c.b lecture notes (1-28)

7/31/2019 c.b Lecture Notes (1-28)

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CONSUMER BEHAVIOURLecture-1

The American Marketing Association has defined consumer behavior as The dynamic interaction

affect and cognition, behavior, and the environment by which human being product the exchan

aspects of their lives.

Consumer behaviour refers to the actions and decision processes of people who purchase goods a

services for personal consumption. Peter D. Bennett

Consumer behaviour refers to the mental and emotional processes and the observable behaviour

consumers during searching for , purchasing and post consumption of a product or service.

Engel, Blackwell &Miniard.

Types of consumers:

PERSONAL AND ORGANISATIONAL CONSUMERS

Personal consumer

His or her own use/for the household/another member of the household gift for a friend

Organizational consumer

Profit and non-profit organizations/public sector agencies institutions

BUYERS AND USERS (CONSUMERS) can be classified as

Purchaser procures or obtains product/servicePayer person who provides the money or object of value to obtain the product/service

Consumer person that consumes or uses product/service

THE INTERDISCIPLINARY SCIENCES IN CONSUMER BEHAVIOUR

Psychology

Sociology

Social psychology Cultural anthropology

Economics

BASIC MODEL OF CONSUMER DECISION-MAKING


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Lecture-2

Firms Marketing EffortsProductPromotionPriceChannels of

Distribution

Socio-cultural EnvironmentFamilyInformal sourcesOther noncommercial sourcesSocial classSubculture and culture

Need Recognition

Prepurchase Search

Evaluation ofAlternatives

PsychologicalField

MotivationPerceptionLearningPersonality

Attitudes

Post purchase

Evaluation

PurchaseTrial

Repeat Purchase

ExperiencePost-decisionbehaviour

Input

Process

Output

Consumer Decision Making


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REASONS FOR STUDYING CONSUMER BEHAVIOUR

Key information in marketing strategies

Market segmentation

Target market selection

Positioning

Product or service decisions

Pricing decisions

Distribution decisions

Promotion decisions

Consumer protection and public policy concerns

Environmental concerns

Shorter product life cycles

Growth of services marketing Not-for-profit/social marketing

Growth of global marketing

Importance of Consumer behaviour:

Ever increasing intensifying competition.

More aggressive competitors emerging with greater frequency.

Changes basis of competition.

Geographic sources of competition are becoming wider. Niche attacks are becoming frequent.

Pace of innovation is rapid.

Price competition becoming more aggressive

Product differentiation is declining.

Nature of Consumer behaviour

1. Consumer behaviour is Dynamic: The feelings, thinking, perceptions and actions of

the customer and the society at large keep changing frequently. For example number ofworking women is on rise and this has changed the concept of shopping. The dynamic

nature of the consumer behaviour offers challenges to marketers and the task of creating

marketing strategies becomes complex, and exciting. Strategies that work today may not

work tomorrow. Strategies adopted in one market may not work in another. The product

life cycles are becoming shorter and create additional pressures on marketers to bring

innovative products and concepts. The concept value changes from time to time.

Mahindra and Mahindra had to come out with Scorpio with the launch of Bolero.


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2. Consumer behaviour involves interactions: Consumer behaviour involves

interactions among peoples thinking, feeling, action and the environment. This forces

marketers to understand three things:

What products and services mean to customers.

What influence shopping, purchase, and consumption.

What consumers need to do to purchase and consume products and services.

3. Consumer behaviour involves exchange: Consumer behaviour involves exchange

between human beings. People give up something of value to others and receive

something in return. Much of consumer behaviour involves people giving up money to

obtain product and services, that is, exchanges consumers and sellers. The role of

marketing in society is to help create exchange by formulating and implementing

marketing strategies.

Lecture-3

CONSUMER DECISION MAKING PROCESS -PROBLEM RECOGNITION

Problem recognition is the first stage in the consumer decision process and occurs whenever t

consumer perceives a difference of sufficient magnitude between what is perceived as the desir

state of affairs and what is the current state of affairs, enough to arouse and activate the decisi

process to achieve the desired or ideal state.

Marketers develop products and services to help consumers solve problems. They also attempthelp consumers anticipate and recognize problems, sometimes well in advance of their occurrence


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The process of problem recognition combines some highly relevant consumer behaviour concep

such as information processing and the motivation process.

Types of Consumer Problems and Their Recognition: The problems of which consumers a

aware or will become aware shortly are referred as active problems and the ones about whconsumers are not at all aware are called inactive problems. It is similar to being aware of a need a

having latent needs about which there is no awareness. It is useful to appreciate that there may

several types of problem-recognition processes. Del I. Hawkins, Kenneth A. Coney and Roger

Best (Consumer Behaviour, 1980) have discussed one such approach. They developed

classification system of situations based on the factors of immediacy of required solution a

whether or not the problem was expected


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Types of Problem Recognition

Emergency problems are possible but are unexpected and necessarily need immediate solutions. F

example, say a consumer meets an accident while on his/her way to office, gets injured and t

vehicle is badly damaged. In such an emergency, she/he needs a quick solution to reach hospita

emergency room. Subsequently, she/he may plan to get the vehicle repaired or buy a new one

Situations that can Cause Problem Recognition

There are quite a large number of situations that can create a discrepancy that influence consum

desires, perceptions of the existing state, or both. These include non-marketing factors and marke

initiated activities that can trigger the process of a consumer's problem recognition.

The five of the most common situations are:

Depletion of stocks

Dissatisfaction with goods in stock

Environmental changes

Change in financial situation

Marketer initiated activities.

Approaches to Activating Problem Recognition

1. Generic problem recognition focuses on helping consumers feel a discrepancy that a numb

of brands within a product category can reduce. Generally, a marketer will use this approa

when the problem is either latent or of low importance and one of the following conditio

exists.

Product is in the early stage of its life cycle.

The marketer has very high market share.

After problem recognition, consumers' external search tends to be limited.

It is a situation of industry-wide cooperative effort.

Immediacy of solution

Expectanc

yImmediate Immediate

Of solution solution not

problemrequired

required

Occurrenceof

Problem RoutinePlanningexpecte

dOccurrenceof proble

mEmergency Evolving

unexpected


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2. Selective problem recognition focuses on a discrepancy that only a particular brand can sol

Marketers use this approach to causing problem recognition in an attempt to increase

maintain market share

Marketing Strategy and Problem Recognition

Activity Analysis

Product Analysis

Problem Analysis

Human Factors Research

Emotion Research

Marketers also attempt to influence consumers' perceptions about their existing state. F

instance, many ads of personal care products adopt this approach. Women do not want to us

soap that dries their skin. They desire to have fresh and smooth skin and the advertisement

Dove soap is designed to generate concern about the existing state of their skin

Lecture-4

CONSUMER DECISION MAKING PROCESS-INFORMATION SEARCH

Nature of Information Search

The process of information search refers to what the consumer surveys in her/his environme

appropriate information to make a reasonable purchase decision.

Extended decision-making represents a significantly more involving purchase situation. The re

importance of external information search tends to increase in extended decision-making. Ex

information can refer to any of the following:

1. The opinions, beliefs, attitudes, behaviours and feelings of relatives, friends, neighbour

strangers contacted on the Internet.

2. Professional information contained in handouts, pamphlets, articles, magazines, jou

books, the Internet and provided by personal professional contacts.

3. Direct experiences with the product or service through trial, inspection, or observation.

4. Marketer-initiated information included in advertisements, displays, websites and bypersonnel.

The Types of Information Consumers Seek

A great variety of information of potential interest to consumers exists in the external environ

According to R. Lawson, consumer decision-making requires three types of information:


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The Evaluative Criteria : An important objective of internal and external search for inform

is the determination of appropriate evaluative criteria.

Appropriate Alternatives:Once the consumer has established the evaluative criteria,

probably starts searching for the appropriate alternative which could be brands or perhaps stores

result of internal search or inquiry, the consumer may recall or learn that the available bran

computers include IBM, Compaq, Dell, Wipro, Zenith, Vintron and Apple.

