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    Consumer Behaviour

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    Block 1

    Consumer Behaviour Issues and

    Concepts

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    Nature of Consumer Behaviour

    Consumer Behaviour can be defined as: "The decision process and physical activity engaged

    in when evaluating, acquiring, using or disposing ofgoods and services.

    Initiator The person who determines that some need orwant is not being met.

    Influencer The person who intentionally/unintentionallyinfluences the decision to buy the actual purchase and/oruse of product or service.

    Buyer The person who actually makes the purchase. User The person who actually uses or consumes the product or

    service.

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    THE DECISION PROCESS

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    INDIVIDUAL DETERMINANTS

    Motivation and Involvement Attitudes

    Personality and Self-concept

    Learning and Memory Information Processing

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    EXTERNAL ENVIRONMENT

    Cultural Influences Sub-cultural Influences

    Social Class Influences

    Social Group Influences Family Influences

    Personal Influences

    Other Influences

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    APPLICATIONS OF CONSUMER

    BEHAVIOUR IN MARKETING

    Analyzing Market Opportunity Selecting the Target Market

    Determining the Product Mix

    Use in Non-profit and Social Marketing

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    CONSUMER BEHAVIOUR AND LIFESTYLE

    MARKETING

    CHARACTERISTICS OF LIFESTYLELifestyle is a group phenomenon

    Lifestyle pervades various aspects of life

    Lifestyle implies a central life interest Lifestyles vary according to sociologically

    relevant variables

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    INFLUENCES ON LIFESTYLE

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    VALS SYSTEM OF CLASSIFICATION

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    ORGANISATIONAL BUYING BEHAVIOUR

    organizational buying as a complex process ofdecision making and communication, which

    takes place over time, involving several

    organizational members and relationship with

    other firms and institutions

    Buying decision process

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    ORGANISATIONAL BUYING BEHAVIOUR:

    CHARACTERISTICS

    Organizational buying is a multiperson buyingactivity

    It is a formal activity which follows the

    procedures laid down in an organization

    Longer time lag between efforts and results

    The uniqueness of organizations

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    Factors influencing Organizational

    Buying

    External environment factors Economic

    Infrastructural

    Social Political

    Competition

    Regulatory

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    Organizational factors

    objectives

    Policies

    objectives

    Procedures

    Organizational structure

    System

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    Interpersonal factors

    Authority Status

    Empathy

    Persuasiveness

    Individual factors

    Age

    Income

    Education Job position

    Risk attitude

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    Buying situation

    Straight re-buy situation Modified re-buy

    New task

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    Buying Behavior Models

    Simple model

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    Buy grid model

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    The fishers model

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    Block 2

    Individual influences on buying

    behavior

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    Perception process

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    Stages in perceptual

    Primitive categorization Cue check

    Confirmation check

    Confirmation completion

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    Sensory system

    Vision Smell

    Sound

    Touch Taste

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    Sensory thresholds

    The absolute threshold The differential threshold

    The JND and Webers law

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    Perceptual selection

    Subliminal perceptionSubliminal techniques

    embeds

    auditory messages

    consumer folklore

    low level auditory stimulation

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    Consumer motivation and involvement

    Need and types of needs need for affiliation

    need for power

    need for uniqueness

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    Maslows

    hierarchy needs

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    Motivation

    Refers to the process that cause people to behaveas they do

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    Theories of motivation

    Instinct theory Drive theory

    Expectancy theory

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    Motivational conflicts

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    Types of involvement

    Purchase involvementmessage-response involvement

    ego involvement

    Measuring involvement Development of involvement

    Segmenting by involvement

    Strategies of to increase involvement

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    Attitude and its constituent

    Attitude is learned predisposition to respond in aconsistently favorable and unfavourable manner

    with respect to given stimuli

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    Functions of attitude

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    Attitude models

    Multi-attribute model

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    ATO

    These models seek information on the importance ofbrand attributes, belief about presence and absence

    of those attributes and information on their combined

    effect

    algebraically

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    Behaviour intention model

    This model predict intentions to behaveAlgebraically

    B=BI = W1 (AB) + W2 (SN): where

    B = behavior; BI = Behaviour Intention

    AB = attitude toward performing the behaviorSN = the subjective norm

    W1 and W2, are empirically determined weights, throughregression analysis.

