their own social class. The result may not be accurate because it gives the individuals self-perception or self-image. Reputational measures: The Reputational approach requires selected community informants to make initial judgment concerning the social class membership of others within the community. The final task of assigning the 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 not the consumption behaviour within the class, which is the purpose of the measure. Objective measures: Objective measure consists of some socioeconomic variables like occupation, education and amount of income. These variables are measured through questionnaires, which have some factual questions about themselves, 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. Social-class mobility: Individual can move either up or down in the social-class position held by their parents. Higher education and high-income level favours upward mobility. Upward mobility is common in American society. Geodemographic clustering: Linking of consumer-related geographic and socio-economic data is called as geodemographic clustering. Affluent consumers: Affluent consumers are rich or well off people. Affluent consumers constitute an attractive target segment because they have larger share of discretionary (or disposable) income. Positive relationship exists between health and economic status. ie. Healthiest people are economically advantaged. Segmenting the affluent market: Affluent consumers are broadly divided into 2 groups: Upbeat enjoyers: who live for today. Financial positives: who are conservative and wealth savers. According to Mediamark Research Inc.(MRI) the market segmentation schema of upper deck consumers are: Well-featured nests: household with atleast one high-income earner and children present. No strings attached: household with atleast one high-income earner and no children. Nanny’s incharge: households that have two or more earners none earning high income and children present. Two careers: households that have two or more earners neither earning high income and no children. The good life: households that have high degree of affluence with no persons employed.

The rural affluent customer segments are: Suburban transplants: those who move to the country but still commute (travel) to high paying urban jobs. Equity-rich suburban expatriates: urbanites who sell their home for high profit and buy a less expensive home in a small town and live. City folks with country homes: wealthy vacationers who spend their winter or summers in scenic rural areas. Wealthy landowners: wealthy farmers. Non-affluent consumers: Lower income or downscale consumers are called as non-affluent consumers. These consumers reflect modest lifestyles They are more brand loyal because they are not affordable to make mistake by switching over to unfamiliar brands. Arrival of techno-class: Techno-class is a new type of social class category. The degree of literacy, familiarity and competency with technology is the base for this class standing. Technological class structure centers the amount of computer skills that one possesses. Lack of computer skill is referred as technologically underclassed. Consumer behaviour applications of social class: Some of the applications are: Clothing: People dress to fit their self-image Individuals clothing reflects their perception of their own social class 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 activities. Eg: 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”. CULTURE:( (slide) Definition: The sum total of learned beliefs, values, and customs that serve to regulate the consumer behavior of 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 each meal, 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 Language and symbols Ritual Sharing of Culture Enculturation and acculturation: The learning of one’s 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: Ritual is a type of symbolic activity consisting of a series of steps occurring in a fixed sequence and repeated 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 Analysis Consumer Fieldwork Value Measurement Instruments Content Analysis Content analysis is a method for systematically analyzing the content of verbal, written and pictorial 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 environment that focuses on observing behavior (sometimes without the subjects’ awareness). Characteristics of Field Observation Takes place within a natural environment Performed sometimes without the subject’s awareness Focuses on observation of behavior Participant-Observers : Researchers who participate in the environment that they are studying without notifying 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 most important 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 and resources.

UNIT – IV 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 Opinion Leader Opinion Receiver Seeker

Opinion leader: individuals who influence the behaviour of others. Opinion receiver or opinion recipients: individuals who receive information without consciously searching for 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 any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message’s exposure and influence. The other names of viral marketing are: Buzz Marketing Wildfire Marketing Avalanche Marketing Reasons 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 the product.

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 product information. Information and Advice: Opinion leaders are the source of both information and advice. They may share their experience 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 which they provide information or advice. Opinion Leadership Is a Two-way Street: Consumers who are opinion leaders in one product-related situation may become opinion receivers in another situation, even for the same product. Motivations Behind Opinion Leadership: The Needs of Opinion Leaders The Needs of Opinion Receivers Purchase Pals Surrogate Buyers versus Opinion Leaders The Needs of Opinion Leaders: Opinion leaders may try to reduce their own post purchase dissonance. opinion leaders are motivated by self-involvement, product involvement, social involvement and message involvement. The Needs of Opinion Receivers: Opinion receivers obtain new-product or new-usage information. Opinion receivers reduce their perceived risk. They reduce their search time. Purchase Pals: Purchase pals are information sources who actually accompany consumers on shopping trips. Male purchase pals are the source of product category expertise, product information, retail store and price information. 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-users 2. Information exchange occurs in the context of a casual interaction 3. Homophilous (to a certain extent) to end-users 4. Does not get paid for advice 5. Usually socially more active than end-users 6. Accountability limited regarding the outcome of advice 7. As accountability limited, rigor in search and screening of alternatives low 8. Likely to have used the product personally 9. 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 status 2. 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 paid 5. Not necessarily socially more active than end-users 6. High level of accountability 7. Search and screening of alternatives more rigorous 8. May not have used the product for personal consumption 9. Second opinion taken on rare occasions 10. Usually specializes for a specific product/service category Measurement of Opinion Leadership: Self-Designating Method Sociometric Method Key Informant Method Objective Method

OPINION LEADERSHIP MEASUREMENT METHOD

DESCRIPTION OF METHOD

SELF-DESIGNATING METHOD

Each respondent is asked a series of questions to determine the degree to which he or she perceives himself or herself to be an opinion leader.