Attributes of Alternative:Consumers compare brands in the evoked set to make their c

This process of evaluation requires consumers to collect information about each brand on each rel

evaluative criterion. In case of computer purchase, the consumer might collect information abo

price, processor, memory, graphic card, monitor, accompanying software and warranty etc., for

brand. Marketers are particularly interested in knowing as to how consumers process information

brands in the evoked set. There are two general approaches for evaluation: brand processi

attribute processing.

Consumers' Sources of Information

There are five primary sources of information available to consumers:

Long-term memory: Stored information based on earlier searches, personal experience

low-involvement learning.

Personal sources:These include family, friends, neighbours and peer groups.

Independent sources:Such sources include newspapers, magazines, journals, consumer r

and government agencies.

Marketer controlled sources:These include advertising, sales personnel, direct mail etc.

Experiential sources:This refers to inspection of products or product trial.

Internet as a Source of Information

Sources of Information for Purchase Decision-making

Sources ofInformation

Externalinformation

Internal

information

Acquiredactively

Marketercontrolled

Others

experiences

Acquiredactively

Acquiredpassively

Pastsearches

Personalexperience

Low-involvementlearning

Personalsources

Independentsources


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It is assumed that every educated person today knows that Internet represents inform

commerce, e-mail and entertainment. The Internet or World Wide Web is a network of computers

accessible to anyone with a computer, modem, telephone connection and an Internet ac

Consumers are also exposed to ads on the Internet while searching for general information or vi

entertainment sites. When clicked, banner ads take consumers to the company or products home

or to some special advertisement. Expansion of Internet is taking place in terms of its usage

Extent of External Information Search

Marketers are particularly interested in knowing how much external information search consumer

to undertake. For relatively low-priced products such as soft drinks, Namkeen, toothpaste, soap

detergents etc., there may be very little external search just before the purchase. In fact, this wo

the case with all purchases involving nominal or limited decision-making. External information s

is more likely in case of major purchases such as expensive appliances, professional services and

etc. Generally, consumers tend to consider more alternatives as the price of the product increases.

on research studies, consumers have been classified as1. non-searchers,

2. limited information searchers and

3. extended information searchers.

Lecture-5

ost/Benefit View of External Search

our basic factors influence the perceived benefits and costs of search:Market conditions

Product characteristics

Consumer characteristics

Situational factors.

Market Conditions:Characteristics of the marketplace can have a significant influence on ex

search behaviour. These characteristics include the number of alternatives, price range, distrib

outlets and availability of information. If the number of alternatives in terms of products, outle

brands is more, the consumer is unlikely to undertake more external information search

example, if there are too many models and brands available in a product category, informoverload may discourage consumers' external information search. In response, consumers te

limit their shopping to a single outlet. In case of monopoly, as was the situation in India more t

decade back in the case of telephones and cooking gas etc., there would be no need to search.

Product Characteristics: This refers to product differentiation and range of prices etc

influence consumers' external search for information. If the product price is high and there is g

differentiation among alternatives, there is likely to be increased external search. Product

influences search efforts. Most consumers seem to enjoy shopping for positive products, su

dresses, cameras, music systems and sports goods etc. Shopping for positive products is viewe


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positive experience. The primary benefit of negative products is removal of some unpl

situation. For example, grocery shopping, or getting auto or washing machine repaired is view

less pleasant and most consumers hardly enjoy these situations.

Consumer Characteristics: Many characteristics of individual consumers influence

perceptions of expected benefits, cost of search and need for a certain degree of external sear

information. An individual's satisfying experiences with a brand increases the probability of r

purchase of the brand and decreases the possibility of external search on the next purchase occa

Socio-economic characteristics of consumers such as education, occupation and income influen

degree of external search. Middle-income individuals tend to search more for information

higher or lower levels. Probably because of increased learning, experience and familiarity

product category gained over time, external search decreases with age. Younger people, in

stages of household life cycle, show greater need for external information compared to estab

households. Highly involved consumers with a product category generally seek information

ongoing basis.Situational Factors: A number of situational factors can have substantial influence on inform

search behaviour. If the need is urgent or the available time is very limited, the search behav

influenced. D. S. Sundaram and R. D. Taylor have noted that with the decrease of available ti

solve a particular problem, the extent of information search also decreases. Consumers la

physical or emotional energy are unlikely to engage in detailed information search. Pleasant ph

surroundings in a store increase consumers' tendency to search for information. Promotions of

special occasion attractive prices decrease information search.

Marketing Strategy Implications1. Maintenance strategy

2. Disrupt strategy

3. Capture strategy

4. Intercept strategy

5. Preference strategy

6. Acceptance strategy

1. Maintenance Strategy: In case the nature of marketer's brand is such that consumers in the

market purchase it habitually, the most appropriate strategy is to maintain that behaviour

requires marketer's consistent attention to maintaining product quality, uninterrupted supstocks to retailers and reinforcing advertising messages. To protect the product a

competitors' disruptive tactics, it is necessary to maintain product development and improve

against strategies such as discounts and coupons etc.

2. Capture Strategy: Generally, consumers consider just a few brands and evaluate them on

few attributes when problem solving involves limited decision-making. The information s

tends to be limited to readily available information sources such as local media and poi

purchase in store before making a purchase. The marketer's objective should be to capture a

share of consumers' purchases.


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3. Intercept Strategy: Intercept strategy is also related to consumers' limited decision-m

approach. If the marketer's brand is not part of the evoked set of target market, the appro

strategy is to intercept consumers during their information search on the brands in evoked se

4. Preference Strategy: Preference strategy is appropriate when the brand is part of the evok

of consumers in the target market and the approach to decision-making involves ext

information search.

5. Acceptance Strategy: This strategy focuses on the situation when the target consumers d

search for information about the marketer's brand. The basic objective of the marketer is to mov

brand in theevoked set of consumers, rather than try to "sell" the brand.

Lecture-6

CONSUMER DECISION MAKING PROCESS-EVALUATION OF ALTERNATIVES

Choice Based on Attitude vs. Attributes

Consumers are likely to use any of the two approaches. S. P. Mantell and F. R. Kardes foun

attitude based choice involved the use of general attitudes, impressions, beliefs, intuition, or heur

Consumers do not make attribute-by-attribute comparisons at the time of purchase. Instead they

base their decision on a combination of these. A common approach would be to form opreferences based on attitude-based processing about brands.

Affective Choice (feeling-based choice)

The purchase decision of certain products is primarily based on effective choice or what we call fe

based purchases. For example, a young girl goes to a ready-to-wear clothing store to buy a dre

would wear for the annual college dinner. She examines several dresses, tries a few and finally de

that in one particular dress she looks pretty attractive. For example, the ad of Springwel mattr

aimed at stimulating consumers to anticipate feelings that the consumption experience will produc

base their choice on these anticipated feelings.

Consumer Choices

A large number of research studies on consumer decision-making assume that consumers make car

calculated rational choices. Each alternative to a problem solution set is viewed to have a value

consumer that depends only on the attributes of the alternative. An emerging view is that cons

construct many choices as the decision is made. All consumers have a limited capacity for inform

processing referred as bounded rationality.


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Consumers often state their goals or purchase outcomes in specific terms such as "the car with bes

efficiency," or "the most comfortable jogging shoe." These purchase goals are apparently focus

maximising the accuracy of the decision by describing the desired outcomes.

Another important metagoal consumers often have is to minimise negative emotions when makin

decision. Consumer choices that involve a conflict between important goals such as safety v

performance in making a purchase decision for a car can trigger negative emotions. According

Dhar and S. M. Nowlis, one approach consumers adopt to face this type of decision situation is to

or delay the decision.

Nature of Evaluative Criteria

Consumers' evaluative criteria refer to various dimensions; features, characteristics and benefits

consumer desires to solve a certain problem. For example, a consumer's evaluative criteria for a l

computer may include processor speed, operating system, memory, graphics, sound, display, sof

included, cost and warranty etc.