    AB and SN are obtained directly from consumers viaquestionnaires. Thus, AB is obtained from the followingequation: Where

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    where

    SN = subjective norm;

    NBj = the normative belief that a reference

    group of persons j thinks that the consumer

    should or should not perform thebehaviour;

    MC = the motivation to comply with

    the influence of the referent j and

    n = number of relevant referencegroups of individuals.

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    Learning and Memory

    Learning refers to the permanent change in thebehavior caused by experience.

    Theories of learning

    Classical conditioning :theory given by IvanPavlov.Acc.to theory learning occurs when

    stimulus elicit a response paired with

    another stimulus that initially does not elicit

    as response on its own, but will cause aresponse over time since it is associated

    with the first stimulus

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    Operant conditioning

    This is given by B.F.Skinner acc.to this theoryindividual learns to perform behaviors that

    produce positive outcome and avoid those

    having negative outcome.

    Instrumental learning occurs in 2 ways

    +ve reinforcement in the form of reward response

    is strengthened.

    _ve reinforcement strengthens responses so that

    Appropriate behavior is learned.

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    Issues of learning

    Issue of consciousness Observational learning

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    Memory:structure and functioning

    Is the process of acquiring information andstoring it over time so that it will available when

    needed.

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    Relationship among memory systems

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    Retrieving information

    is the process whereby information isaccessed from long-term memory

    Measuring memory for advertising

    Recognition vs. recall Starch test

    Problems with memory measures

    Response biases

    Memory lapses

    Memory vs. feeling

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    Marketing applications

    Repetition Conditioning product associations

    Stimulus generalizations

    Strategies on stimulusFamily branding

    Product line extensions

    LicensingLook-alike packaging

    Reinforcement of consumption

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    Personality and self concept

    Refers to a person's unique psychological makeup and how it consistently influences the way a

    person response to the environment

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    Personality determinants

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    Theories of personality

    1) Psychoanalytic theorygiven by Sigmund freud . Acc. to this personality is

    the product of

    IdEgo

    Super ego

    2) Neo-Freudian theory

    Acc .to this theory personality is classified into

    three groups

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    Compliant individuals Aggressive individuals

    Detached individuals

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    Trait theory

    a person's unique psychological make up thatallows him to respond in a consistent manner

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    Self-Consciousness Self esteem

    Multiple selves

    Symbolic interactionism The looking-glass self

    THE THEORY OF SELF-CONCEPT

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    CONSUMPTION AND SELF-CONCEPT

    Self Image-Product Image Congruence The Extended Self

    four levels of extended self

    a) Individual levelb) Family level

    c) Community level

    d) Group level

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    Block 3

    Group influences on consumer

    behaviors

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    REFERENCE GROUPS

    reference groups are defined as groups that aperson refers to, and identifies with, to theextent that the group becomes a norm,standard or point of reference.

    Types of reference groups1) Membership or Non-membershipgroups

    2) Formal or Informal Groups

    3) Primary or Secondary Groups4) Aspiration groupsAnticipatory aspiration groupsSymbolic aspiration groups

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    On the basis of function normative group

    comparative group

    status group dissociative group

    status group

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    Types of power

    1) Reward Power2) Coercive Power

    3) Legitimate Power

    4) Referent Power5) Expert Power

    REFERENCE GROUP INFLUENCE ON

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    REFERENCE GROUP INFLUENCE ON

    PRODUCTS

    1) Influence on Product and Brand (PublicLuxuries)

    2) Influence on Product only (Private Luxuries)

    3) Influence on Brand only (Public Necessities)4) No Group Influence (Private Necessities)