“Do you influence other people in their selection of products?”

SOCIOMETRIC METHOD

Members of a social system are asked to identify to whom they give advice and to whom they go for advice.

“Whom do you ask?”“Who asks you for info about that product category?”

SAMPLE QUESTIONS ASKED

OPINION LEADERSHIP MEASUREMENT METHOD

KEY INFORMANT METHOD

DESCRIPTION OF METHOD

SAMPLE QUESTIONS ASKE

Carefully selected key informants in “Who are the most a social system are asked to designate influential people i opinion leaders. the group?”

Artificially places individuals in a OBJECTIVE position to act as opinion leaders and Profile of Opinion Leaders: METHOD measures results of their efforts.

“Have you tried th product?

Frequency and overlap of opinion leadership: Opinion leadership tends to overlap across certain combination of interest areas. Opinion leaders in one product 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 that leads to an early awareness of new products and services.

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

Step 1 Mass Media

Step 2 Opinion Leaders

Opinion Receivers (the masses)

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.

Issues In Opinion Leadership and Marketing Strategy: Marketers are aware of the power that opinion leader ship 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 to stimulate opinion leaders are: Programs Designed to Stimulate Opinion Leadership Advertisements Stimulating Opinion Leadership Word of Mouth May Be Uncontrollable Creation of Opinion Leaders Programs Designed to Stimulate Opinion Leadership: Advertisement and promotional program designed to persuade consumers to “tell your friends how much you like our product” are one way in which marketers encourage consumer discussion of their product and services. Advertisements Stimulating Opinion Leadership: Advertisements stimulate product discussion by portraying people 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-of –mouth is difficult to control so both positive and negative product information spreads like a forest fire. Creation of Opinion Leaders: Product-specific opinion leaders can be created by taking socially involved or influential 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 innovations. Two important processes under the study of diffusion of innovations are: Diffusion process. Adoption process. Diffusion Process : 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 a macro process. Elements of the Diffusion Process : The Innovation The Channels of Communication The Social System Time The innovation: Various definition of innovation or new products are:

Firm-oriented definitions Product-oriented definitions Market-oriented definitions Consumer-oriented definitions Firm-oriented definitions: This approach defines a product as new when the company produces it or markets it for the first time. Product-oriented definitions: This approach defines the newness of the product based on the feature inherent in 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 much exposure consumers have to the new products. Consumer-oriented definitions: Consumer-oriented approach a new product is any product that a potential consumers judges to be new. The channels of communication: Communication channels helps in spreading the innovation to the target market. 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 and within 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 time The identification of adopter categories The rate of adoption Purchase time: Purchase time is the amount of time that elapses between consumer’s 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 new product to achieve widespread adoption. Adopters categories:

A sequence of categories that describes how early (or late) a consumer adopts a new product in relation to other adopters. Adopter categories are: Innovators: Venturesome Very eager to try new ideas Acceptable if risk is daring More cosmopolite social relationships Communicates with other innovators Early Adopters: Respected More integrated into the local social system The persons to check with before adopting a new idea Category contains greatest number of opinion leaders Are role models Early Majority: Deliberate Adopt new ideas just prior to the average time Seldom hold leadership positions Deliberate for some time before adopting Late Majority: Skeptical Adopt new ideas just after the average time Adopting may be both an economic necessity and a reaction to peer pressures Innovations approached cautiously Laggards : Traditional The last people to adopt an innovation Most “localite” in outlook Oriented to the past Suspicious 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 policy Skimming policy Adoption Process :

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 STAGE

EXAMPLE

Awareness

Consumer is first exposed to the product innovation.

Janet sees an ad for a new MP3 player in the magazine she is reading.

Interest

Consumer is interested in the product and searches for additional information.

Janet reads about the MP3 player on the manufacturer’s Web site and then goes to an electronics store near her apartment and has a salesperson show her a unit.

Evaluation

Consumer decides whether or not to believe that this product or service will satisfy the need--a kind of “mental trial.”