Accuracy of Consumer Judgement of Evaluative Criteria

If a consumer decides to buy a laptop computer, she/he is likely to make direct comparisons of

attributes such as price, processor, memory and display clarity etc. However, these compa

judgements that the consumer makes might not be completely accurate. For example, a Pe

processor and an Apple's G4 processor are not the same. A Pentium 1.8 GHz processor does not

that it is faster than G4 power processor 1.25 GHz. The consumer may not be able to make

comparisons of quality. Instead, he might rely on price or brand name to indicate quality. Even th

the average consumer is unlikely to be adequately trained to make comparative evaluations of b

based on complex evaluative criteria, yet most consumers frequently make such judgements.

Decision Rules

It is necessary to make it clear that the choice rules discussed here are not completely pr

representations of consumer decisions as they often make choices that appear to be non-conscio

involving low-effort mental processes. However, the discussed rules help us increase our understa

of how consumers make decisions.

There are two approaches to making decisions:

Non-compensatory decision rules

Compensatory decision rules

Conjunctive Decision Rule

Following this rule, the consumer establishes minimum levels of acceptability for each evalu

criterion (brand attributes) and selects one or more brands that surpass these minimum perform

levels. In effect, each evaluative criterion important to the consumer will have a cut off point.


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Disjunctive Decision Rule

Consumers use disjunctive rules when they establish a minimum acceptable performance level tha

brand must meet. That is, all brands that meet or exceed the minimum performance standard for an

attribute are viewed as acceptable. The decision rule will then be to choose the brand that beats o

by the maximum margin with regard to criterion selected

Elimination-by-aspects Decision Rule

In this approach to decision-making, attributes are first listed in terms of their importance and a c

point for each criterion is established. First of all, the brands are evaluated on the most imp

criterion and the ones that do not exceed the cut off point are dropped from further considerati

case two or more brands exceed the cut off point, the second most important criterion is compar

these brands. The process continues until only one brand emerges as meeting all the criteria.

Lexicographic Decision Rule

In the lexicographic decision approach, consumers rank the criteria in order of importance and selebrand that outperforms others on the most important attribute. If a tie develops among two or

brands on this attribute, they are evaluated on the second most important attribute. The proc

attribute evaluation continues until only one option emerges as the winner, outperforming all other

In case of lexicographic rule, the highest ranked attribute often may reveal something abo

consumer's shopping orientation. For example, the consumer's "buy the best" approach might in

that the consumer places more value on quality.

This rule is similar to elimination-by-aspects approach except that it seeks maximum performa

each stage unlike elimination-by-aspects process, which seeks satisfactory performance at each st

evaluation.

Lecture-7

OUTLET SELECTION AND PURCHASE

At present, only high-income households are indulging in on line shopping. Forrester Research

McQuivey et al., "On-Line Retail Strategies," The Forrester Report, November 1998) has ind

three categories of products and services based on their purchase characteristics relative to In

shopping:

1. Convenience Products2. Researched Items

3. Replenishment Products

It is possible that consumers might make a laptop computer decision at the retail outlet. The follo

conditions are likely to influence brand choice:

1. When consumer is highly store loyal

2. When brand loyalty is low

3. When brand information is inadequate


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Outlet Selection: Except for a very small percentage, the vast majority of sales take place in store

this trend will continue, though technological advances promise exciting changes in non-store ret

in the future

Outlet Image: Whether a consumer chooses a specific retail outlet before or after brand choice, s

evaluates alternative outlets based on predetermined evaluative criteria. The retail outlets m

thought of as having "personalities."

Retailer Brands: Traditionally, retail stores carried only manufacturers' brands. In the current

store scenario, some stores carry their own brands supposedly as low-price alternatives to expe

national or international brands. Shoppers' Stop, for example, carries its own store brands. Such b

become an important attribute of an outlet and also provide attractive margins for such outlets.

Retail (local) Advertising: Retailers' advertising objectives focus on communicating to consumer

at this store." Besides their store attributes, they particularly focus on sale prices to attract consuMore store traffic leads to increased sales because many consumers purchase additional items othe

those that are advertised. This is referred to as spillover sales. Research studies show that pr

frequently not the main reason consumers select a retail outlet.

Location of Outlet and Size: Retail outlet location has an obvious impact on store patronag

consumers' outlet choice often depends on its location. If the differences in other attributes a

significant, consumers generally will choose the store that is closest. Similarly, the size of the st

also an important factor that influences consumers' outlet choice. Consumers tend to prefer larger

compared to smaller ones with cramped spaces.

Consumer Attributes and Outlet Selection: For convenience items or minor shopping g

consumers are unwilling to travel very far. However, for high-involvement purchases, consumers

mind travelling to distant shopping areas. Distance is not relevant for Internet retailers but ea

searching the site is.

Risk Perception in Store Choice

1. If non-traditional stores sell products with either high economic or social risk, there is nee

reassure consumers to minimise risk. The store may reduce risk by adopting a policy o

refund and no questions asked IF consumer is not satisfied," guarantee of 100 percent satisfaand toll-free customer service telephones with trained personnel. Word-of-

communication from satisfied customers reinforces such store advertised policies.

2. Non-traditional retailers, such as Internet, need brand-name products in product cate

perceived as entailing high risk.

3. Traditional outlets have an image advantage and should generally carry product categories perc

as involving high-risk. Low-risk items can be used to maintain overall assortment.

4. Retail outlets can minimise economic risks through warranties or return policies. Social ris

difficult to reduce. Known brands, knowledgeable sales staff and guarantees of satisfactio

help reduce social risks.


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Lecture-8

Consumer Shopping Orientation: There are two distinct approaches to classifying consumer sho

orientation:

Psycho graphics-based orientations describe seven types:

Inactive shoppers

Active shoppers

Service shoppers

Traditional shoppers

Dedicated fringe shoppers

Price shoppers

Transitional shoppers

Using projective research techniques to ascertain the ways that college students shop has idenmotivation-based shopping orientations. Six shopping orientations have been uncovered:

Chameleons

Collectors/gatherers

Foragers

Hibernants

Predators

Scavengers

In-store Influences on Brand Selection:A number of factors present within the retail

environment often stimulate additional information processing and ultimately influence the

purchase. As a result of this, it is not uncommon for consumers to visit a retail outlet with the int

of buying a certain brand and actually buy a different brand than planned and purchase some addi

products as well.

The fact that consumers often make unplanned or impulse purchases has led to considerable inter

this aspect.The Point-of-Purchase Advertising Institute has defined five different types of purchas

Specifically planned

Generally planned

SubstituteUnplanned

In-store decisions

Point-of-purchase (POP) Displays

Howard Stumpf reported that 2,473 supermarket shoppers were interviewed and 38 percent

respondents had purchased at least one item or brand they had never before bought. The reason

for this first-time purchase was that the product was displayed.


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A study by The Point-of-Purchase Advertising Institute (Awareness, Decision, Purchase, 19

5,215 shoppers in supermarkets, variety stores, liquor stores, hardware stores and service st

reported that one-third had purchased at least one of the displayed items

It is clear that POP displays have a significant influence on consumers' in-store pu

behaviour. The sales impact of displays varies widely by product type and location and between b

within a product category; there is generally a strong increase in sales.

Discounts and Deals: Price discounts and other promotional deals that offer same-for-less or mo

the-same are generally associated with POP displays and evidence suggests that in- store

reductions influence brand decisions.

Increase in sales comes from four sources in response to price deals:

Those consumers, who do not normally visit the store announcing a price deal, may com

buy the brand.

Current brand users may buy in advance of their anticipated needs. Ready availability in eoften leads to increased consumption of the brand.

Those consumers, who otherwise use competing brands, may switch to the brand availa

reduced price. A percentage of such brand-switching consumers may become regular users of the b

Non-product category buyers may buy the brand because it is now a better value to sub

product.