    Reference Group Applications in

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    Reference Group Applications in

    Marketing

    Use ofcelebrities for product endorsements Use ofexperts for product endorsements

    Use ofspokespersons for product

    endorsements

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    OPINION LEADERSHIP

    Opinion leadership has been defined as theprocess by which one person, the opinion

    leader, informally influences

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    OPINION LEADERSHIP PROCESS

    THE CONCEPT OF SOCIAL CLASS: ITS

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    THE CONCEPT OF SOCIAL CLASS: ITS

    NATURE AND MEANING

    Social class refers to the social position that anindividual occupies in society

    SOCIAL CLASS AND SOCIAL

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    SOCIAL CLASS AND SOCIAL

    STRATIFICATION

    The significance of social stratification isthat there are differences in values and

    attitudes of each of the classes. These

    differences are reflected in their lifestylesand their purchasing patterns and

    consumption characteristics and,

    therefore, provide a basis on which to

    segment the market

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    SOCIAL CLASS CATEGORISATION

    SOCIAL CLASS AND BUYING

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    SOCIAL CLASS AND BUYING

    BEHAVIOUR

    People's buying behavior is stronglyinfluenced by the social class to which

    they belong.Social class measures have

    also been linked to demographic andgeographic data

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    CONSUMER SOCIALISATION

    Consumer socialization is the process bywhich young people acquire the skills,

    knowledge and attitudes relevant to their

    functioning as consumers FactorsInfluencing Consumer Socialization

    1)The Background/Environmental Factors

    2)The Socializing Agents

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    INTERGENERTIONAL INFLUENCES

    FAMILY ROLE STRUCTURE AND BUYING

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    FAMILY ROLE STRUCTURE AND BUYING

    BEHAVIOUR

    The Instigator (Initiator): This is the personwho first suggests the idea of a product orservice and initiates the purchase process, tobegin with

    The Influencer: This is someone whose opinionis valued in the decision-making process. Aninfluencer may be a friend, brother, sister,spouse, doctor

    The Decider: This is the person who makes thefinal decision on what brand or make to buy,after all aspects such as price, quality, servicing,have been thought over.

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    The Purchaser (Buyer): This is the individualwho actually purchases the product, pays for it,

    takes it home or arranges for delivery

    The Consumer: He is the user of the goods or

    service.Family Decision Stages

    Problem recognition

    Search for information Evaluation of alternatives

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    Final decision Purchase

    THE DYNAMICS OF FAMILY

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    THE DYNAMICS OF FAMILY

    DECISION-MAKING Wife-dominant decisions: Wives have been found to

    dominate decisions on food purchase, groceries,household furniture and appliances.

    Husband-dominant decisions: Husbands have beenfound to dominate the decisions on purchases such as

    automobiles and life insurance. Syncratic decisions (Joint decisions): These are

    decisions in which husbands and wives share influence.Vacations, choice of schools for children, for example,are jointly decided.

    Autonomic decisions (Unilateral decisions): Decisions oflesser importance that either the husband or wife makeindependently

    The element of power within the family is

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    The element of power within the family is

    obtained from a variety of sources

    Economic resources Cultural norms

    Expert power

    Legitimate power

    Bargaining power

    Bargaining power

    Emotional power

    Th f il Lif C l St

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    The family Life Cycle Stages

    The Bachelor Stage (Young and single)In the bachelor stage of the life cycle, income is

    low, few financial burdens

    The Newly Married Couples (Young, no

    children) the requirements and resources

    change. Household requirements increase. In

    addition, in some cases, both partners may be

    working. This stage therefore represents a highexpenditure period.

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    Full Nest 1 (Young, married, with child) Thearrival of a child creates major changes. The

    financial resources change.Child rearing and

    educational responsibilities increase.