After talking to a knowledgeable friend, Janet decides that this MP3 player will allow her to easily download the MP3 files that she has on her computer. She also feels that the unit’s size is small enough to easily fit into her beltpack.

Adoption process model: (slide)

Profile of consumer innovators: Defining the Consumer Innovator Interest in the Product Category The Innovator Is an Opinion Leader Personality Traits Media Habits Social Characteristics Demographic Characteristics Defining the Consumer Innovator: Consumer innovators are small group of consumers who are the earliest purchaser of a new product. Interest in the Product Category: Consumer innovators are more interested in the product category because they are the early purchaser of the new product. The Innovator Is an Opinion Leader: Consumer innovators provide other consumers with information or advice about new product and influence the behaviour of others so they are called as opinion leaders. Personality Traits: Consumer innovators are Less 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 decision High 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 person Higher personal income More formal education Higher occupational status CONSUMER DECISION MAKING PROCESS:

Steps in consumer decision making process are: Need recognition Search for information Pre - purchase evaluation of alternatives Purchase Consumption Post purchase evaluation Disinvestments

MODELS OF CONSUMER DECISION PROCESS: [shopper, buyer and consumer behaviour – Jay. D.Lindquist – Pg.no:605] NICOSIA MODEL: Francesco Nicosia formulated this model. He says the act of purchase itself is more complex decision process. This model focus on conscious and deliberate decision making behaviour. The fields are components are: The firm’s 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. Four major components are: Input variables Output variables Hypothetical constructs Exogenous 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 recognition Search for information Alternative evaluation Purchase Outcomes The variables are grouped into four categories. They are: Stimulus inputs Information processing Decision process Variables influencing the decision process 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 nonrigirous evaluation of alternatives. 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. POST PURCHASE BEHAVIOUR: [shopper, buyer and consumer behaviour – Jay. D.Lindquist – Pg.no:110] Post purchase behaviour is the behaviour of the consumers after purchasing a product. Analyzing the post purchase behaviour is important because it has an impact on future sales. Post purchase behaviour analysis helps the marketer to improve products or services, design better promotion strategy, etc. This behaviour can be: Positive post purchase behaviour. Negative post purchase behaviour. Positive post purchase behaviour: When the consumer is satisfied with the product the positive outcome is gaining customer loyalty. Loyalty: a consumer’s feeling of commitment to a product, brand, marketers or outlet that results in high level of repeat purchase or visits. Consumer loyalty gains repeat purchase and it helps in the formation of purchase habits.

Once the purchase habits are formed then consumers always search and buy the same brand in spite of its availability. Brand loyalty: Factors influencing brand loyalty: In addition to satisfaction with the purchase experience there are several other factors that influence brand loyalty. Number of brands available: the smaller the numbers of brands available customers are more likely to be brand loyal. Frequency of purchase: the more frequently customers purchase a product the most likely they are brand loyal. Perceived difference among brands: if the customers perceive significant difference among brands they tend to be brand loyal. Level of involvement: customers remain loyal to high involvement products than low involvement products. Level of perceived risk: brand loyalty is high when the level of perceived risk associated with the choice is high. Brand benefits: when customer needs are satisfied by a particular brand then it gains loyalty. Negative post purchase behaviour: Negative post purchase behaviour effect the future sales of the product and some times damages the reputation of the firm. Negative post purchase behaviour takes several forms such as: Negative word-of-mouth: consumers express their dissatisfaction with the purchase to others. Rumor: rumors are not only negative information but also untrue information about products and brands. Some rumors are unintentional but some are purposely constructed and voiced to do damage. Complaint behaviour: dissatisfied consumers respond in one of the three ways. No action Private action: warn family and friends or decide not to buy. Public action: seek redress from firm, complaint to government agency or take legal action to obtain redress. CONSUMER EXPECTATION AND SATISFACTION: Customer satisfaction is the individual’s perception of the performance of the product or service in relation to his expectation. Customer satisfaction is the function of customer expectations. Customer experience < expectation = Dissatisfied consumer Customer experience = expectation = Satisfied Consumer Customer experience > expectation = Delighted consumer Link between customer satisfaction and customer behaviour identifies different types of customers. They are:

Loyalists – completely satisfied customer who keeps purchasing Apostles – delighted consumers who spread positive word of mouth Defectors – Feels neutral and stop purchasing Terrorists – gets negative experience and spreads negative word of month Hostages – unhappy customers but keeps purchasing because of monopolistic environment Expectations-confirmation theory: Expectations-confirmation theory posits that expectations, coupled with perceived performance, lead to post-purchase satisfaction. The four main constructs in the model are: expectations, performance, satisfaction and dissatisfaction. If a product outperforms expectations post-purchase satisfaction will result. If a product falls short of expectations the consumer is likely to be dissatisfied Expectations reflect anticipated behavior. Expectations serve as the comparison standard– what consumers use to evaluate performance and form a satisfaction judgment.