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Retail Outlet Atmosphere: The layout, fixtures, lighting, colours, sounds, odours and the dre

behaviour of its personnel affect a retail store's atmosphere. An uncontrollable yet important comp

of store atmosphere is the number of customers present in the store, their characteristics and behav

The outlet atmosphere produces a significant effect on customers' mood and their willingness to

and shop around in the store. The atmosphere also influences consumers' assessment of the qual

the store and the store-image they form. As a result of positive mood induced by store atmosp

consumers are more satisfied and this increases their willingness to visit the store again. This may

in building store loyalty.

Out-of-stock Situation:When a retail outlet is temporarily 'out of stock' for a particular bran

influences a consumer's purchase decision. The consumer has then to decide whether to visit an

store and buy the same brand, switch brands, or delay the purchase and buy the selected brand

sometime from the same retail store, or just drop the idea of buying. Such a situation of temporary

availability may also influence consumer's attitude and verbal behavior.

Sales Personnel: Sales personnel are considered one of the most important in-store factors th

influence consumers. This influence can be understood in terms of exchange theory, wh

emphasizes that every interaction involves an exchange of values. Each participant gives somethi

to the other and hopes to receive something in return. The salesperson, for example, might of

expertise about the product to make the consumer's choice easier. Or the customer may be reassur

Physical Ambient Social SymbolsConditions conditions conditions used

Store Layout, Temperature, Customer Signs,

Atmosphere Equipment, Air quality, characteristics, Dcor,

components Colours, Noise, Number of Point-of-

Furnishings, Music, Sales personnel displays.

Space. Odour. Characteristics.

Sales personnel Consumers

Individual Career objectives, Lifestyle,characteristics Training, Shopping orientation,

Personal situation, Stage in household

Social class, lifecycle,

Stage in HLC. Situation.

Sales personnel Consumers

Mood, Effort, Enjoyment,

Response Commitment, Time in store,Attitude, Items examined,

Knowledge, Information acquired,

Skill. Purchase. Satisfaction.


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because the salesperson is likeable; his tastes are similar and he is perceived as someone who can

trusted.

Purchase: Once the consumer has chosen a brand and selected a retail outlet, she/he takes the fin

step of completing the transaction. Traditionally, this would involve offering the cash to acquire t

rights to the product. In developed and many developing countries, credit often plays an import

role in completing the purchase transaction.

Lecture-9

POST PURCHASE DECISION

Post-purchase Dissonance:Cognitive dissonance occurs as a result of some discrepancy betweenconsumer's prior evaluation and the purchase decision. The dissonance theory was derived from tw

basic principles: (1) dissonance is unpleasant and will motivate the person to reduce it and

individuals experiencing dissonance will avoid situations that produce more dissonance. Po

purchase dissonance is most likely to occur when more than one alternative was attractive and

relatively permanent and difficult decision had to be made. The doubt or anxiety resulting from su

a decision is termed as post-purchase dissonance. The probability that a consumer will experien

dissonance and the magnitude of such dissonance, is a function of the following factors:

The degree of irrevocability of the decision

The importance of decision to the consumer

The difficulty of choosing among the alternatives

The individual's tendency to experience anxiety

The consumers may use one or more of the following approaches to minimising the dissonance:

Increase the desirability of the brand purchased

Decrease the desirability of alternatives not selected

Decrease the importance of the purchase decision

Return the product before using it.

Purchase Evaluation and Satisfaction/Dissatisfaction:Consumers' post-purchase evaluat

process is influenced by the purchase process itself, post-purchase dissonance, product use a

disposal of product/package. These are potential influencing factors and all purchases are n

necessarily influenced by all these four factors. Consumers may evaluate each aspect of the purcha

decision process right from the stage of information search to ultimately the product performan

The satisfaction with one aspect such as product performance may be affected by the degree

satisfaction with other factors such as price or behaviour of the salesperson. In case of nominal


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Lecture-10

Dissatisfaction Responses:Jagdip Singh found that disconfirmation is mediated by consume

desire to understand why products fail. Such attribution processing (trying to learn the causes

failure) by consumers can lead to a particular type of emotional reaction. For instance, if consum

perceive that the problem was preventable by the marketer, they may get angry.

Implications for Marketers:To meet consumer expectations, marketers need to focus on

creating reasonable expectations among consumers through appropriate promotional efforts and

ensure consistency in product quality so that whatever expectations are created among consum

through marketing communications are fulfilled. As consumers tend to express their dissatisfacti

more vigorously, this may result in loss of sales not only to unhappy consumers but to their frien

as well.

It is advantageous for the concerned firm if the dissatisfied consumer directly communicates with tfirm and to no one else about her/his unhappiness with the product. This offers the firm

opportunity to handle the problem quickly and decrease the chance of negative word-of-mou

communications. Research shows that consumers whose complaints are resolved to their satisfacti

are comparatively more satisfied than consumers who had no complaints and were actually satisf

with the product.

Satisfaction, Repeat Purchase and Customer Loyalty:Many multinational and domestic fir

have responded positively to increased competition by focusing their efforts on producing satisfi

customers rather than aiming for short-term sales results.

At any point in time, the total number of buyers of any brand includes a percentage of satisfi

customers. While many of these satisfied customers switch brands, satisfied customers are mo

likely to repeat purchase the brand than customers who are dissatisfied. Repeat purchasers contin

to patronise the same brand without developing any kind of emotional attachment to it

A firm has to specify its objectives for a particular market segment before developing the marketi

strategy. Several objectives can be considered:

To attract new users to the product category.

Encourage current customers to use more.

Encourage customers to become repeat buyers.Encouraging brand loyalty among current customers.

To capture competitor's current customers.

To encouraging brand switching among marginal customers.

Relationship marketing focuses on developing an ongoing and profitable relationship with

company's customers. There are five important elements of relationship marketing:

Developing a core product or service around which to build customer relationship.

Customising the relationship according to the needs of the individual customer.

Augmenting the core product or service with extra benefits.

Pricing the product or the service in a manner that would encourage loyalty.


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Internal marketing to employees so that they will perform well for customers.

Product Disposal:Disposal of the product or its container may occur before, during, or after produ

use.In India, many state governments have banned the use of certain types of plastic bags.

Huge loads of product packages are disposed of every day in the form of containers. The

containers are thrown away as garbage, used in some way by consumers, or recycled. For examp

Canon, Epson and some others boldly mention on the package that it is made from recycled materi

Product/package

Get rid of it Keep it

Throwaway

Tradein

Sellit

Giveaway

Recycle Loan StoreNewuse

DISPOSAL ALTERNATIVES


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Lecture-11

ROLE OF INVOLVEMENT

Involvement Theory

Traits of person, such as needs, importance, interest, values and unique experiences.

The characteristics of the stimulus, such as differentiation of alternatives, communication

media and message content.

Situational factors, such as purchase or use occasion for a particular product.

Involvement Variables

A number of variables are believed to precede involvement and influence its nature and exte

These variables are believed to be the sources that interact with each other to precipitate the level

consumers involvement at any particular time and situation.

The variables related to person refer to personalneeds, values, interests and experiences etc.

MODERATING VARIABLES

Involvement variables Possible results of involvement

Consumer factors: Evoking of counter-argumentsto advertisements

-Needs-

Interests

-Importance

Ad effectiveness to inducepurchase

-

Values

Involvement with

Product or message

Relative importance ofproduct class

factor Advertisements

-Product differentiation

-

Perceived differences inproduct attributes

- Communication Products orsource

services

-Content of comm

- Particular brand preference

nication

PurchaseInfluence of price on choice

Situationalfactors:

decisions-

Purchase occasionAmount of information

Search-Use

occasionTime spent evaluating

alternatives

Type of decision ruleUsed in choice

- Opportunity to process- Ability to process.

Involvementvariables

Involvementproperties

Responsefactors

- Person- Stimulus/object- Situational

- Intensity- Direction- Persistence

- Search- Information processing- Decision/persuasion


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MAJOR DIMENSIONS OF INVOLVEMENT

Moderating Factors

Many conditions may be present to limit the influence of involvement variables. For example

consumer is contemplating the purchase of a cellular phone and the commercial she/he is watchi

would be quite interesting to her/him. Suddenly, somebody noisily knocks on the door and t

distracts her/his attention from the advertisement, or the consumer may not possess much knowled

about a particular product and fail to understand some of the information contained in ads. T

would limit the evaluation of alternative brands in a satisfactory manner. Such situations may limthe opportunity and the ability to process the information and influence the level of involvement.