    Full Nest 2 (Older, married, with children)The family's financial position starts to improve

    because of career

    Full Nest 3 (Older, married, with dependentchildren) Income is high. they represent

    experienced buyers and less interested in new

    product purchases. Expenditures continue to be

    high

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    Empty Nest (Older, married, with no childrenliving with them)

    financial position stabilizes

    Savings accumulate.

    Hobbies become an important source ofsatisfaction.More is spent on luxury appliances

    Solitary Survivor (Older, single, retired

    people)more economical lifestyle

    lower income due to retirement

    C lt d b lt

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    Culture and subculture

    Culture is defined as:"a complex set of values, ideas, beliefs,

    attitudes and other meaningful symbols,

    created by human beings to shape human

    behaviors and the artifacts of that behavioras they are transmitted from one generation

    to another .

    culture is divided into two components

    1) internal mental culture

    2) The external material culture

    THE CHARACTERISTICS OF CULTURE

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    THE CHARACTERISTICS OF CULTURE

    Culture is invented Culture is a set of learned responses

    Culture is shared

    Culture is gratifying and persistent Culture is dynamic and adapts

    Culture is an organized and integrated whole

    Cultures are similar yet different Culture is prescriptive

    CULTURAL VALUES

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    CULTURAL VALUES

    A cultural value can be defined as a widely heldbelief that endures over time

    Two types of values

    Instrumental values

    Terminal values

    SUBCULTURES AND THEIR INFLUENCE

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    SUBCULTURES AND THEIR INFLUENCE

    Subcultures can be defined as a distinctcultural group that exists within a layer,

    complex society as an identifiable segment

    in terms of its beliefs customs and values

    Types of subcultures

    Racial or nationality subcultures

    Religious subcultures

    Geographical and regional subcultures

    Age subcultures

    Block 4

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    Block 4

    The buying process

    PROBLEM RECOGNITION

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    PROBLEM RECOGNITION

    INFORMATION SEARCH

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    INFORMATION SEARCH

    Is the search for informationTypes of information search

    Types of Information Search

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    Types of Information Search

    Internal search External search

    Sources of Information

    Internet

    Advertising

    In-store promotion

    Dealer information

    package information Sales personnel

    samples and demonstrations

    INFORMATION PROCESSING

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    INFORMATION PROCESSING

    a series of activities by which stimuli aretransformed into information, stored and used

    Information processing consists of two separate

    terms: Information and Processing

    Information is "all facts, estimates, predictions,

    and generalized relationships which affect a

    decision maker's perception of the nature and

    extent of uncertainties associated with a givenconsumption problem or opportunity

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    Processing Processing refers to the act(s) bywhich the stimulus is converted into response

    THE INFLUENCING FACTORS

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    THE INFLUENCING FACTORS

    demographics of the consumers psychographic factors

    information characteristics themselves

    cultural environment

    media characteristics

    ALTERNATIVE EVALUATION IN BUYING

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    DECISIONS

    ALTERNATIVE EVALUATION : FOURCOMPONENTS

    Product Attributes

    Utility Function Importance Weights of Attributes

    Brand Beliefs Based on Consumer

    Perception

    FORMATION OF BRAND SETS FOR

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    ALTERNATIVE EVALUATION

    THE CHOICE-MAKING RULES

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    Consumers

    Consumers make a variety of choices. These aremade on the basis of certain criteria known as

    choice rules or heuristics.

    The Benefits of Choice Heuristics

    provide with guidance while making decisions;

    offer a short cut to a decision;

    allow them to integrate and arrange information

    In consumer information processing help thembetter in facing complexities

    The Use of Choice Rules

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    The Use of Choice Rules

    The most complicated buying decision behavior isknown as Extended Problem Solving (EPS). It is

    seen mostly for high involvement products.

    The second type is the Limited Problem Solving

    (LPS). It is The most common and routineprocess is called Routine Response Behaviour

    (RRB).

    The last one is most evident in respect of low

    involvement products.

    The Choice Rules and the Multi-Attribute

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    Choice Models

    Multi-attribute choice models explain howconsumers combine their beliefs about productattributes to form their attitudes about variousbrand alternatives. These models assume thatthe brand which receives the best attitude will bechosen.