Satisfaction Expectation

Perceived Performance Dissatisfaction

UNIT – V ADDITIONAL DIMENSIONS CONSUMERISM: Definition: Consumerism is defined as social force designed to protect consumers interests in the marketplace by organizing and exerting consumer pressure on business. Roots of consumerism/ problems that underlie consumer moments: Disillusionment with the system: consumers feel their bargaining position is weakening. Dissatisfaction with the quality of goods and services: the quality of the product is below their expected level. Consumer information gap: because of time pressure consumers are not able to collect information so they fail to consume the best. Anti-advertisement attitude: Ads are sometimes the source of unrealistic information, irrational facts or brain washing. Fall in standard of living: the real purchasing power of the consumers is getting eroded.

Uncooperative marketing institution: withholding of information from consumers and dealing in impersonal way results in the feeling that marketers are uncooperative. Motive of consumerism: To make the consumers aware of their rights and unite them into one force. To check unfair trade practices like monopoly power and fight against exploitation. To effectively implement consumer protection law. To educate the consumers with latest and complete information. To fight against anti-social practice like black market, hoarding, adulteration, etc. Rights of consumers: The right of safety The right to be informed The right to choose The right to be heard The right to seek redressal The right to basic needs The right to consumer education CONSUMER PROTECTION: Consumer protection is the core of consumerism. Consumer protection means protecting the consumers from the evils of marketing. It strike a balance in the buyer-seller relation. Need for consumer protection: Some products are short in supply when the demands are high so producers try to exploit the consumers in that situation. Sometimes producers increase the demand by restricting the supply so they are able to push up the price. The producers exploit ignorant and uneducated consumers. Consumers sometimes will not exercise their rights because of their fear in legal proceedings. Since most of the people in India are middle class and poor they consider raising voice against injustice is time wasting activity. Parties in consumer protection: Three parties in consumer protection are: Business Government Consumers Business: Business comprises of the producers and the distribution channels. Producers should pay attention to consumer rights and they should supply quality product at reasonable price.

Government: Government protects the consumer against exploitation through its interventions. Consumers: Consumers should be aware of their rights and should raise voice against illegal practices. Consumer protection act 1986: This act was enacted to promote and protect the rights of the consumers. It provides for simple, speedy and inexpensive redressal of grievances. Extend and coverage of the act: The act applies to all goods and services whether in private, public or cooperative sectors. Who can file a complaint? A consumer or any voluntary organization or the government. What constitutes a complaint? A complaint in writing should state whether one have suffered a loss due to unfair trade practices. Where to file a complaint? District forum: compensation < 5 lakhs State commission: 5 lakhs to 20 lakhs National commission: > 20 lakhs How to file a complaint? Complaint can be made in person or by post or through authorized agents. Relief available to consumers: The redressal forum may gives order for removal of defects from goods, replacement of goods or refund the price. Time limit for deciding the case: The redressal foreum should address the issue within the period of 3 months from the date of notice received by the opposite party. The features of the act are: Social welfare legislation Effective provisions and safeguards Special consumer courts Simple, speedy and inexpensive redressal machinery Convenient procedure Covers goods and services Time-limits

Class action Check on unfair practices Price Consumer councils ORGANIZATIONAL BUYER BEHAVIOUR: Definition: Organizational buying is the process by which a company/organization establishes a need for purchasing products and choose among competing brands and suppliers. Decision making unit[buying center]: Buying center is an informal, cross department decision unit in which the primary objective is the acquisition, impartation and processing of relevant purchasing related information. Buying center roles: Primary roles – deciders and influencers Secondary roles – users, buyers and gatekeepers Different departments role in business buying: Marketing: purchasing decision has an effect on marketability of product so they are active influencers in purchase decision process. Manufacturing: responsible for determining the feasibility and economic consideration of producing end products. R & D: initial development of product and set board specification for components. Purchasing: they are negotiable experts dominant in straight rebuy. Buying situation: 3 types of situation are: Straight rebuy: Straight rebuy is a repetitive or routine buying order placed by the buyer to the supplier. Modified rebuy: This situation occurs when buyer wants to modify any purchase ie improvement in product specification and this poses a threat and opportunity to suppliers. New task: This is most risky decision of buyer. Buyer goes for first time purchase so take lot of time to decide about the purchase. Model of industrial buyer behaviour: The different aspects of this model are: Difference between individuals involved and psychological make up Joint decision making Product specific factors

Organization factors affecting purchase Situational factors Ways of information search Conflict resolution among individuals Industrial buying behaviour is affected by the background of the individuals involved in the purchase. The factors are: Specialized education Roles and status Lifestyle Expectation from the product