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Lecture-12

UNIT II

CONSUMER MOTIVATION

Motivation is said to be the driving force within individuals produced by a state of tension caused

unfulfilled needs and wants. Individuals strive to reduce this tension through appropriate behavio

that they expect will satisfy their needs

NeedsNeed has been defined as a felt state of deprivation of some basic satisfaction. Every person h

needs. Some of these needs are basic to sustaining life and are born with individuals. These ba

needs are also called physiological needs or biogenic needs and include the needs for air, water, fo

shelter, sleep, clothing, and sex. Physiological needs are primary needs or motives because they a

essential to survival.

Acquired needs are learnt needs that we acquire as a result of being brought up in a culture a

society.Needs may also be classified even more basically utilitarian or hedonic.

Goals

Human behaviour is goal-oriented. Marketers are particularly interested in consumers goal-orientbehaviour that concerns product, service or brand choice.

To satisfy any specific need there are a number of solutions or goals. For example, to satisfy hung

any type of food is good enough but the individual consumers goal may be a chicken roast. The g

selection depends on an individuals personal experiences, physical capacity and prevailing cultu

norms and values and whether the goal object is accessible.

Without needs there are no goals. Needs and goals are interdependent and neither can exist witho

the other.

Unfulfilled

Needs, WantsandDesires

Learning

Felt Tension Drive AppropriateBehaviour

Goal or NeedFulfillment

CognitiveProcesses

Tension

Reduction


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Classifying Motives

Several schemes of classifying motives have been suggested which group motives on the basis

one unique characteristic of interest. One such scheme distinguishes physiological ver

psychogenic motives. Physiological motives are concerned with satisfying biological needs of

individual such as hunger, thirst and safety etc. and psychogenic motives focus on satisfy

psychological needs such as achievement, affection, or status etc. One important characteristic

psychological motives is that they are learned. These acquired or secondary motives exert v

powerful influence on people.

Motives have also been classified as positive versus negative. Positive motives attract consum

towards desired goals, while negative motives direct them to avoid unpleasant consequences. F

example, fear can induce consumers into buying water purifiers.

Needs and Goals are Dynamic

The nature of needs and goals is not static; they keep on recurring, changing and growing as a res

of an individuals changing physical condition, environment, experiences, learning and socinteractions.

Some important reasons why motivated behaviour never comes to an end include the following:

Needs are never satisfied completely or permanently

New needs emerge

New needs emerge

Substitute goals are formed

Lecture-13

Motivational Conflict:Motivational conflicts can take one of the three principal forms.

Approach Approach Conflict: This type of conflict occurs when a consumer is faced with

two desirable alternatives, such as either to buy a good music system or a computer.

Approach Avoidance Conflict: This type of conflict occurs when a consumer is facing a

purchase choice that has both positive and negative consequences.

Avoidance Avoidance Conflict: This involves deciding between two or more alternatives

that are perceived as undesirable. Such situations are somewhat stable and consumers tend to

vacillate between the undesirable choices.

Motivational Intensity: Motivational intensity represents how strongly individuals are motivated

satisfy a particular need. Sometimes, the need to satisfy a particular motive may be very strong andother times the intensity may be only modest. As the deprivation of need increases, need recogniti

becomes more acute and motivational intensity becomes stronger. Motivational intensity a

depends on the felt needs importance and needs perceived as most important by an individual

pursued more vigorously. For instance, if a person is kept awake for three or four days at a stret

she/he will experience greater sense of urgency to get sleep. Motivational intensity will also depe

on an individuals involvement in some object or behaviour of great personal relevance that

perceived to satisfy important needs. For example, individuals motivated to be attractive to oppos

sex, will be more involved with products and services perceived as satisfying this need compared

those who are not much motivated about being attractive to the opposite sex.


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Frustration and Defence Mechanisms

Some more common forms of individual reaction to frustration can be of the following type:

Aggression

Rationalisation

Regression

Withdrawal

Projection

Autism

Identification

8. Repression

Needs and Goals may Vary Among IndividualsOur behaviour as consumers is often focused on satisfying more than one need at the same tim

Usually there is one predominant need that triggers the behaviour.

It is not possible to accurately identify the motives by observing behaviour. People striving to sati

different needs may choose the same goals or people with same needs may seek different goa

Consider, for example, three people with ego needs. Each of them may seek fulfillment in differe

ways. One becomes a professor, the second becomes a pianist and the third becomes active in ci

defence.

Motive Arousal

Physiological Arousal:Deprivation of any bodily need such as food, water and other l

sustaining necessities activates the need. Most of the physiological cues are involuntary and oft

arouse some related needs. For example, a person may heat up water to take a bath and may a

make a note to buy a geyser.

Emotional Arousal: Sometimes latent needs are stimulated because a person gets involved

thinking or daydreaming about them. For example, a young man who wants to become a crick

player may identify with Sachin Tendulkar and use products endorsed by him commercially.

Cognitive Arousal: Sometimes just random thoughts may stimulate arousal of needs. An

home away from home may remind a person of home and he may suddenly become aware of

need to call his wife or children.

Situational Arousal: A certain situation confronting a consumer may also trigger arousal. Tcan occur when the situation attracts attention to an existing bodily condition. For example, seeing

ad of Coca-Cola or a display suddenly makes one aware of being thirsty. The need would have be

present but was not strong enough to trigger arousal.

Lecture-14

Systems of Needs


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Most authorities agree about specific physiological needs but there is marked disagreement abo

specific psychogenic or secondary needs.

Henry Murray (1938) prepared a list of 28 psychogenic motives. He believed that everyone has t

same basic set of needs. What differs among individuals is that they attach different priority a

ranking to these needs. Some important psychogenic motives pointed out by Murray inclu

acquisition, achievement, recognition and exhibition,which are believed to play an important role

consumer behaviour.

Maslows Hierarchy of Needs

The hierarchy of needs proposed by Abraham H. Maslow is perhaps the best known and is go

guide to general behaviour. Maslow classified needs into five groupings, ranking in order

importance from low-level (biogenic) needs to higher-level (psychogenic) needs and suggested t

degree to which each would influence human behaviour.


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Evaluation of Maslows Need Hierarchy Theory

The five need-levels are generic enough to cover most human needs. The major problem with ne

hierarchy theory is that research does not generally validate the theory. It is not at all possible

measure accurately how satisfied one need is before the next higher-level need becomes active.

Despite criticisms, Malows theory is widely used by marketers to understand how various produ

or services fit into the plans, goals and lives of potential consumers. It is used to develop suitab

advertising appeals, enabling marketers to focus on a need level that is shared by large number

audience in the target market.

McGuires Comprehensive Scheme of Psychological Motives

William J. McGuire presented a more comprehensive list of 16 motive categories. He first divid

motivation into four main categories based on two criteria:

Cognitive & affective motivation.

Preservation & growth motivation.

Cognitive Preservation Motives

1. Consistency-Need (active, internal): This need focuses on maintaining a consistent a

coherent view of oneself and the world. These aspects include beliefs, attitudes, behaviou

opinions, self-images, and view of others etc.

2. Attribution-Need(active, external): This need focuses on understanding and inferring cau

for various occurrences. Humans have a tendency to attribute causes of success to self a

unfavourable outcomes to some outside causes or forces.

3. Categorisation-Need (passive, internal): Consumers have a need to categorise comp

information in order to organise and understand it easily. There is too much information a

almost every day we are exposed to new experiences, so we have need to establish distin

categories that facilitate processing large amounts of information.

4. Objectification-Need(passive, external): Motives of this category focus on observable stim

or symbols that helps people to draw conclusions about what they feel and know. We establ

impressions, feelings, and attitudes by observing our own and others behaviour to dr

inferences what one feels and thinks.