    The Choice Rules and the Ideal Brand Model

    This model prescribes that a consumer will

    compare actual brands to his ideal brand. Thecloser an actual brand comes to this ideal, themore it will be preferred.

    THE BASIC CHOICE HEURISTICS

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    THE BASIC CHOICE HEURISTICS

    THE MARKETING RESPONSE TO THE

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    CHOICE HEURISTICS

    Relying on a product signal Market beliefs as heuristics

    Price as a heuristics

    Brand name as a heuristic

    PURCHASE PROCESS & POST-

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    PURCHASE BEHAVIOUR

    PURCHASE PROCESSConsumers make two types of purchases

    Trial purchase and repeat purchases. `If aconsumer purchases or is induced to purchase

    for the first time, a smaller quantity than usualthis is termed as a product trial.

    Repeat purchase on the other hand, indicatescommitment on the part of the customer

    towards the product, company and others. It isclosely related to concept of development ofbrand loyalty and signifies that the product hasmet with the consumers' expectations.

    Determinants of Choice Process

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    Determinants of Choice Process

    STEPS TO BENEFIT FROM SITUATIONAL

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    INFLUENCES Identify the relevance of each situational factor

    on his buying process; Determine the impact of relevant situational

    variables through appropriate research;

    Consider appropriate segmentation andpositioning based on the findings;

    Develop an appropriate marketing mix,incorporating the above;

    Remember the general findings andhypothesized relationships between situationalvariables and purchase process.

    AN ANATOMY OF NON-STORE BUYING

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    AN ANATOMY OF NON-STORE BUYING

    non-store buying is known as direct marktingTheDirect Mail Marketing Association (DMMA) has

    defined Direct Marketing as follows:

    "Direct (response) marketing is the total of

    activities by which products and services areoffered to market segment in one or more media

    for information purposes, or to solicit a direct

    response from a present or prospective

    customer or contributor by mail, telephone orother access."

    ROUTES OF NON-STORE BUYING

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    ROUTES OF NON-STORE BUYING

    The in-home buyer Tele Marketing

    Mail-order buying

    Direct in-home sales

    Interactive video selling

    POST-PURCHASE BEHAVIOUR

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    POST-PURCHASE BEHAVIOUR

    Post purchase activities

    Formation of Satisfaction/Dissatisfaction

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    Formation of Satisfaction/Dissatisfaction

    THEORIES OF POST-PURCHASE

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    EVALUATION

    Responses of a Dissatisfied Customer

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    Responses of a Dissatisfied Customer

    Block 5

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    Block 5

    MODELLING BUYER BEHAVIOUR

    EARLY MODELS

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    EARLY MODELS

    ECONOMIC MODELSThe economic theory, which largely explains

    behaviour on the basis of allocation of scarce

    resources among unlimited needs and wants,

    has given alternative views of the consumerfrom the view point of its sub-disciplines, i.e.

    micro-economic and macro economics.

    Micro economic models:The focus was on the

    act of purchase in terms of what customer

    bought and how much would be purchased

    Macro economic perspective

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    Macro economic perspective

    Macro economics, focused on aggregate flowsin the economy, their direction and change overtime. Macro economic field are important for ourunderstanding of consumer behaviour. Theseare

    the relative income hypothesis hypothesisHigher income families spend a lower portion oftheir disposable income as compared to thelower income families. thesis.

    the permanent income hypothesis is thatindividuals are slow to change their consumptionpatterns even when there are sudden changesin their income.

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    stimuli are inputs which are capable of arousing

    drives or motives.

    Cues is a sign or signal which acts as a

    stimulus to a particular drive.