Cognitive Growth Motives

Autonomy-Need(active, internal): The need for independence and individuality is viewedan important characteristic in many cultures around the world.People seek individuality and perso

growth through self-actualisation and development of distinct identity.One way of expressing t

need for autonomy is that consumers acquire or possess products that are considered as unique

some way.

Stimulation-Need(active, external): This need focuses on seeking stimulation through n

events circumstances, or exploration. Consumers indulge into variety seeking just for the sake

change and brand switching to satisfy this need.


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Matching-Need (passive, internal): People are motivated to create mental images of id

situations according to their perceptions and on an ongoing basis match (compare) their perceptio

of actual situations to these ideals.

Utilitarian-Need(passive, external): This type of motivation focuses on the need to make u

of different sources of information in the external environment for ones advantage.

Affective Preservation Motives

Tension-Reduction Need(active, internal): People are faced with various situations in th

daily lives when their needs are not fulfilled, causing undesirable stress and tension.

Self-expression Need (active, external): This need deals with projecting ones identity

others so that others know who they are, what type of products they use and make a statement abo

their lifestyle.

Ego Defence-Need(passive, internal): It is another important motive and concerns the ne

to protect oneself from social embarrassment and other threats to self-concept.Reinforcement-Need(passive, external): People often experience strong motive to behave

certain manner because that behaviour brought rewards in similar situations in the past.

Affective Growth Motives

Assertion-Need(active, internal): This need leads one to compete, achieve success, pow

and admiration. For those having this motivation dominance, accomplishment and success

important.

Affiliation-Need (active, external):People seek acceptance, affection, and warm perso

relationshipswith others. Group membership is important to most people in their lives and to fu

this need they observe group norms including purchase decisions.

Identification-Need(passive, internal): This motive drives people to adopt new identities a

roles to increase ones self-concept.

Modelling-Need(passive, external): Modelling is major learning method by which childr

learn to become consumers. Children imitate the behaviour of elders and learning takes place.

Freuds Theory of Motivation

Sigmund Freuds psychoanalytic theory has had a strong influence on the development of modepsychology and on explanations of motivation and personality and has been used to study consum

motivations.

Motivation researchers conduct in-depth interviews with a few dozen consumers to expl

unconscious motives. They also use projective techniques such as word association tests, senten

completion tests and picture interpretation etc.

Lecture-15


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PERSONALITY AND SELF CONCEPT

In the context of application to marketing, three distinct properties of personality appear to be

central importance:

Personality is used to account for differences between individuals rather than the

similarity. However, all individuals may not differ in every respect. Many individuals tend to

similar in terms of single personality traits.

Personality is generally believed to be consistent and enduring over time and tends to carry

a variety of situations. Knowing this, marketers attempt to influence specific consumer responses

appealing to relevant personality traits.

Despite the fact that personality tends to be consistent and enduring, it may change due

major life events such as marriage, birth, death in family, changes in economic circumstances and

process of ageing.

Self-concept (self-image) Theory

Self-concept is defined as the totality of the individuals thoughts and feelings having reference

herself/ himself as an object.

Self-concept theory is related to ego and super-ego, which are the two important concepts

psychoanalytic theory.

Two important principles govern the self-concept theory

the desire to achieve self-consistency and

the desire to enhance ones self-esteem.

There are three levels

Actual Self

Ideal Self

Consumption and Extended Self

Psychoanalytic Theory

Freuds psychoanalytic theory proposes that every individuals personality is the result of childho

conflicts. These conflicts are derived from three fundamental components of personality: Id, Ego a

Superego. According to the theory, the id (or libido) is the source of an individuals strong ba

drives and urges such as hunger, sex, aggression and self-preservation. The id operates on what

called the pleasure principle, that is, to seek immediate pleasure and avoid pain. The id is entireunconscious and not fully capable of dealing with objective reality. Many of its impulses are n

acceptable to the values of organised society. A newborn babys behaviour, for example, is govern

totally by the id.

There are several themes based on psychoanalytic theory, which are sometimes used by marketers

attempting to influence consumers such as fantasy, wish fulfillment, aggression and escape fro

lifes pressures (perfume, hair dye, skincare products, dresses, farm houses and motorcycles are so

examples of product categories).


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Social/Cultural (Neo-Freudian) Theory

Freuds understanding of personality focused mainly on observations of emotionally disturb

people. They believed that social and cultural variables, rather than biological drives, are mo

important in the development of an individuals personality.

These social theorists, also referred as neo-Freudian school, viewed individuals as striving to w

over the feelings of inferiority and searching for ways to gain love, security and relationships.

Carl Jung identified a number of personality types, such as sensing-thinking, sensing-feeli

intuiting-thinking and intuitive-feeling etc.

1. Sensing-thinking Personality

2. Sensing-feeling Personality

3. Intuiting-thinking Personality

4. Intuiting-feeling Personality

Trait Theory

The trait theory states that human personality is composed of a set of traits that describe gene

response patterns. The concept is that traits are general and relatively stable characteristics

personality that influence behavioural tendencies. The concept can be summed up in th

assumptions:

Behavioural tendencies in individuals are relatively stable.

A limited number of traits are common to most individuals. They differ only in the

degree to which they have these tendencies.

These traits and their relative degree when identified and measured, are useful in

characterising individual personalities.

.


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Lecture-16

CONSUMER PERCEPTION AND ATTENTION

Information processing involves a series of activities by which stimuli are recognis

perceived, transformed into meaningful information and stored in memory

Sensation (Exposure to Stimuli)

Sensation is the immediate and direct response of sense organs to simple stimuli such as

advertisement, a brand name, or a package etc. Exposure only requires presence of a stimulus with

an individuals relevant environment. Sensitivity to stimuli varies among individuals and depends

the quality of sensory receptors. Sensation for a stimulus depends on differentiation of input.

relatively static and unchanging environment provides little or no sensation even though the senso

input is strong.

FactorsFacets

Traits

Down-to

-earth Down

-to

-earth, Family

-oriented,Small town.

Honest Honest, Sincere, Real.

1. Sincerity Wholesome Wholesome, Original.

Cheerful Cheerful, Sentimental, Friendly.

Daring

Daring, Trendy, Exciting.

Spirited

Spirited, Cool, Young.2. Excitement Imaginativ

e Imaginative, Unique.

Up-to

-date Up

-to

-date, Independent, Contemporary.

Reliable Reliable, Hard working, Secure.

3. Competence

Intelligent Intelligent, Technical, Corporate.

Successful Successful,Leader, Confident.

Upper class Upper class, Glamorous, Good-looking.

4. Sophistication Charmi

n Charming, Feminine,

Smooth.

Outdoorsy Outdoorsy, Masculine, Western.5. Ruggedness

Tough Tough, Rugged.Type of decision ruleUsed in choice


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Absolute Threshold

Absolute threshold refers to the lowest level at which an individual can experience a sensation.

this point, an individual can detect a difference between something and nothing and this po

would be that individuals absolute threshold for that stimulus.. Absolute threshold for sound in ca

of these two individuals would be different. Many individuals ability to discriminate senso

characteristics such as taste, smell, hearing, or feel is small.

The senses are likely to become increasingly dull under conditions of constant stimulation and t

absolute threshold increases.

Differential Threshold

Differential threshold is the smallest detectable difference between two values of the same stimulu

This is also referred to asj.n.d (just noticeable difference).To measure the differential threshold a stimulus, one commonly changes its intensity in very small amounts. An individuals thresho

exists when she/he first notices that the stimulus has changed. The difference between this value a

the starting value is the just noticeable difference. Webers Law states that stronger the init

stimulus, greater the additional intensity needed for the second stimulus to be perceived as differe

The difference in price may become noticeable if the increase were to be one thousand rupees

more.

Marketers use Webers law to predict how consumers will respond to differences between marketi

variables or changes in these variables.

Attention

Attention occurs when one or more stimuli activate one or more sensory receptor nerves and t

resulting sensations reach the brain for further processing. Human beings are constantly exposed

numerous stimuli every minute of the day. This heavy intensity of stimulation to which we a

exposed should serve to confuse us totally but it does not. The reason is that perception is no

function of sensory input alone. An important principle of perception is that raw sensory input alo

does not elicit or explain the coherent picture of the world that most adults possess. Perception is

outcome of interaction of physical stimuli from external environment and an individua

expectations, motives and learning based on earlier experiences. The interaction of these two types

very different stimuli creates, for an individual, a very private and personal picture of the worSince every individual is unique because of needs, wants, desires, expectations and experiences,

two people perceive the world precisely the same way.

Perceptual Selection

Human beings, subconsciously, are quite selective in their perception. Everyday we look at so ma

things, ignore others and do not even notice many others. We really perceive only a very sm

fraction of stimuli to which we are exposed.One or more factors related to experience and motiv

affect consumers selective exposure and selective attentionat a given time and can increase

decrease the probability that a certain stimulus will be perceived.


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Stimulus Factors

There are numerous marketing-related stimuli that affect consumers perception, such as type

product, physical characteristics, packaging, colour, brand name, advertisement, claims, endors

size of ad, position of ad or time of commercial etc. The product and its components such

package, contents and physical properties etc. are primary or intrinsic stimuli, while market

communications developed to influence consumer behaviour are secondary or extrinsic stimuli.

In general, stimuli that stand out against their background capture immediate attention. Novel stim

achieve this through unique images, shapes, sounds and colours. For example, in many print a

there is lots of white space and just a few words, or the opening scene of a commercial is withou

sound. These are attempts at differentiation and often merit the attention of consumers.

Expectations

People generally see what they expect to see and this expectation is based on familiarity and previo

experience. Consumers often perceive products and product attributes according to thexpectations. It is also true that in many instances stimuli that are in sharp contrast to expectatio

attract more attention than those that meet our expectation.

Motives

Selective Exposure

Selective Attention

Adaptation

Perceptual Vigilance and Defence

Perceptual Blocking

Perceptual Organisation

All the selected stimuli from the environment are not experienced as separate and discrete sensatio

Individuals tend to organise these sensations into a coherent pattern and perceive them as unif

wholes. The specific principles underlying perceptual organisation are sometimes referred as Gest

psychology. Gestalt is a German word and means pattern or configuration. Three most ba

principles of perceptual organisation focus on figure and ground relationships, grouping a

closure.

Figure and Ground

This is one of the most basic and automatic organisational processes that perceivers use. People ha

a tendency to organise their perceptions into figure and ground relationship. In order to be notic

stimuli must contrast with their environment. The common line separating the figure and the grou

is perceived as belonging to the figure and not to the ground. This gives greater definition to t

figure.

Grouping


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Individuals have an inherent tendency to grouping or chunking a variety of information or ite

close to each other in time or space and form a unified picture. The tendency to group stimuli m

result as a consequence of proximity, similarity, or continuity. When an object is associated w

another because of its closeness to that object.

Closure

Individuals have a need for closure and fulfil it by organising their perceptions in a manner that lea

to forming a complete picture. In the event that they are exposed to a pattern of stimuli, which

their view is incomplete, they tend to perceive it as complete by filling in the missing pieces. Th

phenomenon may be the result of conscious or subconscious efforts. Because of this need for closu

individuals experience tension when some task is incomplete and a feeling of satisfaction and rel

develops with its completion.

Interpretation of Stimuli

As the old saying goes, a person sees what he/she expects to see, Interpretation of stimuli individuals is based on their earlier experiences, plausible explanations they can assign, th

motives, beliefs and interests at the time of perception. For a number of reasons, stimuli can often

weak or strong and may prove to be quite ambiguous to individuals.

A number of factors influence individuals that may distort their perceptions, such as physi

appearances, stereotyping stimuli, irrelevant stimuli, first impressions, jumping to conclusions a

halo effect etc.

Physical Appearance

Stereotyping Stimuli

Irrelevant Stimuli

First Impression

Jumping to Conclusions

Halo Effect

Images are Important to Consumers

An image is a total perception of something that individuals form by processing all the informati

they are exposed to over time. Research indicates that consumers develop enduring perceptions

images about brands, prices, stores and companies.They believe correspond to or agree with th

self-images and avoid buying products that do not fit their self-images.

Consumers also tend to buy from those outlets that seem to be consistent with their self-image. Ma

large retail stores and chains in India have started focusing on the need to build their identity

attract certain classes of consumers and create store loyalty among them

.

Price Perceptions

The company in 1989 reverted back to its strength of high-priced pens and became profitable again

Consumers have certain expectations of what the price is or should be of a product or servic

Their expectations may or may not reflect the actual price of the product or service.


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Consumers often associate the price of a product or service with quality.

Consumers consider differential pricing used by some marketers to benefit certain classes

consumers such as club members, senior citizens, women etc.,A reference price (also called stand

price) is any price that a consumer uses as a basis for comparing another price.

Consumers are willing to accept a range of prices, called the acceptable price range,for a prod

or service.

Researchers have investigated the effects of three types of consumer price perceptions communica

through advertising.

Plausible low prices

Plausible high prices

3. Implausible high prices

Lecture-16

Perceived Product and Service Quality

Consumers often tend to assess the quality of a product or service on the basis of different types

information they relate with the product or service.

In general, experienced and knowledgeable consumers are inclined to use country-of-origin as

indicator of product quality only when the information about product attributes is ambiguous a

consumers lacking experience tend to use country-of-origin as an indicator of product quality.

Kent B. Monroe and Susan B. Petroshius have summarised research findings to show h

consumers react to price variable:

Consumers seemingly use price as an indicator of product quality as well as an indicator

purchase cost.

Consumers appear to develop reference prices as standards for evaluating prices they see in t

marketplace.

Consumers reference prices are not constant and get modified by shopping experiences.

Factors, such as brand image or store image, can soften the strength of the perceived pric

quality relationship.

Some researchers believe that there are five dimensions of service quality:

The appearance of physical facilities, equipment, personnel and communication materials.Ability to perform the promised service dependably and accurately.

Willingness to help customers and provide prompt service.

Knowledge and courtesy of employees and their ability to convey trust and confidence.

Caring, individualised attention that the firm provides to the customers.

Joseph Plummer is of the opinion that there are three components to a brand image:

Attributes

Consequences and

Brand personality


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Consumers Risk Perception

Financial or monetary riskis the risk that the product will not be worth its cost. Expensi

products and services are mostsubject to this risk.

Performance risk, which is associated with the possibility that the product will not perform

anticipated or may even fail. The consumer wastes time in getting it repaired, or replaced. The r

is greatest when the product is technically complex. For example, an expensive computer.

Physical riskrefers to bodily harm to self and others due to product usage. For example, fo

and beverages, electrical or mechanical appliances, or medical services etc. can sometimes pro

risky.

Social risk, which means that a poor product purchase may not meet the standards of

important reference group and may result in social embarrassment. For example, clothes, jewel

carpet, or car etc.

Psychological riskrelates to loss of self-esteem or self-imageas a result of poor choand making her/him feel stupid. For example, high- involvement category products or service

How Consumers Deal with Risk

Consumers acquire additional information. This allows them to better assess the risk.

Consumers remain brand loyal. They stay loyal to a brand which has delivered satisfacti

instead of buying an untried brand.

Consumers buy the most popular brand because they usually believe that well-known a

popular brands can be trusted.

Consumers buy the most expensive model or brand as they often associate price with quality

Consumers rely on store image. They trust reputable retail outlets and depend on th

regarding their choice of merchandise for resale.

Consumers seek money-back guarantees, warranties and pre-purchase trial. For example

marketer offers free trial and no questions asked refund of money, or there are guarante

warranties.

Reduce level of expectations to reduce psychological consequences before making

purchase.

Lecture-17

CONSUMER LEARNING

Four components seem to be fundamental to almost all the learning situations, motivation, cu

response and reinforcement.