    The way an individual reacts to the stimuli is

    known as his response. If the response to a

    given stimulus is "rewarding", it reinforces the

    possibility of similar response

    THE PSYCHOLOGICAL MODEL (THE

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    PAVLOVIAN LEARNING MODEL) The learning model was first introduced by Ivan

    Pavlov.The model suggests that humanbehaviour is based on some central concepts -the drives, stimuli, cues, responses andreinforcements which determine the human

    needs and needs satisfying behavioura drive isa strong internal stimulus which compels action.

    stimuli are inputs which are capable of arousing drivesor motives.

    The way a person responds to a given stimulus woulddepend upon the Configuration of cues. Cues is a signor signal which acts as a stimulus to a particular drive.

    The way an individual reacts to the stimuli is known as

    his response.

    THE GESTALT MODEL

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    THE GESTALT MODEL

    Empahsis on man and his environment. individuals perceive and interpret the

    stimuli in relation to their own individual

    experiences. the gestalt theory dealt specifically with

    the physical perception of stimuli

    THE PSYCHOANALYTIC MODEL

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    THE PSYCHOANALYTIC MODEL

    Sigmund Freud is the founder of thismodel.

    Pioneered the procedure of observation

    and analysis to understand the personalitycomplexities

    THE COGNITIVE DISSONANCE

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    COG SSO C

    Leon Festinger, the propounder of the theoryhypothesised that:

    The existence of dissonance (a state of

    imbalance in the cognitive structure) is

    psychologically uncomfortable and will lead theperson to reduce dissonance and achieve

    consonance (i.e. balance)

    Whenever dissonance exists, the person willtry to avoid situations and information which

    add to dissonance.

    SOCIOLOGICAL MODEL

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    This model is given by thorsteine veblen He suggested that man's needs and behaviour

    are dependent upon and shaped by the social

    groups and forces.

    HOWARDSHETH MODEL

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    TYPES OF PROBLEM SOLVING

    BEHAVIOUR

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    BEHAVIOUR

    1) Extensive problem solving behaviourrepetitive decision making where the buyer has

    not yet developed strongly predispositions

    2) Limited problem solving behaviour

    where because of learned experience about the

    brands, the choice criteria have a clear

    definition and organization, but the buyer is still

    undecided about the actual choice among thealternatives.

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    3) Routinised response behaviourThe buyer on account of the learned

    experience has now well defined

    evaluative criteria and strong

    predisposition towards one particular

    brand

    THE EVALUATIVE CRITERIA

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    The evaluative criteria are the consumer'sreference scale on which he judges the

    brands as alternative choices

    CLASSIFICATION OF CURRENT

    MODELLING EFFORTS

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    MODELLING EFFORTS

    Modelling ObjectivesDescription of buying behaviour

    Describing the consumer processes

    Predictability and Control of Consumerbehaviour

    Support of Basic Disciplines

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    pp p

    Decision Sciences Anthropology

    Systems Dynamics and Simulation

    Support of Analytic Techniques

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    pp y q

    stepwise regression analysis,correspondence analysis are very often

    used for identifying the salient variables

    and their relationships out of the observed

    data.

    Factor analysis and multidimensional

    scaling techniques are used for reducing

    data. Conjoint analysis has come as a

    handy tool for such purposes.

    SOME RECENT MODELS

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    a) Nicosia's Model of Consumer Decision

    Process

    This model elaborates the decision making

    steps that the consumers adopt before buying

    goods or services.

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    BETTMAN'S INFORMATION PROCESSING MODEL

    OF CONSUMER CHOICE

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    OF CONSUMER CHOICEThe main components of the model are the

    following

    Processing Capacity

    Motivation

    Attention and perceptual encoding

    Information acquisition and evaluation

    Memory

    Decision process

    Consumption and learning processes

    Scanner and interrupt mechanisms

    EVALUATION OF CONSUMER

    BEHAVIOUR MODELS

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    BEHAVIOUR MODELS

    i) External validityii) Internal validity

    iii) Robustness

    iv) Generalisability

    v) Descriptive ability

    vi) Predictability

    vii) Simplicity

    viii) Comprehensiveness