Motivation: Motivation is the driving force that impels individuals to action and is the result

unfulfilled need(s).


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Cues:Cues are relatively weak stimuli, not strong enough to arouse consumers but have t

potential of providing direction to motivated activity.

Response: The way an individual reacts to a cue or stimulus is the response and could

physical or mental in nature, leading to learning.

Reinforcement: Most scholars agree that reinforcement of a specific response increases t

likelihood for the response to reoccur.Reinforcement can be anything that both increases the streng

of response and tends to induce repetitions of the behaviour that preceded the reinforcement.

Behavioural Learning Theories

Behavioural learning theories are sometimes also referred to as connectionist or stimulus respon

theories. Behaviourist psychologists believe in observing changes in an individuals responses t

result due to exposure to specific external, environmental stimuli. Behavioural theories are based

stimulus-response (SR) orientation and the belief is that learning occurs through the connecti

between the stimulus and a response. When an individual responds in a predictable manner toknown stimulus, the person is said to have learned. Two important behavioural theories, classi

conditioning (also called respondent conditioning) and instrumental conditioning (also called oper

conditioning) are of great relevance tomarketing.

Classical Conditioning

In everyday life, we think of conditioning as a kind of automatic response to something as a result

repeated exposure to it. Classical conditioning pairs one stimulus with another that already elicit

given response and over a period of repeated trials, the new stimulus will also start causing the sam

or quite similar response.

The Russian psychologist, Ivan Pavlov, was the first who pioneered the study of classi

conditioning.

Repetition

Repetition is believed to work by strengthening the bond of association and thus slowing the proce

of forgetting. Learning follows a pattern, which is known as learning curve. In the figure 7.2, x a

shows the number of repetitions and yaxis represents the amount of learning. In a typical case,

rate of learning is quite rapid in the early stages. In later stages, as the amount learned accumulat

the rate of learning per repetition decreases. This shows that there is a limit to the amount

repetition that will aid learning and beyond a limit, the attention and, the rate of learning will declin

Stimulus Generalisation

Stimulus generalisation occurs when two stimuli are seen as similar and the effects of one, therefo

can be substituted for the effects of the other. This principle states that a new but similar stimulus

stimulus situation will produce a response that is the same or similar as that produced by the origin

stimulus. The more the new stimulus is like the conditioned stimulus, the more probable it is that t

new stimulus will produce the same conditioned response. According to Bernard Brelson and Ga

A. Steiner, the process of stimulus generalisation seems to occur automatically unless stopped

discrimination learning. Stimulus generalisation makes consumer life easier and allows them


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simplify the process of evaluation because they do not have to make separate judgements for ea

and every stimuli.

Some companies follow a policy of stimulus generalisation and some others avoid it.

Product line extension

Product form extension

Product category extension

Family branding

Stimulus Discrimination

Stimulus discrimination is just opposite to stimulus generalisation. Unlike reaction to similarity

stimuli, discrimination is a reaction to differences among similar stimuli. The ability of humans

discriminate among stimuli is learned. For example, frequent users of a brand are better able

notice relatively small differences among brands in the same product category. Not taking a

chances, marketers use advertising to communicate brand differences that looking at physicharacteristics alone would not convey. The concept of product or brand positioning is based

stimulus discrimination, which strives to create a brands unique image in the consumers minds.

Instrumental Conditioning (Operant Conditioning)

Instrumental conditioning also involves developing association between stimulus and response b

requires the subject to discover a correct response that will be reinforced. Any response elicited

within the conscious control of the subject.

Reinforcement

Reinforcement is anything that increases the strength of response and tends to induce repetitions

the behaviour that preceded it. Reinforcement or repeated positive outcome influences the likeliho

that a response will be repeated. Reinforcement can be of two types: positive reinforcement a

negative reinforcement.

Instrumental conditioning has important marketing applications in influencing the likelihood th

consumers will repurchase a product or service. Repurchase may result only when they are satisfiwith usage or consumption experience.

Cognitive Learning Theory

Cognitive learning approach has dominated the field of consumer behaviour in recent yea

Learning that takes place as a result of mental activity is termed as cognitive learning. Cognit

theorists do not endorse the view that learning is based on repetitive trials leading to the developm

of links between stimuli and responses because consumer behaviour typically involves choices a

decision-making. Much earlier, Wolfgang Kohlers work in the 1920s with apes has furnish


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important insight into cognitive learning.In case of cognitive learning theory, the concept of closu

(the reader may refer to the topic Perception) is important and is considered as the reinforci

factor.

Cognitive learning theory is quite relevant in understanding the consumer decision process

situations of high-involvement purchases. In case of complex buying behaviour (extensive probl

solving), the consumer becomes aware of a need, indulges in information search and evalua

available alternatives to satisfy the need.

Lecture-18

CONSUMER ATTITUDES

Functions of Attitude (Functional Theory of Attitudes)

Understanding functions of attitudes helps in learning how they serve consumers. Using tapproach, marketers attempt to influence effective responses by using messages that appeal

consumers on the basis of one or more of these four types of functions. According to Daniel Ka

attitudes perform four important functions for individuals:

Utilitarian function

Value-expressive function

Ego-defensive function

Knowledge function

Attitude ModelsTri-component Attitude Model

According to this model, attitudes consist of three main components:

Cognitive component

Affective component

Conative component

Multi-attribute Attitude Models

The Attitude-toward-object Model

This is the simplest model and is particularly appropriate for measuring attitudes towa

product/service category, or specific brands.The model is usually shown by the following equation:

where Attitude 0 = the persons overall attitude toward the object

b i = the strength of persons belief that the object contains attribute i

e i =persons evaluation or intensity of feeling towards attribute i (importan

of attribute)

n = the number of relevant beliefs for that person.

The Ideal-Point Multi-Attribute Model


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According to the attitude toward object model, more (or less) is liked only up to a point for som

attributes. Any further increase (or decrease) beyond this point in these attributes becomes bad.

Fishbeins Attitude toward Behaviour Model

The revised Fishbein model focuses on an individuals attitude towards her/his engaging in purcha

behaviour or acting with respect to an object rather than only the attitude towards the object itse

The appeal of this model is that it seems to be a better predictor of an individuals actual behavio

than the attitude-toward-object model.

The Attitude Toward Behaviour Model is expressed as:

where: AB = the individuals overall attitude towards performing the specific behaviour

bi = the persons belief that performing that behaviour results in consequen

1

e i = the persons evaluation of consequence of1n = the number of relevant behavioural beliefs.

Theory of Reasoned Action Model (TORA)

Theory of Reasoned Action (TORA) is the third modification of the original Fishbein model. Th

theory assumes that consumers consciously consider the consequences of the alternative behaviou

being contemplated and choose the one that leads to the most desirable consequences.

Factors Inhibiting the Relationship Between Beliefs, Feelings and Behaviour

Lack of consumer involvement

Lack of purchase feasibility

Lack of personal experience with the product

Lack of relation between consumers values and beliefs

Effect of market conditions

Purchase situation

Poor attitude accessibility from memory

FORMATION AND CHANGE OF ATTITUDES

Changing Attitudes

It is easier to change beliefs than desired benefits. Marketers could attempt either to chanbrand beliefs or change the benefits consumers desire by changing the value of attribut

Consumers desired benefits are more enduring than beliefs.

It is easier to change brand beliefs than brand attitudes. The high-involvement hierarc

models suggest that change in beliefs precedes a change in attitudes (feelings).

Changing attitudes is a more relevant vehicle than beliefs for hedonic products. Produ

purchases based on emotion or fantasy rely on feelings (attitude) rather than beliefs.

It is easier to change attitudes for low-involvement products. Under conditions of lo

involvement, consumers are not committed to the brand.


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It is easier to change weak attitudes than strong ones. If consumers do not hold strong feelin

(attitudes) about brands, any commitment is non- existent and brand switching is quite common.

Multi-attribute Models and Attitude Change

On the basis of Fishbeins multi-attribute model, four strategies can be considered to chan

attitudes:

By chan

c.b lecture notes (1-28)

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